<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1996.
REGISTRATION STATEMENT NO. 333-05857
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
PRE-EFFECTIVE AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------
TELCO COMMUNICATIONS GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 4813 54-1674283
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)
4219 LAFAYETTE CENTER DRIVE
CHANTILLY, VIRGINIA 20151
(703) 631-5600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
DONALD A. BURNS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TELCO COMMUNICATIONS GROUP, INC.
4219 LAFAYETTE CENTER DRIVE
CHANTILLY, VIRGINIA 20151
(703) 631-5600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
MORRIS F. DEFEO, JR. DENNIS J. BLOCK
SWIDLER & BERLIN, CHARTERED AKIKO MIKUMO
3000 K STREET, N.W., SUITE 300 WEIL, GOTSHAL & MANGES LLP
WASHINGTON, D.C. 20007 767 FIFTH AVE.,
(202) 424-7500 NEW YORK, N.Y. 10153
(212) 310-8000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
----------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The table below sets forth the expenses to be incurred by the Company in
connection with the issuance and distribution of the shares registered for
offer and sale hereby, other than underwriting discounts and commissions. All
amounts shown represent estimates except the Securities Act registration fee
and the NASD filing fee.
<TABLE>
<S> <C>
Registration fee under the Securities Act of 1933................... $62,358
NASD filing fee..................................................... 18,584
Nasdaq National Market fee.......................................... 7,775
Printing expenses................................................... *
Registrar and Transfer Agent's fees and expenses.................... *
Accountants' fees and expenses...................................... *
Legal fees and expenses (not including Blue Sky).................... *
Blue Sky fees and expenses.......................................... *
Miscellaneous....................................................... *
-------
Total............................................................. $ *
=======
</TABLE>
- --------
*To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 10 of the Virginia Stock Corporation Act allows, in general, for
indemnification, in certain circumstances, by a corporation of any person
threatened with or made a party to any action, suit, or proceeding by reason
of the fact that he or she is, or was, a director, officer, employee, or agent
of such corporation. Indemnification is also authorized with respect to a
criminal action or proceeding where the person had no reasonable cause to
believe that his conduct was unlawful. Article 9 of the Virginia Stock
Corporation Act provides limitations on damages payable by officers and
directors, except in cases of willful misconduct or knowing violation of
criminal law or any federal or state securities law.
The Company's Articles of Incorporation provide for mandatory
indemnification of its directors and officers against liability incurred by
them in proceedings instituted or threatened against them by third parties, or
by or on behalf of the Registrant itself, relating to the manner in which they
performed their duties unless they have been guilty of willful misconduct or a
knowing violation of the criminal law.
The Company has directors' and officers' insurance with National Union Fire
Insurance Company of Pittsburgh which provides for indemnification, subject to
certain conditions, of certain directors and officers of the Company.
In the U.S. Underwriting Agreement and International Underwriting Agreement,
proposed forms of which have been filed as Exhibits 1.1 and 1.2 hereto,
respectively, the U.S. Underwriters and Managers will agree to indemnify,
under certain conditions, the Registrant's officers, directors and controlling
persons against certain liabilities, including liabilities under the
Securities Act of 1933.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following reflects a 10-for-1 stock split declared by the Company on
July 1, 1994 and a 425-for-1 stock split to be effective immediately prior to
the Offerings.
In connection with the organization of the Company, 4,250 shares of the
Company's Common Stock was issued to Henry G. Luken, III, 4,845 shares were
issued to Donald A. Burns, and 3,655 shares were issued to Walter C. Anderson
on August 15, 1993.
II-1
<PAGE>
On November 9, 1993, an additional 6,718,187, 7,666,405 and 5,790,157 shares
of the Company's Common Stock were issued to Mr. Luken, Mr. Burns and Mr.
Anderson, respectively.
On July 1, 1994 options for 623,687 shares of Common Stock were granted to
Mr. Rachlin, at an exercise price of $0.31 per share.
On July 20, 1994, the Company reacquired 5,794,025 shares of its Common
Stock from Mr. Anderson for $25,000. On July 25, 1994, the Company issued
6,470,412 shares of its Common Stock to Iceberg Transport, S.A., a Panamanian
corporation, in a private placement for $50,000.
On November 30, 1994 options for 797,300 shares were issued to Ms. Marine-
Street at an exercise price of $1.76 per share.
On December 30, 1994 options for 212,500 shares were issued to Mr. Stodter
at an exercise price of $1.85 per share.
On September 1, 1995 options for 212,500 shares were issued to Ms. Anastasi
at an exercise price of $3.23 per share.
On June 27, 1994 a warrant to purchase 682,082 shares at a nominal exercise
price was issued to Signet Media Capital Group.
On March 19, 1996, options to acquire 425,000 shares were issued to Mr.
Merrick at an exercise price of $7.53 per share.
On April 4, 1996, options to acquire 1,062,500 shares were issued to Mr.
Canton at an exercise price of $7.53 per share.
On April 1, 1996, Bonita Anderson, James Sznajder, Bryan Rachlin and Dennis
Jarman exchanged their options in LDWC for options to acquire 25,511, 51,021,
102,043, and 113,267 shares of Telco Common Stock, respectively, under the
Company's Stock Option Plan.
On July , 1996, 593,334 shares of the Company's Common Stock were issued to
the shareholders of Tel Labs in exchange for all of their shares in Tel Labs
in connection with the acquisition of Tel Labs.
Each issuance of securities described above was made in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act as
a transaction by an issuer not involving any public offering. The recipients
of securities in each such transaction represented their intention to acquire
the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed
to the share certificates issued in such transactions. All recipients had
adequate access, through their relationships with the Company, to information
about the Company.
II-2
<PAGE>
ITEM 16(A). EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
------- ----------- -------------
<C> <S> <C>
1.1 Form of U.S. Underwriting Agreement...................
*1.2 Form of International Underwriting Agreement..........
*2.1 Share Exchange Agreement between Telco Communications
Group, Inc., Henry G. Luken, III, Bryan Rachlin,
Michael Cheng and Kevin Yang dated as of June 1, 1996
(Tel Labs, Inc. Share Exchange Agreement) ...........
*2.2 Long Distance Wholesale Club Share Exchange
Agreement............................................
*3.1 Form of Restated Articles of Incorporation of Telco
Communications Group, Inc............................
*3.2 Form of Amended and Restated Bylaws of Telco
Communications Group, Inc............................
*4.1 Form of Common Stock Certificate of Telco
Communications Group, Inc............................
*5.1 Opinion of Swidler & Berlin, Chartered................
10.1 Agreement for the Provision of Billing and Collection
Services between Telco Development Group of Delaware,
Inc. and the Ameritech Companies dated July 1, 1995..
10.2 Agreement for the Provision of Billing and Collection
Services between the Bell Atlantic Operating
Telephone Companies and Telco Development Group of
Delaware, Inc. dated June 10, 1994...................
10.3 Clearinghouse Billing and Collection Services
Operating Contract between Telco Development Group of
Delaware, Inc. and Bell South Communications dated
January 3, 1994......................................
**10.4 Agreement for Billing Services by Tel Labs, Inc. and
Esprit Telecom dated December 29, 1995...............
**10.5 Agreement for Billing Services by Tel Labs, Inc. and
Long Distance Wholesale Club, Inc. dated July 19,
1995.................................................
**10.6 One Plus Billing & Information Management Services
Agreement between Long Distance Wholesale Club, Inc.,
and Telco Development Group of Delaware, Inc. dated
January 23, 1996.....................................
10.7 Agreement between Nevada Bell and Telco Development
Group of Delaware, Inc. for Billing and Collection
Service dated September 3, 1995......................
10.8 Agreement for Interstate Billing and Collection
Services Agreement between New England Telephone and
Telegraph Company and Telco Development Group of
Delaware, Inc. dated July 31, 1995...................
10.9 Agreement for Interstate Billing and Collection
Services between New York Telephone Company and Telco
Development Group of Delaware, Inc. dated July 31,
1995.................................................
10.10 Agreement for the Provision of Billing and Collection
Services between Pacific Bell and Telco Development
Group of Delaware, Inc. dated July 12, 1996..........
10.11 Casual Billing Services Agreement between the Southern
New England Telephone Company and Telco Development
Group of Delaware, Inc. dated February 9, 1996.......
**10.12 Agreement for the Provision of Billing and Collection
Services between Southwestern Bell Telephone Company
and Telco Development Group of Delaware, Inc. dated
December 16, 1994; and Amendment to the Agreement for
the Provision of Billing and Collection Services
between Southwestern Bell Telephone Company and Telco
Development Group of Delaware, Inc. dated December
19, 1994.............................................
**10.13 One Plus Billing and Information Management Services
Agreement between Telco Development Group of
Delaware, Inc. and Telco Communications Group, Inc.
dated December 30, 1995..............................
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
------- ----------- -------------
<C> <S> <C>
**10.14 Agreement for Billing Services by Tel Labs, Inc. and
Telco Communications Group, Inc. (undated).................
10.15 Agreement for the Provision of Billing and Collection
Services for Clearing Agents between U S WEST, Inc. and
Telco Development Group of Delaware, Inc. dated April 1,
1995; Amendment dated June 6, 1996......................
10.16 Standard Agreement for the Provision of Billing and
Collection Services between United Telephone Company of
Florida and Telco Development Group of Delaware, Inc.
dated October 19, 1994..................................
**10.17 Service Agreement between IXC Carrier, Inc. and Telco
Communication Group, Inc. dated December 15, 1995.......
**10.18 Telco Communications Group, Inc. Wholesale Customer
Agreement for Special International Pricing with Esprit
Telecom dated February 21, 1996.........................
*10.19 Telco Communications Group, Inc. 1994 Amended and
Restated Stock Option Plan..............................
**10.20 Lease Agreement between CPL Properties and Telco
Communications Group, Inc. effective March 1, 1995
(Davenport, Iowa Switch Site)...........................
**10.21 Lease Agreement between Thomas Kurschner and Telco
Communications Group, Inc. effective November 2, 1995
(Las Vegas, Nevada Switch Site).........................
**10.22 Deed of Lease Agreement between Bricks in the Sticks,
Ltd. and Telco Communications Group, Inc. effective
March 1, 1995 (Chattanooga, Tennessee Switch Site)......
**10.23 Lease Agreement between The University of Texas System
and Telco Communications Group, Inc. effective August
22, 1994 (Austin, Texas Switch Site)....................
**10.24 Agreement of Lease between 13th and L Associates and
Telco Communications Group, Inc. effective August 25,
1994 (Washington, DC Switch Site).......................
**10.25 Deed of Lease agreement between Bricks in the Sticks,
Ltd. and Tel Labs, Inc. effective July 1, 1994
(Corporate Office)......................................
**10.26 Deed of Lease Agreement between Bricks in the Sticks,
Ltd. and Telco Communications Group, Inc. effective
March 1, 1995 (Corporate Office)........................
**10.27 Master Lease Agreement between Telco Communications
Group, Inc. and Dana Commercial Credit Corporation dated
September 14, 1995; Addendum to the Master Lease
Agreement dated September 15, 1995; and Lease Schedules
001 and 002 ............................................
10.28 Equipment Lease between DGI Technologies, Inc. and Telco
Communications Group, dated October 1, 1994.............
**10.29 Equipment Leases between DSC Finance Corporation and
Telco Communications Group, Inc. (Master Lease dated
January 1, 1994 and Schedules A-P1).....................
**10.30 Credit Agreement between Telco Communications Group,
Incorporated, Signet Bank and the Banks listed therein,
dated as of January 24, 1996............................
10.31 Employment Agreement between Telco Communications Group,
Inc. and Donald A. Burns dated as of July 10, 1996......
**10.32 Employment Agreement between Telco Communications Group,
Inc. and Thomas J. Cirrito dated as of April 1, 1996....
**10.33 Employment and Stock Option Agreement between Telco
Communications Group, Inc. and Stephen G. Canton dated
as of April 4, 1996.....................................
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
------- ----------- -------------
<C> <S> <C>
**10.34 Employment Agreement between Telco Communications
Group, Inc. and Bryan K. Rachlin dated as of July
10, 1996............................................
**10.35 Employment Agreement between Telco Communications
Group, Inc. and Nicholas A. Merrick dated as of
March 19, 1996......................................
**10.36 Employment Agreement between Telco Communications
Group, Inc. and Janet D. Anastasi dated as of May 2,
1996................................................
**10.37 Employment Agreement between Telco Communications
Group, Inc. and Natalie Marine-Street dated as of
May 3, 1996.........................................
**10.38 Employment Agreement between Telco Communications
Group, Inc. and Mark J. Stodter dated as of May 2,
1996................................................
*10.39 Employment Agreement between Telco Communications
Group, Inc. and Henry G. Luken, III dated as of July
10, 1996............................................
*10.40 Indemnification Agreement............................
*10.41 Registration Rights Agreement........................
11.1 Statement Regarding Computation of Per Share
Earnings............................................
*21.1 Subsidiaries of Telco Communications Group, Inc. ....
**23.1 Consent of Deloitte & Touche LLP.....................
**23.2 Consent of Chase and Associates CPAs, PC.............
*23.3 Consent of Swidler & Berlin, Chartered (to be
included in Exhibit 5.1 to this Registration
Statement)..........................................
**24.1 Powers of Attorney...................................
27.1 Financial Data Schedule..............................
</TABLE>
- --------
*To be filed by amendment.
**Previously filed.
ITEM 16(B). FINANCIAL STATEMENT SCHEDULES.
None.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-5
<PAGE>
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CHANTILLY, COMMONWEALTH
OF VIRGINIA, ON JULY 30, 1996.
Telco Communications Group, Inc.
By: /s/ Bryan K. Rachlin
-------------------------------
BRYAN K. RACHLIN
Chief Operating Officer, Secretary
and General Counsel
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON JULY 30, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Chairman of the Board and Director
- -------------------------------------
HENRY G. LUKEN, III
Vice Chairman of the Board,
* President, Chief Executive Officer
- ------------------------------------- and Director (Principal Executive
DONALD A. BURNS Officer)
* President of Consumer Division and
- ------------------------------------- Director
THOMAS J. CIRRITO
* Director
- -------------------------------------
ROBERT W. ROSS
* Chief Financial Officer and
- ------------------------------------- Treasurer (Principal Financial
NICHOLAS A. MERRICK Officer)
* Vice President and Corporate
- ------------------------------------- Controller (Principal Accounting
JANET D. ANASTASI Officer)
</TABLE>
* Bryan K. Rachlin, by signing his name hereto, signs this document on behalf
of each of the persons so indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
Attorney-in-Fact
/s/ Bryan K. Rachlin
- -------------------------------------
BRYAN K. RACHLIN
II-7
<PAGE>
EXHIBIT 1.1
6,960,000 Shares of Common Stock
(no par value per share)
TELCO COMMUNICATIONS GROUP, INC.
FORM OF U.S. UNDERWRITING AGREEMENT
-----------------------------------
________ __, 1996
Bear, Stearns & Co. Inc.
Salomon Brothers Inc
as Representatives of the
several U.S. Underwriters named
in Schedule I hereto
----------
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, N.Y. 10167
Ladies and Gentlemen:
Telco Communications Group, Inc., a Virginia corporation (the "Company"),
and each of the selling stockholders listed on Schedule II hereto (the "Selling
-----------
Stockholders") hereby confirm their respective agreements with you as follows:
1. U.S. Underwriters. The term "U.S. Underwriters", as used herein,
refers collectively to you and the other underwriters named in Schedule I
----------
hereto, for whom you are acting as representatives. Except as may be expressly
set forth below, any reference to you in this Agreement shall be solely in your
capacity as representatives of the U.S. Underwriters, and the Company and the
Selling Stockholders shall be entitled to act and rely upon any statement,
request, notice, consent, waiver or agreement purportedly on behalf of any U.S.
Underwriter made or given by Bear, Stearns & Co. Inc. ("Bear, Stearns").
2. Description of Stock.
(a) The Company and the Selling Stockholders severally propose to sell to
the U.S. Underwriters an aggregate of 6,960,000 shares (the "Firm U.S. Shares")
of Common Stock, no par value per share (the "Common Stock"), of the Company,
upon the terms and subject to the conditions set forth herein. Of the Firm U.S.
Shares, 4,880,000 are to be issued and sold by the Company and 2,080,000 in the
aggregate are to be sold severally by the Selling Stockholders. The Company
also proposes to grant to the U.S. Underwriters an option to purchase from the
Company,
<PAGE>
for the sole purpose of covering over-allotments in connection with the
sale of the Firm U.S. Shares, an aggregate of up to 1,044,000 additional shares
(the "Additional U.S. Shares") of Common Stock upon the terms and subject to the
conditions set forth herein and for the purposes set forth in Section 5(b)
hereof. The Firm U.S. Shares and the Additional U.S. Shares are hereinafter
referred to collectively as the "U.S. Shares."
(b) It is understood and agreed to by all the parties that the Company and
each of the Selling Stockholders are concurrently entering into an agreement
(the "International Underwriting Agreement") providing for the sale by the
Company and the Selling Stockholders of an aggregate of 1,740,000 shares (the
"Firm International Shares") of Common Stock through arrangements with certain
underwriters outside the United States and Canada (the "Managers"), for which
Bear, Stearns International Limited, and Salomon Brothers International Limited
are acting as representatives. Of the International Shares, 1,220,000 are to be
issued and sold by the Company and 520,000 in the aggregate are to be sold
severally by the Selling Stockholders. The Company also proposes to grant the
Managers an option to purchase from the Company, for the sole purpose of
covering over-allotments in connection with the sale of the Firm International
Shares, an aggregate of 261,000 additional shares (the "Additional International
Shares") of Common Stock upon the terms and subject to the conditions set forth
in the International Underwriting Agreement. The Firm International Shares and
the Additional International Shares are hereinafter referred to collectively as
the "International Shares". The U.S. Shares and the International Shares are
collectively referred to herein as the "Shares" and this Agreement and the
International Underwriting Agreement are collectively referred to herein as the
"Underwriting Agreements." Two forms of prospectus are to be used in connection
with the offering and sale of the Shares contemplated by the foregoing, one
relating to the U.S. Shares and the other relating to the International Shares.
The latter form of prospectus will be identical to the former except for certain
substitute pages as included in the registration statement and amendments
thereto as mentioned below. Except as the context otherwise may require,
references hereinafter to any prospectus, whether in preliminary or final form
and whether as amended or supplemented, shall include the U.S. and the
international versions thereof.
(c) It is also understood and agreed to by all the parties that the U.S.
Underwriters have entered into an agreement with the Managers (the "Agreement
Between U.S. Underwriters and Managers") contemplating the coordination of
certain transactions between the U.S. Underwriters and the Managers and that,
pursuant
2
<PAGE>
thereto and subject to the conditions set forth therein, the U.S. Underwriters
may (i) purchase from the Managers a portion of the International Shares to be
sold to the Managers pursuant to the International Underwriting Agreement or
(ii) sell to the Managers a portion of the U.S. Shares to be sold to the U.S.
Underwriters pursuant to this Agreement. The Company and the Selling
Stockholders also understand that any such purchases and sales between the U.S.
Underwriters and the Managers shall be governed by the Agreement Between U.S.
Underwriters and Managers and shall not be governed by the terms of this
Agreement.
(d) The Shares to be sold by Signet Media Capital Group, a division of
Signet Bank, a Virginia banking corporation, ("Signet"), hereunder will be
purchased by Signet immediately prior to sale through the exercise of
outstanding warrants (the "Signet Warrant") to purchase shares of Common Stock,
which Signet Warrant was issued to Signet in connection with the credit facility
provided to the Company by Signet Bank. It is understood by all parties that
the Company will receive an aggregate of $58.70 upon the exercise of the Signet
Warrant.
3. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, each U.S. Underwriter that:
(a) The Company meets the requirements for the use of a Registration
Statement on Form S-1 under the Securities Act of 1933, as amended (the
"Act"), and has prepared and filed with the Securities and Exchange Commission
(the "Commission"), pursuant to the Act and the rules and regulations
promulgated by the Commission thereunder (the "Regulations"), a registration
statement on Form S-1 (File No. 333-05857) relating to the Shares and may have
filed one or more amendments thereto, including in each case preliminary
prospectuses relating to the offerings of the Shares. The Company next
proposes to file with the Commission a further amendment to the registration
statement, including therein a final prospectus, necessary to permit the
registration statement to become effective or, if no amendment is required for
that purpose, then promptly following the effectiveness of the registration
statement, the Company proposes to file with the Commission, in accordance
with Rules 430A and 424(b)(1) or Rule 424(b)(4) of the Regulations, final
prospectuses with respect to the offerings of the Shares, the final prospectus
so filed in either case to include all Rule 430A Information (as hereinafter
defined) and to conform, in content and form, to the last printer's proof
thereof furnished to and approved by you immediately prior to such filing. As
used in this
3
<PAGE>
Agreement, (i) "Effective Date" means the date that the registration statement
hereinabove referred to, or the most recent post-effective amendment thereto,
if any, is declared effective by the Commission, (ii) "Registration Statement"
means such registration statement as last amended prior to the time the same
was declared effective by the Commission, including all exhibits and schedules
thereto and all Rule 430A Information deemed to be included therein at the
Effective Date pursuant to Rule 430A of the Regulations, (iii) "Rule 430A
Information" means information with respect to the Shares and the public
offerings thereof permitted, pursuant to the provisions of paragraph (a) of
Rule 430A of the Regulations, to be omitted from the form of prospectus
included in the Registration Statement at the time it is declared effective by
the Commission, (iv) "U.S. Prospectus" means the form of final prospectus
relating to the U.S. Shares first filed with the Commission pursuant to Rule
424(b) of the Regulations or, if no filing pursuant to Rule 424(b) is
required, the form of final prospectus included in the Registration Statement
at the Effective Date, (v) "International Prospectus" means the form of final
prospectus relating to the International Shares first filed with the
Commission pursuant to Rule 424(b) of the Regulations or, if no filing
pursuant to Rule 424(b) is required, the form of final prospectus included in
the Registration Statement at the Effective Date (the U.S. Prospectus and the
International Prospectus are referred to collectively as the "Prospectuses")
and (vi) "Preliminary Prospectus" means any preliminary prospectus (as
described in Rule 430 of the Regulations) with respect to the Shares that
omits Rule 430A Information.
(b) The Registration Statement conforms and on the Effective Date will
conform, and the Prospectuses on the date thereof and on the date first filed
with the Commission pursuant to Rule 424(b) of the Regulations (if required)
will conform, in all material respects with the applicable requirements of the
Act and the Regulations. On the Effective Date, the date the Prospectuses are
first filed with the Commission pursuant to Rule 424(b) of the Regulations (if
required), at all times subsequent thereto to and including the Closing Date
(as defined in Section 5(a)(ii) hereof) and, if later, the Additional Closing
Date (as defined in Section 5(b)(ii) hereof), when any post-effective
amendment to the Registration Statement becomes effective or any supplement to
the Prospectuses is filed with the Commission, and during such longer period
as the Prospectuses may require to be delivered in connection with sales of
Shares by the U.S. Underwriters, the Managers or a
4
<PAGE>
dealer, the Registration Statement and the Prospectuses (as amended or
supplemented if the Company shall have filed with the Commission an amendment
or supplement thereto) did not and will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein (in the case of the
Prospectuses, in light of the circumstances under which they were made) not
misleading. No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and when any Preliminary
Prospectus was first filed with the Commission (whether filed as part of the
Registration Statement or an amendment thereof or pursuant to Rule 424(a) of
the Regulations) and when any amendment thereof or supplement thereto was
first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto conformed in all material respects
with the applicable requirements of the Act and the Regulations thereunder and
did not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. No representation and warranty, however, is made in this
subsection 3(b) by the Company with respect to written information contained
in or omitted from the Registration Statement, the Prospectuses, any
Preliminary Prospectus, or any amendment or supplement in reliance upon and in
conformity with written information with respect to the U.S. Underwriters and
the Managers and the plan of distribution of the Shares furnished to the
Company on your behalf by Bear, Stearns expressly for use in connection with
the preparation thereof.
(c) Each contract, agreement, instrument, lease, license or other item
required to be described in the Registration Statement or the Prospectuses or
filed as an exhibit to the Registration Statement has been so described or
filed, as the case may be.
(d) Deloitte & Touche LLP, whose separate reports appear in the
Prospectuses, are independent public accountants with respect to the Company,
as required by and within the meaning of the Act and the Regulations. The
financial statements (including the related notes) of the Company (the
"Company Financials") included in the Registration Statement or any
Preliminary Prospectus, or to be included in the Prospectuses fairly present
the financial position, results of operations and cash flows of the Company
and the other information purported to be shown
5
<PAGE>
therein at the respective dates and for the respective periods to which they
apply. The Company Financials have been prepared in accordance with generally
accepted accounting principles as in effect in the United States ("US GAAP")
consistently applied throughout the periods involved, except as disclosed
therein, and are, in all material respects, in accordance with the books and
records of the Company and its subsidiaries. The consolidated "pro forma" and
"pro forma as adjusted" financial information included in the Registration
Statement or any Preliminary Prospectus, or to be included in the
Prospectuses, fairly present the information purported to be shown therein at
the respective dates thereof and for the respective periods covered thereby
and all adjustments have been properly applied. No other financial statements
are required by Form S-1 or otherwise to be included in the Registration
Statement or the Prospectuses other than those included therein.
(e) Subsequent to the respective dates as of which information is given in
the Registration Statement, except as set forth in the Registration Statement
or as may be set forth in the Prospectuses, there has not been any material
adverse change in the business, properties, operations, condition (financial
or other) or results of operations of the Company and the subsidiaries (as
defined below) taken as a whole, whether or not arising from transactions in
the ordinary course of business, and since the date of the latest balance
sheet of the Company included in the Registration Statement, and except as
described in the Registration Statement or as may be described in the
Prospectuses, (i) neither the Company nor any subsidiary (A) has incurred or
undertaken any liabilities or obligations, direct or contingent, that are,
individually or in the aggregate, material to the Company and the subsidiaries
taken as a whole, or (B) entered into any transaction not in the ordinary
course of business that is material to the Company and the subsidiaries taken
as a whole; and (ii) the Company has not declared or paid any dividend on or
made any distribution of or with respect to any shares of its capital stock or
redeemed, purchased or otherwise acquired or agreed to redeem, purchase or
otherwise acquire any shares of its or its subsidiaries' capital stock. As
used in this Agreement, the term "subsidiary" means any corporation,
partnership, joint venture, association, company, business trust or other
entity in which the Company directly or indirectly (i) beneficially owns or
controls a majority of the outstanding voting securities having by the terms
thereof ordinary voting power to elect a majority of the board of directors
(or other body fulfilling a substantially
6
<PAGE>
similar function) of such entity (irrespective of whether or not at the time
any class or classes of such voting securities shall have or might have voting
power by reason of the happening of any contingency) or (ii) has the authority
or ability to control the policies of such entity (including, but without
limitation thereto, any partnership of which the Company or a subsidiary is a
general partner or owns or has the right to obtain a majority of limited
partnership interests and any joint venture in which the Company or a
subsidiary has liability similar to the liability of a general partner of a
partnership or owns or has the right to obtain a majority of the joint venture
interests).
(f) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under each of the Underwriting
Agreements and to issue, sell and deliver the Shares in accordance with the
terms and conditions thereof. Each of the Underwriting Agreements has been
duly and validly authorized, executed and delivered by the Company and is a
legal and binding obligation of the Company, enforceable against the Company
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting rights and remedies of creditors and other obligees generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity), and except insofar as rights to indemnification and contribution
contained herein may be limited by federal or state securities laws or related
public policy.
(g) The Company's execution and delivery of, and its performance of its
obligations under, each of the Underwriting Agreements and the consummation of
the transactions contemplated thereby, and the issuance of shares of Common
Stock to Signet upon the exercise of the Signet Warrant, will not (i) conflict
with or result in a breach of any of the terms and provisions of, or
constitute a default under (or an event that with notice or lapse of time, or
both, would constitute a default under) or require approval or consent under,
or result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any subsidiary pursuant to the
terms of any agreement, contract, indenture, mortgage, lease, license,
arrangement or understanding to which the Company or a subsidiary is a party,
or to which
7
<PAGE>
any of its properties is subject, that is material to the Company and the
subsidiaries taken as a whole (hereafter, collectively, "Material Contracts"),
or any governmental franchise, license or permit heretofore issued to the
Company or any subsidiary that is material to the Company and the subsidiaries
taken as a whole (hereafter, collectively, "Material Permits"), (ii) violate
or conflict with any provision of the certificate of incorporation, by-laws or
similar governing instruments of the Company or any subsidiary or (iii)
violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or
body having jurisdiction over the Company or any subsidiary or any of its
respective properties or assets, except for those violations or conflicts,
that, individually or in the aggregate, would not have a material adverse
effect on the Company and the subsidiaries taken as a whole (hereafter, a
"Material Adverse Effect").
(h) No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any subsidiary or any of its respective properties or assets is required
for (i) the Company's execution and delivery of, and its performance of its
obligations under, each of the Underwriting Agreements, and the consummation
of the transactions contemplated thereby, and (ii) the issuance of shares of
Common Stock to Signet upon the exercise of the Signet Warrant, except the
registration of the Shares under the Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the approval of the Shares for
quotation on the Nasdaq National Market ("Nasdaq") and such filings and
registrations as may be required under state securities or "Blue Sky" laws and
the securities laws of foreign jurisdictions in connection with the purchase
and distribution of the Shares by the U.S. Underwriters and the Managers.
(i) All of the currently outstanding shares of capital stock of the
Company, and all of the outstanding shares of capital stock (or similar
interests) of each of the subsidiaries have been duly and validly authorized
and issued, are fully paid and nonassessable and were not issued in violation
of or subject to any preemptive rights. The shares of Common Stock of the
Company to be outstanding on the Closing Date (as defined in Section 5(a)(ii)
hereof) have been duly authorized and, when issued will be validly issued,
fully paid and nonassessable, and will not have been
8
<PAGE>
issued in violation of or be subject to any preemptive rights. The Company's
obligations under the Signet Warrant have been duly and validly authorized and
are legal and binding obligations of the Company entitling the holder thereof
to acquire shares of Common Stock upon the terms and in the manner set forth
therein. The Shares of Common Stock issuable upon exercise of the Signet
Warrant (the "Underlying Shares") have been duly authorized and validly
reserved for issuance, and when issued and delivered to Signet upon receipt of
the exercise price for the Signet Warrant, the Underlying Shares will be
validly issued, fully paid and nonassessable, and will not have been issued in
violation of or be subject to any preemptive rights. The Shares have been duly
authorized and, when issued, delivered and sold in accordance with the terms
of the Underwriting Agreements, will be validly issued, fully paid and
nonassessable, and will not have been issued in violation of or be subject to
any preemptive rights, and the U.S. Underwriters and the Managers will receive
valid title to those of the Shares to be purchased by them from the Company,
free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements and voting trusts (other than any
placed thereon by the U.S. Underwriters or Managers). The Company has, as of
the date hereof, and will have, as of the Closing Date and the Additional
Closing Date, if any, an authorized and outstanding capitalization as set
forth in the Registration Statement and as shall be set forth in the
Prospectuses, both on an historical basis and as adjusted to give effect to
the offering of the Shares. The Company's capital stock conforms to the
description thereof set forth in the Registration Statement and as shall be
set forth in the Prospectuses. The Company owns directly or indirectly such
percentage of the outstanding capital stock (or similar interests) of each of
its subsidiaries as is set forth opposite the name of such subsidiary in
Schedule III hereto, free and clear of all claims, liens, security interests,
------------
pledges, charges, encumbrances, stockholders agreements and voting trusts,
except as otherwise described in said Schedule III.
------------
(j) There is no commitment, plan or arrangement to issue, and no
outstanding option, warrant or other right calling for the issuance of, any
shares of capital stock (or similar interests) of the Company or of any
subsidiary or any security or other instrument that by its terms is
convertible into, exchangeable for or evidencing the right to purchase capital
stock (or similar interests) of the Company or such subsidiary, except as
described in the
9
<PAGE>
Registration Statement and as shall be described in the Prospectuses.
(k) The Company has no subsidiaries other than those listed in Schedule
--------
III hereto. Each of the Company and the subsidiaries has been duly organized
---
and is validly existing as a corporation in good standing under the laws of
its jurisdictions of incorporation. Each of the Company and the subsidiaries
duly listed on Schedule IV hereto (the "Material Subsidiaries") is qualified
-----------
and in good standing as a foreign corporation in each jurisdiction in which
the character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary, except
for those failures to be so qualified or in good standing that will not in the
aggregate have a Material Adverse Effect. Each of the Company and the
subsidiaries has all requisite corporate power and authority, and all
necessary consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits of and from all public, regulatory or
governmental agencies and bodies, to own, lease and operate its properties and
conduct its business as now being conducted and as described in the
Registration Statement and as shall be described in the Prospectuses (except
for those the absence of which, individually or in the aggregate, would not
have a Material Adverse Effect), and no such consent, approval, authorization,
order, registration, qualification, license or permit contains a materially
burdensome restriction that is not adequately disclosed in the Registration
Statement and the Prospectuses. Neither the Company nor any of the
subsidiaries has received any notice of proceedings relating to revocation or
modification of any such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses or permits.
(l) Neither the Company nor any subsidiary, nor to the best knowledge of
the Company, any other party, is in any material respect in violation or
breach of, or in default under (nor has an event occurred that with notice,
lapse of time or both, would constitute a default under), any Material
Contract, and each Material Contract is in full force and effect, and is the
legal, valid, and binding obligation of the Company or such subsidiary, as the
case may be, and (subject to applicable bankruptcy, insolvency, and other laws
affecting the enforceability of rights of creditors and other obligees
generally and general equitable principles) is enforceable as to the Company
or such subsidiary, as the case may be, in accordance with its
10
<PAGE>
terms. Neither the Company nor any subsidiary is in violation of its
certificate of incorporation, by-laws or similar governing instrument.
(m) There is no litigation, arbitration, claim, governmental or other
proceeding pending or, to the best knowledge of the Company, threatened or
contemplated with respect to the Company or any subsidiary, or any of its
respective operations, businesses, properties or assets, except as described
in the Registration Statement and as shall be described in the Prospectuses,
that, individually or in the aggregate, might have a Material Adverse Effect.
Neither the Company nor any subsidiary is, or, to the best knowledge of the
Company, with the giving of notice or lapse of time or both would be, in
violation of or non-compliance with the requirements of any Material Permit or
the provisions of any law, rule, regulation, order, judgment or decree,
including, but without limitation thereto, all applicable federal, state and
local laws and regulations relating to (i) zoning, land use, protection of the
environment, human health and safety or hazardous or toxic substances, wastes,
pollutants or contaminants and (ii) employee or occupational safety,
discrimination in hiring, promotion or pay of employees, employee hours and
wages or employee benefits, except for such violations or failures of
compliance that, individually or in the aggregate, would not have a Material
Adverse Effect.
(n) Except as described in the Registration Statement and as shall be
described in the Prospectuses, the Company and each subsidiary have (i) good
and marketable title to all real and personal properties owned by them, free
and clear of all liens, security interests, pledges, charges, encumbrances,
and mortgages, and (ii) valid, subsisting and enforceable leases for all real
and personal properties leased by them, in each case, subject to such
exceptions as, individually or in the aggregate, do not have and are not
reasonably likely to have a Material Adverse Effect. No real property owned,
leased, licensed or used by the Company or by any subsidiary lies in an area
that is, or to the best knowledge of the Company will be, subject to zoning,
use, or building code restrictions that would prohibit, and, to the best
knowledge of the Company, no state of facts relating to the actions or
inaction of another person or entity or his, her or its ownership, leasing,
licensing, or use of any real or personal property exists that would prevent,
the continued effective ownership, leasing, licensing, or use of such real
property in the business of the Company or such subsidiary as presently
conducted or as the Prospectuses
11
<PAGE>
indicate are contemplated to be conducted, subject to such exceptions as,
individually or in the aggregate, do not have and are not reasonably likely to
have a Material Adverse Effect.
(o) The Company, directly or through one or more of the subsidiaries, owns
or possesses all patents, patent rights, licenses, inventions, copyrights,
trademarks, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
service marks and trade names (collectively, "Intellectual Property")
necessary to conduct its business as now conducted and proposed to be
conducted as disclosed in the Registration Statement and as shall be disclosed
in the Prospectuses, except where the failure to own or possess such
Intellectual Property, individually or in the aggregate, would not have a
Material Adverse Effect. Other than as disclosed in the Registration Statement
and as shall be disclosed in the Prospectuses, neither the Company nor any
subsidiary has received any notice of infringement of or conflict with the
asserted rights of others with respect to any Intellectual Property, which, if
adversely determined, would have a Material Adverse Effect. To the best
knowledge of the Company, there is no infringement by others of any
Intellectual Property of the Company or any subsidiary that has had or is
reasonably likely to have a Materially Adverse Effect. The Company or a
predecessor has registered, and the Company or a subsidiary owns the rights to
all registrations of, predecessors, the rights to the trademark and related
logo for each of "Dial and Save" and "Long Distance Wholesale Club" in all
jurisdictions in which such trademarks and logos are currently being or are
contemplated to be used and in which such registration is currently permitted.
(p) To the Company's best knowledge, neither the Company, any subsidiary,
nor any director, officer or employee of the Company or any subsidiary has,
directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful expenses relating to political
activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment.
12
<PAGE>
(q) No person or entity has the right, by contract or otherwise, to
require registration under the Act of shares of capital stock or other
securities of the Company or any subsidiary solely because of the filing or
effectiveness of the Registration Statement and the consummation of the
transactions contemplated by the Underwriting Agreements, except for (i)
Signet which has exercised its right to have the Underlying Shares registered
under the Act and (ii) such other rights as have been legally and effectively
waived.
(r) Neither the Company nor any of its officers, directors or affiliates
(as defined in the Regulations) has taken or will take, directly or
indirectly, prior to the termination of the offerings of the Shares
contemplated by the Underwriting Agreements, any action designed to stabilize
or manipulate the price of the Common Stock, or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of
the Common Stock.
(s) Neither the Company nor any subsidiary is, or intends to conduct its
business in such a manner that it would become, an "investment company" or a
company "controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "Investment Company Act").
(t) Except as may be set forth in the Prospectuses, the Company has not
incurred any liability for a fee, commission, or other compensation on account
of the employment of a broker or finder in connection with the transactions
contemplated by the Underwriting Agreements.
(u) The Company and each of the subsidiaries maintain systems of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with US GAAP and to maintain
accountability for assets; (iii) the access to the respective assets of the
Company and each subsidiary, as the case may be, is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
13
<PAGE>
(v) Other than as disclosed in the Registration Statement and as shall be
disclosed in the Prospectuses, no labor dispute with the employees of the
Company or any subsidiary exists or, to the best knowledge of the Company, is
imminent that, individually or in the aggregate, is or is reasonably likely to
have a Material Adverse Effect.
(w) (i) All United States Federal income tax returns of the Company and
each subsidiary required by law to be filed have been filed and all taxes
shown by such returns or otherwise assessed that are due and payable have been
paid, except assessments against which appeals have been or will be promptly
taken and (ii) the Company and the subsidiaries have filed all other tax
returns that are required to have been filed by them pursuant to the
applicable laws of all other jurisdictions, except, as to each of the
foregoing clauses (i) and (ii), insofar as the failure to file such returns,
individually or in the aggregate, would not have a Material Adverse Effect,
and the Company and the subsidiaries have paid all taxes due pursuant to said
returns or pursuant to any assessment received by the Company or any
subsidiary, except for such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided in accordance with
US GAAP. The charges, accruals and reserves on the consolidated books of the
Company in respect of any tax liability for any years not finally determined
are adequate to meet any assessments or re-assessments for additional tax for
any years not finally determined, except to the extent of any inadequacy that
would not have a Material Adverse Effect.
(x) The Company and each subsidiary is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which the Company and the
subsidiaries are engaged. Neither the Company nor any subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage from similar insurers as may be necessary to continue its business,
except as are disclosed in the Registration Statement and as shall be
disclosed in the Prospectuses.
(y) Except as disclosed in the Registration Statement and as shall be
disclosed in the Prospectuses, there are no business relationships or related
party transactions of the nature required to be disclosed herein under Item
404 of Regulation S-K of the Commission involving the Company or any other
persons referred to in such Item 404.
14
<PAGE>
4. Representations and Warranties of the Selling Stockholders. Each of
the Selling Stockholders (other than Signet), with respect to itself and
severally and not jointly, represents and warrants to, and agrees with, each
U.S. Underwriter that:
(a) Such Selling Stockholder, if it is a corporation or partnership, has
been duly organized and is validly existing as a corporation or partnership,
as the case may be, in good standing under the laws of its jurisdiction of
organization.
(b) Such Selling Stockholder is the sole owner of the number of Shares set
forth opposite its name on Schedule II hereto, and, upon delivery of and
-----------
payment for the Shares to be sold by the Selling Stockholder to each U.S.
Underwriter and Manager in accordance with the Underwriting Agreements and the
Power of Attorney and Custody Agreement, each U.S. Underwriter and Manager
will receive valid title to such Shares, free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements and voting
trusts.
(c) There is no commitment, plan or arrangement to transfer, and no
outstanding option, warrant or other right calling for the transfer of, any of
the Shares to be sold by such Selling Stockholder to the U.S. Underwriters or
to the Managers pursuant to the Underwriting Agreements.
(d) Such Selling Stockholder has duly executed and delivered an Irrevocable
Power of Attorney and Custody Agreement (the "Power of Attorney and Custody
Agreement"), in the form heretofore delivered to you, appointing
[_________________________] as such Selling Stockholder's attorney-in-fact
(the "Attorney-in-Fact"), with full power and authority to execute, deliver
and perform the Underwriting Agreements, and, in the case of the Power of
Attorney and Custody Agreement duly executed and delivered by Signet,
appointing the Attorney-in-Fact, with full power and authority to exercise the
Signet Warrants for the purchase from the Company of the Shares to be sold by
Signet pursuant to the Underwriting Agreements. If such Selling Shareholder is
a corporation or a partnership, such Power of Attorney and Custody Agreement
is a legal and binding obligation of such Selling Stockholder, enforceable
against such Selling Stockholder in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights and remedies
generally, and
15
<PAGE>
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity), and except insofar as rights to indemnification contained therein may
be limited by federal or state securities laws or related public policy. The
appointment of the Attorney-in-Fact by such Selling Stockholder and the
Attorney-in-Fact's authority under the Power of Attorney and Custody Agreement
are irrevocable, and the obligations of such Selling Stockholder under the
Underwriting Agreements shall not be terminated, except as provided in the
Underwriting Agreements and the Power of Attorney and Custody Agreement.
(e) Each of the Underwriting Agreements has been duly and validly executed
and delivered by the Attorney-in-Fact on behalf of such Selling Stockholder
and is a legal and binding obligation of such Selling Stockholder, enforceable
against such Selling Stockholder in accordance with its terms, subject, in the
case of each Selling Stockholder which is a corporation or a partnership, to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity), and except insofar as right to indemnification and contribution
contained herein may be limited by federal or state securities laws or related
public policy.
(f) The execution, delivery and performance by such Selling Stockholder (or
the Attorney-in-Fact on behalf of such Selling Stockholder) of the
Underwriting Agreements, the Power of Attorney and Custody Agreement, and the
consummation of the transactions contemplated thereby, including the exercise
of the Signet Warrants and the purchase, delivery and sale of the Shares to be
delivered and sold thereunder, will not (i) conflict with or result in a
breach of any of the terms and provisions of, or constitute a default under
(or an event that with notice or lapse of time, or both, would constitute a
default under) or require approval or consent under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets
of such Selling Stockholder pursuant to the terms of any agreement, contract,
indenture, mortgage, lease, license, arrangement or understanding to which
such Selling Stockholder is a party, or to which any of its
16
<PAGE>
properties is subject or (ii) in the case of each Selling Stockholder which is
a corporation or a partnership, violate or conflict with any provision of the
certificate of incorporation, by-laws or similar governing instruments of such
Selling Stockholder or any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or
body having jurisdiction over such Selling Stockholder or any of its
properties or assets.
(g) No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over such
Selling Stockholder or any of its properties or assets is required for (i)
such Selling Stockholder's execution and delivery of, and performance of its
obligation under, Underwriting Agreements, the Power of Attorney and Custody
Agreement, and the consummation of the transactions contemplated thereby, and
(ii) the exercise of the Signet Warrant and the purchase of the Underlying
Shares upon such exercise, except for the registration of the Shares under the
Act and the Exchange Act, the authorization of the Shares for quotation on
Nasdaq and such filings and registration as may be required under state
securities or "Blue Sky" Laws and the securities laws of foreign jurisdictions
in connection with the purchase and distribution of the Shares by the U.S.
Underwriters and the Managers.
(h) To the extent that any statements or omissions are made in the
Registration Statement, the Prospectuses or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished
to the Company by such Selling Stockholder specifically for use therein, on
the Effective Date, the date the Prospectuses are first filed with the
Commission pursuant to Rule 424(b) of the Regulations (if required), at all
times subsequent thereto to and including the Closing Date, when any post-
effective amendment to the Registration Statement becomes effective or any
supplement to the Prospectuses is filed with the Commission, and during such
longer period as the Prospectuses may require to be delivered in connection
with sales of Shares by the U.S. Underwriters, the Managers or a dealer, the
Registration Statement and the Prospectuses (as amended or supplemented if the
Company shall have filed with the Commission an amendment or supplement
thereto) did not and will not contain an untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements made
17
<PAGE>
therein (in the case of the Prospectuses, in light of the circumstances under
which they were made) not misleading. Such Selling Stockholder has reviewed
the most recent Preliminary Prospectuses, the Prospectuses (if the same shall
be in existence) and the Registration Statement, and the information regarding
such Selling Stockholder set forth therein is complete and accurate. From the
Effective Date through the Closing Date, such Selling Stockholder will advise
Bear, Stearns in writing if and to the extent that such information does not
conform with the requirements of the Act and the Regulations or contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements
made therein (in the case of the Prospectuses, in light of the circumstances
under which they were made) not misleading.
(i) The sale by such Selling Stockholder of Shares pursuant to the
Underwriting Agreements is not prompted by any adverse information concerning
the Company known to such Selling Stockholder that is not set forth in the
Registration Statement or the Prospectuses.
(j) Such Selling Stockholder has not taken or will not take, directly or
indirectly, prior to the termination of the offerings of the Shares
contemplated by the Underwriting Agreements, any action designed to stabilize
or manipulate the price of the Common Stock, or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of
the Common Stock.
4A. Representations and Warranties of Signet. Signet represents and
warrants to, and agrees with, each U.S. Underwriter that:
(a) Signet is a corporation duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
organization.
(b) Signet is the sole owner of the Signet Warrants and, upon its exercise
of the Signet Warrants and issuance by the Company of the number of Shares set
forth opposite Signet's name on Schedule II, Signet will be the sole owner of
such Shares and upon delivery of and payment for such Shares to each U.S.
Underwriter and Manager in accordance with the Underwriting Agreements and the
Power of Attorney and Custody Agreement, each U.S. Underwriter and Manager
will acquire such Shares free and clear of all adverse
18
<PAGE>
claims, assuming it has purchased the Shares in good faith and without notice
of any adverse claim.
(c) There is no commitment, plan or arrangement to transfer, and no
outstanding option, warrant or other right calling for the transfer of, any of
the Shares to be sold by Signet to the U.S. Underwriters or to the Managers
pursuant to the Underwriting Agreements.
(d) Signet has duly executed and delivered an Irrevocable Power of Attorney
and Custody Agreement (the "Power of Attorney and Custody Agreement"), in the
form heretofore delivered to you, appointing the Attorney-in-Fact, with full
power and authority to exercise the Signet Warrants for the purchase from the
Company of the Shares to be sold by Signet pursuant to the Underwriting
Agreements. Such Power of Attorney and Custody Agreement is a legal and
binding obligation of Signet. The appointment of the Attorney-in-Fact by
Signet and the Attorney-in-Fact's authority under the Power of Attorney and
Custody Agreement are irrevocable, and the obligations of Signet under the
Underwriting Agreements shall not be terminated, except as provided in the
Underwriting Agreements and the Power of Attorney and Custody Agreement.
(e) Assuming that each of the Underwriting Agreements has been duly and
validly executed and delivered by the Attorney-in-Fact on behalf of Signet,
each such Underwriting Agreement is a legal and binding obligation of Signet.
(f) The execution, delivery and performance by Signet (or the Attorney-in-
Fact on behalf of Signet) of the Underwriting Agreements, the Power of
Attorney and Custody Agreement, and the consummation of the transactions
contemplated thereby, including the exercise of the Signet Warrants and the
purchase, delivery and sale of the Shares to be delivered and sold thereunder,
will not (i) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default under (or an event that with notice or
lapse of time, or both, would constitute a default under) or require approval
or consent under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of Signet pursuant to the terms of
any agreement, contract, indenture, mortgage, lease, license, arrangement or
understanding to which Signet is a party, or to which any of its properties is
subject or (ii) violate or conflict with any provision of the certificate of
incorporation, by-laws or similar governing instruments of Signet or any
judgment, decree,
19
<PAGE>
order, statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over Signet or any of its
properties or assets.
(g) No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over Signet or
any of its properties or assets is required for (i) Signet's execution and
delivery of, and performance of its obligation under, Underwriting Agreements,
the Power of Attorney and Custody Agreement, and the consummation of the
transactions contemplated thereby, and (ii) the exercise of the Signet Warrant
and the purchase of the Underlying Shares upon such exercise, except in each
case as may be required under the Act and the Exchange Act, the authorization
of the Shares for quotation on Nasdaq and such filings and registration as may
be required under state securities or "Blue Sky" Laws and the securities laws
of foreign jurisdictions in connection with the purchase and distribution of
the Shares by the U.S. Underwriters and the Managers.
(h) Such parts of the Registration Statement and Prospectuses comprised of
the table and notes thereto under the caption "Principal and Selling
Shareholders" which specifically relate to Signet do not, and, on the Closing
Date, will not, contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein (in the case of the Prospectuses, in light of
the circumstances under which they were made) not misleading.
(i) Signet has not taken or will not take, directly or indirectly, prior to
the termination of the offerings of the Shares contemplated by the
Underwriting Agreements, any action designed to stabilize or manipulate the
price of the Common Stock, or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or the resale of the Shares pursuant to the distribution
contemplated by this Agreement.
5. Purchase, Sale and Delivery of the U.S. Shares.
(a)(i) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to each of the U.S. Underwriters an
20
<PAGE>
aggregate of 4,880,000 shares of Common Stock and the Selling Stockholders,
severally and not jointly, agree to sell to the U.S. Underwriters an aggregate
of 2,080,000 shares of Common Stock (each such Selling Stockholder to sell the
number of Shares set forth opposite its name in Schedule III hereto under the
------------
caption "Number of Firm U.S. Shares to be Sold"), and each U.S. Underwriter
agrees, severally and not jointly, to purchase from the Company and the Selling
Stockholders, the number of Firm U.S. Shares set forth opposite the name of such
U.S. Underwriter in Schedule I hereto, all at a purchase price per share of
----------
$_________ (the "Purchase Price"). The number of Firm U.S. Shares to be
purchased from the Company and the Selling Stockholders by each U.S. Underwriter
(as adjusted by Bear, Stearns to eliminate fractions) shall be determined by
multiplying the aggregate number of Firm U.S. Shares to be sold by the Company
or the Selling Stockholders, as the case may be, as set forth above by a
fraction (A) the numerator of which is the total number of Firm U.S. Shares set
forth opposite the name of such U.S. Underwriter in Schedule I hereto and (B)
----------
the denominator of which is the total number of Firm U.S. Shares.
(ii) Delivery of the Firm U.S. Shares and payment of the aggregate
Purchase Price therefor shall be made at the offices of Bear, Stearns & Co. Inc.
at 245 Park Avenue, New York, New York 10167, or such other location in the New
York City metropolitan area as Bear, Stearns shall determine and advise the
Company and the Selling Stockholders upon at least two full business days' (as
defined in Section 20 hereof) notice in writing. Such delivery and payment
shall be made at 10:00 A.M., New York City time, on the [third] [fourth] full
business day following the determination of the Purchase Price, or at such other
time as may be agreed upon by Bear, Stearns, the Company and the Selling
Stockholders. The time and date of such delivery and payment are herein called
the "Closing Date." Delivery of the Firm U.S. Shares shall be made to or upon
the order of Bear, Stearns, for the respective accounts of the U.S.
Underwriters, against payment to the Company or the Selling Stockholders, as the
case may be, of the aggregate Purchase Price therefor by wire transfer of same
day funds to the respective accounts of the Company and each Selling
Stockholder, as the case may be, designated in writing to Bear, Stearns at least
two business days prior to the Closing Date.
(iii) Certificates for the Firm U.S. Shares shall be registered in such
name or names and in such authorized denominations as Bear, Stearns may request
in writing at least two full business days prior to the Closing Date, provided
that, if so specified by Bear, Stearns, the Firm U.S. Shares may be represented
by a global certificate registered in the name of
21
<PAGE>
Cede & Co., as nominee of the Depositary Trust Company ("Cede"). Bear, Stearns
shall be permitted to examine and package such certificates for delivery at
least one full business day prior to the Closing Date, unless the Firm U.S.
Shares are to be represented by a global certificate.
(b)(i) The Company hereby grants to the U.S. Underwriters an option (the
"U.S. Option") to purchase from the Company the Additional U.S. Shares at the
Purchase Price, for the sole purpose of covering over-allotments in the offering
of the Firm U.S. Shares by the U.S. Underwriters. The U.S. Option shall be
exercisable by the U.S. Underwriters on one occasion only, at any time before
the expiration of 30 days from the date of the U.S. Prospectus, for the purchase
of all or part of the Additional U.S. Shares, such exercise to be made by
notice, given by Bear, Stearns to the Company in the manner specified in Section
16 hereof, which notice shall set forth the aggregate number of Additional U.S.
Shares with respect to which the U.S. Option is being exercised, the
denominations and the name or names in which certificates evidencing the
Additional U.S. Shares so purchased are to be registered, and the date and time
of delivery of such Additional U.S. Shares, which date may be at or subsequent
to the Closing Date and shall not be less than two nor more than ten days after
such notice. The aggregate number of Additional U.S. Shares so purchased from
the Company by each U.S. Underwriter (as adjusted by Bear, Stearns to eliminate
fractions) shall be determined by multiplying the total number of such
Additional U.S. Shares to be sold by the Company by a fraction (A) the numerator
of which is the number of Firm U.S. Shares set forth opposite the name of such
U.S. Underwriter in Schedule I hereto and (B) the denominator of which is the
----------
total number of Firm U.S. Shares.
(ii) Delivery of the Additional U.S. Shares so purchased and payment of
the Purchase Price therefor shall be made at the offices of Bear, Stearns & Co.
Inc. at 245 Park Avenue, New York, New York 10167, or such other location in the
New York City metropolitan area as Bear, Stearns shall determine and advise the
Company upon at least two full business days' notice in writing. Such delivery
and payment shall be made at 10:00 A.M., New York City time, on the date
designated in such notice or at such other time and date as may be agreed upon
by Bear, Stearns and the Company. The time and date of such delivery and
payment are herein called the "Additional Closing Date." Delivery of the
Additional U.S. Shares shall be made to or upon the order of Bear, Stearns, for
the respective accounts of the U.S. Underwriters, against payment to the Company
of the aggregate Purchase Price therefor by wire transfer of same day funds to
the account of the Company.
22
<PAGE>
(iii) Certificates for the Additional U.S. Shares purchased by the U.S.
Underwriters, when so delivered, shall be registered in such name or names and
in such authorized denominations as Bear, Stearns shall have requested in the
notice of exercise of the U.S. Option, provided that, if so specified therein,
such Additional U.S. Shares may be represented by a global certificate
registered in the name of Cede. Bear, Stearns shall be permitted to examine and
package such certificates for delivery at least one full business day prior to
the Additional Closing Date, unless the Additional U.S. Shares are to be
represented by a global certificate.
(c) The U.S. Underwriters shall not be obligated to purchase any Firm U.S.
Shares from the Company or the Selling Stockholders except upon tender to the
U.S. Underwriters by the Company or the Selling Stockholders, as the case may
be, of all of the Firm U.S. Shares and the U.S. Underwriters shall not be
obligated to purchase any Additional U.S. Shares from the Company except upon
tender to the U.S. Underwriters by the Company of all of the Additional U.S.
Shares specified in the notice of exercise of the U.S. Option. The Company or
the Selling Stockholders shall not be obligated to sell or deliver any Firm U.S.
Shares or Additional U.S. Shares, as the case may be, except upon tender of
payment by the U.S. Underwriters for all the Firm U.S. Shares or the Additional
U.S. Shares, as the case may be, agreed to be purchased by the U.S. Underwriters
hereunder.
6. Offering.
The Company and the Selling Stockholders have been advised by Bear, Stearns
that the U.S. Underwriters propose to make a public offering of their respective
portions of the U.S. Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable. The Company
and the Selling Stockholders have been further advised by Bear, Stearns that the
U.S. Shares are to be offered to the public initially at a price of $_____ per
share and to certain dealers selected by you at a price that represents a
concession not in excess of $____ per share, and that any U.S. Underwriter may
allow, and such dealers may reallow, a further concession, not in excess of
$____ a share, to any U.S. Underwriter or to certain other dealers, and that
after the initial offering of the U.S. Shares, the public offering price and
such concessions may be changed by you.
7. Covenants of the Company. The Company covenants and agrees with each
U.S. Underwriter that:
23
<PAGE>
(a) The Company shall use its best efforts to cause the Registration
Statement to become effective as promptly as possible and to maintain it in
effect. If the Registration Statement has become or becomes effective pursuant
to Rule 430A of the Regulations, or filing of the Prospectuses with the
Commission is otherwise required under Rule 424(b) of the Regulations, the
Company shall file the Prospectuses, properly completed, with the Commission
pursuant to Rule 424(b) of the Regulations within the time period therein
prescribed and shall provide evidence satisfactory to you of such timely filing.
The Company shall promptly advise you and confirm such advice in writing, (i)
when the Registration Statement or any post-effective amendment thereto has
become effective, (ii) of the initiation or threatening of any proceedings for,
or receipt by the Company of any notice with respect to, the suspension of the
qualification of the Shares for sale in any jurisdiction or the issuance by the
Commission of any order suspending the effectiveness of the Registration
Statement and (iii) of receipt by the Company or any representative of or
attorney for the Company of any other communications from the Commission
relating to the Company, the Registration Statement, any Preliminary Prospectus,
the Prospectuses or the transactions contemplated by the Underwriting
Agreements. The Company shall make every reasonable effort to prevent the
issuance of an order suspending the effectiveness of the Registration Statement
or any post-effective amendment thereto and, if any such order is issued, to
obtain its lifting as soon as possible. The Company shall not file any amendment
to the Registration Statement or any amendment of or supplement to the
Prospectuses before or after the Effective Date to which you shall reasonably
object after being timely furnished in advance a copy thereof unless the Company
shall conclude, upon the advice of counsel, that any such amendment must be
filed at a time prior to obtaining such consent.
(b) Within the time during which the Prospectuses are required to be
delivered under the Act, the Company shall comply with all requirements imposed
upon it by the Act, as now or hereafter amended, and by the Regulations, as from
time to time in force, so far as necessary to permit the continuance of sales of
or dealings in the Shares as contemplated by the provisions hereof and by the
Prospectuses. If, during such period, any event shall occur as a result of
which the Prospectuses as then amended or supplemented include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements made therein, in
24
<PAGE>
the light of the circumstances under which they were made, not misleading, or if
it shall be necessary at any time to amend the Registration Statement or
supplement the Prospectuses to comply with the Act and the Regulations, the
Company shall notify you promptly and prepare and file with the Commission an
appropriate post-effective amendment to the Registration Statement or supplement
to each Prospectus (in form and substance reasonably satisfactory to you) that
will correct such statement or omission and shall use its reasonable best
efforts to have any such post-effective amendment to the Registration Statement
declared effective as soon as possible.
(c) The Company shall promptly deliver to you five manually-signed copies
of the Registration Statement, including exhibits and all amendments thereto,
and to those persons (including your counsel) whom you identify to the Company,
such quantity of conformed copies of the Registration Statement, with exhibits,
each Preliminary Prospectus, the Prospectuses and all amendments of and
supplements to such documents, if any, as you may reasonably request.
(d) The Company shall cooperate with the U.S. Underwriters, the Managers
and Weil, Gotshal & Manges LLP ("Underwriters' Counsel") in connection with
their efforts to qualify or register the Shares for sale under the state
securities (or "Blue Sky") or foreign laws of such jurisdictions as you shall
request, shall execute such applications and documents and furnish such
information as reasonably may be required for such purpose and shall comply with
such laws so as to continue such registrations and qualifications in effect for
so long as may be required to complete the distribution of the Shares; provided,
--------
however, that in connection therewith the Company shall not be required to (i)
- -------
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified as of the date hereof, (ii) file a consent to service of process in
any jurisdiction in any action other than one arising out of the offering or
sale of the Shares in such jurisdiction or (iii) become subject to taxation in
any jurisdiction in which it is not now so subject.
(e) The Company shall make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you, in such numbers as
you reasonably may request for distribution to the U.S. Underwriters, as soon as
practicable but in no event later than 45 days after the end of its fiscal
quarter in which the first anniversary
25
<PAGE>
date of the Effective Date occurs, an earnings statement, covering a period of
at least twelve consecutive full calendar months commencing after the Effective
Date, that satisfies the provisions of Section 11(a) of the Act and Rule 158 of
the Regulations.
(f) For a period of 180 days after the date of this Agreement, without the
prior written consent of Bear, Stearns, the Company shall not, directly or
indirectly, issue, offer or agree to sell, sell or otherwise dispose of any
shares of Common Stock (or any securities convertible into, exercisable for or
exchangeable for or evidencing the right to purchase shares of Common Stock)
other than (A) the Company's issuance of shares of Common Stock in connection
with the 425-for-1 stock split, (B) the Company's issuance and sale of Shares in
accordance with the Underwriting Agreements, including the issuance of
Underlying Shares upon exercise of the Signet Warrant, (C) the Company's
issuance of shares of Common Stock in exchange for all the issued and
outstanding capital stock of Tel Labs, Inc., (D) the issuance of Common Stock
upon the exercise of stock options granted, or the grant of stock options under
the Company's Stock Option Plan (and the filing of a Form S-8 registration).
(g) During the five years following the Effective Date, the Company shall
furnish to Bear, Stearns, in such quantity as Bear, Stearns may reasonably
request for distribution to the U.S. Underwriters, copies of (i) all reports
furnished by the Company to its stockholders, and (ii) all reports, financial
statements, and proxy or information statements filed by the Company with the
Commission or any national securities exchange.
(h) The Company shall apply the proceeds from the sale of the Shares to be
sold by it under the Underwriting Agreements in the manner set forth under "Use
of Proceeds" in the Prospectuses. The Company shall take such steps as shall be
necessary to ensure that neither the Company nor any subsidiary shall become an
"investment company" or a company "controlled" by an "investment company" within
the meaning of such terms under the Investment Company Act of 1940.
(i) The Company shall use its best efforts promptly to cause the Shares to
be quoted on Nasdaq and shall take all actions necessary to comply with the
rules and regulations of Nasdaq in order to maintain the quotation of the Shares
on Nasdaq.
26
<PAGE>
(j) The Company shall comply with all registration, filing and repor-
ting requirements of the Exchange Act and the rules and regulations
thereunder, which may from time to time be applicable to the Company, and
shall timely file with the Commission such reports on Form SR as may be
required pursuant to Rule 463 of the Regulations.
(k) The Company shall comply with all provisions of all undertakings
contained in the Registration Statement.
(l) Prior to the Closing Date and, if the U.S. Option is exercised,
until the Additional Closing Date, the Company shall issue no press release
or other communication or hold any press conference with respect to the
offerings of the Shares, or the financial condition, results of operations,
operations, business properties, assets, liabilities, or prospects of the
Company, without your prior consent, which consent shall not be
unreasonably withheld, unless the Company shall conclude upon advice of
counsel that such press release or other communication should be issued at
a time prior to obtaining such consent.
8. Covenants of the Selling Stockholders. Each Selling Stockholder
(other than Signet), severally and not jointly, covenants and agrees with each
U.S. Underwriter that:
(a) For a period of 180 days after the date of this Agreement, with-
out the prior written consent of Bear, Stearns, such Selling Stockholder
shall not, directly or indirectly, offer or agree to sell, sell or
otherwise dispose of any shares of Common Stock (or any securities
convertible into, exercisable for or exchangeable for or evidencing the
right to purchase shares of Common Stock).
(b) If, within the time during which the Prospectuses are required to
be delivered under the Act, such Selling Stockholder shall believe or have
any reasonable grounds to believe that the Prospectuses as then amended or
supplemented include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading, or that any of the representations of such
Selling Stockholder contained in the Underwriting Agreements are untrue,
such Selling Stockholder shall notify you and the Company promptly to such
effect.
(c) Such Selling Stockholder will not take, directly or indirectly,
prior to the termination of the offering of
27
<PAGE>
the Shares contemplated by the Underwriting Agreements, any action designed
to stabilize or manipulate the price of the Common Stock, or that might
reasonably be expected to cause or result in stabilization or manipulation
of the price of the Common Stock.
(d) In order to document the U.S. Underwriters' and the Managers'
compliance with the reporting and withholding provisions of the Internal
Revenue Code of 1986, as amended, such Selling Stockholder shall deliver to
you on or prior to the Closing Date, a properly completed and executed
United States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department Regulations in lieu thereof).
9. Payment of Expenses. Whether or not the transactions contem-
plated by the Underwriting Agreements are consummated or this Agreement is
terminated, the Company agrees to pay all costs and expenses incident to the
performance of its obligations under the Underwriting Agreements, including
those in connection with (i) preparing, printing, duplicating, filing and
distributing the Registration Statement (including all amendments thereof and
exhibits thereto), any Preliminary Prospectus, the Prospectuses and any
supplements thereto, the Underwriting Agreements and all related agreements, and
all other documents relating to the public offering of the Shares, (ii) the
issuance, transfer and delivery of the Shares to the U.S. Underwriters and the
Managers, including any transfer or other taxes payable thereon, (iii) the
registration and qualification if any, of the Shares under state securities or
Blue Sky laws or the securities laws of foreign jurisdictions, or where
applicable the obtaining of exemptions therefrom, including the costs of
preparing, printing and distributing to the U.S. Underwriters and Managers a
preliminary and final Blue Sky Memorandum and the reasonable fees and
disbursements of Underwriters' Counsel in connection therewith, (iv) the
quotation of the Shares on Nasdaq, (v) the review of the terms of the public
offering of the Shares by the National Association of Securities Dealers, Inc.
(the "NASD") and the reasonable fees and disbursements of Underwriters' Counsel
in connection therewith, (vi) the printing of certificates representing the
Shares and (vii) the cost and charges of any transfer agent and registrar for
the Shares.
10. Conditions of the U.S. Underwriters' Obligations. The obligations of
the several U.S. Underwriters to purchase and pay for the U.S. Shares, as
provided herein, shall be subject to (i) the accuracy of the representations and
warranties of the Company and each of the Selling Stockholders herein contained,
as of the date hereof, as of the Closing Date and, with respect to
28
<PAGE>
the Additional U.S. Shares, the accuracy of the representations and warranties
of the Company as of the Additional Closing Date, (ii) to the absence from any
certificates, opinions, written statements or letters furnished pursuant to this
Section 10 to you or to Underwriters' Counsel of any qualification or limitation
not previously approved in writing by you, (iii) to the performance by the
Company and each of the Selling Stockholders of their respective obligations
hereunder and (iv) to the following additional conditions:
(a) The Registration Statement shall have become effective not later than
5:00 P.M., New York City time, on the date of this Agreement or at such later
time and date as shall have been consented to in writing by Bear, Stearns. All
post-effective amendments, if any, to the Registration Statement shall have
become effective. If the Company shall have relied upon Rule 430A of the
Regulations, the Prospectuses shall have been filed with the Commission in a
timely fashion in accordance with Section 7(a) hereof. All filings required by
Rule 424 of the Regulations shall have been made and no such filings shall
have been made without your consent. No stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereof shall have been issued by the Commission or any state securities
commission and no proceedings therefor shall have been initiated or threatened
by the Commission or any state securities commission.
(b) At the Closing Date (and, with respect to the Additional Shares, the
Additional Closing Date), you shall have received the written opinion of
Swidler & Berlin, Chartered, counsel for the Company, dated the date of its
delivery, addressed to the U.S. Underwriters and the Managers, and in form and
scope reasonably satisfactory to Underwriters' Counsel, to the effect that:
(i) Each of the Company and the subsidiaries listed in Schedule III
------------
hereto (x) has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation and is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to be
so qualified or in good standing that will not in the aggregate have a
Material Adverse Effect, and (y) to the knowledge of such counsel, has all
requisite corporate power and
29
<PAGE>
authority, and all necessary consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses and permits of and from all
public, regulatory or governmental agencies and bodies, to own, lease and
license its respective properties and conduct its business as now being
conducted and as described in the Registration Statement and the
Prospectuses, except for those the absence of which, individually or in the
aggregate, would not have a Material Adverse Effect. All of the issued and
outstanding capital stock (or similar interests) of each subsidiary have
been duly and validly authorized and issued, are fully paid and
nonassessable and were not issued in violation of or subject to any
preemptive rights arising under each such subsidiary's charter or by-laws or
the laws of its jurisdiction of incorporation or to such counsel's
knowledge, any contractual preemptive rights (collectively, "Preemptive
Rights") and are owned by the Company or a subsidiary, free and clear of all
claims, liens, security interests, pledges, charges, encumbrances,
stockholders agreements and voting trusts, except as otherwise described in
Schedule III to the U.S. Underwriting Agreement.
------------
(ii) The authorized capital stock of the Company is as set forth in
the Prospectuses under the caption "Capitalization". All of the outstanding
shares of such capital stock have been duly and validly authorized and
issued, are fully paid and nonassessable and were not issued in violation of
or subject to any Preemptive Rights. The shares of Common Stock to be
outstanding on the Closing Date have been duly authorized and when issued
will be validly issued, fully paid and nonassessable, and will not have been
issued in violation of or be subject to any Preemptive Rights. The Company's
obligations under the Signet Warrant have been duly and validly authorized
and are legal and binding obligations of the Company entitling Signet to
acquire shares of Common Stock upon the terms and in the manner set forth
therein. The Underlying Shares have been duly authorized and validly
reserved for issuance, and when issued and delivered to Signet upon receipt
of the exercise price for the Signet Warrant, the Underlying Shares will be
validly issued, fully paid and nonassessable, and will not have been issued
in violation of or be subject to any Preemptive Rights. The Shares have been
duly authorized and, when issued, delivered and sold in accordance with the
terms
30
<PAGE>
of the Underwriting Agreements, will be validly issued, fully paid and
nonassessable and will not have been issued in violation of or be subject to
any Preemptive Rights. To such counsel's knowledge, there is no outstanding
option, warrant or other right calling for the issuance of any share of
capital stock (or similar interests) of the Company or of any Material
Subsidiary or any security or other instrument that by its terms is
convertible into, exchangeable for or evidencing the right to purchase
capital stock (or similar interests) of the Company or any Material
Subsidiary, except as described in the Registration Statement and the
Prospectuses. Upon delivery of and payment for the Shares to be sold by the
Company to each U.S. Underwriter and Manager in accordance with the
Underwriting Agreements, each U.S. Underwriter and each Manager (assuming
that it acquires such Shares without notice of any adverse claim, as such
term is used in Section 8-302 of the Uniform Commercial Code in effect in
the State of New York) will acquire valid title to the Shares so sold and
delivered to it, free and clear of all liens, pledges, charges, claims,
security interests, restrictions on transfer, agreements or other defects of
title whatsoever (other than those resulting from any action taken by such
U.S. Underwriter or such Manager). The capital stock of the Company conforms
in all material respects to the description thereof contained in the
Registration Statement and the Prospectuses.
(iii) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under each of the Underwriting
Agreements and to issue, sell and deliver the Shares in accordance with the
terms and conditions thereof. Each of the Underwriting Agreements has been
duly and validly authorized, executed and delivered by the Company.
(iv) The Company's execution and delivery of, and its performance of
its obligations under, each of the Underwriting Agreements and the
consummation of the transactions contemplated thereby, and the issuance of
the Underlying Shares to Signet upon the exercise of the Signet Warrant, do
not and, when such performance is required pursuant to the terms thereof,
will not (A) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default under (or an event that with notice
or lapse of time, or both, would constitute a default under) or require
31
<PAGE>
approval or consent under, or result in an acceleration of indebtedness,
termination of rights or the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any subsidiary
pursuant to the terms of any Material Contract or any Material Permit, (B)
violate or conflict with any provision of the certificate of incorporation,
by-laws or similar governing instruments of the Company or any subsidiary,
or (C) violate or conflict with any law, rule or regulation of the United
States of America or the Commonwealth of Virginia, applicable to the Company
or the subsidiaries, with any judgment, decree or order known to such
counsel of any court or any public, governmental or regulatory agency or
body having jurisdiction over the Company or any subsidiary or any of its
respective properties or assets.
(v) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any federal or Virginia
court or any public, governmental, or regulatory agency or body having
jurisdiction over the Company or any subsidiary or any of its respective
properties or assets is required for the Company's execution and delivery
of, and its performance of its obligations under, each of the Underwriting
Agreements, and the consummation of the transactions contemplated thereby,
including, without limitation, the issuance of the Underlying Shares to
Signet upon the exercise of the Signet Warrants and the issuance, sale and
delivery of the Shares, except for (A) such as may be required under state
securities or Blue Sky laws and the securities laws of foreign jurisdictions
in connection with the purchase and distribution of the Shares by the U.S.
Underwriters and the Managers (as to which such counsel need express no
opinion) and (B) such as have been made or obtained under the Act, the
Exchange Act or the rules of Nasdaq.
(vi) Insofar as statements in the Prospectuses purport to summarize
the nature and status of litigation or the provisions of laws, rules,
regulations, orders, judgments or decrees, or the terms of any Material
Contracts or Material Permits, such statements are correct in all material
respects and are fair summaries of the matters referred to therein.
(vii) To such counsel's knowledge, no person or entity has the right,
by contract or otherwise, to require registration under the Act of shares of
capital
32
<PAGE>
stock or other securities of the Company or any subsidiary solely because of
the filing or effectiveness of the Registration Statement and the
consummation of the transactions contemplated by the Underwriting
Agreements, except for such rights as have been legally and effectively
waived.
(viii) The Registration Statement and the Prospectuses (except for
the financial statements and the notes thereto, the financial statement
schedules and the other financial and accounting data included therein, as
to which no opinion need be expressed) comply as to form in all material
respects with the requirements of the Act and the Regulations.
(ix) The Registration Statement has become effective under the Act,
and such counsel has no knowledge of any stop order suspending the
effectiveness of the Registration Statement and to such counsel's knowledge
no proceedings therefor have been initiated or threatened by the Commission,
and there are no other filings on the part of the Company required by the
Act or the Regulations, including those required by Rule 424(b) of the
Regulations, that to such counsel's knowledge have not been made.
(x) The Shares have been duly authorized for trading on Nasdaq,
subject only to official notice of issuance.
(xi) To such counsel's knowledge, there is no litigation,
arbitration or governmental or other action, suit, proceeding or
investigation before any court or before or by any public, regulatory or
governmental agency or body pending or threatened against, or involving the
properties or business of, the Company or any subsidiary, that, if resolved
against the Company or such subsidiary, individually or, to the extent
involving related claims or issues, in the aggregate, is of a character
required to be disclosed in the Registration Statement and the Prospectuses
that has not been properly disclosed therein; and to such counsel's
knowledge, there is no contract or document concerning the Company or any
subsidiary of a character required to be described in the Registration
Statement and the Prospectuses or to be filed as an exhibit to the
Registration Statement, that is not so described or filed.
33
<PAGE>
(xii) The Company is not an "investment company" or a company
"controlled" by an "investment company" as defined in the Investment Company
Act.
(xiii) the licenses, permits and authorizations attached to such
opinion constitute all of the licenses, permits and authorizations required
by the Federal Communications Commission ("FCC") and the relevant state
public service commissions ("PSCs") for the provision of telecommunications
services by the Company and each of its Subsidiaries as such counsel
understands those services currently to be provided based on the declaration
of an executive officer of the Company attached to such opinion, where the
failure to obtain or hold such license, permit or authority would materially
adversely affect the ability of the Company or any of its Subsidiaries to
provide such service;
(xiv) to the best of such counsel's knowledge, after due inquiry,
neither the Company nor any of its Subsidiaries is subject to any pending or
threatened proceeding, complaint or investigation before the FCC or any PSC
based on any alleged violation by the Company or its Subsidiaries in
connection with the provision of or failure to provide telecommunications
services, of a character required to be disclosed in the Registration
Statement which is not disclosed in the Prospectuses;
(xv) the statements in the Prospectus under the headings "Risk Factors
-- Increasing Competition," "Risk Factors -- Regulatory and Legislative
Risks," "Business -- Industry Overview," "Business --Regulation,"
"Description of Capital Stock" and "Certain United States Tax
Considerations," insofar as they purport to summarize provisions of laws or
documents referred to therein, are accurate and correct in all material
respects;
(xvi) no consent, approval, authorization, license, certificate,
permit or order of the FCC or any PSC is required for the consummation of
the transactions contemplated herein;
(xvii) neither the execution and delivery of this Agreement nor
the issue and sale of the Shares contemplated hereby will conflict with or
result in a violation of any order or regulation applicable to the Company
or any of its subsidiaries in connection with
34
<PAGE>
the provision of telecommunications services of the FCC or any PSC, the
conflict with or the violation of which would have a Material Adverse
Effect; and
(xviii) Registration under the Act was not required for the offer
and issuance of Common Stock in connection with the acquisition of Tel Labs,
Inc. and such acquisition has been consummated in accordance with the terms
of the Share Exchange Agreement dated as of June 1, 1996 between the Company
and Tel Labs, Inc.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent certified public accountants of the Company,
representatives of the U.S. Underwriters and the Managers and Underwriters'
Counsel at which the contents of the Registration Statement, the Prospectuses
and any amendments thereof or supplements thereto and related matters were
discussed and, although such counsel has not undertaken to investigate or verify
independently and are not passing upon, and does not assume any responsibility
for, the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectuses or any amendments thereof or
supplements thereto (except as to matters referred to in the last sentence of
clause (ii) above), no facts have come to such counsel's attention which lead
such counsel to believe that the Registration Statement, on the effective date
thereof (or any post-effective amendment thereof as of the date of such
amendment), contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectuses, on the date thereof
or the date of such opinion, contained an untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading (it being understood that such counsel need express no
view with respect to the financial statements and related notes, the financial
statement schedules and the other financial and accounting data included therein
or omitted therefrom).
In rendering such opinion, such counsel (i) may limit its opinions to the
laws of the District of Columbia, the General Corporation Law of the State of
Virginia, the corporate laws of the State of Delaware and the federal laws of
the United States of America, and (ii) may rely (A) as to
35
<PAGE>
matters involving the application of laws other than the laws of the District of
Columbia, the General Corporation Law of the State of Virginia, the corporate
laws of the State of Delaware and the federal laws of the United States of
America, to the extent such counsel deems proper and to the extent specified in
such opinion letter, if at all, upon a written opinion or opinions (in form and
scope reasonably satisfactory to Underwriters' Counsel) of other counsel
reasonably acceptable to Underwriters' Counsel, familiar with the applicable
laws; and (B) as to matters of fact, to the extent such counsel may deem proper,
on certificates of responsible officers of the Company and certificates or other
written statements of officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of the
Company and the subsidiaries. The opinion of such counsel shall specifically
state that the opinion of any such other counsel is in form and scope
satisfactory to such counsel and, in such counsel's opinion, such counsel, you
and Underwriters' Counsel are justified in relying thereon. A copy of the
opinion of any such other counsel shall be delivered to Underwriters' Counsel.
(c) At the Closing Date, you shall have received the written opinion of
Swidler & Berlin, Chartered, counsel for each of Thomas J. Cirrito, Natalie J.
Marine-Street, Mark J. Stodter, Janet D. Anastasi, James Sznajder and Dennis
Jarman, each of whom is a Selling Stockholder listed on Schedule II hereto,
dated the date of its delivery, addressed to the U.S. Underwriters and the
Managers, and in form and scope reasonably satisfactory to Underwriters'
Counsel, to the effect that:
(i) Upon the issuance by the Company to the Selling Stockholder of the
number of Shares to be sold by the Selling Stockholder on or before the
Closing Date, the Selling Stockholder will be the sole owner of such Shares,
and, upon delivery of and payment for the Shares to be sold by the Selling
Stockholder to each U.S. Underwriter and Manager in accordance with the
Underwriting Agreements and the Power of Attorney and Custody Agreement, each
U.S. Underwriter and Manager (assuming that it acquires such Shares without
notice of any adverse claim, as such term is used in Section 8-302 of the
Uniform Commercial Code in effect in the State of New York) will acquire valid
title to such Shares, free and clear of all liens, pledges, charges, security
interests, restrictions on transfer, agreements or other defects of title
whatsoever (other
36
<PAGE>
than those resulting from any action by such U.S. Underwriter or such
Manager).
(ii) The Selling Stockholder has duly executed and delivered a Power
of Attorney and Custody Agreement, and such Power of Attorney and Custody
Agreement is a legal and binding obligation of the Selling Stockholder.
(iii) Each of the Underwriting Agreements has been duly executed and
delivered by the Attorney-in-Fact on behalf of the Selling Stockholder and is a
legal and binding obligation of the Selling Stockholder.
(iv) The execution, delivery and performance by the Selling
Stockholder (or the Attorney-in-Fact on behalf of the Selling Stockholder) of
the Underwriting Agreements and the Power of Attorney and Custody Agreement, and
the consummation of the transactions contemplated thereby, will not (i) conflict
with or result in a breach of any of the terms and provisions of, or constitute
a default under (or an event that with notice or lapse of time, or both, would
constitute a default under) or require approval or consent under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Selling Stockholder pursuant to the terms of any agreement,
contract, indenture, mortgage, lease, license, arrangement or understanding
known to such counsel to which the Selling Stockholder is a party, or to which
any of the Selling Stockholder's properties is subject or (ii) violate or
conflict with any law, rule or regulation applicable to the Selling Stockholder,
or to such counsel's knowledge, any judgment, decree or order of any court or
any public, governmental or regulatory agency or body having jurisdiction over
the Selling Stockholder or any of the Selling Stockholder's properties or
assets.
(v) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the Selling
Stockholder or any of the Selling Stockholder's properties or assets is required
for the Selling Stockholder's execution and delivery of, and performance of the
Selling Stockholder's obligation under, the Underwriting Agreements, the Power
of
37
<PAGE>
Attorney and Custody Agreement, and the consummation of the transactions
contemplated thereby, except as may be required under the Act and the
Exchange Act, the authorization of the Shares for trading on Nasdaq and
such filings and registration as may be required under state securities or
"Blue Sky" Laws and the securities laws of foreign jurisdictions in
connection with the purchase and distribution of the Shares by the U.S.
Underwriters and the Managers.
In rendering such opinion, such counsel may limit its opinion to the laws
of the jurisdiction in which it is licensed to practice law. The opinion of
counsel shall specifically state that the same may be relied upon by you and
Underwriters' Counsel.
(d) At the Closing Date, you shall have received the written opinion of
Debevoise & Plimpton, counsel for each of Henry G. Luken, III and Donald A.
Burns, each of whom is a Selling Stockholder listed on Schedule II hereto, dated
the date of its delivery, addressed to the U.S. Underwriters and the Managers,
and in form and scope reasonably satisfactory to Underwriters' Counsel, to the
effect that:
(i) Upon the issuance by the Company to the Selling Stockholder of the
number of Shares to be sold by the Selling Stockholder on or before the
Closing Date, the Selling Stockholder will be the sole owner of such Shares,
and, upon delivery of and payment for the Shares to be sold by the Selling
Stockholder to each U.S. Underwriter and Manager in accordance with the
Underwriting Agreements and the Power of Attorney and Custody Agreement, each
U.S. Underwriter and Manager (assuming that it acquires such Shares without
notice of any adverse claim, as such term is used in Section 8-302 of the
Uniform Commercial Code in effect in the State of New York) will acquire valid
title to such Shares, free and clear of all liens, pledges, charges, security
interests, restrictions on transfer, agreements or other defects of title
whatsoever (other than those resulting from any action by such U.S.
Underwriter or such Manager).
(ii) The Selling Stockholder has duly executed and delivered a Power
of Attorney and Custody Agreement, and such Power of Attorney and Custody
Agreement is a legal and binding obligation of the Selling Stock holder.
38
<PAGE>
(iii) Each of the Underwriting Agreements has been duly executed and
delivered by the Attorney-in-Fact on behalf of the Selling Stockholder and is
a legal and binding obligation of the Selling Stockholder.
(iv) The execution, delivery and performance by the Selling
Stockholder (or the Attorney-in-Fact on behalf of the Selling Stockholder) of
the Underwriting Agreements and the Power of Attorney and Custody Agreement,
and the consummation of the transactions contemplated thereby, will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default under (or an event that with notice or lapse of time, or
both, would constitute a default under) or require approval or consent under,
or result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Selling Stockholder pursuant to the terms
of any agreement, contract, indenture, mortgage, lease, license, arrangement
or understanding known to such counsel to which such Selling Stockholder is a
party, or to which any of the Selling Stockholder's properties is subject or
(ii) any law, rule or regulation applicable to the Selling Stockholder, or to
such counsel's knowledge, any judgment, decree or order of any court or any
public, governmental or regulatory agency or body having jurisdiction over the
Selling Stockholder or any of the Selling Stockholder's properties or assets.
(v) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the Selling
Stockholder or any of the Selling Stockholder's properties or assets is
required for the Selling Stockholder's execution and delivery of, and
performance of the Selling Stockholder's obligation under, the Underwriting
Agreements, the Power of Attorney and Custody Agreement, and the consummation
of the transactions contemplated thereby, except as may be required under the
Act and the Exchange Act, the authorization of the Shares for trading on
Nasdaq and such filings and registration as may be required under state
securities or "Blue Sky" Laws and the securities laws of foreign jurisdictions
in connection with the purchase and distribution of the Shares by the U.S.
Underwriters and the Managers.
39
<PAGE>
In rendering such opinion, such counsel may limit its opinion to the laws
of the jurisdiction in which it is licensed to practice. The opinion of counsel
shall specifically state that the same may be relied upon by you and
Underwriters' Counsel.
(e) At the Closing Date, you shall have received the written opinion of
McGuire, Woods & Battle, counsel for Signet, dated the date of its delivery,
addressed to the U.S. Underwriters and the Managers, and in form and scope
reasonably satisfactory to Underwriters' Counsel, to the effect that:
(i) Signet has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of Virginia.
(ii) Upon the issuance by the Company to Signet of the number of
Shares to be sold by Signet on or before the Closing Date, Signet will be the
sole owner of such Shares, and, upon delivery of and payment for the Shares to
be sold by Signet to each U.S. Underwriter and Manager in accordance with the
Underwriting Agreements and the Power of Attorney and Custody Agreement, each
U.S. Underwriter and Manager (assuming that it acquires such Shares without
notice of any adverse claim, as such term is used in Section 8-302 of the
Uniform Commercial Code in effect in the State of New York) will acquire such
Shares, free and clear of all adverse claims (other than those resulting from
any action by such U.S. Underwriter or such Manager).
(iii) Signet has duly executed and delivered a Power of Attorney and
Custody Agreement, and such Power of Attorney and Custody Agreement is a legal
and binding obligation of Signet.
(iv) Each of the Underwriting Agreements has been duly executed and
delivered by the Attorney-in-Fact on behalf of Signet.
(v) The execution, delivery and performance by Signet (or the
Attorney-in-Fact on behalf of Signet) of the Underwriting Agreements and the
Power of Attorney and Custody Agreement, and the consummation of the
transactions contemplated thereby, including the exercise of the Signet
Warrant and the purchase, delivery and sale of the Shares to be delivered and
sold thereunder, will not (i) conflict with or result
40
<PAGE>
in a breach of any of the terms and provisions of, or constitute a default
under (or an event that with notice or lapse of time, or both, would
constitute a default under) or require approval or consent under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of Signet pursuant to the terms of any agreement, contract,
indenture, mortgage, lease, license, arrangement or understanding known to
such counsel to which Signet is a party, or to which any of its properties is
subject or (ii) violate or conflict with any provision of the certificate of
incorporation or by-laws of Signet, any U.S. federal or Commonwealth of
Virginia law, rule or regulation applicable to Signet, or to such counsel's
knowledge, any judgment, decree or order of any court or any public,
governmental or regulatory agency or body having jurisdiction over Signet or
any of its properties or assets.
(vi) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over Signet or
any of its properties or assets is required for (i) Signet's execution and
delivery of, and performance of its obligation under, the Underwriting
Agreements, the Power of Attorney and Custody Agreement, and the consummation
of the transactions contemplated thereby, and (ii) the exercise of the Signet
Warrant and the purchase of the Underlying Shares upon such exercise, except
as may be required under the Act and the Exchange Act, the authorization of
the Shares for trading on Nasdaq and such filings and registration as may be
required under state securities or "Blue Sky" laws and the securities laws of
foreign jurisdictions in connection with the purchase and distribution of the
Shares by the U.S. Underwriters and the Managers.
In rendering such opinion, such counsel (i) may limit its opinion to the
laws of the jurisdiction in which it is licensed to practice and (ii) may rely
as to matters of fact, to the extent such counsel may deem proper, on
certificates of responsible officers of Signet and certificates or other written
statements of officers of departments of jurisdictions having custody of
documents respecting the corporate existence or good standing of Signet. The
opinion of counsel shall specifically state
41
<PAGE>
that the same may be relied upon by you and Underwriters' Counsel.
(f) At the Closing Date, you shall have received the written opinion of
Arent Fox Kintner Plotkin & Kahn, British Virgin Islands counsel for Gold &
Appel, S.A. ("Gold & Appel"), dated the date of its delivery, addressed to the
U.S. Underwriters and the Managers, and in form and scope reasonably
satisfactory to Underwriters' Counsel, to the effect that:
(i) Gold & Appel has been duly organized and is validly existing as
a corporation in good standing under the laws of the British Virgin Islands.
(ii) Upon the issuance by the Company to Gold & Appel of the number
of Shares to be sold by Gold & Appel on or before the Closing Date, Gold &
Appel will be the sole owner of such Shares, and, upon delivery of and payment
for the Shares to be sold by Gold & Appel to each U.S. Underwriter and Manager
in accordance with the Underwriting Agreements and the Power of Attorney and
Custody Agreement, each U.S. Underwriter and Manager (assuming that it
acquires such Shares without notice of any adverse claim, as such term is used
in Section 8-302 of the Uniform Commercial Code in effect in the State of New
York) will acquire valid title to such Shares, free and clear of all liens,
pledges, charges, security interests, restrictions on transfer, agreements or
other defects of title whatsoever (other than those resulting from any action
by such U.S. Underwriter or such Manager).
(iii) Gold & Appel has duly executed and delivered a Power of
Attorney and Custody Agreement, and such Power of Attorney and Custody
Agreement is a legal and binding obligation of Gold & Appel.
(iv) Each of the Underwriting Agreements has been duly executed and
delivered by the Attorney-in-Fact on behalf of Gold & Appel and is a legal and
binding obligation of Gold & Appel.
(v) The execution, delivery and performance by Gold & Appel (or the
Attorney-in-Fact on behalf of Gold & Appel) of the Underwriting Agreements and
the Power of Attorney and Custody Agreement, and the consummation of the
transactions contemplated thereby, will not (i) conflict with or result in a
breach of any of the
42
<PAGE>
terms and provisions of, or constitute a default under (or an event that with
notice or lapse of time, or both, would constitute a default under) or require
approval or consent under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of Gold & Appel
pursuant to the terms of any agreement, contract, indenture, mortgage, lease,
license, arrangement or understanding known to such counsel to which Gold &
Appel is a party, or to which any of its properties is subject or (ii) violate
or conflict with any provision of the certificate of incorporation, by-laws or
similar governing instruments of Gold & Appel or any law, rule or regulation
applicable to Gold & Appel, or, to such counsel's knowledge, any judgment,
decree or order of any court or any public, governmental or regulatory agency
or body having jurisdiction over Gold & Appel or any of its properties or
assets.
(vi) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over Gold &
Appel or any of its properties or assets is required for Gold & Appel's
execution and delivery of, and performance of its obligation under, the
Underwriting Agreements, the Power of Attorney and Custody Agreement, and the
consummation of the transactions contemplated thereby, except as may be
required under the Act and the Exchange Act or such as may be required under
state securities or "Blue Sky" laws and the securities laws of foreign
jurisdictions in connection with the purchase and distribution of the Shares
by the U.S. Underwriters and the Managers.
In rendering such opinion, such counsel (i) may limit its opinion to the
laws of the jurisdiction in which it is licensed to practice and (ii) may rely
as to matters of fact, to the extent such counsel may deem proper, on
certificates of responsible officers of Gold & Appel and certificates or other
written statements of officers of departments of jurisdictions having custody of
documents respecting the corporate existence or good standing of Gold & Appel.
The opinion of counsel shall specifically state that the same may be relied upon
by you and Underwriters' Counsel.
(g) At the Closing Date (and, with respect to the Additional Shares, the
Additional Closing Date), you shall
43
<PAGE>
have received a certificate of the Company executed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, dated the date
of its delivery, to the effect that the conditions set forth in subsection (a)
of this Section 10 have been satisfied, that as of the date of such certificate
the representations and warranties of the Company set forth in Section 3 hereof
are true and correct as of such Closing Date and the obligations of the Company
to be performed hereunder on or prior thereto have been duly performed.
(h) At the Closing Date, you shall have received a certificate of each
Selling Stockholder, dated the date of its delivery, to the effect that as of
the date of such certificate the representations and warranties of such Selling
Stockholder set forth in Section 4 hereof are true and correct as of the Closing
Date and the obligations of the Selling Stockholder to be performed hereunder on
or prior thereto, including, in the case of Signet, the exercise of the Signet
Warrants and the purchase of the Shares to be sold by Signet hereunder, have
been duly performed.
(i) At the time this Agreement is executed and at the Closing Date (and,
with respect to the Additional Shares, the Additional Closing Date), you shall
have received a letter, from Deloitte & Touche LLP, dated the date of its
delivery, addressed to the U.S. Underwriters and the Managers and in form and
substance reasonably satisfactory to you, to the effect that: (i) they are
independent accountants with respect to the Company within the meaning of the
Act and the Regulations and stating that the answer to Item 10 of the
Registration Statement is correct insofar as it relates to them; (ii) in their
opinion, the Company Financials audited by such firm and included in the
Registration Statement and the Prospectuses comply as to form in all material
respects with the applicable accounting requirements of the Act and the
applicable published rules and regulations thereunder; (iii) on the basis of
procedures (but not an audit made in accordance with generally accepted auditing
standards) consisting of a reading of the latest available unaudited interim
consolidated financial statements of the Company and the subsidiaries, a reading
of the minutes of meetings and consents of the stockholders and boards of
directors of the Company and the subsidiaries and the committees of such boards
subsequent to December 31, 1995, inquiries of certain officials of the Company
and the subsidiaries who have responsibility for financial and accounting
matters of the Company and the subsidiaries with
44
<PAGE>
respect to transactions and events subsequent to December 31, 1995, and other
specified procedures and inquiries to a date not more than five days prior to
the date of such letter, nothing has come to their attention that would cause
them to believe that: (A) the unaudited historical financial statements of the
Company and the subsidiaries included in the Registration Statement and the
Prospectuses do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the published rules and
regulations thereunder or that any material modification should be made to such
unaudited financial statements for them to be in conformity with US GAAP; (B)
with respect to the period subsequent to December 31, 1995 there were, as of the
date of the most recent available monthly financial data of the Company and the
subsidiaries, if any, and as of a specified date not more than five days prior
to the date of such letter, any changes in the capital stock or long-term
indebtedness of the Company or any decrease in stockholders' equity of the
Company, in each case as compared with the amounts shown in the most recent
balance sheet included in the Registration Statement and the Prospectuses,
except for changes or decreases that the Registration Statement and the
Prospectuses disclose have occurred or may occur; (C) the unaudited pro forma
consolidated financial statements of the Company and the subsidiaries included
in the Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the applicable published rules
and regulations thereunder or the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of such financial
statements; or (D) that during the period from December 31, 1995 to the date of
the most recent available monthly consolidated financial data of the Company and
the subsidiaries, if any, and to a specified date not more than five days prior
to the date of such letter, there was any decrease, as compared with the
corresponding period in the prior fiscal year, in total revenues, or total or
per share net income, except for decreases that the Prospectuses disclose have
occurred or may occur; and (iv) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings and other
financial information pertaining to the Company and the subsidiaries set forth
in the Prospectuses, which have been specified by you prior to the date of this
Agreement, to the extent that such dollar amounts, numbers, percentages and
information may be derived from the general accounting and financial records
that are subject to the internal control structure policies and procedures of
the Company's and the
45
<PAGE>
subsidiaries' accounting systems or that have been derived directly from such
accounting records by analysis or computation, and excluding any questions
requiring an interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries, and other appropriate procedures
specified by you (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in such letter,
and found them to be in agreement.
(j) All proceedings taken in connection with the sale of the Shares as
contemplated by the Underwriting Agreements shall be reasonably satisfactory in
form and substance to you and to Underwriters' Counsel, and you shall have
received from Underwriters' Counsel a written opinion, dated as of the Closing
Date and addressed to the U.S. Underwriters and the Managers, with respect to
the sale of the Firm Shares, and dated as of the Additional Closing Date with
respect to the sale of the Additional Shares, as to such matters as you
reasonably may require, and the Company shall have furnished to Underwriters'
Counsel such documents as Underwriters' Counsel may reasonably request for the
purpose of enabling Underwriters' Counsel to pass upon such matters.
(k) The NASD, upon review of the terms of the underwriting arrangements for
the public offering of the Shares, shall have raised no objections thereto.
(l) The Shares shall have been approved for trading on Nasdaq, subject to
official notice of issuance.
(m) At the time this Agreement is executed, the Company shall have
furnished to you the written undertakings referred to in the last sentence of
Section 7(f) hereof, in form and substance satisfactory to Underwriters'
Counsel.
(n) At the time the Underwriting Agreements are executed, each Selling
Stockholder shall have executed and delivered to you (i) a Power-of-Attorney and
Custody Agreement and (ii) other than Signet, a United States Treasury
Department Form W-9 (or other applicable form or statement specified by Treasury
Department Regulations in lieu thereof).
(o) Signet shall have exercised the Signet Warrants and purchased
from the Company the Shares to be sold by Signet under the Underwriting
Agreements.
46
<PAGE>
(p) Prior to the Closing Date and, with respect to the Additional
Shares, the Additional Closing Date, the Company and each Selling Stockholder
shall have furnished to you such further information, certificates, opinions,
agreements and documents as you may reasonably request.
(q) The closing of the purchase of the International Shares pursuant
to the International Underwriting Agreement shall occur concurrently with (i)
the closing described in Section 5(a)(ii) hereof, in the case of the Firm U.S.
Shares, and (ii) the closing described in Section 5(b)(ii) hereof, in the case
of the Additional U.S. Shares.
If any of the conditions specified in this Section 10 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements, or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 10 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the U.S. Underwriters hereunder not
theretofore discharged may be canceled by you at, or at any time prior to, the
Closing Date and with respect to the Additional U.S. Shares, the Additional
Closing Date. Notice of such cancellation shall be given to the Company in
writing, or by telephone, telex, telephonic facsimile or telegraph, confirmed in
writing.
11. Indemnification.
(a) The Company, and each of the Selling Stockholders, jointly and
severally, agree to indemnify and hold harmless each U.S. Underwriter and each
person, if any, who controls any U.S. Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against any and all losses,
liabilities, claims, damages and expenses whatsoever (including but not limited
to attorneys' fees and any and all expenses reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation, provided that such settlement was effected with the
Company's or the Selling Stockholders' written consent in accordance with
Section 11(c) hereof), joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact made by the Company or the Selling Stockholders contained in the
Registration Statement or the U.S. Prospectus or any Preliminary Prospectus, or
in any supplement
47
<PAGE>
thereto or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of the U.S. Prospectus,
in light of the circumstances under which they were made) not misleading;
provided, however, that neither the Company nor the Selling Stockholders shall
- -------- -------
be liable under this subsection 11(a) to any U.S. Underwriter in any such case
to the extent but only to the extent that any such loss, liability, claim,
damage or expense arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company by or on
your behalf with respect to the U.S. Underwriters; and provided, further, that
-------- -------
as to any Preliminary Prospectus this indemnity shall not inure to the benefit
of any U.S. Underwriter or any person controlling such U.S. Underwriter on
account of any loss, liability, claim, damage or expense, or action in respect
thereof, arising from the sale of Shares to any person by that U.S. Underwriter
if that U.S. Underwriter failed to deliver a copy of the Prospectus, as the same
may be amended or supplemented, to that person within the time required by the
Act, and the untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact in such Preliminary
Prospectus was corrected in the Prospectus, unless such failure resulted from
the Company's noncompliance with Sections 7(b) or (c) hereof or, in the case of
information furnished by Signet, then only with respect to written information
furnished to the Company by Signet specifically stating that such information is
expressly for use in the Registration Statement; and provided, further, that the
-------- -------
obligations of each Selling Stockholder under this subsection 11(a) shall be
limited to the product of the number of U.S. Shares sold by such Selling
Stockholder and the Purchase Price. This indemnity agreement will be in addition
to any liability that the Company and the Selling Stockholders may otherwise
have to any U.S. Underwriter or to any controlling person of such U.S.
Underwriter, including under this Agreement.
(b) Each U.S. Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company, each of the directors of the Company,
each of the officers of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and the
Selling Stockholders, against any losses, liabilities, claims, damages and
expenses whatsoever (including but not limited to attorneys' fees and any and
all expenses reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
48
<PAGE>
any and all amounts paid in settlement of any claim or litigation, provided that
such settlement was effected with such U.S. Underwriter's written consent in
accordance with Section 11(c) hereof), joint or several, to which they or any of
them may become subject under the Act, the Exchange Act or otherwise, insofar as
such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the U.S.
Prospectus or any Preliminary Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of the U.S. Prospectus, in
light of the circumstances under which they were made) not misleading, in each
case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by you or on your behalf with respect to such U.S. Underwriter expressly
for use in the Registration Statement or U.S. Prospectus; provided, however,
-------- -------
that in no case shall such U.S. Underwriter be liable or responsible for any
amount in excess of the aggregate underwriting discounts and commissions
applicable to the U.S. Shares purchased by such U.S. Underwriter hereunder. This
indemnity will be in addition to any liability that the U.S. Underwriters may
otherwise have to the Company or any such director, officer or controlling
person, or the Selling Stockholders, including under this Agreement. The
Company acknowledges that the statements set forth in the last paragraph of the
cover page, the legend concerning stabilization on the inside front cover page
of the U.S. Prospectus and the statements set forth under the captions
"Underwriting" in the U.S. Prospectus constitute the only information furnished
in writing by or on behalf of any U.S. Underwriter expressly for use in the
Registration Statement, any related Preliminary Prospectus and the U.S.
Prospectus.
(c) Promptly after receipt by an indemnified party under subsection
11(a) or (b) above of notice of the assertion of any claim or the commencement
of any action, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the claim or the
commencement of such action (but the failure so to notify an indemnifying party
shall not relieve it from any liability that it may have under this Section 11
except to the extent that it has been prejudiced in any material respect by
49
<PAGE>
such failure or from any liability that it may have otherwise). In case any such
claim or action is brought against any indemnified party, and it notifies an
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein, and to the extent it may elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party, including the employment of such counsel and payment of
all fees and expenses. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to take charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them that are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties with respect to such
different defenses), in any of which events such fees and expenses shall be
borne by the indemnifying parties. The indemnifying party under subsection 11(a)
or (b) above shall only be liable for the reasonable legal expenses of one
counsel for all indemnified parties in each jurisdiction in which any claim or
action is brought; provided, however, that the indemnifying party shall be
-------- -------
liable for separate counsel for any indemnified party in a jurisdiction, if
counsel to the indemnified parties shall have reasonably concluded that there
may be defenses available to such indemnified party that are different from or
additional to those available to one or more of the other indemnified parties
and that separate counsel for such indemnified party is prudent under the
circumstances. Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its written consent; provided, however, that such written
-------- -------
consent was not unreasonably withheld.
(d) The Company and the Selling Stockholders may agree, as among
themselves and without limiting the rights of the U.S. Underwriters and their
controlling persons under this Agreement against the Company and the Selling
Stockholders, as to the respective amounts of liability under this Section 11
and Section 12 below for which they each shall be responsible.
50
<PAGE>
12. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 11(a) hereof
is for any reason held to be unavailable from the Company or the Selling
Stockholders or is insufficient to hold harmless a party indemnified thereunder,
the Company, the Selling Stockholders and the U.S. Underwriters shall contribute
to the aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provisions (including any investigation,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claims asserted,
but after deducting in the case of losses, claims, damages, liabilities and
expenses suffered by the Company and the Selling Stockholders, any contribution
received by the Company and the Selling Stockholders from persons, other than
one or more of the U.S. Underwriters, who may also be liable for contribution,
including persons who control the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, officers of the Company who signed
the Registration Statement and directors of the Company) to which the Company,
the Selling Stockholders and one or more of the U.S. Underwriters may be
subject, in such proportions as are appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders, on the one hand, and the
U.S. Underwriters, on the other hand, from the offering of the U.S. Shares or,
if such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 11 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company and the Selling Stockholders, on the one hand, and the U.S.
Underwriters, on the other hand, in connection with the statements or omissions
that resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Selling Stockholders, on the one hand, and the U.S.
Underwriters, on the other hand, shall be deemed to be in the same proportion as
(x) the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and the
Selling Stockholders and (y) the underwriting discounts and commissions received
by the U.S. Underwriters, respectively, bear to the total proceeds to the public
of the Shares, in each case as set forth in the table on the cover page of the
U.S. Prospectus. The relative fault of the Company and the Selling
Stockholders, on the one hand, and of the U.S. Underwriters, on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to
51
<PAGE>
information supplied by the Company or the Selling Stockholders, as such, on the
one hand, or the U.S. Underwriters, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Selling Stockholders and the U.S.
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 12 were determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to above. The Selling Stockholders' obligations in this
Section 12 to contribute are joint and several and the U.S. Underwriters'
Obligations under this Section 12 to contribute are several and not joint.
Notwithstanding the provisions of this Section 12, (i) in no case shall any U.S.
Underwriter be required to contribute any amount in excess of the amount by
which the aggregate public offering price of the U.S. Shares underwritten by it
and distributed to the public exceeds the amount of any damages that such U.S.
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or such omission or alleged omission, (ii) in no case
shall any Selling Stockholder be required to contribute any amount in excess of
the amount by which the product of the number of U.S. Shares sold by such
Selling Stockholder and the Purchase Price exceeds the amount of any damages
that such Selling Stockholder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or such omission or alleged omission and
(iii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
Section 12, each person, if any, who controls any U.S. Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have
the same rights to contribution as such U.S. Underwriter and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of this Section 12. Any party entitled to contribution shall,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 12, notify such
party or parties from whom contribution may be sought, but the omission to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 12 or otherwise. No party shall be liable for contribution with respect
to any action or claim settled without its written
52
<PAGE>
consent; provided, however, that such written consent was not unreasonably
-------- -------
withheld.
13. Survival of Representations and Agreements. All representations
and warranties, covenants and agreements of the U.S. Underwriters, the Company
and the Selling Stockholders contained in this Agreement, including without
limitation the agreements contained in Sections 7, 8 and 9 hereof, the indemnity
agreements contained in Section 11 hereof and the contribution agreements
contained in Section 12 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the U.S.
Underwriters or any controlling person of any U.S. Underwriter or by or on
behalf of the Company, any of its officers, directors and controlling persons,
or the Selling Stockholders, and shall survive delivery of the U.S. Shares to
and payment for the U.S. Shares by the U.S. Underwriters. The representations
contained in Sections 3 and 4 hereof and the agreements contained in Sections 7,
8, 9, 11, 12 and 15(d) hereof shall survive the termination of this Agreement
including pursuant to Section 14 or 15 hereof; provided, however, that if this
-------- -------
Agreement is terminated pursuant to Section 14 or 15 hereof or if for any reason
the purchase of the U.S. Shares by the U.S. Underwriters as contemplated
hereunder is not consummated, the agreements contained in Sections 7 and 8
hereof shall not survive.
14. Default by a U.S. Underwriter.
(a) If any U.S. Underwriter or U.S. Underwriters shall default in its
or their obligation to purchase Firm U.S. Shares or Additional U.S. Shares
hereunder, and if the Firm U.S. Shares or Additional U.S. Shares with respect to
which such default relates do not (after giving effect to arrangements, if any,
made pursuant to subsection 14(b) below) exceed in the aggregate 10% of the
number of shares of Firm U.S. Shares or Additional U.S. Shares, as the case may
be, that all U.S. Underwriters have agreed to purchase hereunder, then such Firm
U.S. Shares or Additional U.S. Shares to which the default relates shall be
purchased by the non-defaulting U.S. Underwriters in proportion to the
respective proportions that the numbers of Firm U.S. Shares set forth opposite
their respective names in Schedule I hereto bear to the aggregate number of Firm
----------
U.S. Shares set forth opposite the names of the non-defaulting U.S.
Underwriters.
(b) If such default relates to more than 10% of the Firm U.S. Shares
or Additional U.S. Shares, as the case may be, you may, in your discretion,
arrange for another party or parties (including any non-defaulting U.S.
Underwriter or U.S. Underwriters who so agree) to purchase such Firm U.S. Shares
or
53
<PAGE>
Additional U.S. Shares, as the case may be, to which such default relates on
the terms contained herein. If within five (5) calendar days after such a
default you do not arrange for the purchase of the Firm U.S. Shares or
Additional U.S. Shares, as the case may be, to which such default relates as
provided in this Section 14, this Agreement (or, in the case of a default with
respect to the Additional U.S. Shares, the obligations of the U.S. Underwriters
to purchase and of the Company to sell the Additional U.S. Shares) shall
thereupon terminate, without liability on the part of the Company or any Selling
Stockholder with respect thereto (except in each case as provided in Sections 9,
11(a) and 12 hereof) or the several non-defaulting U.S. Underwriters (except as
provided in Sections 11(b) and 12 hereof), but nothing in this Agreement shall
relieve a defaulting U.S. Underwriter or U.S. Underwriters of its or their
liability, if any, to the other several U.S. Underwriters, the Company and the
Selling Stockholders for damages occasioned by its or their default hereunder.
(c) If the Firm U.S. Shares or Additional U.S. Shares to which the
default relates are to be purchased by the non-defaulting U.S. Underwriters, or
are to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date or Additional Closing Date, as
the case may be, for a period not exceeding five (5) business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the U.S. Prospectus or in any other documents and arrangements, and
the Company agrees to file promptly any amendment or supplement to the
Registration Statement or the U.S. Prospectus that, in the opinion of
Underwriters' Counsel, may thereby be made necessary or advisable. The term
"U.S. Underwriter" as used in this Agreement shall include any party substituted
under this Section 14 with like effect as if it had originally been a party to
this Agreement with respect to such Firm U.S. Shares and Additional U.S. Shares.
15. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the later of (i) when
you and the Company shall have received notification of the effectiveness of the
Registration Statement and (ii) the execution and delivery of this Agreement by
the parties hereto. Until this Agreement becomes effective as aforesaid, this
Agreement may be terminated by the Company by notifying you or by you by
notifying the Company without any liability of any party to any party hereunder.
Notwithstanding the foregoing, the provisions of this Section 15 and of Sections
54
<PAGE>
9, 11, 12 and 13 hereof shall at all times be in full force and effect.
(b) This Agreement and the obligations of the U.S. Underwriters
hereunder may be terminated by you by written notice to the Company at any time
at or prior to the Closing Date (and, with respect to the Additional U.S.
Shares, the Additional Closing Date), without liability (other than with respect
to Sections 11 and 12) on the part of any U.S. Underwriter to the Company and
the Selling Stockholders if, on or prior to such date, (i) the Company or the
Selling Stockholders shall have failed, refused or been unable to perform in any
material respect any agreement on its part to be performed hereunder, (ii) any
other condition to the obligations of the U.S. Underwriters set forth in Section
10 hereof is not fulfilled when and as required in any material respect, (iii)
trading in securities generally on the NYSE or the American Stock Exchange or in
the over-the-counter market shall have been suspended or materially limited, or
minimum prices shall have been established on either exchange or such market by
the Commission, or by either exchange or other regulatory body or governmental
authority having jurisdiction, (iv) a general banking moratorium shall have been
declared by Federal or New York State authorities, (v) there shall have occurred
any outbreak or escalation of armed hostilities involving the United States on
or after the date hereof, or if there has been a declaration by the United
States of a national emergency or war, the effect of which shall be, in your
judgment, to make it inadvisable or impracticable to proceed with the sale and
delivery of the Shares on the terms and in the manner contemplated in the
Prospectuses, (vi) in your reasonable opinion any material adverse change shall
have occurred since the respective dates as of which information is given in the
Registration Statement or the Prospectuses affecting the business, prospects,
condition (financial or other) or results of operations of the Company and its
subsidiaries taken as a whole, whether or not arising in the ordinary course of
business other than as set forth in the Prospectuses or contemplated thereby,
(vii) there shall have occurred such a material adverse change in the financial
markets in the United States such as, in your judgment, makes it inadvisable or
impracticable to proceed with the sale and delivery of the Shares on the terms
and in the manner contemplated in the Prospectuses, or (viii) there shall have
been any enactment, proposal, publication, decree or other promulgation of any
foreign or United States federal or state statute, regulation, rule or order of
any court or other governmental authority that would, in your reasonable
judgment, make it inadvisable or impracticable to proceed with the sale and
delivery of the Shares on the terms and in the manner contemplated in the
Prospectuses. Your right to terminate this
55
<PAGE>
Agreement will not be waived or otherwise relinquished by their failure to give
notice of termination prior to the time that the event giving rise to the right
to terminate shall have ceased to exist, provided that notice is given prior to
the Closing Date (and, with respect to the Additional U.S. Shares, the
Additional Closing Date).
(c) Any notice of termination pursuant to this Section 13 shall be by
telephone, telex, telephonic facsimile, or telegraph, confirmed in writing by
letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to notification by you as provided in
subsection 15(a) or 15(b) hereof), or if the sale of the U.S. Shares provided
for herein is not consummated because any condition to the obligations of the
U.S. Underwriters set forth herein is not satisfied (other than with respect to
Section 10(q) hereof as a result of a default by the Managers in the purchase of
the International Shares) or because of any refusal, inability or failure on the
part of the Company or the Selling Stockholders to perform any agreement herein
or to comply with any provision hereof (other than by reason of a default of the
U.S. Underwriters), the Company agrees, subject to demand by you, to reimburse
the U.S. Underwriters for all reasonable out-of-pocket expenses (including the
reasonable fees and expenses of Underwriters' Counsel), incurred by the U.S.
Underwriters in connection herewith.
16. Notices. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to any
one or more of the U.S. Underwriters, shall be hand delivered, telexed,
telegraphed or faxed to each such U.S. Underwriter in care of Bear, Stearns &
Co. Inc., 245 Park Avenue, New York, New York 10167, Attention: Corporate
Finance Department (Fax No. 212-272-3092); if sent to the Company, shall be hand
delivered, telexed, telegraphed or faxed to the Company, 4219 Lafayette Center
Drive, Chantilly, Virginia 22021, Attention:
_________________________________________________ (Fax No. ________________);
and if sent to any one or more of the Selling Stockholders, shall be hand
delivered, telexed, telegraphed or faxed to the Attorney-in-Fact, __________
(Fax No. ________).
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.
18. Parties. This Agreement shall inure solely to the benefit of,
and shall be binding upon, each of the U.S.
56
<PAGE>
Underwriters, the Company and the Selling Stockholders, and the controlling
persons, directors, officers, employees and agents referred to in Sections 11
and 12 hereof, and their respective successors and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provision herein
contained. The term "successors and assigns" shall not include a purchaser, in
its capacity as such, of U.S. Shares from the U.S. Underwriters.
19. Construction. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
20. Definition of Business Day. For the purposes of this Agreement,
"business day" means any day on which the NYSE is open for trading.
If the foregoing correctly sets forth the complete agreement among the
U.S. Underwriters, the Company and the Selling Stockholders, please so indicate
in the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among us.
Very truly yours,
TELCO COMMUNICATIONS GROUP, INC.
By:
---------------------------------------------
Name:
Title:
SELLING STOCKHOLDERS
By:
---------------------------------------------
Name:
Attorney-in-Fact for each
Selling Stockholder listed
in Schedule II annexed hereto
57
<PAGE>
Accepted as of the date first
above written.
BEAR, STEARNS & CO. INC.
SALOMON BROTHERS INC.
Acting severally on behalf
of themselves and the several
U.S. Underwriters named in Schedule I
annexed hereto.
By: BEAR, STEARNS & CO. INC.
By:
------------------------------
Name:
Title:
58
<PAGE>
SCHEDULE I
Number of
Firm U.S. Shares
Name of U.S. Underwriter to be Purchased
- ------------------------ ---------------
Bear, Stearns & Co. Inc. .....................................
Salomon Brothers Inc. ........................................
----------
TOTAL
==========
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
Number of Number of Firm
Firm U.S. International
Name of Selling Stockholder Shares to be Sold Shares to be Sold
- --------------------------- ----------------- -----------------
<S> <C> <C>
Donald A. Burns 378,422 126,140
Henry G. Luken, III 378,422 126,141
Gold & Appel Transfer, S.A. 339,697 113,232
Thomas J. Cirrito 257,151 85,717
Natalie J. Marine-Street 41,858 13,953
Signet Media Capital Group 511,562 170,520
Mark Stodter 11,156 3,719
Janet Anastasi 23,109 7,703
James Sznajder 2,678 892
Dennis Jarman 5,946 1,982
</TABLE>
<PAGE>
SCHEDULE III
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
Percent of
Name Jurisdiction Equity
- ---- ------------ -----------
<S> <C> <C>
Dial & Save of Alabama, Inc. Delaware 100%
Dial & Save of Arizona, Inc. Delaware 100%
Dial & Save of Arkansas, Inc. Delaware 100%
Dial & Save of California, Inc. Delaware 100%
Dial & Save of Colorado, Inc. Delaware 100%
Dial & Save of Connecticut, Inc. Delaware 100%
Dial & Save of Delaware, Inc. Delaware 100%
Dial & Save of Florida, Inc. Delaware 100%
Dial & Save
of Florida, Alpha, Inc. Delaware 100%
Dial & Save
of Florida, Beta, Inc. Delaware 100%
Dial & Save
of Florida, Gamma, Inc. Delaware 100%
Dial & Save
of Florida, Delta, Inc. Delaware 100%
Dial & Save of Georgia, Inc. Delaware 100%
Dial & Save of Idaho, Inc. Delaware 100%
Dial & Save of Illinois, Inc. Delaware 100%
Dial & Save of Indiana, Inc. Delaware 100%
Dial & Save of Iowa, Inc. Delaware 100%
Dial & Save of Kansas, Inc. Delaware 100%
Dial & Save of Kentucky, Inc. Delaware 100%
Dial & Save of Louisiana, Inc. Delaware 100%
Dial & Save of Maine, Inc. Delaware 100%
Dial & Save of Maryland, Inc. Delaware 100%
Dial & Save
of Massachusetts, Inc. Delaware 100%
Dial & Save of Michigan, Inc. Delaware 100%
Dial & Save of Minnesota, Inc. Delaware 100%
Dial & Save of Mississippi, Inc. Delaware 100%
Dial & Save of Missouri, Inc. Delaware 100%
Dial & Save of Montana, Inc. Delaware 100%
Dial & Save of Nebraska, Inc. Delaware 100%
Dial & Save of Nevada, Inc. Delaware 100%
Dial & Save of New Hampshire, Inc. Delaware 100%
Dial & Save of New Jersey, Inc. Delaware 100%
Dial & Save of New Mexico, Inc. Delaware 100%
Dial & Save of New York, Inc. Delaware 100%
Dial & Save
of North Carolina, Inc. Delaware 100%
Dial & Save of North Dakota, Inc. Delaware 100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percent of
Name Jurisdiction Equity
- ---- ------------ -----------
<S> <C> <C>
Dial & Save of Ohio, Inc. Delaware 100%
Dial & Save of Oklahoma, Inc. Delaware 100%
Dial & Save of Oregon, Inc. Delaware 100%
Dial & Save of Pennsylvania, Inc. Delaware 100%
Dial & Save of Rhode Island, Inc. Delaware 100%
Dial & Save
of South Carolina, Inc. Delaware 100%
Dial & Save of South Dakota, Inc. Delaware 100%
Dial & Save of Tennessee, Inc. Delaware 100%
Dial & Save of Texas, Inc. Delaware 100%
Dial & Save of Utah, Inc. Delaware 100%
Dial & Save of Vermont, Inc. Delaware 100%
Dial & Save of Virginia, Inc. Delaware 100%
Dial & Save of Washington, Inc. Delaware 100%
Dial & Save
of Washington, D.C., Inc. Delaware 100%
Dial & Save of West Virginia, Inc. Delaware 100%
Dial & Save of Wisconsin, Inc. Delaware 100%
Dial & Save of Wyoming, Inc. Delaware 100%
Long Distance Wholesale Club, Inc. Delaware 100%
Tel Labs, Inc. Delaware 100%
</TABLE>
Signet Bank has a security interest in all outstanding capital stock of the
foregoing subsidiaries of the Company.
<PAGE>
SCHEDULE IV
MATERIAL SUBSIDIARIES
JURISDICTION OF
NAME INCORPORATION
- ---- ---------------
Long Distance Wholesale Club, Inc. Delaware
Tel Labs, Inc. Delaware
<PAGE>
Pages where confidential treatment has been
requested are stamped "Confidential Treatment
Requested. The redacted material has been
separately filed with the Commission."The redacted
portions are indicated by a (*).
TABLE OF CONTENTS
Exhibit 10.1
<TABLE>
<CAPTION>
Section Title Page
- ------- ----- ----
<S> <C> <C>
I. Term ............................................................... 2
II. General Provisions ................................................. 2
III. Purchase/Collection of Accounts Receivable ......................... 4
IV. Payment for Billing and Collection Services ........................ 5
V. Uncollectible Factor................................................ 5
VI. Application of Taxes to End Users .................................. 5
VII. Taxes Imposed on Services Performed by AOC ......................... 7
VIII. Legal and Regulatory Requirements .................................. 8
IX. Limitation of Liability ............................................ 9
X. Indemnification .................................................... 9
XI. Force Majeure ...................................................... 10
XII. Proprietary Information ............................................ 11
XIII. Advertising and Publicity .......................................... 14
XIV. Fraudulent or Improper Billing Information ......................... 14
XV. Deposits ........................................................... 14
XVI. Amendments; Waivers................................................. 15
XVII. Assignment ......................................................... 15
XVIII. Default by Customer ................................................ 15
XIX. Notice and Demands ................................................. 15
XX. Third-party Beneficiaries .......................................... 17
XXI. Governing Law ...................................................... 17
XXII. Severability ....................................................... 17
XXIII. Order of Precedence ................................................ 17
XXIV. Survivability of Obligations ....................................... 17
XXV. Entire Agreement ................................................... 17
XXVI. Headings ........................................................... 18
List of Exhibits ................................................... 19
</TABLE>
<PAGE>
AGREEMENT FOR THE
PROVISION OF BILLING AND COLLECTION SERVICES
BETWEEN TELCO DEVELOPMENT GROUP OF DELAWARE, INC. AND
AMERITECH ILLINOIS,
AMERITECH INDIANA,
AMERITECH MICHIGAN,
AMERITECH OHIO,
WISCONSIN BELL, INC., dba AMERITECH WISCONSIN
AMERITECH SERVICES, INC.
This Agreement for the Provision of Billing and Collection Services
(hereinafter "Agreement") is entered into between Ameritech Illinois, an
Illinois corporation, Ameritech Indiana, an Indiana corporation, Ameritech
Michigan, a Michigan corporation, Ameritech Ohio, an Ohio corporation, Wisconsin
Bell, Inc., dba Ameritech Wisconsin, a Wisconsin corporation (hereinafter
collectively referred to as "AOCs" and each individually as "AOC") and Ameritech
Services, Inc., a Delaware Corporation, (hereinafter referred to as "ASI") and
Telco Development Group of Delaware, Inc. (hereinafter referred to as
"Customer"), acting through their authorized representatives.
WHEREAS, the AOCs provides billing and collection services to the Customer
for its end uers, and
WHEREAS, Customer or its subtending clients as listed in Exhibit F has
received a certificate of authority from the Indiana Utility Regulatory
Commission to provide intrastate long distance or operator services, and
WHEREAS, Customer or its subtending clients as listed in Exhibit F has
either applied for certification as a Common Carrier in the State of Ohio, or
the Customer or its subtending clients is a Common Carrier duly authorized by
the Public Utilities Commission of Ohio to provide intrastate toll operator
services, and
WHEREAS, the Customer wishes to purchase Billing and Collection services,
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, the Parties hereby covenant and mutually agree as follows:
1
<PAGE>
I. TERM
----
This Agreement will become effective as to each AOC on July 1, 1995, and is
to continue through December 31, 1997, and thereafter may be renewed or
extended upon written terms mutually agreeable to the Customer and any or all
AOCs, provided, however, that the provisions in Section IX; Limitation of
-------------
Liability, Section X, Indemnification, Section XII, Proprietary Information,
--------- --------------- -----------------------
Section XXI, Governing Law and any obligations of the Parties which by their
-------------
nature continue beyond the term of this Agreement shall survive expiration or
termination of this Agreement. Notwithstanding the foregoing, any AOC may
terminate this Agreement as to such AOC at any time upon sixty (60) days
prior written notice to Customer; provided, however that this Agreement shall
remain in effect between Customer and any AOC not affected by such
termination.
II. GENERAL PROVISIONS
------------------
A. Except where expressly provided otherwise, all references in this
Agreement to "AOC" or "the AOC" shall mean each AOC individually, as
if this Agreement constitutes five (5) separate Agreements between
each AOC and Customer. Any reference to "Party" shall mean Customer or
any single AOC and ASI (where applicable), and any reference to
"Parties" shall mean, as the context requires, Customer and a single
AOC and ASI (where applicable), or Customer, all AOCs and ASI (where
applicable).
B. Commencing on the effective date, the AOC shall provide all interstate
and intrastate billing and collection services pursuant to the terms and
conditions of this Principal Agreement and the exhibits hereto,
subject to any applicable intrastate tariffs.
C. This Agreement includes, and the Parties adopt, the following documents
which specify certain details of the relationship between the Parties:
1. This Principal Agreement as hereinafter defined;
2. The Price Schedule ("Price Schedule"), attached hereto and
incorporate herein as Exhibit A;
3. Services and Customer Responsibilities for the Provision of
Billing and Collection Services ("Services and Responsibilities"),
attached hereto and
2
<PAGE>
incorporated herein as Exhibit B, which may be amended from time to
time by AOC upon written notice to the Customer;
4. Ameritech Billing and Collection Services Procedures dated March 29,
1995, attached hereto and incorporated herein as Exhibit C, which may
be modified from time to time by AOC upon written notice to the
Customer;
5. Specifications for billing and collection services
a. End User Billing From Rated Message Input Specifications dated
November 1,1994.
b. Purchase/Collection of Accounts Receivable By Rated Message Input
Specifications dated November 1,1994.
c. Tape and Data Transmission Specifications dated February 22, 1995.
d. Bill Format Specifications dated November 1, 1994, all of which are
attached hereto and incorporated herein as Exhibit D1 - D4, which
may be modified from time to time by AOC upon written notice to the
Customer;
6. Proprietary Information dated November 1,1994, attached hereto and
incorporated herein as Exhibit E, and
7. List of Interexchange Carriers dated July 1,1995, attached hereto and
Incorporated herein as Exhibit F.
8. Ameritech Billing and Collection Services Requirements For Handling
700 NXX XXXX, 900 NXX XXXX, NPA 976 XXXX (or like services) Messages,
dated November 1,1994, attached hereto and incorporated herein as
Exhibit G, which may be modified from time to time by AOC upon written
notice to the Customer.
9. Types of Messages for which Billing and Collection Services are
provided, attached hereto and incorporated as Exhibit H, dated July
1,1995, which may be modified from time to time by Customer upon
written notice to the AOC(s), with implementation thirty (30) days
after completion of successful testing of a new message type.
3
<PAGE>
10. Ameritech Billing Services Guidelines, dated November 1,1994,
attached hereto and incorporated herein as Attachment 1 to Exhibit
B, which may be modified from time to time by AOC upon written
notice to the Customer.
D. The term "Principal Agreement" as used herein shall refer to this
document consisting of twenty-six (26) sections. Except where expressly
provided otherwise, the term Agreement as used herein shall include the
Principal Agreement and all present Exhibits and Attachments thereto
and, upon adoption and incorporation herein, all future Exhibits.
E. Except where expressly provided otherwise, the definitions contained in
the Principal Agreement or the Exhibits shall govern all parts of the
Agreement.
F. The words "shall" and "will" are used interchangeably throughout the
Agreement. The use of one or the other shall not mean a different degree
of right or obligation for either Party.
G. Certain obligations under this Agreement are or may be undertaken by
ASI, an affiliate of AOC, on behalf of AOC. Reference herein to AOC may
include ASI whether specified or not. AOC and ASI shall constitute a
single "Party" or "Company" whenever those terms are used herein
applicable to AOC .
III. PURCHASE/COLLECTION OF ACCOUNTS RECEIVABLE
------------------------------------------
A. Except in Indiana, the AOC will purchase from Customer its accounts
receivable that arise from bills rendered by the AOC to Customer's end
users. The purchase of accounts receivable will be limited to amounts
due Customer when the AOC provides Bill Rendering Service for Customer.
The AOC's purchase of Customer's accounts receivable shall be with
recourse adjustments, payment procedures and interest, as set forth in
Subsection 2.1 of Exhibit C.
B. In Indiana, notwithstanding anything to the contrary in this Agreement
or in any documentation utilized in connection herewith, AOC shall at
all times hereunder act as billing agent for Customer in rendering
billing and collection services with respect to charges to Customer end
users for Customer services and shall not be deemed to purchase
Customer's accounts receivable that arises from bills rendered by the
AOC to Customer's end users. AOC's remittance of Customer's accounts
receivable shall be with recourse adjustments, payment procedures and
interest, as set forth in Section 2.1 of Exhibit C.
4
<PAGE>
IV. PAYMENT FOR BILLING AND COLLECTION SERVICES
-------------------------------------------
A. Each month during the term hereof, Customer agrees to pay to AOC,
pursuant to the Guidelines set forth in Exhibit C, Subsection 2.2, for
"Billing and Collection Services", the charges set forth in Exhibit A,
Price Schedule.
B. Monthly charges for "Billing Services", provided by each AOC, shall be
on the basis of usage multiplied by the appropriate price in Price
Element II set forth in Exhibit A, subject to satisfaction of the monthly
minimum amount specified in Price Element I.
V. UNCOLLECTIBLE FACTOR
--------------------
The Customer's Uncollectible Factor for the first nine months of the term
shall be 3%, as described in Exhibit C, Subsection 2.1.1.D. Thereafter, this
factor will be reviewed every three months and revised, if appropriate,
pursuant to Exhibit C, Subsection 2.1.1.D.
VI. APPLICATION OF TAXES TO END USERS
---------------------------------
A. Billing of Taxes
----------------
1. In performing services hereunder, AOC will apply the tax procedures
being utilized immediately preceding the effective date hereof with
respect to the application, billing, recording and collection of
appropriate federal, state or local sales, use, excise, gross receipts
or other taxes or additional charges imposed on end users or imposed
on Customer and collected from end users with respect to services
billed hereunder by AOC. All such taxes and charges are referred to in
the singular as "Tax" and in the plural as "Taxes".
2. Customer will advise AOC in writing of Tax procedures with respect to
application, billing, recording and collection of Taxes on services
billed hereunder by AOC and introduced after July 1, 1995, including
any changes in the law affecting the taxability of such service.
Provided reasonable advance notice is given, AOC agrees to use its
best efforts to implement such procedures on a timely basis based upon
effective date of service or as otherwise instructed by Customer.
5
<PAGE>
3. With respect to changes in the law of which AOC has received timely
written notification from Customer, AOC will use its best efforts to
make the necessary system changes to implement the Tax prior to the
statutory effective date of the change. Whenever the AOC estimates
that the time required for it to implement a change in the law would
preclude its implementation by the statutory effective date, the
Parties will together apply to the taxing authority for an appropriate
extension of the effective date of a change.
4. AOC shall not be entitled to retain or receive from Customer any
statutory fee or share of Taxes to which the person collecting such
Taxes is entitled under applicable law.
B. Tax Exemptions
--------------
1. AOC, in its performance of services hereunder, will apply the
exemption status of its customers and maintain exemption certificate
information derived from its exemption certificates. To the extent
permitted by law, and except as a change may be implemented pursuant
to Customer's request as provided for in the succeeding subsection,
AOC's exemption certificate information will be utilized as a basis
for exempting end users from Taxes on services billed hereunder by
AOC.
2. Should a taxing authority determine that Customer may not properly
rely upon AOC's exemption certificate information, Customer may
request a listing of exempt end users (including pertinent end user
account, end user contact and Tax status information to the extent in
AOC's possession) and may request estimates of AOC's charges for AOC
to secure exemption certificates with respect to services billed
hereunder by AOC.
C. Filing of Tax Returns
--------------------
Customer shall file all returns for Taxes imposed on or with respect to
services billed hereunder by AOC and pay or remit all such Taxes and
other items and any applicable interest or penalties. AOC shall furnish
to Customer, on a timely basis, all information in AOC's possession as
agreed to between the Parties for Customer to file its Tax returns, and
Customer shall notify AOC if such information is not received. The timing
for, and format of, such information shall be as specified by Customer,
subject to AOC's ability to comply therewith.
6
<PAGE>
D. Indemnity
---------
Customer agrees to indemnify and hold AOC harmless from and against any
liability or loss, as to services billed hereunder by AOC to end users,
resulting from any Taxes, penalty, interest, additions to Tax,
surcharges or other charges or expenses payable or incurred by AOC as a
result of:
1. the delay or failure of Customer (to the extent not attributable to
any negligent act or omission of AOC) to pay any Tax or such other
item or file any return or other information as required by law,
tariff or this Agreement; or
2. the AOC complying with any of its obligations under this Agreement,
or with any determination or direction by or advice of the Customer,
or using information provided by the Customer in performing any Tax-
related service hereunder.
The indemnity payable hereunder shall be payable in all events and
without regard to any determination that AOC is the party obligated
to collect and remit such Taxes or file the Tax returns.
VII. TAXES IMPOSED ON SERVICES PERFORMED BY AOC
------------------------------------------
Customer shall be responsible for payment of all sales, use or other taxes
of a similar nature imposed on AOC's performance of services under this
Agreement. Should any federal, state or local jurisdiction determine that
any sales, use or other taxes (including interest, penalties and surcharges
thereon) are due by AOC, as a result of AOC's performance of any obligation
under this Agreement which have not been paid by the Customer, and to the
extent AOC has been so notified by such federal, state or local
jurisdiction, AOC will so advise the Customer. Customer agrees to be liable
for any such tax, interest, penalty and surcharge, but retains the right to
protest the assessment. If Customer disagrees with any assessment of any
taxes due by AOC or disagrees with an assessment of any additional tax,
penalty, surcharge and/or interest due by AOC, as a result of AOC's
performance of any obligation under this Agreement, Customer shall, at its
option and expense (including payment of any such assessment prior to final
resolution of the issue), have the right to seek a ruling as to the
applicability of any such tax or to protest any assessment and participate
in any legal challenge to such assessment, but shall be liable for any tax,
penalty, surcharge and interest ultimately determined to be due. AOC shall,
when requested by Customer and
7
<PAGE>
at Customer's expense, cooperate with Customer in any such proceeding,
protest or legal challenge.
VIII. LEGAL AND REGULATORY REQUIREMENTS
---------------------------------
A. In no event shall the Customer forward to the AOC for billing any
messages or invoices containing messages which are not in compliance
with applicable law and regulations.
B. Performance under this Agreement shall be in accordance with all
applicable legal and regulatory requirements, including without
limitation the requirements of the Modification of Final Judgment
("MFJ") entered in United States v. Western Electric. Co., 552 F.
---------------------------------------
Supp.131 (D.D.C.,1982), aff'd sub nom. Maryland v. United States, 460
----------------------------------------
U.S. 1001 (1983), as subsequently amended. No provisions in this
Agreement shall cause or be construed to cause either Party to violate
any legal or state/federal regulatory requirement or cause or be
construed to cause the AOC to violate any of its obligations, including
nondiscrimination, under the MFJ.
C. The AOC and Customer shall comply, as applicable, with any legal and/or
regulatory requirement necessary to effectuate this Agreement,
including, but not limited to, the filing thereof with any applicable
regulatory commission.
D. In the event that, during the term of this Agreement, the Federal
Communication Commission or any state regulatory commission modifies
any existing rules or regulations or adopts any new rules or
regulations, which modification or adoption impacts the billing and
collection services provided hereunder, including the treatment of
expenses for such services, the Parties agree to discuss with one
another in good faith the effect of such modifications or adoption upon
the Parties' performance under this Agreement. If the Parties agree
that any terms and conditions of this Agreement, including the rates
paid by the Customer hereunder for billing and collection services,
should be revised to preserve the original intent of the Parties to the
maximum extent possible, they shall renegotiate such terms and
conditions.
8
<PAGE>
IX. LIMITATION OF LIABILITY
-----------------------
A. Each Party's liability to the other (as distinct from a Party's
obligation to pay for services provided pursuant to this Agreement) for
any loss, cost, claim, injury, liability, or expense, including
reasonable attorneys' fees, relating to or arising out of any act or
omission in its performance of this Agreement shall be limited to the
amount of direct damages actually incurred; and there shall be no
liability under this Agreement for acts or omissions which do not occur
in connection with performance hereunder. Neither Party shall be liable
to the other for any indirect, special, or consequential damage(s) of any
kind whatsoever.
B. Any AOC's liability for any loss, cost, claim, injury, liability, or
expense, including reasonable attorneys' fees, relating to or arising out
of any act(s) or omission(s) in its performance of this Agreement shall
be limited, on an annual basis, to the total charges assessed by such AOC
to Customer during the most recent twelve (12) month period for the
Billing and Collection Services provided hereunder.
C. Customer shall not seek to hold one or more than one AOC responsible for
the acts or omissions of another AOC (or of ASI, on behalf of such AOC),
and one AOC's breach of this Agreement, or liability hereunder, resulting
from its act or omission or ASI's act or omission on its behalf, shall
not be construed as a breach or liability of any other AOC. Similarly
each AOC agrees that Customer's breach or liability under this Agreement
as to any AOC shall not be construed as a breach or liability as to any
other AOC.
X. INDEMNIFICATION
---------------
Each Party (the "Indemnifying Party") will indemnify and hold harmless the
other Party ("Indemnified Party") from and against any loss, cost, claim,
liability, damage or expense (including reasonable attorneys' fees) to
third-parties, relating to or arising out of negligence or wanton or willful
misconduct by the Indemnifying Party, its employees, agents, or contractors
in the performance of this Agreement, or the provision of the services being
billed hereunder, and shall reimburse the Indemnified Party for any
reasonable expenses (including reasonable attorneys' fees) incurred by the
Indemnified Party in defending any such third-party action. In addition, the
Indemnifying Party will, to the extent of its negligence or wanton or
willful misconduct, defend any action or suit brought by a third-party
against the Indemnified Party for any loss, cost, claim, liability, damage
or expense relating to or arising out of negligence or wanton or willful
misconduct by the Indemnifying Party, its employees, agents, or
9
<PAGE>
contractors, in the performance of this Agreement, or the provision of the
services being billed hereunder. For purposes of the preceding two
sentences, any negligence or wanton or willful misconduct by Customer's
third-party customers shall be deemed negligence or wanton or willful
misconduct by Customer and Customer shall constitute the Indemnifying Party
with respect thereto. The Indemnified Party will notify the Indemnifying
Party promptly in writing of any written claims, lawsuits, or demands by
third-parties for which the Indemnified Party alleges that the Indemnifying
Party is responsible under this Section X and tender the defense of such
claim, lawsuit or demand to the Indemnifying Party. The Indemnified Party
also will cooperate in every reasonable manner with the defense or
settlement of such claim, demand, or lawsuit. The Indemnifying Party will
not be liable under this Section X for settlements by the Indemnified Party
of any claim, demand, or lawsuit unless the Indemnifying Party has approved
the settlement in advance or unless the defense of the claim, demand, or
lawsuit has been tendered to the Indemnifying Party in writing and the
Indemnifying Party has failed promptly to undertake the defense.
XI. FORCE MAJEURE
-------------
Neither Party shall be held liable for any delay or failure in performance
of any part of this Agreement from any cause beyond its control and without
its fault or negligence, such as, but not limited to, acts of God, acts of
civil or military authority, government regulations, embargoes, epidemics,
war, terrorist acts, riots, insurrections, fires, explosions, earthquakes,
nuclear accidents, floods, strikes, power blackouts, volcanic action, other
major environmental disturbances, unusually severe weather conditions,
inability to secure products or services of other persons or transportation
facilities, or acts or omissions of transportation common carriers (a Force
Majeure Condition"). If such Force Majeure Condition occurs, the Party
injured by the other's inability to perform may elect to: (a) terminate this
Agreement as to the affected AOC for services not already performed or
received, if such Force Majeure Condition results in a delay or failure to
perform which continues for more than thirty (30) days; or (b) suspend such
services as to the affected AOC and any monthly minimum amount due hereunder
from Customer for the duration of the delaying cause, buy or sell elsewhere
the services to be bought or sold hereunder, and resume performance under
this Agreement once the delaying cause ceases. Until such time as the
injured Party terminates this Agreement by written notice pursuant to (a),
(b) shall be deemed selected.
10
<PAGE>
XII. PROPRIETARY INFORMATION
-----------------------
A. Identification of Information
AOC and Customer recognize and acknowledge that, in connection with the
Billing and Collection Services to be provided hereunder, AOC and
Customer will have in their possession and control information in the
form of data, records, reports, processes, models, computer programs and
other documentation which is proprietary to AOC or to Customer
(hereinafter Proprietary information"). The Proprietary Information of
each Party intended to be covered by and protected under this Section
XII, as agreed upon by the Parties, is specifically designated by each
Party in Exhibit E. Further, it is understood that Proprietary
Information of a Party may include Proprietary Information of third-
parties and/or information which is considered confidential with respect
to end users. Additional types and categories of AOC Proprietary
Information, and Customer Proprietary Information may be added to or
deleted from Exhibit E from time to time by written agreement of the
Parties.
B. Disclosure of Information Between the Parties
---------------------------------------------
AOC may, but is not required to, disclose AOC Proprietary Information to
Customer. Customer, at its discretion, may disclose its Proprietary
Information to AOC.
C. Handling of Proprietary Information
-----------------------------------
1. Except as set forth in Paragraph 4 herein, Proprietary Information
possessed of one Party ("Disclosing Party") that is obtained by the
other Party ("Receiving Party") shall be held in confidence by the
Receiving Party and its employees, contractors or agents; treated
with the same degree of care as the Receiving Party would treat its
own Proprietary information; shall not be disclosed to third-parties,
but may be disclosed to employees, contractors and agents who may
have a need for it solely for the use or provision of services
hereunder; shall be used by the Receiving Party only for the purpose
of performing or obtaining services under this Agreement; and may be
used or disclosed for other purposes only upon such terms and
conditions as may be mutually agreed upon by the Parties in writing.
For purposes of this Section XII the Receiving Party" shall include
the AOC, ASI and the other AOC with respect to Customer Proprietary
Information provided to the AOC or ASI. To the extent that the
11
<PAGE>
AOC receives Customer Proprietary Information provided to another AOC
or to ASI, the AOC agrees to comply with all obligations of the
Receiving Party specified in this Section XII with respect to such
Proprietary Information.
2. The Receiving Party shall put in place and strictly enforce
procedures to ensure that its employees, contractors and agents are
aware of and fulfill the obligations under this Section to hold the
aforesaid information in confidence.
3. Each Party acknowledges that its Proprietary Information may be
commingled with Proprietary information of the other and that each
must have access to and use of its own Proprietary Information in
order to conduct its business. Accordingly, each Party shall to the
extent practicable use good faith efforts to ensure that its
Proprietary Information shall be masked or rendered mechanically
inaccessible to the other Party. In the event that masking is not
accomplished despite such efforts, access shall be provided hereunder
to the commingled unmasked Proprietary information and the Receiving
Party shall: (a) use its best efforts to destroy or otherwise render
unusable such information; (b) will be bound by this Section XII as
to such information; and (c) will not use such information for any
purpose, except as required to fulfill its obligations under this
Agreement.
4. Each Party agrees to give notice to the other Party of any demand to
disclose or provide Proprietary Information provided by said other
Party to other persons, under lawful process, prior to disclosing or
furnishing such information; further, the Party giving such notice
agrees to reasonably cooperate if the other Party deems it necessary
to seek protective arrangements. A Party may disclose or provide
Proprietary Information provided by said other Party to meet the
requirements of a court, regulatory body or government agency having
jurisdiction over the Party; provided that such Party will notify the
other Party so as to give the other Party a reasonable opportunity to
object to such disclosure. The other Party may not unreasonably
withhold approval of protective arrangements provided by any such
court, regulatory body or government agency. Nothing herein requires
either Party to support the position of any person
12
<PAGE>
or entity as to whether any particular information is proprietary
under applicable law or this Section.
5. Notwithstanding any other provision of this Agreement to the
contrary, the Proprietary Information described herein shall not be
deemed confidential or proprietary and the Receiving Party shall have
no obligation to prevent disclosure of such information if such
information:
a. is already known to the Receiving Party;
b. is or becomes publicly known, through publication, inspection of
the product or otherwise, and through no wrongful act of Receiving
Party;
c. is received from a third-party without similar restriction and
without breach of this Section;
d. is independently developed, produced, or generated by Receiving
Party;
e. is furnished to a third-party by the Disclosing Party without a
similar restriction on the third-party's rights; or
f. is approved for release by written authorization of the Disclosing
Party but only to the extent of such authorization.
6. AOC's possession of Customer Proprietary Information through
recording does not mean that such Proprietary Information is "already
known" to AOC, or independently developed, produced, or generated by
AOC" within the meaning of the preceding paragraph.
D. Permitted Uses
--------------
1. Anything to the contrary notwithstanding, nothing contained herein
shall prevent either Party from disclosing to any of its end users,
at their request, any billing information in such Party's possession
regarding such end user.
2. Anything to the contrary notwithstanding, nothing contained herein
shall limit SOC's right to disclose aggregate interLATA usage
information for the long distance market, provided that there is no
Customer identification.
13
<PAGE>
E. Indemnity
---------
Each Party (the "Indemnifying Party") will hold the other Party (the
"Indemnified Party") harmless from and against any liability or loss
resulting from the Indemnified Party's proper use of any Proprietary
Information provided by the Indemnifying Party under this Agreement.
F. Applicability of Statutes. Decisions and Rules
----------------------------------------------
Notwithstanding any other provision in this Agreement, a Party's
ability to disclose information or use disclosed information is subject
to all applicable statutes, decisions, and regulatory rules concerning
the disclosure and use of such information which, by their express
terms, mandate a different handling of such information, e.g., non-
published telephone numbers.
XIII. ADVERTISING AND PUBLICITY
-------------------------
Customer shall not use the AOC's or any affiliate's name, service mark or
trademark in any advertising, sales promotion or other publicity material
(including press releases or other public statements) concerning the
subject matter of this Agreement or the relationship of the parties
hereunder without the prior written consent of ASI, nor shall the Customer
engage in any false, deceptive or misleading advertising with respect to
the subject matter of this Agreement or the parties relationship
hereunder. Any breach of this Section by the Customer may result in
termination of this Agreement as to one or more AOC(s) upon five (5) days
written notice given by ASI.
XIV. FRAUDULENT OR IMPROPER BILLING INFORMATION
------------------------------------------
When the Customer is advised by the AOC that it is providing the AOC with
billing information that is fraudulent or that is being improperly charged
to an end user, the Customer shall take immediate and prompt action to
eliminate such fraudulent or improperly charged information from subsequent
billing detail provided to the AOC. Customer's failure to take such action
shall constitute a Default by Customer under section XVIII.
XV. DEPOSITS
--------
The AOC, consistent with regulatory requirements and regulations, will
determine and collect deposits from end users to which the AOC renders
bills hereunder according to the AOC deposit policy.
14
<PAGE>
XVI. AMENDMENTS; WAIVERS
-------------------
This Agreement (or part thereof, including Exhibits or documents referred
to herein) may be modified or additional provisions may be added by
written agreement signed by or on behalf of Customer, each affected AOC
and ASI, unless otherwise provided herein. No amendment or waiver of any
provision of this Agreement and no consent to any default under this
Agreement shall be effective unless the same shall be in writing and
signed by the Party against whom such amendment, waiver or consent is
claimed. In addition, no course of dealing or failure of any Party to
strictly enforce any term, right or condition of this Agreement shall be
construed as a waiver of such term, right, or condition.
XVII. ASSIGNMENT
----------
Any assignment by the Customer or by the AOC and/or ASI of any right,
obligation or duty, in whole or in part, or of any other interest
hereunder, without the written consent of the other Party shall be void.
All obligations and duties of any Party under this Agreement shall be
binding on all successors in interest and assigns of such Party.
XVIII. DEFAULT BY CUSTOMER
-------------------
Notwithstanding the provisions in Section I. Term, in the event of a
default under or breach of any material term, or condition of this
Agreement by Customer, the AOC shall have the right to terminate this
Agreement, as to such AOC, upon fifteen (15) calendar days' written
notice to Customer if the default or breach is not cured within such
fifteen (15) day period or, if the default or breach cannot reasonably be
cured within such fifteen (15) day period, Customer has not initiated
action during such period to promptly cure such default or breach.
XIX. NOTICE AND DEMANDS
------------------
Except as otherwise provided under this Agreement, all notices, demands,
or requests which may be given by any Party to the other Party shall be
in writing and shall be deemed to have been duly given on the date
delivered in person or via overnight express delivery service, or on the
third work day following the date deposited, postage prepaid, in the
United States mail via Certified Mail, return receipt requested, to the
respective Parties and addressed as follows:
15
<PAGE>
To Customer:
-----------
Mr. Mark Stodter
Telco Development Group of Delaware, Inc.
4219 Lafayett Center Drive
Chantilly, VA 22021
To the AOC (as applicable):
----------
Ameritech Illinois
225 W. Randolph, HQ9A
Chicago, IL 60606
Attn: Marketing Operations Manager
Ameritech Indiana
220-240 North Meridian Street
Indianapolis, IN 46204
Attn: Marketing Operations Manager
Ameritech Michigan
23800 Northwestern Highway
Room 101
Southfield, MI 48075
Attn: Marketing Operations Manager
Ameritech Ohio
45 Erieview Plaza
Cleveland, OH 44114
Attn: Marketing Operations Manager
Wisconsin Bell, Incorporated, dba Ameritech Wisconsin
845 N. 35th Street
Room 22
Milwaukee, WI 53202
Attn: Marketing Operations Manager
Copies of all notices from Customer to one or more AOCs shall be sent as
specified above to:
AMERITECH SERVICES, INC.
2000 W. Ameritech Center Drive
Location 2G90
Hoffman Estates, IL 60196-1025
ATTENTION: General Manager- Billing and Customer Information Services
If personal delivery is selected as the method of giving notice under this
Section, a receipt of such delivery shall be obtained. The address to which such
notices, demands, requests, elections or other communications is to be given by
any Party may be changed by written notice given by such Party to the other
Party pursuant to this Agreement.
16
<PAGE>
XX. THIRD-PARTY BENEFICIARIES
-------------------------
This Agreement shall not provide any person not a party to this Agreement
with any remedy, claim, liability, reimbursement, claim of action or
other right in excess of those existing without reference to this
Agreement.
XXI. GOVERNING LAW
-------------
The construction and interpretation of this Agreement and any claim
arising hereunder or related to, whether contract or tort, shall be
governed by the domestic laws of the State of Illinois.
XXII. SEVERABILITY
------------
If any provision of this Agreement shall be held invalid or
unenforceable, such provision shall be deemed deleted from this Agreement
and replaced by a valid and enforceable provision acceptable to both
Parties which so far as possible achieves the same economic and other
benefits for the Parties as the severed provision was intended to
achieve, and the remaining provisions of this Agreement shall continue in
full force and effect.
XXIII. ORDER OF PRECEDENCE
-------------------
In the event of any conflict between the provisions of this Principal
Agreement and any Exhibits hereto, this Principal Agreement shall take
precedence.
XXIV. SURVIVABILITY OF OBLIGATIONS
----------------------------
Notwithstanding expiration or termination of this Agreement, the
provisions of this Agreement and each Party's obligations hereunder,
which by their nature or context are required or intended to survive,
shall survive and remain in full force and effect after such expiration
or terminate.
XXV. ENTIRE AGREEMENT
----------------
This Agreement (including all Exhibits, Attachments and/or Schedules
attached thereto) constitutes the entire understanding between the
Parties and supersedes all prior Agreements, oral or written,
representations, statements, negotiations, proposals and undertakings
with respect to the subject matter hereof. The Parties acknowledge that
this Agreement contains confidential information and agree to limit
distribution of the Agreement to those individuals in their respective
organizations with a need to
17
<PAGE>
know the contents of the Agreement. The Parties further agree to seek
confidential status for the Agreement with any regulatory commission,
court or other governmental body with which the Agreement must be filed,
to the extent such a designation can be secured.
XXVI. HEADINGS
--------
The headings in this Agreement are for convenience and shall not be
construed to define or limit any of the terms herein or affect the
meanings or interpretation of this Agreement.
IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the date
first written above.
TELCO DEVELOPEMENT GROUP OF DELAWARE, INC.
Printed Name: Bryan Rachlin
-----------------------
Title: President
------------------------------
Signature: /s/ Bryan Rachlin
--------------------------
Date: 7/5/95
-------------------------------
AMERITECH ILLINOIS,
AMERITECH INDIANA,
AMERITECH MICHIGAN,
AMERITECH OHIO,
WISCONSIN BELL, INC., dba AMERITECH WISCONSIN
Signature: /s/ Thomas M. Wilson
---------------------------
Printed Name: Tom Wilson
------------------------
Title: Agent for the Ameritech Operating Companies
-------------------------------------------
Date: 7/10/95
--------------------------------------------
AMERITECH SERVICES, INC.
Signature: /s/ Thomas M. Wilson
---------------------------------------
Printed Name: Tom Wilson
------------------------------------
Title: General Manager- Ameritech Long Distance
-------------------------------------------
Industry Services
-------------------------------------------
Date: 7/10/95
--------------------------------------------
18
<PAGE>
LIST OF EXHIBITS
- ----------------
A. Price Schedule
B. Services and Customer Responsibilities
C. Ameritech Billing and Collection Procedures
D. Specifications
1. End User Billing from Rated Message Input Specifications
2. Purchase/Collection of Accounts Receivables from Rated Message Input
Specifications
3. Tape and Data Transmission Specifications
4. Bill Format Specifications
E. Proprietary Information
F. List of Interexchange Carriers
G. Ameritech Billing and Collection Services Requirements for handling 700 NXX
XXXX, 900 NXX XXXX, NPA 976 XXXX (or like services) messages
H. Types of messages for which Billing and Collection Services are provided
19
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
EXHIBIT A
(start-up IN, Ml, OH, WI)
Date:
---------------
BILLING AND COLLECTION SERVICES
PRICE SCHEDULE
<TABLE>
<CAPTION>
PRICE ELEMENT PRICE
- ------------- -----
<S> <C>
I. MONTHLY MINIMUM (*) per Ameritech Operating
Company
</TABLE>
The Monthly Minimum will be the minimum charge by the AOC for Billing and
Collection Services covered by Price Element II below in a billed month. The
Monthly Minimum will become effective in the first full month in which the AOC
is ready to accept messages.
II. RATES FOR BILLING SERVICE
A. Bill Rendering (*)
B. Bill Processing
1. Messages other than 900/Pay-Per-Call (and like services) Services:
a. With Inquiry: Average (*) through (*) messages
per bill (*) per message
or
Average greater than (*) messages
per bill # (*) per message for
first (*) messages and (*) for
each additional message (or portion
thereof)
b. Without Inquiry Average (*) through (*) messages
per bill- (*) per message***
or
Average greater than (*) messages
per bill - (*) per message for first
messages and (*) for each
additional message (or portion
thereof)**
plus
(*) per EC memo submitted to AOC
IPOC, if applicable
Average messages per bill shall be determined by dividing the total
number of messages billed by the total number of bills rendered.
* Bill may consist solely of credit entry(ies) from 41-50-01
Miscellaneous Credit Record.
** Each credit entry from 41-50-01 Miscellaneous Credit Record
constitutes a message.
*** The higher per message rate of (*) or (*) , as applicable, may be
assessed in each instance where the AOC must perform the Inquiry
function for the end user.
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
EXHIBIT A
2. 900/Pay-Per-Call Service Messages and like services:
a. With Inquiry: (*) per message
b. Without Inquiry: (*) per message***
(*) plus
per EC memo submitted to AOC
IPOC, if applicable
III. POSTAGE ESCALATION FACTOR
A postage escalation factor of (*) percent of any increases during
the term of this Agreement in the United States postal rate applicable to
the mailing of AOC bills shall be applied to revise the Bill Rendering rate
element. For any increase to the rate for the predominant postal category
used for mailing AOC bills, the following amount shall be added to the Bill
Rendering rate:
Postal increase amount X (*) percent (rounded to the nearest tenth of one
cent).
This postage escalator is applicable solely to the Bill Rendering rate
element, which has been defined in Price Element II, above, as
per bill. Bill Rendering is charged to Customer solely for those end users,
bills which include charges for Customer. If an end user bill does not
include charges for Customer, Customer shall not be assessed a Bl11
Rendering rate for that bill, and, therefore, shall not share in the
postage costs (nor the escalator) applicable to that end user.
IV. ONE-TIME SETUP CHARGE
A one-time non-refundable set up charge of (*) shall be payable by
Customer as follows:
An initial installment of (*) is due and payable to the AOC
upon execution of this Agreement by Customer.
The second installment of such setup charge is due and payable with
the charges contained in the first monthly invoice for Billing and
Collection Services rendered to Customer under this Agreement. This
amount shall be (*) .
V. RATES FOR SYSTEM DEVELOPMENT
Hourly labor rates for enhancements to billing programs once Billing and
Collection Services are established are as follows:
1/1/94 - 12/31/94 (*)
1/1/95 - 12/31/95 (*)
The number of hours will be established from a Time and Cost estimate
provided by the AOC resulting from a review of the program request. The
rate to be applied will be the prevailing rate at the time the work is
authorized in writing by Customer and not necessarily the rate when the
---------------------
work is actually performed.
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commision.
EXHIBIT A
Vl. STANDARD PRODUCT CHARGES
Certain programming requests that are of a general nature can be quoted
since the programming work required to accomplish these changes is of a
predictable nature. The categories of common requests are listed below
(price ace per AOC):
- Change Corporate Name on Bill (*)
- Add, Change or Eliminate Logo on Bill (*)
- Change Name and Logo on Bill (*)
- Change 800 Inquiry Number on Bill (*)
- Change Name/Logo/800 Number (*)
- Change Name/800 Number (*)
- Establish Ohio County Tax Table (*)
- Establish Gross Receipts Surcharge (*)
- Change from tape to CMDS method of (*)
message transmission or vice versa
- Reports in tape format (*)
* NOTE: Charges apply if changes made subsequent to initial
implementation of Billing and Collection Services for
Customer in AOC's billing system.
Revised August 1, 1994
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
Exhibit A
(Start-up IL)
Date:
----------
BILLING AND COLLECTION SERVICES
PRICE SCHEDULE
PRICE ELEMENT PRICE
- ------------- -----
I. MONTHLY MINIMUM (*) per month
The Monthly Minimum will be the minimum charge by the AOC for Billing
and Collection Services covered by Price Element II below in a billed
month. The Monthly Minimum will become effective in the first full month
in which the AOC is ready to accept messages.
II. RATES FOR BILLING SERVICE
A. Bill Rendering (*) per bill rendered*
B. Bill Processing
1. Messages other than 900/Pay-Per-Call (and like services) Services:
a. With Inquiry: Average (*) through (*) messages
per bill - (*) per message
or
Average greater than (*) messages per bill
(*) per message for first (*) messages and
(*) for each additional message (or portion
thereof)
b. Without Inquiry: Average (*) through (*) messages per
bill - (*) per message***
or
Average greater than (*) messages per
bill - (*) per message for first
messages and (*) for each additional
message (or portion thereof)**
plus
(*) per EC memo submitted to AOC IPOC, if
applicable
Average messages per bill shall be determined by dividing the total number
of messages billed by the total number of bills rendered.
* Bill may consist solely of credit entry(ies) from 41-50-01
Miscellaneous Credit Record.
** Each credit entry from 41-50-01 Miscellaneous Credit Record
constitutes a message.
*** The higher per message rate of (*) or (*) , as applicable, may be
assessed in each instance where the AOC must perform the Inquiry
function for the end user.
<PAGE>
Confidential Treatment Requested. The
redacted material has been separately
filed with the Commission.
Exhibit A
2. 900/Pay-Per-Call Services Messages and like services:
a. With Inquiry: (*) per message
b. Without Inquiry: (*) per message***
plus
(*) per EC memo submitted
to AOC IPOC, if applicable
III. POSTAGE ESCALATION FACTOR
A postage escalation factor of (*)percent of any increases during
the term of this Agreement in the United States postal rate applicable to
the mailing of AOC bills shall be applied to revise the Bill Rendering
rate element. For any increase to the rate for the predominant postal
category used for mailing AOC bills, the following amount shall be added
to the Bill Rendering rate:
Postal increase amount X (*)percent (rounded to the nearest tenth
of one cent).
This postage escalator is applicable solely to the Bill Rendering rate
element, which has been defined in Price Element II, above, as (*) per
bill. Bill Rendering is charged to Customer solely for those end users'
bills which include charges for Customer. If an end user bill does not
include charges for Customer, Customer shall not be assessed a Bill
Rendering rate for that bill, and, therefore, shall not share in the
postage costs (nor the escalator) applicable to that end user.
IV. ONE-TIME SETUP CHARGE
A one-time non-refundable set up charge shall be payable by Customer as
follows:
An initial installment of (*) is due and payable to the AOC
upon execution of this Agreement by Customer.
The second installment of such setup charge is due and payable with
the charges contained in the first monthly invoice for Billing and
Collection Services rendered to Customer under this Agreement, as
set forth below:
If customer is the only customer for whom the AOC commences
provision of Billing and Collection Services on the date of
this Agreement, this amount shall be (*).
If there is one additional customer for whom the AOC
commences provision of Billing and Collection Services on
the effective date of this Agreement, this amount shall be
(*).
If there are two additional customers for whom the AOC
commences provision of Billing and Collection Services on
the effective date of this Agreement, this amount shall be
(*).
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
Exhibit A
V. RATES FOR SYSTEM DEVELOPMENT
Hourly labor rates for enhancements to billing programs once Billing and
Collection Services are established are as follows
1/1/94 - 12/31/94 (*)
1/1/95 - 12/31/95 (*)
The number of hours will be established from a Time and Cost estimate
provided by the AOC resulting from a review of the program request. The rate
to be applied will be the prevailing rate at the time the work is authorized
----------
in writing by Customer and not necessarily the rate when the work is
----------
actually performed.
Vl. STANDARD PRODUCT CHARGES
Certain programming requests that are of a general nature can be quoted
since he programming work required to accomplish these changes is of a
predictable nature. The categories of common requests are listed below:
- Change Corporate Name on Bill (*)
- Add Change or Eliminate Logo on Bill (*)
- Change Name and Logo on Bill (*)
- Change 800 Inquiry Number on Bill (*)
- Change Name/Logo/800 Number (*)
- Change Name/800 Number (*)
- Change from tape to CMDS method of message
transmission or vice versa (*)
- Reports in tape format (*) per tape
* NOTE: Charges apply if changes are made subsequent to initial
implementation of Billing and Collection Services for Customer
in AOC's billing system.
Revised August, 1994
<PAGE>
Exhibit B
Services and Customer Responsibilities
For Provision of Billing and Collection Services
Revised November 1, 1994
<PAGE>
1. UNDERTAKING
This Exhibit B identifies the AOC's services and Customer's responsibilities
for the provision of billing and collection services. Unless otherwise
indicated the terms used in this Exhibit B are as defined in Exhibit C,
Section 4 - Glossary.
II. AOC SERVICES
The AOC is responsible for providing the following services at the prices
set forth in the Price Schedule, Exhibit A.
A. "Billing Service" for message-billed and bulk-billed messages, specified
as follows:
A. Bill Processing Service
-----------------------
The integration of the toll master file processing/storing of rated
Customer messages and rate elements, with current service order and
cash activity, in preparation for message-billed or bulk-billed end
user billing.
Bill Processing Service may include the investigation of messages
which pass the initial entry edits and subsequently become unbillable
Customer messages.
1. Message-billed service is an AOC service for an end user account
with an end user common line where individual Customer messages
are posted to the account and are listed on the bill rendered to
the end user.
2. Bulk-billed service is an AOC service for an end user account
where individual Customer messages are not itemized but are
summarized on the end user bill.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
B. Bill Rendering Service
----------------------
The preparation of and mailing to an end user, statements of amounts due for
Customer services provided, collecting deposits and amounts due, record
keeping (e.g., accounts processing), treating of accounts, and implementing
subsequent collection procedures which may be required from time to time.
Such statements of amounts due will be integrated with the AOC's own bill
for local exchange service and will be combined into a single balance due.
Bill Rendering Service also includes the processing of all basic account
data.
C. Inquiry Service
---------------
The acceptance, referral and/or resolution of end user communications and
claims regarding billing per AOC procedures. Inquiry Service shall be in
accordance with Exhibit C, Subsection 1.8.
D. Customer to AOC Data Transmission Services
------------------------------------------
1. Data Transmission Service is the receipt of Customer message detail from
the Bellcore CMDS I message distribution center in Kansas City, MO, or
2. Data Transmission Service is the electronic transmission of Customer
message detail from the Customer to the AOC or a centralized Ameritech
location utilizing Connect:Direct (formerly known as NDM) software, or
3. Data Transmission Service is the transfer of Customer message detail to
the AOC by magnetic tape.
E. Purchase/Collection of Accounts Receivable
------------------------------------------
The AOC will purchase/collect Customer's receivables on AOC accounts and
render integrated bills showing a single balance due. The Purchase/
Collection of Accounts Receivable will be limited to amounts due the
Customer. The Customer is prohibited from assigning, transferring, selling,
exchanging or giving the accounts receivable to any other entity or person,
without the written consent of the AOC(s) and/or ASI.
The AOC's purchase/collection of a Customer's accounts receivable shall be
with recourse adjustments as set forth in Exhibit C, Subsection 2.1.2.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
F. Denial of Service
-----------------
Where legally permitted and consistent with AOC policy, the AOC
will provide Denial of Service to disconnect the end user's local
exchange service in cases of insufficient payment of the full
amount of the bill which shall set forth a single balance due for
AOC and Customer services.
The AOC will determine the necessity for denying end user access
by an AOC procedure consistent with regulatory requirements.
III. CUSTOMER RESPONSIBILITIES
The Customer will be responsible for the following:
A. The Customer shall ensure that messages not covered by Exhibit H are not
forwarded to the AOC for billing unless Exhibit H is modified upon
written notice from the Customer, with implementation 30 days after
completion of successful testing of a new message type. Otherwise the
AOC(s) shall reject all such messages it discovers have been erroneously
forwarded.
B. Except as otherwise specified and ordered by the Customer, the Customer
will rate all messages for the AOC accounts.
C. The Customer will send to the AOC via tape, Connect:Direct, or the
Centralized Message Data System ("CMDS"), messages which have been rated
by the Customer and presented to the AOC in EMI record format. These
rated messages will be delivered to the AOC on a regular basis.
D. Messages to be delivered to the AOC by the Customer will be solely
related to ANIs residing within the AOC's territory, and the AOC will
not bill any other end users to which it does not ordinarily render
bills.
E. [Applicable in Illinois only]
Customer authorizes the AOC to apply the AOC's tariffed billing,
collection and payment terms and conditions, and to add Late Payment
Charges to end user bills at the AOC's tariff rates, as applicable. The
Customer shall, at all times, have a tariff or
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
contract wherein the Customer specifies to the end users that the AOC's
tariffed terms and conditions for billing, payment and collection, including
charges for late payment, shall apply to the Customer's services that are
billed by the AOC. If the Customer provides services for another provider of
services that are billed by the AOC, the Customer shall require such
provider to advise its end user customers of the application of the AOC
tariffed terms and conditions, as provided herein, in such provider's end
user contract, advertising or other appropriate notice to their end user
customers.
F. The Customer shall accept adjustments made by the AOC to end user accounts
if the AOC determines that a pending claim has not been acted upon by the
Customer in accordance with Exhibit C, Subsection 1.10.
G. The Customer shall be responsible for an contacts and arrangements with its
end users concerning the provision and maintenance of the Customer's
service.
H. For messages other than 1 + or 10XXX1 +, the Customer shall be responsible
for clearly identifying itself to end users and informing end users that
they are purchasing the Customer's services with the billing for the message
to be included with the AOC's bill.
I. The Customer shall notify the AOC in writing if the Customer intends to
transmit to the AOC for billing any messages attributable to any entity
other than Customer. Such notification shall identify any such entity and
shall be given not less than thirty (30) days prior to the first
transmission to the AOC of such entity's message(s).
J. The Customer shall retain a copy of the rated message detail for Bill
Processing Service furnished to the AOC for at least ninety (90) days from
the date provided.
K. The Customer shall not publicize or represent to others that the AOC jointly
participates with the Customer in the development of the Customer's end user
records, accounts, data bases or market data, records, files and data bases
or other systems.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
L. The Customer has been provided with the current Ameritech policy on
objectionable programs as set forth in the Ameritech Billing Services
Guidelines (Attachment 1 hereto) and agrees to abide by these
requirements, as modified from time to time by the AOC.
M. [Applicable in Ohio only]
The Customer, on its behalf or on behalf of its subtending clients will
provide the AOC a copy of the certificate of convenience and necessity
that authorizes the Customer or its subtending clients to provide Ohio
intrastate toll operator services or provide the AOC with a written
statement as to its certification status. If such certificate or
written certification status is not provided, then the AOC may refuse
to provide intrastate billing and collection services under this
Agreement.
N. Where the Customer has not requested that the AOC perform Inquiry
Services, in instances where the Customer does not adequately respond
to the end users inquiries, and the AOC has to assume these
responsibilities, the Customer will be assessed the higher per message
rate set forth in Exhibit A.
IV. PRICES
Included In the Price Schedule are the prices applicable to the Billing and
Collection Services covered by this Exhibit B, Section II.
From time to time Customer may order additional services. If the AOC
decides to make such additional Customer specific service available, the
prices, terms and conditions of the additional service will be separately
negotiated.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
Ameritech
Billing and Collection Procedures
Revised 8-30-95
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
EXHIBIT C
TABLE OF CONTENTS
1.0 MESSAGE BILLING SERVICES
1.1 Initial Entry Editing
1.2 Pricing
1.3 Toll Master File Maintenance
1.4 Message Data Transmission
1.5 Bill Rendering
1.6 Payment and Remittance Processing
1.7 Treatment and Collection
1.8 Inquiry
1.9 Disputed Billed Amounts
1.10 End User Adjustments
1.11 End User Bill Format
2.0 SETTLEMENT TERMS
2.1 Net Purchase/Collected Amount Due the Customer
2.2 Amount Due the AOC
2.3 Settlement of Disputed Amounts
3.0 CHANGE REQUESTS
3.1 Customer-Initiated Changes
4.0 GLOSSARY
PROPRIETARY
Subject to restrictions on first page.
<PAGE>
Exhibit C
1.0 MESSAGE BILLING SERVICES
1.1 INITIAL ENTRY EDITING
Refer to Exhibit D, Tape and Data Transmission Specifications.
1.2 PRICING
Refer to Exhibit A, Price Schedule.
1.3 TOLL MASTER FILE MAINTENANCE
1.3.1 The AOC will provide to the Customer, Toll Master File
Maintenance Services, establishing and maintaining end user
accounts for all Customer messages for which the AOC has Bill
Processing Service responsibilities.
1.3.2 For Toll Master File Maintenance, the Customer will identify the
end user account to be billed and will provide rated messages, in
the standard EMI format, delivered to the AOC-specified location.
The AOC will accept rated message data less than ninety (90)
calendar days old. (See Exhibit D, Tape and Data Transmission
Specifications for exceptions.)
1.3.3 Rated messages which the AOC cannot bill for any reason from
Master File Maintenance input may be reviewed by the AOC Message
Investigation Center (MIC) group. Upon completion of the review,
the billable messages will be posted. Unbillable messages, as
defined in Subsection 4 of this Exhibit C, and duplicate messages
will be deducted on the Purchase/Collection of Accounts
Receivable Statement.
1.3.4 The Toll Master File will contain standard AOC information such
as, but not limited to:
A. Billing telephone number
B. Status of line (active, final, etc.)
C. Effective date of line status
D. AOC class of service (Business/Residence/Coin)
1.3.5 AOC service order activity will be processed to maintain billing
integrity for end user messages.
1.4 MESSAGE DATA TRANSMISSION
Refer to specifications in Exhibit D, Tape and Data Transmission
Specifications.
1.5 BILL RENDERING
1.5.1 The AOC will provide Bill Rendering Services to the Customer for those
end users for which the AOCs establish and/or maintain an account.
1.5.1.1 For accounts the AOC bills for the Customer, the AOC will
provide Bill Rendering Services for billable message data
within sixty (60) calendar days of receipt of the messages.
1.5.1.2 Messages which are received in the AOC for billing but which
are found to be unbillable will be deducted on the
Purchase/Collection of Accounts Receivable Statement.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
1.5.2 The AOC Bill Rendering Services will provide an integrated end
user bill with separate charge elements for each serving entity.
1.5.3 The AOC will provide investigation, whenever possible, for the
Customer's messages that have errored as unbillables. Upon
completion of the investigation, the billable messages will be
posted. The unbillable messages, as defined in Subsection 4 of
this Exhibit C, will be deducted on the Purchase/Collection of
Accounts Receivable Statement.
1.5.4 The AOC will retain Customer billing data (bills, etc.) for a
period of time consistent with applicable regulatory or legal
requirements or as otherwise negotiated.
1.5.5 The AOC will perform Bill Rendering Services for the Customer at
a level consistent with AOC service measurement criteria.
1.6 PAYMENT AND REMITTANCE PROCESSING
1.6.1 The AOC will provide Payment and Remittance Processing Services
for all end users for which the AOC performs Bill Rendering
Services for the Customer.
1.6.2 The AOC is currently applying all cash transactions to a single
balance due on an end user account. End user designation of
payment to a specific portion of the balance due will not be
permitted except where mandated by a State Commission.
1.6.3 The AOC will perform Payment and Remittance Processing Services
on the Customer's behalf at a level consistent with AOC service
measurement criteria.
1.7 TREATMENT AND COLLECTION
1.7.1 The AOC will provide Treatment and Collection Services in an
attempt to control or collect appropriate outstanding balance
due amounts.
1.7.2 The AOC will perform Treatment and Collection Services for the
Customer consistent with the regulatory requirements and/or the
treatment of similar AOC charges.
1.7.3 Final collection efforts will begin following unsuccessful
treatment and may ultimately result in the referral of the
account to an outside collection agency and/or write-off of the
account as uncollectible. The Customer shall not engage in its
own independent collection efforts against the account.
1.7.4 Amounts collected by the AOC or its collection agent following
declaration of final bad debt on an account shall be shared
between the AOC and the Customer, net of collection charges,
based on each entity's share of the original charges.
1.7.5 The AOC will utilize the same steps and procedures in collecting
the Customer's accounts as it does on its own behalf.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
1.7.6 The AOC will determine and collect deposits from end users for
which the AOC provides Billing and Collection Services according
to regulatory requirements and the AOC deposit policy. The AOC
deposit policy is nondiscriminatory with regard to the entity on
behalf of which the service is billed.
1.7.7 For treatment & collection of 700, 900, 976 and like services
calls, see Exhibit G.
1.8 INQUIRY
1.8.1 The Inquiry Services provided to the Customer by the AOC
include, but are not necessarily limited to, the following post-
billing inquiries:
A. Dispute of billing charges
B. Explanation of billed charges
1.8.2 The AOC will follow standard AOC procedures by which it will
perform the Inquiry Services related to end user charges for the
Customer's service.
1.8.2.1 The AOC will provide standard procedures for its
Business Offices to handle, resolve, and/or refer end
user inquiries and claims to the Customer.
1.8.2.2 The AOC will perform standard claim investigation
functions for the Customer in order to resolve
inquiries.
1.8.2.3 Following standard procedures, the AOC may determine an
adjustment is necessary/appropriate and enter the
adjustment into the billing system.
1.8.2.4 AOC Inquiry Services provided to the Customer may
include interactions with other AOC functional groups,
such as the Customer (i.e., end user) Name and Address
(CNA) and Message Investigation Center (MIC) groups.
1.8.3 The AOC will perform Inquiry Services for the Customer at a
level consistent with AOC service measurement criteria.
1.8.4 In instances where the Customer does not adequately respond to
the end users inquiries, and the AOC has to assume these
responsibilities, the Customer will be assessed the higher per
message rate set forth in Exhibit A, and the AOC will adjust the
charges, if applicable.
1.9 DISPUTED BILLED AMOUNTS
1.9.1 When the Customer performs their own inquiry, and the end user
is not satisfied with the position the Customer has taken in
resolving the claim, the AOC will advise the end user that the
details of their claim will be referred to the Customer. The AOC
will also advise the end user that the Customer will call upon
receipt of the claim to discuss resolution and will notify the
AOC of the disposition. The AOC then prepares and forwards an
AOC/IC memo, with call details attached, notifying the Customer
of the unresolved claim and the need to contact the end user for
resolution. The AOC/IC memo is noted as "Initial Recourse".
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
1.9.2 The AOC must receive notice of claim resolution within thirty
(30) days of the AOC/IC memorandum issued date. If the
resolution is received, the AOC will proceed according to
Customers instructions on the AOC/IC memo. In cases where the
AOC agrees that the charges have been adequately supported, but
cannot deny service for regulatory reasons, or the AOC does not
agree that the charges have been adequately supported, the AOC
will issue an adjustment and the Customer will receive
notification via the Detailed Adjustment Report.
1.9.2.1 If the Customer grants the adjustment, response to the
AOC must include the date and method that will be used
to credit end users account, and must be processed
within thirty (30) days of the receipt of the AOC/IC
memorandum.
1.9.2.2 If the Customer declines the adjustment, the response
to the AOC must include the reason the adjustment was
declined, the date and method of customer contact, and
the name of the responsible person who accepted the
claim resolution.
1.9.3 The Customer shall not require the AOC to respond to Customer
Inquiries on end user adjustments that are more that ninety (90)
days from date of Detail Adjustment Report.
1.10 END USER ADJUSTMENTS
With Inquiry:
1.10.1 The AOC will provide to the Customer the criteria by which the
AOC will handle adjustments.
1.10.1.1 In cases where a volume discount has been applied, the
adjustment will be calculated on the face value of the
call.
1.10.2 AOC will enter the adjustment into the billing system and will
notify the Customer via the Detailed Adjustment Report.
1.10.3 If the Customer subsequently determines an adjustment is not
warranted, the Customer will contact the end user, sustain the
claim and resend the message to the AOC.
1.10.4 The AOC and the Customer will ensure that adjustments properly
reflect the entity on whose behalf the charges were originally
billed.
1.10.4.1 In cases where fraud has been identified, losses will
be recoursed to each entity based on its actual share
of the original charges.
1.10.5 The AOC will handle end user adjustments for the Customer at a
level consistent with AOC service measurement criteria.
Without Inquiry:
1.10.6 In instances where the Customer does not adequately respond to
the end users inquiries, and the AOC has to assume these
responsibilities, the Customer will be assessed the higher per
message rate set forth in Exhibit A, and the AOC will adjust the
charges, if applicable.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
1.11 END USER BILL FORMAT
1.11.1 The Customer's portion of an integrated end user bill, with
separate pages for the AOC and the Customer, will be implemented
by the AOC. All charges will be considered owed to the AOC and
will be reflected in one total balance due.
1.11.2 When provided, the Customer's corporate logo will be displayed
on the Customers pages of the end user bill.
1.11.3 The integrated bill will contain one payment document, with one
total amount due, and one return envelope.
1.11.4 A billing inquiry telephone number and a Customer contact
telephone number, when provided, will be displayed on the
Customer's portion of the end user bill.
1.11.5 Bill detail for the Customer will begin on a new page, and the
last page of Customer detail will not include entries for any
other entity.
1.11.6 The Customer's charges will be subtotaled.
1.11.7 All amounts for the Customer's services will be taxed as
appropriate and displayed separately.
1.11.8 A bill message may be provided on the Customer's portion of the
bill based upon the terms and conditions separately negotiated
and contracted.
2.0 SETTLEMENT TERMS
2.1 NET PURCHASE/COLLECTED AMOUNT DUE THE CUSTOMER
2.1.1 Formula for Calculation of the Net Purchase/Collected Amount Due
the Customer
The AOC will use the following formula for the calculation of the
Net Purchase/Collected Amount Due the Customer for the
Purchase/Collection of Accounts Receivable:
Total Revenue Accepted
+ Total Billed Taxes/Surcharges (AOC-generated)
+/- Recoursed Adjustments, Discounts, Duplicates,
Unbillables and Rebills
- Uncollectible Bad Debt Allowance
+/- Uncollectible Settlement True-Up
- Gross Receipts Tax (if applicable)
----------------------------------------------
= Net Purchase/Collected Amount Due the Customer
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
A. Total Revenue Accepted
The Customer will provide rated data sets or transmissions to the AOC on a
prearranged schedule. The AOC edits the data set for unbillable and untimely
messages. The AOC also edits to assure the data set balances to totals
predetermined by the Customer and supplied in the data set trailer record.
If there are no edit errors found in the pack header or trailer records,
individual message records are edited for acceptability. The AOC purchases
all the message records in the pack that are determined to be acceptable.
The revenue on the Purchase/Collection of Accounts Receivable Statement(s)
will include all revenues accepted from the transmissions for a specific
journal month.
B. Total Billed Taxes/Surcharges (AOC-generated)
Billed taxes include all AOC-generated Federal, State, and local taxes and
additional charges due to taxes which have been billed to the end user.
Surcharge amounts include all amounts billed to the end user as directed by
the Customer.
C. Recoursed Adjustments, Discounts, Duplicates, Unbillables, and Rebills
1. Recoursed Adjustments
Recoursed Adjustments are amounts that the AOC removes from end user
balances and charges back to the Customer via a deduction on the
Purchase/Collection of Accounts Receivable Statement. They may be
initiated by the Customer or by the end user and include, but are not
limited to, adjustments made to end user bills to correct the charges on
current or prior bills; lawfully billed amounts removed from end user
balances at the direction of the Customer; and disputed billed amounts
removed from end user balances per Paragraph 1.9.2.
2. Discounts
Discounts are credits to an end user's account and may apply on either an
individual message basis or a bulk basis. Discounts are subtracted on the
Purchase/Collection of Accounts Receivable Statement.
3. Duplicates
Duplicates are end user messages which have been successfully processed
through the initial edits but which are later found to match other
messages already awaiting billing. Once duplication is confirmed,
duplicate messages are dropped from the processing stream. Since duplicate
messages are included in the Total Revenue Accepted but do not get billed,
they must be deducted on the Purchase/Collection of Accounts Receivable
Statement.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
4. Unbillables shall be defined as:
. Unidentified messages which become unbillable after current
AOC investigation procedures are used, e.g., messages from a
billing number where no account can be found.
. A message having invalid data that was detected after
successful processing of the transmission and after final
attempts to correct have failed per current AOC procedures,
(e.g., invalid NPA NXX RAO combination) or third number and/or
collect messages received for billing on an account which
includes a "toll billing exception" indicator.
5. Rebills
Rebills are end user messages that the AOC bills again to the
same or other end user accounts within the AOC after having
adjusted the message amounts and applicable taxes.
The Federal, State, or local taxes associated with the rebill
would be included in the "Total Billed Taxes" portion of the
Purchase/Collection of Accounts Receivable Statement.
D. Uncollectible Bad Debt Allowance (for Bad Debt on Accounts Which
Have Received Final Bills)
The AOC will subtract on the Purchase/Collection of Accounts
Receivable Statement an amount for Anticipated Uncollectibles.
Anticipated Uncollectibles are estimated amounts representing the
portion of the Total Revenue Accepted, plus or minus adjustments,
which the AOC expects will ultimately become Realized
Uncollectibles.
Realized Uncollectibles are amounts lawfully billed to end users by
the AOC, which, after standard intervals and application of
standard collection procedures, the AOC determines to be
impracticable of collection and which are added to the AOC's
Realized Uncollectible Accounts identified with the Customer.
The AOC will determine the amounts for Anticipated Uncollectibles
by multiplying the Total Revenue Accepted, plus or minus
adjustments, by the Uncollectible Factor, rounded to the nearest
1/100,000th. The Uncollectible Factor will be determined as
described in 1 to 3 following.
1. Uncollectible Factor - Initial Period (New Billing and
--------------
Collection Customer only)
At the time a new Customer orders Billing and Collection
Services, the AOC will determine the Customer's Uncollectible
Factor for the Initial Period. The Initial Period shall be the
first nine months for which the Customer is provided Billing
and Collection Services if the ninth month is the last month in
a calendar quarter (i.e., March, June, September, or December).
If the ninth month is the first or second month in a calendar
quarter, then the Initial Period shall be the first eight or
ten months for which the Customer orders such service.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
2. Uncollectible Factor- Subsequent Periods
At the end of the Initial Period that Billing and Collection
Services are provided to the new Customer, and at three-month
intervals thereafter, the AOC will revise the Uncollectible
Factor to be used in determining the Anticipated Uncollectible
amounts for the ensuing three-month period. Existing Customers
who extend the term of their billing agreement(s), or who sign
a new agreement as a result of the detariffing of Billing and
Collection Services, will not begin a new nine month initial
period. Rather, their existing Uncollectible Factor, as may be
updated at the previously established quarterly intervals, will
be carried forward to the new or extended agreement. Where the
AOC and Customer enter into a new billing agreement, use of the
existing Uncollectible Factor and the previously established
quarterly intervals shall not be construed to incorporate by
reference any terms or conditions of any previous Billing and
Collections agreement between the AOC and Customer.
3. Calculation of the Uncollectible Factor
The Uncollectible Factor will be revised as follows:
a. The AOC will determine the total amount of all end user
billing which, after standard intervals and application of
standard collection procedures, was written off to the
Realized Uncollectible Accounts of the AOC during the most
recent three month period. This Realized Uncollectible
amount will reflect any payments, applicable deposits, and
accrued interest converted to payments, or Recoursed
Adjustments as described in Paragraph 2.1.1.C preceding,
which were applied during the most recent three-month period
to end user accounts whose unpaid balances have been
included in the Realized Uncollectible amounts for the same
or earlier periods.
b. This total Realized Uncollectible amount will be used by the
AOC in an apportionment study to determine the Uncollectible
Bad Debt Allowance for each billing entity during the
three month period. Apportionment percentages used to
determine each entity's Realized Uncollectibles will be
based on the proportion of charges for those Customer
accounts written off during the three month period.
c. Each Customer's Realized Uncollectible amount for the most
recent three-month period will be divided by the Customer's
Total Revenue Accepted, plus or minus adjustments, for the
three month period ending six (6) months prior to the end of
the most recent three-month period. The result of this
calculation will be the Uncollectible Factor to be used in
the ensuing three month period.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
d. This factor will be used by the AOC as follows:
MONTHS OF STUDY MONTHS FACTOR APPLIED
--------------- ---------------------
Oct., Nov., Dec. Jan., Feb., March
Jan., Feb., March April, May, June
April, May, June July, Aug., Sept.
July, Aug., Sept. Oct., Nov., Dec.
After the end of each three months, the AOC will determine a
new Uncollectible Factor in the same manner as above for
application in the ensuing three-month period.
E. Uncollectible Settlement True-Up
Every month the AOC will calculate an Uncollectible Settlement
True-Up amount as follows. The Realized Uncollectible amount for
the most recent month will be subtracted from the amount of
Anticipated Uncollectibles (Allowance for Uncollectibles) from the
month ending six (6) months prior.
NOTE: The first Uncollectible True-Up following the initial
period of billing will include the Anticipated
Uncollectibles from the first month of billing through the
sixth previous month.
This difference will be the Uncollectible Settlement True-Up
amount used to compensate for the amount by which the Anticipated
Uncollectibles exceeded or were less than the Realized
Uncollectibles. The true-up settlement will be included on the
Purchase/Collection of Accounts Receivable Statement of the next
month.
F. Gross Receipts Tax
Income from Accounts Receivable may be subject to a State Gross
Receipts Tax. If applicable, the Customer will compensate the AOC
for this additional tax liability including a gross-up designed to
offset the additional tax liability caused by the reimbursement.
The AOC will calculate the Gross Receipts Tax amount each bill
month and subtract it in the calculation of the Net
Purchase/Collected Amount Due the Customer.
2.1.2 Final True-Up Upon Cessation of Billing and Collection Services
For a period of one year after the AOC ceases to provide Billing and
Collection Services to the Customer, the AOC shall continue to
determine Recoursed Adjustments as set forth in Paragraph 2.1.1.C
preceding, which are made during this one-year period. The AOC will
also continue to determine the Realized Uncollectible amounts which
occur during this one year period.
A. Recoursed Adjustments
The AOC will subtract from the last regular Purchase/Collection of
Accounts Receivable Statement(s) an amount for anticipated
Recoursed Adjustments during this one-year period. The AOC will
calculate the amount to be subtracted by multiplying the total
Recoursed Adjustments for the previous twelve {12) months, as
detailed on the Purchase/Collection of Accounts Receivable
Statements, times
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
25%. Customer may make additional payments for anticipated
Recoursed Adjustments.
This amount subtracted for anticipated Recoursed Adjustments will be used
on a monthly basis as an offset against Recoursed Adjustments incurred by
end user accounts on behalf of the Customer during the one-year period. The
Customer will receive a monthly statement of such amounts from the AOC
during the one-year period.
After the one-year period has elapsed, the AOC will determine the
settlement amount by which the Recoursed Adjustments exceeded or were less
than the anticipated Recoursed Adjustment. The AOC will prepare a
Settlement Statement one month after the one-year period has elapsed which
will reflect the final settlement amount. The AOC will provide the Customer
a copy of that statement and will make available to Customer all
documentation used in preparation of the Settlement Statement.
The AOC will pay the Customer the amount by which the actual Recoursed
Adjustments are less than the anticipated Recoursed Adjustments. The
Customer will pay the AOC the amount by which actual Recoursed Adjustments
exceeded the anticipated Recoursed Adjustments. Amounts are to be paid
within twenty (20) calendar days of receipt of the Settlement Statement
(Payment Date). Interest charges will be applied at the rate described in
Paragraph 2.1.7 to the settlement amount from the date the anticipated
Recoursed Adjustment amount was subtracted from the Purchase of Accounts
Receivable Statement, until the date the Settlement Statement is prepared
and forwarded to the Customer.
If the settlement amount is not paid by the Payment Date, twenty (20)
calendar days from receipt of the Settlement Statement by Customer,
interest will be charged at the rate described in Paragraph 2.1.7.
B. Uncollectibles
The AOC will make six (6) additional monthly true-ups in the first half of
the one-year period to settle for the last six months of billing prior to
the end of the contract. After the one-year period, the AOC will calculate
the amount by which amounts for Anticipated Uncollectibles during the
entire period that such services were provided exceeded or were less than
the Realized Uncollectibles for the same period, plus the one-year period.
The AOC will prepare a Settlement Statement, one month after the one-
year period has elapsed, which will reflect the amounts by which Realized
Uncollectables exceeded or were less than Anticipated Uncollectibles.
The AOC will pay the Customer the amount by which the Anticipated
Uncollectibles exceeded the Realized Uncollectibles. The Customer will pay
the AOC the amount by which Realized Uncollectibles exceeded Anticipated
Uncollectibles. Amounts are to be paid by the Payment Date, twenty (20)
calendar days from receipt of the date of the Settlement Statement by
Customer. After the Payment Date has passed, interest will be charged at
the rate described in Paragraph 2.1.7.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
C. Special Anticipated Uncollectibles
The AOC may subtract from the last regular Purchase/Collection of
Accounts Receivable Statement(s) an amount for a significant
Anticipated Uncollectible amount. The AOC and the Customer will
agree upon the amount to be subtracted.
If the Anticipated Uncollectible amount does not occur before the
one-year period has elapsed, the AOC shall pay the Customer the
amount subtracted from the Purchase/Collection of Accounts
Receivable Statement. Interest charges will be applied, from the
date of the subtraction, at the rate described in 2.1.7.
D. Netting of Uncollectible Settlement True-Up and Recoursed
Adjustment True-Up Amounts
The AOC can remit the net amount to the Customer on the Payment
Date if such net amount is due the Customer. If such net amount is
due the AOC, the Customer can remit the net amount to the AOC on
the Payment Date.
2.1.3 Statement of Amount Due the Customer
A Statement of Amount Due, e.g., the Purchase/Collection of Accounts
Receivable Statement, will be provided to the Customer by the AOC on a
monthly basis.
2.1.4 Payment Date
The Payment Date will be determined as defined in the
Purchase/Collection of Accounts Receivable by Rated Message Input
Specification (Exhibit D). If the calculated Payment Date is a
Saturday, Sunday, or AOC/Customer bank Holiday, payment for the Net
Purchase/Collected Amount will be due to the Customer as follows:
A. If such Payment Date falls on a Sunday or on a Holiday which is
observed on a Monday, the Payment Date shall be the first non-
Holiday day following such Sunday or Holiday.
B. If such Payment Date falls on a Saturday or on a Holiday which is
observed on Tuesday, Wednesday, Thursday, or Friday, the Payment
Date shall be the last non-Holiday day preceding such Saturday or
Holiday.
2.1.5 Payment Method
Any payment to the Customer from the AOC may be paid by check, or
draft to the payee's lockbox address, or by electronic funds transfer
to a designated bank account. Payment must result in immediately
available funds on the Payment Date. If any portion of the Net
Purchase/Collected Amount is received by the Customer in funds which
are not immediately available to the Customer, then a Late Payment
Penalty shall be due the Customer. The AOC will have full
responsibility for ensuring that payment is received by the Payment
Date.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
2.1.6 Payment Detail
Any payment to the Customer from the AOC must identify the
Purchase/Collection of Accounts Receivable Statement being paid.
2.1.7 Late Payment Penalty
If any portion of the Net Purchase/Collected Amount is received by the
Customer after the Payment Date, or if any portion of the Net
Purchase/Collected Amount is received by the Customer in funds which
are not immediately available to the Customer, then a Late Payment
Penalty shall be due the Customer. The Late Payment Penalty shall be
the portion of the Net Purchase/Collected Amount (as defined in
Paragraph 2.1.1) received after the Payment Date, times a late factor,
compounded daily for the number of calendar days from the Payment Date
to and including the date that the funds are made available to the
Customer. The factor for each day shall be the lesser of:
A. The highest interest rate (in decimal value) which may be levied by
law for commercial transactions in the State in which the AOC
provides Billing and Collection Services to the Customer, or
B. 0.000454 per day compounded daily, resulting in an effective annual
rate of 18%.
2.1.8 Late Payment Resulting from Bank Error
Any late payment resulting from bank error will not be subject to the
Late Payment Penalty provided the AOC can verify that it was not at
fault. Rather, the error will be resolved by the banks involved. It is
the responsibility of the AOC to notify the banks involved and
coordinate resolution of the error.
2.2 AMOUNT DUE THE AOC
2.2.1 General
A Statement of the Amount Due the AOC will be provided to the Customer
by the AOC on a monthly basis. The Amount Due the AOC equals all
appropriate Billing and Collection Services charges billed under
contract or any applicable tariffs. Access charges are not to be
considered a portion of the Amount Due the AOC as part of this
Agreement.
2.2.2 Payment Date
The Amount Due the AOC is due from the Customer on the same date as
the bill date but in the following month unless the bill is received
by the Customer less than twenty (20) calendar days prior to that
date, in which case the due date shall be twenty (20) calendar days
after the Customer's receipt of the bill. It is the Customer's
responsibility to substantiate that a bill was received after the
specified time frame. If the Payment Date would cause payment to be
due on a Saturday Sunday, or AOC/Customer/bank Holiday, payment for
the Amount Due the AOC will be as follows:
A. If such Payment Date falls on a Sunday or on a Holiday which is
observed on a Monday, the Payment Date shall be the first non-
Holiday day following such Sunday or Holiday.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
B. If such Payment Date falls on a Saturday or on a Holiday which is
observed on Tuesday, Wednesday, Thursday, or Friday, the Payment
Date shall be the last non-Holiday day preceding such Saturday or
Holiday.
2.2.3 Payment Method
Any payment to the AOC from the Customer may be paid by check or draft
to the payee's address (to be provided to the Customer by the AOC) or
by electronic funds transfer to a designated bank account of the AOC
(to be provided to the Customer by the AOC). Payment must result in
immediately available funds on the Payment Date. If any portion of the
Amount Due the AOC is received by the AOC in funds which are not
immediately available to the AOC, then a Late Payment Penalty shall be
due the AOC. The Customer will have full responsibility for ensuring
that payment is received by the Payment Date.
2.2.4 Payment Detail
Any payment to the AOC from the Customer must identify the AOC invoice
being paid.
2.2.5 Netting of Amount Due AOC
If the Amount Due is not received by the AOC or is received in funds
not readily available to the AOC, on or prior to the Payment Date, as
defined in Paragraph 2.2.2, the AOC may at its option either apply a
Late Payment Penalty as defined in Paragraph 2.2.6 or may net the
Amount Due the AOC with the Net Purchase/Collected Amount Due the
Customer on the next Purchase/ Collection of Accounts Receivable
Statement issued for the Customer.
2.2.6 Late Payment Penalty
Any payment received by the AOC after the Payment Date, or any payment
received in funds which are not immediately available to the AOC on
the Payment Date, will be subject to a Late Payment Penalty. The Late
Payment Penalty shall be the portion of the Amount Due the AOC (as
defined in Paragraph 2.1.1) received after the Payment Date times a
late factor, compounded daily for the number of calendar days from the
Payment Date to and including the date that the funds are made
available to the AOC. The late factor for each day shall be the lesser
of:
A. The highest interest rate (in decimal value) which may be levied by
law for commercial transactions in the State in which the AOC
provides Billing and Collection Services to the Customer, or
B. 0.000454 per day compounded daily, resulting in an effective annual
rate of 18%.
2.2.7 Late Payment Resulting from Bank Error
Any late payment resulting from bank error will not be subject to the
Late Payment Penalty provided the Customer can verify that it was not
at fault. Rather, the error will be resolved by the banks involved. It
is the responsibility of the Customer to notify the banks involved and
coordinate resolution of the error.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
2.3 SETTLEMENT OF DISPUTED AMOUNTS
2.3.1 Notification of Disputed Amount
Should either Party dispute any portion of the Amount Due (as defined
in Paragraphs 2.1.1 and 2.2.1), said Party shall notify the other
Party in writing of the nature and basis of the dispute. The claim
period shall be limited to six (6) months from the issuance by AOC of
the statement of Amount Due.
2.3.2 Payment of Disputed Amount
Should the dispute not be resolved by the Payment Date, the payer
shall, notwithstanding the continuing existence of the dispute, pay
the billed amount in accordance with settlement terms defined in
Subsections 2.1 and 2.2, but said Party shall reserve and have claim
against the other Partly for reimbursement if the dispute is resolved
at a later date in favor of the claimant.
2.3.3 Ultimate Settlement of Disputed Amount
The Party receiving the notice of dispute shall have 30 calendar days
from the notification date, or other mutually agreed period, to
process the claim and notify the claiming Party of the claim status.
Should the claim, in whole or in part, ultimately be resolved in favor
of the claimant, the claiming Party shall be entitled to a financial
settlement from the other Party to the extent the claim was sustained.
If appropriate, interest on the financial settlement amount shall be
calculated and remitted as follows:
A. Interest will be calculated according to the late factor described
in Paragraphs 2.1.7 or 2.2.5 and will include the period from the
date such overpayment/underpayment was made available to the payee
through the date that the overpayment/underpayment was made
available to the payer.
B. After written notice to the claiming Party that the claim has been
sustained, the total amount of the financial settlement shall be
remitted no later than 31 calendar days following resolution.
2.3.4 Retention of Supporting Data Concerning Disputed Amount
Both parties shall retain such detailed information as may reasonably
be required for resolution of the disputed amount during the pendency
of the dispute.
2.3.5 Netting of Amounts Due AOC or Customer for Other Than Billing Services
Neither the AOC nor the Customer shall perform any netting of the
amounts due either Party for other services according to the
provisions of this Agreement, except as previously described in
Paragraphs 2.1.2.D and 2.2.5.
3.0 CHANGE REQUESTS
3.1 CUSTOMER-INITIATED CHANGES
3.1.1 Modifications of existing AOC systems or procedures may be required to
implement billing changes for new or revised Customer services.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
3.1.2 In such cases, the Customer will initiate a time and cost request
which may include complete specifications or definitions for the
requested change and will send to:
Ameritech
Billing and Customer Information Services Account Manager
2000 W. Ameritech Center Drive, Loc. 2G97F
Hoffman Estates, IL 60196
3.1.3 The Customer may pre-authorize the change request which would
authorize developmental work to begin automatically without customer
first approving the time and cost.
NOTE: If clarification of the Customer's specifications is required,
the AOC(s) will respond within ten (10) workdays of receipt of
the written requested change from the Customer.
3.1.4 Change Requests
All change requests will be handled under the time and cost process.
WITH SPECIFICATIONS:
--------------------
In addition to the ten (10) workdays classification response described
above under the time and cost process, the AOC(s)will provide written
specifications, if applicable, and any questions within two (2) weeks
of receipt of the request.
Responses to the questions should be provided in writing to the
Billing & Customer Information Services Account Manager as indicated
in Paragraph 3.1.2. The AOC(s) will modify the specifications
accordingly.
When both parties agree that the specifications accurately describe
the work to be performed, the Customer will authorize the
specifications in writing.
The authorized specifications will be distributed to the AOC(s) to
develop an estimate of the work effort involved to implement the
change within 2 work days. A written time and cost estimate for the
region will be provided by the AOC(s) within thirty (30) workdays of
the date that the specifications were authorized.
The Customer will have up to thirty (30) calendar days from receipt of
the time and cost to authorize implementation. If implementation is
jeopardized by waiting the thirty (30) calendar days, a shorter time
frame may be requested. If implementation is to proceed, the Customer
will provide written authorization of the time and cost to the
Ameritech contact by date requested.
Any changes to the original request will be subject to re-evaluation
by the AOC(s) and Customer.
WITHOUT SPECIFICATIONS:
-----------------------
The Time and Cost request will be distributed to the AOC(s) to develop
an estimate of the work effort involved to implement the change within
2 workdays. A written time and cost estimate for the region will be
provided
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
by the AOC(s) within thirty (30) workdays of the date that the
specifications were authorized.
The Customer will have up to thirty (30) calendar days from receipt of
the time and cost to authorize implementation. If implementation is
jeopardized by waiting the thirty (30) calendar days, a shorter time
frame may be requested. If implementation is to proceed, the Customer
will provide written authorization of the time and cost to the
Ameritech contact by date requested.
Any changes to the original request will be subject to reevaluation by
the AOC(s) and Customer.
3.1.5 Order of Magnitude Estimates
In some cases, the Customer may not require the kind of detailed time
and cost estimate described above but merely an indication of the
proposed change's degree of difficulty and a broad estimate of when
implementation could take place.
In such cases, the Customer should submit a written request for an
Order of Magnitude estimate to the Billing & Customer Information
Services Account Manager as indicated in paragraph 3.1.2. All
available information regarding the proposed change should be included
with the request.
Ameritech personnel will review the Customer's request, make any
necessary assumptions required for evaluation, and determine whether
the change would be easy, moderately difficult, or very difficult to
implement.
A written response will be provided to the Customer within thirty (30)
workdays of receipt of the original request. The response will
indicate the degree of difficulty involved in making the change and a
broad estimate of the implementation date. When the AOC(s) responds to
this type of request, the Customer shall consider it closed. These
estimates shall not be considered as binding on the AOC(s). The AOC(s)
will not charge the Customer for this Order of Magnitude estimate.
Should the Customer wish to pursue actual implementation of the
change, a request should be submitted as indicated in Paragraph 3.1.2.
3.1.6 General
The AOC will notify the Customer if it fails to implement a change on
the agreed effective date. This notification will take place as soon
as the AOC is aware of the problem, but not later than two business
days after the effective date.
In cases where a nationwide roll out of Customer product is involved,
every effort will be made to expedite implementation. When regulatory
orders require implementation sooner than the previous intervals, the
AOC will be requested to extend its best efforts to meet tariff
effective dates. If the AOC is unable to implement a billing change on
the effective date, the Customer may request alternate arrangements on
an individual case basis.
The Customer will compensate the AOC for billing changes only to the
extent such changes have been authorized by the Customer upon terms
and conditions separately negotiated.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
For canceled requests, the Customer will compensate the AOC for
expenses incurred up to the point of cancellation.
3.1.7 System Embargo
The AOC(s) will notify the Customer in advance when an AOC will be
involved in a major project resulting in a billing system embargo for
a period of time. Such embargo will not affect any existing request
pending before the AOC for which written authorization has been
received. Change requests received during an embargo will be handled
on an individual case basis by the involved AOC.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
4.0 GLOSSARY
- --------------------------------------------------------------------------------
Access Charges Amounts due the AOC under the FCC and State Access Service
Tariffs for interconnection to the AOC's local exchange
network. Access charges are not to be considered a part of
the Amount Due the AOC under the Billing and Collection
Services Agreement.
- --------------------------------------------------------------------------------
Adjustments See Recoursed Adjustments.
- --------------------------------------------------------------------------------
Amount Due AOC The Amount Due the AOC equals all charges for Billing and
Collection Services provided to the Customer under contract
or any applicable tariffs.
- --------------------------------------------------------------------------------
Anticipated Anticipated Uncollectibles are estimated amounts
Uncollectibles representing the portion of the Total Revenue
(Allowance for Accepted - plus or minus Adjustments, Discounts, Duplicates,
Uncollectibles) Unbillables, and Rebills - which the AOC expects will
ultimately become Realized Uncollectibles.
- --------------------------------------------------------------------------------
AOC Ameritech Operating Company, any of the following:
AMERITECH ILLINOIS,
AMERITECH INDIANA,
AMERITECH MICHIGAN,
AMERITECH OHIO,
Wisconsin Bell. Inc. dba AMERITECH WISCONSIN
- --------------------------------------------------------------------------------
AC/IC The manual interface for exchanging account Memorandum
Memorandum adjustment and claim information between the AOC and the
Customer.
- --------------------------------------------------------------------------------
AOC Service This statement indicates that the AOC will perform the
Measurement services for Customer at the same performance level that it
Criteria performs the same service for itself.
- --------------------------------------------------------------------------------
Bill Date The date of the AOC end user bill or the date of the
Statement of Amount Due the AOC, whichever applies.
- --------------------------------------------------------------------------------
Bill Processing The integration of the Toll Master File processing/storing of
Customer messages with current service order and cash
activity, in preparation for billing.
- --------------------------------------------------------------------------------
Bill Rendering The preparation of and mailing to end users, statements of
amounts due for Customer message-billed services.
- --------------------------------------------------------------------------------
Billed Taxes All AOC-generated Federal, State, and local taxes, plus
additional charges due to taxes billed to the end user, which
are included in the Net Purchase/Collected Amount Due the
Customer for the Purchase/Collection of Accounts Receivable.
- --------------------------------------------------------------------------------
Billing and The full range of services offered to the Customer by the
Collection AOCs under the Billing and Collection Services Agreement or
Services any applicable tariffs.
- --------------------------------------------------------------------------------
Billing and Charges which make up the Amount Due the AOC for Billing and
Collection Collection Services provided to the Customer under contract
Services or applicable tariffs.
Charges
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
- --------------------------------------------------------------------------------
Change Requests Requests by the Customer for implementation of billing
changes, which may involve modification of existing AOC
systems or procedures, for new or revised Customer services.
- --------------------------------------------------------------------------------
CNA Customer (i.e., end user) Name and Address Bureau.
- --------------------------------------------------------------------------------
Customer Any entity which subscribes to the Billing and Collection
Services offered by the Ameritech Operating Companies.
- --------------------------------------------------------------------------------
Data Set The file containing end user messages which is transmitted by
the Customer to the AOC for billing.
- --------------------------------------------------------------------------------
Data Transmission Data Transmission Service is the receipt of Customer message
Service detail from the Bellcore CMDS I message distribution center
in Kansas City, MO, or is the electronic transmission of
Customer message detail from the Customer to the AOC or a
centralized Ameritech location, or is the transfer of
Customer message detail to the AOC by magnetic tape.
- --------------------------------------------------------------------------------
Denial Denying an end user's access to the network as a result of
insufficient payment of the full amount of the bill.
- --------------------------------------------------------------------------------
Deposit Partial advance payment collected from end users under the
conditions of the AOC deposit policy and in accordance with
regulatory requirements.
- --------------------------------------------------------------------------------
Disputed Amounts Amounts on which the AOC and the Customer disagree in either
the Purchase/Collection of Accounts Receivable Statement or
the Statement of the Amount Due the AOC, as covered in
Subsection 2.3.
- --------------------------------------------------------------------------------
Disputed Billed Charges in the end user's bill for which there is
Amounts disagreement between the end user and the Customer, as
described in Subsection 1.11.
- --------------------------------------------------------------------------------
EMI Exchange Message Interface, the industry standard format for
the exchange of message data between carriers.
- --------------------------------------------------------------------------------
End User Any subscriber or user of a specific Customer service.
- --------------------------------------------------------------------------------
End User The design of the billing media in a manner that will convey
Bill Format to the end user the charges for telephone service (both AOC
and Customer).
- --------------------------------------------------------------------------------
Entity An individual provider of telecommunications services which
are billed in separate and distinct portions of the AOC bill
to end users.
- --------------------------------------------------------------------------------
Final Bill A bill rendered to an end user for outstanding amounts
following disconnection of all associated services.
- --------------------------------------------------------------------------------
Final True-Up Settlement, between the AOC and the Customer, of Recoursed
Adjustments and Uncollectible Bad Debt which have carried
over into the year following the end of AOC provision of
Billing and Collection Services to the Customer.
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
- --------------------------------------------------------------------------------
Gross Receipts A tax applicable, in some States, to the income derived from
Tax Accounts Receivable. The tax may be imposed on AOC and
deducted from the Purchase/Collection of Accounts Receivable
Statement (e.g., Indiana gross receipts tax) or imposed on
Customer and collected by AOC on behalf of Customer from end
users (e.g., Wisconsin surcharge).
- --------------------------------------------------------------------------------
Initial Entry The editing performed by the AOC upon receipt of data from
Services the Customer. Record counts and message charges are balanced
to ensure that no data has been lost in transmission.
Messages are edited to be certain that they conform to the
required protocols and that the data elements required for
processing are present.
- --------------------------------------------------------------------------------
Inquiries The communications, either written or oral, to the AOCs
concerning end user billing.
- --------------------------------------------------------------------------------
Inquiry Services The acceptance, referral, and/or resolution of end user
communications and claims regarding billing, per the written
instructions provided by the Customer.
- --------------------------------------------------------------------------------
Integrated Bill An end user bill containing charge elements for both the AOC
and the Customer, with the Customer's portion being separate
and distinct from the AOC's portion.
- --------------------------------------------------------------------------------
Net Purchase/ The formula for the calculation of the Net Purchase/Collected
Collected Amount Due the Customer for the Purchase/Collection of
Amount Due Accounts Receivable is as follows:
Customer
Total Revenue Accepted
+ Total Billed Taxes/Surcharges (AOC-generated)
+/- Recoursed Adjustments, Discounts, Duplicates,
Unbillables and Rebills
- Uncollectible Bad Debt Allowance
+/- Uncollectible Settlement True-Up
- Gross Receipts Tax (if applicable)
----------------------------------------------
= Net Purchase/Collected Amount Due the Customer
- --------------------------------------------------------------------------------
Netting Paying a net amount after applying credit for services
rendered or for claims to cover disputes against the amount
due the other Party. This practice is acceptable only as
described in Paragraph 2.1.2.D.
- --------------------------------------------------------------------------------
Payment and The process by which payments are received and applied to the
Remittance end user's balance due for services provided by the Customer.
Processing
- --------------------------------------------------------------------------------
Payment Date The due date by which the AOC must remit the Net
Purchase/Collected Amount Due the Customer or by which the
Customer must remit the Amount Due the AOC - in immediately
available funds - to avoid a Late Payment Penalty.
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
- --------------------------------------------------------------------------------
Pricing Services The application of discounts or allowances to a Customer's
rated messages.
- --------------------------------------------------------------------------------
Purchase/ AOC will purchase/collect Customer's receivables on AOC
Collection of Billing and Collection accounts and render integrated bills
Accounts showing a single balance due. The Purchase/Collection of
Receivable Accounts Receivable will be limited to amounts due the
Customer.
- --------------------------------------------------------------------------------
Purchase/ The statement which the AOC provides monthly to the Customer
Collection of as identification of the Net Purchase/Collection Amount Due
Accounts the Customer for the Purchase/Collection of Accounts
Receivable Receivable.
Statement
- --------------------------------------------------------------------------------
Realized Realized Uncollectibles are amounts lawfully billed to end
Uncollectibles users by the AOC, which, after standard intervals and
application of standard collection procedures, the AOC
determines to be impracticable of collection and which are
added to the AOC's Realized Uncollectible Accounts identified
with the Customer.
- --------------------------------------------------------------------------------
Rebills End user messages billed again to end user accounts following
adjustments to the same or other end user accounts within an
AOC. Since the original messages written off resulted in an
adjustment in the Net Purchase/Collected Amount Due the
Customer for the Purchase/Collection of Accounts Receivable,
rebills must be added back into the Net Purchase/Collected
Amount Due the Customer.
- --------------------------------------------------------------------------------
Recoursed Recoursed Adjustments are amounts that the AOC removes from
Adjustments end user balances and charges back to the Customer via a
deduction on the Purchase/Collection of Accounts Receivable
Statement. They may be initiated by the Customer or by the
end user and include, but are not limited to, adjustments
made to end user bills to correct charges on current or prior
bills; lawfully billed amounts removed from end user balances
at the direction of the Customer; and disputed billed amounts
removed from end user balances per Paragraph 1.10.3.
- --------------------------------------------------------------------------------
Service Order An order issued by the AOC to establish or maintain AOC end
user accounts.
- --------------------------------------------------------------------------------
Settlement The statements which identify the final true-up amount for
Statements Recoursed Adjustments or Uncollectible Bad Debts for the year
following the end of AOC provision of Billing and Collection
Services to the Customer.
- --------------------------------------------------------------------------------
Statement of The Purchase/Collection of Accounts Receivable Statement.
Amount Due the
Customer
- --------------------------------------------------------------------------------
Statement of The monthly bill issued to the Customer by the AOC for
Amount Due the provision of Billing and Collection Services.
AOC
- --------------------------------------------------------------------------------
Surcharges Charges applied to the end user bill, as directed by the
Customer, in compliance with a Commission ruling.
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit C
- --------------------------------------------------------------------------------
Tax Reports The Management Reports providing all of the information
needed, on a monthly basis, for the Customer to meet the
legal requirements for filing tax returns.
- --------------------------------------------------------------------------------
Time and Cost Estimation of the number of hours and expense to complete a
(T&C) Process project requested by the Customer. Ameritech Services
coordinates a regional response to Customer requests on a
case-by-case basis.
- --------------------------------------------------------------------------------
Toll Master File Maintaining a file of unbilled message details in line number
Maintenance order or account sequence. Maintaining message details with
an account in a predetermined sequence. Toll Master File
Maintenance takes service order (guide) activity into
account, and new installs, finals, and telephone number
changes will cause rearrangements of the master file
sequence. Additional information is also maintained to
identify unique services/options to which the billing account
subscribes.
- --------------------------------------------------------------------------------
Total Revenue The total value of the acceptable, rated end user messages
Accepted received In the AOC for billing.
- --------------------------------------------------------------------------------
Treatment and The standard methods for securing past due user revenue which
Collection may include, but are not limited to, the preparation and
Services mailing of account status notices to end users a established
intervals and according to payment conditions, or the
initiation of final collection efforts.
- --------------------------------------------------------------------------------
Unbillables Messages which remain unidentified after standard AOC
investigation (e.g., messages from a billing telephone number
where no account can be found), a message with invalid data
which is detected after successful processing of the
transmission and which fails standard AOC correction
procedures (e.g., invalid NPA NXX RAO combination) or third
number and/or collect messages received for billing on an
account which includes a"toll billing exception" indicator.
- --------------------------------------------------------------------------------
Uncollectible Bad The allowance subtracted in the calculation of the Net
Debt Allowance Purchase/Collected Amount Due the Customer to compensate for
anticipated revenue losses resulting from failure of the end
user to pay legally earned service revenues.
- --------------------------------------------------------------------------------
Uncollectible The percentage applied to Total Revenue Accepted, plus or
Factor minus adjustments, to determine the Anticipated
Uncollectibles for a given time frame.
- --------------------------------------------------------------------------------
Uncollectible The adjustment on the Purchase/Collection of Accounts
Settlement Receivable Statement each month to compensate for the amount
True-Up by which Anticipated Uncollectibles for the month ended six
months prior exceeded or were less than the Realized
Uncollectibles related to that earlier month.
- --------------------------------------------------------------------------------
Uncollectibles Amounts lawfully billed to end users by the AOC, which, after
standard intervals and application of standard collection
procedures, the AOC determines are impracticable of
collection and are written off as bad debt on final accounts.
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-1
End User Billing
From Rated Message Input
Specifications
Revised November 1, 1994
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-1
1.0 GENERAL INFORMATION
1.1 NARRATIVE SERVICE DESCRIPTION
1.1.1 General Description
End User Billing-Rated Input
The Ameritech Operating Companies (AOCs) have agreed to provide
CRIS data processing for the Customer on a contractual basis.
This CRIS data processing offering is one method for the
Customer to bill the end user.
2.0 INPUT REQUIREMENTS
2.1 END USER BILLING-RATED INPUT
2.1.1 Message Record Requirements
The input will be a standard EMI Message Record. The Messages
will be rated by the Customer.
2.1.1.1 Record Layout
Attachment 1 lists the EMI records in effect at the
execution of the agreement. Standard EMI record
layouts will be used by the AOC and Customer unless
otherwise agreed jointly by the AOC and Customer in
writing.
Unshaded areas should be populated in accordance with
EMI standards.
Shaded fields should be populated with default values.
The default values are:
x = blanks
9 = zeros
2.1.2 Control Header Record Requirements
The Control Header record is a standard EMI record and will be
the first data record of each pack on a rated message file
supplied by the Customer.
2.1.2.1 Record Layout
The record layout is presented in Attachment 2.
Unshaded areas should be populated In accordance with
EMI standards.
PROPRIETARY
Subject to restrictions on first page.
<PAGE>
Exhibit D-1
Shaded fields should be populated with default values.
The default values are:
x = blanks
9 = zeros
2.1.3 Control Trailer Record Requirements
The Control Trailer record is a standard EMI record and will be
the last data record of each pack on a rated message file
supplied by the Customer.
2.1.3.1 Record Layout
The record layout is presented in Attachment 3.
Unshaded areas should be populated in accordance with
EMI standards.
Shaded fields should be populated with default values.
The default values are:
x = blanks
9 = zeros
2.2 DATA SET CHARACTERISTICS
2.2.1 Tape Characteristics
All input files (tape) received from the Customer must contain
OS Standard Label Tapes, 9 track tape, as negotiated between
AOC(s) and Customer, 6250 B.P.I., for tape, with a block size
of 2,450. The data set name should be ACCC01XX.
A = AMERITECH
CCC = NUMERIC CARRIER CODE
XX = AOC COMPANY NUMBER
21 = AMERITECH OHIO
23 = AMERITECH MICHIGAN
25 = AMERITECH INDIANA
27 = AMERITECH WISCONSIN
29 = AMERITECH ILLINOIS
2.2.2 Data Transmission
2.2.3 CMDS I
2.2.3.1 The Customer's EMI messages will be separately packed.
The separate Customer packs will be transmitted to
CMDS I by the host Company. The dataset transmitted to
CMDS I will be according to the industry standards for
CMDS I.
2.2.3.2 After receiving the CMDS I dataset, separate the
Customer packs from the AOC packs. Note: The Customer
packs contain the Standard Customer pack header and
trailer records while the AOC packs contain the
Standard CMDS I pack header and trailer.
PROPRIETARY
Subject to restrictions on first page.
<PAGE>
Exhibit D-1
2.2.3.2.1 Process the AOC packs as usual.
2.2.3.2.2 Process the Customer packs as if received
by tape.
2.2.4 Connect:Direct (formerly known as NDM)
2.2.4.1 Another negotiated method of Data
Transmission is to use Connect:Direct
network which would be established between
the AOCs and the Customer.
2.2.4.2 This method must be negotiated separately
and local set up security procedures will
be followed.
2.2.4.3 Standard file structures and packing
routines will continue to be followed.
2.2.5 Media Sequence
2.2.5.1 End User Billing-Rated Input
Input media for End User Billing will be sorted by
line number (NPA, NXX, LINE NO). The file may need to
be sorted further to meet the AOC's message master
file requirements.
3.0 PROCESSING REQUIREMENTS
3.1 MESSAGE PROCESSING
3.1.1 End User Billing-Rated Input
The following is the processing flow for rated messages
received from a Customer for billing.
- Media is received from the Customer in rated EMI format via
tape, cartridge, CMDS I, or Connect:Direct.
- Perform edit and processing procedures as outlined in the
"Tape and Data Transmission" specification.
- Records are maintained in the EMI format in the AOC. Messages
are tracked through the AOC systems by using the Pack Header
Bill RAO, creation date and invoice number.
- Records are distributed to the appropriate data processing
center.
- Match messages to appropriate account.
- Unidentified messages are processed in accordance with
routines used for AOC messages.
- Accumulate message counts and toll charges of unidentified
messages by the Customer and serial number (voucher number
used by the Customer to reconcile revenue).
- Check messages for duplication in accordance with AOC
duplicate criteria used for all other messages omitting
serial number from the duplicate criteria.
PROPRIETARY
Subject to restrictions on first page.
<PAGE>
Exhibit D-1
- Accumulate message counts and toll charges of posted messages
awaiting billing by the Customer and serial number.
- Messages requiring changes in billing information, other than
rate, as a result of error correction should be forwarded to
the appropriate center for billing if that center is within
the same AOC.
- Extract messages for billing in accordance with AOC schedule
for billing.
- Accumulate message counts, toll charges and taxes of messages
extracted for billing by the Customer, invoice and serial
number.
- Format messages for billing in accordance with format used
for AOC messages. The serial number appears on the bill used
for AOC purposes only and not on the end user's bill.
- Produce an Customer section of Detail Charges on the end
user's bill.
- Messages requiring rebilling as a result of a post billing
adjustment should be treated in accordance with the AOC(s)
standard adjustment routines.
3.1.2 Message Processing Exceptions
The above data flow requirements are of a general nature, and
are to serve as a guideline only. Individual AOC message
processing characteristics must be considered.
4.0 OUTPUT REQUIREMENTS
4.1 END USER BILLING-RATED INPUT
4.1.1 Bill Format
The level of detail required on the Customer's toll detail
pages will coincide with what the AOCs are providing their end
users, or what the AOC and Customer mutually agree to.
4.2 REPORTS
4.2.1 Billing Services Statistics
4.2.1.1 Invoice Summary Report
To provide the Customer with confirmation of receipt
and processing of a rated message file, the Customer
will receive an Invoice Summary Report. The report
includes a list of all accepted and rejected packs
with the associated message counts and toll charges.
The "Tape and Data Transmission" specification
describes the report procedures and includes a sample
report.
PROPRIETARY
Subject to restrictions on first page.
<PAGE>
Exhibit D-1
4.2.1.2 Customer Billing
To facilitate billing the Customer, counts must be
provided for:
. number of messages processed, both interstate and
intrastate
. number of bills issued, both interstate and
intrastate
. average number of messages per bill
4.2.2 Audit Statistics
Counts of messages should be produced by the Customer
demonstrating inter and intra run record balancing.
5.0 ADDITIONAL COMMENTS
5.1 BILL SEQUENCING
The order that the Customer's charges will appear on the end user bill
will be in ascending Numeric Carrier Identification Code (CIC).
Questions on these specifications may be referred to Joe Zajac on
708-248-5098.
PROPRIETARY
Subject to restrictions on first page.
<PAGE>
Attachment 1
ACCEPTED EMI RECORD INFORMATION
- - Accepted EMI Record Types:
Category Group Record Type/s
- -------------------------------------------------------------------------------
01 01 01, 06, 07, 12, 14, 16, 17, 18, 32, 35,
37, 80-83
02 01, 06, 07, 08, 17, 80-83
04 01, 80, 81
05 01, 80, 81
07 01
50 32
41 01 01, 06, 08-12, 14, 16, 17, 18, 31-35, 37,
80-82
41 02 01, 06, 09, 14, 17, 18, 32, 80-82
41 03 01, 32, 80
41 04 01, 18, 32, 80
41 05 01, 16, 17, 18, 32, 35, 37, 80, 81
41 06 01, 32, 80
41 07 01, 18, 32
41 50 01
42 50 01
51 01 01, 06, 07, 12, 14, 16, 17, 32, 35, 37,
80-83
02 01, 06, 07, 08, 80-83
04 01, 80, 81
05 01, 80, 81
07 01
71 01 01, 06, 07, 12, 14, 16, 17, 32, 35, 37,
80-83
02 01, 06, 07, 08, 80-83
04 01, 80, 81
05 01, 80, 81
07 01
<PAGE>
ATTACHMENT 2
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
operating companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 2
PACK CONTROL
EXCHANGE CARRIER (--) INTEREXCHANGE CARRIER
IC TO EC HEADER
---------------------------------------------------
[PACK CONTROL FORM APPEARS HERE]
Page 1
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
operating companies without the written consent
of Ameritech Services, Inc.
<PAGE>
ATTACHMENT 3
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
operating companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 3
PACK CONTROL
EXCHANGE CARRIER (--) INTEREXCHANGE CARRIER
IC TO EC TRAILER
---------------------------------------------------
[PACK CONTROL FORM APPEARS HERE]
Page 1
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
operating companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-1
TABLE OF CONTENTS
SECTION 1.0 General Information
SECTION 2.0 Input Requirements
SECTION 3.0 Processing Requirements
SECTION 4.0 Output Requirements
SECTION 5.0 Additional Comments
PROPRIETARY
Subject to restrictions on first page.
<PAGE>
EXHIBIT D-2
PURCHASE/COLLECTION OF ACCOUNTS
RECEIVABLE
FROM RATED MESSAGE INPUT
SPECIFICATIONS
Revised November 1, 1994
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
TABLE OF CONTENTS
SECTION 1.0 General Information
SECTION 2.0 Definitions
SECTION 3.0 Rebills
SECTION 4.0 Procedures for Evaluating the Uncollectible
Factor
SECTION 5.0 True-Up Settlement Procedures
SECTION 6.0 Purchase/Collection of Accounts Receivable
Statement
SECTION 7.0 Payment Remittance
Attachment 1 Journal Month
Attachment 2 Collection Period Lag Factor
Attachment 3 Purchase/Collection of Accounts
Receivable Statement
<PAGE>
Exhibit D-2
1.0 GENERAL INFORMATION
1.1 PURPOSE
The provision of Billing Services, specifically the settlement and
purchase/collection of accounts receivable for Customers who provide a
rated message transmission.
1.2 OVERVIEW
Purchase/Collection and payment procedures are required to provide a
settlement method appropriate for Customers and to interface with the
Customer's accounting classifications and procedures.
Customers who purchase Billing Services will be providing each AOC a
rated transmission. Under these procedures the AOC(s) will
purchase/collect the accounts receivable each month based on actual
messages received in the month. If no messages were received in that
month, all billed amounts subject to purchase/collection (e.g., billed
taxes) will be purchased/collected.
All messages are bought/collected by the AOC when the AOC processes a
rated transmission received from the Customer. Such processing shall
occur within two (2) business days of the AOC's receipt of a rated
transmission from the Customer.
The following specifications outline the accounts receivable
purchase/collection procedures required to meet the Customer's needs.
1.3 PROCEDURAL SUMMARY
The Customer will provide rated data sets or transmissions to the AOC
on a prearranged schedule. The AOC edits the data set for unbillable
and untimely messages. The AOC also edits to assure the data set
balances to totals predetermined by the Customer and supplied in the
data set trailer record.
If there are no edit errors found in the pack header or trailer
records, individual message records are edited for acceptability. The
AOC purchase/collects all the message records in the pack that are
determined to be acceptable. If edit errors are found in the pack
header or trailer records, the entire pack is rejected. None of the
message records are considered for purchase/collection. A transmission
or data set can contain more than one pack.
When the initial edits are performed by the AOC ,the Invoice Summary
Report as shown in the Tape and Data Transmission specifications, (D-3
Attachment 1), is prepared by the message processing system with at
least two copies being generated. The Invoice Summary Report shows the
revenue and message counts transmitted, accepted, and rejected, by
pack. A copy of the Invoice Summary Report is sent to the AOC function
responsible for the Purchase/Collection of Accounts Receivable
Statement, and is retained by the AOC for audit and file copy purpose.
At the end of the journal month, (see Attachment 1), each AOC will
summarize the data on these transmissions and render a single
Purchase/Collection of Accounts Receivable Statement. The Customer is
to be paid based on either each AOC's latest collection lag factor
determined in accordance with the AOC collection period lag study (see
Attachment 2) or, where the AOC charges a late payment penalty to the
end user, the payment date will be calculated using the day after the
date on which the late payment penalty first applies to the end user
bill. The
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-2
Purchase/Collection of Accounts Receivable Statement must be in the
hands of the Customer by the eleventh workday of the following month.
If the "Net Due" on the Purchase/Collection of Accounts Receivable
Statement is negative, the AOC shall issue the carrier a bill for such
amounts. The Payment Date shall be based on the AOC's latest collection
lag factor or the AOC's end user late payment.
In the event payment is not received from the Customer by the payment
date, the AOC shall so notify the Customer in accordance with Section
XIX NOTICE AND DEMANDS of the Principle Agreement. In the event payment
------------------
is not received by AOC within 10 days of Customer's receipt of such
notice, the AOC shall cease provision of all services described in
Exhibit B, including any future revisions thereto.
Further, in the event the AOC at any time, in its reasonable judgment,
anticipates that the "Net Due" on a future Purchase/Collection of
Accounts Receivable Statement will be negative, the AOC reserves the
right to withhold an amount deemed appropriate by the AOC, from the
payment of the current Purchase/Collection of Accounts Receivable
Statement.
The bill should identify the monies as the "Amount Due from the
Purchase/Collection of Accounts Receivable Statement, dated (date)".
The bill should be sent to the same name and address as indicated for
the Purchase/Collection Statement, unless otherwise advised. Note:
These monies should not be included in the Billing Services bill.
The revenue on the Purchase/Collection of Accounts Receivable Statement
will include all revenues accepted from the transmissions and/or all
billed amounts subject to purchase/collection for a specific journal
month.
2.0 DEFINITIONS
Adjustments - Includes adjustments to satisfy, DAKS (Deny All Knowledge),
erroneous billing, and other end user adjustments per current AOC
procedures.
Billed Taxes - Billed taxes include all state, local and federal taxes and
additional charges due to taxes which have been billed to the end user.
Date Created - A six-position numeric field in the EMI header record that
identifies the date a pack or data set was created by the Customer.
Discounts - Discounts include, but are not limited to, discounts based on
end user usage and discounts based upon a promotional offering such as a
flat credit amount to the customer for making a Mother's Day call.
Duplicates - Duplicate messages are end user messages which have
successfully processed through the initial edits, but which are later found
to match other messages awaiting billing on the Master File.
Invoice Number - A two-position numeric field in the EMI header record that
identifies a sequentially assigned control number.
Rebills - Rebills are messages billed after having been previously written
off end user's accounts.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-2
Surcharge - Surcharge amounts include all amounts billed to the end user as
directed by the Customer.
Transmitted Revenue - Includes the total revenue transmitted to the AOC by
the Customer that is to be billed the end user. The transmission may be by
tape, cartridge, data transmission, CMDS or any other method agreed to by
the AOC and the Customer.
True-Up Settlement - Includes the amount by which either Anticipated
Uncollectibles exceeds Realized Uncollectibles or Realized Uncollectibles
exceed Anticipated Uncollectibles for a specified period.
Unbillables - Unbillables include the following:
. Unidentified messages which become unbillable after current AOC
investigation procedures are used, e.g., messages from a billing number
where no account can be found.
. Message having invalid data that was detected after successful
processing of the transmission and after final attempts to correct have
failed per current AOC procedures, e.g., invalid NPA NXX RAO
combination.
Uncollectibles - Based on end user account becoming uncollectible per
current AOC procedures.
Uncollectible Factor - The factor is developed using the procedures outlined
in 4.0. The initial factor is assigned by the AOC.
3.0 REBILLS
3.1 Rebills are end user messages that AOC rebills to end users' accounts
within AOC after having adjusted the message amounts and applicable
taxes off the same or other end users' accounts.
3.2 The Federal, State, or local taxes associated with the rebill would be
included in the "TOTAL BILLED TAXES" portion of the Purchase/Collection
of Accounts Receivable Statement.
4.0 PROCEDURES FOR EVALUATING THE UNCOLLECTIBLE FACTOR
4.1 At the end of the Initial Period, as defined in Exhibit C, Subsection
2.1.1.D, and at three-month intervals thereafter, the AOC will revise
the Uncollectible Factor to be used in determining the Allowance for
Uncollectible amounts for the ensuing three-month period.
4.2 The Uncollectible Factor will be revised as follows:
4.2.1 The AOC will determine the total amount of all end user billing
which, after standard intervals and application of standard
collection procedures, was written off to the Realized
Uncollectible Accounts of the AOC during the most recent three-
month period. This Realized Uncollectible amount will reflect
any payments, applicable deposits, and accrued interest
converted to payments, or adjustments which were applied during
the most recent three-month period to end user accounts whose
unpaid balances have been included in the Realized
Uncollectible amounts for the same or earlier periods.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-2
4.2.2 This total Realized Uncollectible amount will be used by the
AOC in an apportionment study to determined the Uncollectible
Bad Debt Allowance for each billing entity during the three-
month period. Apportionment percentages used to determine each
entity's Realized Uncollectibles will be based on the
proportion of charges for those end user accounts written off
during the three-month period.
4.2.3 The Customer's Realized Uncollectible amount for the most
recent three-month period will be divided by the Customer's
Total Revenue Accepted, plus or minus adjustments, for the
three-month period ending six months prior to the end of the
most recent three-month period. The result of this calculation
will be the Uncollectible Factor to be used in the ensuing
three-month period.
4.2.4 This factor will be used by the AOC as follows:
MONTHS OF STUDY MONTHS FACTOR APPLIED
--------------- ---------------------
OCT, NOV, DEC JAN, FEB, MARCH
JAN, FEB, MARCH APRIL, MAY, JUNE
APRIL, MAY JUNE JULY, AUG, SEPT
JULY, AUG, SEPT OCT, NOV, DEC
After the end of each three months, the AOC will determine a
new Uncollectible Factor in the same manner as above for
application in the ensuing three-month period.
5.0 TRUE-UP SETTLEMENT PROCEDURES
5.1 The AOC will true-up the difference between the amount of Anticipated
Uncollectibles (Allowance for Uncollectibles) withheld and the amount
of Realized Uncollectibles which actually resulted. The difference will
be the Uncollectible Settlement True-Up. If the Realized Uncollectibles
exceed the Anticipated Uncollectibles, the difference will be deducted
from the Amount Due to the Customer. If the Anticipated Uncollectibles
exceed the Realized Uncollectibles, the difference will be added to the
Amount Due to the Customer.
5.2 The True-Up Settlement will be implemented in the month following the
end of the Initial Period that Billing and Collection Services are
provided to a new Customer. The AOC will subtract the sum of the
Realized Uncollectibles incurred during the Initial Period from the sum
of the Anticipated Uncollectibles (Allowance for Uncollectibles) which
were withheld during the period extending from the seventh previous
month back through the first month of the initial period. The
difference will be the True-Up Settlement that will appear on the
Purchase/Collection of Accounts Receivable Statement issued the month
following the end of the Initial Period.
For example, if the Initial Period is January through September, the
True-Up Settlement will be implemented on the October
Purchase/Collection of Accounts Receivable Statement. The sum of the
Realized Uncollectibles for January through September will be
subtracted from the sum of the Anticipated Uncollectibles for January
through March. The difference will be the True-Up Settlement amount
that will appear on the October Purchase/Collection of Accounts
Receivable Statement.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-2
5.3 After settling for the Initial Period, the True-Up Settlement will
continue on a monthly basis. The amount of Realized Uncollectibles for
the first previous month will be subtracted from the amount of
Anticipated Uncollectibles for the seventh previous month. The
difference will appear on the Purchase/Collection of Accounts
Receivable Statement as the True-Up Settlement for the seven previous
month.
For example, after settling for the Initial Period on the October
Purchase/Collection of Accounts Receivable Statement, the True-Up
Settlement for the November Purchase/Collection Statement will be
calculated as follows. The amount of Realized Uncollectibles for
October will be subtracted from the amount of Anticipated
Uncollectibles for April. The difference will be reflected on the
November Purchase/ Collection of Accounts Receivable Statement as the
True-Up Settlement for April.
6.0 PURCHASE/COLLECTION OF ACCOUNTS RECEIVABLE STATEMENT
6.1 Before the Purchase/Collection of Accounts Receivable Statement is
prepared the Invoice Numbers on the Invoice Summary Reports are
reviewed to verify the numbers are in sequence and there are no missing
reports. The Date Created helps to further identify the packs,
transmissions or tapes.
6.2 Data Accumulation for Purchase/Collection of Accounts Receivable
----------------------------------------------------------------
Statement See (Attachment 3)
---------------------------
6.2.1 The AOC(s) will accumulate the following data items on a monthly
basis by carrier by transmission. This should be accumulated
after the last bill period at the end of a journal month. The
data should include all transmissions received in a journal
month. If there are no transmissions, a purchase/ collection
should still be made for those billed amounts that are subject
to purchase/collection (e.g., billed taxes). Line 1 of the
Purchase/Collection of Accounts Receivable Statement would not
contain any data in this instance.
6.2.1.1 Enter in the CUSTOMER field the name of the Customer
for whom the Purchase/Collection of Accounts Receivable
Statement is being prepared.
6.2.1.2 Enter in the MONTH field the month and year for which
data is being accumulated (e.g., 9/94, etc.).
6.2.1.3 Enter in the ISSUE DATE field the issue date of the
Purchase/Collection of Accounts Receivable Statement
(e.g., 10/10/94). The statement should not be in the
hands of the Customer any later than the eleventh
workday following the month under report. Enter in the
DUE DATE field the calendar date the payment is to
reach the Customer as calculated in SECTION 2 and shown
on Line 16j.
6.2.1.4 Line 1, TOTAL REVENUE ACCEPTED. Enter on Line 1a,
b,c,d,e and f the Date Created and Invoice Numbers and
in Column A the amount of revenue accepted from each
transmission as shown on the Invoice Summary Reports.
Total all amounts on Line 1, Column B.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-2
6.2.1.5 Line 2, TOTAL BILLED TAXES/SURCHARGE. Enter on Line 2a,
Column A, Total Federal Taxes Billed for the Journal
month under report (See Attachment 1). Enter on Line
2b, Column A, Total State Taxes Billed for the month
under report. Enter on Line 2c, Column A, Total Local
Taxes Billed for the month under report. Enter on Line
2d, Column A, the Total Surcharge Billed for the month
under report. Total Lines 2a, 2b, 2c and 2d, Column A
and enter the Total on Lines 2, Column B.
6.2.1.6 Line 3, RECOURSED ADJUSTMENTS. Enter on Line 3a, Column
A, the actual post billing adjustments as defined in
Section 2.0 for the journal month under report (See
Attachment 1). Associated taxes should be separately
detailed on Lines 3b, 3c, 3d, and 3e. Enter on Line 3b,
Column A, the Federal Taxes associated with the
adjustments on Lines 3a. Enter on Line 3c, Column A,
the State Taxes associated with adjustment on Line 3a.
Enter on Line 3d, Column A, the local taxes associated
with adjustments on Line 3a. Enter on Line 3e, Column
A, the surcharge tax associated with the adjustments on
3a. Total 3a, 3b, 3c, 3d, and 3e, Column A, and enter
on Line 3, Column B.
6.2.1.7 Line 4, DISCOUNTS - Enter on Lines 4a, 4b, and 4c the
applicable Discounts for the Customer. Total 4a, 4b,
and 4c and enter on Line 4, Column B.
6.2.1.8 Line 5, DUPLICATES - Enter on Line 5, Column B, the
amount of Duplicates as defined in Section 2.0 for the
month under report.
6.2.1.9 Line 6, UNBILLABLES - Enter on Line 6, Column B, the
unbillable amount as defined in Section 2.0 for the
month under report.
6.2.1.10 Line 7, REBILLS - Enter on Line 7, Column B. the
rebills for the month as defined in Section 2.0.
6.2.1.11 Line 8, ADJUSTED REVENUES - Enter the result of the
following calculation, Line 1, Column B, plus Line 2,
Column B, less Line 3, Column B, less Line 4, Column B,
less on Line 5, less Line 6, plus Line 7, on the Total
line of Line 8, Column B. For those companies that are
able, Adjusted Revenues should be detailed as
Interstate and Intrastate in Column A.
6.2.1.12 Line 9, UNCOLLECTIBLE FACTOR - Enter the Uncollectible
Factor for the specific Customer on Line 9, Column B.
For those AOC(s) that are able, both an Interstate and
Intrastate Factor must be entered in Column A.
6.2.1.13 Line 10, ALLOWANCE FOR UNCOLLECTIBLES - Enter on the
Total line of Line 10, Column B, the result of the
following calculation: Line 8, Column B, multiplied
times Line 9, Column B. Line 10 should be detailed as
Interstate, Intrastate and Total for those AOC(s)
entering Interstate and Intrastate numbers on Line 8,
Column A, and Line 9, Column A.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-2
6.2.1.14 Line 11, AMOUNT DUE - Enter on Line 11 the sum of Line
8, Column B, less line 10, Column B.
6.2.1.15 Line 12, TRUE-UP SETTLEMENT - Enter on Line 12 the
month and year of the True-Up Settlement. The
settlement date is always for the seventh previous
month.
One Line 12a, Column A, enter the Anticipated
Uncollectibles for the seventh previous month. This
number should equal the Allowance for Uncollectibles
amount entered on Line 10 for that month's
Purchase/Collection of Accounts Receivable.
Enter on Line 12b, Column A, the Realized Uncollectible
amount for the first previous month. The True-Up
Settlement should be entered on Line 12c (12a-12b),
Column B. If the amount is due the Customer the amount
in 12c will be positive. If the amount is due the AOC
the amount in 12c will be negative.
6.2.1.16 Line 13, NET DUE - Enter the result of Line 11 plus
Line 12, Column B. If the amount is negative, a bill
should be issued to the Customer for the amount due the
AOC, as detailed in Section 1.3.
6.2.1.17 Line 13a, GROSS RECEIPTS TAX and Line 13b, NET DUE
INDIANA are for use by Ameritech Indiana only.
6.2.1.18 Line 14, EARLY/LATE PAYMENT AMOUNT - Enter on Line 14a
the Late Payment Amount from LINE 17. Enter on Line
14b, the Early Payment Amount from Line 18.
6.2.1.19 Line 15, ADJUSTED NET DUE - Enter on Line 15 the sum of
Line 13 (Line 13b for Indiana) plus Line 14a minus Line
14b.
6.2.1.20 Line 16, PAYMENT DATE CALCULATION is calculated as
follows: post the date (Julian calendar) the
transmission(s) was processed to Line 16a, Columns 1,2,
3,4, etc. If there were no transmissions, the last bill
period of the previous month, reflected as a Julian
Calendar date, should be entered on Line 16a, Column 1.
(For example, if the last bill period of the previous
month is January 22, the Julian Calendar date should be
22.) Note that the date should reflect the last bill
period of the previous month, not the actual bill
preparation date, which usually occurs 2-3 days later.
Post 15 days to Line 16b. Post the number of days for
the collection lag factor from the current lag study
(See Attachment 2) or the day after the end user late
payment date to Line 16c. Add Line 16a + 16b + 16c to
get the result to be posted to Line 16d. Post the
earliest payment date (if multiple transmissions) from
Line 16d to Line 16e. Subtract Line 16e from Line 16d.
Post to Line 16g in the appropriate column the revenue
accepted by transmission. Total line 169 across and
post to Line 16g, Column A.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-2
Post to Line 16h in the appropriate column the result
of Line 16f times Line 16g. Total Line 16h across and
post to Line 16h, Column A. Post to Line 16i, Column A,
the result of Line 16h, Column A, divided by Line 16g,
Column A. Post to Line 16j, Column A, the sum of Line
16e plus Line 16i, Column A.
6.2.1.21 Line 17, LATE PAYMENT CALCULATION - If the payment date
is to be later than Line 16j the Net Due, or Net Due
Indiana, as appropriate, must be modified. The Net Due
is multiplied by the Daily Late Payment Percent
compounded daily for the number of late days. The
number of late days is calculated as Actual Date Paid
less the Calculated Payment Date. Enter zero if no
calculation is made.
6.2.1.22 Line 18, EARLY PAYMENT CALCULATION - If the payment
date is to be earlier than Line 16j the Net Due or Net
Due Indiana, as appropriate, must be modified. The Net
Due is multiplied by the Daily Early Payment Percent
Compounded daily for the number of early days. The
number of early days is calculated as Calculated
Payment Date less Actual Date Paid. Enter zero if no
calculation is made.
7.0 PAYMENT REMITTANCE
7.1 AOC PAYMENT PROCEDURE
7.1.1 AOC will remit payment by either check or wire transfer to a
bank designated by the Customer.
7.1.2 Payment will be in immediately available funds.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 1
JOURNAL MONTH BY AMERITECH OPERATING COMPANY
ILLINOIS - Includes all transmissions received and processed through the
28th bill period of the month.
INDIANA - Includes all transmissions received and processed through the
28th bill period of the month.
MICHIGAN - Includes all transmissions received and processed through the
25th bill period of the month.
OHIO - Includes all transmissions received and processed through the
28th bill period of the month.
WISCONSIN - Includes all transmissions received and processed through the
28th bill period of the month.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 2
COLLECTION PERIOD LAG FACTOR
The "collection period lag factor" represents the average number of days elapsed
between the bill date and the date the money is collected and deposited in the
bank as readily available funds. It is expressed in calendar days and has three
component periods:
1. The period from bill date to bill extraction.
2. The period from bill extraction to the date the payment is received and
deposited in the bank.
3. The period from bank deposit to the date the checks have cleared the bank
and funds are readily available for use.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 2
1.BILL DATE TO EXTRACTION DATE
This period represents the average number of calendar days between the end
user bill date and the date the billing information is removed from the
computer for printing (bill extraction date). It is calcuSated from the
billing schedule by averaging the differences between Bill Date (BD) and
Bill Extraction date (BX) for each bill period. For example:
BX = August 29, 1983
BD = August 24, 1983
5 calendar days from BD to BX for the August 24 bill period.
2. EXTRACTION DATE TO DEPOSIT DATE
This period represents the average number of calendar days between the
extraction date and the date the payment is received and deposited in the
bank. It is determined by analyzing the daily accounts receivable balances
and daily bank deposits made over a three-month study period. Throughout the
period, the amounts of new billing, bank deposits, and adjustments and
uncollectibles are tracked daily to determine a daily running balance of
accounts receivable using the following formula:
(ATTACHMENT 3, Page 4)
Previous + Current Day's - Current Day's - Current Day's = Current Day's
Day's Closing New Billing Bank Deposits Adjustments & Closing
Balance of Uncollectibles Balance
Accounts
Receivable
(Previous + [Col B] - [Col C] - [Col D] = [Col E]
Day's
Col E)
The ratio of the total daily accounts receivable balances (billed amounts
outstanding) to the total daily bank deposits (payments received and
deposited) determines the average number of days between bill extraction and
bank deposit, as follows:
(ATTACHMENT 3, Page 5)
Total Daily Closing + Total Daily Closing + Total Daily Closing
Balances Balances Balances
Month 1 Month 2 Month 3
Total Daily Deposits + Total Daily Deposits + Total Daily Deposits
Month 1 Month 2 Month 3
= Average days from bill extraction to date of deposit.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 2
3. DEPOSIT DATE TO AVAILABLE FUNDS
This period represents the average calendar days elapsed between the date
the payment is deposited in the bank and the date the checks have cleared
and the funds are readily available for use. In cases where the AOC has same
day availability of funds, this period does not apply.
4. COLLECTION PERIOD LAG FACTOR
The sum of the calendar days in each component period, (1) bill date to
extraction date, (2) extraction date to deposit date, and (3) deposit date
to funds availability, makes up the collection period lag factor.
REVIEW AND REVISION
The collection period lag factor will be reviewed periodically by the AOC
and revised as necessary. It is important that all values used in the lag
factor formula be kept current to reflect changes in customer composition
and payment habits and to ensure that no financial disadvantage is imposed
on either the AOC or the Customer in making or receiving payment for
receivables.
Therefore, studies to update the factors will be performed at least
annually. The time period chosen will consist of three months which are
representative of the entire year.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 2
COLLECTION PERIOD LAG FACTOR STUDY
DETERMINATION OF LAG BY THE BALANCE-OF-ACCOUNT METHOD
STUDY PERIOD__________________________
_______________________________
COMPANY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Opening Daily Closing
Balance* Daily Adjustments & Balance=Previous Day's
Date $_____________ Deposits Uncollectibles (E)+(B)-(C)-(D)
Current Billing
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
A B C D E
- --------------------------------------------------------------------------------
1
- --------------------------------------------------------------------------------
2
- --------------------------------------------------------------------------------
3
- --------------------------------------------------------------------------------
4
- --------------------------------------------------------------------------------
5
- --------------------------------------------------------------------------------
6
- --------------------------------------------------------------------------------
7
- --------------------------------------------------------------------------------
8
- --------------------------------------------------------------------------------
9
- --------------------------------------------------------------------------------
10
- --------------------------------------------------------------------------------
11
- --------------------------------------------------------------------------------
12
- --------------------------------------------------------------------------------
13
- --------------------------------------------------------------------------------
14
- --------------------------------------------------------------------------------
15
- --------------------------------------------------------------------------------
16
- --------------------------------------------------------------------------------
17
- --------------------------------------------------------------------------------
18
- --------------------------------------------------------------------------------
19
- --------------------------------------------------------------------------------
20
- --------------------------------------------------------------------------------
21
- --------------------------------------------------------------------------------
22
- --------------------------------------------------------------------------------
23
- --------------------------------------------------------------------------------
24
- --------------------------------------------------------------------------------
25
- --------------------------------------------------------------------------------
26
- --------------------------------------------------------------------------------
27
- --------------------------------------------------------------------------------
28
- --------------------------------------------------------------------------------
29
- --------------------------------------------------------------------------------
30
- --------------------------------------------------------------------------------
31
- --------------------------------------------------------------------------------
</TABLE>
Total
This
Sheet
- --------------------------------------------------------------------------------
Total
All
Sheets
- --------------------------------------------------------------------------------
LAG = COL. E/COL. C
* OPENING BALANCE = PREVIOUS MONTH'S CLOSING BALANCE OF ACCOUNTS RECEIVABLE
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 2
COLLECTION PERIOD LAG FACTOR STUDY
THREE-MONTH STUDY PERIOD_______________________________
___________________________
COMPANY
- --------------------------------------------------------------------------------
DAYS AND DOLLAR
LINE ITEM DOLLARS DAYS
# ---------------------------------------------------------------------------
(A) (B) (C)
- --------------------------------------------------------------------------------
1. Three-Months Total Daily Deposits $ XXXXXXXXXXXXX
(Attachment 3, Page 4, Col. C) XXXXXXXXXXXXX
- --------------------------------------------------------------------------------
2. Three-Months Total Daily Closing
Balances (Attachment 3, Page 4, Col. $ XXXXXXXXXXXXX
E) XXXXXXXXXXXXX
- --------------------------------------------------------------------------------
4. Average Days from Billing Extraction
Date to Date of Deposit XXXXXXXXXXXXX Days
(Line 2/Line 1) XXXXXXXXXXXXX
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 3
(AOC NAME)
PURCHASE/COLLECTION OF ACCOUNTS
RECEIVABLE STATEMENT
CUSTOMER:_______________________
MONTH: MM/YY
ISSUE DATE: MM/DD/YY DUE DATE: MM/DD/YY
SECTION 1
- ---------
COLUMN A COLUMN B
-------- --------
1. TOTAL REVENUE ACCEPTED:
a. Transmission 1
Date Created ___________
Invoice Numbers ________ Amount ________
b. Transmission 2
Date Created ___________
Invoice Numbers ________ Amount ________
c. Transmission 3
Date Created ___________
Invoice Numbers ________ Amount ________
d. Transmission 4
Date Created ___________
Invoice Numbers ________ Amount ________
e. Transmission 5
Date Created ___________
Invoice Numbers ________ Amount ________
f. Transmission 6
Date Created ___________
Invoice Numbers ________ Amount ________
TOTAL REVENUE ACCEPTED _____________
2. TOTAL BILLED TAXES/SURCHARGE:
a. Federal _______
For Illustrative purposes only
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 3
COLUMN A COLUMN B
-------- --------
b. State ________
c. Local ________
d. Surcharge ________
TOTAL ________
3. RECOURSED ADJUSTMENTS
a. Adjustments ________
b. Federal Tax ________
c. State Tax ________
d. Local Tax ________
e. Surcharge ________
TOTAL ________
4. DISCOUNTS
a. Volume Discounts ________
b. DA Allowances ________
c. Promotions Discount ________
TOTAL ________
5. DUPLICATES ________
6. UNBILLABLES ________
7. REBILLS ________
8. ADJUSTED REVENUES (1+2-3-4-5-6+7 Column B)
Interstate ________
Intrastate ________
TOTAL ________
9. UNCOLLECTIBLE FACTOR
Interstate ________
Intrastate ________
COMPOSITE ________
For Illustrative purposes only.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 3
COLUMN A COLUMN B
-------- --------
10. ALLOWANCE FOR UNCOLLECTIBLES (8X9)
Interstate _________
Intrastate _________
TOTAL _________
_________
11. AMOUNT DUE (8-10)
12. TRUE-UP SETTLEMENT
FOR _____ MONTH 19__
a. Anticipated _________
b. Realized _________
c. Settlement (a-c) _________
13. NET DUE (11+12) _________
(Lines 13a and 13b are for use
by Indiana Only)
a. Gross Receipts Tax _________
b. NET DUE INDIANA (13-13a) _________
14. EARLY/LATE PAYMENT AMOUNT
a. Late Payment Amount
(From Line 17) _________
b. Early Payment Amount
(From Line 18) _________
15. ADJUSTED NET DUE (13+14a-14b) _________
SECTION 2
- ---------
16. PAYMENT DATE CALCULATION
Column A
--------
TRANSMISSION
1 2 3 4 5 6
- - - - - -
a. Julian Calendar Date Processed
For Illustrative purposes only.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 3
COLUMN A COLUMN B
-------- --------
TRANSMISSION
b. Average Days to Billing Date 1 2 3 4 5 6
-- -- -- -- -- --
15 15 15 15 15 15
-- -- -- -- -- --
c. Lag Study Days/End User Late
Payment Date plus One Day -- -- -- -- -- --
d. Payment Date by Tape (a+b+c) -- -- -- -- -- --
e. Earliest payment date Processed
on Line 16d -- -- -- -- -- --
f. (d-e) -- -- -- -- -- --
g. Transmission Revenue Accepted -- -- -- -- -- -- ________
h. Weighted Tape (fxg) -- -- -- -- -- -- ________
i. h/g (Column A) ________
j. Payment Date for All
Tapes (e+i) ________
SECTION 3
- ---------
17. LATE PAYMENT CALCULATION:
Late Payment = (Net Due or Net Due Indiana) X
[Daily Late Payment %, compounded
daily for the number of late days
calculated as (Actual Date Paid -
Calculated Payment Date)]. If no
Late Payment is to be made, enter
zero. ________
18. EARLY PAYMENT CALCULATION:
Early Payment = Net Due or Net Due Indiana) X
[Daily Early Payment %, compounded
daily for the number of early days
calculated as (Calculated Payment
Date - Actual Date Paid). If no
Early Payment is to be made, enter
zero. ________
For Illustrative purposes only.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-3
Tape and Data Transmission
Specifications
Revised February 22, 1995
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
TABLE OF CONTENTS
SECTION 1.0 General Information
SECTION 2.0 Types of Input
SECTION 3.0 EMI Data Sequence
SECTION 4.0 Edits
SECTION 5.0 Procedure for Rejected Data Set, Pack or
Individual Message
SECTION 6.0 Data Retention
Attachment 1 Edits
Attachment 2A Invoice Summary Report
Attachment 2B Duplicate Detail Report
Attachment 2C Detail Error Report
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
1.0 GENERAL Exhibit D-3
Successful interexchange of information between Companies requires
compatibility in the rules each uses to generate and interpret information
being interexchanged via Magnetic Tape, Data Transmission, Connect:Direct
(formerly, known as NDM) or CMDS I. Information listed here incorporates
many Bellcore recommended standards.
If transmissions are sent via magnetic tape, the following address should be
used;
Ameritech
Usage Control Center
220 N. Meridian Street, Room 768
Indianapolis, IN 46204
2.0 TYPES OF INPUT
2.1 Tape Formats
The following paragraphs are standards that are recommended for the
physical characteristics of magnetic tapes or cartridges used for data
interchange purposes.
2.1.1 Physical Characteristics
9 track, 6250 B.P.I. Tape or 18 track, 38000 Baseline Publishing,
Inc
1 file with fixed length records
Record length - 175 bytes
Fixed block length - 2,450 bytes
Character Set - EBCDIC
Parity - ODD
2.1.2 Internal Labels
IBM OS labels are the standard for interchange. They consist of a
single volume label and two header and trailer labels.
2.1.2.1 Volume Label
The standard volume label is 80 characters in length. It
is always the first record on the file.
1. Label Identifier (3 bytes)
a. Contents: The characters VOL identify this label
as a volume label.
b. Processing by sender The field is read to verify
that a standard label file is mounted and that
this is a volume label.
c. Processing by Receiver: Same as for sender.
2. Label Number (1 byte)
a. Contents: Always a 1.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-3
b. Processing by Sender: verified in conjunction with
the Label identifier to identify the label as
VOL 1.
c. Processing by Receiver: Same as for sender.
3. Volume Serial Number (6 bytes)
a. Contents: A unique identification code for the
physical file. This code should be the same as
that written on the outside of each file. The code
may be any six alpha numeric characters. If it is
fewer than six characters in length, the code must
be left-justified and padded with blanks. It is
suggested that the contents of this field conform
to the Associated Company's standard where one
exists.
b. Processing by Sender: None.
c. Processing by Receiver: The user specified volume
serial number is compared to the number in this
field to ensure that the correct volume is
mounted.
4. Reserved (1 byte)
a. Contents: Must be zero.
b. Processing by Sender: None.
c. Processing by Receiver: None.
5. Reserved (30 bytes)
a. Contents: Must be blanks.
b. Processing by Sender: None.
c. Processing by Receiver: None
6. Owner's Name (10 bytes)
a. Contents: Indicates the ownership of the tape
volume.
b. Processing by Sender: None.
c. Processing by Receiver: None.
7. Reserved (29 bytes)
a. Contents: Must be blanks.
b. Processing by Sender: None.
c. Processing by Receiver: None.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-3
2.1.2.2 Standard Data Set Label 1 (HDR1/EOF1)
Standard Data Set Label 1 is 80 characters long and
describes the associated data set. This FORMAT is used
for header labels (HDR1) and end-of data set trailer
labels (EOF1). File label 1 is always followed by file
label 2.
1. Label Identifier (3 bytes)
a. Contents: Three characters that identify the
label. They may be:
HDR - Header label (at beginning of Data Set).
EOF - Trailer label (at end of Data set).
b. Processing by Sender: At the beginning of a Data
Set the Sender writes HDR in this field. At the
end of a file the Sender writes EOF in this
field.
c. Processing by Receiver: HDR is checked to verify
that standard labels are written. EOF signals the
end of input data.
2. Label Number (1 byte)
a. Always a 1.
b. Processing by Sender: Write a 1.
c. Processing by Receiver: Check for a 1.
3. Data Set identifier (17 bytes)
a. Contents: (Data Set Name) locally negotiated
between involved parties (consider adopting a
format that uniquely identifies the interchanging
companies).
b. Processing by Sender: Write the above contents
into the field.
c. Processing by Receiver: The contents are checked
to ensure that an EMI file is being processed.
4. Data Set Serial Number (6 bytes)
a. Contents: The same volume serial number found in
the VOL 1 label.
b. Processing by Sender: Volume serial number found
in the VOL 1 label is written into this field.
c. Processing by Receiver: None.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-3
5. Volume Sequence Number (4 bytes)
a. Contents: A number (0001-9999) that indicates the
order of the volume within the multi-volume group
created at the same time. This number is always
0001 for a single volume data set.
b. Processing by Sender 0001 is written in this
field for a single volume data set or the first
volume of multi-volume group. Subsequent volumes
will be numbers 0002, 0003, etc.
c. Processing by Receiver: None needed for PIC
(presubscription) files.
6. Data Set Sequence Number (4 bytes)
a. Contents: 0001
b. Processing by Sender 0001 is written in this
field.
c. Processing by Receiver None needed for EMI files.
7. Generation Number (4 bytes)
a. Contents: Blanks.
b. Processing by Sender: Blanks are written.
c. Processing by Receiver: None.
8. Version Number (2 bytes)
a. Contents: Blanks.
b. Processing by Sender: Blanks are written.
c. Processing by Receiver: None.
9. Creation Date (6 bytes)
a. Contents: Year and day of year when this EMI file
was written. The date is shown in the format
byyddd where:
b=blank
yy = year (00-99)
ddd = day (001-366)
b. Processing by Sender: Date is written.
c. Processing by Receiver: Not used under normal
circumstances.
10. Expiration Date (6 bytes)
a. Contents: Year and day of the year when this file
may be overwritten. The expiration date is
written in the same format as the creation date.
Recommended retention is 45 days from Creation
Date.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-3
b. Processing by Sender: The expiration date is
compared to the present date. If the present date
is equal to or greater than the expiration date
the job continues. If it is not, the file is
rejected.
c. Processing by Receiver: None.
11. Data Set Security (1 byte)
a. Content: Zero, which means no protection.
b. Processing by Sender: Zero is written.
c. Processing by Receiver: None.
12. Block Count (6 bytes)
a. Contents: For the HDR1 label this field is always
zero. For the EOF1 label this field contains the
number of data blocks in the data set.
b. Processing by Sender: None.
c. Processing by Receiver: None.
13. System Code (13 bytes)
a. Contents: Not used.
b. Processing by Sender: None.
c. Processing by Receiver: None.
The last seven bytes are written as blanks by the
sender and are not processed by the Receiver.
2.1.2.4 Standard Data Set Label 2 (HDR2/EOF2)
Standard data set label 2 follows data set label 1 and
contains additional information about the data set. The
format is used for header labels (HDR2) and end-of-data
set labels (EOF2).
1. Label identifier (3 bytes)
a. Contents: Three characters that identify the
label. They may be:
HDR - Header label (at beginning of File)
EOR - Trailer label (at the end of File)
b. Processing by Sender: Write the header of trailer
label in this field.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-3
c. Processing by Receiver: HDR is checked to verify
that standard labels are used. EOF signals the end
of input data.
2. Label Number (1 byte)
a. Contents: Always a 2.
b. Processing by Sender: A 2 is written.
c. Processing by Receiver: Check for a 2. If
processing an EOF label, a "2" signals the end of
readable data.
3. Record Format (1 byte)
a. Contents: An alphabetic character that indicates
the format of the records written on the file. For
EMI this will be an F-Fixed.
b. Processing by Sender: An F is written to define
Fixed Length Record Format.
c. Processing by Receiver: Check for F.
4. Block Length (5 bytes)
a. Contents: Contains the block length in bytes. For
EMI the number is 24500.
b. Processing by Sender: Number written.
c. Processing by Receiver: Number checked to
determine block size to be read.
5. Record Length (5 bytes)
a. Contents: A number that indicates the record
length in bytes. Currently, for EMI this number is
00175.
6. Tape Density (1 byte) - Blanks no processing.
7. Data Set Position (1 byte) - Blanks no processing.
8. Job/Job Step Identification (17 bytes) - Blanks no
processing.
9. File Recording Technique (2 bytes) - Blanks no
processing.
10. Control Character (1 byte) - Blanks no processing.
11. Reserved (1 byte) - Blanks no processing.
12. Block Attribute (1 byte)
a. Contents: For EMI the code is B, meaning Block
with no spanning record.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-3
Transmission utilizing Connect:Direct software is available. The
Customer will pack data by Bill RAO and transmit a separate file for
each AOC (as is currently done for tape and CMDS I). The Customer will
transmit to one central hub for each Ameritech Company, which will then
distribute to each AOC for processing. No processing will be performed
at the central hub.
A private line will be established between the Customer data center and
the AOC hub. Both the Customer and the AOC must have Connect:Direct
software available.
2.3 CMDS I
The Customer EMI messages will be separately packed containing only
Customer messages. The separate Customer packs will be transmitted to
CMDS-I by the host Companv with the other Company packs. The dataset
transmitted to CMDS-I will be according to the industry standards for
CMDS-I.
3.0 EMI DATA SEQUENCE
All companies should create 175 byte records and conform to the following
arrangement of data exchanged:
a) Customer to AOC.
. Write Pack Header (202203) for first invoice group.
. Write Message Detail Records for first invoice group.
. Write Pack Trailer (202204) for first invoice group.
b) AOC to Customer.
. Write Pack Header (202201) for first invoice group.
. Write Message Detail Records for first invoice group.
. Write Pack Trailer (202202) for first invoice group.
Repeat for subsequent invoice groups.
4.0 EDITS (REJECTION BY DATA SET, PACK OR INDIVIDUAL MESSAGE)
Attachment 1 is a list of edits/checks that are performed to ensure the
integrity of the data. The edits will guarantee that data has not been lost
in transmission, or that there is sufficient information for billing. Since
these edits are deemed of major significance, an edit failure should cause
the data set, pack or message to be rejected. The action item in Attachment
1 indicates what type of rejection resulted from each edit.
The document on "Interchange Record Format - Exchange Message Interface"
published by Bell Communications Research should be referenced to identify
all valid entries within the message fields. However, specific edits as
documented in the contractual agreement with the carrier will take
precedence over the general edits.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-3
5.0 PROCEDURES FOR REJECTED DATA SET, PACK OR INDIVIDUAL MESSAGE
5.1 If a data set or pack is rejected due to edit errors on the Customer
data set, notify the Customer contact via telephone within one business
day ("down" days being the exception). Do not process the file, for
data set rejection. Individual message rejection does not impact the
processing of the file. The Customer using these methods, may request
the original data set for the investigative purposes within the 5-day
retention period. If the Customer returns a corrected data set, a new
invoice number must be assigned to each pack.
5.2 Forward a copy of the Invoice Summary Report, Duplicate Detail Report,
and the Detail Error Report to the Customer for review within three (3)
business days of processing the transmission. Send these reports via
regular mail. Forward two copies of the Invoice Summary Report to the
person responsible for Customer Accounts Receivables. See Attachment 2A
for the Invoice Summary Report, Attachment 2B for Duplicate Detail
Report and Attachment 2C for suggested Detail Error Report.
6.0 DATA RETENTION
Retain tapes and transmissions for five (5) business days, returning tapes
to the Customer no later than ten (10) business days from receipt. Files are
returned via U.S. mail.
Retain any paper transmissions accompanying tapes for minimum of ninety (90)
days.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 1
DATASET/PACK VERIFICATION EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: First record of pack is not a Pack Header.
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The first record in a pack must be a Header
Record. The record identification (Category,
Group, Record Type) positions 1-6 must be equal
to:
202201 Header Record identification when pack is
from a Ameritech Operating Company to a
Customer
or
202203 Header Record identification when pack is
from a Customer to an Ameritech Operating
Company
- --------------------------------------------------------------------------------
ACTION ITEM: Data Set Rejection
- --------------------------------------------------------------------------------
PACK HEADER EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "IX CARRIER ID XXX is invalid."
xxx - IX CARRIER ID entered in Header Record
positions 17-19.
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The IX CARRIER ID (positions 17-19) in the Pack
Header Record is matched against the table of
valid IX CARRIER IDs
- --------------------------------------------------------------------------------
PACK HEADER EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: Billing RAO XXX is invalid for the Ameritech
Operating Company.
XXX - is RAO number inserted in Pack Header Record
positions 23-25.
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The "Billing RAO" (positions 23-25) in the Pack
Header Record is matched against the table of
valid RAOs for the Ameritech Operating Company
doing the billing.
- --------------------------------------------------------------------------------
ACTION ITEM: Pack Rejection
- --------------------------------------------------------------------------------
Proprietary
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 1
PACK HEADER EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: Invalid Invoice Number. Should be XX.
xx - should be Invoice Number as determined by
processing.
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The "Invoice Number" (positions 13-14) in the Pack
Header record is checked against an "Invoice
Table" for proper sequence, duplication and
missing packs.
- --------------------------------------------------------------------------------
ACTION ITEM: Pack Rejection it received over CMDS-I. With tape
files, or Data transmissions, the pack is rejected
after ten tapes are received with invalid invoice
number.
- --------------------------------------------------------------------------------
DETAIL RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "No detail records in pack."
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The next valid record following a Header record
must be a detail record. It must not be another
Header record or a Trailer record. Detail records
are identified by the following numerics in
positions 1 and 2.
01 - Message Detail Records.
41 - Miscellaneous Credit Records.
42 - Non Detail Charge Records.
- --------------------------------------------------------------------------------
ACTION ITEM: Pack Rejection
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 1
DETAIL RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "XXXXX Invalid Record ID."
- --------------------------------------------------------------------------------
EDIT DESCRIPTION The Record Identification field (positions 1-6)
are edited for valid codes and valid combination
of codes. The valid codes and combinations are:
Pos. 1-2 Pos. 3-4 Pos. 5-6
CATEGORY GROUP RECORD TYPE
-------- ----- -----------
01 01 01,06,07,12,16,18,32,35,37,80-83
01 02 01,06,07,80,81,82,83
01 03,04,05 01,80,81
41 01 01,06,08-18,31-35,37,80-82
41 02 01,06,09,14,17,18,32,80-82
41 03 01,32,80
41 04 01,18,32,80
41 05 01,16-18,32,35,37,80-81
41 06 01,32,80
41 07 01,18,32
41 50 01
42 50 01
- --------------------------------------------------------------------------------
ACTION ITEM: Message Rejection
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 1
DETAIL RECORD EDITS
- --------------------------------------------------------------------------------
ERROR MESSAGE: "XXXXX Invalid Date of record."
XXXXX - Number of records with invalid dates.
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The "Date of Record" field (positions 7-12) in the
Detail records will be edited for validity.
Month must be in range of 01-12.
Day must be in range of 01-31 and maximum for
month.
Year must be current year or a previous year.
a) If message month and day is greater than
current month and day then the year must be
a previous year.
b) If message month and day is equal to or less
than current month and day then the year
must be the current year or a previous year.
c) If the month and day is older than 365 days
from the current date and the message is one
of the following:
- North American originating and terminating
international messages. These are IOC
originated or Overseas Originated
Ameritech billed. EMR Groups 04, 05 and
07.
- WATS messages, inward and outward. T5 and
800 Service. EMR Record Types 02, 03, 04
and 05.
- Rebill or Recharge messages (Indicator 3,
values 3, 4 and 5).
- Return messages (Indicator 3, values 1
through 9).
- Other exceptions as specifically agreed to
between the parties, e.g., Bulk recording
failures.
d) If the month and day is older than 90 days
from the current date and it is not one of
the messages identified in item "c"
preceding.
- --------------------------------------------------------------------------------
ACTION ITEM: Message Rejection
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 1
DETAIL RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "Invalid Charge."
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The "Charge" field (positions 40-47) is edited for
numerics, and must be greater than zero. This
field may equal zero when indicator 13 has a value
of 5 or 7 - the message was recorded by one
carrier and will be rated by another carrier.
- --------------------------------------------------------------------------------
ACTION ITEM: Message Rejection
- --------------------------------------------------------------------------------
DETAIL RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "Billing Number NPA-NNX is invalid for the AOC."
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The Billing Number NPA-NNX field in the detail
record (positions 113-118) must equal a valid
Billing NPA-NNX for the AOC.
- --------------------------------------------------------------------------------
ACTION ITEM: Message Rejection
- --------------------------------------------------------------------------------
DETAIL RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: Invalid Billable or Reported Time.
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The values are:
Positions 61-64 (Minutes) 0000-9999
Positions 65-66 (Seconds) 00-59
Positions 67 (Tenths) 0-9
For all conditions the field cannot be all zeros.
- --------------------------------------------------------------------------------
ACTION ITEM: Message Rejection
- --------------------------------------------------------------------------------
DETAIL RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "Invalid LATA Status Code."
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The LATA Status Indicator 19 (position 100) does
not contain a "2" or "5" value.
"0", "2", "4", "5", or "6".
- --------------------------------------------------------------------------------
ACTION ITEM: Message Rejection
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 1
DETAIL RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: Invalid Billing RAO
- --------------------------------------------------------------------------------
ERROR DESCRIPTION: The Billing RAO field in the detail record
(positions 110-112) must equal the billing RAO
field in the Header Record.
- --------------------------------------------------------------------------------
ACTION ITEM: Message Rejection
- --------------------------------------------------------------------------------
DETAIL RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: Invalid Settlement Code.
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: Valid Settlement Codes are:
Intrastate: 3,5,6,8,9,0
Interstate: G,J,K,L,M,N,P,Q,R
May be zero when Record Type=03; or when Indicator
13-6 unrated message from Carrier).
- --------------------------------------------------------------------------------
ACTION ITEM: Message Rejection
- --------------------------------------------------------------------------------
DETAIL RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR-MESSAGE: Invalid IX Carrier ID.
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The IX Carrier ID field in the detail record
(positions 150-152) must equal the IX Carrier ID
field in the Header Record.
- --------------------------------------------------------------------------------
ACTION ITEM: Message Rejection
- --------------------------------------------------------------------------------
DETAIL RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "Pack exceeds limit of 100,000 records."
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The records submitted per pack are counted and
checked against the number of allowable records.
The limit is 100,000 messages per pack.
Header and Trailer records are not included in the
count.
- --------------------------------------------------------------------------------
ACTION ITEM: Pack Rejection
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 1
TRAILER RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "Trailer Record is missing."
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The last record in a pack must be a Trailer
record. Valid Trailer record identification
(Category, Group, Record Type) is:
202202 - Trailer Record identification when pack
is from an Ameritech Operating Company to
a Customer
or
202204 - Trailer Record identification when pack
is from a Customer to an Ameritech
Operating Company.
- --------------------------------------------------------------------------------
ACTION ITEM: Pack Rejection
- --------------------------------------------------------------------------------
TRAILER RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "Trailer Grand Total Revenue XXXXXXXX.XX is not
equal To the accumulated Revenue Total
XXXXXXXX.XX."
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: During the editing of the Message records the
"Charge" fields (positions 40-45) will be
accumulated and the total matched against the
"Grand Total Revenues" field (positions 101-110)
in the Trailer record. The accumulation must match
the data in the "Grand Total Revenues" field.
* State and local tax will be included in the
accumulation where applicable.
- --------------------------------------------------------------------------------
ACTION ITEM: Pack Rejection
- --------------------------------------------------------------------------------
TRAILER RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "TRAILER GRAND TOTAL RECORD COUNT xxxxxx DOES NOT
EQUAL ACCUMULATED RECORD COUNT yyyyy."
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: During the editing of the Detail records, a count
of the records will be accumulated and the total
matched against the "Grand Total Record Count"
field (positions 111 -117) in the trailer record.
The accumulation must match the date in the "Grand
Total Record Count" field.
In both cases, if the totals do not agree, the
messages will not be processed.
- --------------------------------------------------------------------------------
ACTION ITEM: Pack Rejection.
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Attachment 1
TRAILER RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "IX CARRIER ID) on Trailer record is not equal to
the IX CARRIER ID on Header record."
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The IX CARRIER ID field in the Trailer record
(positions 17-19) must equal the IX CARRIER ID
field in the Header record.
- --------------------------------------------------------------------------------
TRAILER RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "Billing RAO" field in the Trailer record
(positions 23-25) mush equal the "Billing RAO"
field in the Header record.
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The "Billing RAO" field in the Trailer record
(positions 23-25) must equal the "Billing RAO"
field in the Header record.
- --------------------------------------------------------------------------------
ACTION ITEM:
- --------------------------------------------------------------------------------
TRAILER RECORD EDITS (MAJOR)
- --------------------------------------------------------------------------------
ERROR MESSAGE: "Trailer Invoice Number" does not equal Invoice
Number record (positions 13-14) in the Header
record.
- --------------------------------------------------------------------------------
EDIT DESCRIPTION: The "Invoice Number" field in the Trailer record
(positions 13-14) must be equal to the "Invoice
Number" field in the Header record.
- --------------------------------------------------------------------------------
ACTION ITEM: Pack Rejection
- --------------------------------------------------------------------------------
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
<TABLE>
<CAPTION>
AMERITECH -- -- MESSAGE-- PROCESSING SYSTEM PAGE 000001
**I N V O I C E S U M M A R Y R E P O R T**
REPORT NO. XGBIXF01 - XGBIX052-01
CYCLE NO. 94027 DPO 1
DATE 01-28-94
TIME 14:01:01
PROCESSED DATE : 01/27/94 INTEREXCHANGE CARRIER DISTRIBUTION PAGE 01
PROCESSED TIME : 12.56.00 **I N V O I C E S U M M A R Y R E P O R T**
PROGRAM ID. : XGBIX052
PROCESSING ABOC: AMERITECH - INDIANA
INTEREXCHANGE CARRIER ID: NAME:
************************************************************************************************************************************
TO CARRIER:
** ACCEPTED PACKS ** RATED **
****PACK IDENTIFICATION****
BILL CREATION INV SERIAL TOTAL CARR. RTNS PACK EDIT CAT34 NET MSG
RPO DATE NO. NUMBER RECEIVED TO AOC ERRORS DUPLIC. RECVD ACCEPTED
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
080 01/24/94 19 00000001 29063 0 0 0 0 29063
24877.13 .00 .00 .00 .00 24877.13
320 01/24/94 15 00000001 9697 0 1 0 0 9696
9151.69 .00 .13 .00 .00 9151.56
321 01/24/94 14 00000001 2971 0 0 0 0 2971
2883.01 .00 .00 .00 .00 2883.01
TOTAL PROCESSED: 41731 0 1 0 0 41730
36911.83 .00 .13 .00 .00 36911.70
</TABLE>
<TABLE>
<CAPTION>
** ACCEPTED PACKS ** RATED **
****PACK IDENTIFICATION****
BILL CREATION INV SERIAL TOTAL CARR. RTNS PACK EDIT CAT34 NET MSG
RPO DATE NO. NUMBER RECEIVED TO AOC ERRORS DUPLIC. RECVD ACCEPTED
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
080 01/24/94 20 00000000 17 0 0 0 0 17
114.62CR .00 .00 .00 .00 114.62CR
</TABLE>
ATTACHMENT 2A
*** NOTICE ***
***NOT FOR USE OR DISCLOSURE OUTSIDE THE AMERITECH ***
***COMPANIES EXCEPT UNDER WRITTEN AGREEMENT. ***
***************** END OF REPORT ******************
<PAGE>
<TABLE>
<CAPTION>
AMERITECH -- -- MESSAGE-- PROCESSING SYSTEM PAGE 000002
**I N V O I C E S U M M A R Y R E P O R T**
REPORT NO. XGBIXF01 - XGBIX052-01
CYCLE NO. 94027 DPO 1
DATE 01-28-94
TIME 14:01:01
PROCESSED DATE : 01/27/94 INTEREXCHANGE CARRIER DISTRIBUTION PAGE 02
PROCESSED TIME : 12.56.00 **I N V O I C E S U M M A R Y R E P O R T**
PROGRAM ID. : XGBIX052
PROCESSING ABOC: AMERITECH - INDIANA
INTEREXCHANGE CARRIER ID: NAME:
************************************************************************************************************************************
TO CARRIER:
** ACCEPTED PACKS ** RATED **
****PACK IDENTIFICATION****
BILL CREATION INV SERIAL TOTAL CARR. RTNS PACK EDIT CAT34 NET MSG
RPO DATE NO. NUMBER RECEIVED TO AOC ERRORS DUPLIC. RECVD ACCEPTED
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
? 01/24/94 16 00000000 1 0 0 0 0 1
5.00CR .00 .00 .00 .00 5.00CR
TOTAL PROCESSED 18 0 0 0 0 18
119.62CR .00 .00 .00 .00 119.62CR
</TABLE>
ATTACHMENT 2A
*** NOTICE ***
***NOT FOR USE OR DISCLOSURE OUTSIDE THE AMERITECH ***
***COMPANIES EXCEPT UNDER WRITTEN AGREEMENT. ***
***************** END OF REPORT ******************
<PAGE>
ATTACHMENT 2B
AMERITECH -- -- MESSAGE PROCESSING SYSTEM PAGE 000001
**D U P L I C A T E D E T A I L R E P O R T**
REPORT NO. XGBIXF01-XGBIX052-02
CYCLE NO. 94027 DPO 1
DATE 01-28-94
TIME 14:00:51
<TABLE>
<CAPTION>
PROCESSED DATE : 01/27/94 INTEREXCHANGE CARRIER DISTRIBUTION PAGE 1
PROCESSED TIME : 12.01.37 **D U P L I C A T E D E T A I L R E P O R T**
PROGRAM ID. : XGBIX052
PROCESSING ABOC: AMERITECH - MICHIGAN
INTEREXCHANGE CARRIER ID: NAME:
************************************************************************************************************************************
*** FIELDS CHECKED FOR DUPLICATION *** *** ADDITIONAL INFORMATION ***
REC. MSG FROM TO CONN BILL BILL FROM BILL CURRENT PREVIOUS
ID DATE NUMBER NUMBER TIME TIME NUMBER CHARGE RAO RAO SER. NO. SER. NO.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
010101 940120 517-783- 914-921- 121000 0.300 517-783- $0.09 084 224 94012417 94012417
<CAPTION>
<S> <C> <C>
TOTAL NUMBER OF DUPLICATE MESSAGES 1 $0.09
TOTAL NUMBER OF DUPLICATE COIN MESSAGES 0 $0.00
</TABLE>
*** NOTICE ***
*** NOT FOR USE OR DISCLOSURE OUTSIDE THE AMERITECH ***
*** COMPANIES EXCEPT UNDER WRITTEN AGREEMENT. ***
*************** E N D O F R E P O R T *****************
<PAGE>
Attachment 2C
PRINTED DETAIL ERROR REPORT
The printed error report sent to the Customer will contain at least the
following information:
Name of the AOC
Name of the Customer
Date the Tape was Rejected
Invoice Number of the Header Record
Create Date on the Header Record
Error Message (explaining the incorrect Header, Trailer or Detail Record)
Followed by the Incorrect Record
Total Number of Errors by Type of Error
Total Number of Errors and Revenue
Attachment 4, Page 1, Contains an Adapted Ohio Bell Error Report
Note 1: If all records in the pack are incorrect for the same reason, the
carrier may only request some of the records (10 records) back instead
of the entire listing.
<PAGE>
Attachment 2C
<TABLE>
<CAPTION>
AMERITECH -- -- MESSAGE PROCESSING SYSTEM PAGE 000001
** D E T A I L E R R O R R E P O R T **
<S> <C> <C> <C>
REPORT NO. XGBIXFO1-XGBIXO51-01
CYCLE NO. 94027 DPO 1
DATE 01-28-94
TIME 14:00:39
PROCESSED DATE : 01/27/94 INTEREXCHANGE CARRIER DISTRIBUTION PAGE : 1
PROCESSED TIME : 12.33.09 ** D E T A I L E R R O R R E P O R T **
JOB ID : XGBIX051-01
PROCESSING ABOC : AMERITECH - INDIANA
INTEREXCHANGE CARRIER ID : NAME :
********************************************************************************************************************************
***** INVOICE NUMBER 19 HAS BEEN RECEIVED, INVOICE CREATION DATE IS 01/24/94, BILLING RAO IS 080
***** INVOICE NUMBER 19 HAS BEEN ACCEPTED FOR PROCESSING
***** INVOICE NUMBER 19 HAS BEEN SUCCESSFULLY PROCESSED WITHOUT ERRORS
***** INVOICE NUMBER 20 HAS BEEN RECEIVED, INVOICE CREATION DATE IS 01/24/94, BILLING RAO IS 080
***** INVOICE NUMBER 20 HAS BEEN ACCEPTED FOR PROCESSING
***** INVOICE NUMBER 20 HAS BEEN SUCCESSFULLY PROCESSED WITHOUT ERRORS
***** INVOICE NUMBER 15 HAS BEEN RECEIVED, INVOICE CREATION DATE IS 01/24/94, BILLING RAO IS 320
***** INVOICE NUMBER 15 HAS BEEN ACCEPTED FOR PROCESSING
DETAIL ERRORS FOLLOW:
INVALID NPA/NXX ( OR RAO/NXX ) ( POSITIONS 113-118 )
1 80 0101019 9776678300010414871956200001300000000000190000010000200080000341
1 175 00000030/0000045000200000000 0000100000000000000000
***** INVOICE NUMBER 15 TOTAL MESSAGES IN ERROR 1 TOTAL REVENUE ON ERROR RECORDS $0.13
***** INVOICE NUMBER 16 HAS BEEN RECEIVED, INVOICE CREATION DATE IS 01/24/94, BILLING RAO IS 320
***** INVOICE NUMBER 16 HAS BEEN ACCEPTED FOR PROCESSING
***** INVOICE NUMBER 16 HAS BEEN SUCCESSFULLY PROCESSED WITHOUT ERRORS
***** INVOICE NUMBER 14 HAS BEEN RECEIVED, INVOICE CREATION DATE IS 01/24/94, BILLING RAO IS 321
***** INVOICE NUMBER 14 HAS BEEN ACCEPTED FOR PROCESSING
***** INVOICE NUMBER 14 HAS BEEN SUCCESSFULLY PROCESSED WITHOUT ERRORS
***** TOTAL ERRORS FOUND BY TYPE *****
INVALID NPA/NXX ( OR RAO/NXX ) ( POSITIONS 113-118 ) 1
TOTAL OF ERRORS 1
*** NOTICE ***
*** NOT FOR USE OR DISCLOSURE OUTSIDE THE AMERITECH ***
*** COMPANIES EXCEPT UNDER WRITTEN AGREEMENT ***
************************************** E N D O F R E P O R T ****************************************
</TABLE>
<PAGE>
Exhibit D-4
Bill Format Specifications
Revised November 1,1994
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-4
TABLE OF CONTENTS
SECTION 1.0 General Information
SECTION 2.0 Page Content/Format
SECTION 3.0 Page Sequence
SECTION 4.0 Customer Presence
SECTION 5.0 Taxing
SECTION 6.0 Bill Sample
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-4
1.0 GENERAL INFORMATION
This document specifies a regional standard bill format for the Ameritech
Operating Companies' (AOCs) end user billing.
2.0 PAGE CONTENT/FORMAT
2.1 The Customer message detail will appear on the AOC end user bill in the
current standard bill format.
2.2 Standard phrases will be used to display contact telephone numbers on
the end user bill pages.
2.2.1 Bill inquiry telephone numbers should be displayed as:
"To question your bill call" 1 NPA NXX-LINE" (AOC performs
inquiry and provides number).
The telephone number displayed will be an AOC service center
number when the AOC provides bill inquiry.
2.2.2 To provide Customers with a means to have direct contact with
their end users a second line will be made available to display
a Customer contact number using the phrase:
"For other (Customer Name) services, call 1 NPA NXX-Line"
2.2.3 Because of space limitations, the Customer name will be limited
to 30 print positions.
2.2.4 The Customer must provide the telephone number to be displayed.
2.3 In the display of message details, the duration of the call will be
shown as minutes and tenths of minutes (MMMM.T); depending on how the
Customer rates the message and passes the entry in the EMI record.
3.0 PAGE SEQUENCE
3.1 The Customer messages will be provided in the "Important Information"
section of the Standard Bill, on the appropriate page.
3.2 Each bill will begin with the AOC pages. When provided by the AOC, the
pages will appear as follows:
3.2.1 OCR Return Document (Top portion of the Summary Page).
3.2.2 Summary page and Detail - a summary of all the total current
charges by Customer found below the Return Document.
3.2.3 "Detailed Charges" - for itemization of AOC billing.
3.2.4 Detail Changes - for itemization of Customer billing.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit D-4
3.3 Following the AOC pages will be the bill pages for each Customer.
3.3.1 Current Charges page - summarizing the Customer's charges; in
AOCs that format this page.
3.3.2 Detailed Charges pages - for the Customer's bill data.
3.4 The sequence defined in Section 3.3 will be repeated for as many
Customers as there are on the end user bill.
4.0 CUSTOMER PRESENCE
4.1 Customer logos can be printed on the pages in the Carrier Section of
the end user bill.
4.2 The Customer must provide "camera ready" copies of the logo it wants
displayed.
4.3 The maximum logo size that can be accommodated on all AOC bill formats
is 11/32 inches high and 3-3/4 inches long.
4.4 A Customer not requiring a logo can have its corporate name printed in
this area of the bill. A maximum of 30 characters is available.
5.0 TAXING
5.1 As specified by the Customer, application of taxes will be done by the
AOCs following the methods currently in use.
6.0 BILL SAMPLES
6.1 Ameritech Illinois pages are used as an illustration. The other AOC
Bill Pages would be similar in appearance since all AOCs use a Standard
Bill Format.
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Section 6.0
Bill Sample
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Bill Sample
Ameritch
013120555121240403520097002003580000000000000099999
[BAR CODE APPEARS HERE] -----------------------
Ameritech Account Number
PO Box 2500 312 555-1212 000 1
BEDFORD PARK, IL 60499-2500 ------------------------
SEP 15, 1993
**CR 80
JOHN DOE
123 MAIN STREET
ANYTOWN, IL 60499
- -------------------------------------------------------------------------------
CURRENT CHARGES TOTAL
PAST DUE AFTER.... Oct 5, 1993 AMOUNT DUE... 36.07
- -------------------------------------------------------------------------------
Detach and mail top section with your check made payable to Ameritech
for total amount due.
-------------------------
CONSUMER SERVICES 312 555-1212 000 1
BILLING SUMMARY -------------------------
SEP 15, 1993
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Previous Payments Adjustments Balance Current Total
Bill Thank You Charges Amount Due
<S> <C> <C> <C> <C> <C>
34.28 31.74 2.54CR 0.00 36.07 36.07
</TABLE>
JOHN DOE 123 MAIN STREET ANYTOWN, IL 60499
<TABLE>
<CAPTION>
SUMMARY OF CURRENT CHARGES
<S> <C>
AMERITECH
Monthly Service............................... 18.27
Information Charges........................... 1.00
Other Charges and Credits..................... 8.00
Long Distance................................. 1.21
Local and State Additional Charges............ .23
Taxes (Fed .90) (St 1.91)............ 2.81
AMERITECH CURRENT CHARGES..................... 31.52
XYZ (Carrier Name)
Long Distance................................. 3.79
Local and State Additional Charges............ .46
Taxes (Fed .11) (St .19)......... .30
XYZ CURRENT CHARGES........................... 4.55
===========================================================
TOTAL CURRENT CHARGES 36.07
</TABLE>
Page 2
For Illustrative Purposes Only
PROPRIETARY
Subject to restrictions on first page.
<PAGE>
[LOGO OF AMERITECH APPEARS HERE]
Bill Sample
DETAILED CHARGES
Page 2
To order new service or move service, call 1 800 555-1212 ====================
To discuss bill payment, call 1 800 555-1213 312 555-1212 000 1
For all other reasons, call 1 800 555-1214 ====================
Office hours are 7:30am - 6:30pm Monday thru Friday SEP 15, 1993
FOR FASTER SERVICE CALL TUESDAY THRU FRIDAY
IMPORTANT INFORMATION
Our records indicate your primary Dial 1 Plus Long Distance Company is XYZ.
DETAIL OF PAYMENTS AND ADJUSTMENTS
<TABLE>
<CAPTION>
No. Date Description Adjustments Payments
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 3-23 Payment 31.74
2 3-19 Itemized Calls 2.41CR
3 3-19 Federal Tax .13CR
------------- ------------
Totals 2.54CR 31.74
</TABLE>
CURRENT CHARGES
<TABLE>
<CAPTION>
Monthly Service - Sep 15 thru Oct 14
<S> <C>
Local Line ................................................. 9.52
. Touch-Tone Service ......................................... 1.50
. Call Waiting ............................................... 2.75
. Line-Backer Maintenance .................................... 1.00
Access Charge per FCC order ................................ 3.50
. Indicates Optional Services - May be discontinued
without a charge.
Monthly Service reflects $.53 temporary credit per
P.S.C. order.
Total Monthly Service Charges ................................ 18.27
Information Charges
You placed 4 call(s) to 1+411 at $.25 each ................. 1.00
</TABLE>
FOR CALLING CODES
============= PLEASE SEE THE BACK OF THIS PAGE
Page 3
For Illistrative Purposes Only
PROPRIETARY
Subject to restrictions on first page.
<PAGE>
[LOGO OF AMERITECH APPEARS HERE]
Bill Sample
DETAILED CHARGES PAGE 3
To order new services or more services, call 1 800 555-1212 --------------------
To discuss bill payment, call 1 800 555-1213 312 555-1212 000 1
For all other reasons, call 1 800 555-1214 --------------------
Office hours are 7:30am-6:30pm Monday thru Friday SEP 15,1993
FOR FASTER SERVICE CALL TUESDAY THRU FRIDAY
Other Charges and Credits
This section of the bill reflects charges or credits
resulting from recent account activity.
<TABLE>
<CAPTION>
Monthly
No. Description Qty. Charges
-----------------------------------------------------
<C> <S> <C> <C> <C>
1 Charge for Changing your Directory
Listing/Billing Records on Sept 10, 1993 ........ 8.00
Total Other Charges and Credits ....................... 8.00
<CAPTION>
Long Distance
No. Date Time Place Called Number Code Min.
-----------------------------------------------------
<C> <S> <C> <C> <C>
1 3-30 130P BEAVER DAM WI 414-555-1515 N 1 .21
2 4-01 308P INTERRUPT CHG 312-555-0259 1.00
Total Long Distance ................................... 1.21
Local and State Additional Charges
9-1-1 Emergency System
Billed for Cook County .............................. .25
Taxes
Federal at 3% ....................................... .90
State at 5% ......................................... 1.91
</TABLE>
======================================================================
TOTAL AMERITECH CURRENT CHARGES 31.52
FOR CALLING CODES
PLEASE SEE THE BACK OF THIS PAGE
Page 4
For Illistrative Purposes Only
PROPRIETARY
Subject to restrictions on first page.
<PAGE>
XYZ Long Distance
Bill Sample
DETAILED CHARGES Page 41
For questions regarding XYZ charges call 1 800 555-1212 =======================
For changes to your XYZ services call 1 800 555-2345 312 555-1212 000 1
=======================
SEP 15, 1993
IMPORTANT INFORMATION
This portion of your bill is provided as a service to XYZ. There is no
connection between Ameritech and XYZ. You may choose another company for your
long distance telephone calls while still receiving your local telephone service
from Ameritech.
CURRENT CHARGES
Long Distance (Logo Area)
No Date Time Place Called Number Code Win.
1 3-15 823P PORT HURON MI 313-555-8000 E 17 2.62
2 3-20 818P CHICAGO IL 312-555-5343 E 1 .16
3 3-23 1008P CLEVELAND OH 216-555-2009 E 5 .77
4 4-01 615A MADISON WI 608-555-2494 N 2 .24
Total Long Distance ............................................... 3.79
Local and State Additional Charges
XYZ Long Distance Interstate Interlata Subtotal................. 3.79
Illinois Tax Adjustment (12.14%)................................ .46
Taxes
Federal at 3%................................................... .11
State at 5%..................................................... .19
==============================================================================
TOTAL XYZ CURRENT CHARGES 4.55
FOR CALLING CODES
PLEASE SEE THE BACK OF THIS PAGE
Page 5
For Illistrative Purposes Only
PROPRIETARY
Subject to restrictions on first page.
<PAGE>
Exhibit E
11/94
PROPRIETARY INFORMATION
AOC PROPRIETARY INFORMATION
End User Credit Information (including)
Credit Class
Treatment History
Dishonored Check History
Discretionary Data - Comments, e.g., number of years in business, other
billing numbers
Deposits (Excluding WATS and Private Line amounts)
Bank Draft Plan
Number and Type of Exchange Access Lines (other than Customer public telephones)
AOC intraLATA messages
AOC Official Service Messages
Directory Advertising
AOC Specific USOCs
AOC Public Telephone (Account Detail)
Listed Name and Address
Billed Name and Address
Account Established Date
Denial of Service
Customer Primary Interexchange Carrier Code - PIC
Services Location
Contract and Exhibits
Non-Pub Indicators
Class of Service (Res/Bus/Public)
Customer Code
Business Office Code
SIC Code
Type of Customer - TYA (Except AOC Public and AOC Board of Directors)
Generic Tax Area Codes
Billing Period Schedules
Tax Exempt Status
Number Change
Page Numbers of Statement
Temporary Suspension
CUSTOMER PROPRIETARY INFORMATION
Customer Message Detail
Correspondence Relating to Taxation of Customer's End Users
Contract and Exhibits
Listed Name and Address
Billed Name and Address
Service Location
Contract and Exhibits
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
DATE:______________
Exhibit F
List of Interexchange Carriers
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
DATE: July 1, 1995
------------
Teleco Development Group of Delaware, Inc.
CIC 457
Exhibit F
List of Interexchange Carriers
Dial & Save 100
LDWC 200
LDI 300
RoadCall 400
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit G
Ameritech
Billing and Collection Services
Requirements
For Handling 700 NXX XXXX,
900 NXX XXXX, NPA 976 XXXX
(or like services) Messages
Revised November 1, 1994
PROPRIETARY
This document contains proprietary information which shall not be released
in any manner to any party other than one of the Ameritech
Operating Companies without the written consent
of Ameritech Services, Inc.
<PAGE>
Exhibit G
I. GENERAL
The requirements detailed herein will apply to the AOC for the billing of
end users for the handling of the Customers 700 NXX XXXX, 900 NXX XXXX, NPA
976 XXXX (or like services) messages and will replace the applicable
procedures detailed in Exhibit C, Subsections 1.7, for such messages.
The EMI 01-01-16 record is to be used for billing of all 700 NXX XXXX,
900 NXX XXXX, presubscription or comparable arrangement services. The
telephone number dialed by the caller (e.g.700, 900, number will be
populated in the "To Number" field.) The charges for these services will
appear in the separate "900 and Other Information Services" section of the
bill page.
II. TREATMENT AND COLLECTION
AOC will provide Treatment and Collection Services in an attempt to control
or collect appropriate outstanding balance due amounts. When an end user's
account being treated for collection by the AOC remains delinquent thirty
(30) days beyond the payment date, the AOC may, at its sole discretion,
adjust the delinquent monies attributable to the Customers 700 NXX XXXX,900
NXX XXXX, NPA 976 XXXX (or like services) messages and recourse them back
to the Customer using procedures set forth in Exhibit C, Subsection 1.9.
It is Ameritech's expectation that those Customers that provide their own
inquiry service have sufficient resources available to serve the end user.
In instances where the Customer does not adequately respond to the end
users inquiries, and the AOC has to assume these responsibilities, the
Customer will be assessed the higher per message rate set forth in Exhibit
A, and will adjust the charges, if applicable.
The AOC may issue an adjustment to remove any unpaid Customer 700 NXX XXXX,
900 NXX XXXX, NPA 976 XXXX (or like services) messages from the end user
account, at such time as the account is disconnected for any reason.
III. DISPUTED BILL AMOUNTS
See Exhibit C, Subsection 1.9.
IV. END USER ADJUSTMENTS
See Exhibit C, Subsection 1.10.
V. DENIAL OF SERVICE
AOC will not provide Denial of Service to disconnect the end user's local
exchange service in cases of insufficient payment of the Customer's 700 NXX
XXXX, 900 NXX XXXX, NPA 976 XXXX (or like services) messages.
The Customer shall not represent to any AOC end user that failure to pay
Customers 700 NXX XXXX, 900 NXX XXXX, NPA 976 XXXX (or like services)
message charges may result in denial of the end user's telephone service.
PROPRIETARY
Subject to restrictions on first page.
<PAGE>
Date: July 1, 1995
------------
Telco Development Group of Delaware, Inc.
CIC 457
Exhibit H
Types of Messages for which
Billing and Collection Services
Are Provided
Direct Dial
Collect
Third Number
Credit/Calling Card
Misc. Credit 41
Misc. Charge 42
<PAGE>
Exhibit 10.2
P-1
AGREEMENT FOR THE
PROVISION OF BILLING AND COLLECTION SERVICES
BY BELL ATLANTIC OPERATING COMPANIES
This Agreement for the Provision of Billing and Collection Services between the
Bell Atlantic Operating Telephone Companies (Bell Atlantic - Pennsylvania, Inc.,
Bell Atlantic - Delaware, Inc., Bell Atlantic - New Jersey - Inc., Bell
Atlantic - Maryland, Inc., Bell Atlantic - Washington, D. C., Inc., Bell
Atlantic - Virginia, Inc. and Bell Atlantic - West Virginia, Inc.) (hereinafter
referred to collectively as "Bell Atlantic" and individually as ("BOC") and
Telco Development Group, Inc. (hereinafter "Customer") (hereinafter "Agreement")
- -----------------------------
is entered into this 10th day of June, 1994.
---- ---- ----
<PAGE>
P-2 7/15/93
Table of Contents
-----------------
EXHIBIT
-------
Principal Agreement
Billing and Collection Services Requirements A
Rates and Charges B
Letter of Credit C
Bell Atlantic 700/900 Service Billing Policy D
Customer Tax Responsibility Letter E
Billing Intermediary Amendment F
Glossary G
Sub-Carrier Listing Requirement H
Chapter 64 of Bell of Pennsylvania Requirements I
AIFP Service Agreement J
<PAGE>
P-3 7/15/93
AGREEMENT - TABLE OF CONTENTS
I. Purpose of this Agreement . . . . . . . . . . . . . . . . . . 4
II. Description of Contents . . . . . . . . . . . . . . . . . . . 4
III. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
IV. Regulatory Considerations . . . . . . . . . . . . . . . . . . 5
V. Description of Services . . . . . . . . . . . . . . . . . . . 5
VI. Purchase of Accounts Receivable . . . . . . . . . . . . . . . 6
VII. Audits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
VIII. Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 8
IX. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 10
X. Security. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
XI. Non-Exclusivity . . . . . . . . . . . . . . . . . . . . . . . 11
XII. Changes and Amendments. . . . . . . . . . . . . . . . . . . . 12
XIII. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
XIV. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 12
XV. Notice and Demands. . . . . . . . . . . . . . . . . . . . . . 12
XVI. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . 13
XVII. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . 13
XVIII. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 14
XIX. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 14
XX. Execute in Counterparts . . . . . . . . . . . . . . . . . . . 14
XXI. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 14
XXII. Use of Billing Intermediary. . . . . . . . . . . . . . . . . 15
XXIII. Bell Atlantic Calling Cards . . . . . . . . . . . . . . . . . 15
XXIV. MINIMUM REVENUE OBLIGATION . . . . . . . . . . . . . . . . . 15
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 16
<PAGE>
P-4 7/l5/93
I. PURPOSE OF THIS AGREEMENT
-------------------------
The purpose of this Agreement is to describe the terms and conditions under
which Billing and Collection Services will be provided by Bell Atlantic to
the customer.
II. DESCRIPTION OF CONTENTS
-----------------------
The parties adopt the following documents appearing as exhibits to this
contract:
(1) Billing and Collection Services Requirements, attached hereto and
incorporated herein as Exhibit A, and
(2) Rates and Charges, attached hereto and incorporated herein as
Exhibit B, and
(3) Letter of Credit, attached hereto and incorporated herein as
Exhibit C, and
(4) Bell Atlantic 700/900 Service Billing Policy, attached hereto and
incorporated herein as Exhibit D, and
(5) Customer Tax Responsibility Letter, attached hereto and incorporated
herein as Exhibit E, and
(6) Billing Intermediary Amendment, attached hereto and incorporated
herein as Exhibit F, and
(7) Glossary of Terms, attached hereto and incorporated herein as
Exhibit G, and
(8) Sub-Carrier Listing Requirements, attached hereto and incorporated
herein as Exhibit H, and
(9) Bell of Pennsylvania Chapter 64 Requirements, attached hereto and
incorporated herein as Exhibit I.
III. TERMS
-----
This Agreement shall become effective on the date of execution and remain
in effect for five (5) years.
<PAGE>
P-5 7/15/93
IV. REGULATORY CONSIDERATIONS
-------------------------
In the event of any conflict between provisions contained in this
Agreement and the provisions of an effective tariff or regulatory
requirements, the provisions of the tariff or regulatory requirements
shall control. However, it is the intention of the parties that this
Agreement, to the extent not in conflict with the provisions of an
effective tariff or regulatory requirements, supplements the tariff or
regulatory requirements, supplies necessary operational practices, and is
to be construed to the extent possible in harmony with the tariff or
regulatory requirements.
V. DESCRIPTION OF SERVICES
-----------------------
Billing and Collection Services under this Agreement are the preparation
and rendering of bills and collection of telecommunication related services
charges on behalf of the Customer. The services include:
- Pre-billing message investigation
- Processing Customer rated messages for bill preparation
- Maintenance for end user accounts that are located within the operating
territory of Bell Atlantic (Maintenance includes the posting of
charges, payments, adjustments and other activities required to
maintain an accurate billing record)
- Rendering of bills
- Treatment of accounts, including the forwarding of collection notices and
other collection steps that may be required
- Inquiry service involving answering end user questions about charges for
Customer services and negotiating adjustments to end user accounts
<PAGE>
P-6 7/15/93
Charges for products and services other than telecommunication transmission
services provided by the Customer will be billed by Bell Atlantic at Bell
Atlantic's discretion. In addition, the Bell Atlantic 700/900 Service
Billing Policy, Exhibit D, will apply to the billing of Adult and GAB
Programs offered through the Customer's 700 or 900 service.
VI. PURCHASE OF ACCOUNTS RECEIVABLE
-------------------------------
At its discretion, Bell Atlantic may purchase from the Customer its
accounts receivable that arise from messages received by Bell Atlantic to
be billed to the Customer's end users. The purchase of accounts receivable
will be limited to amounts due to Customer when Bell Atlantic provides
Billing and Collection Services for the Customer.
Bell Atlantic's purchase, if any, of a Customer's accounts receivable shall
be with recourse, adjustments, payment procedures and interest penalties,
as set forth in Exhibit A, Billing and Collection Services Requirements.
VII. AUDITS
------
A. Notice, Scope and Frequency
---------------------------
Upon written notice to Bell Atlantic, the Customer or its authorized
representative shall have the right to commence an audit. The scope of
the audit will be mutually agreed to by the parties to this Agreement.
The notice of audit shall identify the requested date upon which it is
to commence, the projected completion date, the geographic location to
be audited, the Customer representatives, the purpose and subject
matter of the audit and the material to be reviewed.
<PAGE>
P-7 7/15/93
The notice of audit shall be directed to the Bell Atlantic representatives
at the address set forth in the NOTICE AND DEMANDS, Paragraph XVI, or to
such other address as Bell Atlantic may from time to time stipulate. Within
thirty (30) days from the receipt of the notice, the specific items of
information to be audited and the date of the commencement of the audit
shall be mutually agreed upon. Generally the commencement date shall be no
greater than forty-five (45) days from the date of the agreement.
No more than one audit may be conducted in any twelve (12) month period
during the term of this Agreement. Audits shall be conducted during normal
business hours and shall be of such records and accounts as may, under Bell
Atlantic recognized accounting practices, contain information bearing upon
(1) the amount being billed to the Customer's end users by Bell Atlantic as
part of its provisioning of Billing and Collection services, (2) the
charges to the Customer therefore, and (3) the charges for other services
provided by Bell Atlantic pursuant to this Agreement.
B. Expenses
--------
Each party shall bear its own expenses associated with the conduct of the
audit, except that special requirements, including but not limited to,
special data extractions required by the Customer to conduct the audit,
will be paid by the Customer. For the purpose of this subsection, a
"special data extraction" means programming and computer time required to
program and run, at the Customer's request, an extraction of data which is
not currently maintained or reported by Bell Atlantic and which the
Customer specially requests for the conduct of the audit. Special data
extractions shall be subject to Time and Cost Estimate procedures as set
forth in Exhibit A.
<PAGE>
P-8 7/l5/93
C. Adjustments
-----------
Adjustments to Customer revenues or to Bell Atlantic's Billing and
Collection charges shall be made to correct errors or omissions disclosed
by the audit, and will follow the claims process established under this
Agreement.
D. Handling of Materials
---------------------
Materials of Bell Atlantic reviewed by the Customer in the course of the
audit, shall be deemed confidential. Their use by the Customer shall be
limited to the conduct of the audit and the preparation of a report for
appropriate distribution by the Customer to those within its organization
who need to know the results of the audit.
VIII. LIABILITY
---------
Bell Atlantic's liability for Billing and Collection Service shall
be as follows:
A. When the Customer furnishes Bell Atlantic messages or other billing
detail for Billing and Collection Services as provided under this
Agreement, the Customer shall retain a copy of the detail for ninety
(90) days from the date received by Bell Atlantic.
B. If Bell Atlantic discovers an error or omission in the Customer
furnished data, Bell Atlantic will notify the Customer within ninety
(90) days. If the Customer fails to provide the necessary correct
data in the time period which will allow Bell Atlantic to bill the
appropriate end users within the time limits permitted by law or
regulation, Bell Atlantic will have no liability for any damages
arising from failure to provide Billing and Collection Services to
the affected end users.
<PAGE>
P-9 7/15/93
C. If Customer billing detail is not available because Bell Atlantic
lost or damaged records or incurred processing system outages, Bell
Atlantic will attempt to recover the lost Customer billing detail. If
the lost or damaged Customer billing detail cannot be recovered, the
Customer will be asked to resupply the Customer Billing detail. If
the Customer has not complied with the retention requirements, Bell
Atlantic will have no liability.
If the Customer has complied with the retention requirements of
Paragraph A above and cannot resupply the detail, Bell Atlantic will
estimate the volume of lost Customer billing detail and associated
revenue based on previously known values. In such events, the extent
of Bell Atlantic's liability shall be limited to the granting of a
special settlement adjustment to account for the unbillable revenue.
D. If Bell Atlantic finds, or is notified within forty-five (45) days of
the end user bill date, an error in billing to an end user, it will
make a reasonable effort to correct the error and bill the
appropriate end user within the limits permitted by the laws of the
jurisdiction in which it provides the service. If the error is caused
by Bell Atlantic and Bell Atlantic cannot bill the proper end user,
the extent of Bell Atlantic's liability for damages will be the known
amount misbilled or when the amount misbilled is unknown, limited as
set forth in Paragraphs B and C preceding.
<PAGE>
P-10 7/15/93
E. IN THE ABSENCE OF WILLFUL MISCONDUCT, BELL ATLANTIC SHALL HAVE NO
LIABILITY FOR DAMAGES TO THE CUSTOMER TO ANY OTHER PERSON OR ENTITY
OTHER THAN AS SET FORTH IN PARAGRAPHS B, C AND D.
IX. INDEMNIFICATION
---------------
Bell Atlantic shall be indemnified, defended and held harmless by the
Customer against any claim, loss, liability or damage (including
reasonable attorney's fees) relating to or arising from the Customer's
use of services offered in this Agreement or claims arising out of any
act or omission of the Customer in the course of using services provided
pursuant to this Agreement.
X. SECURITY
--------
Bell Atlantic may, at its discretion, require a Customer who has a proven
history of late payments or who does not have established credit, to make a
deposit, make an advance payment or secure a Letter of Credit.
A. Letter of Credit
----------------
The Letter of Credit will be authorized from a recognized commercial
bank in the amount that will cover one year's Minimum Annual Revenue
Obligation as described in Exhibit B, Rates and Charges. The Letter of
Credit may be revised to reflect only the annual usage charges one year
after billing service implementation and receipt of payment for the
initial start-up charges. The Letter of Credit will appear as Exhibit C
of this Agreement.
<PAGE>
P-ll 7/15/93
B. Advance Payment
---------------
The Advance Payment will be made to Bell Atlantic prior to the processing
of the service request. The funds requested will be for one year's
Minimum Annual Revenue Obligation as described in Exhibit C, Rates and
Charges. The monies collected will be applied toward the first bill
rendered.
C. Deposit
-------
A deposit will be requested in the amount to cover one year's Minimum
Annual Revenue Obligation described in Exhibit B, Rates and Charges. The
fact that a deposit has been made in no way relieves the Customer from
the prompt payment of bills. At such time as the provision of the service
to the Customer is terminated, the amount of the deposit and interest
will be credited to the Customer's account and any credit balance which
remains will be refunded. The deposit and interest may also be refunded
or credited to the Customer's account when Bell Atlantic is satisfied the
Customer has established proper credit. Interest on deposits will be paid
at the same percentage as set forth in the current access tariffs.
XI. NON-EXCLUSIVITY
---------------
Nothing in this Agreement shall be construed as limiting the ability of Bell
Atlantic to offer the same or similar services to any other person or
organization.
<PAGE>
P-12 7/15/93
XII. CHANGES AND AMENDMENTS
----------------------
Bell Atlantic may change the terms and conditions and rates and charges
contained in this Agreement and Exhibits hereto upon providing one
hundred twenty (120) days written notice to the Customer.
Notwithstanding any provisions to the contrary, however, changes
required by regulatory or judicial authority shall be effective as
directed by that authority.
XIII. WAIVERS
-------
No amendment or waiver of any provision of this Agreement and no
consent to any default under this Agreement shall be effective unless
the same shall be in writing and signed by or on behalf of the party
against whom such amendment, waiver or consent is claimed. In addition,
no course of dealing or failure of party to strictly enforce any term,
right or condition of the Agreement shall be construed as a waiver of such
term, right or condition.
XIV. ASSIGNMENT
----------
Any assignment by the Customer of any right, obligation or duty, in
whole or in part, or of any other interest hereunder, without the
written consent of the BOC shall be null and void.
XV. NOTICE AND DEMANDS
------------------
Except as otherwise provided under this Agreement, all notices, demands or
requests which may be given by either party to the other party shall be in
writing and shall be deemed to have been duly given on the date delivered
in person or deposited, postage prepaid, in the United States mail via
Certified Mail, return receipt requested, and addressed as follows:
<PAGE>
P-13 7/l5/93
TO BELL ATLANTIC:
-----------------
Bell Atlantic Network Services, Inc.
Director of Sales and Marketing
Carrier Marketing and Sales
8251 Greensboro Dr., 10th floor
McLean, VA 22102
TO CUSTOMER:
------------
(Customer Location)
If personal delivery is selected as the method of giving notice under
this section, a receipt of such delivery shall be obtained. The address to
which such notices, demands, requests, elections or other communications
is to be given by either party may be changed by written notice given by
such party to the other party pursuant to this Article.
XVI. FORCE MAJEURE
-------------
Bell Atlantic shall not be held liable for any delay or failure in
performance of this Agreement from any cause beyond its control, such as
acts of God, acts of civil or military authority, government
regulations, embargoes, epidemics, war, terrorist acts, riots,
insurrections, fires, explosions, earthquakes, nuclear accidents,
floods, strikes, power blackouts, volcanic action, other major
environmental disturbances, unusually severe weather conditions,
inability to secure products or services of other persons or
transportation facilities, or acts of omission or commission by third
parties.
XVII. THIRD-PARTY BENEFICIARIES
-------------------------
This Agreement shall not provide any person not a party to this
Agreement with any remedy, claim, liability, reimbursement, cause of
action or other right in excess of those existing without reference to
this Agreement.
<PAGE>
P-14 7/15/93
XVIII. GOVERNING LAW
-------------
This Agreement shall be governed by the laws of the state where the
service is provided.
XIX. ENTIRE AGREEMENT
----------------
This Agreement and any Exhibits attached hereto, and any Attachments or
Schedules attached thereto, constitute the entire understanding between
the parties and supersedes all prior understandings, oral or written
representation, statements, negotiations, proposals and undertaking with
respect to the subject matter hereof. The parties acknowledge that this
Agreement contains commercially confidential information which may be
considered proprietary by either or both parties, and agree to limit
distribution of the Agreement to those individuals in their respective
organizations with a need to know the contents of the Agreement. The
parties further agree to seek commercial confidential status for the
Agreement with any regulatory commission with which the Agreement must
be filed, to the extent such a designation can be secured.
XX. EXECUTED IN COUNTERPARTS
------------------------
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together
constitute but one and the same document.
XXI. HEADINGS
--------
The headings in this Agreement are for convenience and shall not be
construed to define or limit any of the terms herein or affect the
meanings or interpretation of this Agreement.
<PAGE>
P-15 7/15/93
XXII. USE OF BILLING INTERMEDIARY
---------------------------
Customer, at its option, may receive the Billing and Collection Services
provided under this Agreement through a third party billing intermediary,
as described in the Blanket Agency Agreement and Exhibit F.
XXIII. BELL ATLANTIC CALLING CARDS
---------------------------
Customer may use Bell Atlantic Calling Cards to charge telecommunications
services provided by Customer only in accordance with the terms and
conditions described in Exhibit A, Section 2.10.
XXIV. MINIMUM REVENUE OBLIGATION
--------------------------
The Customer will be required to pay Bell Atlantic a Minimum Annual
Revenue Obligation each year of the five year agreement as detailed in
Exhibit B, Rates and Charges.
<PAGE>
P-16 7/15/93
WITNESS WHEREOF the parties have entered into this Agreement as of the date
first written above.
Telco Development Group, Inc.
- -----------------------------
(Customer Name)
By: /s/ Henry G. Luken
--------------------------------------------------------------
(Signature)
Name: Henry G. Luken, III
------------------------------------------------------------
Title: Chairman
-----------------------------------------------------------
Date: June 8, 1994
------------------------------------------------------------
BELL ATLANTIC NETWORK SERVICES, INC.
- ------------------------------------
By: /s/ Patrick A. Hanley
--------------------------------------------------------------
(Signature)
Name: Patrick A. Hanley
------------------------------------------------------------
Title: President - Carrier Services
-----------------------------------------------------------
Date: June 10, 1994
------------------------------------------------------------
<PAGE>
A-l 7/15/93
EXHIBIT 10.2
EXHIBIT A:
- ----------
SERVICE REQUIREMENTS
--------------------
INDEX
-----
<TABLE>
<CAPTION>
Section Title Page
- ------- ----- ----
<C> <S> <C>
1.0 General A-2
1.1 Service Description A-2
1.2 Bell Atlantic Responsibilities A-2
1.3 Customer Responsibilities A-3
1.4 Data Retention A-3
1.5 Reprovision of Data A-3
2.0 Services Provided A-4
2.1 End User Account Maintenance A-4
2.2 Customer Account Maintenance A-4
2.3 Message Billing A-5
2.4 Payment/Adjustment/Remittance Processing A-6
2.5 Treatment A-6
2.6 Denial of Service A-7
2.7 Final Bill Collection A-7
2.8 Inquiry Support services A-7
2.9 End User Bill Format A-9
2.10 Bell Atlantic Card Billing Service A-10
2.11 Miscellaneous Charge Record A-10
2.12 Account Information for Fraud Prevention A-11
3.0 Settlement Terms to Cust. for Receivables Purchased A-15
3.1 Amount Due Customer A-15
3.2 Settlement of Disputed File Receipt Amount A-21
4.0 Settlement to Bell Atlantic for Services Rendered A-23
4.1 Amount Due Bell Atlantic for Billing Services A-23
4.2 Disputed Billing and Collection Service Amount A-25
5.0 Billing Changes A-27
5.1 Customer Requests A-27
5.2 Types of Billing Change Requests A-27
5.3 Implementation Issues A-28
5.4 Compensation A-29
5.5 Bell Atlantic Billing Errors A-29
5.6 Right of Refusal A-29
6.0 Taxes A-30
6.1 Filing of Taxes A-30
6.2 Taxes Billed and Collected by the BOC A-30
6.3 Tax Liability A-30
6.4 End User Tax Status A-31
6.5 Customer Tax Information Provided by the BOC A-31
6.6 Billing of Taxes A-32
6.7 Indemnification by Customer A-32
</TABLE>
<PAGE>
A-2 7/15/93
1.0 General
-------
1.1 Service Description
-------------------
Billing and Collection Service is a service where rated Customer messages
are posted to and listed on the bill rendered to an end user by Bell
Atlantic at the request of the Customer. Bell Atlantic may also bill
charges other than message details for the Customer. The Customer may
purchase inquiry for all or a portion of the messages for which Bell
Atlantic performs Billing and Collection Service. In Pennsylvania, the
provision of this service is subject to Pa. Chapter 64 Guidelines. Bell
Atlantic will only provide Billing and Collection service for rated
Customer messages and other Customer charges posted to end user accounts
located within the territory of Bell Atlantic. Bell Atlantic will not
establish an end user account solely for billing of Customer services.
Customers will be responsible for providing only legal messages to be
billed.
1.2 Bell Atlantic Responsibilities
------------------------------
When Billing and Collection Service is ordered by the Customer, Bell
Atlantic, consistent with its billing practices, will:
o Clarify details of the Exchange Message Interface (EMI) format
as determined by Bellcore for the messages to be billed.
o Post the rated messages to the end user account.
o Prepare and mail statements of the amount due to the end user.
o Collect monies from the end user for service furnished by the
Customer.
o Pursue collections of end user accounts for delinquent or unpaid
amounts.
o Post credits and adjustments to the end user accounts.
o Arrange with the Customer to accept end user adjustments to change
end user account balance due.
o Perform pre-billing message investigation to secure proper account
information prior to the preparation of the end user bills.
<PAGE>
A-3 7/15/93
1.3 Customer Responsibilities
--------------------------
The Customer will:
o Limit the number of billing files/tapes sent from the Customer to
Bell Atlantic to 25 files/tapes per month. Bell Atlantic will charge
$500 per file for each file/tape in excess of 25 per calendar month.
o Provide rated messages, i.e., complete toll detail plus rate.
o Format the messages in the standard EMI format.
o Include the end user working line number to be billed in each message.
o Be responsible for collecting all end user balances due which were
incurred prior to the start of the Agreement.
o Satisfy requirements of appropriate regulatory bodies.
1.4 Data Retention
--------------
All data associated with the invoicing of Customer messages will be
retained by Bell Atlantic for the length of time used by Bell Atlantic for
retention of its own billing information.
1.5 Reprovision of Data
-------------------
In the event the Customer requests data that has previously been provided
by Bell Atlantic, the data, if available, will be reprovided to the
Customer at a charge.
<PAGE>
A-4 7/15/93
2.0 Services Provided
-----------------
2.1 End User Account Maintenance
----------------------------
2.1.1 When Billing and Collection Service is requested by the Customer, Bell
Atlantic will maintain end user accounts for all Customer messages of end
users for which it has billing responsibilities.
2.1.2 The rated Customer messages must be in the standard EMI format and
delivered to the locations specified by Bell Atlantic.
2.1.3 Customer provided rated message data must identify the end user working
line number to be billed.
2.1.4 Rated Customer messages which Bell Atlantic cannot bill will be
investigated. Upon completion of the investigation the billable messages
will be posted and the appropriate charges will apply, Messages
determined to be unbillable will be returned to the Customer.
2.1.5 Subject to the processing requirements of Bell Atlantic, the End User
Account File will contain standard information such as, but not limited
to:
1. Billing telephone number
2. Status of line (active, final, etc.)
3. Effective Date of line status
4. Class of Service
2.1.6 The End User Account File is structured so that standard billing periods
and billing account sequencing can accomplish the billing of Customer
revenues in a manner consistent with Bell Atlantic service measurement
criteria.
2.2 Customer Account Maintenance
----------------------------
2.2.1 Bell Atlantic will provide Account Maintenance Service for all categories
of information required to maintain the integrity of information
pertaining to Customer revenue.
<PAGE>
A-5 7/15/93
2.2.2 Bell Atlantic will accept billing service orders via a mutually agreeable
manual or mechanized interface and process them through Bell Atlantic
systems in a timely manner consistent with Bell Atlantic requirements.
2.3 Message Billing
---------------
2.3.1 Message Billing is the receiving of Customer messages, posting them to
the specific end user's account, and the rendering of bills, i.e. the
preparation and mailing of Statements of the amounts due from the end
user for Customer message billed services.
2.3.2 Bell Atlantic will bill rated Customer messages to the appropriate end
user accounts. Bell Atlantic will make adjustments to end user balances
due 1) as a result of the credits authorized by the Customer if Inquiry
Service is not purchased or 2) according to existing Bell Atlantic
Inquiry Guidelines if Inquiry is purchased.
2.3.3 Bell Atlantic will provide Message Billing Services to the Customer for
Customer messages regardless of the message call date as long as the age
of the message is within reasonable limitation periods as determined by
Bell Atlantic or regulation. A Delayed Message charge will apply to
messages received that are over ninety (90) days from the date of the
call to receipt by each BOC.
<PAGE>
A-6 7/15/93
2.4 Payment, Adjustment and Remittance Processing
---------------------------------- -----------
2.4.1 Bell Atlantic will provide Payment, Adjustment and Remittance Processing
as an integrated feature of Message Processing Services for all
subscribers for which Bell Atlantic provides Bill Rendering Services for
the Customer. Bell Atlantic may purchase the Customer accounts
receivable. The purchase of the Customer accounts receivables will
include the provision of recourse for disputed Customer charges,
including taxes. Bell Atlantic will, as a portion of the Payment and
Remittance Processing Services supplied to Customer, use existing Bell
Atlantic methods and procedures to support payment and remittance,
treatment, denial and collection services, to the extent allowed by law
or regulation and deemed appropriate by Bell Atlantic.
2.4.2 Bell Atlantic will apply all cash transactions to a single balance due
on an end user account. Specified application of cash will not be
permitted except where mandated by appropriate regulatory authorities.
2.4.3 Adjustment transactions will be processed by Bell Atlantic against a
single balance due on an end user account.
2.4.4 If an end user sends a check to Bell Atlantic for processing and the
check is payable to the Customer, Bell Atlantic will not process the
payment but will return it to the end user.
2.5 Treatment
---------
2.5.1 Bell Atlantic will provide treatment services, to the extent permitted
by law or regulation, in an attempt to control or collect appropriate
outstanding balance due amounts for high current toll or previously
billed end user charges.
2.5.2 Treatment services will be provided consistent with the treatment of
Bell Atlantic charges.
<PAGE>
A-7 7/15/93
2.6 Denial of Service
-----------------
2.6.1 Bell Atlantic will, at its discretion, provide denial of service,
restricting end user access to the network, to the extent allowed by law
or regulation, in cases of insufficient payment of end user bills.
2.6.2 The procedures used by Bell Atlantic to determine denial status will
utilize a single balance due amount, unless otherwise mandated by a
regulatory agency.
2.7 Final Bill Collection
---------------------
2.7.1 Final Bill Collection procedures utilized by Bell Atlantic will be the
vehicle to obtain past due end user revenue on disconnected accounts.
These activities will begin following treatment on active accounts. It
may include writing off an account as uncollectible and referral of the
account to an outside collection agency.
2.8 Inquiry Support Services
-------------------------
2.8.1 Billing and Collection Services can be ordered with or without inquiry
except in Pennsylvania where the provision of the services are subject to
Pa. PUC Chapter 64 Guidelines. If inquiry service is ordered, the Bell
Atlantic will provide the service to 'the Customer to support the verbal
or written informational exchanges initiated by Customer end users. Bell
Atlantic will provide inquiry procedures upon Customer request.
2.8.2 Inquiry Not Purchased
---------------------
When inquiry is not purchased, all contacts from end users concerning the
Customer billed amounts will be referred to the Customer. The Customer
shall furnish to Bell Atlantic written instructions concerning where
inquiries are to be directed and provide a toll free number to Bell
Atlantic for referring end user inquiries. In Pennsylvania, the provision
of this service is subject to Pa. PUC Chapter 64 Guidelines:
<PAGE>
A-8 7/15/93
2.8.3 Bell Atlantic's Responsibility When Inquiry is Not Purchased
------------------------------------------------------------
Bell Atlantic will be responsible for answering questions from end users
when Billing and Collection Services have been purchased without inquiry
concerning:
o Balance due
o Tax exemption
o Refusal to pay Federal taxes
o Payment application
o Timeliness of the BOC invoice
2.8.4 Customer's Responsibility When Inquiry is Not Purchased
---------------------------------------------------------
The Customer is responsible for responding to all inquiries except those
noted in 2.8.3 above.
2.8.5 Inquiry Purchased
-----------------
When inquiry is purchased, Bell Atlantic will be responsible for contacts
and arrangements with the end user concerning billing, collecting and the
crediting and adjusting of the Customer's services charges (except prior
Customer balance due from end users). Procedures will be followed as
defined in the Bell Atlantic Inquiry Guidelines or in the Pa. PUC Chapter
64 Guidelines.
2.8.6 Recourse
--------
When Bell Atlantic has purchased the Customer's accounts receivable, Bell
Atlantic may recourse disputed amounts to the Customer in connection with
a billing dispute between the Customer and the end user. Bell Atlantic
will make appropriate adjustments to the Customer's Accounts Receivable
Settlement following Bell Atlantic Inquiry Guidelines.
<PAGE>
A-9 7/15/93
2.9 End User Bill Format
--------------------
2.9.1 Bell Atlantic will make a reasonable, good faith effort to display
Customer charge elements on the BOC integrated end user bill based on
specifications provided by the Customer to Bell Atlantic. Bell Atlantic
will consider implementation of current or future Customer bill display
specifications consistent with the then current BOC bill format
specifications and policy, technical capabilities, and regulatory
constraints. Customer charges will be reflected in the total amount due
on the bill.
2.9.2 At the Customer's request, when possible and at the Logo Implementation
rate, the Customer corporate logo may be displayed on the Customer pages
of the end user bill. The Customer's name will be printed on each detail
page, as well as on the sub-totaled line showing total charges.
2.9.3 The integrated bill may contain one payment document, with one total
amount due, and one return envelope.
2.9.4 Customer contact number(s) will be displayed on the Customer portion of
the end user bill unless otherwise mandated by a regulatory agency. If
inquiry is purchased the BOC contact number will be displayed for bill
inquiries.
2.9.5 Bell Atlantic will provide page numbering according to current BOC
specifications. Bell Atlantic reserves the right to determine page
numbering.
2.9.6 A disclaimer disavowing any BOC responsibility for the Customer rates
charged may appear on the Customer bill page.
<PAGE>
A-10 7/15/93
2.10 Bell Atlantic Card Billing Service
----------------------------------
Bell Atlantic Card Billing allows a holder of a Bell Atlantic Card to
charge telecommunications services provided by the Customer to the holder's
Bell Atlantic card. Bell Atlantic will only bill Bell Atlantic Card calls
that have been validated through Bell Atlantic's Line Information Database
(LIDB), either directly or through a hub provider. In order to insure
validation, indicator #17 on the EMI record must be appropriately
populated. If the customer chooses to participate in this service, the
customer agrees that they will forward all Bell Atlantic Card calls
(messages) to Bell Atlantic for Billing under the terms of this agreement.
2.11 Miscellaneous Charge Record
---------------------------
2.11.1 The Miscellaneous Charge record is a Standard EMI (42-50-01) record
that allows the Customer to bill for recurring and nonrecurring
telecommunications charges. This record may be used to bill non-usage
related Customer charges and does not contain billable message
information such as Called-To and Originating-From numbers or connect
time. This record may be used by the Customer to bill service
subscription fees, CPE charges, network access fees and other non-
usage related telecommunications services. The charges will display as
a separate portion at the end of the toll detail area of the
Customer's bill and appear as "Miscellaneous Charges."
2.11.2 Use of the Miscellaneous Charge Record is subject to regulatory
approval and requirements in each Bell Atlantic jurisdiction. Bell
Atlantic will review the Customer's planned use of this record to
verify the charges are telecommunications related and conform to the
Bell Atlantic billing policy.
<PAGE>
A-11 7/15/93
2.11.3 Bell Atlantic will build an upfront table for the Customer
identifying each Miscellaneous Charge type to be billed, i.e.
subscription fee, hospital fees, fax services, etc. This table will
allow Bell Atlantic to properly book the revenue and inform the Bell
Atlantic business office of what services are being billed.
2.12 Account Information for Fraud Prevention Service (AIFP)
-------------------------------------------------------
2.12.1 Account Information for Fraud Prevention (AIFP) Service is an optional
service that provides the Customer with specific account information
on a live, verbal basis. The selected end user account information
will be provided for those end-user accounts PICed to the Customer, or
an account that has "current" casual caller usage. "Current" is
defined as that call detail residing on Bell Atlantic's Business
Office Support System (BOSS) or equivalent. Call detail resides on
BOSS for usually up to 2 months after billing. This service is
initiated by the completion of the service agreement (Exhibit J).
2.12.2 AIFP provides the following end-user account detail:
A. Verification on Working Number/Billing number (WTN/BTN)
B. Type of service: Non-Pub, Non-List
C. Installation date/disconnect date of local service
D. Adjustment amounts/dates, posting information
E. Billing Name and Address
F. Subscription to Call Forwarding: Custom calling and Remote
G. Disconnect Reason: including forwarding address and new Number
H. BA IQ card (BOC Card): date of issuance and cancellation
I. Toll restriction: Third party, Collect, One-Plus
J. Denial for Non-payment status
K. 700/900 blocking status: when installed, who initiated
L. Class of Service: Business, Residence, Coin
M. Customer Code
N. Return Call Information: to help sustain charges (to-number must
be within the BA region)
<PAGE>
A-12 7/15/93
0. Carrier's Balance Due: current and overdue
P. Social Security Number
Q. Can be Reached Number
2.12.3 End-user account information will be provided by the IPOC located
within the jurisdiction that handles the account in inquiry.
Locations, jurisdictions served, hours of operation and telephone
number of each Bell Atlantic IPOC are as follows:
Pittsburgh, PA
---------------
Bell of Pennsylvania, Diamond State, and
the C&P Companies of Washington, Maryland, Virginia
and West Virginia
Hours: 9 a.m. to 4:30 p.m.
Telephone Number: (412) 633-3498
Newark, NJ
----------
New Jersey Bell
Hours: 8 a.m. to 4:30 p.m.
Telephone Number: (201) 649-8393
2.12.4 Bell Atlantic will issue a unique password to the Customer upon
request to purchase this service. The Customer shall be solely
responsible for safeguarding the password, and must take appropriate
steps to protect the use of this password. The customer agrees to
limit access to the password to those individuals in their respective
Fraud Investigation and Customer Service Center organizations with a
need for such access.
2.12.5 When a call is placed to the IPOC by the Customer, the Customer's
representative must provide the IPOC with the appropriate company
password. Once the password has been confirmed by the IPOC and it is
verified that the end-user account in question is either PICed to the
Customer or has current usage, the requested information will be
verbally provided to the Customer. Formal documentation will not be
provided.
<PAGE>
A-13 7/15/93
2.12.6 Should the number of Customer AIFP calls to the IPOC increase
significantly, Bell Atlantic may increase the monthly fee for each
IPOC proportionately by giving thirty (30) days written notice to the
Customer.
2.12.7 Either Party may terminate this service by giving the other Party at
least thirty days advance written notice of such termination.
2.12.8 The information provided to the Customer under this Agreement is the
proprietary unpublished copyrighted information of Bell Atlantic.
Nothing in the Agreement will be deemed to convey to Customer an
ownership interest in or title to the information. Customer may
utilize the information only for fraud prevention and investigation
and for collection of accounts due (to the extent Customer is
permitted to engage in collection activities under the Billing and
Collection Agreement). Customer may not reproduce the information in
any form, or use the information provided for any other purpose. The
information shall be destroyed upon the termination, cancellation or
expiration of this Agreement.
The Customer agrees to safeguard the information provided and prevent
its unauthorized disclosure. The Customer also agrees to limit access
to the information provided hereunder to those Customer employees in
its Fraud Investigation and Customer Services organizations with a
need to know.
2.12.9 In addition to all other rights or remedies provided in law, equity,
or otherwise, Bell Atlantic reserves the right to terminate this
Agreement immediately if Customer fails to comply with the provisions
regarding use of the information.
<PAGE>
A-14 7/15/93
2.12.10 LIMITATIONS OF LIABILITY
------------------------
BELL ATLANTIC MAKES NO WARRANTY, EXPRESSED OR IMPLIED, OF ANY NATURE
WHATSOEVER WITH RESPECT TO THE SERVICE OR ACCURACY OR COMPLETENESS OF
THE INFORMATION PROVIDED HEREUNDER, INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. BELL
ATLANTIC WILL NOT BE LIABLE FOR ANY LOSS, COST, CLAIM, INJURY,
LIABILITY, OR EXPENSE RELATED TO, OR ARISING OUT OF THE SERVICE,
INCLUDING BUT NOT LIMITED TO SPECIAL, INCIDENTAL, INDIRECT, OR
CONSEQUENTIAL DAMAGES, WHETHER SUCH CLAIM IS BASED IN CONTRACT, TORT,
OR OTHERWISE.
<PAGE>
A-15 7/15/93
3.0 Settlement to Customer for Receivables Purchased
------------------------------------------------
The timing, format and descriptions of the settlement reports provided as
part of the Billing and Collection Service are as defined in the "Overview
of the Accounts Receivable on a File Receipt Basis". This overview package
will be provided to the Customer upon request.
3.1 Amount Due Customer
-------------------
3.1.1 Formula For Calculation of Amount Due Customer
----------------------------------------------
Bell Atlantic will use the following formula for the calculation of
the dollar amount due Customer for the possible purchase of accounts
receivable:
Total File Receipt Revenue
+ Taxes
+ Adjustments
-
- Unbillables
----------------
= Total A/R Subject to Bad Debt
- Uncollectible Bad Debt Allowance
+ Monthly Uncollectible True-up
-
+ Special Settlement
-
------------------------------------
= Amount Due Customer
Where:
A. Total File Receipt Revenue is the amount of revenue associated with
the Customer billing detail received from the Customer to be lawfully
billed to Customer's end users by Bell Atlantic for Customer services.
A Total File Receipt Amount will be determined for each rated file
received from the Customer.
B. Taxes are the amounts that are billed according to the provisions of
this Agreement.
<PAGE>
A-16 7/15/93
C. Adjustments are amounts which may be classified as follows:
1) End user adjustments - Bell Atlantic will add to or subtract
--------------------
from the Total Current Amount billed, the amounts that Bell
Atlantic adds to or removes from (adjusts) the end user
balances due. These adjustments may be either uncollectible
direct (uncollectibles on live accounts) or adjustments to
correct charges.
2) Recourse adjustments - Recourse adjustments are Bell
--------------------
Atlantic initiated adjustment amounts to end user balances
caused by Customer/end user disputed charges.
D. Unbillables are messages which cannot be billed by Bell Atlantic and
are returned to the Customer.
E. Total A/R Subject to Bad Debt = Total File Receipt Revenue + Taxes
+ Adjustments - Unbillables.
-
F. Uncollectible Bad Debt Allowance is an amount deducted from Total AR
Subject to Bad Debt to compensate for anticipated losses resulting
from the failure of end users to pay for final bill amounts due.
Derivation of the Uncollectible Bad Debt Allowance is defined in
paragraph 3.1.2.
G. Monthly Uncollectible True-up is an amount due to/from Customer as a
result of the retroactive adjustment of a previously deducted
uncollectible estimate (allowance) using more accurate uncollectible
data associated with the original billing.
H. Special Settlement Adjustments - For each file receipt purchase, Bell
Atlantic may add to-subtract from the Total A/R Subject to Bad Debt,
Settlement Amounts Due to/from Customer as a result of revenue claims
and/or prior billing period errors. This activity may or may not
initiate end user billing activity.
<PAGE>
A- 17 7/15/93
I. Amount Due Customer represents the Net Purchase Amount for Accounts
Receivable, if applicable.
3.1.2 Uncollectible Bad Debt Allowance
--------------------------------
For each file received, Bell Atlantic will subtract from the New
Current Amount Received a discount for uncollectibles. A file is a
collection of the rated messages received from the Customer on any
given day. The uncollectible bad debt allowance is an allowance which
estimates, in conjunction with current billing activity, future
uncollectible final accounts which result from the failure of end
users to pay for billed Customer services revenues. The allowance will
be calculated based upon the application of a monthly bad debt
discount factor to each current file receipts Total A/R Subject to
Bad Debt.
The Customer discount factor (calculated to the nearest 1/1000) is
updated monthly based upon Bell Atlantic's analysis either through an
apportionment study or on an actual basis of billing history on
written off final end user balances, net of adjustments to accounts
for any payments received by Bell Atlantic for outstanding final bill
amounts that were declared uncollectible, deposits (where regulatory
agencies permit collection of deposits to secure charges) held by
Bell Atlantic for services provided to the end users where final bills
have been rendered, and any adjustments pertaining to the account.
The factor is calculated using data from Customer and includes
realized uncollectibles as determined by the BOC, divided by the
Twelve (12) cumulative months of Total A/R Subject to Bad Debt which
are associated with these realized uncollectibles based on the number
of uncollectible reserve months used. This updated factor will be used
to discount future purchases. Apportionment percentages or amounts
used to determine Customer realized uncollectibles will be based on
Customer proportion of charges back to and including the first bill
not paid in full for those Customer accounts written off during the
month.
<PAGE>
A-18 7/15/93
For the period of time prior to the development of the updated factor,
the discount factor will be calculated using data from all Bell
Atlantic customers.
Bell Atlantic is in the process of implementing billing system changes
that will allow Bell Atlantic to calculate current month Customer
specific Bad Debt allowances. Bell Atlantic reserves the right to
convert Customers to their own specific current month Bad Debt
Allowance upon providing thirty (30) days written notice to the
Customer.
3.1.3 Uncollectible True-up
---------------------
The Uncollectible true-up will be performed monthly. The bad debt
allowance originally withheld will be retroactively adjusted in the
month determined by the number of uncollectible reserve months
(average period between BOC billing and final uncollectible write-off)
from the original purchase. The true-up amount will be based upon the
difference between the estimated uncollectible bad debt allowance
originally withheld and a recalculated bad debt amount based on
current uncollectible data. The true-up amount will be added
to/subtracted from the current month's purchase of accounts receivable
settlement. Upon termination of the Billing and Collection Agreement
with the customer, the final true-up will be based on the current
number of uncollectible reserve months for the BOC.
Bell Atlantic calculates each Customer's Bad Debt true-up by dividing
the total realized Bad Debt of the Customer by the total Purchase of
Accounts Receivable of all Bell Atlantic billing Customers.
<PAGE>
A-19 7/15/93
3.1.4 Billing Detail
--------------
A Statement of Amount Due Customer will be provided to the Customer by
Bell Atlantic.
3.1.5 Payment Due
-----------
When Bell Atlantic purchases accounts receivable from the Customer, it
will do so each time a file is received. Settlement amounts will equal
the Amount Due Customer as determined in the preceding. The Settlement
date will be determined by adding fifteen (15) days plus the number of
days determined to be the Average Customer Payment Availability Period
(ACPAP) to the file processing date. (The file processing date is the
date that the.customer billing data is actually entered into Bell
Atlantic's BOC billing systems. The file processing date will be no
more than five (5) days from the date the file is physically received
by Bell Atlantic).
ACPAP will be calculated individually in each Bell Atlantic
jurisdiction and will include the sum of:
a) the average interval between bill date and bill extract
date,
b) the interval from the bill extract date to the date, on
average, end user payments are applied to the end users
account, and
c) the interval from the application of payment to the end
users account to the average date of available funds for
disbursement to BOC at the BOC's financial institution.
ACPAP is updated monthly. Except as provided herein, Bell Atlantic
will remit settlement to the Customer on the settlement date. If such
settlement date would cause payment to be due on a Saturday, Sunday,
or a Bell Atlantic or Customer Bank Holiday (applicable holidays will
be identified and lists exchanged between Bell Atlantic and the
Customer by December each year) the payment date for the net purchase
amount will be due to Customer as follows:
<PAGE>
A-20 7/15/93
A. If such settlement date falls on a Sunday or on a Holiday
which is observed on a Monday, the payment date shall be the
first non-Holiday day following such Sunday or Holiday.
B. If such settlement date falls on a Saturday or on a Holiday
which is observed on Tuesday, Wednesday, Thursday, or
Friday, the payment date shall be the last non-Holiday day
preceding such Saturday/Holiday.
3.1.6 Payment Method
--------------
Settlement will be made by Electronic Funds Transfer for amounts over
$100,000 or by check postmarked two (2) days prior to the payment date
for amounts less than $100,000.
Bell Atlantic is in the process of making payment process changes that
will allow Bell Atlantic to make corporate level payments for as many
jurisdictions as are applicable on that payment date. These corporate
payments will be made by Electronic Funds Transfer regardless of the
amount of the payment. Bell Atlantic reserves the right to convert
Customers to corporate payments upon providing thirty (30) days
written notice to the Customer.
If the Bell Atlantic remits erroneous amounts to the Customer, the
Customer will return these amounts back to Bell Atlantic upon
recognition of the discrepancy. Bell Atlantic still retains the
obligation to meet the established payment date. If any portion of the
settlement amount is received by the Customer in funds which are not
immediately available to the Customer, then a late payment penalty
shall be due the Customer. Bell Atlantic will have full responsibility
for ensuring that payment is received by the payment date.
3.1.7 Late Payment Penalty Resulting From Adjustment
----------------------------------------------
Any interest penalty due Bell Atlantic as a result of an end user
dispute will be calculated as set forth in Section 2 of the then
current BOC Access Tariff filed with the Federal Communications
Commission.
<PAGE>
A-21 7/15/93
Any interest penalty will be deducted as Special Settlement adjustment
made by Bell Atlantic to the Total Amount Due Customer.
3.2 Settlement of Disputed File Receipt Amounts
-------------------------------------------
3.2.1 Notification of Disputed Amount
-------------------------------
Should either party dispute any portion of the Amount Due Customer,
said party shall notify the other party in writing of the nature and
basis of the dispute. The Customer may file a substantiated claim with
Bell Atlantic for revenue billed and not remitted as well as revenue
not billed. The substantiated claim should be provided by the Customer
with sufficient detail to allow investigation by Bell Atlantic. This
detail should include, but is not limited to, examples of the
incorrect end user bills and explanations of systems used for
comparison or tracking purposes.
3.2.2 Payment of Disputed Amount
--------------------------
Should the dispute not be resolved by the payment date, said party
shall reserve and have claim against the other party for reimbursement
with interest after the dispute is resolved.
3.2.3 Ultimate Settlement of Disputed Amount
--------------------------------------
The party receiving the claim shall have thirty (30) days from the
notification of the dispute, to process the claim and notify the
claiming party if sufficient detail was provided for investigation.
Should the claim, in whole or in part, ultimately be resolved in favor
of a refund, it shall include interest to the extent the claim was
sustained. Interest on the settlement amount shall be calculated as
follows:
A. If the claim with sufficient detail for investigation is received
within ninety (90) days of the payment due date of the bill date,
the interest will be calculated using the late payment penalty
factor described in Section 2 of the appropriate Access Tariff.
<PAGE>
A-22 7/15/93
B. If the claim with sufficient detail for investigation is received
ninety (90) days or more after the payment due date, the interest
will be calculated using the late payment penalty factor
described in Section 2 of the appropriate Access Tariff.
The amount due for the disputed/claimed revenue amounts shall be
incorporated into the Statement of Amount Due Customer as a Special
Settlement and paid as defined in 3.1.1.
3.2.4 Retention of Supporting Data Concerning Disputed Amount
--------------------------------------------------------
Both parties shall retain such detailed information as may reasonably
be required for resolution of the disputed amount during the pendency
of the dispute.
<PAGE>
A-23 7/15/93
4.0 Settlement to Bell Atlantic for Services Rendered
----------------------------------------------
4.1 Amount Due Bell Atlantic for Billing and Collection Services
------------------------------------------------------------
4.1.1 Calculation of Amount Due Bell Atlantic
-----------------------------------------
The amount due Bell Atlantic equals all appropriate Billing and
Collection charges billed under contract or any applicable tariffs. Bell
Atlantic will be charging the Customer for performing the Billing and
Collection functions.
4.1.2 Billing Detail
--------------
A Statement of amount due Bell Atlantic for Billing and Collection
Services will be provided to the Customer.
4.1.3 Payment Date
------------
The Customer will remit a monthly payment to each BOC for Billing and
Collection Service charges. The settlement date for the amount due the
BOC from the Customer is thirty (30) days after the bill date or the
same date in the month following the bill date, whichever is earlier. If
the settlement date would cause payment to be due on a Saturday, Sunday
or BOC/Customer bank holiday (applicable holidays will be identified and
lists exchanged between the BOC and Customer by December 1 each year),
the payment date for the amount due the BOC will be as follows:
A. If such settlement date falls on a Sunday or on a Holiday which is
observed on a Monday, the payment date shall be the first non-
Holiday following such Sunday or Holiday.
B. If such settlement date falls on a Saturday or on a Holiday which is
observed on Tuesday, Wednesday, Thursday, or Friday, the payment
date shall be the last non-Holiday day preceding such Saturday or
Holiday.
<PAGE>
7/15/93
A-24
4.1.4 Payment Method
--------------
Settlement will be made by Electronic Funds Transfer for amounts over
$100,000 or by check postmarked two (2) days prior to the payment date
for amounts less than $100,000.
If any portion of the net settlement amount is received by the BOC in
funds which are not immediately available to the BOC, then a late payment
charge shall be due the BOC. The Customer will have full responsibility
for ensuring that payment is received by the payment date.
4.1.5 Payment Detail
--------------
Any payment to the BOC from the Customer must be accompanied
by an indication of the BOC invoice number being paid.
4.1.6 Timeframe for Bill Issuance
---------------------------
Statements (bills) detailing the Amount due the BOC must be received by
Customer at least twenty (20) days prior to the payment date to allow
Customer adequate time to process payment. Bills not received within this
timeframe will not be subject to the late payment penalty for the number
of days the bill was received after the specified timeframe.
4.1.7 Late Payment Penalty
--------------------
Any payment not received by the BOC as specified previously will be
subject to a late payment penalty. The late payment penalty shall be the
portion of the Amount Due the BOC received after the payment date times a
late factor. The late factor shall be applied as set forth in the Access
section of the then current BOC Access Tariff filed with the FCC. Any
late payment penalty will be included with the next Customer payment of
Bell Atlantic.
<PAGE>
7/15/93
A-25
4.1.8 Late Payment Resulting From Bank Error
--------------------------------------
Any late payment resulting from bank error will not be subject to the
late payment penalty provided the sending party (party making payment)
can verify that it was not at fault. Rather, the discrepancy will be
resolved by the banks involved. It is the responsibility of the sending
party to notify the banks involved and coordinate resolution of the
discrepancy.
4.1.9 Billing and Collection Claim/Dispute
-------------------------------------
The amount due for a substantiated Billing and Collection claim/dispute
shall be adjusted on the current month's Billing and Collection bill
rendered to the Customer.
4.2 Disputed Billing and Collection Service Amounts
-----------------------------------------------
4.2.1 In the event the Customer disputes any portion of the Billing and
Collection bill, the Customer should notify Bell Atlantic in writing of
the nature and basis of the claim. The claim should contain sufficient
detail to allow investigation by Bell Atlantic. This detail should
include, but not be limited to, examples of the incorrect Billing and
Collection bills and explanations of methods used for comparison or
tracking purposes.
4.2.2 Should dispute not be resolved by the Billing and Collection payment
due date, the Customer must pay the billed amount including the charges
in dispute by the payment due date. The Customer will then have claim
against Bell Atlantic for reimbursement, with interest, if the dispute is
resolved in favor of the Customer.
4.2.3 Bell Atlantic will have thirty (30) days from receipt of written
notification of the dispute to process the claim and inform the Customer
if sufficient detail was provided for investigation.
<PAGE>
7/15/93
A-26
4.2.4 For claims resolved in favor of the Customer, interest on the disputed
amount will be calculated as follows:
A. If the claim with sufficient detail for investigation is received
within ninety (90) days of the payment due date, the interest will be
calculated according to the penalty factor as set forth in the current
Access Tariff from the original payment date to the date of
resolution.
B. If the claim with sufficient detail for investigation is received
within ninety (90) days or more after the payment due date, the
interest will be calculated according to the penalty factor described
above.
C. The claimed revenue with interest will be paid no later than thirty-
one (31) calendar days after written notification to the Customer that
the claim has been sustained. The amount of the substantiated claim
will be adjusted on the following month's Billing Collection bill.
<PAGE>
7/15/93
A-27
5.0 Billing Charges
---------------
The Customer may anticipate that modifications to Bell Atlantic's billing
systems will be required to implement billing changes for new and revised
end user services offered by the Customer as well as any new
administrative and operating procedures that may be requested by the
Customer.
5.1 Customer Requests
-----------------
All Customer requests will be identified by type and include the
information needed by the Bell Atlantic to develop a suitable response.
For example, a complete package from the Customer may contain the
following:
(1) Billing specifications
(2) Illustrative tariff
(3) Methods and Procedures
(4) Account codes
(5) Bill Format
(6) Service order example
(7) Other
The Customer will be asked to clarify or enhance the specifications as
necessary.
5.2 Types of Billing Change Requests
--------------------------------
5.2.1 Detailed Time and Cost Request (T&C)
------------------------------------
A. Bell Atlantic will undertake a detailed analysis of the complete
specifications received from the Customer. Bell Atlantic will
respond to the Customer within 30 days with the estimated cost to
the Customer of providing the request, the projected implementation
date, and any recurring charges if applicable. For estimates less
than $100,000, Bell Atlantic will charge the Customer the estimated
costs. For estimates greater than $100,000, Bell Atlantic will
charge the Customer the actual programming hours times the current
Program Development Rate.
<PAGE>
A-28 7/15/93
B. The Customer will notify Bell Atlantic within thirty (30) work days
whether the proposed T&C quote is accepted or rejected. If the
Customer fails to notify Bell Atlantic within thirty (30) work
days, the T&C quote will be void unless the Bell Atlantic agrees in
writing to extend it. The hourly rate for Program Development is
applicable for the effort in developing the T&C quote. In the event
that the Customer accepts the estimate and authorizes the work, the
amount billed for the development of the estimate will be credited
to the account when the actual hours are billed for the project.
C. For an accepted T&C estimate, Bell Atlantic will concur with the
acceptance notice within ten (10) work days. Any changes by Bell
Atlantic to the accepted response may be treated by the Customer as
a revised T&C estimate and be subject to reevaluation by the
Customer.
5.2.2 Pre-authorized Development and Implementation
---------------------------------------------
If the Customer pre-authorizes development and implementation, Bell
Atlantic will evaluate and begin development and implementation
activities for the request. The Customer will be charged the
appropriate rates for these activities as described in the Principle
Agreement.
5.3 Implementation Issues
---------------------
When the Customer requests Time and Cost Estimates for discretionary
charges, e.g., new services offerings or restructures to existing services,
Bell Atlantic's estimate will reflect the earliest implementation date
possible. Should the Customer elect to make the service offering available
prior to Bell Atlantic's ability to provide service, Bell Atlantic will not
be responsible for maintaining records for back-billing of end users. Back-
billing will occur only when mutually agreed upon and applicable charges
will apply.
<PAGE>
A-29 7/15/93
5.4 Compensation
------------
The customer will compensate Bell Atlantic for billing changes authorized
by the customer. For canceled requests, the Customer will compensate Bell
Atlantic for expenses incurred up to the point of cancellation, as well as
any charges reasonably required to terminate Bell Atlantic's activities.
5.5 Bell Atlantic Billing Errors
----------------------------
The Customer will provide written documentation of any Bell Atlantic
billing errors and Bell Atlantic will attempt to respond within thirty (30)
work days of receipt. Where meeting the thirty (30) work days objective is
not possible, Bell Atlantic will extend its best efforts to resolve the
error as quickly as possible thereafter.
These corrections will be paid for by the Customer only if the Customer's
billing specifications provided to Bell Atlantic did not completely and
accurately address the circumstances under which the billing errors were
found.
5.6 Right of Refusal
----------------
Bell Atlantic reserves the right to refuse a billing change request from
the Customer.
<PAGE>
A-30 7/15/93
6.0 TAXES
-----
6.1 Filing of Taxes
---------------
The customer shall file all returns for federal, state or local sales,
uses, excise, gross receipts or other taxes or tax-like fees imposed on
or with respect to the customer's services (which include the services of
any third party billing through the customer) and pay or remit all such
taxes and other similar items. All such taxes and other similar items
together with gross receipts taxes and similar items imposed on or arising
out of amounts received pursuant to Bell Atlantic's performance of services
hereunder (including all amounts received by Bell Atlantic from the
Customer's end users), are referred to herein as "Tax" or "Taxes", unless
otherwise specifically named.
6.2 Taxes Billed and Collected by the BOC
-------------------------------------
In any jurisdiction which imposes a Tax which will be billed and Collected
by Bell Atlantic as part of Billing and Collection Services rendered to the
Customer, the Customer shall file with the appropriate tax authority, if
required in order for the Customer to file returns and remit Taxes in such
jurisdiction, a letter or such other document(s) as may be required by such
taxing authority.
This letter or document must state that the Customer has assumed
responsibility for accurate collection and remittance of such Taxes and
that the Customer will satisfy any other conditions such tax authority
might impose. Such letter shall be substantial substantially in the form
set forth in Exhibit E.
6.3 Tax Liability
-------------
The Customer shall hold Bell Atlantic harmless from and against any
liability arising with respect to any period during which the Customer
files tax returns, prepares tax returns, or remits any Taxes.
<PAGE>
A-31 7/15/93
6.4 End User Tax Status
-------------------
In the provision of Billing and Collection Services, the BOC shall apply
Taxes based on the tax status of the Customer's end users as instructed by
the Customer. If the Customer requires the BOC to apply the BOC tax tables
or schedules, end users' tax exemptions and/or exemption certificates to
Customer services, the BOC will apply such tax tables or schedules,
exemptions and/or exemption certificates without warranty as to accuracy,
completeness or applicability to the Customer's end users. The Customer
shall pay, indemnify and hold the Bell Atlantic harmless from any federal,
state or local taxing authority's assessments, including interest and
penalties, that may result from challenges to the applicability or
correctness of the BOC tax tables or schedules, end user's tax exemption
and/or tax exemption certificates to the Customer's services. If the
Customer directs Bell Atlantic to provide to the Customer any information
relating to end user inquires as to the payment of any Tax, such
information shall be furnished by Bell Atlantic to the extent permitted by
law and without warranty as to accuracy or completeness.
6.5 Customer Tax Information Provided by the
----------------------------------------
The BOC shall furnish the Customer all information in the BOC's possession
reasonably necessary for the Customer to file its tax returns. Such
information shall be in the format normally used by the BOC in the
preparation of its returns. If a change in format or additional information
is required by the Customer in order to prepare and file tax returns, the
requested format or information shall be supplied according to a schedule
and a format mutually agreed to by Bell Atlantic and the Customer. The
Customer shall reimburse Bell Atlantic for its costs of providing such
additional information or change in format.
<PAGE>
A-32 7/15/93
6.6 Billing of Taxes
----------------
The Customer will advise Bell Atlantic of details or amounts of Taxes to be
billed or collected in connection with Customer services and new services
introduced from time to time by the Customer. If the Customer elects to
have the BOC apply the same tax rates and tables to Customer services as
the BOC applies to BOC services then the BOC will apply such tax rates and
tables to Customer services without warranty as to accuracy, completeness
or applicability to Customer services. By advance written notice to Bell
Atlantic, the Customer may request that the BOC adjust the bills of the
Customer's end users who protest against, claim exemption from and/or
refuse to pay any tax billed to them; provided, however, that the BOC shall
comply with such request only to the extent permitted by law and only to
the extent the BOC has such correspondence and/or forms as it deems
necessary from such end user documenting their protest, exemption claim
and/or refusal to pay any Tax. Bell Atlantic shall not be entitled to
retain or receive from the Customer any statutory fee or share of Taxes to
which the person collecting such Taxes is entitled under applicable law.
6.7 Indemnification by Customer
---------------------------
6.7.1 The Customer agrees to pay, indemnify and save Bell Atlantic harmless
from any liabilities, claims or demands (including costs, expenses and
reasonable attorney's fees) resulting from any tax, penalties,
interest, additions to tax, surcharges or other charges which are
either payable by Bell Atlantic or required to be collected by Bell
Atlantic as a result of:
A. delay or failure of the Customer, for any reason, to pay any Tax
or other such item, or file any return or other information as
required by law or this Agreement or;
<PAGE>
A-33 7/15/93
B. Bell Atlantic complying with this Agreement (including, without
limitation, the application of Bell Atlantic to adjust the amount
of Taxes billed to the Customer's customers as instructed by the
Customer, and the billing of taxes by Bell Atlantic) or complying
with any determination or direction by or advice of the Customer
or using information provided by the customer in performing any
tax-related service hereunder; or
C. in the absence of any such direction or advice by the customer in
this Agreement or otherwise, Bell Atlantic taking or failing to
take any action with respect to any Tax unless such action or
inaction constitutes willful misconduct by Bell Atlantic.
6.7.2 If the Customer disagrees with Bell Atlantic's determination that any
Taxes are payable by Bell Atlantic or disagrees with an assessment of
any additional Tax, penalty, addition to tax, surcharge and/or
interest due by Bell Atlantic as a result of Bell Atlantic's
performance of any obligation under this Agreement, the Customer
shall, at its option and expense (including payment for any such
assessment prior to final resolution of the issue), have the right to
seek a ruling as to the applicability of any such Tax or additional
charge or to protest any assessment and participate in any legal
challenge to such assessment, but shall be liable for any Tax or
additional charge, penalty, surcharge and interest ultimately
determined to be due. Bell Atlantic shall, when requested by the
Customer and at the Customer's expense, cooperate or participate with
the Customer in any such proceeding, protest or legal challenge to the
extent such cooperation or participation is not inconsistent with the
interests of Bell Atlantic or Bell Atlantic's other Customers. Bell
Atlantic may participate, at its own expense, in any such proceeding,
protest or legal challenge.
<PAGE>
A-34 7/15/93
6.7.3 The indemnity payable hereunder shall be payable in all events and
without regard to any determination that Bell Atlantic is the party
obligated to collect and remit such Taxes or file the tax returns.
<PAGE>
B-1 7/15/93
EXHIBIT B
RATES AND CHARGES
-----------------
1.0 DESCRIPTION OF RATE ELEMENTS
-----------------------------
1.1 MESSAGE PROCESSING
------------------
Message Processing is the processing of the Customer's end user's completed
messages and placing them into the end user's account file. The Message
Processing rate element is applied on a per message basis to each message
billed for the Customer.
1.2 INVOICE PROCESSING
------------------
1.2.1 Invoice Processing is the processing of all end user account data and
records, the enclosing and mailing of the invoice, and the collection
related activities associated with the end user's bill. The Invoice
Processing charge is applied for each end user invoice rendered.
1.2.2 The Invoice Processing charge will be adjusted upward by 1/3 of any
First Class Postage increase occurring in the first postage band.
1.3 INQUIRY-SERVICE
---------------
Inquiry Service is the answering of end user questions relating to Customer
charges billed and the application of credits and adjustments to end user
accounts. The Inquiry rate is applied on a per message basis to each
message billed for the Customer. In Pennsylvania this service is provided
in accordance with Pa. PUC Chapter 64 Guidelines.
<PAGE>
B-2 7/15/93
1.4 DELAYED MESSAGE
---------------
Delayed Message charges are applied on a per message basis to all usage
received from the Customer that is more than ninety (90) days old from the
date the call was made to the date the message was received by Bell
Atlantic. Since this charge recovers the costs predominately associated
with Inquiry, different rates apply to Customers who purchase Inquiry than
to those Customers who do not purchase Inquiry. In Pennsylvania the
provision of this service is subject to Pa. PUC Chapter 64 Guidelines.
1.5 DATA TRANSMISSION
-----------------
The Data Transmission charge is applied to billing detail that is data
transmitted from the Customer location to any Bell Atlantic location and to
Customer billing detail that is transmitted to a Customer location from a
Bell Atlantic location. The Data Transmission Charge is applied to Bell
Atlantic's count of records transmitted and received.
1.6 END USER ACCOUNT ADJUSTMENT CHARGES
-----------------------------------
End User Account Adjustment charges are applied whenever the Customer
furnishes to Bell Atlantic end user account information that changes the
balance due associated with an end user account or when Bell Atlantic
initiates a Recourse Adjustment. End User Account Adjustment Charges do not
apply to Customers who purchase Inquiry Service.
1.6.1 The Manual Carrier Initiated Adjustment charge applies to all
adjustments received by Bell Atlantic on a non-mechanized basis or
paper basis.
1.6.2 The Manual Recourse Adjustment charge applies to all Bell Atlantic
initiated recourse adjustments.
1.6.3 The mechanized adjustment charge applies to all Category 41 credit
records received by Bell Atlantic. Category 41 credit records may be
available on a, jurisdiction by jurisdiction basis starting
after June, 1994.
<PAGE>
B-3 7/15/93
1.7 PROGRAM DEVELOPMENT
-------------------
1.7.1 The basic per hour rate for Program Development is applied for each
Bell Atlantic employee hour, or fraction thereof, of time spent on
behalf of the Customer, at the Customer's request, for work performed
within Bell Atlantic's is normal work schedule and using the normal work
force.
1.7.2 The premium per hour rate for program development is applied for each
Bell Atlantic employee hour, or fraction thereof, of time spent on
behalf of the Customer, at the Customer's request, for work performed
outside the Bell Atlantic's is normal work schedule and/or which
requires additions to the work force .
1.8 SYSTEM TEST CHARGE
------------------
The Standard System Test charge will apply to all Customer initiated Bell'
Atlantic billing system changes that require a billing system test. This
charge may be applied in addition to other charges (e.g. Program
Development) required to implement system changes or new services.
1.9 ADMINISTRATIVE EMPLOYEE TIME
----------------------------
The per hour rate for Administrative Employee Time is applied for each
Bell Atlantic employee hour, or fraction thereof, of time spent on behalf
of the Customer, at the Customer's request, for performing additional
administrative functions such as copying bills, message investigation,
etc.
1.10 CENTRAL PROCESSING UNIT (CPU) TIME
----------------------------------
CPU Time is charged on a half hour basis for each Central Processing Unit
half hour, or fraction thereof, of time spent on behalf of the Customer,
at the Customer's request, for performing additional processing functions
not recovered under the specific rate elements detailed in this Agreement.
<PAGE>
B-4 7/15/93
1.11 CENTRALIZED MESSAGE DATA SYSTEM (CMDS) CHANGE CHARGE
----------------------------------------------------
The CMDS Change charge is applied to all Customers who change their mode
of data provisioning from CMDS to tape or from tape to CMDS. This charge
will apply in each BOC to recover the costs associated with changing this
service. For the purpose of CMDS Change charges, New Jersey Bell
constitutes a single "BOC", Bell of Pennsylvania and the Diamond State
Telephone Co. constitute a single "BOC", and the four C&P Companies
constitute a single "BOC".
1.12 LOGO IMPLEMENTATION AND CHANGE CHARGE
-------------------------------------
The Customer's Logo may be displayed on the Customer's bill page in
jurisdictions where technically available and allowed by law or
regulation. The Logo Implementation charge is applied in each BOC to
recover the initial cost of setting up this service. There is no recurring
charge for this service. For purpose of Logo Implementation charges, New
Jersey Bell constitutes a single "BOC", Bell of Pennsylvania and the
Diamond State Telephone Co. constitute a single "BOC", and the four C&P
Companies constitute a single "BOC".
1.13 BILL PERIOD UPDATE TABLE
------------------------
A listing of all business, residence and fictitious NPA NXXs is provided
via the Bill Period Update Table on a monthly basis. A one time
implementation charge will be applied by each BOC to all Customers
requesting this service. The implementation charge applies to recover the
initial cost of setting up this service. The listing will be provided via
Magnetic Tape and a recurring monthly charge will apply for each BOC. For
purposes of Bill Period Update Table charges, New Jersey Bell constitutes
a single "BOC", Bell of Pennsylvania and the Diamond State Telephone Co.
constitute a single "BOC", and the four C&P Companies constitute a single
"BOC".
<PAGE>
B-5 7/15/93
1.14 SUB-CARRIER LISTING
-------------------
The initial implementation rate is applied in each jurisdiction to set-up
the initial sub-cic table. The change rate is applied to each request
received by the Bell Atlantic for changes, modifications, additions, and
deletions to the IC's Sub-carrier Listing. This charge will be applied in
each jurisdiction affected by the request (NJ, PA, DE, DC, VA, MD, WV).
1.15 ACCOUNT INFORMATION FOR FRAUD PREVENTION SERVICE
------------------------------------------------
Account Information for Fraud Prevention (AIFP) Service is an optional
service that provides the Customer with specific account information on a
live, verbal basis. The flat monthly charge associated with this service
is applied on a per BOC basis. For the purpose of AIFP service, New Jersey
Bell constitutes a single "BOC", Bell of Pennsylvania and the Diamond
State Telephone Co. constitute a single "BOC", and the four C&P Companies
constitute a single "BOC".
1.16 MISCELLANEOUS CHARGE RECORD
---------------------------
The Miscellaneous Charge Record is a standard Category 42 EMI record
designed for billing non-usage related, telecommunications customer
charges. This charge is applied on a per record basis. Category 42 records
will be available on a jurisdiction by jurisdiction basis starting after
August 1992.
An initial one-time set-up charge will be applied when the Customer
initiates Miscellaneous Charge Records after the original "initiation of
service" in each BOC. This charge recovers the expenses associated with
testing and with the implementation of the initial revenue classification
table.
<PAGE>
B-6 7/15/93
However, the per BOC charge for the "Initial Implementation" of the Cat.
42, Misc. Charge Record, will not apply when a customer request the
---
implementation of this record in conjunction with the initiation of
service. If a customer request the implementation of the Cat. 42 record
after service is initiated, i.e. any date after the initial service order
is forwarded to CRIS, the per BOC charge will be applied. Note that Cat.
42 records must be included with the test data for initiation of service.
1.17 INITIAL START-UP
----------------
An Initial Start-Up charge is applied to all new Customers to recover the
initial costs of billing implementation. This charge will apply in
each.BOC where service is ordered, whether or not service is ordered in
all jurisdictions within that BOC. For purpose of Initial Start-Up
charges, New Jersey Bell constitutes a single "BOC", Bell of Pennsylvania
and the Diamond State Telephone Co. constitute a single "BOC", and the
four C&P Companies constitute a single "BOC".
If Bell Atlantic chooses to terminate this Agreement within one year of
initial service initiation for reasons other than breach of the Agreement
by the Customer, Bell Atlantic will refund to the Customer a pro-rata
portion of the Initial Start-up charge.
1.18.1 MINIMUM ANNUAL REVENUE OBLIGATION
---------------------------------
The Customer will be required to pay Bell Atlantic a Minimum Annual
Revenue Obligation of $1,000,000 each year of the five year agreement.
on each anniversary of the effective date of the contract, Bell Atlantic
will review the previous year's Billing and Collections' revenue to
determine if the minimum obligation has been met. For purposes of
satisfying this Minimum Annual Revenue obligation, the amount paid Bell
Atlantic by the Customer shall be determined by adding the total Billing
and Collection charges for services provided under this Agreement. The
Customer will be responsible to pay Bell Atlantic the difference between
the Minimum Annual Revenue Obligation and the actual revenue calculated
by Bell Atlantic should a shortfall occur.
<PAGE>
B-7 7/15/93
1.18.2 If the Customer does not meet the Minimum Annual Revenue Obligation in a
given year other than the first year of the Agreement, the Customer may
apply up to $100,000 of any previous year's Billing and Collection
Services revenue that was over the Minimum Annual Revenue obligation to
the current year's shortfall.
1.18.3 If the Customer does not meet the Minimum Annual Revenue Obligation in a
given year other than the final Agreement year, the Customer shall have
the option of moving an amount of up to $100,000 of that year's Minimum
Annual Revenue obligation to the following year. For example, if the
amount of the Customer payment for Bell Atlantic Billing and Collections
services in 1994 only equals $700,000, there is a $300,000 shortfall.
The Customer shall be permitted to move $100,000 of the 1994 obligation
to 1995. The Customer would still be required to pay Bell Atlantic
$200,000 for 1994 and would be obligated to pay Bell Atlantic $1,100,000
in 1995.
MINIMUM REVENUE OBLIGATION EXAMPLE:
-----------------------------------
<TABLE>
<CAPTION>
<S> <C>
1994 Guarantee $1,000,000
Actual Customer B&C charges $ 700,000
1994 Shortfall ($1,000,000 minus $700,000) $ 300,000
Moveable amount to 1995 $ 100,000
New 1994 Minimum ($1,000,000 minus $100,000) $ 900,000
1994 Shortfall the Customer is required
to pay ($900,000 minus $700,000) $ 200,000
New 1995 Minimum Revenue Guarantee
($1,000,000 plus $100,000 1994 carry-over) $1,100,000
</TABLE>
<PAGE>
B-7 7/15/93
1.18.2 If the Customer does not meet the Minimum Annual Revenue obligation in a
given year other than the first year of the Agreement, the Customer may
apply up to $100,000 of any previous year's Billing and Collection
Services revenue that was over the Minimum Annual Revenue Obligation to
the current year's shortfall.
1.18.3 If the Customer does not meet the Minimum Annual Revenue obligation in a
given year other than the final Agreement year, the Customer shall have
the option of moving an amount of up to $100,000 of that year's Minimum
Annual Revenue obligation to the following year. For example, if the
amount of the Customer payment for Bell Atlantic Billing and Collections
services in 1994 only equals $700,000, there is a $300,000 shortfall.
The Customer shall be permitted to move $100,000 of the 1994 obligation
to 1995. The Customer would still be required to pay Bell Atlantic
$200,000 for 1994 and would be obligated to pay Bell Atlantic $1,100,000
in 1995.
MINIMUM REVENUE OBLIGATION EXAMPLE:
-----------------------------------
<TABLE>
<S> <C>
1994 Guarantee $2,000,000
Actual Customer B&C charges $1,600,000
1994 Shortfall $ 400,000
Moveable amount to 1995 $ 300,000
New 1994 Minimum $1,700,000
1994 Shortfall the Customer is required
to pay $ 100,000
New 1995 Minimum Revenue Guarantee $2,300,000
</TABLE>
<PAGE>
7/15/93
B-8
RATES
-----
RATE ELEMENT RATE
------------ ----
(1) Message Processing Service, per msg. .035
---------------------------
(2) Invoice Processing *, per invoice .33
--------------------
(3) Inquiry, per msg billed .04
-------
(4) Delayed Message, per msg.,
---------------
Inquiry purchased .08
Inquiry not purchased .02
(5) Data Transmission,
-----------------
per record transmitted or received .003
(6) End User Account Adjustment Charges,
------------------------------------
per manual carrier initiated adjustment 6.00
per manual recourse adjustment 12.00
per mechanized adjustment (per record) .25
(7A) Basic Program Development, per hour
--------------------------
1992 - 1994 90.00
1995 - 1996 105.00
1997 - 1999 120.00
(7B) Premium Program Development, per hour
----------------------------
1992 - 1994 135.00
1995 - 1996 157.50
1997 - 1999 180.00
(8) System Test Charge, per BOC
-------------------
(NJ, PA/DE, C&P) 2,000.00
(9) Administrative Employee Time, per hr. 45.00
-----------------------------
(10) CPU Time, per 1/2 hr. 1,000.00
---------
(11) CMDS Change Charge, per BOC 4,000.00
-------------------
<PAGE>
B-8 7/15/93
RATES
-----
RATE ELEMENT RATE
------------ ----
(1) Message Processing Service, per msg. .024
---------------------------
(2) Invoice Processing *, per invoice .32
--------------------
(3) Inquiry, per msg billed .04
--------
(4) Delayed Message, per msg.,
---------------
Inquiry purchased .08
Inquiry not purchased .02
(5) Data Transmission,
-----------------
per record transmitted or received .003
(6) End User Account-Adjustment Charges,
-----------------------------------
per manual carrier initiated adjustment 6.00
per manual recourse adjustment 12.00
per mechanized adjustment (per record) .25
(7A) Basic Program Development, per hour
--------------------------
1992 - 1994 90.00
1995 - 1996 105.00
1997 - 1999 120.00
(7B) Premium Program Development, per hour
----------------------------
1992 - 1994 135.00
1995 - 1996 157.50
1997 - 1999 180.00
(8) System Test Charge, per BOC
---------------------------
(NJ, PA/DE, C&P) 2,000.00
(9) Administrative Employee Time, per hr. 45.00
-----------------------------
(10) CPU Time, per 1/2 hr. 1,000.00
---------
(11) CMDS Change Charge, per BOC 4,000.00
--------------------
<PAGE>
B-9 7/15/93
RATES
-----
RATE ELEMENT RATE
- ------------ ----
(12) LOGO Implementation and Change, per BOC 4,000.00
----------------------
(13) Bill Period Update Table
------------------------
Initial Implementation Charge, per BOC 500.00
Monthly Charge, per jurisdiction 50.00
(14) Sub-Carrier Listing Change
---------------------------
Initial set-up, per jurisdiction 1,000.00
Per change request, per jurisdiction 100.00
(15) Account Information for Fraud Prevention
----------------------------------------
per BOC, per month 500.00
or per account query 2.00
(16) Excess file/tape processing charge 500.00
----------------------------------
(17) Miscellaneous Charge Record,
----------------------------
Initial Implementation Charge, per BOC 14,000.00
per recorad .25
(18) Initial Start-up Charge, per BOC 20,000.00
-----------------------
(19) Minimum Monthly Payment 300.00
-----------------------
* The Invoice Processing charge will be adjusted upward by 1/3 of any First
Class Postage increase occurring in the first postage band.
<PAGE>
C-1 7/15/93
EXHIBIT C
IRREVOCABLE LETTER OF CREDIT
U.S. Dollar Amount $ Date
--------------------- ----------------------
TO: (Bell Atlantic BOC)
--------------------------------------
--------------------------------------
--------------------------------------
RE: (Billing Services Subscriber, Customer)
Gentlemen:
At the request and for the account of (Customer), we hereby establish our
----------
irrevocable letter of credit in your favor in connection with the account
indicated above for the sum or sums not exceeding dollars.
----------------------
This letter of credit covers all charges incurred within one year of the
date hereof for Billing and Collection Services originated from or charges
accepted by any telecommunications service billed to the above indicated
account, including termination of services charges, if any.
Any draft drawn under this letter of credit must be accompanied by your
statement from your authorized representative that the amount drawn represents
the unpaid amount for services rendered or termination charges due as of the
date of any such statement for services or date of disconnection, whichever is
later. Each draft drawn relative hereto must be marked: Drawn Under Credit.
We hereby agree to honor each draft drawn under and in compliance with the
terms of this credit, if duly presented (together with the documents herein
specified) within forty-five (45) days after the date of expiration of this
irrevocable letter of credit.
Very truly yours,
By
--------------------------------
(President)
--------------------------------
(Financial Institution Name)
<PAGE>
D-1 7/l/92
EXHIBIT D
BELL ATLANTIC 700/900 SERVICE BILLING POLICY
Bell Atlantic will not provide Billing and Collection Services for 700 and 900
services unless Adult and GAB Programs offered through those services are
provided in accordance with certain controls. Adult and Gab Programs are
defined as follows:
(1) obscene, sexually explicit, lewd or indecent (commonly referred to as
"adult") live or recorded programs where any of the amount billed is
remitted to, or otherwise accrues to the benefit of, the originator of
the program (hereinafter referred to as "Adult Programs"); and
(2) Live Group Access Bridged Programs where the primary or exclusive
purpose is for callers to converse with one another, where any of the
amount billed is remitted to, or otherwise accrues to the benefit of,
the originator of the program (hereinafter referred to as "GAB
Programs")
If Adult or GAB Programs are available through the Customer's 700 or 900 service
and if the Customer desires Bell Atlantic to bill for 700 or 900 services, the
Customer must implement one or both of the following control measures:
(1) Establish a separate NXX code for all Adult or GAB Programs, access to
which is blocked by the Customer unless the telephone subscriber gives
written authorization to the Customer for access and agrees to pay
charges for any calls from the subscriber's telephone to such
services; or
<PAGE>
D-2 7/l/92
(2) Provide a Personal Identification Number (PIN) access code to a
telephone subscriber, upon written request and agreement by the
subscriber to pay charges for any calls from the subscriber's
telephone to such services. The PIN access code would be required by
the Customer for access to Adult and GAB 700 and 900 programs.
In addition, the Customer may not allow Adult and GAB 700 and 900 services to be
available to subscribers through the Customer's or Bell Atlantic's coin phones
or operators, if applicable, in Bell Atlantic's service territories.
If Bell Atlantic determines that any Adult or GAB Program, as defined herein, is
being offered by the Customer without the necessary controls, Bell Atlantic
shall notify the Customer in writing identifying such program. The Customer
shall have sixty (60) days from receipt of such written notice to provide
written acknowledgment to Bell Atlantic that the program has been discontinued
or that the subject program is not within the above definitions, or that it is
being provided with the requisite controls. In the event that the Customer does
not demonstrate to the satisfaction of Bell Atlantic that it has discontinued
the program or applied the necessary controls, Bell Atlantic may terminate all
Billing and Collection Services for all 700 services if the subject program was
a 700 service and for all 900 services if the subject program was a 900 service.
In the event of termination, or if the Customer notifies Bell Atlantic in
writing of the Customer's intent to offer 700 or 900 programs without Bell
Atlantic's Billing and Collection Services, Bell Atlantic shall, for the term of
the Agreement, make available billing detail necessary for the Customer to bill
the applicable 700 or 900 service subscribers.
<PAGE>
E-1 7/15/93
EXHIBIT E
REQUEST FOR TAX BILLING
NOTIFICATION
Dear ,
----------------
The Billing and Collections Service Agreement requires (Customer's Name) to
-------------------
provide Bell Atlantic an affidavit that states whether your service is subject
to any federal and/or state taxes. The enclosed blank notification form lists
the information Bell Atlantic needs to properly apply these taxes. Please
submit one completed form for each tax you wish Bell Atlantic to bill directly
to your customers. Bell Atlantic has the capability to bill and collect only
the following taxes:
Federal Excise Tax
Pennsylvania Sales Tax
Delaware Public Utilities Tax on Telecommunication Services
In addition, the Billing and Collection Service Agreement between you and Bell
Atlantic requires you to take an additional action concerning the taxes. Please
inform us if you wish us to use Bell Atlantic tax exemptions and/or exemption
certificates for your customer and services.
--------------------------
(Account Manager)
<PAGE>
<PAGE>
E-2 7/15/93
EXHIBIT E
BELL ATIANTIC TAX BILLING NOTIFICATION/CHANGE
ACNA:
---------------------
Date:
---------------------
Tax:
---------------------
Tax Rate:
--------------------
Tax Base:
--------------------
Implementation Date:
--------------------
Tax Contact: (Name, Address, Telephone Number)
- --------------------------------------------------------------------------------
Comments:
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* For the purposes of this document, "Taxes" shall mean federal, state or local
sales, use, excise, gross receipt or other taxes or tax like fees imposed on
or with respect to services provided by Customer and billed directly to the
Customer's end user as a tax.
--------------------------------------
(Authorized Customer Signature)
--------------------------------------
(Customer Name)
--------------------------------------
(Title)
--------------------------------------
(Corporation Name)
--------------------------------------
(Date)
<PAGE>
E-3 7/15/93
EXHIBIT E
-----------------
(Date)
Deputy Secretary for Taxation
Department of Revenue
P.O. Box 1874
Harrisburg, PA 17105
Dear Deputy Secretary:
Re: Acknowledgment of-Responsibility
--------------------------------
In accordance with the provisions of paragraph C of tax memorandum subject
"Sales/Use Tax Utilities Gross Receipts Tax -Communications Equipment and
Services" dated March 1, 1984,
(Customer Name) assumes the responsibility under the Tax Reform Code of 1971
- ------------------
for the accurate collection and remittance of sales tax upon
intrastate/interLATA telephone service to its commercial customers.
Under separate agreement effective (Date) ,
-----------
(Customer Name) has engaged Bell of Pennsylvania as its agent for
- -----------------
the purpose of collecting the tax. (Customer Name) , however, will remit the
-----------------
tax directly to the Department of Revenue.
Should the Department of Revenue desire to examine the books and records of
Bell of Pennsylvania for the purpose of verifying the accurate collection of tax
by (Customer Name) ,
------------------
(Customer Name) will issue a written request to Bell of Pennsylvania
-----------------
authorizing the examination of the department in accordance with our memorandum.
Very truly yours,
<PAGE>
F-I 7/15/93
EXHIBIT F
BILLING INTERMEDIARY
In the event that the Customer obtains any Bell Atlantic Billing and Collection
Services under this Agreement through a third party intermediary (Intermediary),
the terms contained in this Exhibit E will apply and take precedence over any
conflicting terms contained elsewhere in the Agreement.
1. Access and Use of Services
--------------------------
a. The Customer will provide written notice, either directly or through the
Intermediary, to Bell Atlantic identifying the Intermediary as the
Customer's agent for accessing and using specified billing services. The
Customer will not obtain the specified billing services directly from
Bell Atlantic so long as the notice, of agency is in effect.
b. All notices and demands by Bell Atlantic under the Agreement related to
the specified billing services will be provided only to the Intermediary.
c. The Customer and Intermediary shall be jointly and severally liable to
Be11 Atlantic for any and all of the Customer's obligations under the
Agreement related to the specified billing services. Such liability shall
survive termination of the Agreement.
d. The name of the Customer will be displayed on the bill to the end user.
<PAGE>
7/15/93
F-2
2. Aggregation of Services
-----------------------
If Intermediary represents more than one customer in obtaining Services from
Bell Atlantic, those customers will be treated as a single customer by Bell
Atlantic for certain purposes under the Agreement. Such aggregation of
treatment shall include, but shall not be limited to, the activities
described in the following portions of the Agreement:
VII. AUDITS
X. SECURITY
EXHIBIT A - SERVICE REQUIREMENTS INDEX
EXHIBIT B - RATES AND CHARGES
Note that such things as charges, settlement amounts, and taxes shall not be
treated separately. The Intermediary shall be responsible for dividing such
items among its customers.
<PAGE>
F-3 7/15/93
BLANKET AGENCY AGREEMENT
This Agreement is made and entered into by the Bell Atlantic Operating
Telephone companies (The Bell Telephone Company of Pennsylvania, The Diamond
State Telephone Company, the New Jersey Bell Telephone Company, The Chesapeake
and Potomac Telephone Company, The Chesapeake and Potomac Telephone Company of
Maryland, The Chesapeake and Potomac Telephone Company of Virginia, and The
Chesapeake and Potomac Telephone Company of West Virginia) (hereinafter referred
to as "Bell Atlantic") and
--------------
(hereinafter referred as "Intermediary").
Intermediary has been authorized to act as an agent for certain interexchange
carriers (hereinafter "Customers") to obtain billing and collection services
from Bell Atlantic provided under the Agreement for the Provision of Billing and
Collection Services by the Bell Atlantic Operating companies (hereinafter
"Billing Agreement"). The list of Customers for whom Intermediary is acting as
agent for all Bell Atlantic billing services described in the Billing Agreement
is contained in Attachment 1, which may be amended from time-to-time by
Intermediary. The list of Customers for whom Intermediary is acting as agent
for Bell Atlantic Card Billing services only is contained in Attachment 2, which
may be amended from time-to-time by Intermediary. The list of Customers for
Whom Intermediary is acting as an agent for all of Bell Atlantic billing
services except Bell Atlantic Card Billing Service is contained in Attachment 3,
which may be amended from time-to-time by Intermediary.
In consideration of Bell Atlantic's agreement not to require Intermediary to
submit individual agency authorizations from its Customers and other good and
valuable consideration, Intermediary makes the following representations,
agreements, and commitments:
1. Intermediary represents that it has a current written authorization from
each Customer listed in Attachment 1 allowing Intermediary, on its behalf,
to enter into the Billing Agreement, attached hereto as Attachment 4.
<PAGE>
F-4 7/15/93
Intermediary represents that it has a current written authorization from
each Customer listed in Attachment 2 allowing Intermediary, on its behalf,
to enter into the Billing Agreement, but only for obtaining Bell Atlantic
Card Billing Service, described in Exhibit A, Section 2.10. Intermediary
represents that it has a current written authorization from each Customer
listed in Attachment 3 allowing Intermediary, on its behalf, to enter into
the Billing Agreement for all services except for Bell Atlantic Card
Billing Service. Intermediary agrees to retain all such authorizations in
its files and will provide copies of same to Bell Atlantic within three
(3) days of receipt of a written request from Bell Atlantic.
2. By submission of billing data or service request, Intermediary represents
to Bell Atlantic that it is in possession of a current written
authorization permitting it to do so.
3. In the event that a Customer, a Bell Atlantic end user, or any regulatory,
governmental or judicial authority challenges any action taken by Bell
Atlantic as a result of Bell Atlantic's provision of service in accordance
with this Agreement, Intermediary will provide evidence of proper Customer
authorization and will indemnify and hold Bell Atlantic harmless from any
and all damages, losses, or expenses (including attorney's fees) resulting
from said challenge.
4. Intermediary and its Customer shall be jointly and severally liable to
Bell Atlantic for any and all of Customer's obligations under the Billing
Agreement related to services provided to Customer for which Intermediary
herein represents that it is an authorized agent.
<PAGE>
F-5 7/15/93
5. If Intermediary represents more than one Customer in obtaining Billing
Services from Bell Atlantic, those Customers will be treated as single
customer by Bell Atlantic to the extent described in Exhibit H of the
Billing Agreement.
6. Intermediary agrees that Bell Atlantic shall have the right to terminate
this Blanket Agreement at any time upon the provision of thirty (30) days
prior notice to Intermediary.
7. Intermediary warrants and represents that the signatory of this Blanket
Agreement is an official of the Intermediary authorized to legally bind
Intermediary to the above stated representations and commitments.
BELL ATLANTIC OPERATING
TELEPHONE COMPANIES INTERMEDIARY
----------------------- -----------------------
(Signature) (Signature)
----------------------- -----------------------
(Name) (Name)
----------------------- -----------------------
(Title) (Title)
----------------------- -----------------------
(Date) (Date)
<PAGE>
G-1 7/15/93
EXHIBIT G
GLOSSARY
The following definitions are for informational purposes and are not to be
considered legally binding:
Account Maintenance - Account Maintenance consists of the updating and retention
- -------------------
of all information needed for the billing of end users, either BOC or Customer.
This information includes: end user name and address, credit history, account
type, tax status, line information to generate toll guides, etc. The Agreement
to provide Account Maintenance to the Customer does not constitute data elements
necessary for the BOC to provide its services. Provision of any such data will
be negotiated separately.
Adjustments - Adjustments are amounts which may be classified as follows:
- -----------
(1) End User Adjustments - For each bill date, the BOC may add to/subtract from
--------------------
the Total Current Amount Billed the lawfully billed amounts which the BOC
adds to/removes from the end user's balances due as specified by the
Customer, per general inquiry instructions.
(2) End User Disputed Amounts - For each bill day, the BOC may subtract from
-------------------------
the Current Amount Billed end user bill amounts which the BOC has recoursed
to the Customer in conjunction with disputes between the Customer and the
end user related specifically to Customer services, charges, taxes, or
prior adjustments.
(3) Special Settlement Adjustments - For each file receipt purchase, the BOC
------------------------------
may add to/subtract from the Total Current Amount Billed Customer as a
result of revenue and billing claims. This activity may or may not
initiate end user billing activity.
<PAGE>
G-2 7/15/93
GLOSSARY
Average Customer Payment Availability Period-(ACPAP) - The estimated number of
- ----------------------------------------------------
calendar days from the end of any billing period to the calendar day on which
the Customer payment of the total balance due on average becomes available to
the BOC at its banking institution.
Date of Claim - Date BOC receives sufficient documentation from the Customer to
- -------------
investigate the claim.
Date of Resolution - The date the Customer receives payment for the
- ------------------
disputed/claimed amount from the BOC.
Denial-of Service - Denial of Service consists of denying an end user's access
- -----------------
to the network, or a portion of the network.
Editing - Editing is the verification of the aggregated message data (resulting
- -------
from the assembly process) which ensures accordance with standard format.
EMI - Exchange Message Interface (EMI) is the industry standard format for the
- ---
exchange of message data between BOCS.
End User Bill Date - The date of the BOC end user bill, upon which recurring
- ------------------
and nonrecurring charges to the Customer are based.
End User Bill Format - End User Bill Format consists of the design of the
- --------------------
billing media in a manner that will convey to the end user the charges for
telephone service (both BOC and Customer) in a clear and understandable format.
IC - A term used to denote an inter-exchange carrier.
- --
IXC - A term used to denote an inter-exchange carrier.
- ---
<PAGE>
G-3 7/15/93
GLOSSARY
Inquiries - Inquires consist of the communications, either written or oral,
- --------
concerning end user billing.
Master File Maintenance - Message Master File Maintenance consists of
- -----------------------
maintaining a file of all unbilled message details in line number order or
account sequence. Message details within an account are also maintained in a
predetermined sequence. Service order (guide) activity must be accounted for in
master file maintenance. New installs, finals, and telephone number change will
cause rearrangements of master file sequence. Additional information is also
maintained to identify unique services/options to which the billing account
subscribes.
Messages Distribution Interface - Message Distribution Interface consists of the
- -------------------------------
identification, formatting, packing, and invoicing of message data. It does not
include transmission.
OPH - Operator Handled calls.
- ---
Payment and Remittance - Payment and Remittance Processing is a process by which
- ----------------------
payments are received and applied to the bill of Customers for services
rendered.
Prebilling Message Investigation - Prebilling Message Investigation procedures
- --------------------------------
include:
(1) Checking all possible sources for service order work to establish billing
for the number when no account is found in the Customer Record Information
System (CRIS).
60
<PAGE>
G-4 7/15/93
GLOSSARY
(2) Comparing calls before connect or after disconnect dates to bills on
the Business Office Support System (BOSS) when an account exists but
message dates all outside the service period for that account. If like
messages appear on the bill, the BOC will change the toll guide and attempt
to post the messages for the next bill date.
(3) Checking for wiring errors for direct dialed calls.
RAO - Revenue Accounting office
- ---
Rating - Rating of messages is the computing of applicable charges for each
- ------
message based on the Customer provided schedule of rates. Rating also includes
the preparation of message detail information.
Service Order - A Service order authorizes the BOC to commence billing of
- -------------
Customer services under the terms of the Billing and Collection Agreement.
Standard Collection - The standard collection and treatment methods for
- -------------------
collecting payment, including, but not limited to, suspension and denial of
service for delinquent accounts, and initiation of normal collection efforts,
including legal action where deemed appropriate.
Statement of Amount Due BOC - The statement (or bill) sent to the Customer by
- ---------------------------
the BOC detailing the Amount Due BOC for Billing Services charges.
Treatment - Treatment encompasses all activities included in the collection of
- ---------
end user billed amounts.
<PAGE>
G-5 7/15/93
GLOSSARY
Uncollectible Bad Debt Allowance - Uncollectible Bad Debt Allowance is an amount
- --------------------------------
deducted from Total A/R Subject to Bad Debt to compensate for anticipated losses
resulting from the failure of end users to pay for final bill amounts due.
Uncollectible Reserve Months - Average period for BOC between billing and final
- ----------------------------
uncollectible write-off.
Unbillable Revenue Resulting From Failure of BOC Subscribed Service As a
- -------------------------------------------------------------------
component of the possible Purchase of Accounts Receivable, these are the
estimated revenues which cannot be billed to the end user because of a BOC
malfunction in one or more of the Billing and Collection services it is
providing for the Customer. To arrive at this component, the BOC will estimate
the amount of Customer revenue that would have been billed to the end user had
the message detail not been lost.
Unbillable Revenues Resulting From Failure of Other Than BOC Subscribed Services
- --------------------------------------------------------------------------------
- - A pre-billing message which has been determined to be unbillable due to any
reason other than a malfunction in one or more of the Billing and Collection
Services provided to the Customer.
USOCs - Identifies the Universal Service Order Code for the specific item of
- -----
equipment or service provided.
<PAGE>
H-1 7/15/93
EXHIBIT H
SUB-CARRIER LISTINGS
For IC/OSPs that are functioning as "service bureaus" the detail of itemized
call statement will be in a modified format to allow for identification of the
Carrier for which the IC/OSP is acting as agent.
The Sub-Carrier names will be displayed as a separate line in Billing Entity
Code numeric order on the Detail of Itemized call pages, followed in date order
by the call detail messages handled by that carrier. An example of how Sub-
Carrier Listings are displayed on the end user's bill follows on the next page
of this section.
In order to provide the sub-Billing entity names, a four digit CIC/RAO code
must be included in the Local Use field, character positions 168 to 171, of the
EMI record. The first character will represent whether the code is an RAO (1)
or a CIC (2). The code will be used to reference a local table of IC/OSP
customer names (each individual IC, Independent or Reseller) for display on the
bill pages.
For example, "2358" in character positions 168 to 171 indicates an IC with a
CIC code of 358. "1234" in character positions 168 to 171 indicates an
Independent Company with an RAO of "234." This will eliminate potential
problems if CIC code and RAO are the same.
A complete table of names and corresponding CIC/RAO code for each of the
Carriers that the IC/OSP bills for must be provided prior to implementation of
billing for that IC/OSP. In addition, the IC/OSP must notify Bell Atlantic
through the Open Billing request process, of additions and changes to carriers
and corresponding CIC/RAO codes no later than thirty (30) days to sending
messages for that carrier.
<PAGE>
I-1 7/15/93
EXHIBIT I
CHAPTER 64 OF BELL OF PENNSYLVANIA
Because this contract contains many referenceS to Chapter 64, this section has
been added to provide the latest information Bell Atlantic has received
regarding this subject.
These billing standards, applicable to Residence End User Billing in
Pennsylvania, state that a Local Exchange Carriers (LEC) may provide Billing
Services for Interexchange Carriers (ICs) if the LEC assumes responsibility for
settling disputes involving accounts receivable which it purchases, and applies
its deposit rules.
The Pennsylvania Public Utility Commission is conducting an investigation on the
current handling of disputed IC charges when the IC's number is shown on the
customer bill. The outcome of this investigation could require Bell of
Pennsylvania's phone number in place of the IC's phone number on all residence
customer bills. In essence, Bell of Pennsylvania would be performing the
inquiry function for all residence billing including IC charges. There are
several ICs which have not purchased inquiry that are expected to continue to
appeal any unfavorable decisions in this area.
<PAGE>
J-1 7/15/93
EXHIBIT J
ACCOUNT INFORMATION FOR FRAUD PREVENTION SERVICE
This Agreement is made by and between Bell Atlantic Network Service, Inc., on
behalf of itself and each of its affiliated operating telephone companies,
(hereafter, collectively and individually "Bell Atlantic") and
(hereafter "Customer") effective .
- -------------------- --------------------
BACKGROUND
Bell Atlantic and Customer are parties to an agreement for billing and
collection services, as amended (the "Billing and Collection Agreement") ,
pursuant to which Bell Atlantic provides such services to Customer. Among other
things, that agreement provides for the allocation of uncollectible amounts
resulting from use of the Customer's interexchange services. The parties are
desirous of implementing a program to reduce the overall level of fraud
adversely affecting the Billing and Collection Agreement.
NOW THEREFORE, in consideration of the mutual promises contained herein and
other good and valuable consideration, the Parties agree to the following terms
and conditions.
1. INTEGRATION
-----------
This Agreement is appended to the Billing and Collection Agreement. To
the extent not otherwise inconsistent with the terms of this Agreement,
and to the extent applicable, the terms and conditions of the Billing and
Collection Agreement. Not withstanding Section III of the Billing and
Collection Agreement, the terms of this Agreement shall prevail.
2. SERVICE DESCRIPTION
-------------------
The Account Information for Fraud Prevention Service (hereafter
"Service") is offered in conjunction with the billing services provided
by Bell Atlantic. Refer to Attachment 1 for a description of the service
under the Billing and Collection Agreement.
65
<PAGE>
J-2 7/15/93
3. TERM OF THE AGREEMENT
---------------------
a. The term of this Agreement shall commence on the effective date set
forth above and shall continue in effect until terminated as provided
herein, or until the expiration, cancellation, or termination of the
Billing and Collection Agreement, which ever occurs first.
b. Either Party may terminate this Agreement by giving the other Party at
least thirty days advance written notice of such termination.
4. COMPENSATION
------------
a. In consideration of the services to be provided by Bell Atlantic
hereunder, Customer shall pay to Bell Atlantic a monthly fee of Five
Hundred Dollars ($500) for each Bell Operating Company (BOC) in the
Bell Atlantic region, equating to a total monthly fee of Fifteen
Hundred Dollars ($1500), or a usage fee of Two Dollars ($2.00) per
account query.
b. The monthly fee for each BOC shall be included in the invoice rendered
under the Billing and collection Agreement by the representative
operating company, based on the location of the end user account that
is being queried (i. e. - Bell of Pennsylvania for Pennsylvania and
Delaware, C&P of Maryland for C&P of Washington, Maryland, Virginia
and West Virginia, and New Jersey Bell for New Jersey). Terms
pertaining to the payment of such invoices shall be as provided in
the Billing and collections Agreement.
c. The usage fee for each account queried shall be included in the
invoice rendered under the Billing and Collection Agreement by the
operating telephone company, based on the location of the end user's
account that is being queried. Terms pertaining to the payment of such
invoices shall be as provided in the Billing and collections
Agreement.
66
<PAGE>
J-3 7/15/93
d. The monthly fee stated in paragraph a. above is based on the estimated
usage of the Customer as determined by Customer's annual number of
bills rendered and trial statistics. Should the number of calls made
by Customer to the IPOC increases significantly, Bell Atlantic may
increase the monthly fee for each BOC proportionately by giving thirty
(30) days written notice to Customer.
5. RESTRICTIONS ON USE OF INFORMATION
-----------------------------------
a. The information provided Customer under this Agreement is the
proprietary unpublished copyrighted information of Bell Atlantic.
Nothing in the Agreement will be deemed to convey to Customer an
ownership interest in or title to the information. Customer may
utilize the information only for fraud prevention and investigation
and for collection of accounts due (to the extent Customer is
permitted to engage in collection activities under the Billing and
Collection Agreement). Customer may not reproduce the information in
any form, or use the information provided for any other purpose. The
information shall be destroyed upon the termination, cancellation or
expiration of this Agreement.
b. Customer agrees to safeguard the information provided and prevent its
unauthorized disclosure. Customer agrees to limit access to the
information provided hereunder to those Customer employees in its
Fraud investigation and Customer Services organizations with a need to
know.
c. Bell Atlantic will issue a unique password to Customer upon signing of
this agreement. Customer shall be solely responsible for safeguarding
the password, and must take appropriate steps to protect the use of
this password. Customer agrees to limit access to the password to
those individuals in their respective Fraud Investigation and
Customer Service Center organizations with a need for such access.
67
<PAGE>
J-4 7/15/93
d. In addition to all other rights or remedies provided in law, equity,
or otherwise, Bell Atlantic reserves the right to terminate this
Agreement immediately if Customer fails to comply with the provisions
regarding use of the information.
6. LIMITATIONS OF LIABILITY
------------------------
BELL ATLANTIC MAKES NO WARRANTY, EXPRESSED OR IMPLIED, OF ANY NATURE
WHATSOEVER WITH RESPECT TO THE SERVICE OR ACCURACY OR COMPLETENESS OF THE
INFORMATION PROVIDED HEREUNDER, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. BELL ATLANTIC WILL
NOT BE LIABLE FOR ANY LOSS, COST CLAIM, INJURY, LIABILITY, OR EXPENSE
RELATED TO, OR ARISING OUT OF THE SERVICE, INCLUDING BUT NOT LIMITED TO
SPECIAL, INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES, WHETHER SUCH CLAIM
IS BASED IN CONTRACT, TORT, OR OTHERWISE.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first written above.
(Company Name)
--------------
By: Name:
------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
BELL ATLANTIC NETWORK SERVICES, INC.
------------------------------------
By: Name:
------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
68
<PAGE>
Pages where confidential treatment has been requested are stamped
"Confidential Treatment Requested. The redacted material has been
separately filed with the Commission." The redacted portions are
indicated by a "(*)."
Exhibit 10.3
CLEARINGHOUSE
BILLING AND COLLECTION SERVICES
OPERATING CONTRACT
This Contract ("Contract"), effective as of January 3, 19 94, is entered
---------- ---
into by and between Telco Development Group. Inc. (herein referred to as "IXC"),
-----------------------------
and BellSouth Telecommunications, Inc. (herein referred to as "Company"), a
Georgia corporation and subsidiary of BellSouth Corporation. IXC and the Company
are hereinafter collectively referred to as the "Parties."
WHEREAS, Company has offered intrastate billing and collection services
under state Access Service Tariffs in Company's operating territory; and Company
is offering similar services for interstate billing and collection services
under this Contract; and
WHEREAS, said state tariffs give a general description of the intrastate
services and establish rates for intrastate services, but there are also various
services offered on an "individual case basis" ("ICB") which must be tailored to
the needs of the subscriber to these services; and
WHEREAS, this Contract gives a general description of the interstate
services and establishes rates for interstate services, and allows for various
services to be offered on an "individual case basis" ("ICB") which must be
tailored to the needs of the subscriber to these services; and
WHEREAS, there are operational details and procedures which are not
provided in the state tariffs; and
WHEREAS, Company shall perform billing and collection services under the
state tariffs and this Contract; and
WHEREAS, IXC has entered or shall enter into contracts with other entities
(herein referred to as "Customers") to act as a clearinghouse for such Customers
with respect to the provision of billing and collection services; and
-1-
<PAGE>
WHEREAS, IXC desires to subscribe to Company's billing and collection
services:
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, Company and IXC hereby covenant and mutually agree as follows:
-2-
<PAGE>
1. SCOPE OF THIS CONTRACT AND RELATIONSHIP TO OTHER DOCUMENTS
A. This Contract shall be construed in accordance with and supports
Section E8 of State Company Access Service Tariffs (collectively, "the
State Tariffs") which deal with the provision of billing and
collection services (services by Company to interexchange carriers. It
also supports all other portions of such State Tariffs and any other
tariffs referenced therein in said Section E8. as they may be modified
from time to time. All terms used herein which are defined in the
State Tariffs shall have the same meaning herein. For such purposes,
all references to "IC" in the State Tariffs shall mean IXC and
Customers.
B. It is expressly understood and acknowledged that the intrastate
Services are provided pursuant to and under the terms and Tariffs in
effect from time to time. In the event of any conflict between this
Contract and the State Tariffs, the State Tariffs regarding intrastate
traffic shall prevail.
C. It is also expressly understood and acknowledged that the interstate
Services are provided pursuant to and under the terms, conditions.
rates and charges as set forth in Exhibit A which is hereby made a
part At this Contract. The rates offered on an ICB shall be negotiated
separately and contracted for under individual cover. In the event of
any conflict between this contract and the Interstate Access Tariffs,
the Interstate Tariffs shall prevail.
D. It is also expressly understood and acknowledged that only messages
carried by IXC and/or Customers shall be covered by this Contract.
Furthermore, IXC shall not submit messages to Company if such messages
are not covered by this Contract.
-3-
<PAGE>
2. DETARIFFING OF THE SERVICES
Should it be determined by any appropriate regulatory or other authority
that any or all of the Services should no longer be offered under State
Tariffs and provided that it is otherwise permissible, the Parties agree
to comply with and continue this Contract for such Services under the
terms and conditions of Exhibit A.
3. GENERAL DESCRIPTION OF SERVICES TO BE PURCHASED
A. IXC shall purchase Bill Processing without Inquiry in accordance with
-------
the State Tariffs and this Contract for 5 years, beginning with the
-
effective date of this Contract.
B. For interstate Services, the Parties agree to contact each other three
months before the expiration of this Contract to discuss continuing
such Services and to negotiate the terms and conditions under which
such interstate Services shall continue to be provided.
C. Inquiry and Message Investigation, when provided under this Contract,
are coterminous with Bill Processing Service regardless of initial
order date; the expiration date of these Services shall be that of
Bill Processing.
D. IXC and Customers shall record and rate traffic originating on their
facilities. The rated messages which IXC desires Company to bill shall
be sorted by IXC by Company Billing Revenue Accounting Office and
delivered to Company in Exchange Message Interface (EMI) format, via a
mutually agreeable medium. All messages delivered to Company shall be
on an "as processed" basis and shall normally represent traffic for
more than one cycle.
E. IXC shall associate each Customer's messages with the sub-CIC of the
end user perceived provider of the service being billed, as assigned
by IXC.
-4-
<PAGE>
F. Should the Company be authorized by the appropriate regulatory bodies
to impose a late payment charge on end users, it may do so; such
revenue is considered part of the collection process and shall be
retained solely by the Company. This late payment charge may apply to
interstate and intrastate end user charges.
4. PURCHASE OF ACCOUNTS RECEIVABLE
As stated in the State Tariffs and/or Exhibit A, the Company shall
purchase from IXC its accounts receivable and/or accounts receivable of
Customers that arise from bills rendered by Company to the end user (the
"Accounts Receivable"), subject to recourse. IXC warrants that (1) IXC has
title to the Accounts Receivable purchased by Company, or (2) IXC's
Customers have title to the Accounts Receivable purchased by Company and
IXC has the authority, as agent for and on behalf of Customers, to sell
and convey all such Accounts Receivable to Company. IXC agrees and
Customers have agreed, or shall agree prior to sending any messages to
Company for processing not to assign, transfer, sell, exchange or give the
Accounts Receivable to any other entity or person, and such assignment,
transfer, sale, exchange, or gift is null and void.
A. In accordance with State Tariffs, the estimated uncollectible factor
for both interstate and intrastate data shall be 3 %. The
uncollectible factor for both interstate and intrastate shall be
adjusted in accordance with the State Tariff and Exhibit A.
5. COLLECTIONS AND TREATMENT
In collecting amounts due for services provided by IXC and Customers, the
Company shall use its then existing collections, treatment, and (where
authorized by the appropriate regulatory authority) denial of service
procedures. IXC shall be notified promptly of any significant changes to
the presently existing procedures. Company shall provide reports that
allow IXC to monitor total adjustments amounts.
-5-
<PAGE>
6. OPERATING PROCEDURES
A. The Company will communicate to IXC its existing operating procedures
for the following:
(1) Inquiry Service.
(2) Data Transfer or Data Transmission.
(3) Accounts receivable settlements.
(4) Accounting and Management reports.
(5) Payments.
(6) Audits.
These procedures are subject to change, and such changes will be
communicated to IXC in a timely manner.
B. It is understood that it is not the intent of the Parties for Company
to become involved in disputes between IXC or Customers and end users.
Consequently, the procedures for Inquiry Service shall specifically
provide that at any time in the collection process, after 30 days
notice to IXC, utilizing existing Company procedures, Company may
remove a disputed IXC and/or Customer charge from an end user's bill
and deduct that amount from IXC's and/or Customer's receivables as
applicable If IXC and/or Customer chooses to continue to pursue the
collection of that amount, it shall be IXC's and/or Customer's sole
responsibility to do so and the Company shall have no liability
therefor.
7. TAXES
A. IXC shall file, to the extent permitted by law, all returns for
federal, state or local sales, use, excise, gross receipts or other
taxes or tax-like fees imposed on or with respect to services provided
by IXC and/or Customers and pay or remit all such taxes and other
items to the imposing authority. All such taxes, foreign state taxes,
and other items are referred to as
-6-
<PAGE>
"Taxes". In addition. the Company shall furnish IXC the information
necessary for IXC to file its tax returns. Such information shall not
include foreign state taxes which IXC should compute before passing rated
messages to the Company for billing. Such information necessary for tax
return purposes shall be provided to IXC according to the current schedule
and in currently used format.
B. IXC shall be solely responsible for determining and advising the Company in
writing of details of Taxes to be calculated and billed or collected by the
Company in connection with services provided by IXC and/or by Customers.
Company shall not be entitled to retain or receive from IXC any statutory
fee or share of Taxes to which the person collecting such Taxes is entitled
under applicable law. IXC shall give the Company reasonable written notice
of Tax billing changes, and the Company shall make a reasonable effort to
implement such changes within forty-five (45) days. IXC shall hold the
Company harmless from any liability arising during the 45-day period in
which the Company is implementing Tax billing changes. Company shall apply
Taxes to end user bills for services rendered by IXC and/or by Customers
using the same information and the same procedures applicable to services
rendered by Company. unless otherwise informed by IXC and mutually agreed
to by the parties.
C IXC agrees to pay and hold the Company harmless from and against any
liability or loss resulting from any Taxes, penalties. interest, additions
to Taxes. surcharges or other charges payable by the Company as a result of
(i) delay or failure by IXC and/or Customers or failure by IXC and/or
Customers for any reason, to pay any Taxes or other such items or file any
return or other information as required by law or this Contract, (ii) the
Company's compliance with this Contract or with any determination or
direction by or advice of IXC or correctly using information provided by
IXC in performing any Tax-related Service hereunder, or (iii) in the
absence of any such direction by IXC in this Contract or otherwise, the
Company's failure to take any action with respect to any Taxes which are
the subject of the Contract, unless such inaction constitutes willful
-7-
<PAGE>
misconduct or gross negligence. Such indemnity shall be provided to the
Company on an aftertax basis. If IXC disagrees that any Taxes are payable
by the Company, or disagrees with an assessment of any additional Taxes,
penalty, addition to tax, surcharge or interest due by the Company as a
result of the Company's performance of any obligation under this Contract,
or disagrees with a determination that an additional charge is applicable
to the Company's billing to IXC for Services under this Contract, IXC
shall, at its option and expense (including, if required by law, payment of
any such assessment prior to final resolution of the issue) and subject to
the Company's review and concurrence, have the right to seek administrative
relief, a ruling, judicial review (original and appellate level) or other
appropriate review as to the applicability of any such Taxes or additional
charge or to protest any assessment and direct any legal challenge to such
assessment, but shall be liable for any Taxes or additional charge,
penalty, surcharge and interest ultimately determined to be due. The
Company shall receive a copy of all filings in any such proceeding, protest
or legal challenge, all rulings issued in connection therewith and all
correspondence between the IXC and the taxing authority. The Company shall,
when requested by IXC and at IXC's expense, cooperate or participate with
IXC in any such proceeding, protest or legal challenge and may participate,
at its own expense, in any such proceeding, protest or legal challenge. It
is understood that the Company shall calculate state and/or local Taxes for
intrastate messages that are billed in the state in which the call was made
and for interstate messages which originate or terminate in the billing
state. The Company's determination of Tax is expressly adopted by the IXC
as its own determination of Tax.
D. The Company shall use for the tax status of IXC's and Customer's end users
such information as may be in the Company's possession regarding tax
exemptions of end users and services related to IXC and Customers. IXC may
review information relating to an end user's exemption status and request
that Company verify the exempt status contained in Company records.
-8-
<PAGE>
8. CONFIDENTIALITY AND PUBLICITY
A. All IXC business-sensitive and competitive information disclosed by
IXC to the Company during the negotiation of this Contract, as well as
information generated during the performance of the Services
contemplated herein are proprietary and confidential to IXC. Company
shall use the same standard of care to protect such information of IXC
as it uses to protect its own similar confidential and proprietary
information unless such information was previously known to Company
free of any obligation to keep it confidential, or has been or is
subsequently made public by IXC or a third party.
B. Unless otherwise required by applicable law or regulatory agency, each
Party agrees that it shall not, without the prior written consent of
the other Party, make any news release, public announcement, or denial
or confirmation of the whole or any part of their agreement which
names the other Party, except that IXC may inform Customers about the
Parties' relationship and describe the provisions set forth herein
which affect Customers (for Customer's internal circulation only).
C. The parties acknowledge that this Contract contains both Parties, and,
except to the extent otherwise provided in this Agreement, agree to
limit distribution of the Contract to those individuals in their
respective organizations, and in their affiliated companies, with a
need to know the contents of the Contract. The Company may disclose or
provide copies of all or part of this Contract to meet the
requirements of a court, regulatory body or government agency having
jurisdiction over the Company.
9. TRADEMARKS, TRADE NAMES AND SERVICE MARKS
A. IXC agrees to submit to the Company all advertising, sales promotion,
press releases and other publicity matters relating to the Contract or
the
-9-
<PAGE>
services performed by the Company under the State Tariffs or this Contract
wherein the corporate or trade names, logos, trademarks or service marks of
BellSouth Corporation or any of its affiliated companies are mentioned or
language from which the connection of said names or trademarks therewith
may be inferred or implied; and IXC further agrees not to publish or use
such advertising, sales promotions, press releases or publicity matters
without Company's prior written approval.
B. Subject to the terms of this Contract, the Company grants to IXC a
nonexclusive, nontransferable license to use the Company's billing services
service mark (hereinafter "Mark"), a copy of which will be provided to IXC
upon request.
IXC acknowledges the ownership of the Mark in the Company's parent,
BellSouth Corporation ("BellSouth"), agrees that it shall do nothing
inconsistent with such ownership and that all use of the Mark by IXC shall
inure to the benefit and be on behalf of BellSouth Corporation and Company.
C. IXC agrees to use the Mark only in the form and manner and with appropriate
legends as prescribed from time to time by Company. IXC further agrees not
to use any other trademark, trade name or service mark in combination with
the Mark without prior written approval of Company.
D. IXC agrees that an advanced copy of all promotion material, advertising,
signs and other publicity matters (hereinafter collectively referred to as
"Materials") containing the Mark shall be submitted to Company for approval
at least thirty (30) days before use. Company reserves the right to approve
or deny the appearance, placement and wording of IXC's Materials containing
any of the Marks. If Company does not respond within thirty days, IXC may
consider the Material approved.
E. Upon expiration or termination of this Agreement, IXC agrees to immediately
discontinue all use of the Mark and any term confusingly similar thereto,
to destroy all printed materials bearing any of the Mark,
-10-
<PAGE>
and that all rights in the Mark and the goodwill associated therewith
shall remain the property of telephone Company.
F. IXC shall notify the Company of any unauthorized use of the Mark or
any mark confusingly similar thereto by others promptly as it comes to
IXC's attention. The Company shall have the sole right to engage in
infringement or unfair competition proceedings involving the Mark, and
IXC shall cooperate fully in the prosecution or defense by the Company
of any such proceedings.
G. The parties acknowledge that IXC is not an agent, partner, joint
venturer, distributor or subcontractor of the Company in the provision
of the Service and that IXC is wholly responsible for any obligations
or liabilities arising in the conduct of its business. IXC further
acknowledges that it assumes any and all risks associated with IXC's
use of the Mark and that BellSouth makes no representations or
warranties regarding BellSouth's ownership of, the validity of, or the
enforceability of the Mark. IXC agrees to indemnify, defend, and hold
the Company and its affiliated companies harmless against all claims,
suits, costs, damages, expenses, attorneys fees and judgments arising
out of or alleged to arise out of IXC's use of the Mark, performance
under this Agreement, provision of the Service or conduct of its
business.
H. No licenses, express or implied, are granted by either party to the
other, except as provided hereunder.
10. SOFTWARE
Company or its contractors or agents may develop specifications, drawings,
documentation, concepts, methods, techniques, processes, adaptations and
ideas including, but not limited to, software (hereinafter "Software") for
the purpose of rendering Services to IXC under this Contract. Unless
otherwise agreed by authorized representatives of the Parties, in writing,
in advance of the
-11-
<PAGE>
creation of the Software, the Company shall own all right, title and
interest, including copyright, in and to the Software.
11. ASSIGNMENT
Neither Party shall assign any right, obligation or duty, in whole or in
part, or any other interest hereunder, without the written consent of the
other Party, under the restrictions detailed in Exhibit A.
12. AMENDMENTS; WAIVERS
This Contract or any part thereof or any Attachments hereto may be
modified or additional provisions may be added by written agreement signed
by or on behalf of both Parties. No such amendments or waiver and no
consent to any default under this Contract shall be effective unless the
same shall be in writing and signed by or on behalf of the Party against
whom such amendment, waiver or consent is claimed. In addition, failure to
strictly enforce any term, right or condition of this Contract shall not
be construed as a waiver of such term, right or condition.
13. DENIAL OF END USER SERVICE AUTHORIZATION
IXC authorizes the Company to disconnect end user services for non-payment
in accordance with established Company procedures and the rules and
regulations of the appropriate regulatory agencies.
14. AUTHORIZATION TO CONDUCT BUSINESS
A. IXC and Customers shall comply with the provisions of all applicable
federal, state, county and local laws, ordinances, orders, tariffs,
regulations and codes. IXC and Customer shall jointly and severally
indemnify the Company for, and defend the Company against, any loss or
damage sustained because of IXC's and/or any Customer's noncompliance.
-12-
<PAGE>
B. IXC shall obtain and keep current federal, state, and local licenses
or approvals that may be required to carry the traffic or otherwise
conduct the business for which Company is billing hereunder, and shall
require Customers to obtain and keep current all such necessary
licenses or approvals. IXC shall obtain and keep current all federal,
state and local licenses or approvals and comply with other such
regulations as may be applicable for IXC to merge call detail records
for other carriers and serve as a data clearinghouse or otherwise
conduct business which is related to Company billing hereunder. Such
other business specifically includes, but is not limited to, operator
services. IXC is solely and fully responsible to Company for any
damages incurred due to breach of this obligation. COPIES OF ALL
REQUIRED LICENSES AND APPROVALS OBTAINED BY IXC AND CUSTOMERS SHALL BE
FURNISHED TO THE Company UPON EXECUTION OF THIS CONTRACT OR IF ISSUED
DURING THE TERM OF THIS CONTRACT, WITHIN THIRTY (30) DAYS OF ISSUANCE.
IF IXC ENTERS INTO AN AGREEMENT WITH CUSTOMER DURING THE TERM OF THIS
CONTRACT, ALL REQUIRED LICENSES AND APPROVALS OBTAINED BY CUSTOMER
SHALL BE FURNISHED TO Company WITHIN THIRTY (30) DAYS OF THE EXECUTION
OF SUCH AGREEMENT.
C. Company shall obtain and keep current all federal, state and local
licenses or approvals or comply with other such regulations as may be
applicable to the billing and collection Services performed by Company
hereunder.
D. Warranty: IXC warrants that it has full authority to enter into the
terms and conditions herein on its own behalf and on behalf of
Customers.
15. INDIVIDUAL MEMBER OBLIGATION
A. To the extent any obligation herein is agreed upon by IXC, that
obligation shall be retained by IXC, and is also flowed automatically
through to each
-13-
<PAGE>
Customer. Further, with respect to any action taken by or on behalf of
an individual Customer by the Company, IXC and Customer shalt jointly
and severally indemnify and hold harmless Company.
B. Warranty: IXC warrants that it has full authority to enter into the
terms and conditions specified above.
IN THE EVENT AN AGENCY AGREEMENT BETWEEN IXC AND CUSTOMER IS
TERMINATED, IXC MUST IMMEDIATELY NOTIFY THE Company.
16. LIST OF CUSTOMERS AND PROVISION OF CUSTOMER INFORMATION AND AGENCY
AGREEMENT
It shall be the responsibility of IXC to provide Company with a current
list of Customers, Customer's Carrier Identification Code (CIC),
Customer's IXC assigned sub-CIC address, telephone number, and designated
contact person for each Customer. Any change in the above described list
shall be provided to Company within 30 days of such change. In addition,
IXC shall provide Company with a copy of IXC's current agency agreement
with each Customer during the term of this Agreement.
17. PROVISION OF CUSTOMER INFORMATION TO END USERS
IXC agrees that if requested by the end user, the IXC shall provide the
end user with the telephone number of the Customer. The end user may
contact the IXC for the Customer's telephone number when IXC does not
order Inquiry Service or when IXC orders Inquiry Service but the end user
is not satisfied with the Company's response.
18. NOTICES AND DEMANDS
A. Except as otherwise provided under this Contract or in the Attachments
hereto, all notices, demands, or requests which may be given by one
-14-
<PAGE>
Party to the other Party shall be in writing and shall be deemed to
have been duly given on the date delivered in person or deposited,
postage prepaid, in the United States Mail via Certified Mail return
receipt requested, or sent by telex or cable and addressed as follows:
Company:
BellSouth Telecommunications, Inc.
South E5E1
3535 Colonnade Parkway
Birmingham, Alabama
IXC:
Name: Mark J. Stodter
--------------------------
Co. Name: Telco Communications Group,Inc.
----------------------
Address: 4206 Technology Court
-----------------------
City/State/Zip: Chantilly, VA 22021
----------------
B. The above addresses may be changed By written notice given by such
Party to the other Party pursuant to this Section.
19. THIRD-PARTY BENEFICIARIES
This Contract shall not provide any person not a party to this Contract
with any remedy, claim, liability, reimbursement, cause of action or other
right in excess of those existing pursuant to this Contract.
20. TERMINATION UPON EVENT OF DEFAULT BY IXC AND/OR CUSTOMER
A. Upon the occurrence of an event of default (as hereinafter defined) by
IXC and/or Customer, and so long as such event of default shall be
continuing, the Company may elect to give notice to IXC that the
Contract
-15-
<PAGE>
is terminated and, if the IXC shall elect, proceed by appropriate
court action, either at law or in equity, to recover damages for the
breach thereof. The occurrence of any of the following shall
constitute an event of default:
(1) IXC shall fail to pay any amounts due under this Contract and
such failure to pay shall continue for more than thirty (30)
business days after written notice from the Company.
(2) Any representation or warranty made by IXC in this Contract or in
any report, certificate, financial statement or other statement
furnished pursuant to the provisions of this Contract or
otherwise, shall prove to have been false or misleading in any
material respect as of the date on which the same was made.
(3) IXC shall fail to successfully complete testing requirements of
the Company and successfully implement the services governed by
this agreement within six months of signing this agreement; or
the IXC shall fail to utilize the services governed by this
agreement for a consecutive period of six months.
(4) IXC and/or the Customer shall fail in any material respect to
duly observe or perform any covenant, condition or agreement made
by it in this Contract and shall continue to fail to do so for a
period of thirty (30) business days after receipt of written
notice thereof.
A "business day" shall mean a calendar day, excluding Saturdays,
Sundays and all holidays celebrated by IXC.
B. The foregoing does not represent the sole and exclusive remedy of the
Company upon the occurrence of an event of default by IXC and/or
Customer.
-16-
<PAGE>
21. ENTIRE AGREEMENT
The above referenced State Tariffs and this document, including
all exhibits, addendums, and amendments, constitute the entire
agreement between IXC and Company which supersedes all prior
agreements or contracts, oral or written representations,
statements, negotiations, understandings, proposals and
undertakings with respect to the subject matter hereof.
22. OBLIGATIONS SURVIVE TERMINATION
The Parties agree that the termination of this Contract pursuant
to any provision or section hereof, or for any other reason, shall
not affect or terminate any obligation or liability incurred or
assumed by either Party prior to the effective date of termination
of this Contract, and the provisions of this Contract shall
survive its termination with respect to conclusion of any
unresolved matters relating to the Services performed prior to
termination.
23. SEVERABILITY OF PROVISIONS
Except as expressly provided in this Contract, if any part of this
Contract is held or construed to be invalid or unenforceable, the
validity of any other Section of this Contract shall remain in
full force and effect to the extent permissible or appropriate in
furtherance of the intent of this Contract.
24. TERM OF CONTRACT
This Contract shall continue in effect for the term provided in
paragraph 3A preceding. Upon termination by either party, certain
charges as specified in the State Tariffs and Exhibit A may be
applicable. This Contract would continue to apply to orders placed
prior to this Contract's termination throughout the remainder of
the order period.
-17-
<PAGE>
25. FORCE MAJEURE
Neither Party shall be held liable for any delay or failure in
performance of any part of this Agreement from any cause beyond
its control and without its fault or negligence, such as acts of
God, acts of civil or military authority, government regulations,
embargoes, epidemics, war, terrorist acts, riots, insurrections,
fires, explosions, earthquakes, nuclear accidents, floods,
strikes, power blackouts, volcanic action, other major
environmental disturbances, unusually severe weather conditions,
inability to secure products or services of other persons or
transportation facilities, or acts or omissions of transportation
common carriers.
26. GOVERNING LAW
Except as otherwise expressly provided in this Agreement, this
Agreement shall be deemed to be a contract made under the laws of
the State of Alabama, and the construction, interpretation and
performance of this Agreement and all transactions hereunder shall
be governed by the domestic law of such State.
Dated as of this 22nd day of June, 1994.
BELLSOUTH TELECOMMUNICATIONS, INC.
By: [SIGNATURE APPEARS HERE]
-------------------------------------
Sales Interexchange
Title: Vice President - Carrier Services
----------------------------------
IXC
By: [SIGNATURE APPEARS HERE]
-------------------------------------
Title: CEO
----------------------------------
-18-
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
TELCO DEVELOPMENT GROUP. INC.
-----------------------------
ADDENDUM A
WITH VOLUME COMMITMENT
of the
Billing and Collection Service Operating Contract
with BellSouth Telecommunications, Inc.
The rates and charges for Bill Processing Per Message and Per Bill and the
terms applicable thereto are set forth in this Addendum A as an addition to
I.J.6. (Rates and Charges), II.C. (Bill Processing Service; Customer Rated
Messages) of Exhibit A:
I.J.6.A) RATES AND CHARGES - BILL PROCESSING SERVICE
1. PER MESSAGE RATE - CALCULATION AND MANAGEMENT
a) Percent of Business
(1) The appropriate Bill Processing Service Per Message rate for the
message volumes committed to herein are determined by: 1) the
number of interstate and intrastate messages on the bill on which
the message appears; and 2) by the percent of the Customer's
total message volume which is billed by the Company as follows:
<TABLE>
<CAPTION>
Message Tiers Percent of Customer's Business (Messages)
<S> <C> <C> <C> <C>
(*) (*) (*) (*)
(*) msgs/bill (*) (*) (*) (*)
(*) msgs/bill (*) (*) (*) (*)
(*) msgs/bill (*) (*) (*) (*)
</TABLE>
(2) The Customer will provide an annual estimate of the percent of
its total message volume which will be billed by the Company
during a Year. Said estimate will be provided within thirty (30)
days of the execution of this Agreement and, thereafter, no later
than thirty (30) days before the beginning of the next Year.
(3) The percent of the Customer's total message volume which is
billed by the Company, will be reported by the Customer to the
Company. It will be calculated based on the Customer's total
message volume which the Company has the capability of billing.
1 July 1994
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
The formula will be:
Customer's Messages Billed By Company
- ------------------------------------------------------------------------------
Total Customer Messages Which Company Has Capability of Billing
b) Message Volume Commitment
(1) The Customer's message volume commitment is stated as a separate
commitment for each twelve (12) month period, commencing on the
effective date of this Agreement (hereinafter Year"), as follows:
<TABLE>
<S> <C> <C> <C> <C>
MO/DAY/YR- MO/DAY/YR- MO/DAY/YR- MO/DAY/YR- MO/DAY/YR-
MO/DAY/YR MO/DAY/YR MO/DAY/YR MO/DAY/YR MO/DAY/YR
07/01/94- 07/01/95- 07/01/96- 07/01/97- 07/01/98-
06/30/95 06/30/96 06/30/97 06/30/98 06/30/99
(*) (*) (*) (*) (*)
</TABLE>
(2) All volume commitments will be met based on messages actually billed.
(3) Both interstate and intrastate messages will be counted for
determining whether the Customer's volume message commitment has been
met.
(4) All message volumes which exceed the commitment level for that Year
will be carried forward to the following Year.
(5) If in any Year other than the final Year of the commitment the number
of actual messages billed is less than (*) of
the Customer's volume commitment set forth above, an additional
payment will apply as follows:
(message volume commitment minus actual messages billed) X (the (*)
message per bill rate at the appropriate percent of business)
If the actual messages billed in the final Year is less than the
volume commitment for that Year, the same additional payment set forth
above will apply.
(6) If this Agreement or the Customer's volume commitment is canceled
prior to termination, the discount for the volume commitment will no
longer apply. The Customer agrees to pay the then current (no volume
commitment discount) rates for any subsequent message billing.
Additionally, if this Agreement is canceled during the first two Years
of the commitment, the Customer will pay a penalty equal to the
2 July 1993
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
interstate portion (based on the most recent three .c.1.1.1 months) of
the second ;Year message volume commitment times the committed (*)
message Per Bill rate at the appropriate percent of business. If the
commitment is canceled after the second Year, all messages billed up
to the cancellation of the commitment will be re-calculated at the
non-discounted message rate. The difference between the original
billed amount and the recalculated (nondiscounted) Per Message rate
will then be charged to the Customer and the Customer agrees to pay
such charges.
C) Audit Provisions
(1) The Company will have the right to audit the Customer's records as set
forth in (b) below to verify the percentage of message volume reported
by the Customer. If such an audit determines that the percentage of
message volume is different than that reported by the Customer and if
such difference would result in a different rate to be charged per
message accordinfferethe rates above, a true-up of all messages billed
up to the date of the completion of the audit will be performed.
Additionally, the current percentage of business as determined by the
audit will be applied for the remainder of that Year. The Company
retains the right to audit any subsequent Year's records.
(2) Upon written notice by the Company to the Customer, the Company will
have the right, through its authorized representative, to examine and
audit, during normal business hours and at reasonable intervals, all
such records and accounts as may under recognized accounting practices
contain information bearing upon the percent of the Customer's total
message volume which is billed by the Company. Adjustment will be made
by the proper party to compensate for any errors or omissions
disclosed by such examination or audit. Neither such right to examine
and audit nor the right to receive such checks or otherwise, unless
such statement expressly waiving such right appears in a letter signed
by the authorized representative of the party having such right and
delivered to the other party.
Any information received or reviewed by the Company or its authorized
representative during the audit is to be considered confidential and
not to be distributed, provided or disclosed in any form to anyone not
involved in the audit, nor is such information to be used for any
other purpose.
3 July 1993
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
2. PER BILL RATE AND POSTAGE ESCALATOR
The Bill Processing Service Per Bill rate will be (*).
A) In the event of a postage increase for carrier pre-sorted first class
mail up to one (1) ounce, the interstate Bill Processing Service Per
Bill rate will be increased by an amount equal to (*)
of the postage increase, effective as of the effective date of such
postage increase. The Company will provide the Customer with written
notice of any increase in this bill rendering rate and the effective
date of such increase. The increased bill rendering rate may be
applied retroactively as of the effective date of the postage
increase.
b) In the event the Customer acquires a carrier which has a billing and
collections agreement with the Company which includes a volume
commitment, the acquired carrier's volume commitment will be in
addition to the Customer's commitment hereunder. If the Customer
acquires a carrier which has a billing and collections agreement with
the Company which does not include a volume commitment, the messages
for the acquired carrier will not count toward satisfying the
Customer's volume commitment for the remainder of that Year or for the
following Year. Thus, for each month of the remainder of the Year in
which the carrier is acquired, and for each month of the next
subsequent Year, the Customer and the Company agree that the number of
messages equal to the acquired carrier's average monthly messages
(based on the preceding twelve months) billed by Company will not
count toward the Customer's volume commitment.
CONCURRENCE:
- ------------
Customer: /s/ Henry G. Luken
------------------------
Name: Henry G. Luken III
----------------------------
Title: Chairman of the Board
---------------------------
Date: May 26, 1994
----------------------------
4 July 1993
<PAGE>
AMENDMENT NUMBER 1
The following is Amendment No. 1 to the Billing and Collections Services
Operating Contract dated January 3, 1994(the "Agreement") between Telco
---------------
Development Group, Inc. (referred to as "Customer" in Exhibit A) and BellSouth
Telecommunications, Inc. (referred to as the "Company" in Exhibit A). The
Agreement is hereby amended as follows:
1. This Amendment No. 1 shall be effective as of July 1, 1994.
2. Module II., Part D., paragraph 3.c)(i), of Exhibit A, Bad Debt Allowance is
deleted in its entirety.
3. Module II., Part D., paragraph 3.c)(iii), of Exhibit A, Net Bad Debt is
deleted in its entirety and replaced with Module II., Part D., paragraph
3.c)(iii), of Exhibit A, Net Bad Debt included in Attachment 1, attached
hereto.
4. Module II., Part D., paragraph 4., of Exhibit A, TRUE-UP is deleted in its
entirety.
In all other respects, the Agreement shall remain unchanged and in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 by
their duly authorized representatives in one or more counterparts, each of which
shall constitute an original, on the dates set forth below.
Telco Development Group, Inc. BellSouth Telco Communications, Inc.
By: /s/ Henry G. Luken III By: /s/ Richard Robertson
---------------------- ---------------------
By: Henry G. Luken III By: Richard Robertson
---------------------- ---------------------
(Printed Name) (Printed Name)
Title: Chairman Title: Sales Vice President
---------------------- ---------------------
Date: 06/01/94 Date: 06/22/94
---------------------- ---------------------
<PAGE>
Amendment Number 1
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE II. BILL PROCESSING SERVICE
PART D. PURCHASE OF ACCOUNTS RECEIVABLE (PAR)
3. RECOURSE
c) Bad Debt
(iii) Net Bad Debt
The Customer's Net Bad Debt, also referred to as "realized bad
debt", is made up of the net of two parts:
(1) Actual write-offs of End User amounts due that have been
removed from the Company's books after standard
collection efforts are completed; and
(2) Recoveries on previously written off End User amounts
due. A recovery is a payment made on an End User account
previously removed from the Company books.
For each settlement period, the Company will recourse to the
IXC the amount of Net Bad Debt. This Net Bad Debt will be
reported on the PARS and recoursed to the Customer when
realized; i.e., the month in which the revenue is written off
or recovered.
<PAGE>
EXHIBIT A
OF THE
BELL SOUTH TELECOMMUNICATIONS
BILLING AND COLLECTION OPERATING CONTRACT
JULY, 1993
<PAGE>
EXHEBIT A
of the
Billing and Collection Services Operating Contract
MASTER
TABLE OF CONTENTS
----------------------
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
i. LIST OF ABBREVIATIONS............................................ 3
ii. GLOSSARY......................................................... 4
iii. HOW TO USE THIS DOCUMENT......................................... 9
</TABLE>
<TABLE>
<S> <C> <C>
MODULE I GENERAL PROVISIONS......................................... 10
Part A GENERAL STATEMENTS......................................... 13
Part B COMPANY UNDERTAKINGS....................................... 14
Part C CUSTOMER OBLIGATIONS....................................... 17
Part D COMPANY SERVICE SECURITY REQUIREMENTS...................... 18
Part E TESTING REQUIREMENTS....................................... 20
Part F BILLING AND COLLECTION (B&C) SERVICES BILL................. 23
Part G AUDIT PROVISIONS........................................... 26
Part H OPEN BILLING REQUESTS (OBRs)............................... 30
Part I RESERVED FOR FUTURE USE.................................... 35
Part J RATES AND CHARGES.......................................... 36
MODULE II BILL PROCESSING SERVICE.................................... 46
Part A GENERAL DESCRIPTION........................................ 48
Part B PROVISION OF SERVICE....................................... 49
Part C CUSTOMER RATED MESSAGES.................................... 51
Part D PURCHASE OF ACCOUNTS RECEIVABLE (PAR)...................... 54
Part E END USER ACCOUNT MANAGEMENT................................ 61
Part F WITHOUT INQUIRY............................................ 65
Part G ORDERING BILL PROCESSING SERVICE........................... 67
MODULE III OPTIONAL MESSAGE BILLING SERVICES.......................... 68
Part A GENERAL DESCRIPTION........................................ 69
Part B WITH INQUIRY............................................... 70
Part C END USER BILL SERVICES..................................... 72
Part D BILLING INFORMATION SERVICES............................... 75
Part E BILLING ANALYSIS/FRAUD SERVICE............................. 81
</TABLE>
-- 1 --
July 1993
<PAGE>
EXHIBIT A
Of the
Billing and Collection Services Operating Contract
MASTER
TABLE OF CONTENTS
-----------------
Continued
<TABLE>
<S> <C> <C>
MODULE IV RECORDING SERVICE............................................ 82
Part A GENERAL DESCRIPTION.......................................... 83
Part B SERVICE PROVISION............................................ 84
Part C MESSAGE DETAIL DELIVERY...................................... 87
Part D BILLING AND PAYMENT.......................................... 88
</TABLE>
-- 2 --
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
i.
LIST OF ABBREVIATIONS
<TABLE>
<S> <C>
AMA Automatic Message Accounting (Recording)
B&C Billing and Collection
BOC Bell Operating Company
BTN Bill To Number
CMDS Centralize Message Data System
CNA Customer Name and Address
CRIS Customer (End User) Records Information System
DAK Deny All Knowledge
EMI Exchange Message. Interface
FTS File Transfer System(TM)
ICB Individual Case Basis
ICO Independent Telephone Company
IL Information Letter
IEC Interexchange Carrier
IXC Interexchange Carrier
LEC Local Exchange Company
MIC Message Investigation Center
MSS Message Switching System
NDM Network Data Mover(TM)
NPA Numbering Plan Area (Area Code)
NXX Exchange Code
OBR Open Billing Request
OM Order of Magnitude
OPH Operator Handled calls
PAR Purchase of Accounts Receivable
PARS Purchase of Accounts Receivable Statement
PBA Post Billing Adjustment
PIC Primary Interexchange Carrier
PIN Personal Identification Number
PIU Percent of Interstate Usage
PON Purchase Order Number
RAO Revenue Accounting Office
T&C Time and Cost
UB Unbillable
UC Uncollectible
</TABLE>
-- 3 --
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
ii.
GLOSSARY
Automatic Message Accounting (AMA). Consists of the recording and storing,
on magnetic tape or other acceptable medium, of the basic details
of End User local and toll calls.
Amount Due Company. Equals all appropriate Billing and Collection (B&C)
charges billed under this Agreement or any applicable tariffs.
Answer Supervision. An indication from the Customer to the Company that
the called party has answered.
Assembly. (or Assembling) The collection of recorded End User call details
to create individual messages for rating.
Bill Rendering. Preparation, printing and mailing of Customer charges
for services rendered, and for toll and local telephone exchange
service received by the End User.
Bill to Namer (BTN). The primary Customer number assigned to the End
User receiving the bill. May consolidate multiple telephone lines
and calling card numbers. May or may not be an actual dialable
number.
Casual Caller. End Users who have accessed and used the Customer's network via
10XE dialing.
Centralized Message Data System (CMDS). The system used to transfer Exchange
Message Interface (EMI)-formatted billing data between the
recording/rating company and the billing company.
Company. BellSouth Telecommunications, Inc.
Customer. The party purchasing B&C Service(s) under this Agreement.
Customer's End User. A telecommunications user who either chose or was assigned
by default to the Customer for Primary Interexchange Carrier
(PIC) services in the Equal Access selection process. Could also
be a user who has accessed and used the Customer network or
services, or has been or is being billed by the Company for the
Customer's services.
Data Transfer. The process of delivering standard format call detail or records
via magnetic tape, cartridge tape, and/or diskette.
-4-
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
Data Transmission. The process of sending standard format call detail or records
from one location to another using standard transmission
software programs; i.e., CMDS, NDM(TM), TTRAN, and/or FTS (see
i. - List of Abbreviations).
Denial of Service. The interruption of the End User's local exchange service as
defined in the Company's General Subscriber Services Tariff.
Disconnect Supervision. Indication from the Customer, or from the Customer's End
User who originated the call, to the Company that the call is
ended.
Dispute. A dispute occurs after the End User has notified the Customer of
a claim and the Customer, after investigation, sustains the
charges and the End User continues to refuse to pay.
Editing. The verification of compiled call detail (resulting from the
Assembly process) in accordance with the standard EMI format.
Exchange Message Interface (EMI). The industry standard record layout for the
exchange of call detail between telecommunication providers.
The EMI standards are maintained and provided by Bellcore.
End User. A person or entity who uses Company and/or Customer
telecommunications services, as applicable (see Customer's End
User).
File transfer System(TM) (FTS). A communication protocol product of Bellcore
used to electronically transmit data files. Accessed via either
4.8 or 9.6 Kbps indial with no restart capability.
Foreign State Taxes. Taxes on calls which originate in one state, where
state or local tax is applicable, and are billed in another
state. The taxes, calculated by the rating Party and based on
the origination point of the call, are included in the call
detail record. When billed and journalized, these taxes are
documented as revenue.
Feature Group D. Provides a trunk side connection to a central office
switch for originating or terminating calls to or from
subscribers served by that end office within the exchange.
Feature Group D is the "equal access" feature group, and is
available to any interexchange carrier for use in switched
telecommunications or information services.
Independent Telephone Company (ICO). Non-Bell Operating Companies acting as
Local Exchange Companies within the BellSouth Telecommunications
(BST) region.
- 5 -
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
Information Letter (IL). Notification from the Customer to the Company of an
administrative change in the Customer's business as usual". No
programming changes will be made by the Company. Part of the
Company's Open Billing Request (OBR) Procedures.
Marketing Message. A printed promotional, informational, or legally required
communication from the Customer to its End Users which
is printed on the Customer's standard bills in any given month.
Message. Depending on the B&C Service, the meaning varies with the context
of the term "Message". With Recording Service, it refers to a
call(s) completed by the Customer's End Users. With Bill
Processing Service, it refers to the call itself and/or the call
detail.
Message Investigation. Review of the Customer's call detail to identify
suspected unauthorized use of the Customer's service(s) or to
determine proper billing.
Message Switching System (MSS). The Company's initial point of entry to a
Customer's EMI-formatted, rated call detail for bill
processing. The Company transmits the Customer's call detail
from the MSS to the appropriate Revenue Accounting Office (RAO).
MSS Edits. Basic edits of the Customer's EMI records to assure the minimal
information needed for billing is present.
Message Investigation Center (MIC). Analyzes call detail which is either
unbillable or has been disputed by an End User.
Network Data Mover(TM) (NDM). A communication protocol product of System Center,
Inc., used to electronically transmit data files. Supports speeds
up to 56 Kbps with restart capability. BST's NDM does not support
indial at this time.
Obligation ID (OBID). A sequencing number that an interexchange carrier uses
to identify transmission to the LEC. It is an tight (8)
position numeric field in the EMI record.
Order of Magnitude (OM). Correspondence from the Customer to the Company
requesting a mutually non-binding Time and Cost (T&C)
estimate for implementing a new service or initiating a change
in existing service. This enables the Customer to gain knowledge
and understanding before making a commitment. Part of the
Company's Open Billing Request (OBR) Procedures.
-6-
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
Payment Availability Period. The average number of days between the billing
period date of an End User bill and the date payment for
the bill is deposited in the Company account.
Post Billing Adjustment (PBA). An adjustment made after a charge has been
rendered to the End User (Also see Adjustment").
Post Billing Message Investigation. The investigation to secure billing of those
billed messages disputed by the End User.
Pre Billing Message Investigation. The investigation to secure billing of those
messages which fail the Company's bill processing edits.
Processing Site. A designated Company site at which a significant processing
stream exists to produce bills. BellSouth currently has 12
processing sites ~~ Birmingham, Louisville, New Orleans,
Jackson, Nashville, Jacksonville, Ft. Lauderdale, Miami,
Atlanta, Macon, Charlotte and Columbia.
Program Development. Work performed by the Company to meet a specific Customer
request for creation and implementation of a new service or
modifications to enlisting service(s).
Purchase Order Number (PON). A customer's specific written request to purchase
new B&C Service(s) or initiate changes to enlisting service(s).
The Customer will be charged both the programming and
nonprogramming, recurring and nonrecurring charges, incurred
by the Company in developing and implementing the changes, and,
as applicable, in providing the service(s) on an on-going basis.
Part of the Company's Open Billing Request (OBR) Procedures.
Purchase Of Accounts Receivable (PAR). Statement sent to the Customer by
Company detailing the amount due the Customer for the the
purchase of Accounts Receivable.
Rating. The computing of applicable charges for each call. Rating also
includes the preparation of call detail information.
Record. A telecommunications industry standard used to refer to the
unique layout that contains End User billing information, account
summary and tracking analysis.
Regional Data Center (RDC). A physical location which contains the computer
hardware which multiple Processing Sites share for bill
processing. For example, the RDC in Birmingham processes bills
for the Atlanta, Macon and Birmingham Processing Sites.
BellSouth maintains five (5) Regional Data Centers.
-7-
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
Revenue Accounting Office (RAO). An accounting office which performs the
accounting functions for all of the Processing Sites. The
centralized Revenue Accounting Office is located in Birmingham.
Settlement Period. The period of time which begins on the first of the month and
goes through the end of the month.
10XXX (Casual Traffic). Direct distance dialed call when the End User dials
10XX, where XX is the Carrier Identification Code (CIC) of
the Interexchange Carrier (IXC).
Time and Cost (T&C) Estimate. Supplied by the Company to the Customer in
response to the Customer's initial OM or PON request. The T&C
estimate projects the time and associated costs to develop and
implement a system and/or procedure for either a new service or
a service modification. Part of the Company's Open Billing
Request (OBR) Procedures.
Treatment. Any action taken by the Company to collect delinquent or unpaid
End User accounts.
Unbillable (UB). A pre-billing message recorded by a Local Exchange Company
(LEC), Independent Company (ICO) or Interexchange Carrier (IXC)
which, after passing the Message Switching System (MSS)
screening, fails Message Processing, Rating or Guide edits.
Subsequently, after investigation, billing cannot be posted to a
Company End User account.
Uncollectible (UC). End User message charges the Company is unable to collect
because the End User failed to pay for services rendered.
-8-
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
iii.
HOW TO USE THIS DOCUMENT
At the beginning of each Module, you will find a detailed Table of Contents
organized as follows:
I. MODULE TITLE (Roman Numeral)
A. PART (Uppercase Alpha)
1. SECTION (Arabic Numeral)
a) Subsection (Lowercase Alpha with single parenthesis)
(i) Secondary subsection (Lowercase Roman
Numeral with parentheses)
As you read through this Exhibit, we may want to direct you to
associated information found elsewhere in the document. Information previously
presented may be referred to again. To help you locate this information, please
note the following example of how the document organization can help you find
the associated or previously presented material for further reference.
EXAMPLE 1: (NOTE: not actual text from contract)
If the text reads:
"For further information on Mozart, see I.B.2.b.i.""
to locate the reference I.B.2.b.i., you would turn to:
Module I - Classical Music
Part B - Austria
Section 2 - Wolfgang Amadeus Mozart
Subsection b) - Concertos
Secondary subsection (i) - D Minor
This outline format follows standard guidelines and should make it
easy for you to locate references as they are presented.
-9-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
TABLE OF CONTENTS
for
MODULE I. GENERAL PROVISIONS
PART PAGE
A. GENERAL STATEMENTS.................................................. 13
1. Overview
2. Comprehensive Scope of This Part
3. Company's Operating Territory
4. Non-Waiver Statement
B. COMPANY UNDERTAKINGS................................................ 14
1. Limitations on Assignment or Transfer of Services
2. Liability
a) General Statement of Liability
b) Claims Against the Company
3. Refusal or Discontinuance of Service
C. CUSTOMER OBLIGATIONS................................................ 17
1. Unlawful Use
2. Unauthorized Records
3. Discontinuance of Service
D.COMPANY SERVICE SECURITY REQUIREMENTS............................... 18
1. B&C Services Deposit
a) General Statement
b) Calculation of Interest Payment
2. Bad Debt Allowance Reserve
E. TESTING REQUIREMENTS................................................ 20
1. Company Facilities, Systems, Etc.
a) Company Undertakings
b) Customer Obligations
2. Testing Services,
a) General Description
b) Company Undertakings
(1) Timing
(2) Completion
(3) Propriety of Customer Data
-10-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
TABLE OF CONTENTS
for
MODULE I. GENERAL PROVISIONS
Continued
PART PAGE
E. TESTING REQUIREMENTS Cont'd......................................... 20
2. Testing Services Cont'd
b) Company Undertakings Cont'd
(4) Allowable Test Runs At No Charge
c) Customer Obligations
d) Recording Service
e) Bill Processing Service
f) Billing Information Service
F. BILLING AND COLLECTION (B&C) SERVICES BILL......................... 23
1. Bill Contents
2. Definition of Payment Due Date
3. Payment due date on Saturday, Holiday, Etc.
4. Late Payment Penalty
5. Disputes/Claims and Resolution
a) Dispute Date and Documentation
b) Resolution of Dispute
6. Accuracy of Data
7. Percent of Interest Usage (PIU) Factor
G. AUDIT PROVISIONS.................................................... 26
1. General Description
2. Terms and Conditions
a) On-Site
b) Miscellaneous
c) Handling of Materials
3. Written Notification and Time Frame Requirements
4. Final Report and Claim Payment
5. Billing of Claim
H. OPEN BILLING REQUESTs (OBRs)........................................ 30
1. General Description
2. Documentation and Time Frames
3. Change Sample
4. PON Authorization and Concurrence
-11-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
TABLE OF CONTENTS
for
MODULE I. GENERAL PROVISIONS
Continued
PART PAGE
H. OPEN BILLING REQUESTs (OBRs) Cont'd................................. 30
5. PON Pre-Authorization
6. Completion and Confirmation
7. Billing
8. Accuracy of Data
I. RESERVED FOR FUTURE USE............................................. 35
J. RATES AND CHARGES................................................... 36
l. Service Establishment and Program Development Charges............ 36
a) Service Establishment Charge
b) Bill Processing Service Program Development Charges
c) Recording Service Program Development Charges
2. Minimum Yearly B&C Service Charge and Requirements............... 37
a) General Description
b) Billing
3. Customer Testing................................................. 38
4. Late Payment Penalty, Interest Factor and
Calculation of Payment........................................... 39
a) B&C Service Security Deposit
b) B&C Bills
c) B&C Bill Claim Payments
d) PAR Claim Payments
e) Audit Claim Payments
5. Open Billing Requests (OBRs)..................................... 41
6. Bill Processing Service.......................................... 42
7. Billing Formation Service........................................ 44
8. Recording Service................................................ 45
-12-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE I. GENERAL PROVISIONS
PART A. GENERAL STATEMENTS
1. OVERVIEW
Within this Exhibit A,
o The interexchange carrier or carrier will be referred to as "Customer",
o BellSouth Telecommunications, Inc., will be referred to as "Company",
o The end user customer will be referred to as "End User", and
o All documents which make up the Customer's B&C Service(s) (the operating
contract, this Exhibit A, any other exhibits, addendums, and amendments,
and any applicable sections of the state access tariffs) will be referred
to as "Agreement".
2. COMPREHENSIVE SCOPE OF THIS MODULE
Module I contains the Customer and Company conditions, responsibilities,
requirements, and provisions applicable to all services purchased under this
Agreement.
3. COMPANY'S OPERATING TERRITORY
The Company's operating territory is comprised of market areas within the
nine states of Alabama, Kentucky, Louisiana, Mississippi, Tennessee, Florida,
Georgia, North Carolina and South Carolina. It also includes selected areas in
states adjacent to the Company's operating territory where the Company's Local
Access and Transport Area (LATA) boundaries overlap those of the adjacent state.
4. NON-WAIVER STATEMENT
No waiver or failure to exercise any option, right, or privilege under the.
terms of this Agreement on any occasion will constitute a waiver of the same or
any other option, right, or privilege on any other occasion.
-13-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE I. GENERAL PROVISIONS
PART B. COMPANY UNDERTAKINGS
1. LIMITATIONS ON ASSIGNMENT OR TRANSFER OF SERVICES
The Customer may not assign or transfer the use of service(s) under this
-------
Agreement without receiving written consent from the Company. The
Customer's request must include all information reasonably requested by the
Company to assure that the assignee or transferree:
o qualifies to receive the service(s);
o accepts all the terms and conditions of this Agreement;
o can establish credit and prove that they are able to pay the amounts due;
and
o any assignment must not interrupt use or involve relocation of the
service.
The Company will respond to the Customer's request within fifteen (15)
calendar days after receiving the Customer's written notification and
required information.
Even with completion of the assignment or transfer of service(s) to
another, the Customer continues to be responsible with the assignee or
transferree for any remaining liabilities for any obligations to the
Company.
2. LIABILITY
a) General Statement of Liability
o In the absence of willful misconduct, no liability for damages to the
Customer or any third person or entity, other than as specifically set
forth in various sections of this Agreement, will be attached to the
Company for its actions or the conduct of its employees in providing
servicer(s) purchased under this Agreement.
o The Company's liability for any willful misconduct is limited by this
Agreement as follows. Such liability:
- Will not exceed any amounts due the Customer through the rendering
services under this Agreement,
- Will be restricted to the period in which the service(s) was
effective,
- Will be limited to an amount equal to the proportionate charge for
the effective period of the service(s), and
- Will be impacted by exceptions set forth in II.C.4. (Bill Processing
Service) and V.B.2.c. (Recording Service)
-14-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
b) Claims Against the Company
Any claims against the Company by the Customer, or any damages
associated with the Company's provision, termination, or maintenance of
service(s), are limited by the conditions set forth in (1) through (4)
following.
(1) The Company will not be liable for any act or omission of any entity
in the provision of any portion of a service for the Customer.
Further, the Company will not hold any entity liable for its own act
or omission in providing its portion of the service to the Customer.
(2) The Customer will indemnify, defend, and hold the Company harmless
against any claim, loss, or damage arising from the Customer's use
of service(s) offered under this Agreement involving:
i. Claims for libel, slander, invasion of privacy, or infringement
of copyright arising from the Customer's own communications;
ii. Claims for patent infringement arising when the Customer
combines or uses the service furnished by the End User or
Customer; or
iii. All other claims arising out of any Customer act or omission in
the course of using a service(s) provided pursuant to this
Agreement.
(3) No license under patents (other than the limited license to use) is
granted or implied by the Company, or will arise by estoppel, with
respect to any service offered under this Agreement. The Company
will defend the Customer against claims of patent infringement
arising solely from the Customer's use of service(s) offered under
this Agreement and will indemnify such Customer for any damages
awarded based solely on such claims.
(4) The Company will not be liable for failure to provide or maintain
service(s) under this Agreement due to labor difficulties,
governmental orders, civil commotions, criminal actions taken
against the Company, acts of God, and other circumstances beyond the
Company's reasonable control.
-15-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
3. REFUSAL AND DISCONTINUANCE OF SERVICE
If the Customer fails to comply with the rules, conditions, and obligations
stated within this Agreement, including the requirement that payments be
made on the dates and times specified herein, the Company will notify the
Customer in writing of the non-compliance by Certified U.S. Mail to the
person designated by the Customer to receive such notices of non-
compliance. If the non-compliance is not corrected in thirty (30) calendar
days, the Company may:
o refuse additional applications for service(s),
o refuse to complete any pending orders,
o discontinue the provision of the service(s) for the non-complying
Customer.
Upon discontinuance of service(s), all charges incurred by the Customer
will be due the Company.
-16-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE I. GENERAL PROVISIONS
PART C. CUSTOMER OBLIGATIONS
1. UNLAWFUL USE:
The service(s) provided under this Agreement will not be used by the
Customer for any unlawful purpose.
If the Customer uses the service(s) for any unlawful purpose, the
Customer will indemnify, defend and hold the company harmless against any and
all damages and expenses, arising in any manner, due to the Customer's use of
the service(s) in an unlawful way.
2. UNAUTHORIZED RECORDS
If the Customer sends any unauthorized or untested records to the
Company's billing system which cause production failure and/or the need for
recovery world the Customer will pay the costs for this recovery. Such recovery
may include extracting and returning call detail records to the Customer and
correcting system damage.
The total cost of this recovery will be determined on an Individual
Case Basis (ICB) using the Open Billing Request (OBR) rates and charges set
forth in IJ. (Rates and Charges).
In such circumstances, the Customer will indemnify, defend and hold
the Company harmless against any claims, loss or damage arising from the system
failure which, in turn, may damage or destroy the Customer's unauthorized or
untested records.
3. DISCONTINUANCE OF SERVICE
If the Customer initiates discontinuance of the service(s) purchased
prior to the expiration of this Agreement, the Customer agrees to pay the
Company all minimums associated with the term of this Agreement as specified in
paragraph 3A of the operating contract.
-17-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE I. GENERAL PROVISIONS
PART D. COMPANY SERVICE SECURITY REQUIREMENTS
1. BILLING AND COLLECTION (B&C) SERVICES DEPOSIT
a) General Statement
The Company may require the Customer to pay a cash deposit for the
service(s) being purchased under this Agreement. This deposit may, in
the Company's sole discretion, be due either before the implementation
of any service(s) or at any time during the life of this Agreement. In
the Company's sole discretion, either an Irrevocable Bank Letter of
Credit or a Surety Bond may be accepted in lieu of a cash deposit.
The deposit or security will be equal to the estimated or actual rates
for the service(s) purchased under this Agreement over a two (2) month
period.
The sole purpose of this deposit or security is to guarantee payment
for services rendered to the Customer. It does not relieve the
Customer of complying with the Company's conditions regarding prompt
payment of bills. At any time before the termination of service(s),
the Company, in its sole discretion, may refund or credit the deposit
to the Customer's account once the Customer has established good
credit.
b) Calculation of Interest Payment
The Company will pay the Customer interest on the B&C Services cash
deposit amount described above as set forth in IJ.4. (Rates and
Charges).
The Company may apply the Customer's earned interest amount to pay any
Customer balance due the Company.
2. BAD DEBT ALLOWANCE RESERVE
Upon establishment of Bill Processing Service, the Company will withhold
the percentage set forth in the operating contract of this Agreement of the
Customer's Purchase of Accounts Receivable (PAR) interstate net settlement of
each month for the first nine (9) months of live End User interstate billing as
a "bad debt allowance reserve". If one Customer receives transfer of the
interest of an established Customer with verifiable credit, and/or the new
customer has a proven history of prompt payment, the Company may, in its sole
discretion, waive the bad debt allowance reserve.
-18-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
For renewed agreements, or at any time during the life of this
Agreement for Bill Processing Service, the Company may withhold a percentage of
the Customers Purchase of Accounts Receivable (PAR) net settlement. This
percentage and the number of months withheld will be developed on an ICB.
The sole purpose of this bad debt allowance reserve is to guarantee
payment for any Customer bad debt and for any true-up monies due the Company. It
does not relieve the Customer of complying with the Company's conditions
regarding prompt payment of any outstanding amounts due. The Customer's bad debt
allowance reserve will be retained by the Company up to twelve (12) months after
the termination of this Agreement to assure all outstanding bad debt true-up
amounts are paid.
- 19 -
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE I. GENERAL PROVISIONS
PART E. TESTING REQUIREMENTS
1. COMPANY FACILITIES, SYSTEMS, ETC.
a) Company Undertakings
The Company will be responsible for the development, establishment,
installation, operation, and maintenance
of the service(s) it provides to the Customer.
When deemed necessary by the Company, services will be tested for the
sole purpose of detecting and/or clearing troubles.
The Company warrants that its facilities and services will meet
standards set forth in this Agreement. The Company does not warrant to
meet any other facility or services standards.
b) Customer Obligations
The Customer will comply with reasonable requests from the Company to
test and adjust its facilities, equipment, services, etc., to maintain
any of the Customer's service(s) purchased under this Agreement. The
test and adjustment times will be mutually agreed upon by the Customer
and Company and completed in a reasonable time frame.
The Customer will not receive credit for any interruptions to
service(s) during the tests and adjustments.
2. TESTING SERVICES
a) General Description
Testing is required by the Company for any new or revised records
and/or data files sent from the Customer, or from an entity in the
Customer's behalf, to the Company even if the Customer or entity
perceives the revision to be transparent. Examples of these revisions
include, but are not limited to:
. Conversion from other Centralized Message Data System (CMDS) Host
to direct send of data to the Company;
. Addition of record types;
. Change by the Customer to a different data processing provider;
. Customer use of new Exchange Message Interface (EMI) standard;
. Purchase of new Company service offering;
-20-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
. Data media conversion, for example, from magnetic tape to data
transmission;
. Items already being billed by another Local Exchange
Company (LEC)
b) Company Undertaking
(1) Timing
Testing of Customer data files will be scheduled to
begin after all items listed in c) Customer Obligations below are
received by the Company. Testing will complete thirty-five (35)
business days after receipt of valid Customer test data. The
Customer agrees to an extension if significant problems arc
encountered during testing which require software changes in the
Company's billing system.
(2) Completion
System testing is considered complete by the
Company when the data runs successfully through the final
software application in the test sequence.
(3) Propriety Of Customer Data
The Customer's test data will be used by the Company for testing
only. It will not be processed as production or 'live' data.
(4) Allowable Test Runs At No Charge
For all services purchased under this Agreement, with the
exceptions of Recording Service and the Billing Information
Service custom reports, the Company will process a maximum of
three (3) data files for each service at no additional charge to
the Customer. If the Customer requires additional tests for a
particular service, the Company will process the Customer data/
files at the Per Test Data or File charge set forth in I.J.3.
(Rates and Charges) of this MODULE.
For Recording Service and the Billing Information Service custom
reports, i.e., Unbillable, Post Billing Adjustment (PBA), and
Uncollectible EMI format records, the Company will send the
Customer one (1) test data file at no additional charge. If the
Customer requires additional test data files for each service,
the Company will send the Customer a test data file at an ICB
charge as set forth in I.J.3. (Rates and Charges) of this MODULE.
-21-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
c) Customer Obligations
For all services except Recording Service and the Billing
Information Service Custom Reports, the following
four (4) items must be received from the Customer before the
Company will schedule testing:
o Written OBR Authorization for Time and Cost (T&C) estimate.
See I.H.4. (Open Billing Requests - PON Authorization and
Concurrence) for further explanation;
o Test data formatted in compliance with Company documented
standards. Variance from these standards will result in the
Company's billing system rejecting the test data;
o Tape transmittal form (Form RF-1016 or RF-1018); and
o "Interexchange Carrier (IXC) Test File Pack Information"
form (required only for testing a new B&C Service(s)
Customer).
The Customer must pass the Company's system test before
going into production or 'live' data.
d) Recording Service Tests
When the Company provides the Customer with recorded messages,
i.e., Recording Service, in EMI format, the Company will provide
the Customer a test data file for format and data content
verification under the terms and conditions set forth in this
Part. The Customer assumes full responsibility for processing the
files at its location.
e) Bill Processing Service Tests
Every time a Customer revises its casual Message data and/or
files, whether data transfer or data transmission, the Company
will test a Customer data file under the terms and conditions set
forth in this Part. The Customer is required to pass the
Company's system test before going into 'live' production.
f) Billing Information Service Tests
The Company will provide the Customer custom report test data
files for format and data content verification under the terms
and conditions set ford in this Part. The Customer assumes full
responsibility for processing the files at its location.
-22-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE I. GENERAL PROVISIONS
PART F. BILLING AND COLLECTION (B&C) SERVICES BILL
1. BILL CONTENTS
The Company will establish in each state a B&C account(s) for each
Customer for the service(s) purchased under this Agreement and will deliver a
current bill to the Customer which will cover:
o non-usage sensitive service charges for the ensuing billing
period for which the bill is rendered;
o any known unbilled non-usage sensitive charges for prior periods;
o unbilled usage sensitive charges from the 1st to the 31st of the
previous month;
o any known unbilled usage sensitive charges for prior periods;
o any known unbilled adjustments;
o any known unbilled minimum charge requirement differential; and
o any unbilled service deposit credits or claim adjustments with
associated late payment penalty or interest payments.
In addition, the Company bill will include charges for any services that
may be established or discontinued within the given billing period. Adjustments
for the quantities of services established or discontinued in any billing
period, beyond the minimum period set forth for services in other Modules and
Parts of this Agreement, will be prorated to the number of days or fraction of
days based on a thirty (30) day month.
2. DEFINITION OF PAYMENT DUE DATE
The payment due date is either thirty-one (31) calendar days after the
Company's bill day or the next bill date, whichever is shorter. The next bill
date is the same day of the following month as the bill date of the current
month. For example, if a bill was rendered on January 7, 1993, the next bill
date is February 7, 1993.
3. PAYMENT DUE DATE ON SATURDAY, HOLIDAY, ETC.
Should the payment due date, as determined above, fall on a Saturday,
Sunday, or holiday, when the Customer is prohibited by the local banks or the
Federal Reserve Bank from making payment by electronic funds transfer, the
payment due date is as follows:
-23-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
o If the payment due date falls on a Sunday or Monday on which payment
cannot be made as described above, the payment due date will be the
first business day following the Sunday or Monday.
o If the payment due date falls on a Saturday, Tuesday, Wednesday,
Thursday, or Friday on which payment cannot be made as described
above, the payment due date will be the last business day preceding
the given Saturday, Tuesday, Wednesday, Thursday or Friday.
4. LATE PAYMENT PENALTY
If any portion of the Customer's amount due the Company is not received
by the Company on the payment due date as set forth above, or if any portion of
the payment funds are not immediately available to the Company, then a late
payment penalty may be assessed by the Company as set forth in IJ.4. (Rates and
Charges).
5. DISPUTES/CLAIMS AND RESOLUTION
In the event of a B&C bill dispute, the Customer must submit to the
Company a documented claim in writing for the disputed amount. The Customer will
submit any dispute promptly so that the information relevant for the
investigation of the dispute is available for both the Customer and the Company.
The Customer and the Company will use best efforts to resolve the dispute. The
responsibilities of the Customer and the Company are as follows:
a) Dispute Date and Documentation
The dispute date is the date on which the Company receives a
documented claim in writing. Such documentation must include, at a
minimum, but is not limited to:
o The nature of the dispute, including the basis for the
Customer's belief that the bill is incorrect;
o The amount of money in dispute identified by each category;
o The bill dates and state(s) of the bill(s) in dispute;
o Applicable transmission dates and obligation Identifications
(IDs).
If additional, available and relevant information from the Customer
is necessary to resolve the dispute, the Company will request this information.
This request will not affect the established dispute date if the Customer meets
the written documentation requirements stated herein.
-24-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
b) Resolution of Dispute
If after investigation of the dispute, the bill is found by the
Company to be correct, the parties will consider the dispute
settled. The Customer will be responsible for immediate payment of
the unpaid amount plus any late payment penalty as set forth in
----
I.J.4. (Rates and Charges).
If the bill amount is found to be incorrect, the dispute will be
settled as follows. If a credit is due the Customer, the amount due
plus any interest payment less any amounts withheld by the Customer
---- ----
during the dispute will be credited to the Customer's B&C account.
The Company will place the adjustment on a subsequent bill, and the
adjustment will be for the amount documented in the Company's
findings. If a payment is due the Company from the Customer, the
Customer will pay the amount due plus any late payment penalty as
set forth in I.J.4. (Rates and Charges).
6. ACCURACY OF DATA
The Company will make every effort to assure the accuracy of the
Customer's B&C bill. If a change is required, the Company will make the
necessary adjustment on a subsequent bill. If the Company discovers a necessary
correction, and the discovery is not associated with any written inquiry by the
Customer, no interest payment applies.
7. PERCENT OF INTERSTATE USAGE (PIU) FACTOR
A PIU factor will be developed for each customer account. This factor
will be based on the actual number of records sent to the Company for billing.
When the jurisdiction for a charge cannot be determined, the PIU factor will be
applied to the charge in order to allocate it among the interstate and
intrastate jurisdictions.
The Customer will keep all call detail records and any other data used
to calculate these initial PIU factors for eighteen (18) months. The Company may
verify the Customer's PIU factors by sending the Customer a written request for
all pertinent information which the Customer will provide within thirty (30)
calendar days from receipt. The Customer will provide the Company the requested
information on a prospective basis if the historical information cannot be
provided.
After the Company has billed twelve (12) months of Customer records and
service(s), the Company has the right to update the Customer's PIU based on this
historical data. Thereafter, the Company may, at its sole discretion,
recalculate, revise and reapply the Customer's PIU factors to its B&C bill(s) at
least, but not limited to, once a year on an on-going basis. The Customer will
be notified of changes to its PIU factors sixty (60) calendar days before the
effective date.
-25-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE I. GENERAL PROVISIONS
PART G. AUDIT PROVISIONS
1. GENERAL DESCRIPTION
The Customer will have the right to perform an audit, which is the
review of multiple subjects, and/or an examination, which is the review of only
one subject such as Unbillables or Uncollectibles (also referred to as "special
examinations"), of the Company's records relating to services purchased under
this Agreement. The audit or examination will be at Company locations for the
service(s) purchased under this Agreement in accordance with the terms and
conditions set forth in this Part. These terms and conditions apply to all
services purchased under this Agreement.
2. TERMS AND CONDITIONS
The Customer will initiate an audit or examination by giving the
Company written notification of its intent to perform an audit or examination at
a minimum of ninety (90) calendar days before the Customer's desired start date.
a) On Site
o Audits and examinations will be performed during normal
Company business hours only on information that reasonably
may bear upon the provision of services specified as part of
this Agreement.
o A maximum of one (1) audit per calendar year and two (2)
examinations per calendar year are granted by the Company.
o Audits are limited to a maximum period of three (3) weeks
on-site, provided all key personnel and documentation are
available at the start of and throughout the audit.
o Examinations are limited to a maximum period of two (2) weeks
on-site, provided all key personnel and documentation are
available at the start of and throughout the examination.
o Audits and examinations are limited to one (1) Regional
Accounting Office (RAO) or state.
b) Miscellaneous
o Each party will bear its own expenses in connection with
performing an audit or examination.
-26-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
o Should the Customer commission an independent auditing firm,
the authorized firm representative must sign a joint non-
disclosure agreement with the Customer and the Company.
o All information received or reviewed by either party or
authorized representative is considered proprietary. Its use
will be limited to:
- performance of the audit or examination;
- preparation of any report(s) for the sole purpose of
providing audit or examination results, and the
resolution of its findings, to authorized
Customer, firm, and Company personnel only;
- no other purpose unless agreed to in writing by the
Customer and Company.
o For any special Customer data requirements, the Customer will
issue a Purchase Order Number (PON) through the OBR Process
and pay the cost for the extraction.
o The Company will respond to the Customer's inquiries or audit
findings within the specified time frame set forth in I.G.2.
(Written Notification and Time Frame Requirements).
c) Handling Of Material
Company materials and data reviewed by the Customer are considered
proprietary and cannot be copied or removed from site.
Observation or monitoring of Company employee contacts with End
Users is prohibited.
Interview of a Company non-management employee is prohibited.
3. WRITTEN NOTIFICATION AND TIME FRAME REQUIREMENTS
The Customer will provide the Company written notification of its
intent to perform an audit or examination at a minimum of ninety (90) calendar
days before desired start date. This written notification must include, at a
minimum:
o The specific objective of the audit or examination;
-27-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
o The start date of the audit or examination;
o The scope of the audit or examination. The scope will not change
once the audit or examination begins;
o The data and/or documents to be audited. The data request stands
as written once the audit or examination begins;
o The site to be audited.
o The requested location(s) for performing on-site activities.
Location(s) will be mutually agreed upon by the Customer and
Company;
o The data request sample size. Sarnple size will be mutually
agreed upon by the Customer and Company;
o The specific period or test month requested to be audited. Test
month will be limited to the three (3) months before audit or
examination start date, or to a mutually agreed-upon test month;
o The Customer's expected duration of on-site activity. The
Customer will limit on-site audit activities to a maximum period
of three (3) weeks, and on-site examination activity to a maximum
period of two (2) weeks;
o The names, addresses and telephone numbers of Customer personnel
and/or outside firm representatives conducting the audit or
examination.
Within fifteen (15) calendar days of Customer notice, the Company will
acknowledge receipt of written notification and may at that time, for good and
reasonable cause, change the audit or examination start date to a mutually
agreed-upon date.
Once the start date is mutually agreed upon, the Company will schedule
a pre-review meeting with the Customer within thirty (30) calendar days of the
Company's receipt of the written notification described herein. This pre-review
meeting cannot be less than forty-five (45) calendar days before the Customer's
audit or examination start date. The pre-review meeting activities will include,
but are not limited to:
o Clarification and concurrence of Customer's requests as outlined
in the written notification;
o Review of sample documentation;
o Concurrence in documentation to be provided during audit or
examination.
-28-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
4. FINAL REPORT AND CLAIM PAYMENT
Within forty-five (45) calendar days of an audit or examination's
conclusion, the Customer will provide to the Company a final report, in writing,
identifying any deficiencies found and documenting any claims associated with
the audit or examination. In the event this time frame cannot be met, the
Customer will advise the Company and negotiate an extension.
Upon receipt of the Customer's final report, the Company will
investigate all findings and claims. After investigation, the Company will
provide a response, in writing, within forty-five (45) calendar days of receipt
of the Customer's final report. In the event this time frame cannot be met, the
Company will advise the Customer and negotiate an extension.
This report will detail the Company's investigative actions, and may
resolve that one of the following is true: (1) no settlement is due, (2) a
settlement is due to the Customer from the Company, or (3) a settlement is due
the Company from the Customer.
If the resolution is (1), both parties will document the agreed-upon
resolution, and close the finding and associated claim.
If the resolution is (2), the Company will adjust a subsequent bill
and/or settlement due the Customer for the mutually agreed-upon amount, and will
make any associated interest payment as set forth in I.J.4.e. (Rates and
Charges).
If the resolution is (3), the Customer will pay the Company the
mutually agreed-upon claim and any associated interest payment as set forth in
I.J.4.e. (Rates and Charges).
The Customer will provide concurrence with or objection to the
Company's respond within forty-five (45) calendar days of receipt of the
Company's written response.
5. BILLING OF CLAIM
The Company will pay the mutually agreed-upon claim amount and any
associated interest payment by adjusting a subsequent bill and/or settlement due
the Customer.
- 29 -
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE I. GENERAL PROVISIONS
PART H. OPEN BILLING REQUESTS (OBRs)
1. GENERAL DESCRIPTION
Once the Customer's initial service establishment is complete for any
service(s) purchased under this Agreement, i.e., Recording, Bill Processing,
etc., the Customer may purchase new B&C Services or enhancements and/or initiate
modifications to existing service(s) through the Company's OBR process. The
Company agrees to use best efforts to make such modifications, subject to the
terms and conditions set forth in this Part, and as specified in the individual
service MODULES within this Agreement.
The Customer may submit three types of written OBRs:
o An Information Letter (L) is an administrative change in the
Customer's "Business as usual", e.g., change in designated contact
manager, change in mailing address, etc., not requiring program-
ming changes. No programming changes will be made by the Company.
No charges will be billed to the Customer for the change.
o An Order of Magnitude (OM) is a specific request for a Time and
Cost (T&C) estimate. The T&C estimate will not be binding on
either party. This enables the Customer to gain knowledge and
determine the feasibility of pursuing the modification before
making a commitment.
o A Purchase Order Number (PON) is a specific request to purchase
new B&C Services or initiate modifications to existing services).
The Customer will be charged both the programming and nonprogram-
ming, recurring and nonrecurring charges incurred by the Company
to develop and implement the modification, and, as appropriate,
provide the service(s) on an on-going basis.
2. DOCUMENTATION AND TIME FRAMES
In the Customer's initial OBR correspondence, a complete information
package must be provided for the Company to develop a T&C estimate and implement
the request. The following list gives examples of what this package is to
contain, as appropriate for the specific modification:
o Type of OBR; i.e., IB, OM, or PON;
o Detailed description of the requested modification;
o Billing Specifications (OMs and PONs only);
- 30 -
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
o Illustrative tariff(s);
o Methods and Procedures;
o Tax applications;
o Journal account codes;
o Bill format example;
o Service order example;
o Record description for interfaces;
o Requested completion date.
With the exceptions stated herein, the Company will respond within
twenty (20) business days from receipt of a Customer's IL.
With the exceptions stated herein, within twenty (20) business days
from receipt of a Customer's OM or PON, the Company will mail the Customer a
written Time and Cost T&C) estimate.
For PONs only, within forty (40) business days from the date of the T&C
estimate, the Customer will notify the Company, via an authorization letter,
that the estimate is accepted or rejected. The T&C estimate and Customer PON
will be void if the Customer fails to accept a T&C quote within the forty (40)
business day time limit. Once void, the Customer may resubmit a new PON. The
Company will determine on an ICB the conditions and period of time necessary to
implement each PON. See I.H.4. (PON Authorization and Concurrence) below for
further details on PON authorization and concurrence.
For calculating the estimated cost of the Customer's OM or PON, the
Company will use: a) the applicable rates and charges as set forth in I.J.
(Rates and Charges); b) the appropriate tariff rate; and/or c) any ICB
rates/charges negotiated and authorized by both the Customer and the Company.
For complex modification, the Company may require an extension to the
Company's standard twenty (20) business day T&C estimate time frame. The Company
will notify the Customer of this extension within fifteen (15) business days
from receipt of the Customer's OM or PON and the Customer and Company will
negotiate a new T&C estimate date.
The Customer will consider the twenty (20) business day commitment met
by the Company when questions and/or issues necessary to complete the Customer's
OM or PON billing specifications are sent to the Customer for
answers/resolutions. The twenty (20) business day time frame starts over when
the Company receives the Customer's answers/resolutions in writing. The Company
will cancel the Customer's OM or PON if the Customer does not provide the
Company with answers/resolutions by the fortieth (40th) business day from the
date on the Company's T&C estimate letter.
- 31 -
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
3. CHARGE SAMPLE
Upon request from the Customer, in the initial PON correspondence, the
Company will provide:
o a copy of an End User bill (with account information deleted);
o a report sample; or
o other implementation validation media mutually agreed upon by both
parties.
This documentation will demonstrate the authorized changes after the
first billing cycle, but not later than forty-five (45) business days after
implementation. The Company will notify the Customer in circumstances where,
despite best efforts to do so, the Company cannot locate any End User usage
affected by the billing change. The Customer will then, via the PON, supply the
Company with account numbers or other information identifying End Users whose
billing the Customer believes is affected by the billing change. The Company
will then provide the Customer a copy of such End Users' bills.
4. PON AUTHORIZATION AND CONCURRENCE
Before the Company will concur, the Customer's written PON
authorization must include all appropriate information, including the following:
o The Company assigned PON number which is provided in the
T&C estimate letter;
o The issue date of the Customer's initial PON correspondence;
o The specific rates and charges (both non-recurring and recurring)
quoted in the Company T&C estimate letter;
o The implementation date(s) mutually agreed upon by the
Customer and Company.
The Company will add concurrence signature and date at the bottom of
the Customers PON authorization letter and return a signed original to the
Customer within ten (10) business days of receipt. The PON development and
implementation work will begin only upon signature of both parties.
5. PON PRE-AUTHORIZATION
The Customer may pre-authorize a PON modification for:
o Development Only - Company begins development work; or
o Development and Implementation - Company begins development and
implementation activities.
- 32 -
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
This pre-authorization is only for services and changes for which the
Company has published standard rates and charges (both non-recurring and
recurring), or for a dollar amount the Customer is willing to pay for the
modification.
With published standard rates and charges, within ten (10) business
days from the receipt date of the pre-authorized PON, the Company will send the
Customer the scheduled implementation date. The Customer will then give the
Company billing authorization within twenty (20) business days from receipt.
When the Customer pre-authorizes a dollar amount it is willing to pay
for a given PON, the Company will send the Customer the T&C estimate within ten
(10) business days from receipt of the pre-authorized PON. The Customer will
then give the Company billing authorization within twenty (20) business days
from receipt. If the Customer does not provide the Company the required written
billing authorization, the Company may bill the Customer for all work performed
at the scheduled or tariffed rate, up to the point of cancellation and/or up to
the limit of the pre-authorization, whichever is less.
6. COMPLETION AND CONDITION
Within five (5) business days from completion of the Customer's PON,
the Company will send the Customer written confirmation that all work is
completed and all billing procedures are in place.
For ILs, whether work is or is not required by the Company, the Customer
and Company will consider an IL complete when the Company notifies the Customer
of its action. If the IL implementation results in chargeable work, the Customer
agrees to resubmit the needed modification as a PON and pay: a) the applicable
rates and charges as set forth in I.J. (Rates and Charges); b) the appropriate
tariff rate; and/or c) any ICB rates/charges negotiated and authorized by both
the Customer and Company.
An OM will be considered complete when the T&C response letter is mailed
to the Customer. If the Customer would like to implement the modification upon
receipt of the OM's T&C, the Customer agrees to issue a PON. In such cases, the
Customer will reference the Company-assigned OM number and the OM's initial
issue date within the text of the initial PON correspondence.
A PON will be considered complete by the Customer and Company when:
o a written Implementation Validation Form (IVF) is mailed to the
Customer;
o the PON is cancelled by the Customer;
o or the PON is cancelled by the Company under the terms and
conditions set forth in this Part.
-- 33 --
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
7. BILLING
Customer-authorized PON cost will be billed on a subsequent B&C bill as
follows:
o PONs under S100,000 will be billed after completion of all work;
o PONs over S100,000 will be billed monthly for the work completed in
the given bill period.
For PONs cancelled by the Customer, the Customer will pay the Company
for all work performed at the scheduled and/or tariff rate(s) up to the point of
cancellation.
If the Company is unable to implement changes to the B&C program
required to bill the Customer for the PON's recurring rates and charges, the
Company may bill using another Charges and Credits (OC&C) entry or may retain
records and then back bill the Customer when the necessary billing system
changes are implemented.
8. ACCURACY OF DATA
The Company will make every reasonable effort to assure the accuracy of
the Customer's OBR billing. At such time a change is required, the Company will
make the necessary adjustment on a subsequent B&C bill with no interest payment
applied.
-- 34 --
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE I. GENERAL PROVISIONS
PART I. RESERVED FOR FUTURE USE
- 35 -
July 1993
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE I. GENERAL PROVISIONS
PART J. RATES AND CHARGES
1. SERVICE ESTABLISHMENT AND PROGRAM DEVELOPMENT CHARGES
a) Service Establishment Charge
The following Service Establishment Charge will be billed upon the
effective date of this Agreement.
Service Establishment Charge
per new Customer Agreement (*)
This one-time charge is applied to the Customers initial Agreement
regardless of the number of services purchased, and whether they are
provisioned in one state or in all nine.
If at any time during the life of this Agreement, and/or during
renewal, the Customer Other purchases additional services and/or
expands its existing service to additional states, no additional
Service Establishment Charges will be due the Company. However, each
service has its own unique Program Development and other applicable
development charges which the Customer agrees to pay the Company to
establish the given service(s).
b) Bill Processing Service Proven Development Charges
In addition to the Service Establishment Charge, the initial Bill
Processing Service program development charges, as applicable, will be
due upon completion of testing but in no event later than six (6)
months from the effective date of this Agreement.
Description Charge
-------------------
o Tape Settlement
o other CMDS Host (*)
o direct tape or
Company CMDS Host (*)
o MSS Program Development
(includes three [3] test tapes at no
additional charge)
o For only one Company state (*)
o For more than one Company state (*)
-36-
July 1993
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
EXHIBIT A
of the
Billing and Collection Services Operating Contract
. Sub-CIC Processing
. Up to ten (10) sub-CICs (*)
. Logo
. Initial set-up (*)
c) Recording Service Program Development Charge
This charge win be determined on an ICB.
2. MINIMUM YEARLY B&C SERVICE(s) CHARGE REQUIREMENT
a) General Description
The minimum yearly B&C Service(s) charge will be (*) . This
----------
charge includes all services provided to the Customer during each
twelve (12) month period while this Agreement is in effect.
Calculation of the B&C Service(s) charge win begin the first month
that live End User billing for Bill Processing Service is rendered and
no later than six (6) months from the effective date of this
Agreement. This charge win be in addition to any initial Service
Establishment and/or Program Development charges associated with
establishing service. In the event that the Customer's total B&C
Service charges are less than (*) for any twelve (12) month
period, the Customer will pay the Company an amount equal to the
difference between (*) and the Customer's service charges under
this Agreement. This amount win be calculated by the Company and
billed to the Customer as set forth in I.J.2.b. (Billing).
If the period for determining the Customer's minimum yearly B&C
Service(s) charge is less than twelve (12) months, the Company will
prorate the minimum yearly charge requirement accordingly.
b) Billing
Within ninety (9O) calendar days from the last day of the twelfth
(12th) month, the Company win total the Customer's charges for all B&C
Services purchased under this Agreement for the completed twelve (12)
month period. The Company will then send written notification of these
findings to the Customer and appropriately adjust a subsequent bill.
-37-
July 1993
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
EXHIBIT A
of the
Billing and Collection Services Operating Contract
3. CUSTOMER TESTING
Included in the Program Development Charge described in IJ.l.b. (Bill
Processing Service Program Development Charges) above, for all new or additional
Message Billing Services, the Company will process three (3) test data files for
each service verification at no additional cost to the Customer.
o If the Customer is establishing a Message Billing Service and
requires additional tests for each service verification, the
Company will continue to process Customer test data files at the
charge shown in the chart following.
o If the customer is establishing either a Recording Service or a
Billing Information Service Custom Report, the Program Development
Charge will be determined on an ICB. The Company will provide the
Customer one (1) test data file. If the Customer requires
additional test data files, the applicable ICB recreate rate and/
or charge will apply as shown in the chart following.
Description Charge
------------ ------
- Bill Processing Service
Per Additional Test Data File
(Three [3] are processed by the Company at no charge) (*)
- Billing Information Service Custom Report
Per Additional Test Data File
(One [1] is provided to the Customer at no charge) (*)
- Recording Service
Per Additional Test Data File
(One [1] is provided to the Customer at no charge) (*)
If the Customer's Bill Processing Service is established and the
Customer wishes to add an enhancement to its service, the following charges
apply for up to three (3) test data files. If additional test data files are
processed, each additional test, whether complete or abbreviated, will be
processed at an additional charge of (*).
o Bill Processing Service Enhancement Testing
o Complete - from Customer initial
distribution through Bill Format (*)
o Abbreviated - from Customer initial
distribution through IXC Interface (*)
-38-
July 1993
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
EXHIBIT A
of the
Billing and Collection Services Operating Contract
4. LATE PAYMENT PENALTY, INTEREST FACTOR AND CALCULATION OF PAYMENT
The late payment penalty or interest factor for this Agreement is (*)
per month (. (*) per day simple interest) or (*) annually. The resulting
amount will be rounded to the nearest penny; i.e., to two decimal places.
a) B&C Service Security Deposit
For the B&C Service Security deposit set forth in I.D.1., the
interest factor stated above will be applied daily to the deposit
amount based on a mutually agreed-upon ending date. The Customer
will either receive a check or the deposit will be credited to a
subsequent B&C bill due the Customer.
b) B&C Bills
For B&C bills set forth in I.F.4., the late payment penalty factor
stated above will be applied daily to the portion of the Customer
payment not received by the Company on the payment due date. It is
calculated for the number of days from the payment due date to, and
including, the date the Company receives full payment from the
Customer.
c) B&C Bill Claim Payments
For B&C bill claim payments, set forth in I.F.S., the late payment
penalty and/or interest factor stated above will be applied daily
to the amount owed. Interest will accumulate beginning either on
the date the written documented claim is received by the Company or
from the bill payment due date, whichever occurs later. The
Customer will either receive a check or the resolution amount will
be posted as an adjustment on a subsequent B&C bill due the
Customer.
d) PAR Claim Payment
For PAR claim payments, set forth in II.D.S.c., the late payment
penalty and/or interest factor stated above will be applied daily
to the amount owed. Interest will accumulate beginning either on
the date the written, documented claim of the monies in question is
received by the Company, or from the settlement due date, whichever
occurs later. The Customer will either receive a check or the
resolution amount will be posted as an adjustment on a subsequent
settlement payment.
e) Audit Claim Payments
For audit claim payments, as set forth in I.G.4. (Final Report and
Claim Payment) and I.G.S. (Billing of Claim), the interest factor
stated above will be applied as follows:
-39-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
o Interstate/International jurisdiction: Each claim will be reviewed
on an ICB to determine applicability of interest payment.
o Intrastate jurisdiction: Interest payment is not applicable in
accordance with the state access tariffs.
The interest payment will not be applicable if it is determined that
the claimant was responsible for circumstances causing the error. Both
parties will mutually agree on the interest payment applicability when
multiple contributable factors are involved.
The interest payment start date is the receipt date of the claim
provided all documentation to substantiate the claim is submitted on
receipt date and mutually agreed upon between the Customer and the
Company. When actual data to support the claim has to be retrieved by
either the Customer or the Company, the interest payment date is the
day both parties mutually agree upon supporting documentation and
revenue amount.
The interest payment stop date is the date the claim revenue amount is
posted to a subsequent bill and/or settlement due either party.
-40-
July 1993
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
EXHIBIT A
of the
Billing and Collection Services Operating Contract
5. OPEN BILLING REQUESTS
The following Program Development rates and charges apply to the hours
required by the Company to design, develop, test, and maintain the necessary
programs for all the services purchased under this Agreement and used to
calculate the Customer's total OBR cost. When the charge for a given service or
change is on an ICB, the Company will document the hours and fractions thereof
used by the Company personnel to provide program development and will billed the
Customer in accordance with this record. The hours and fractions will then be
totaled and rounded to the nearest hour.
The basic per hour rate for program development is for the use of one
hour of one Company employee's time required to design, develop, test and
maintain necessary programs. The premium per hour rate is for either a Company
employee's time or for a programmer contracted by the Company.
Description Rate
----------- ----
o Special Order Charge,
per PON authorized and implemented (*)
o Program and Development Rate,
- Standard, per hour
(Rate applicable to work performed
with the Company's normal work
schedule and using the normal
work force.) (*)
- Premium, per hour
(Rate applicable to work performed
outside the Company's normal work
schedule and/or which requires additions
to the work force. The Customer may
contact its Company representative to be
advised of normal work schedule.) (*)
o Non-Program and Development Rate,
- Standard, per hour
(Rate applicable to work performed
with the Company's normal work
schedule and using the normal
work force.) (*)
-41-
July 1993
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
EXHIBIT A
of the
Billing and Collection Services Operating Contract
6. BILL PROCESSING SERVICE
Description Rate
----------- ----
a) Bill Processing Service,
- per message See Addendum A
- per bill See Addendum A
Bill Processing Service Per Message and Per Bill and the terms
applicable thereto are set forth in Addendum A to this Exhibits
b) Receipt of Data Transfer of Rated
Customer Message Detail
To the Company From the Customer or a Location
Designated by the Customer,
- per record received $ (*)
c) Delivery by Data Transfer of Rated
Customer Message Detail
From the Company To the Customer or a Location
Designated by the Customer,
- per record processed $ (*)
- per record sent $ (*)
- per tape or diskette $ (*)
d) Receipt of Data Transmission of Rated
Customer Message Detail
To the Company from the Customer or a Location
Designated by the Customer,
- per record received $ (*)
e) Delivery by Data Transmission of Rated
Customer Message Detail
From the Company to the CMDS Center, or from
the Company to Customer or a Location Designated
by the Customer,
- per record processed $ (*)
- per record transmitted $ (*)
- per data file $ (*)
-42-
July 1993
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
EXHIBIT A
of the
Billing and Collection Services Operating Contract
f) Receipt or Delivery by Data Transmission
of Rated Customer Message Detail
To the Company from CMDS Center or from
the Company to the CMDS Center,
- per record received or delivered $ (*)
* The Company will determine the total charge based on its count of the
records received or delivered and, when applicable, the number of tapes
required.
g) End User Account Activity
(1) End User Balance Due Change,
- Special Order (Adjustment) To
Receive Each End User Balance
Due Change
o Standard procedure,
each $ (*)
o Non-Standard procedure,
each (*)
(2) End User Account Establishment and Change,
- Other than rate element rate level change,
per End User account non-recurring and
recurring rate element established or
changed, and End User balance due
changed,
each $ (*)
h) "Without Inquiry" Optional Services,
(1) Investigation of Bill Charges
- per message processed $ (*)
(2) Message-Billed Message Investigation,
Service
- per End User account,
per occurrence $ (*)
(i) "With Inquiry" Service
Message-Billed Inquiry
- per message processed $ (*)
-43-
July 1993
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
EXHIBIT A
of the
Billing and Collection Services Operating Contract
(j) Marketing Message,
- Standard message,
per message, per bill $ (*)
- Separate Page message,
per message, per bill $ (*)
(k) Expedited Marketing Message Request Charge,
- per request $ (*)
* This rate includes Message-Billed Message Investigation Service and
Investigation of Bill Charges.
** The Company will determine the total charge based on its count of
interstate and intrastate Marketing Messages. The PIU will apply to
determine the jurisdiction of the Marketing Messages.
7. BILLING INFORMATION SERVICES
Description Rate
----------- ----
o Service Establishment for or changes to
Billing Information Service,
- Per Special Order, (*)
o Custom Reports,
for Message Detail and/or Account Detail
- Per tape (*)
- Per data file (*)
- Per report (*)
- Per record (*)
- Per microfiche (*)
o Day Transmission to a Customer Location
of Billing Information Detail,
- Per record transmitted (*)
o Updating of Customer Data Bases or Files
- Per record transmitted (*)
o File Interrogation
- Per request received (*)
-44-
July 1993
<PAGE>
Confidential Treatment Requested.
The redacted material has been
separately filed with the Commission.
EXHIBIT A
of the
Billing and Collection Services Operating Contract
8. RECORDING SERVICE
Description Rate
----------- ----
o Recording Rate,
- If Minimum Yearly B&C Charge*
is met (See I.J.2.a.),
Rate per customer message $ (*)
- If Minimum Yearly B&C Charge*
is NOT met (See I.J.2.a.),
---
Rate per customer message $ (*)
o Assembly and Editing,
- Unsorted without name and
address information,
Rate per record processed $ (*)
o Delivery of Message Detail,
- Per record transmitted/1/ (*)
Per tape $ (*)
/1/ ICB rates and charges apply.
* In each twelve (12) month period, the Company will use the Customer's
annual Recording Revenue Statement (set forth in IV.B.2.b. - Customer
Revenue Statement), and assume the Customer will meet the Minimum Yearly
B&C Charge, set forth in I.J.2., to determine which rate will apply.
Within ninety (90) calendar days after the twelfth (12th) month, the
Company will determine whether the Customer met the Minimum Yearly B&C
Charge.
If the Customer meets the Yearly Minimum B&C Charge, there will be no
adjustment made to the Customer's account.
If the Customer does not meet the Yearly Minimum B&C Charge, the Company
will apply the appropriate Recording rate per Customer message to all
messages recorded within the twelve (12) month period under review. The
company will then appropriately adjust a subsequent B&C bill to true-up the
account.
-45-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
TABLE OF CONTENTS
for
MODULE II. BILL PROCESSING SERVICE
PART PAGE
A. GENERAL DESCRIPTION........................................ 48
B. PROVISION OF SERVICE....................................... 49
1. Scope
2. Purchase of Accounts Receivable (PAR)
3. Minimum Service Period Requirement
4. Customer Volume Estimates
5. Age of Message Limitation
6. Customer's Service(s)
7. Authorization to Deny Service
C. CUSTOMER RATED MESSAGES.................................... 51
1. Message Format, Content and Delivery
2. Unbillables
3. Errors or Omissions
4. Lost or Damaged Messages
5. Application of Rates and Charges
D. PURCHASE OF ACCOUNTS RECEIVABLE (PAR)...................... 54
1. Transmitted Revenue
2. Taxes
3. Recourse
a) Unbillables
b) Post Billing Adjustments
c) Bad Debt
(i) Bad Debt Allowance
(ii) Bad Debt Allowance Reserve
(iii) Net Bad Debt
4. True-up
5. Settlement
a) Determination of Settlement Due Date
b) Late Payment Penalty
-46-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
TABLE OF CONTENTS
for
MODULE II. BILL PROCESSING SERVICE
Continued
D. PURCHASE OF ACCOUNTS RECEIVABLE (PAR) Cont'd:............... 54
5. Settlement Cont'd
c) Disputes/C1aims and Resolution
(i) Dispute Date and Documentation
(ii) Resolution of Dispute
d) Accuracy of Data
E. END USER ACCOUNT MANAGEMENT................................. 61
1. Service Deposits
2. Post Billing Adjustments
3. Post Billing Message Investigation Service and
Investigation of Bill Charges
4. End User Account Activity
a) End User Balance Due Change
b) End User Account Establishment and Change
5. Account Information
6. End User Late Payment Charges
7. Collection/Treatment
8. Disputes
F. WITHOUT INQUIRY............................................. 65
1. General Description
2. Customer Responsibilities
3. Post Billing Adjustments
4. Post Billing Message Investigation Service
5. Investigation of Bill Charges Service
G. ORDERING BILL PROCESSING SERVICE............................ 67
1. Initial Service Order
2. Changes
3. Cancellations
-47-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE II. BILL PROCESSING SERVICE
PART A. GENERAL DESCRIPTION
Bill Processing Service is a Message Billing Service and includes the
following billing and collections functions performed by the Company on the
Customer's behalf:
- Establish End User accounts for the Company and/or Customer;
- Collect and maintain End User service deposits;
- Post Customer messages with associated charges to End User accounts.
These charges are included in the total amounts due to the Company for
telecommunication services received by the End User accounts;
- Prepare and mail a separate Customer bill page(s) of Customer rated
messages with associated charges in the Company's regular monthly bill
for Local Telephone Exchange Service;
- Receive payments for amounts due;
- Maintain End User accounts;
- Perform Collection and Treatment processes on End User accounts;
- Perform pre-billing investigation;
- Perform post-billing investigation when ordered by the Customer; and
- Perform Inquiry ("With Inquiry") when ordered by the Customer.
It does not include Rating Service (also called "Message Processing"
---
Service.)
Refer to Module I., General Provisions, for more information relating
to Bill Processing Service, specifically I.J., Rates And Charges. Module I is a
companion to the terms and conditions set forth in this Module and in Module
III, optional Message Billing Services, which details additional services
available for purchase by the Customer.
-48-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE II. BILL PROCESSING SERVICE
PART B. PROVISION OF SERVICE
1. SCOPE
This Agreement applies only to those Customer rated messages received
into the Company's bill processing system and can be posted to Company End User
accounts. The Company will not establish an End User account solely for billing
of Customer services.
The Company will provide Bill Processing Service to the Customer on a
state-by-state basis either "With Inquiry" or "Without Inquiry" at the
appropriate rates and charges set forth in I.J.6. (Rates and Charges). See II.F.
(Without Inquiry), and III.B. (With Inquiry) for details on Inquiry services.
2. PURCHASE OF ACCOUNTS RECEIVABLE (PAR)
The Company will purchase the Customer's accounts receivable of End
User amounts due for Customer services and charges billed by the Company,
through its Bill Processing Service, less amounts due which the Company cannot
bill and/or collect. The Company will purchase the Customer's accounts
receivable on a monthly basis. See II.D. (Purchase of Accounts Receivable) for
details.
3. MINIMUM SERVICE PERIOD REQUIREMENT
The minimum service period for which a Customer may purchase Bill
Processing Service is one (1) twelve (12) month calendar period.
4. CUSTOMER VOLUME ESTIMATES
See Addendum A of this Agreement for details on this subject.
5. AGE OF MESSAGE LIMITATION
The Customer will send the Company messages and charges with an age of
six (6) months or less for input into the Company's bill processing system. The
age of the message is based on the date the call was placed or the date the
charge was incurred by the End User. Any call older than six (6) months will be
returned to the Customer.
-49-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
6. CUSTOMER'S SERVICE(S)
The Customer will be responsible for all End User contact and arrangements
concerning the provision and maintenance of the Customer's Service(s), even if
the Customer purchases Bill Processing Service "With Inquiry". For example, the
Company will not, under this Agreement, handle End User complaints about the
Customer's network/service provision quality.
The Customer will be responsible for collecting all End User balances due
before any messages with associated charges are purchased from the Customer and
billed by the Company.
At the written request of the Customer, the Company may agree to perform
additional billing and collection functions for the Customer's Message Billing
Service(s) which will be reviewed on an ICB. These requests will be submitted
and reviewed in accordance with the Company's OBR procedures. See I.H. (Open
Billing Requests).
7. AUTHORIZATION TO DENY SERVICE
By signing this Agreement, the Customer grants the Company the right to
refuse service to its End Users for non-payment of any deniable
telecommunication service charges rendered by the Company in accordance with the
Company's state tariff.
-50-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE II. BILL PROCESSING SERVICE
PART C. CUSTOMER RATED MESSAGES
1. MESSAGE FORMAT, CONTENT AND DELIVERY
The Customer will complete all rating and assembling/editing functions and
provide the rated message detail in compliance with the Company's standard
format. The Company will provide the Customer the precise details of the
acceptable standard format and notify the Customer at least six (6) months
before any scheduled change to its standard format occurs.
The Company is responsible for posting and billing only those Customer
records in which the Customer has identified the Company End User account to be
billed.
The Customer will deliver its message detail for all Bill Processing
Services to the location specified by the Company and will retain a copy of the
message detail for at least ninety (90) calendar days. Failure of the Customer
to retain a copy for the required ninety (90) days will abrogate the Company's
liability as set forth in II.C.3. (Errors or Omissions) and II.C.4. (Lost or
Damaged Messages) following for lost or damaged message detail, End User billing
errors, and/or errors or omissions in printing and mailing.
The Customer or its agent may use either data-transfer; i.e.. magnetic
tape, cartridge tape, or diskette, or data transmission; i.e., NDM(TM) FTS(TM)
or CMDS, as its delivery method under the rates set forth in I.J.6. (Rates and
Charges) applying on a per record basis.
The Company will determine the End User bill format for the Customer
services and associated amounts due.
2. UNBILLABLES
Customer rated messages which the Company cannot bill to the designated End
User account will be either returned to the Customer or investigated by the
Company's Message Investigation Center (MIC), as appropriate. Upon completion of
the investigation, the billable messages will be posted to End User accounts,
and the unbillable messages will be handled in accordance with the Company's
procedures. Those unbillables returned to the Customer will be delivered in a
medium mutually agreed upon.
-51-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
3. ERRORS OR OMISSIONS
If the Customer discovers a Customer generated error, the Customer will
notify the Company in writing and the Company will handle the error on an ICB.
If the Company finds or is notified of an End User billing error, it will
mace every reasonable effort to correct the error and bill correctly within the
limits permitted by the laws of the state in which the service is provided. If
the error is caused by the Company, and the Company cannot correct the billing
error in a timely manner, the extent of the Company's liability for damages will
be only the known amount misbilled or, when the amount misbilled is unknown,
limited as set forth in II.C.1. (Message Format, Content and Delivery) preceding
and II.C.4.b. (Lost or Damaged Messages) following.
If the error is caused by information or directions provided by the
Customer, the Customer will be liable for all appropriate charges for Bill
Processing Service, as set forth in I.J.S. (Rates and Charges - OBRs) and
I.J.6. (Rates and Charges - Bill Processing Service) and Addendum A, and for
any other costs and expenses incurred by the Company to correct the error.
4. LOST OR DAMAGED MESSAGES
a) If the Company loses or damages the Customer's Rated Messages or
incurs bill processing system outages, the Company will attempt to
recover the lost Customer messages. If the Customer messages can be
recovered, they will be re-processed and serviced as usual. If the lost
Customer messages cannot be recovered, the Customer will be requested
to re-submit the messages. If the Customer can re-submit, the recovered
Customer message will be billed. Any recovered Customer messages
subsequently billed, for which the Customer received a credit
adjustment under paragraph b) below, will be excluded from the
Customer's amounts due. If the Customer cannot re-submit the messages,
the extent of the Company's liability for damages will be limited as
set forth in II.C.4.b. following.
b) The Company's liability for lost or damaged Customer Rated Messages,
including the situations given in IV.3. and II.4.a). above, is as
follows:
If the Company loses or damages the Customer's Rated Messages in any
way, including, but not limited to, bill processing system outages, the
extent of the Company's liability for damages will be limited to the
granting of a corresponding credit adjustment, less the estimated B&C
charges.
-52-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
5. APPLICATION OF RATES AND CHARGES
The Bill Processing Service Per Message and Per Bill rates and their
application are described in detail in Addendum A of this Agreement. See Billing
Information Service, III. D., for the provision, by either data transfer or data
transmission, of the Company's custom reports; i.e., Unbillables,
Uncollectibles, and Post Billing Adjustments.
-53-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE II. BILL PROCESSING SERVICE
PART D. PURCHASE OF ACCOUNTS RECEIVABLE (PAR)
The Company will purchase the Customer's accounts receivable files of rated
messages, less the amounts which the Company cannot bill and/or collect, as set
forth herein. The Company's obligation to purchase the Customer's accounts
receivable will be limited to End User amounts due for Customer services and
charges billed by the Company through its Bill Processing Service. The Company
will purchase the Customer's accounts receivables only on a monthly basis,
whether the Customer uses data transfer or data transmission for file delivery.
With the signing of this Agreement, and once the Customer's Bill Processing
Service is implemented and the Company is purchasing the Customer's accounts
receivable, the Customer is prohibited from assigning, transferring, selling,
exchanging, or giving these accounts receivable to any other entity or person.
See I.B.1. (limitations on Assignment and Transfer).
The amounts due the Customer for the purchase of its accounts receivable
will be determined as follows:
1. TRANSMITTED REVENUE
The Customer revenue received from the first through the end of the month
by the Company's Message Switching System (MSS) and/or CMDS will represent the
accounts receivable to be purchased by the Company. Transmitted revenues also
include any messages re-billed by the Company for each settlement period.
Customer Category 41 credits will reduce the total amount of transmitted
revenue.
2. TAXES
For each settlement period, the Company will determine the billed taxes
associated with the Customer's billed messages. The tax amount will, generally,
increase the amounts due the Customer on the Purchase of Accounts Receivable
Statement (PARS).
3. RECOURSE
The following three (3) Company recourse categories will, generally,
decrease the amounts due the Customer for the purchase of accounts receivable.
The full amount due, including associated taxes for unbillable amounts and/or
uncollectible End User charges, will be recoursed back to the Customer:
-54-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
a) Unbillables
From the first through the twenty-ninth bill period, the Company will
determine the Customer's amount of unbillable revenues excluding taxes.
b) Post Billing Adjustments (PBAs)
PBAs represent adjustments posted on live and final accounts. PBAs,
which appear on the PARS as "Adjustments," are actual revenue plus any
applicable taxes. There are multiple types of adjustments. The following
are examples of PBAs but are not all inclusive:
. Service fault adjustments resulting in a billing error.
. Adjustments to satisfy the End User.
. Recourse adjustments are non-deniable; for example, 900 adjustments,
or situations where the End User is disputing charges with the
Customer who is doing the Inquiry.
End User adjustments may be initiated by either the Customer or the
Company. On the Customer's PARS, these adjustments are representative of
a journal month.
For more information on Post Billing Adjustments see II.E.2. (End User
Account Management), II.F.2. (Without Inquiry) and III.B.2. (With
Inquiry) following.
c) Bad Debt
(i) Bad Debt Allowance
Bad Debt Allowance is the Company's estimated amount of Customer
bad debt. It is based on the given journal month of the Customer's
billed revenue multiplied by a Bad Debt Factor. See II.D.5.
(True-up) below for more information on the Bad Debt Factor. The
calculated Bad Debt Allowance will, generally, decrease the
amounts due the Customer for the purchase of its account
receivable.
(ii) Band Debt Allowance Reserve
Bad Debt Allowance Reserve is an amount withheld by the Company
from the Customer's PAR Settlement for the first nine (9) months
of live interstate End User billing which will be retained by the
Company up to twelve (12) months after the termination of this
Agreement to assure all outstanding bad debt
-55-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
true-up amounts are paid. See I.D.2. (Company Service Security
Requirements) for details on this subject.
(iii) Net Bad Debt
The Customer's Net Bad Debt also referred to as "Realized bad
debt," is made up of the net two parts:
(1) Actual write-offs of End User amounts due that have been
removed from the Company's books after standard collection
efforts are completed.
(2) Recoveries on previously written off End User amounts due. A
recovery is a payment made on an End User account previously
removed from the Company books.
Certain types of services/revenues for a Customer are directly written
off to the Customer as they become realized. No allowance is charged up
front against the Customer's accounts receivable. Direct write-offs are
not part of the quarterly true-up process. An example of a direct write-
off is tax. Taxes associated with net bad debt are reported on the PARS
and recoursed to the Customer when realized; i.e., the month in which
the revenue is written off or recovered.
4. TRUE-UP
True-up is a quarterly process performed by the Company to determine
the True-up Amount due from the previous three (3) month period. It is also used
to calculate a new Customer Bad Debt Factor for the next three (3) month period.
True-up Amount - Determined by calculating the difference between the
estimated Bad Debt Allowance charged on the PARS during the True-up
period and the Customer's calculated realized bad debt for the same
period.
Bad Debt Factor - Determined by dividing the calculated realized bad debt
by the Customer's billed revenue for the true-up period. This factor is
then used to calculate the Bad Debt Allowance on the PARS during the
next three (3) months.
Before any true-up process begins, the Bad Debt Allowance Reserve is
accumulated for the first nine (9) months of live interstate End User billing.
If the ending of the nine (9) month period coincides with a regularly scheduled
true-up period, the bad debt which occurred in the nine (9) month period will be
due the Company. However, if the nine (9) month period does not coincide with a
---
normal true-up period, the reserve
-56-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
factor will continue to be applied until the occurrence of the next true-up
period. At that time, a true up of the realized bad debt to-date and any
allowance calculated after the initial nine (9) month period will be performed.
Following the completion of the initial true-up, all subsequent
true-ups will be performed at three (3) month intervals. These true-ups will be
performed during the month following the end of each calendar quarter as shown
below:
True-up Months True-up
period Included Month
------- --------- --------
First Jan, Feb, Mar April
Second Apr, May, Jun July
Third Jul, Aug, Sep October
Fourth Oct, Nov, Dec January
The True-up Amount will be reported on the Special True-up PARS for the
month following the true-up month shown above.
The Bad Debt Factor developed in the true-up will be used on the PARS
starting with the month following the true-up month shown above.
5. SETTLEMENT
Settlements with the Customer will occur once a month as set forth in
5.a) through 5.d) following:
a) Determination of Settlement Due Date
The settlement due date for the aggregated purchase of the accounts
receivable will be determined by adding the average Customer payment
availability period (in days) to the averaged bill date of the file
receipt purchases. The average Customer payment availability period
will be determined annually when the Company performs the monthly lag
study. The average bill date will be determined by adding fifteen (15)
calendar days to the date the file of End User messages is received
from the Customer. Except as provided herein, the Company will remit
settlement to the Customer on said settlement due date. The Category
41 negative revenue included in the transmittal revenue amount will
not be used by the Company when calculating the settlement due date.
Payments due to the Customer for settlement which do not exceed
$100,000 will be made either by electronic funds transfer or by other
means of transferring funds, by check or by draft postmarked two (2)
days
-57-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
before the settlement due date. Payments exceeding S100,000 will be
made only by electronic funds transfer.
Should the settlement due date fall on a Saturday, Sunday, or holiday
when the Company is prohibited by the local banks or the Federal
Reserve Bank from making payment by electronic funds transfer, the
settlement due date is as follows:
If such settlement due date falls on a Sunday or a Monday on which
a payment cannot be made as described above, the settlement due
date will be the first business day following the Sunday or
Monday.
If such settlement due date falls on a Saturday, Tuesday,
Wednesday, Thursday, or Friday on which payment cannot be made as
described above, the settlement due date will be the last business
day before the given Saturday, or holiday.
If the settlement due date falls before the twelfth (12th) business
day of the month, the settlement due date for the net amount due to
the Customer will not be until the twelfth (12th) business day.
b) Late Payment Penalty
If any portion of the net settlement amount payment is not received by
the Customer on the settlement due date, as set forth in 6.a) above,
or if any portion of the payment funds are not immediately available
to the Customer, then a late payment penalty may be due to the
Customer by the Company. The late payment penalty may be applied to
the portion of the payment not received by the settlement due date
times a late payment penalty factor, as set forth in I.J.4. (Rates and
Charges) and paid on a subsequent PARS due to the Customer.
c) Disputes/Claims and Resolution
In the event of a settlement dispute, the Customer must submit to the
Company a documented claim in writing for the disputed amount. The
Customer will submit any dispute promptly so that the information
relevant for the investigation of the dispute is attainable for both
the Customer and the Company. The Customer and the Company will use
best efforts to resolve the dispute. The responsibilities of the
Customer and the Company are as follows:
-58-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
(i) Dispute date and documentation
The dispute date is the date on which the Company receives from
the Customer a documented claim in writing. Such documentation
must include, at a minimum, but is not limited to:
- The nature of the dispute, including the basis for the
customer's belief that the settlement is incorrect.
- The amount of money in dispute identified by each category;
i.e., Adjustments, Unbillables, Taxes, etc.
- The report month and state(s) of the settlement in dispute.
- Applicable transmission dates and obligation IDs.
If additional information from the Customer is necessary to
resolve the dispute, the Company will request this information.
This request will not affect the established dispute date if the
Customer meets the written documentation requirements stated
herein.
(ii) Resolution of dispute
If the dispute is received by the Company and resolved before or
on the settlement due date, no interest or late payment penalty
will apply to the disputed amount.
If after investigation of the dispute, the settlement is found
by the Company to be correct, the parties will consider the
dispute settled.
If the settlement amount is found to be incorrect, the dispute
will be settled as follows. If a credit is due the Customer, the
amount due, plus any late payment penalty and less any amounts
---- ----
withheld by the Customer during the dispute, will be credited to
the Customer's settlement account. The Company will place the
adjustment on a subsequent settlement, and the adjustment will
be for the amount documented in the Company's findings. If a
payment is due the Company from the Customer, the Customer will
pay the amount due plus any interest payment as set forth in
I.J.4. (Rates and Charges).
- 59 -
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
d) Accuracy of Data
The Company will make every reasonable effort to assure the
accuracy of the Customer's PARS. At such time a change is
required, the Company will make the necessary adjustment on a
subsequent PARS. If the Company discovers a necessary correction,
and such discovery is not associated with any written inquiry by
the Customer, no interest payment applies .
-60-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE II. BILL PROCESSING SERVICE
PART E. END USER ACCOUNT MANAGEMENT
1. SERVICE DEPOSITS
. The Company may collect and maintain a service deposit for each End User
account, when necessary, in accordance with its service deposit conditions.
This deposit may be required when the End User is establishing an account
with the Company for the first time or when the first Customer message is
posted to the End User account.
Consequently, service deposits will not be maintained by individual
Customer accounts, but wiU be maintained for the End User account in
general.
. The Customer will notify its End Users, through its tariffs or by other
means, that the Company will, when necessary and in accordance with the
Company's service deposit conditions, determine and collect service
deposits for the Customer's service(s). The Customer will also include this
policy in its service arrangements, and obtain regulatory concurrence for
the Company to use its deposit conditions to determine and collect End User
service deposits.
. Upon written request to the Company, the Customer may obtain a copy of the
Company's service deposit conditions.
2. POST BILLING ADJUSTMENTS
Whether the Customer elects BiU King Service "With Inquiry" or "Without
Inquiry", the Customer may initiate End User adjustments for its charga on
Company End User accounts by sending the Company a written Interexchange
Carrier/Bell Operating Company (IEC/BOC) memo. The Company will provide the
Customer operating procedures for processing these adjustments, including the
detail information required from the Customer. Examples of the details required
are: the Customer message(s) being credited, the End User account number to
which the messages were billed, the End User billing name, the date the Customer
message(s) was billed by the Company, and the amount of the credit. These
adjustments will be received and processed by the Company in accordance with
II.D.3. (PAR), II.E.3. Most Biding Message Investigation Service) and II.E.4.
(End User Account Activity) at applicable rates set forth in I.J.6. (Rates and
Charges).
The Company will determine the format of the Customer IEC/BOC memo and will
provide it to the Customer.
-61-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
8. DISPUTES
The Company will not become involved in disputes between the Customer and
its End User. Consequently, using guidelines and tariffs established for
collecting and handling disputes of its own accounts, the Company may remove a
disputed Customer's charge from an End User's account and deduct that amount
from the Customer's accounts receivable. It will then be the Customer's
responsibility to pursue the collection of that account.
When the Customer orders Bill Processing Service wWithout Inquiry," the
Company will promptly notify the Customer, via an IEC/BOC memo,when the Company
becoma aware of an End User dispute. The Customer has thirty-five (35) calendar
days to resolve the End User dispute. The resolution must be in accordance with
the Company's operating standards and the appropriate regulatory agencies'
rules. If the Customer fails to resolve the dispute within the thirty-five (35)
calendar day time frame, the Company will recourse the disputed charga to the
Customer.
Any charga identified as fraud under the Company's procedural definition
will be recoursed to the Customer.
The Customer will indemnify and hold the Company harmless for any and all
damages and expenses arising from the recourse of End User disputed charges.
-64-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE II. BILL PROCESSING SERVICE
PART F. WITHOUT INQUIRY
1. GENERAL DESCRIPTION
"Without Inquiry," the Customer's contact number will be printed on the End
User's bill page. If the Company representative receives a misdirected End User
inquiry, the End User will be referred directly to the Customer. These End User
inquiries, which will be referred to the Customer, include:
. toll claims and adjustments
. rate information
. Customer promotions
. Customer gift certificates
. request for PINs or authonzation code
. request for re bills outside Company area
. request for direct billing by the Customa
. recording problems,; i.e. quations date, time, from number, etc.
The Customer will be responsible to provide the Company with the telephone
number(s) and address where End Users are to be referred, and to notify its End
Users through its tariffs or other appropriate means that the Customer is
handling bill inquines.
The Company will notify the Customer when there is a dispute with an End
User's account. See II.E.8. (Disputes) for Customa obligations.
2. POST BILLING ADJUSTMENTS
See "Post Billing Adjustments" II.D.3.b. (PAR), II.E.2. and II.E.3. (End
User Account Management) for this subject.
3. POST BILLING MESSAGE INVESTIGATION SERVICE
When the Customer purchases Bill Processing Service Without Inquiry", it
may also purchase post Billing Message Investigation Service from the Company
for the same state area(s) and time period in which Bill Processing Service is
being provided at additional rates set forth in IJ.6. (Rates and Charges).
With this service, the Company reviews adjusted End User messages to
identify unauthorized use of the Customer's service(s) and/or determine proper
billing.
-65-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
4. INVESTIGATION OF BILL CHARGES
When the Customer purchases Bill Processing Sevice wWithout Inquiry," it
may also purchase Investigation of Bill Charges from the Company for the same
-----------------------------
state area(s) and time period in which Bill Processing Service is being provided
at the additional rate set forth in IJ.6. (Rates and Charges).
This service includes the provision of information about the Customer's End
User's charges and deposits where the Customer information can be obtained by
the Company; i.e., the Company doa not have Customer, Name, and Address (CNA)
information for called parties outside the state operating territory.
It also includes the provision of an additional copy of the Customer's End
User's bill and the address to which the bill was sent. It does not include the
CNA of the called party and/or a non-billed calling party, nor does it include
activities or responses on charges removed from the bill at the Customer's
request.
-66-
July 1993
<PAGE>
EXHIBlT A
of the
Billing and Collection Services Operating Contract
MODULE II. BILL PROCESSING SERVICE
PART G. ORDERING BILL PROCESSING SERVICE
1. INITIAL SERVICE ORDER
The Customer may order Bill Processing Service by submitting an OBR, as set
forth in I.H. (Open Billing Requests). The Service Establishment Charge and Bill
---------------------------- ----
Processing Program Development Charges set forth in IJ.1. (Rates and Charges)
- --------------------------------------
will apply to all Bill Processing Services except establishment of or change to
End User Account data, including calling card data, andlor balances due. These
services are ordered under End User Account Activity Service.
---------------------------------
At the same time the Customer orders Bill Processing Service, it can also
order wWith Inquiry", described in III.B. (Optional Message Billing Services),
and II.E.4. (End User Account Activity). These services can be ordered for the
same state operating areas and time period that Bill Processing Service is
ordered under the terrns and conditions set forth in this Agreement.
Upon acceptance of these Customer orders, the Company will determine the
conditions and the period of time required to implement on an ICB.
2. CHANGES
The Customer may request a change to its pending initial service order by
submitting an OBR as set forth in I.H. (Open BIlling Requests), and the Company
will make every reasonable effort to accommodate it. When the change can be
accommodated, the Customer will pay the cost incurred by the Company for the
change. The Customa will also grant the Company a new service effective date
when deemed necessary by the Company to accommodate such a change.
3. CANCELLATIONS
The Customer may cancel any pending Bill Processing Service order on any
date before the service effective date. The cancellation date will be the date
the Company receives written or verbal notice from the Customer that its order
is cancelled. If verbal notice is given, it must be followed with written
confirmation within ten (10) calendar days.
When the Customer cancels a service order, it agrees to pay the Company for
any program and non-program development completed, and any non-recoverable costs
and expenses incurred by the Company up to the cancellation date. This
requirement is also addressed in I.H. (Open Billing Requests).
-67-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
TABLE OF CONTENTS
for
MODULE II. OPTIONAL MESSAGE BILLING SERVICES
PART PAGE
A. GENERAL DESCRIPTION................................................ 69
B. WITH INQUIRY....................................................... 70
1. General Description
2. Post Billing Adjustments
3. Post Billing Message Investigation Service and
Investigation of Bill Charges
C. END USER BILL SERVICES............................................. 72
1. Customer Gift Certificates
2. Marketing Messages
D. BILLING INFORMATION SERVICES....................................... 75
1. General Description
2. Custom Reports
3. File Interrogation
4. Service Requirements
a) Proprietary Information
b) Limitations
c) Liability
d) Re-creates
e) End User Contacts and Inquiries
f) Application of Rates and Charges
5. Ordering Services
a) Initial Service Order
b) Changes
c) Cancellations
E. BILLING ANALYSIS/FRAUD SERVICE..................................... 81
-68-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collectdon Services Operating Contract
MODULE III. OPTIONAL MESSAGE BILLING SERVICES
PART A. GENERAL DESCRIPTION
A Message Billing Service Customa may order the services contained herein
under the terms and conditions set forth in Module I., Gensal Provisions, which
includes the applicable rates and charges, Module II., Bill Processing Service,
and this Module.
Module II., Bill Processing Service, contains details on all services and
subjects that are standard to Bill Processing.
This module contains services that are optdonal for the Customa. Some are
ordered for the same states and time periods for which Bill Processing Service
is ordered, others may be ordered on a case-by-case basis.
-69-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE III. OPTIONAL MESSAGE BILLING SERVICES
PART B. WITH INQUIRY
1. GENERAL DISCUSSION
With Inquiry, the Company's contact number will be printed on the End
User's bill page. The Company will handle the following functions on behalf of
the Customer, as set forth in (1) through (5) below, with the exception of
specific toll claims and adjustments noted in (3). These functions will be
performed in accordance with Company procedures.
(1) The Company will serve as the End User's initial point of contact for
the purposes of:
. obtaining the information/clarification on payment and billed
amounts due the Company;
. making payment arrangements on amounts due; and
. obtaining credit or adjustments on charges billed.
(2) The Company representative will receive and answer End User questions
concerning the Customer's charges billed and the following types of
inquiries:
. End User duplicate bill requests;
. payment arrangements
. balance due inquiries, except for any balance due before the
Company began billing;
. call details;
. refusal to pay tax;
. disability services; and
. account profile updates.
(3) The Company representative will apply the same procedures as it does to
Company charges for handling the following types of End User toll
claims and adjustments to Customer charges, with specific exceptions
noted in the next path:
o call not complete;
o cut off;
o denies all
o knowledge;
o duplicate calls;
o fraud;
-70-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
. incorrect timing;
. poor transmission;
. request for call details;
. request for
. re-bills within Company area;
. wrong number reached;
. and international calls,
. except Deny All Knowledge (DAK).
The following specific claims/questions will not be handled by the
Company, but will be referred to the Customer for handling:
. balances due before the Company billed;
. rate inforrnation;
. Customer promotions;
. Customer gift certificates;
. request for PINs or authorization codes;
. requesh for
. re-bills outside the Company area;
. request for direct billing by the Customer;
. recording problems; i.e., questions date, time, from number, etc.);
. questions regarding charges directly billed by the Customer;
. request for dialing instructions; and
. international call DAKs.
(4) The Company will not become involved in disputes between a Customer
and its End Users. See II.E.8. (Disputes) for Customer obligations.
2. POST BILLING ADJUSTMENTS
See "Post Billing Adjustments" II.D.3. (PAR) and II.E.2. (End User Account
Management) for this subject.
3. POST B1LIING MESSAGE INVESTIGATION SERVICES AND
INVESTIGATION OF ALL CHARGES
"With Inquiry", the services of Post Billing Message Investigation Service
------------------------------------------
and Investigation of Bill Charges are provided to the Customer as part of its
- ---------------------------------
Bill Processing Service Message-Billed Inquiry rate set forth in IJ.6. (Rates
and Charges). These services will be provided for the same state area (s) and
time period in which Bill Processing Service "With Inquiry" is ordered. See
II.E.3. (End User Account Management) and II.F.3. and II.F.4. (Without Inquiry)
for more information on these services.
-71-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE III. OPTIONAL MESSAGE BILLING SERVICES
PART C. END USER BILL SERVICES
1. CUSTOMER GIFT CERTIFICATES
The Customer agrees to immediately redeem all Customer gift certificates
which the Company has accepted from its End Users for payment of Customer
charges. If the Customer fails to redeem the gift certificates, the value of the
unredeemed certificates will be deducted from the Customer's PARS.
The Customer will make the gift certificates payable to both the End User
and the Company.
At least thirty (30) calendar days before the gift certificates will be
published, the Customer and Company will jointly review the gift certificate's
format, content, and image, and the process for redemption. The Customer will
not publish the certificates until it has received written concurrence from the
Company.
2. MARKETING MESSAGES
With Bill Processing Service, the Company provides two types of
Customer-provided Marketing Message offerings:
. a Standard Message which is printed on the last page of the Customer's
End User bin pages; and
. a Separate Message which is printed on a Customer End User bill page.
The Customer's request for dither type of marketing message will be made in
writing. The Company will print a Customer-provided Marketing Message on the
Customer's page of the End User's bin under the following terms and conditions.
. The Marketing Message may contain promotional, informational or legally
required communication from the Customer.
. The Company will use standard print characteristics and spacing when
printing the Customer's Marketing Message.
. The products or services advertised will comply with requirements
mutually agreed upon by both parties in writing. The Company reserves
the right, within the time periods set forth herein, to reject any
Marketing Message which, in the Company's opinion, does not conform to
Company requirements. Before rejection of any Customer Marketing
Message, the
-72-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
Company will notify the Customer of the reason for the rejection.
. At least one (1) calendar month before the requested month for
printing, the Customer will provide the Company with the proposed text
and selection criteria as described in the paragraph below.
. The following selection criteria is available for Standard and Separate
Page Marketing Messages:
- * Accounts where the Customer is the Primary
Interexchange Carrier (PIC);
- * Accounts not PIC'd to the Customer but
with Customer charges in the current bill month;
- Service Class (Business/Residence); and
- RAO.
- Selected Call Types;
- Amounts of Toll Usage.
* For multi-line accounts the PIC for the Master Billing Number
will be used.
If an End User qualifies for more than one Marketing Message, the first
Marketing Message requested for the given month will be printed.
. The Company will use best efforts to notify the Customer of approval or
requested revision(s) within five (5) business days after receipt of
the Customer's request. A proof of the approved Marketing Message will
be provided to the Customer within five (5) business days of text
approval.
. The Customer will notify the Company by no later than five (5) business
days before the requested month for printing if they do not approve the
Company's Marketing Message "proof". If notification is not received,
the Company assumes that the Customer approves the text.
. The Company will use best efforts to accommodate an accelerated time
frame for acceptance of a Customer Marketing Message.
. When the acceleration time frame is for any type of Marketing
Message, other than a regulatory agency mandate, or is for a revision
to a submitted Marketing Message and the Company can accommodate, the
Customer agrees to pay the Expedited Marketing Message Charge set forth
----------------------------------
in IJ.6. (Rates and Charges). When the acceleration is due to a mandate
by a regulatory agency on an exception basis and the Company can
accommodate, the Expedited Marketing Message Charge set forth in IJ.6.
----------------------------------
(Rates and Charges) will not apply.
-73-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
. A Standard Marketing Message, at the rate set forth in I.J.6. (Rates
and Charges), can be up to eight (8) lines long. Each line can have up
to sixty (60) character spaces. If space is available on the last page
of the Customer's End User bill pages in the messages section, a
Standard Marketing Message will be printed. If the entire Standard
message cannot be printed on this page, it will be printed in its
entirety on the next page.
. A Separate Page Message can be up to thirty-one (31) lines long. Each
line can have up to sixty (60) character spaces. It will always be
printed on a separate bill page at the rate set forth in IJ.6. (Rates
and Charges).
. All information submitted to the Company for the Customer's Marketing
Message(s) is confidential to the Customer and will be treated by the
Company in a manner consistent with the Non-Disclosure Agreement which
is a part of this Contract.
. When Marketing Messages are requested, the Customer agrees to purchase
the following minimum number of messages per month.
- Standard Messages 3,000 per state
- Separate Page Messages l,5OO per state
. The Customer will be charged for all Marketing Messages after the
service has been provided. The charges will be included in the
Customer's B&C bill.
-74-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE III. OPTIONAL MESSAGE BILLING SERVICES
PART D. BILLING INFORMATION SERVICES
1. GENERAL DISCUSSION
A Message Billing Service Customer may also order Billing Information
Services under the terms and conditions set forth in Module I. (General
Provisions), which includes the rates and charges for Billing Information
Services in IJ.8., and this Part.
Billing Information Services provide the Customer with Company End User
message detail and/or account detail information from its record systems,
billing files, and account data base.
. Message detail includes message-billed records in EMI format.
--------------
. Account detail includes End User name, billing address and/or billing
--------------
parameters other than message detail.
. Information is any entry in the Company's records or data base.
-----------
The Company will provide the Customer such information dither via a Custom
Report and/or File Interrogation on a per request basis. The information
provided to the Customa will be limited exclusively to the Customer's End User
services and to information not listed as confidential and proprietary to the
Company.
2. CUSTOM REPORTS
Custom Reports may be a paper printout or a data file of mechanized EMI
records. Mechanized EMI records will be provided to the Customer by either data
transfer or data transmission.
Examples of paper reports are:
. 9399-E: Unbillable;
. 3112: Uncollectible; and
. 0826: Post Billing Adjustment.
Examples of mechanized Custom Reports are:
. Unbillable EMI records;
. Uncollectible EMI Category 46 records; and
. Post Billing Adjustment EMI Category 45 records.
For both paper and mechanized Custom Reports, the frequency of such reports
will be mutually agreeable to both parties. The content and format will be
determined by the Company.
-75-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
The Program Development rates and OBR charges as set forth in IJ.S. (Rates
and Charges) apply for the hours required to design, develop, test and establish
the necessary programs and data files to create and provide the reports. The
recurnng rate(s) and charge(s) for processing and delivering each Custom Report
will be determined on an ICB.
Paper printouts and fiche will be sent to the Customer via first class U.S.
Mail seneice. The Company will provide magnetic tapes without the return of
previously supplied tapes and will send each tape to the Customer via an
overnight courier service selected by the Company. At the option of the
Customer, the Customer or its representative may pick up the paper printout,
magnetic tape or fiche at a location designated by the Company.
3. FILE INTERROGATION
The Company will develop and provide the Customer End User information on
an interrogation basis if:
. Company facilities are available;
. The Company agrees to the specific information to be accessed as well
as the methods and procedures;
. The Customer's terminals used to interrogate the Company data bases and
files are compatible with Company equipment and software;
. The Customer furnishes the Company all information necessary for the
Company to establish an interrogation program;
. The Customer adheres to Company computer security conditions;
. The Customer and Company complete successful testing before sending
live data;
. The Customer furnishes the Company with an estimate of the number of
requests per business day that the Company data bases and files will be
asked to handle;
. The Customer identifies the data processing terminals authorized to
receive the information and the authorized Customer personnel who will
be responsible for all terminal activities; and
. The Company provides the format for interrogation of its data files,
and for any paper printout, magnetic tape, fiche, or data transmission
output from its files.
The File Interrogation will be provided during normal Company business
hours, and updated each bill day to reflect the available current End User
information. The Customer will access this data file by furnishing the End
User's telephone number. After the Company verifies the Customer's
authorization, the Customer will receive the End User information.
-76-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
The Customer agrees to pay the Company to design, develop, test and
maintain the necessary retrieval and interrogation programs for the Customer's
information order based on mutually agreeable specifications. The Program
Development rates and OBR charges set forth in I.J.S. (Rates and Charges) apply.
4. SERVICE REQUIREMENTS
a) Proprietary Information
The information provided to the Customer will be limited exclusively
to the Customer's End User services and to information not listed as
confidential and proprietary to the Company or to the Customer.
Company End User message detail and/or account detail which is
confidential and proprietary due to legal, national security, End
User, and/or other appropriate requirements will not be provided to
the Customer. If the Customer requires this information in order to
bill its services, it may secure written permission from the End User
and provide this written permission to the Company for the Company to
release its information.
b) Limitations
The Customer will not publicize or represent to others that the
Company jointly participates with the Customer in the development of
its End User records, accounts, data bases or market data, records,
files and data bases or other systems it assembles through the use of
Billing Information Services.
c) Liability
The Customer will indemnify and hold the Company harmless for any and
all claims and damages arising from the Customer's failure to maintain
confidentiality of any previously mentioned detail or information, or
failure to use the information for strictly legitimate business
purposes.
-77-
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
d) Re-creates
If the Customer requests the Company to re-supply information, or a
Custom Report(s) previously provided, and if such request arises
from incorrect Customer specifications or errors, the Company will
make every effort to re-create and supply. When the Company can
re-supply, the Customer will pay the cost incurred by the Company
to process and provide the information. These costs will be
determined on an ICB.
e) End User Contacts and Inquiries
The Customer will be responsible for all contacts and inquiries
from its End Users concerning Billing Information Services.
f) Application of Rates and Changes
Records, as defined in the Glossary of this Exhibit, are used to
process the information, print the paper printout, data transfer,
and/or data transmit the detail.
For each service and type of output ordered, the Company will
determine the number of records processed to prepare the output.
The number of records processed will be determined using the number
of records input to, or the number of records output from, the
programs that process the information, print the paper output and
load the magnetic tape or send the data file, whichever number of
records is higher. The Company will use this total number to
calculate the total charges for Billing Information Services to be
billed the Customer.
The specific per record, per report, per magnetic tape, per
microfiche, and per data transmitted record rates and charges will
be determined on an ICB. The application of the rates and charges
will be as follows:
o The per record rate applies per record entered on the Company's
data file or magnetic tape;
o The per report charge applies per report processed and sent to
the Customer
o The per magnetic tape charge applies for each tape prepared;
o The per microfiche rate applies per fiche prepared;
o The per data file charge may apply per data file re-created,
independent of the delivery media selected.
- 78 -
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
5. ORDERING SERVICES
a) Initial Service Order
The Customer may order Billing Information Services by submitting an
OBR as set forth in I.H. (Open Billing Requests) to the Company. The
Customer will order one (1) service; i.e., Custom Report and/or File
Interrogation per OBR and will provide within the initial
correspondence of each OBR the following details:
o The specifications for the Custom Report or File Interrogation;
o The specific states in the Company's operating territory where it
wishes to receive service(s);
o How often the Customer wishes each service to be provided;
o The authorized Customer personnel and address to receive the
Billing Information Services output; and
o The requested implementation date.
Upon acceptance of the Customer's Order for Billing Information
Services, the Company will bill the Customer the Service Establishment
Special Order Charge which will be determined on an ICB. The period of
time needed to implement such service will also be determined on an
ICB.
b) Changes
The Customer may request changes to its pending initial service order
by following the OBR procedures set forth in I.H. (Open Billing
Requests) and the Company will make every reasonable effort to
accommodate such request. The Customer will pay the cost incurred by
the Company for the change. When necessary, the Customer will also
grant the Company a new service effective date to accommodate such
change.
c) Cancellations
The Customer may cancel any pending Billing Information Services order
on any date before the service date. The cancellation date is the date
the Company receives written or verbal notice from the Customer that
the Order is to be cancelled. If verbal cancellation is given, it must
be followed by written confirmation within ten (10) calendar days. The
service date for a Billing Information Services is the date the
Company notifies the Customer that the Company is ready to provide
Billing Information Services Custom Reports or receive interrogation
requests.
- 79 -
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
When a Customer cancels an order for Billing Information Services
after the order date but prior to the start of service, the following
charges will apply:
o The appropriate per hour rate will apply for all work performed at
the ICB and/or tariff rate(s) up to the point of cancellation;
o Any expense for equipment obtained for the service will apply
where such equipment cannot be reused within six (6) months.
- 80 -
July 1993
<PAGE>
EXHIBIT A
of the
Billing and Collection Services Operating Contract
MODULE III. OPTIONAL MESSAGE BILLING SERVICES
PART E. BILLING ANALYSIS/FRAUD SERVICE
As information to the Customer, the Customer may gain assistance from the
Company in identifying and/or stopping toll billing evasion activities of the
Customer's service(s) through the Company's Billing Analysis/Fraud Service,
purchased under a separate Agreement. The Customer may purchase this service on
an individual account basis per occurrence; i.e., fraud security cases. Once
purchased, and at the request of the Customer in writing, the service can be
initiated by the Company's MIC to investigate an unbillable message for
unauthorized use.
Evasion activities fall into two major categories: Network abuse, which
involves deceiving the toll network in order to avoid billing; i.e., blue box
fraud, and Message toll abuse, which generally is the fraudulent use of an
authorization code or calling card. Billing Analysis/Fraud Service consists of
the following three activities:
o Detection: The provision of equipment by the Company to identify and
---------
collect information on Network abuse. Such equipment may be located on
the Company's premise or attached to access lines.
o Investigation: The provision of services such as identifying a suspect
-------------
telephone number, collecting sufficient evidence to document the billing
evasion activities, preparing an affidavit and prosecutive summary,
assisting law enforcement officials, providing expert witness analysis
and testimony, and reviewing a Customer's security program for
effectiveness.
o Deterrence: Actions such as contacting and interviewing parties
----------
identified in billing evasion activities, the recovery of devices or
materials used in billing evasion activities (where legally permitted),
and assistance in publicizing billing evasion deterrence.
- 81 -
July 1993
<PAGE>
ADDENDUM A
WITH VOLUME COMMITMENT
of the
Billing and Collection Service Operating Contract
The rates and charges for Billing Processing Per Message and Per Bill and
the terms applicable thereto are set forth in this Addendum A as an addition to
I.J.6. (Rates and Charges), II,C. (Bill Processing Service; Customer Rated
Messages) of Exhibit A:
I.J.6.A) RATES AND CHARGES - BILL PROCESSING SERVICE
1. PER MESSAGE RATE - CALCULATION AND MANAGEMENT
a) Percent of Business
(1) The appropriate Bill Processing Service Per Message rate for the
message volumes committed to herein are determined by: 1) the
number of interstate and intrastate message on the bill on which
the message appears; and 2) by the percent of the Customer's total
message volume which is billed by the Company as follows:
<TABLE>
<CAPTION>
Message Tiers Percent of Customer's Business (Messages)
------------- ----------------------------------------------------
Less than 50% 50-70% 70-90% More than 90%
<S> <C> <C> <C> <C>
1 - 10 msgs/bill x x x x
11 - 100 msgs/bill x x x x
101 + msgs/bill x x x x
</TABLE>
(2) The Customer will provide an annual estimate of the percent of its
total message volume which will be billed by the Company during a
Year. Said estimate will be provided within thirty (30) days of
the execution of this Agreement and, thereafter, no later than
thirty (30) days before the beginning of the next Year.
(3) The percent of the Customer's total message volume which is billed
by the Company, will be reported by the Customer to the Company.
It will be calculated based on the Customer's total message
volume which the Company has the capability of billing.
The formula will be:
Customer's Messages Billed By Company
---------------------------------------------------------------
Total Customer Messages Which Company Has Capability of Billing
b) Message Volume Commitment
1 July 1993
<PAGE>
(1) The Customer's message volume commitment is stated as a separate
commitment for each twelve (12) month period, commencing on the
effective date of this Agreement (hereinafter "Year"), as follows:
MO/DAY/YR- MO/DAY/YR- MO/DAY/YR- MO/DAY/YR- MO/DAY/YR-
MO/DAY/YR MO/DAY/YR MO/DAY/YR MO/DAY/YR MO/DAY/YR
- ---------- ---------- ---------- ---------- ---------
X X X X X
(2) All volume commitments will be met based on messages actually
billed.
(3) Both interstate and intrastate messages will be counted for
determining whether the Customer's volume message commitment has
been met.
(4) All message volumes which exceed the commitment level for that Year
will be carried forward to the following Year.
(5) If in any Year other than the final Year of the commitment the
number of actual messages billed is less than five percent (5%) of
the Customer's volume commitment set forth above, an additional
payment will apply as follows:
(message volume committment minus actual messages billed) X (the
11-100 message per bill rate at the appropriate percent of business)
If the actual message billed in the final Year is less than the
volume commitment for that Year, the same additional payment set
forth above will apply.
(6) If this Agreement or the Customers volume commitment is canceled
prior to termination, the discount for the volume commitment will no
longer apply. The Customer agrees to pay the then current (no volume
commitment discount) rates for any subsequent message billing.
Additionally, if this Agreement is canceled during the first two
Years of the commitment, the Customer will pay a penalty equal to
the interstate portion (based on the most recent three [3] months)
of the second Year message volume commitment times the committed
11-100 message Per Bill rate at the appropriate percent of business.
If the commitment is
2 July 1993
<PAGE>
canceled after the second Year, all messages billed up to the
cancellation of the commitment will be re-calculated at the non-
discounted message rate. The difference between the original
billed amount and the re-calculated (non-discounted) Per Message
rate will then be charged to the Customer and the Customer agrees
to pay such charges.
c) Audit Provisions
(1) The Company will have the right to audit the Customer's records as
set forth in (b) below to verify the percentage of message volume
reported by the Customer. If such an audit determines that the
percentage of message volume is different than that reported by
the Customer and if such difference would result in a different
rate to be charged per message according to the rates above, a
true-up of all messages billed up to the date of the completion of
the audit will be performed. Additionally, the current percentage
of business as determined by the audit will be applied for the
remainder of that Year. The Company retains the right to audit any
subsequent Year's records.
(2) Upon written notice by the Company to the Customer, the Company
will have the right, through its authorized representative, to
examine and audit, during normal business hours and at reasonable
intervals, all such records and accounts as may under recognized
accounting practices contain information bearing upon the percent
of the Customer's total message volume which is billed by the
Company. Adjustment will be made by the proper party to compensate
for any errors or omissions disclosed by such examination or
audit. Neither such right to examine and audit nor the right to
receive such adjustment will be affected by any statement to the
contrary, appearing on checks or otherwise, unless such statement
expressly waiving such right appears in a letter signed by the
authorized representative of the party having such right and
delivered to the other party.
Any information received or reviewed by the Company or its
authorized representative during the audit is to be considered
confidential and not to be distributed, provided or disclosed in
any form to anyone not involved in the audit, nor is such
information to be used for any other purpose.
3 July 1993
<PAGE>
Confidential Treatment Requested. The
redacted materia has been separately
filed with the Commission.
2. PER BILL RATE AND POSTAGE ESCALATOR
The Bill Processing Service Per Bill rate will be (*).
a) In the event of a postage increase for carner pre-sorted first
class mail up to one (1) ounce, the interstate Bin Posing Dice Per
Bin rate will be increased by an amount equal to (*) of the
postage increase, effective as of the effective date of such
postage increase. The Company will provide the Customer with
written notice of any increase in this bin rendering rate and the
effective date of such increase. The increased bill rendering rate
may be applied rectoactively as of the effective date of the
postage increase.
b) In the event the Customer acquires a camer which has a.billing and
collections agreement with the Company which includes a volume
commitment, the acquired carrier's volume commitment will be in
addition to the Customer's commitment hereunder. If the Customer
acquires a carrier which has a billing and collections agreement
with the Company which does not include a volume commitment, the
message for the acquired carrier will not count toward satisfying
the Custmer's volume commitment for the remainder of that Year or
for the following Year. Thusj for each month of the remainder of
the Year in which the camer is acquired, and for each month of the
next subsequent Year, the Customer and the Company agree that the
number of messaga equal to the acquired carrier's average monthly
messages (based on the preceding twdve months) billed by Company
will not count toward the Customer's volume commitment.
4
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
ADDENDUM A
of the
Billing and Collection Service Operating Contract
The rates and charges for Bill Processing Per Message and Per Bill, and the
terms applicable thereto, are set forth in this Addendum A as an addition to
IJ.6. (Rates and Charges) and II.C. (Bill Processing Service).
IJ.7. Rates and Charges - Bill Processing Service
a) Per Message Rate - Calculation and Management
. Percent of Business
The appropriate Bill Passing Service Per Message Rate
is determined by:
1) The number of interstate and intrastate messages on
the bill on which the message appears;
2) by the percent of the Customer's total message
volume which is bill by the Company; and
3) by the total number of messages bilk by the Company
on behalf of the Customer during each twelve (12)
month period beginning with the effective date of
this Agreement (hereinafter "Year") as follows:
Annual Message Percent of Business (Messages)
Volume (*) (*) (*) (*)
------ ---- ------ ------ ----
[S] [C] [C] [C] [C]
(*) msgs/bill
--------------
(*) $ (*) $ (*) $ (*) $ (*)
(*) (*) (*) (*) (*)
(*) (*) (*) (*) (*)
(*) (*) (*) (*) (*)
(*) msgs/bill
----------------
(*) (*) (*) (*) (*)
(*) (*) (*) (*) (*)
(*) (*) (*) (*) (*)
(*) msgs/bill
--------------
(*) (*) (*) (*) (*)
(*) (*) (*) (*) (*)
1 July 1993
<PAGE>
- The Customer will provide an annual estimate of the
percent of the Customer's total message volume which
will be billed by the Company during a Year. Said
estimate will be provided within thirty (30)
calendar days of the execution of this Agreement
and, thereafter, no later than thirty (30) calendar
days prior to the beginning of the next Year.
- The percent of the Customer's total message volume
which is billed by the Company will be reponed by
the Customer to the Company. It will be calculated
based on the Customer's total message volume which
the Company has the capability of billing.
The formula will be:
Customer's Messages Billed By Company
--------------------------------------
Total Customer Messages Which Company Has Capability
of Billing
. Message Volume E stimate
- The Customer will provide an estimate of the number
of combined messages which will be billed by the
Company for each Year. Said estimate will be
provided within thirty (30) calendar days of the
execution of this Agreement and, thereafter, no
later than thirty (30) calendar days prior to the
beginning of the next Year.
- Both interstate and intrastate messages will be
counted for determining whether the Customer's
volume message estimate has been met. Refer to II.I.
for details.
. Audit Provisions
- The Company will have the right to audit the
Customer's records-as set forth in the next
paragraph-to verify the percentage of message volume
reported by the Customer. If such an audit
determines that the percentage of message volume is
different than that reported by the Customer, and if
such difference would result in a different rate to
2 July 1993
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
be charged per message according to the rates above,
a true-up of all messages billed up to the date of
the completion of the audit will be performed.
Additionally, the current percentage of business, as
determined by the audit, will be applied for the
remainder of that Year. The Company retains the
right to audit any subsequent Year's records.
- Upon written notice by the Company to the Customer,
the Company will have the right, through its
authorized representative, to examine and audit,
during normal business hours and at reasonable
intervals, all such records and accounts as may,
under recognized accounting practices, contain
information bearing upon the percent of Customer's
total message volume which is billed by the Company.
Adjustment will be made by the proper party to
compensate for any errors or omissions disclosed by
such examination or audit. Neither such right to
examine and audit, nor the right to receive such
adjustment,will be affected by any statement to the
contrary, appearing on checks or otherwise, unless
such statement expressly waives such right. This
statement must appear in a letter signed by the
authorized representative of the party having such
right and must be delivered to the other party.
Any information received or reviewed by the Company
or its authorized representative during the audit is
to be considered confidential and not to be
distributed, provided or disclosed in any form to
anyone not involved in the audit, nor is such
information to be used for any other purpose.
b) Per Bill Rate and Postage Escalator
The Bill Processing Service Per Bill rate will be (*).
- In the event of a postage increase for carrier pre
sorted first class mail up to one (1) ounce, the
interstate Bill Processing Service Per Bill rate
will be increased by an amount equal to (*)
of the postage increase, effective as of the
effective date of such postage increase. The Company
will provide the Customa with written notice of any
increase in the bill rendering rate and the
effective
3 July 1993
<PAGE>
date of such increase. The increased bill rendering
rate may be applied retroactively as of the
effective date of the postage increase.
4 July 1993
<PAGE>
Pages where confidential treatment has been requested are stamped
"Confidential Treatment Requested. The redacted material has been
separately filed with the Commission." The redacted portions are
indicated by an "(*)".
EXHIBIT 10.7
AGREEMENT
BETWEEN
NEVADA BELL
AND
Telco Development Group of Delaware, Inc.
--------------------
FOR
BILLING AND COLLECTION SERVICE
"The parties acknowledge that this Agreement may contain information which is
commercially confidential and may be considered proprietary by either or both
parties, and agree to limit the distribution of the Agreement to those
individuals within each of their representative organizations with a legitimate
need to know the contents of hereof."
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
SECTION TITLE PAGE
- ------- ----- ----
<S> <C> <C>
1 Definitions 5
2 Term of Agreement 6
3 Term of Orders 6
4 Scope of Agreement 6
5 Amendments 7
6 Assignment 7
7 Confidentiality 9
8 Audit or Examination by Customer 10
9 Compliance with Laws 12
10 Governing Law 13
11 No Third Party Beneficiaries 13
12 Intellectual Property 13
13 Publicity 14
14 Limitation of Liability 14
15 Indemnification 15
16 Invoices and Payments 16
17 Disputed Invoices 17
18 Taxes Billed to Customer's End User 19
19 Termination 22
20 Cancellation of Orders 23
21 Modification of Orders 23
22 Notices 24
23 Remedies Cumulative 25
24 No Waivers 25
25 Survival 25
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS (CONT'D)
--------------------------
SECTION TITLE PAGE
- ------- ----- ----
<S> <C> <C>
26 Order of Precedence 26
27 Headings not Controlling 26
28 Severability 26
29 Force Majeure 27
30 Entire Agreement 28
</TABLE>
EXHIBITS
--------
ORDER FORMS
-----------
<TABLE>
<S> <C>
Exhibit 1 Recording Services
Order Form 1 - Recording
Exhibit 2 Message Processing
Order Form 2 - Message Processing
Exhibit 3 Bill Processing
Order Form 3 Bill Processing/900 Service
Order Form 3A
Sub-Carrier Identification
Exhibit 4 Billing Analysis
Order Form 4 Billing Analysis
Exhibit 5 Billing Information Service
Order Form 5 Billing Information
Order Form 5A Billing Name/Address
Exhibit 6 Rate Schedule
</TABLE>
- 3 -
<PAGE>
BILLING AND COLLECTION SERVICES AGREEMENT
-----------------------------------------
This Billing and Collection Services Agreement ("Agreement"), effective
, 199 , is between NEVADA BELL, a Nevada corporation ("Nevada"), and
- -------- --
Telco Development Group of Delaware, Inc. a Delaware corporation ("Customer").
- ----------------------- --------
R E C I T A L S
---------------
Nevada is currently providing intrastate Billing and Collection Services to
Customer pursuant to Schedule Nevada P.S.C.N. No. C Section 8 ("Intrastate
Tariff") and Interstate Billing and Collection Services pursuant to an agreement
for such services, effective , and each as currently in effect.
---------------
This Agreement shall supersede such existing interstate agreement with
respect to the subject matter thereof. The parties intend that this Agreement
shall control the provision of Billing and Collection Services covered under the
Intrastate Tariff, in the event that such services are detariffed.
The parties agree that this Agreement shall at all times be subject to such
changes or modifications as may, from time to time, be directed by the Federal
Communications Commission, the Public Service Commission of Nevada, or any other
duly constituted governmental entity with appropriate jurisdiction.
- 4 -
<PAGE>
1. DEFINITIONS
-----------
For the purposes of this Agreement, the following terms and all other terms
defined herein shall have the meanings so defined unless the context clearly
indicates otherwise. Terms defined in the singular or plural shall be
interchangeable when the context so indicates.
<TABLE>
<S> <C>
"Affiliates" - any corporation or other entity (a) owning, either
directly or indirectly, a majority of the out-
standing stock of Nevada or Customer ("Parent"),
(b) in which a majority of the ownership interest
is held, either directly or indirectly, by Parent
or Nevada or Customer.
"Billing and - services to be provided by Nevada to Customer
Collection Services" hereunder, as described in Exhibits attached
hereto, pursuant to Orders executed by Customer
for such services.
"Information" - specifications, drawings, sketches, models,
manuals, samples, tools, technical information and
other confidential business, customer or personnel
information or data, whether written, oral or
otherwise.
"Laws and Regulations" - individually and collectively, any applicable
federal or state domestic laws, ordinances, codes,
rules, regulations, orders, or requirements of all
duly constituted governmental authorities with
appropriate jurisdiction.
</TABLE>
- 5 -
<PAGE>
1. DEFINITIONS (Cont'd)
-----------
<TABLE>
<S> <C>
"Orders" - Orders executed hereunder for Billing and
Collection Services. Each such Order shall be
deemed to be a separate and independent agreement
between the Parties with respect to the subject
matter thereof, and shall incorporate all
provisions of this Agreement (including any
appendices, exhibits and other documents attached
hereto) as it may from time to time be amended.
</TABLE>
2. TERM OF AGREEMENT
-----------------
This Agreement shall become effective as of the date first written above
and, shall remain in full force and effect until terminated as provided for in
this Agreement.
3. TERM OF ORDERS
--------------
Orders executed hereunder shall become effective as provided in such Orders
and, shall remain in full force and effect until terminated as provided for in
this Agreement.
4. SCOPE OF AGREEMENT
------------------
(a) This Agreement anticipates the future execution of Orders hereunder
between Customer and Nevada for provision of Billing and Collection Services by
Nevada to Customer. Such services shall be provided as set forth in this
Agreement, including the applicable Order(s) and Exhibit(s) attached hereto.
- 6 -
<PAGE>
4. SCOPE OF AGREEMENT (Cont'd)
------------------
(b) Nevada reserves the right, commencing December, 1992 to modify the
rates for Billing and Collection Services contained in Exhibit 6 hereto on sixty
(60) days written notice to Customer; provided, however, Nevadans right, to
adjust the Bill Rendering rate upon any increase in the United States Postal
Service postage rates shall commence with the effective date of this Agreement.
5. AMENDMENTS
----------
No provision of this Agreement shall be deemed waived, amended, or modified
by either Party, unless such waiver, amendment or modification is in writing and
signed by the authorized representatives of both Parties.
6. ASSIGNMENT
----------
(a) Except as otherwise expressly provided in this Agreement, any
assignment by either Party of any right, obligation or duty, in whole or in
part, or any other interest hereunder, without the prior written consent of the
other Party
- 7 -
<PAGE>
6. ASSIGNMENT (Cont'd)
----------
shall be void, provided, however, that:
(1) Nevada may assign its rights and delegate its duties under
this Agreement, either in whole or in part, to (i) any present or future
Affiliate of Nevada or (ii) to any other company if such assignment will, in
Nevada's opinion, assist in the implementation of any Laws or Regulations issued
in any form whatsoever by any judicial or other governmental authority. Nevada
shall give Customer prior written notice of any such assignment. In the event of
any such assignment, Nevada shall be released and discharged, to the extent of
the assignment, from all obligations under this Agreement.
(2) Any attempted assignment or delegation in contravention of this
Subsection (a) shall be void and of no effect.
(b) Subject to the provisions of Subsection (a) above, this Agreement shall
inure to the benefit of the Parties hereto and be binding upon any respective
successors and assigns.
- 8 -
<PAGE>
7. CONFIDENTIALITY
---------------
(a) Customer agrees that any Information of Nevada that is furnished, made
available or otherwise disclosed to Customer pursuant to this Agreement shall
remain the property of Nevada. Unless any such Information was previously known
to Customer free of any obligation to keep it confidential or becomes generally
available to the public through acts not attributable to Customer or any agent
or contractor of Customer, it shall be subject to the provisions set forth in
this section, and (1) shall be held in confidence by Customer, its employees,
contractors and agents; (2) shall be disclosed to only those of Customer's
employees, contractors or agents who have a legitimate need to know; and (3) may
be released or disclosed to others only upon such terms and conditions as may be
previously agreed to by Nevada in writing.
(b) Except as otherwise provided herein, no Information furnished by
Customer to Nevada hereunder or in contemplation hereof shall be considered to
be confidential or proprietary unless (1) it is conspicuously marked as such or
(2) it is usage or account data of Customer. If Customer provides Nevada with
any such proprietary or confidential Information, Nevada shall use the same
degree of care to prevent its disclosure to unauthorized persons as it uses with
respect to its own proprietary or confidential Information.
- 9 -
<PAGE>
8. AUDIT OR EXAMINATIONS BY CUSTOMER
---------------------------------
(a) As used herein "Audit" shall mean a formal verification and/or review
of Billing and Collection Services as performed by Nevada on behalf of Customer;
"Examination" shall mean an informal inquiry into a specific element or process
which supports Billing and Collection Services in total. Customer shall have a
right to examine such methods and procedures of Nevada as are specifically
applied to Billing and Collection Services provided to Customer hereunder;
provided that such right shall not be construed to apply to Nevada's Business
Office operations.
(b) Upon thirty (30) days written notice by Customer to Nevada, Customer
shall have the right through its authorized representative to make an Audit or
Examination, during normal business hours, at reasonable intervals determined by
Nevada, of all such records and accounts as may under recognized accounting
practices contain information bearing upon the provision of Billing and
Collection Services by Nevada to Customer under this Agreement. In order to
ensure the effective implementation of the Audit or Examination, the scope,
parameter, timing, and length of the Audit or Examination shall be defined in
advance of the commencement of the Audit or Examination activity and shall be
agreeable to both Parties.
(c) The notice of Audit or Examination shall identify the date upon which
it is to commence, the location, Customer representatives who will participate
in the Audit or Examination,
- 10 -
<PAGE>
8. AUDIT OR EXAMINATIONS BY CUSTOMER (Cont'd)
---------------------------------
the subject matter of the Audit or Examination and the materials to be reviewed.
The notice of the Audit or examination shall be made pursuant to Section 22 -
Notices, below.
(d) Each Party shall bear its own expenses in connection with the conduct
of the Audit or Examination. The reasonable cost of special data extractions
required by Customer to conduct the Audit or Examination, or direct reasonable
expenses incurred by Nevada following notice of Audit or Examination which Audit
or Examination is subsequently canceled by Customer, will be paid for by
Customer.
(e) Adjustments shall be made or any corrective action shall be initiated
within thirty (30) days of the final audit report to Nevada to compensate for
any errors or omissions which are disclosed by such Audit or Examination and are
agreed to by the Parties. In the event that any adjustment accrues to the
benefit of Customer, a penalty shall be payable by Nevada to Customer in an
amount equal to that provided in Section 16-Invoices and Payments, below. In
the event that any adjustment accrues to the benefit of Nevada, a penalty shall
be payable by the Customer to Nevada in an amount equal to that provided in
Section 16-Invoices and Payments, below.
(f) Neither such right of Audit or Examination nor the right to receive
such adjustment shall be affected by any statement to the contrary, appearing on
checks or otherwise,
- 11 -
<PAGE>
8. AUDIT OR EXAMINATIONS BY CUSTOMER (Cont'd)
---------------------------------
unless such statement expressly waiving such right appears in writing, signed by
the authorized representative of the Party having such right and delivered to
the other Party.
(g) All information received or reviewed by Customer or its authorized
representative pursuant to this section is considered confidential and is not to
be distributed, provided, or disclosed in any form to anyone not involved in the
Audit or Examination, nor is the information to be used for any other purposes
without the prior written consent of Nevada.
(h) The right of Audit or Examination provided in this Agreement shall
continue in full force and effect for a period of one (1) year after termination
of this Agreement.
9. COMPLIANCE WITH LAWS
--------------------
Customer agrees to comply with all applicable Laws and Regulations in the
performance of this Agreement and to indemnify Nevada for any loss or damage
that may be sustained by reason of Customer's failure to comply therewith.
Specifically, but not by way of limitation, Customer agrees to comply with the
following Nevada Administrative Code Sections:
(a) NAC 704.749 which provides:
Limitation on competition with local telephone company. A carrier
-------------------------------------------------------
between local areas of transport and access or a reseller shall not
provide service within a local area of transport and access in
competition with a local telephone company, except as authorized by
NAC 704.749. In the event of a breach of this provision, Nevada shall
be entitled to cancel this Agreement in (10) business days after such
breach.
- 12 -
<PAGE>
9. COMPLIANCE WITH LAWS (Cont'd)
-----------------------------
(b) NAC 704.687 which provides:
Area within which services prohibited.
--------------------------------------
Alternative Operator Services must not be provided within a local
area of transport and access, except as authorized by NAC 704.749.
(c) Customer also agrees that Billing and Collection Service will not be
utilized by Customer, its agents, employees or its customers, to
provide billing to coin operated pay telephones for local or intraLata
billing services or operator services.
10. GOVERNING LAW
-------------
This Agreement shall be construed in accordance with the laws of the State
of Nevada.
11. NO THIRD PARTY BENEFICIARIES
----------------------------
Except as otherwise expressly provided herein, the provisions of this
Agreement are for the benefit of the Parties hereto and not for any person. This
Agreement shall not provide any person, not a party hereto with any remedy,
claim, liability reimbursement, claim of action, or other right in excess of
those existing without reference to this Agreement.
12. INTELLECTUAL PROPERTY
---------------------
Except as otherwise expressly provided herein, nothing contained in this
Agreement shall be construed as conferring by implication, estoppel or otherwise
any license or right under any patent, trade name or copyright of either Party.
- 13 -
<PAGE>
13. PUBLICITY
---------
Unless otherwise mutually agreed upon in writing, neither Party shall
publish or use the other Party's name or any language, pictures or symbols from
which the other Party's name may reasonably be inferred or implied in any
advertising, promotion, or other publicity matter relating directly or
indirectly to this Agreement.
14. LIMITATION OF LIABILITY
-----------------------
(a) Except as specifically provided otherwise in this Agreement, Nevada's
liability with respect to any claim or suit by Customer or any third party for
damages associated with this Agreement or with the provision of Billing and
Collections Services hereunder, except in the case of willful misconduct by
Nevada, its officers, directors, and employees thereof, shall not exceed an
amount equal to the proportionate charges for the service for the period during
which the service was affected.
(b) Except in the case of willful misconduct by either Party, its officers,
directors, and employees thereof, neither Party shall be liable to the other for
any lost profits or revenues for any indirect, incidental, special or
consequential damages arising out of or resulting from this Agreement or the
provision of Billing and Collection Services hereunder.
- 14 -
<PAGE>
15. INDEMNIFICATION
---------------
(a) Customer shall defend, indemnify, and hold harmless Nevada and its
affiliates, and the officers, directors, agents and employees thereof, from and
against any fine, penalty, claim, encumbrance, demand, or liability (including
any related losses, reasonable costs, expenses and attorney's fees) arising out
of or resulting from any breach of this Agreement by Customer or any claim, loss
or damage arising from Customer's use of Billing and Collection Services
hereunder, including but not limited to: (1) claims for libel, slander, invasion
of privacy, or infringement of copyright arising from Customer's own
communications; (2) claims for patent infringement arising from Customer's acts
combining or using the service furnished hereunder by Nevada in connection with
facilities or equipment furnished by end users or Customer; (3) any claims
arising out of Nevada's provision of Billing and Collection Services hereunder,
including Customer requested specialized services, except where Nevada has acted
intentionally with intent to injure another, and; (9) all other claims arising
out of any act or omission of Customer in the course of using services provided
pursuant to this Agreement.
(b) Customer shall also (1) pay costs of reasonable attorney's fees
incurred by Nevada or its Affiliates in connection with such claim or suit, (2)
keep Nevada or its Affiliates fully informed as to the progress of such defense,
and
- 15 -
<PAGE>
15. INDEMNIFICATION (Cont'd)
------------------------
(3) afford Nevada or its Affiliates, at their respective expense, an opportunity
to participate on an equal basis with Customer in the defense or settlement of
any such claim.
16. INVOICES AND PAYMENTS
---------------------
(a) Amounts due hereunder shall be determined as agreed in the applicable
Order and Exhibit 6. In addition to any such amounts, Customer shall be
responsible for paying any taxes resulting from this Agreement or any services
provided hereunder, exclusive of taxes based on net income of Nevada.
(b) All invoices for Billing and Collection Services provided to Customer
by Nevada are due 31 days after the invoice date or by the Late Payment
Application Date shown on the invoice ("Payment Date"), whichever is the later,
except as provided herein. If such Payment Date would cause payment to be due on
a Saturday, Sunday, or Holiday (i.e. New Year's Day, Independence Day,
Thanksgiving Day, the day after Thanksgiving, Christmas Day and a day when
President's Birthday, Labor Day and Memorial Day is legally observed), payment
for such invoice shall be due from Customer as follows:
(1) if such Payment Date falls on a Sunday or on a Holiday which is
observed on a Monday, the Payment Date shall be the first non-Holiday following
such Sunday or Holiday;
- 16 -
<PAGE>
16. INVOICES AND PAYMENTS (Cont'd)
------------------------------
(2) if such Payment Date falls on a Saturday or on a Holiday which is
observed on Tuesday, Wednesday, Thursday or Friday, the Payment Date shall be
the last non-holiday day preceding such Saturday or Holiday.
(c) If any portion of the payment is received by Nevada after the Payment
Date as set forth in Subsection (b) preceding then a late payment penalty shall
be due to Nevada. The late payment penalty shall be 1.5% of the entire unpaid
balance for each month or portion thereof that an outstanding balance remains.
(d) When a payment for Billing and Collection Services charges billed under
this Agreement for any other tariffed service provided by Nevada for Customer is
past due to Nevada from the Customer, Nevada may, with at least 31 days notice
to the Customer, net the past due payment against Nevada's subsequent payments
on Customer's accounts receivable.
17. DISPUTED INVOICES
-----------------
(a) In the event that a billing dispute concerning any charges invoiced to
Customer by Nevada is resolved in favor of Nevada, any payments withheld pending
settlement of the dispute shall be subject to the late payment penalty set forth
in Section 16 "Invoices and Payments", above.
(b) If Customer disputes an invoice on or before the Payment Date, and pays
the undisputed amount on or before such date, any late payment charge for the
disputed amount will not start until ten (10) working days after the Payment
Date. If
- 17 -
<PAGE>
17. DISPUTED INVOICES (Cont'd)
--------------------------
the billing dispute is resolved in favor of Customer, no late payment
penalty will apply to the disputed amount.
(c) If Customer disputes the invoiced amounts and pays the total amount
(i.e., the non-disputed amount and the disputed amount) on or before the Payment
Date and the billing dispute is resolved in favor of Customer, Customer will
receive a credit for the disputed amount plus a disputed amount penalty which
shall be calculated as follows: Customer shall provide Nevada written
documentation in support of its dispute. If Customer provides such
documentation: (i) within ninety (90) days of the Payment Date, the disputed
amount penalty will be applied from eleven (11) days after the Payment Date to
the next payment due date; (ii) after ninety (90) days of the Payment Date, the
disputed amount penalty will be calculated from the date the documentation is
provided to the next payment due date. The disputed amount penalty shall apply
only if the billing dispute is not resolved within ten (10) working days
following the Payment Date or the date Customer furnishes to Nevada
documentation to support its claim plus ten (10) working days, whichever date is
later. The disputed amount penalty shall be the disputed amount resolved in
Customer's favor times the penalty factor equal to that set forth in the section
entitled "Invoices and Payments" of this Agreement.
- 18 -
<PAGE>
18. TAXES BILLED TO CUSTOMER'S END USER
-----------------------------------
(a) Nevada shall, in conjunction with Bill Processing Service, Message
Processing Service, bill applicable federal, state, or local sales, use, excise
or other taxes or tax-like charges imposed on or with respect to Customer's
services (hereinafter collectively "taxes") to Customer's end users. For message
charges, where the message originates in Nevada, the Customer shall indicate
whether the message charge is interstate or intrastate service, and Nevada,
using statutory tax rates and applicable tariffs, shall compute and bill amounts
of applicable federal and Nevada state and local taxes. For message charges
where the call originates outside Nevada, Nevada, using statutory tax rates and
applicable tariffs, shall compute and bill the amount of applicable federal
taxes only. Taxes not described in the preceding two sentences shall be billed
by Nevada as instructed by Customer and negotiated by Nevada.
(b) It is recognized by each Party that Nevada is merely acting as
Customer's agent with respect to the calculation, billing and collection of
taxes hereunder. Nevada shall not be entitled to retain or receive from Customer
any statutory fee or share of Taxes to which the person collecting such taxes
may be entitled under applicable law.
(c) Customer shall be solely responsible for filing all returns for all
such taxes with the applicable taxing authority and shall pay or remit all such
taxes to the applicable taxing authority.
- 19 -
<PAGE>
18. TAXES BILLED TO CUSTOMER'S END USER (Cont'd)
-----------------------------------
(d) Nevada shall use information in Nevada's possession regarding Customer
end users' exemption status and geographic location as it pertains to the
calculation, billing and collection of taxes. If such information in Nevada's
possession is sought by a taxing authority in conjunction with an audit of
Customer, Nevada will cooperate with Customer in such audit at Customer's
expense, and to the extent required or allowed by law will make such information
available to the taxing authority, subject to any applicable legal restrictions.
Nevada shall determine the manner in which such information is made available.
(e) Nevada shall maintain the information pertaining to the calculation,
billing and collection of taxes from Customer end user in an accurate and
complete manner commensurate with sound business practices and procedures. In
addition, Nevada shall furnish Customer with all the information in Nevada's
possession which is necessary for Customer to file its tax returns. Such
information shall be accurate and complete commensurate with sound business
practices and procedures. Furthermore, such information shall be provided to
Customer in accordance with a mutually agreed upon format and schedule. Nevada
shall provide to Customer a report of all taxes collected on behalf of Customer
on a regular basis.
(f) Nevada shall establish the tax exempt status of end users in
conformance with applicable tax laws. Information regarding end user tax exempt
status shall remain the exclusive property of Nevada.
- 20 -
<PAGE>
18. TAXES BILLED TO CUSTOMER'S END USER (Cont'd)
-----------------------------------
(g) When Customer advises Nevada that a particular message is tax exempt,
Nevada will not calculate or bill taxes.
(h) When Customer does not order Inquiry Service, the Customer shall be
responsible for any communications from Customer end users relating to taxes as
well as all determinations as to the removal, addition, or adjustment of taxes
to be billed to Customer end users.
(i) Customer shall be responsible for all communications with taxing
authorities regarding taxes applicable to Customer charges.
(j) Customer agrees to pay, and hold Nevada harmless from and against any
penalty, interest, additional tax or other charge that may be levied or assessed
as a result of the following:
(i) The provision by Nevada of services covered by this Agreement; (ii) the
delay or failure of Customer, for any reason, to pay any tax or other such item
covered by this Agreement; (iii) the delay or failure of Customer, for any
reason, to file any return or provide other information covered by this
Agreement; (iv) the reliance by Nevada on any advice, determination or direction
of the Customer in Nevada's calculation, billing or collection services under
this Agreement; (v) the delay or failure of Nevada to take any action with
respect to any taxes or other such items under this Agreement unless such
inaction constitutes willful misconduct or gross negligence, or Nevada knowingly
contradicts Customer's
- 21 -
<PAGE>
18. TAXES BILLED TO CUSTOMER'S END USER (Cont'd)
-----------------------------------
timely written direction; or (vi) a determination by the Internal Revenue
Service or any other taxing authority that Nevada is responsible for collecting
taxes, remitting taxes or filing returns or other information as required by
law, rule, or regulation.
(k) The Customer also agrees to reimburse Nevada any and all penalties,
interest, additional tax or other charges including reasonable outside
attorney's fees that Nevada may pay directly or be obligated to pay as a result
of the circumstances enumerated in Subsection (j) (i) through (vi) above.
(l) The indemnities payable by the Customer hereunder shall be payable in
all events.
19. TERMINATION
-----------
(a) In the event of breach of any provision of this Agreement by either
Party, including non-payment for services, the non-breaching Party shall give
the breaching Party written notice thereof. If the breaching Party fails to cure
a material breach, including non-payment for services, to the non-breaching
Party's reasonable satisfaction within thirty (30) days of receiving such
notice, the non-breaching Party may, at its sole option, cancel this Agreement,
and shall be entitled to pursue all available legal and equitable remedies for
such breach. In addition to the above remedies, Nevada may refuse additional
applications for service of any kind from Customer, including but not limited,
to those for Billing and Collection
- 22 -
<PAGE>
19. TERMINATION (Cont'd)
-----------
Services, refuse to complete any pending orders for such service from Customer
at any time after notice of breach is given, and discontinue provision of
Billing and Collection Services.
(b) Either party may, upon six (6) months written notice to the other
party, terminate this Agreement for any reason.
(c) In the event Nevada changes billing rates as set forth in Section 4
above, Customer may terminate this Agreement or any applicable Order, on thirty
(30) days written notice, effective coincident with the effective date of the
new rates.
20. CANCELLATION OF ORDERS
----------------------
Customer may cancel Orders hereunder upon thirty (30) days written notice
delivered to Nevada. Customer shall pay Nevada for all costs incurred in
executing such Orders prior to the effective date of the cancellation.
21. MODIFICATION OF ORDERS
----------------------
Orders may be modified for various types of services only as specifically
set forth in the respective Exhibits/Orders attached to this Agreement.
- 23 -
<PAGE>
22. NOTICES
-------
Except as otherwise provided in this Agreement, all notices or other
communications hereunder shall be in writing and shall be deemed to have been
duly given on the date delivered in person or deposited in the United States
mail, postage prepaid, certified mail, return receipt requested and addressed as
follows:
<TABLE>
<CAPTION>
CUSTOMER TO NEVADA:
<S> <C>
Telco Development Group of Delaware, Inc.
- ----------------------------------------- --------------------------------------
- ----------------------------------------- --------------------------------------
- ----------------------------------------- --------------------------------------
- ----------------------------------------- --------------------------------------
Attn: Mark Stodter Attn:
----------------------------------- ---------------------------------
</TABLE>
If personal delivery is the selected method of giving notice under this
Section, a receipt of such delivery shall be obtained. The address to which
notices or communications may be given to either Party may be changed by written
notice given by such Party to the other pursuant to this Section.
- 24 -
<PAGE>
23. REMEDIES CUMULATIVE
-------------------
Any rights of termination, cancellation, or other remedies prescribed in
this Agreement are cumulative and are not intended to be exclusive of other
remedies to which the injured Party may be entitled at law or equity in case of
any breach or threatened breach by the other Party of any provision of this
Agreement. Use of one or more remedies shall not bar use of any other remedy for
the purpose of enforcing provisions of this Agreement; provided, however, that a
Party shall not be entitled to retain the benefit of inconsistent remedies.
24. NO WAIVERS
----------
(a) No course of dealing or failing of either Party to strictly enforce any
term, right or condition of this Agreement, in any instance shall be construed
as a general waiver or relinquishment of such term, right or condition.
(b) Waiver by either Party of any default by the other Party shall not be
deemed a waiver of any other default.
25. SURVIVAL
--------
Provisions contained in this Agreement that by their sense and context are
intended to survive the performance, termination or cancellation of this
Agreement hereof by any Party hereto shall so survive.
- 25 -
<PAGE>
26. ORDER OF PRECEDENCE
-------------------
In the event of any conflict or inconsistency between provisions of this
Agreement and provisions of an Order, the provisions of the Order shall control,
but only for purposes of such Order, and except for such Order, the terms and
conditions of this Agreement shall not be deemed to be waived, amended, or
modified.
27. HEADINGS NOT CONTROLLING
------------------------
Headings used for Sections in this Agreement are for reference purposes
only and shall not be construed to limit any of the terms herein or affect in
any way the meaning or interpretation of this Agreement.
28. SEVERABILITY
------------
In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held invalid or unenforceable in any respect
under the laws of the State of Nevada, the remaining provisions shall not be
affected thereby, but rather, the entire Agreement shall be construed as if not
containing the particular invalid or unenforceable provisions, and the rights
and obligations of the parties hereto shall be construed and enforced
accordingly.
- 26 -
<PAGE>
29. FORCE MAJEURE
-------------
(a) Neither Party shall be deemed in default of this Agreement to the
extent that any delay or failure in performance of its obligations results,
without its fault or negligence, from any cause beyond its control, such as acts
of God, acts of civil or military authority, embargoes, epidemics, wars,
terrorist acts, riots, insurrections, strikes, fires, explosions, earthquakes,
nuclear accidents, floods, unusually severe weather conditions, or omissions of
transportation common carriers. In the event of any such excused delay, the time
for performance shall be extended by a term equal to the time lost by reason of
the delay.
(b) If any such excused delay results in a delay in the performance of all
or part of a Party's obligations for more than thirty (30) days, the other Party
may, by written notice given to the Party whose performance is delayed,
terminate all or part of those services which may be affected by such delay
without any termination charges.
- 27 -
<PAGE>
30. ENTIRE AGREEMENT
----------------
This Agreement, including all Orders, Appendices, Exhibits, and subordinate
documents attached to or referenced herein, all of which are hereby incorporated
by reference herein, constitute the entire Agreement between Nevada and Customer
with respect to the subject matter hereof, and supersede all prior oral or
written agreements, representations, statements, negotiations, understandings,
proposals, and undertakings with respect to the subject matter hereof.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its duly authorized representatives.
/s/ Bryan K. Rachlin
-----------------------------------------
BY: Bryan K. Rachlin
-------------------------------------
Telco Development Group of Delaware, Inc.
-----------------------------------------
TITLE: President
----------------------------------
DATE SIGNED: February 24, 1995
----------------------------
NEVADA BELL
/s/ Judy Smith
BY: Judy Smith
-------------------------------------
TITLE: Manager Industry Market
---------------------------------
DATE SIGNED: 9-3-95
----------------------------
- 28 -
<PAGE>
EXHIBIT 6
RATE
SCHEDULES
SERVICE
<PAGE>
Confidential Treatment Requested. The
redacted material has been separately
filed with the Commission.
EXHIBIT 6
BILLING AND COLLECTIONS SERVICE
-------------------------------
RATE SCHEDULE
-------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Billing And Collection Service Interstate/Intrastate
- ------------------------------ ---------------------
<S> <C>
. Per set-up for generic service (*)
. Per set-up for generic service (*)
(Implementation with Pacific Bell)
. Per set-up for 900 service (*)
. Supersedure (*)
. Cancellation (*)
Inquiry/Non-Inquiry Customer
- ---------------------------
. Per Account Session adjustment (*)
issued by MIB
Manual Adjustment
- -----------------
. Per Memo (*)
Data Transmission *
- -----------------
To/From Nevada
. Per Record - Option 1 (*)
Option 2 (*)
*NOTE: Option 1 = Stand Alone Service
Option 2 = Purchases with Bill
Processing and Bill Rendering
Sub-Carrier Identification
- --------------------------
. Set-up fee (Pending Tariff Approval) (*)
. Record fee (Pending Tariff Approval) (*)
(Per Addition, Deletion or Change)
</TABLE>
- --------------------------------------------------------------------------------
Rates effective through June 30, 1994
6-3
<PAGE>
Confidential Treatment Requested. The
redacted material has been separately
filed with the Commission.
EXHIBIT 6
BILLING AND COLLECTIONS SERVICE
-------------------------------
RATE SCHEDULE
-------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
General Interstate/Intrastate
<S> <C>
- Program Development, Regular per hour (*)
- Program Development, Premium per hour (*)
- Project Development, Regular per hour (*)
- Project Development, Premium per hour (*)
- Central Processor Unit, Per hour (*)
Billing Analysis
- Electronic Detection
- Subject list, per month (*)
Electronic Investigation
- Phase I or II, per hour (*)
- Minimization, per hour (*)
Message Investigation
- Phase I, Customer Investigation per hour (*)
- Security Investigation per hour (*)
- Phase II, per hour (*)
Electronic Deterrence
- Assistance to Law Enforcement (*)
Agencies, per hour
- Recovery of Devices/Material (*)
(with or without Law Enforcement
Assistance), per hour
- Contact and Interview of (*)
Parties, per hour
- Preparation of Affidavit and (*)
Prosecutive Summary, per hour
- Provision of Expert Witness (*)
Analysis, per hour
- Provision of Expert Witness (*)
Testimony, per hour
- Storage of Evidence, per month (*)
- Consultation, per hour (*)
- Assistance to Publicize (*)
Deterrence, per hour
Message Investigation
Phase I
MIC Investigation
- Per hour (*)
Security Investigation/Deterrence
- Per hour (*)
Phase II (Settlement Agreement)
- Per hour (*)
</TABLE>
- --------------------------------------------------------------------------------
Rates effective through 1992
6-4
<PAGE>
Confidential Treatment Requested. The
redacted material has been separately
filed with the Commission.
EXHIBIT 6
BILLING AND COLLECTIONS SERVICE
-------------------------------
RATE SCHEDULE
-------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Interstate/Intrastate
---------------------
Billing Information
- -------------------
<S> <C>
. CRIS Accounting information (*)
. Paper output (*)
. Magnetic tape, per tape (*)
. Fiche output, per master, per page (*)
per copy, per page (*)
Billing Name and Address
- ------------------------
. Per set-up for BNA service (*)
. Per "found" request (*)
. Per "not found" request (*)
. Magnetic tape handling fee (*)
. Paper output (*)
</TABLE>
- --------------------------------------------------------------------------------
AUTHORIZED SIGNATURE FOR APPROVAL
"Customer" hereby acknowledges
- ------------------------------------------------
that Customer has read and agrees to the applicable rates contained in Exhibit 6
above, for the services ordered.
Name: Bryan K. Rachlin
-------------------------
Signature: /s/ Bryan K. Rachlin
-------------------------
Bryan K. Rachlin
Title: President
-------------------------
Date Signed: February 24, 1995
-------------------------
6-5
<PAGE>
Exhibit 10.8
AGREEMENT FOR
INTERSTATE BILLING AND COLLECTION SERVICES
BETWEEN
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
AND
TELCO DEVELOPMENT GROUP OF DELAWARE, lNC.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
---------------------
<S> <C>
Page
----
Section 1. Certain Defined Terms 1
Section 2. General Service Description 2
Section 3. Types of Calls Billed 4
Section 4. Late Payment Charge 5
Section 5. Settlements and Purchase of Rated Messages 5
(A) Adjustments 5
(B) Payment of Purchase Price 7
(C) Settlement Reports 8
Section 6. Assignment of Rated Messages 8
Section 7. Application of Taxes and Tax Associated Rate Elements 9
(A) Billing of Taxes and Tax Associated Rate Elements 9
(B) Filing of Tax Returns 10
(C) Indemnity 10
(D) Indemnity Procedures 11
(E) General Tax Audit Requirements 11
Section 8. Customer Service Procedures 12
(A) Referral Process 12
(B) Adjustment Process 12
(C) Recourse of Disputed Charges 13
Section 9. Collection Services 14
Section 10. Payment Procedures for Interstate Billing and Collection 15
Services
Section 11. Deposits 16
</TABLE>
-1-
<PAGE>
<TABLE>
<S> <C>
Page
----
Section 12. Audits 16
(A) Notice and Scope 16
(B) Frequency 17
(C) Expenses 17
(D) Handling of Materials 17
(E) Requests for Examination 17
Section 13. Claims 17
(A) Notification of Disputed Amounts 17
(B) Payment of Disputed Amount 18
(C) Settlement of Claims 18
(D) Claims Limitation 18
(E) Retention of Supporting Data Concerning Claimed
Amount 19
Section 14. Limitation of Liability 19
Section 15. Termination 19
Section 16. Indemnification 19
Section 17. Proprietary Information 19
Section 18. Amendments and Waivers 20
Section 19. Assignment 20
Section 20. Notice and Demand 20
Section 21. Force Majeure 21
Section 22. Non-Exclusive Agreement 21
Section 23. EEO Clause 21
Section 24. Non-Publicity 21
Section 25. Detariffing of Services 21
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Page
----
Section 26. Merger Clause 22
Section 27. Headings 22
Section 28. Independent Contractors 22
Section 29. Bank Errors 22
Section 30. Performance 22
Section 31. Third Party Beneficiaries 23
Section 32. Executed in Counterparts 23
Section 33. Severability 23
Section 34. Governing Law 23
Section 35. Most Favored Nation 23
Section 36. Changes in State Tariffs 23
Section 37. Dispute Resolution 23
Section 38. List of ICs and/or OSPs 24
Section 39. Use of IC Specifications 24
Section 40. Billing Modifications 24
Section 41. Term 24
Exhibit A - Contract Order Form
Exhibit B - Inquiry Service
Exhibit C - Billing for Client 700/900 Service
Exhibit D - Rates and Charges
Exhibit F - Message Ready Bill Message Service
</TABLE>
-iii-
<PAGE>
AGREEMENT FOR
INTERSTATE BILLING AND COLLECTION SERVICES
BETWEEN
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
AND
TELCO DEVELOPMENT GROUP OF DELAWARE, INC.
This Agreement is entered into between NEW ENGLAND TELEPHONE AND TELEGRAPH
COMPANY ("NET"), a corporation incorporated under the laws of the State of New
York with its principal place of business in Boston, Massachusetts, and TELCO
DEVELOPMENT GROUP OF DELAWARE, INC. ("Client"), a corporation incorporated under
the laws of the State of Delaware with its principal place of business in
Chantilly, Virginia.
WHEREAS, Client is either an Interexchange Carrier (IC), or an Operator Service
Provider (OSP) or is acting as a Clearing Agent for billing and collection
purposes for certain ICs and/or OSPs;
WHEREAS, Client desires to purchase from NET, and NET desires to provide to
Client, interstate and intrastate billing and collection services for Client End
User Customers or, in the case of a Clearing Agent, for the end user customers
of the ICs and/or the OSPs that the Client represents, who are also end user
customers of NET;
WHEREAS, the terms and conditions governing NET's provision of intrastate
billing and collection services are set forth in NET's applicable intrastate
tariffs; and
WHEREAS, the parties desire to set forth the terms and conditions governing
NET's provision of Interstate Billing and Collection Services.
NOW, THEREFORE, in consideration of the mutual benefits accruing to each party,
the parties hereby covenant and agree as follows:
Section 1. Certain Defined Terms
---------------------
As used in this Agreement and in the attached Exhibits which form a part of this
Agreement, and unless otherwise expressly indicated herein, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Adjustment" - A billing amount related to Client End User Customer charges
----------
which is added to or subtracted from the balance due from the Client End User
Customer.
"Calling Card" - A calling card issued by NET on its own behalf or on behalf of
------------
an Interexchange Carrier.
"Carrier Identification Code (CIC)"- A numeric code which is currently used for
---------------------------------
customers who feature Feature Group B or Feature Group D Access Service.
"Centralized Message Data System ('CMDS')" - A system used to transfer exchange
----------------------------------------
message interface ("EMI") formatted billing data between the designated
recording/rating company and NET.
<PAGE>
2
"Client End User Customer" - A telephone user who makes Sent Paid, Operator
------------------------
Assisted, Calling Card, Directory Assistance, International or 700/900 Service
calls routed by Client acting as an IC or an OSP or, in the event the Client is
acting as a Clearing Agent, those telephone users who make any of the
aforementioned call types using any of the ICs or OSPs represented by the
Client.
"Directory Assistance" - A telephone call where IC or OSP support services
--------------------
(either manual or mechanized) are provided to the end user at the end user's
request in order to determine a telephone number.
"Holiday" - Includes New Year's Day, Independence Day, Labor Day, Thanksgiving
-------
Day, Christmas Day, Veterans Day and the days when Washington's Birthday,
Patriots' Day, Memorial Day and Columbus Day are legally observed in the
Commonwealth of Massachusetts.
"Host Choice Company" - The local exchange carrier chosen by Client to receive
-------------------
Client data and to process and distribute such data to NET via CMDS.
"International Calls" - A telephone call originating outside the area covered by
-------------------
the North American Numbering Plan or originating in the United States
(including Hawaii and Alaska) and terminating in any other country except
Canada, Mexico, and the Caribbean.
"Interstate Billing and Collection Services" - Billing and Collection Services,
------------------------------------------
as described herein, rendered in connection with Client End User Customer
telephone calls other than (1) telephone calls both originating and terminating
within the Commonwealth of Massachusetts; (2) telephone calls both originating
and terminating within the State of Maine; and (3) telephone calls both
originating and terminating within any other New England State in which a state
regulatory authority has directed NET not to provide such Billing and Collection
Services.
"New England States" - The states of Rhode Island, Vermont, Maine and New
------------------
Hampshire, and the Commonwealth of Massachusetts.
"Operator Assisted" - A telephone call where IC or OSP operator support services
-----------------
(either manual or mechanized) are provided to the end user at the end user's
request in order to complete the call.
"Rated Message" - A message which has been assembled and edited by Client (or
-------------
the ICs and/or OSPs for which the Client is acting as agent) and to which Client
(or the ICs and/or OSPs for which the Client is acting as agent) has applied
its applicable rates and charges, as well as all applicable taxes as set forth
in this Agreement.
"Sent Paid" - A telephone call where the charges are billed to the telephone
---------
number of the originating station.
"700/900 Service" - A call dialed using the special access codes of 700 or 900.
---------------
Section 2. General Service Description
---------------------------
NET shall provide Interstate Billing and Collection Services in accordance with
the terms and conditions set forth in this Agreement, the Order Form attached
hereto as Exhibit A and the other exhibits attached hereto. Additional details
regarding NET's billing and collection services are set forth in the NYNEX
Billing and Collections Operations Manual.
<PAGE>
3
Client or the IC/OSP for whom the Client is acting as Clearing Agent shall
record both domestic and international messages originating on its facilities.
For the purpose of this Agreement, international traffic shall include only
those telephone calls which originate outside the area covered by the North
American Numbering Plan or which originate from the United States (including
Hawaii and Alaska) and terminate in any other country except Canada, Mexico and
the Caribbean. Client or the IC/OSP for whom the Client is acting as Clearing
Agent shall assemble, edit and rate those messages which Client will deliver to
NET pursuant to this Agreement. Such messages shall be processed by Client's
Host Choice Company and delivered as Rated Messages to NET in EMI format, via
CMDS or magnetic tape, or any other method as may be mutually agreed upon by the
parties in writing.
Client shall not deliver to NET any Rated Messages which Client does not own.
Notwithstanding the foregoing, in those instances where the Client is acting as
a Clearing Agent for other ICs and/or OSPs, such Rated Messages may not be owned
by the Client but may be owned by other ICs or OSPs. However, in these
instances, Client represents that it is acting as the agent for the owning IC or
OSP and has full authority to act on behalf of the IC or OSP principal and sell
to NET the Rated Messages. In this event Client shall not deliver to NET any
Rated Messages for which Client does not act as an IC or OSP agent. Further,
Client shall not deliver any Rated Messages which Client or ICs and OSPs
represented by Client acting as a Clearing Agent have previously billed to a
Client End User Customer directly. Client shall deliver domestic Rated Messages
to NET no later than 90 days, and international Rated Messages no later than 120
days, from the date that the Rated Messages were first recorded by Client or
those ICs and OSPs for whom Client is acting as Clearing Agent, unless otherwise
agreed to by NET in writing.
Within five (5) business days of its receipt of Rated Messages from Client, NET
shall identify those Rated Messages which it accepts for billing and collection
pursuant to this Agreement ("Accepted Rated Messages"), and those Rated Messages
which are rejected pursuant to this Agreement and shall notify Client of such
acceptance or rejection in writing within five (5) business days of receipt of
such transmission.
Those Rated Messages not accepted in writing, unless accepted for billing and
collection services pursuant to NET's applicable intrastate tariffs, shall be
deemed rejected, and NET shall have no obligation to bill or collect said Rated
Messages. NET may reject a Rated Message if the Rated Message fails any of the
NET edits.
NET shall provide Client with Account Record Keeping which consists of the
updating and retention of all information needed for the billing of Client End
User Customers. NET shall also provide to Client the error resolution services
and processing for Accepted Rated Messages failing the Account Record Keeping
processing requirements.
NET will maintain a file of Accepted Rated Messages until such messages are
included in the Client End User Customer's bill in accordance with NETs normal
billing cycle.
NET shall prepare and mail bills to Client End User Customers and shall post
bills as rendered to NET's accounts receivable in accordance with NET's
procedures for its own services. An integrated bill will be rendered based on
the standard bill format provided by NET, which will contain charge elements for
both NET and Client. All charges will be considered owed to NET and will be
reflected in one total balance due. NET reserves the right to change the
standard bill format. NET shall advise Client of any substantive changes in the
standard bill format 30 days prior to the enactment of any such change. When
bill format changes will affect Client systems, NET will not enact any such
change without notification to Client in writing six months prior to
implementation.
<PAGE>
4
The Client corporate logo will be displayed on the Client pages of the Client
End User Customer bill. "Client" shall be printed on each detail page, as well
as on the sub-totaled line showing total Client charges. If Client provides more
than one Carrier Identification Code (CIC) within one Billing and Collection
Agreement, Client will have option to have a separate logo. If NET provides
Billing and Collection Services under separate CIC, the bill for each CIC will
be displayed on separate page of bill and be subtotaled separately.
NET will provide Client with Collection Services in accordance with the
provisions of Section 9 hereof. NET shall also provide, at the Client's option
as specified in Exhibit A, Inquiry Service in accordance with the provisions of
Exhibit B attached hereto.
The Parties recognize that, despite the best efforts of both Parties, from time
to time errors will occur in the billing and collection process. In such cases,
the Parties agree to fully cooperate in joint efforts including exchange of data
to minimize Client End User Customer billing disruptions as soon as possible.
Each Party will bear its own costs incurred in connection with the above
recovery activities. However, if either Party judges this procedure requires
either Party over time to bear a disproportionate share of the costs, the
Parties will mutually agree to an equitable sharing of costs.
Section 3. Types of Calls Billed
---------------------
For Client End User Customers who are also end user customers of NET, NET shall
provide to Client Interstate Billing and Collection Services for the following
types of calls:
(a) Sent Paid;
(b) Operator Assisted;
(c) Calling Card;
(d) Directory Assistance;
(e) International; and
(f) 700/900.
NET shall not be obligated to provide Interstate Billing and Collection Services
for any of the foregoing call types until such time as Client provides to NET an
acceptable test tape for the type of call to be billed, and has paid all
applicable program development fees, if any.
NET shall have no obligation to bill for other charges associated with such
calls, including but not limited to charges for merchandise, gift certificates,
catalogs, political or charitable contributions, or other services or products,
unless agreed to by NET in writing. Additional terms and conditions applicable
to 700/900 calls are set forth in Exhibit C.
NET shall not be obligated to provide Interstate Billing and Collection Services
for any other call type, including but not limited to cellular calls, unless
agreed to by NET in writing. NET reserves the right to not bill for calls which
are prohibited by applicable regulations, laws or tariffs, or which contain
matter which, in the sole discretion of NET, implicitly or explicitly invites,
describes, stimulates, excites, arouses, or otherwise refers to sexual conduct,
or sexual innuendo. NET also reserves the right at any time to reject or refuse
to bill for any calls if and when directed to do so by a regulatory authority or
if the billing of such calls would, in the sole discretion of NET, adversely
impact the image and reputation of NET. NET will notify Client in writing of any
condition that results in its refusing to bill calls for the above stated
reasons. If Client is unable to cure the problem within 60 days from receipt of
NET's written notice, NET reserves the right to terminate billing for such
calls. The standards NET applies in
<PAGE>
5
deciding whether to bill pursuant to this Section shall be applied to all
Clients for whom NET provides billing and collection services and shall be
applied consistent with its obligations under Section 30 of this Agreement.
Upon request from Client, NET will consider providing billing and collection
services for new telecommunications services, including non-regulated or
non-tariffed telecommunications services.
Section 4. Late Payment Charge
-------------------
Client or the ICs/OSPs for whom the Client is acting as Clearing Agent shall
notify Client End User Customers that amounts payable to NET may be subject to a
late payment charge on all outstanding amounts which remain unpaid at the time
the next NET bill is rendered, or at such other time of imposition as may be
determined by NET. Inclusion of such notice in Client's tariffs or the tariffs
of the ICs/OSPs for whom the Client is acting as a Cleating Agent will
constitute adequate notice under this Section. Any such late payment charges
paid by Client End User Customers are the property of NET. Client shall
indemnify and hold harmless NET from and against any loss, cost, claim,
liability, damage and expense (including attorney's fees) relating to or arising
out of Client's failure or the failure of the ICs/OSPs for whom the Client is
acting as a Clearing Agent to include and maintain such notice of late payment
charges in its tariffs.
Section 5. Settlements and Purchase of Rated Messages
------------------------------------------
To facilitate its provision of Interstate Billing and Collection Services, NET
shall purchase Accepted Rated Messages, including the associated Client accounts
receivable. In the event that NET agrees to provide Billing and Collection
Services to Client under an additional Carrier Identification Code, a separate
Settlements and Purchase of Rated Messages process shall apply for each
additional Carrier Identification Code provided.
The purchase price ("Purchase Price") to be paid by NET for the Accepted Rated
Messages shall equal the dollar amount of the Accepted Rated Messages ("Face
Amount of the Accepted Rated Messages") on a per transmission basis, plus or
minus the adjustments set forth below.
(A) Adjustments
-----------
The following adjustments shall be made to the Face Amount of the
Accepted Rated Messages to determine the Purchase Price:
(1) Miscellaneous Adjustments
-------------------------
(a) On a monthly basis, the Face Amount of the Accepted Rated Messages
shall be reduced by the amounts which NET removes from Client End
User Customer balances pursuant to Sections 8(B) and (C) of this
Agreement.
(b) On a monthly basis, the Face Amount of the Accepted Rated Messages
shall be reduced by amounts which NET is unable to bill to Client
End User Customers as a result of NET's inability to identify or
locate Client End User Customers.
(c) On a monthly basis, the Face Amount of the Accepted Rated Messages
shall be adjusted for errors made by Client or NET in prior billing
periods.
<PAGE>
6
(d) On a monthly basis, the Face Amount of the Accepted Rated Messages
shall be adjusted for additions or subtractions, other than late
payment charges provided for in Section 4, to Client End User
Customer balances due for Client services billed in prior periods.
(2) Uncollectible Adjustments
-------------------------
The Face Amount of the Accepted Rated-Messages, plus or minus the
miscellaneous adjustments set forth in Section 5(A)(l) ("Net Adjusted
Amount"), shall be reduced by an amount (the "Factored Uncollectible
Amount") to compensate for the anticipated revenue loss due to the
failure of Client End User Customers to pay NET. NET shall determine
the Factored Uncollectible Amount by multiplying the Net Adjusted Amount
by Client's uncollectible factor ("Uncollectible Factor") as determined
below rounded up to the nearest l/l000th.
NET shall determine an Uncollectible Factor for Client in the following
manner:
(i) Based upon its records for the three (3) month period prior to the
execution of this Agreement, NET shall determine the amount
billed, including taxes, by NET to Client End User Customers on
final bills which, after standard collection efforts, are
accounted for as realized uncollectibles (the "Realized
Uncollectible Amount"). The Realized Uncollectible Amount shall be
adjusted for payments received by NET during said three (3) month
period for outstanding final bills that predate that period and
for deposits held by NET for service provided to the Client End
User Customer where final bills have been rendered.
(ii) To derive the uncollectible factor, the Realized Uncollectible
Amount shall be divided by the revenues from the three (3) month
period in which the Realized Uncollectible Amount was originally
billed to the end user. These revenues will include the face
amount of the Accepted Rated Messages plus billed taxes and plus
or minus those miscellaneous adjustments stated in Section
5(A)(1).
(iii) The Uncollectible Factor, once determined, shall be used for the
ensuing three (3) month period, at which time a new Uncollectible
Factor shall be computed and used for the succeeding three (3)
month period.
(iv) In the event that NET has not provided Billing and Collections
Services to Client during the three month period prior to
execution of this agreement, NET shall apply an initial
Uncollectible Factor of twelve percent (12%).
(v) In the event the term of this Agreement is for two (2) or three
(3) years, after the first year of the Agreement, NET will
determine the Factored Uncollectible Amount by utilizing a Fixed
Uncollectible Factor from a range of minimum and maximum
Uncollectible Factors to be agreed upon by the parties. The
parties will also negotiate a new true-up adjustment process and
procedures for renegotiating the Fixed Uncollectible Factor and
the minimum and maximum Uncollectible Factors in the event of
governmental, regulatory or judicial action that causes a change
in NET's rate of collection of Client's charges, together with
such other terms and conditions as the parties may mutually agree
upon.
<PAGE>
7
(vi) In the event the parties cannot reach agreement upon new
Uncollectible Factors and procedures as contemplated in subsection
(v) above, then NET shall continue to determine a new Uncollectible
Factor every three months in accordance with the methodology
specified in subsection (ii) above and the true-up procedure
described in subsection (3) following shall continue to apply.
(3) True-Up Adjustment
----------------------
In order to account for the difference between the Factored Uncollectible
Amount and the Realized Uncollectible Amount for each three (3) month
period, NET shall make a true-up adjustment as follows (the "True-Up
Adjustment"):
If the Factored Uncollectible Amount for any three (3) month period exceeds
the Realized Uncollectible Amount for that same period, NET shall add the
difference to the Purchase Price. If the Factored Uncollectible Amount for
any three (3) month period is less than the Realized Uncollectible Amount
for that same period, NET shall subtract the difference from the Purchase
Price.
After each true-up period as described above, the True-Up Adjustment,
either reducing or increasing the Purchase Price, will be made in the month
or months following the month that said True-Up Adjustment is calculated.
If NET ceases to render billing and collection services to Client for any
reason, NET shall make a final True-Up Adjustment to cover the period from
any prior True-Up Adjustment, as follows:
(a) If the Factored Uncollectible Amount for the final true-up period
exceeds the Realized Uncollectible Amount for the final true-up
period, NET shall, within twelve (12) months of said cessation, pay
to Client an amount equal to said excess; or
(b) If the Factored Uncollectible Amount for the final billing period is
less than the Realized Uncollectible Amount for the final billing
period, Client shall, within twelve (12) months of said cessation,
pay to NET an amount equal to said difference.
(B) Payment of Purchase Price
----------------------------
(1) Except as provided below, NET shall pay to Client the Purchase Price,
computed in accordance with Section 5(A), no later than fifty-eight (58)
days from the date the Accepted Rated Messages are accepted by NET (the
"NET Payment Date") pursuant to Section 2 of this Agreement. Upon
written request from Client, NET shall advance the payment of the
Purchase Price up to thirty (30) days from the date the Accepted Rated
Messages are accepted by NET. In return, NET shall charge Client .0005
per day, simple interest, or the maximum interest rate allowed by law,
whichever is lower, for the number of days advanced times the Purchase
Price due Client (the "Discount"). NET shall pay Client the Purchase
Price, less the Discount. It is contemplated that payments made
hereunder may not include any applicable True-Up Adjustment, which shall
be made at the appropriate subsequent date.
Payment will result in immediately available funds on the NET Payment
Date. If the NET Payment Date falls on a Sunday or on a Holiday which
is observed on a Monday, the NET
<PAGE>
8
Payment Date shall be the first non-Holiday day following such Sunday or
Holiday. If the NET Payment Date falls on a Saturday or on a Holiday
which is observed on Tuesday, Wednesday, Thursday or Friday, the NET
Payment Date shall be the last non-Holiday day preceding such Saturday
or Holiday.
(2) If Client does not receive any portion of the Purchase Price by the NET
Payment Date, or if any portion of the Purchase Price is received by
Client in funds which are not immediately available to Client, then NET
shall pay to Client a late payment penalty. The late payment penalty
shall be the portion of the Purchase Price not received by the NET
Payment Date times a late factor. The late factor shall be the lesser
of:
(a) the highest interest rate (in decimal value) as of the NET Payment
Date which may be levied by law for commercial transactions in the
Commonwealth of Massachusetts, with interest compounded daily for
the number of days from the NET Payment Date to and including the
date that NET actually makes the payment to Client; or
(b) .0005 per day, simple interest for the number of days from the NET
Payment Date to and including the date that NET actually makes the
payment to Client.
Any late payment penalty shall be included with the next NET payment to
Client.
(3) NET will conduct an annual lead-lag study during the fourth (4th)
quarter of each calendar year during the term of this Agreement to
measure end user customer payment behavior. The results will be used to
set the Payment Date for the following year. Client shall have the right
to review the lead-lag data and methodology used by NET and should such
review reveal an error in determination of the Payment Date, the Payment
Date shall be changed to reflect the corrected lead-lag study results.
(C) Settlement Reports
--------------------
For each transmission received from Client, NET shall provide Client with a
report indicating the total number of messages received in the transmission
and the dollar amount of those messages, the number of rejected messages and
their dollar amount, and the number of Accepted Rated Messages and their
dollar amount. For each transmission, NET shall also provide an Accounts
Receivable Settlement Statement providing all information necessary for
calculating the Purchase Price due to Client.
On a monthly basis, by the eighth business day of the month following the
month under report, NET will deliver, without charge, to Client a Revenue
Journal report displaying billed revenue, taxes, adjustments and surcharges.
Section 6. Assignment of Rated Messages
--------------------------------
Client represents and warrants to NET that each and every Rated Message which it
shall deliver to NET under this Agreement is either owned by Client or that
Client is authorized to deliver such Rated Messages to NET acting in its
capacity as agent for the principal IC or OSP. Further, Client represents and
warrants that to the best of its knowledge the IC and/or OSP for whom it is
acting as agent owns the Rated Messages delivered to the Client. Notwithstanding
the foregoing, Client represents and warrants that each Rated Message delivered
to NET shall be delivered free and clear of any and all liens or claims
<PAGE>
9
by any third party, and that at the time of delivery of such Rated Message to
NET, such Rated Message has not been assigned, pledged, transferred, sold,
exchanged, or otherwise conveyed or encumbered. Upon the request of NET, Client
shall provide reasonable written assurance to NET of the foregoing. Any such
conveyance or encumbrance shall be null and void and any breach by Client of its
representation and warranty as set forth herein shall subject Client to all
liabilities, expenses, and costs, including reasonable attorneys' fees, expended
and incurred by NET in pursuing exclusive ownership of Rated Messages.
Section 7. Application of Taxes and Tax-Associated Rate Elements
---------------------------------------------------------
(A) Billing of Taxes and Tax-Associated Rate Elements
----------------------------------------------------
(1) NET agrees on behalf of Client to charge certain taxes as hereinafter
provided. Regardless of whether taxes are computed by NET or Client or
those ICs and/or OSPs for whom Client is acting as Clearing Agent,
Client is solely responsible for the determination of the appropriate
federal, state and local taxes and tax-associated rate elements,
including sales taxes, federal excise taxes and other taxes imposed on
Client End User Customers ("End User Taxes").
With respect to End User Taxes, NET shall compute the federal excise
taxes and sales taxes applicable in the New England States to Client's
services. Transmission tapes provided to NET by Client shall not include
a calculation of federal excise taxes or state sales taxes, but Client
shall provide sufficient information to NET to enable NET to compute and
charge the applicable state sales taxes and federal excise taxes. All
other End User Taxes and any other applicable taxes and tax-associated
rate elements shall be computed by Client. Each End User Tax computed by
Client shall be stated separately from, and not included in, the Rated
Messages and all other taxes computed by Client shall be included as
part of the Rated Messages delivered to NET.
With respect to the federal excise tax, Client hereby directs NET (i) to
treat as exempt from the federal excise tax those Client End User
Customers who have furnished NET federal excise tax exemption
certificates in connection with their purchase of service from NET; and
(ii) to compute and charge the applicable federal excise tax to
non-exempt Client End User Customers.
With respect to telephone calls originating in the New England States,
Client hereby further directs NET (i) to treat as exempt from the
applicable state sales tax those Client End User Customers who have
furnished NET sales tax exemption certificates in connection with their
purchases of service from NET; and (ii) to compute and charge the
applicable state sales tax to non-exempt Client End User Customers. NET
shall not treat a Client End User Customer as exempt from federal excise
tax or state sales tax for any periods prior to the actual receipt by
NET of an exemption certificate.
In accordance with the procedures outlined in the Billing Modification
Request section of the NYNEX Billing and Collection Operations Manual,
Client shall advise NET in writing regarding the application of the
state sales and federal excise tax to new services offered by Client and
Client shall advise NET whenever any change in state or federal law
requires a change in the computation or application of the federal
excise or state sales tax to Client's services. Client hereby releases
NET from any and all liability arising out of NET's compliance with
Client's instructions and directions regarding the imposition,
computation
<PAGE>
10
and collection of federal, state and local taxes imposed on Client End
User Customers, including, but not limited to, Client's direction that
NET treat as exempt from the federal excise tax and/or state sales tax,
those Client End User Customers who have furnished NET federal excise
tax and/or state sales tax exemption certificates in connection with
their purchase of service from NET.
(2) NET shall, at the time it pays the Purchase Price as provided for in
Section 5(B) hereof, pay over to Client all sales taxes, federal excise
taxes and other taxes imposed on Client End User Customers, which NET
has billed to Client End User Customers on behalf of Client.
(B) Filing of Tax Returns
---------------------
Client shall file all returns for all federal, state and local taxes,
including sales taxes, federal excise taxes and other taxes imposed on
Client End User Customers, or with respect to Client services and shall pay
or remit to the respective taxing authorities all such taxes.
(C) Indemnity
------------
(1) Client agrees to indemnify and hold NET harmless from and against any
liability or loss resulting from any federal, state or local taxes,
including sales taxes, federal excise taxes and other taxes imposed on
Client End User Customers, and including penalty, interest, additions to
tax, surcharges or other charges or expenses including reasonable
attorney's fees, payable or incurred by NET, as a result of
(a) the delay or failure of Client to pay any federal, state or local
taxes, including sales taxes, federal excise taxes and other taxes
imposed on Client End User Customers, or file any return or other
information as required by law or this Agreement; or
(b) NET's compliance with this Agreement, or any determination by,
direction by, or advice of Client, or NET's use of information
provided by Client in performing any tax-related service hereunder;
or
(c) any tax audit, investigation, or assessment by any governmental unit
or agency with respect to Client services billed by NET in
accordance with this Agreement. In this regard, if any federal,
state or local jurisdiction determines that any tax, including but
not limited to State Gross Earnings Tax, State Gross Income Tax,
City Utility Tax, and also including sales taxes, federal excise
taxes and other taxes imposed on Client End User Customers
(including interest, penalties and surcharges thereon) are due from
NET on amounts collected by NET and remitted to Client in the form
of NET's purchase of accounts receivable or Accepted Rated Messages
pursuant to this Agreement, Client agrees to be liable for and
indemnify NET against any such taxes, including any interest,
penalties and surcharges. The indemnity payable hereunder shall be
payable in all events and without regard to any determination that
NET is the party obligated to collect and remit such tax or other
taxes or file the tax returns.
(2) NET agrees to indemnify and hold harmless Client from and against any
liability or loss resulting from any penalties, interest, additions to
tax, surcharges or other charges or expenses incurred by Client as a
result of:
(a) the willful or gross negligent failure of NET to compute and charge
taxes in accordance with Section 7(A) of the Agreement; or
<PAGE>
11
(b) the willful or gross negligent failure of NET to provide the tax
information included in the Settlement Reports provided for under
Section 5(C) of the Agreement.
(D) Indemnity Procedures
--------------------
(1) In the event NET becomes aware that any taxing jurisdiction is auditing
the Agreement or the services and activities performed pursuant thereto,
NET shall so notify Client as soon as practicable and periodically
advise Client of the status of such audit. In the event that any taxing
jurisdiction asserts against NET any- claim for which indemnity by
Client may be required under paragraph 7(C)(1) of this Section
("Claim"), NET shall so notify Client in writing as soon as practicable.
If Client disagrees with said Claim, Client shall, within ten (10) days
after written notice of such Claim by NET, direct NET in writing to
protest, appeal or contest the asserted Claim; provided, however, in
the event NET is required under the law of the taxing jurisdiction to
pay all or any portion of the asserted Claim prior to protesting,
appealing or contesting said Claim, including interest and penalties
thereon, Client shall pay said amount to NET prior to NET's filing of
said protest, appeal or contest. In the event NET refuses to protest,
appeal or contest any Claim after direction by Client to do so, Client
shall not indemnify NET for said Claim, and NET shall be responsible for
all amounts due pursuant to the Claim, including interest and penalties
thereon and all other related costs. NET shall keep Client advised of
the status of any such proceeding, and shall solicit Client's views on
matters of litigation strategy, including the selection of counsel.
Notwithstanding the foregoing, however, NET shall retain control over
the progress and disposition of any such protest, appeal, contest,
litigation and proceeding, including the selection of counsel, and shall
pursue same with due diligence and good faith. In any event, NET shall
obtain Client's written consent prior to settling any Claim.
(2) In the event NET pays all or any portion of the Claim, and/or incurs
costs incident to contesting such Claim, NET shall, from time to time,
bill Client for all or any portion of such payments, including interest,
penalties and attorney fees. Client shall pay the entire amount billed
in immediately available funds within thirty (30) days of the date such
bill was rendered by NET.
(E) General Tax Audit Requirements
------------------------------
(1) If a governmental authority conducting an audit of Client seeks access
to tax records in the possession of NET,
(a) NET shall promptly notify Client; and
(b) to the extent permitted by law, NET shall cooperate in any effort by
Client to object to the production of such records and/or seek
protective arrangements with respect to such records.
(2) When any governmental authority conducts an audit of NET with respect to
taxes for which Client might be required to reimburse NET,
(a) NET shall promptly notify Client of any audit matters that arise
which might affect Client; and
(b) NET shall seek Client's advice in dealing with audit matters that
might affect Client and shall keep Client fully informed as to the
status of such matters, however, NET will retain control of the
audit.
<PAGE>
12
(3) Each Party shall bear its own expenses with respect to any audit.
Section 8. Customer Service Procedures
------------------------------
(A) Referral Process
-----------------
(1) When a Client End User Customer requests direct contact with Client, NET
shall refer that customer to an 800 number, which Client shall provide
and maintain. If requested by the Client End User Customer, NET may
also furnish such Client End User Customer with the following
information:
CUSTOMER SERVICE
4219 Lafayette Center Drive
Chantilly, Virginia 22021 - 1209
(2) Client shall notify NET of any changes with respect to the 800 number or
to Client's address as provided above at least thirty (30) days prior to
the effective date of any such change.
(3) To facilitate communications between Client and NET Customer Service
personnel, Client shall, at Client's cost and expense, provide NET with
an 800 telephone number.
(B) Adjustment Process
--------------------
NET will adjust Client charges on a Client End User Customer bill at the
direction of the Client. Client will pay NET $10.00 for each Adjustment
processed. Where Client determines that an Adjustment to a Client End User
Customer's bill is warranted, the following process shall apply.
(1) Client shall promptly notify NET of any Adjustment to a Client End User
Customer bill. Client shall transmit such Adjustments to NET via the
LEC/IC memo as specified in the NYNEX Billing and Collections Operations
Manual. NET reserves the right to return to Client any IC/LEC Memo
submitted by Client to NET, which is illegible, requires clarification,
contains errors or for other reasons which prohibit NET from processing
such Memo. In situations where return of an IC/LEC Memo will adversely
affect the Client End User Customer, oral communication may be used by
Client and/or NET in order to provide a prompt resolution. NET agrees to
use its best efforts to include all Adjustments received from Client in
accordance with NET's normal bill cycle.
(2) Client agrees not to submit for rebilling to NET those charges
associated with any adjustment made pursuant to Section 8(B)(1) above
except that Client may submit such Accepted Rated Messages for rebilling
provided that Client has obtained the consent of the Client End User
Customer to accept and pay for the rebilled amount, and Client so
notifies NET in writing of such consent prior to any resubmission to
NET. This notice to NET shall include the date of the contact and the
name and telephone number of the consenting party. In the event the
Client End User Customer still refuses to pay the rebilled amount, NET
may adjust the charge off the Client End User Customer bill and recourse
the disputed charge to Client in accordance with the recourse procedure
set forth in Section 8(C) below.
<PAGE>
13
(C) Recourse of Disputed Charges
------------------------------
In accordance with the procedures described in this subsection, NET may
issue Initial or Final Recourse Memoranda for recourse amounts on live
accounts or on final Client End User Customer bills prior to write-off by
NET for Client charges billed by NET which a Client End User Customer
disputes.
(1) NET shall notify Client of the dispute via an IC/LEC Memo identifying
the amount of the dispute and the Client End User Customer's name,
address and billing telephone number, and accompanied by a record of all
call details/usage involved, a statement describing the collection
actions taken, if any, any correspondence with the Client End User
Customer relating to the dispute, or other notes relating to the
dispute, and the results of any wire check or premises visit or other
investigation of the dispute. This IC/LEC Memo shall be conspicuously
labeled as an "Initial Recourse Memorandum". If the disputed amount is
more than $15,000, NET shall also send a copy of the Initial Recourse
Memorandum to Mark Stodter. No disputed amounts shall be recoursed to
Client until thirtv (30) days after Client's receipt of the Initial
Recourse Memorandum. Additional recourse requirements are described
below.
(2) When Client sustains disputed amounts, Client shall provide
documentation to NET to support the charges. In evaluating whether
charges have been adequately supported, NET shall apply the same
standards that it applies to the support for its position on disputes
concerning its own local and/or intraLATA charges. Charges that have
been adequately supported shall not be recoursed by NET to Client,
unless the Client End User Customer subsequently notifies NET that the
Client End User Customer continues to dispute the charges. In instances
where NET agrees that disputed Client charges are sustained and the
Client End User Customer continues to dispute the charges, but NET
declines to deny service consistent with NET treatment policy:
(i) Following exhaustion of normal treatment and collection practices,
as applicable and not less than thirty (30) days after Client's
receipt of the Initial Recourse Memorandum concerning the dispute,
NET may recourse the disputed amount unilaterally if it is $15,000
or less, after following the procedures set forth in this Section.
If the disputed amount is over $15,000, NET shall follow the
procedures set forth in subsection (3) below before recoursing the
disputed amount.
(ii) NET shall advise the Client End User Customer in writing that (I)
the disputed amount will be removed from the bill, (2) Client has
not forgiven the charge, and (3) Client may independently pursue
collection remedies. NET may then recourse the disputed amount by
preparing and forwarding to Client an adjustment via an IC/LEC
Memorandum identifying the amount of the adjustment, the Client End
User Customer's name, address, and billing telephone number, the
date of the Initial Recourse Memorandum sent to Client about the
dispute, and any communication with the Client End User Customer or
investigation by NET concerning the dispute since the Initial
Recourse Memorandum. This IC/LEC Memo shall be conspicuously labeled
as a "Final Recourse Memorandum." If the disputed amount is more
than $15,000, NET shall also send a copy of the Final Recourse
Memorandum to Mark Stodter.
<PAGE>
14
(3) In addition to complying with the requirements set forth in subsection
(2) above, where a disputed amount is over $15,000, NET shall perform
the following activities, and shall discuss the results of such
activities with Client prior to recoursing the disputed amount to
Client.
(i) Involve appropriate Client managers in the collection effort; and
(ii) In cases involving alleged fraud, NET shall cooperate with any
investigation by Client security organization if Client has
contracted with NET to obtain Billing Analysis Services from NET.
After these activities have been completed, and not less than thirty
(30) days after Client's receipt of the Initial Recourse Memorandum
concerning the dispute, NET may recourse these disputed amounts and
shall notify the Client End User Customer in writing that (1) the
disputed amount will be removed from the bill, (2) Client has not
forgiven the charge, and (3) Client may independently pursue collection
remedies.
NET shall prepare and forward to Client an IC/LEC Memo containing the
information and associated documentation set forth in subsection (2)
above. This Memo shall be conspicuously labeled as a "Final Recourse
Memorandum".
(4) Notwithstanding any of the foregoing provisions, prior to any recourse,
appropriate levels of NET's management shall review and approve recourse
of charges to Client in accordance with existing NET authorization
levels and the provisions of this Section.
(5) In no event shall NET recourse any disputed amount unless it provides to
Client with the Final Recourse Memorandum the record of all call
details/usage that were removed from the Client End User Customer bill
involved if different from that provided with the Initial Recourse
Memorandum.
(6) At the time when an account is written off as final uncollectible bad
debt, all charges associated with Client 900 services billed by NET
shall be recoursed to Client and NET shall provide Client with the
information specified in subsection (2) above.
Section 9. Collection Services
-------------------
NET shall process bills to Client End User Customers and apply payments and
adjustments to the aggregate amount due NET on the NET bill. NET shall not
apply Client End User Customer payments to specific portions of the NET bill
as may be directed by any such Client End User Customer (e.g., a direction
that the entire amount paid be allocated to the local exchange service
portion of the bill), except where mandated by regulatory authorities.
Partial payments shall be apportioned in accordance with NET's existing
procedures.
NET shall provide collection services pursuant to this Agreement in a manner
consistent with the procedures applied by NET on its own behalf and in
accordance with applicable regulatory requirements, including but not
limited to notification and customer billing requirements. NET will pursue
collections as single amounts due to NET unless prohibited by regulatory
requirements.
Collection services include, but are not limited to, the preparation and
mailing of account status notices to Client End User Customers with
outstanding balance due amounts. NET shall provide Client with a
<PAGE>
15
copy of its collection procedures that are in effect as of the date of this
Agreement. Any significant changes to the NET collection procedures shall be
communicated to Client at least three (3) months prior to implementation except
as otherwise directed by regulatory agencies.
In cases where treatment and collection action fails to produce payment of
outstanding amounts, NET may provide denial of local service, restricting Client
End User Customer access to the network, or a portion of the network, dependent
upon regulatory requirements or network limitations.
In those instances where there is termination of service, NET will render a
final bill to the Client End User Customer for total charges due and pursue
collection of the final charges. The decision to refer to an outside collection
agency will be made in accordance with NET's collection procedures. Amounts
collected by NET or its agent following declaration of final bad debt on a
Client End User Customer account shall be shared between NET and Client based
on the apportionment of NET and Client revenues. Amounts not collected by NET or
its agent following declaration of final bad debt on a Client End User Customer
account shall be shared between NET and Client based on the apportionment of NET
and Client revenues.
Section 10. Payment Procedures for Interstate Billing and Collection Services
-----------------------------------------------------------------
NET will bill Client for its Billing and Collection Services on a monthly basis.
The billing and collection billing schedule will be provided to Client by NET.
Client will be notified by NET at least sixty (60) days prior to a billing
schedule change. In the event that NET agrees to provide Billing and Collection
Services to Client under an additional Carrier Identification Code, a separate
bill will be rendered for each additional Carrier Identification Code.
In order to calculate Client's money payment, NET will apply the rates and
charges detailed in Exhibit D to Client's monthly message and bill volumes.
Client shall pay the stated rates and charges by the same date of the following
month as the billing date so designated on the bill sent by NET to Client (the
"Client Payment Date") unless the bill is received by Client less than twenty
(20) days prior to that date, in which event the Client Payment Date shall be no
less than twenty (20) days after Client's receipt of the bill. Any payment to
NET from Client must be accompanied by an indication of the NET invoice number
being paid.
Payment to NET by Client must result in immediately available funds on the
Client Payment Date. If the Client Payment Date falls on a Sunday or on a
Holiday which is observed on a Monday, the Client Payment Date shall be the
first non-Holiday day following such Sunday or Holiday. If the Client Payment
Date falls on a Saturday or on a Holiday which is observed on a Tuesday,
Wednesday, Thursday or Friday, the Client Payment Date shall be the last
non-Holiday day preceding such Saturday or Holiday.
If any portion of the payment due from Client for Interstate Billing and
Collection Services is not received by the Client Payment Date or if any portion
of the payment is received by NET in funds which are not immediately available
to NET, then a late payment penalty shall be due NET. The late payment penalty
shall be the portion of the payment due to NET for Interstate Billing and
Collection Services not received by the Client Payment Date times a late factor.
The late factor shall be the lesser of:
(a) the highest interest rate (in decimal value), as of the Client
Payment Date which may be levied under the applicable law for
commercial transactions within the Commonwealth of Massachusetts,
with interest compounded daily for the number of days from the
<PAGE>
16
Client Payment Date to and including the date that Client actually
makes the payment to NET; or
(b) .0005 per day, simple interest for the number of days from the
Client Payment Date to and including the date that Client actually
makes the payment to NET.
Any late payment penalty shall be included with the next Client payment due to
NET.
Section 11. Deposits
---------
In the event Client has not established credit with NET or does not pay the
billing and collection charges on time, NET shall have the right to require a
deposit from Client to guarantee payment. The deposit will not exceed the
actual or estimated charges for providing Interstate Billing and Collection
Service to Client for a three month period. Upon termination of service, NET
will credit the amount of the deposit to the Client's account and any remaining
credit balance will be refunded. At NET's option the deposit may be refunded or
credited to Client's account prior to termination of service if the Client has
promptly paid all billing and collection charges for a period of one year.
Client will receive interest on the deposit at the rate set forth in Section
10(a) or (b) above, whichever is lower. The rate will be compounded daily from
the date the deposit is received to and including the date the deposit is
credited to Client's account or is refunded by NET.
Section 12. Audits
-------
(A) Notice and Scope
-----------------
(1) Upon forty-five (45) days prior written notice by Client to NET (or such
shorter period as the parties may mutually agree upon), Client or its
authorized representative shall have the right to commence an Audit (as
defined in subsection (E)(3) below) during normal business hours of such
source documents, systems, records and procedures which, under
recognized accounting practices, contain information bearing upon (i)
the amounts being billed to Client End User Customers by NET as part of
its provision of Interstate Billing and Collection Services, and (ii)
the charges to Client therefor, and the charges to Client for other
services provided by NET pursuant to this Agreement.
(2) The written notice of Audit shall identify the date upon which it is to
commence, the location, the Client representatives that will conduct the
Audit, the subject matter of the Audit, and the materials to be
reviewed.
(3) The written notice of Audit shall be directed to NET's representatives
at the address set forth in Section 20 hereof, or to such other address
as NET may from time to time stipulate.
(4) NET may, within thirty (30) days of receipt of Client's notice of Audit,
postpone commencement for a period not to exceed fifteen (15) days,
which shall be set forth in writing by NET. NET shall also indicate the
new date for commencement of an Audit.
(5) Client's auditors will present a preliminary oral report of their
findings to NET prior to their departure. Client will provide a
confirming letter, within thirty (30) days of making its oral report,
setting forth the results of the Audit. If the Audit shows an error, NET
or Client, as
<PAGE>
17
appropriate, shall promptly correct such errors and file claims, as
appropriate. Client shall not be entitled to commence another Audit on
the same subject prior to submission of the letter confirming conclusion
of the Audit, and in accordance with subsection (B) below.
(B) Frequency
---------
Not more than one (1) Audit may be conducted in any twelve (12) month period
during the term of this Agreement.
(C) Expenses
--------
Each party shall bear its own expenses in connection with the Audit. Special
data extractions required by Client or its representatives to conduct an
Audit will be paid for by Client. For purposes of this subsection, a
"special data extraction" shall mean programming, clerical, and computer
time required to create an output record (from existing data files) that
cannot normally be created from software programs that are currently
resident on the production program library. NET will provide Client with a
working area for the Audit. Any other reasonable assistance requested by
Client, such as programming, computer time, clerical assistance, telephones
and copying, will, if possible, be provided by NET at Client's cost and
expense.
(D) Handling of Materials
---------------------
All documents and materials of NET reviewed by Client in the course of an
Audit shall be deemed proprietary, and their use by Client shall be governed
by Section 17 of this Agreement.
(E) Requests for Examination
------------------------
(1) In addition to Audits, Client may request, from time to time, the
opportunity to conduct an Examination (as defined in subsection (2),
below ). NET will make reasonable efforts to accommodate requests for an
Examination and to cooperate in the conduct of an Examination.
(2) An "Examination" shall, for purposes of this subsection, constitute a
reasonable inquiry on a single issue or a specific topic related to
billing and collection services for a stated reason.
(3) An "Audit" shall, for purposes of this Section, constitute a reasonable
inquiry on more than one issue or specific topic related to billing and
collection services.
(4) Client shall have the right to request an Examination after the
expiration of this Agreement. Said Examination shall be limited to the
following topics: payments from NET to Client; NET's charges for billing
and collection services; and any additional billing and collection
reporting provided by NET to Client after the expiration of the
Agreement.
Section 13. Claims
------
(A) Notification of Disputed Amounts
--------------------------------
If either Party disputes any portion of the amount due the other Party (as
defined in Sections 5 and 10), the disputing Party shall notify the other
Party in writing of the nature and basis of the dispute. Client may file a
substantiated claim with NET for billing and collection charges; for
<PAGE>
18
revenue billed, collected and not remitted; and for revenue not billed. NET
may file a substantiated claim with Client for billing and collection
charges or for billed revenue.
(B) Payment of Disputed Amount
--------------------------
If the dispute is not resolved by the Payment Date, the disputing Party
shall pay the undisputed portion of the amount due in accordance with the
settlement terms defined in Sections 5 and 10 and advise the other Party in
writing of its reasons for not paying the disputed amount. If the dispute
arises after the amount due has been paid, the disputing Party shall file
its claim in writing within the time period set forth in subsection (D)
below.
(C) Settlement of Claims
--------------------
If the claim, in whole or in part, ultimately is resolved in favor of the
disputing Party and the disputing Party has paid the full amount due the
other Party, the Disputing Party shall be entitled to payment, with interest
as specified below, from the other Party. If the claim, in whole or in part,
ultimately is resolved against the disputing Party, and the disputing Party
has not paid the full amount due the other Party, then the other Party shall
be entitled to payment, with interest as specified below, from the Disputing
Party. Interest on the claim settlement amount shall be in accordance with
the following:
(1) Interest on Client claims with respect to billing and collection charges
shall be calculated using the actual Payment Date as set forth in
Section 10. Interest on Client revenue claims for amounts billed and
collected but not remitted by NET shall be calculated using the Payment
Date as set forth in Section 5 preceding. The rate of interest to be
used in both cases is as set forth in Sections 5 and 10.
(2) Interest on revenue claims for amounts not billed by NET and not
remitted and where access charges have been paid to NET by Client shall
be calculated using the rate in accordance with Section 5 and the
Payment Date set forth in Section 5. NET shall reimburse Client for
fifty (50) percent of the interest amount calculated above.
(3) Interest shall not apply on revenue claims for amounts not billed by NET
and not remitted to Client and where access charges have not been paid
to NET by Client.
(4) Interest on NET claims with respect to billing and collection charges
and revenue claims for amounts billed and remitted, where Client was at
fault, shall be calculated as set forth in subsection (C)(1) above.
Any payments due to a Party as a result of a claim resolution shall be
remitted, with interest as defined above, no later than thirty-one (31)
calendar days following resolution.
(D) Claims Limitation
-----------------
Any claim asserted by a Party under Section 13(A) shall be brought to the
attention of the other Party in writing as soon as possible upon discovery
thereof. Failure of the claiming Party to assert in writing to the other
Party any such claim within two (2) years from the date on which the cause
of the claim occurred shall be deemed a waiver of the right to assert that
claim in any judicial or administrative proceeding and furthermore shall bar
recovery under this Agreement.
<PAGE>
19
(E) Retention of Supporting Data Concerning Claimed Amount
-----------------------------------------------------
Both Parties shall retain such detailed information as may reasonably be
required for resolution of the claim amount during the pendency of the
claim.
Section 14. Limitation of Liability
-----------------------
Except as provided for in Section 6 (Assignment of Rated Messages) and 7
(Application of Taxes and Tax-Associated Rate Elements), neither party shall be
liable to the other for any loss, cost, claim, injury, liability, or expense,
including reasonable attorneys' fees, relating to or arising out of any ordinary
negligent act or omission by a party. In no event shall either party be liable
to the other for any indirect, special, incidental or consequential damages,
including, but not limited to, loss of profits, income or revenue.
Section 15. Termination
-----------
In the event of a default under or breach of any material term or condition of
this Agreement, the nondefaulting party shall have the right to terminate this
Agreement if the default or breach is not cured within sixty (60) days of the
date that written notice of such default or breach is given by the non-
defaulting party to the defaulting party. Either party shall also have an
immediate right to terminate this Agreement in the event of the other Party's
bankruptcy, liquidation, insolvency or receivership.
Section 16. Indemnification
----------------
Except as otherwise provided in this Agreement, each party (the "Indemnifying
Party") will indemnify and hold harmless the other party ("Indemnified Party")
from and against any loss, cost, claim, liability, damage and expense (including
reasonable attorney's fees) to third parties, relating to or arising out of the
negligence, negligent omission or misconduct by the Indemnifying Party, its
employees, agents, or contractors in the performance of this Agreement. In
addition, the Indemnifying Party will, to the extent of its negligence,
negligent omission or misconduct, defend any action or suit brought by a third
party against the Indemnified Party for any loss, cost, claim, liability, damage
or expense relating to or arising out of negligence, negligent omission or
misconduct by the Indemnifying Party, its employees, agents, or contractors, in
the performance of this Agreement. The Indemnified Party will notify the
Indemnifying Party promptly in writing of any written claims, lawsuits, or
demands by third parties for which the Indemnified Party alleges that the
Indemnifying Party is responsible under this Section, and, if requested by the
Indemnifying Party, will tender the defense of such claim, lawsuit or demand.
The parties will cooperate in every reasonable manner with the defense or
settlement of such claim, demand, or lawsuit. The Indemnifying Party will not be
liable under this paragraph for settlements by the Indemnified Party of any
claim, demand, or lawsuit unless the Indemnifying Party has approved the
settlement in advance or unless the defense of the claim, demand, or lawsuit has
been tendered to the Indemnifying Party in writing and the Indemnifying Party
has failed promptly to undertake the defense.
Section 17. Proprietary Information
-----------------------
(1) Attached to this Agreement as Exhibit E and incorporated herein by
reference is the parties' agreement with respect to proprietary
information.
<PAGE>
20
(2) Neither party waives any rights it may have to assert before any
regulatory or judicial forum, with jurisdiction over the subject matter,
that a proposed or actual use of proprietary information is unlawful or
in violation of this Agreement. For purposes of such claims, both
parties submit to the personal jurisdiction of the federal and state
courts of Massachusetts and service by mail of any summons and/or
complaint at the addresses provided in Section 20 below shall be deemed
sufficient service of process upon the served party. Should either party
choose to assert a claim that a proposed use of proprietary information
is unlawful or in violation of this Agreement in a judicial forum, the
party asserting such a claim further agrees that such claim shall be
brought only in the state or federal courts of Massachusetts and that
party shall not commence any judicial proceedings outside Massachusetts
even though personal jurisdiction over the other party may be proper in
other jurisdictions.
Section 18. Amendments and Waivers
-----------------------
In addition to the provisions of Exhibit D which specify procedures by which
charges for services under this Agreement may be changed, no amendment or waiver
of any provisions of this Agreement, and no consent to any default under this
Agreement, shall be effective unless the same shall be in writing and signed by
a duly authorized representative on behalf of the party against whom such
amendment, waiver or consent is claimed except as otherwise provided in Exhibit
D. In addition, no course of dealing or failure of any party to enforce strictly
any term, right or condition of this Agreement shall be construed as a waiver of
such term, right or condition.
Section 19. Assignment
----------
Any assignment by either party to any non-affiliated entity of any right,
obligation or duty, in whole or in part, or of any other interest hereunder,
without the written consent of the other party shall be void. All obligations
and duties of any party under this Agreement shall be binding on all successors
in interest and assigns of such party.
Section 20. Notice and Demand
-----------------
Except as otherwise provided under this Agreement, any notices, demands, or
requests made by either party to the other party shall be in writing and shall
be deemed to have been duly given on the date delivered in person or deposited,
postage prepaid, in the United States mail via Certified Mail, return receipt
requested, and addressed as follows:
To: Telco Development Group of Delaware. Inc.
------------------------------------------------
Mark Stodter
4219 Lafayette Center Drive
Chantilly, Virginia 22021-1209
To New England Telephone and Telegraph Company:
------------------------------------------------------
Client Account Manager
NYNEX
2nd Floor
222 Bloomingdale Road
White Plains NY 10605
<PAGE>
21
If personal delivery is selected as the method of giving notice under this
Section, a receipt of such delivery shall be obtained. The address to which such
notices, demands, requests, elections, or other communications may be given by
either party may be changed by written notice given by such party to the other
party pursuant to this Section.
Section 21. Force Majeure
--------------
Neither Party shall be held liable for any delay or failure in performance of
any part of this Agreement to the extent that such failure or delay is caused by
Acts of God, acts of civil or military authority, government regulations,
embargoes, epidemics, war, terrorist acts, riots, insurrections, fires,
explosions, earthquakes, nuclear accidents, floods, strikes, power blackouts,
volcanic action, other major environmental disturbances, unusually severe
weather conditions, inability to secure products or services of other persons or
transportation facilities, or acts or omissions of transportation common
carriers or other causes beyond the control of the Parity. If any force majeure
condition occurs, the Park delayed or unable to perform shall give immediate
notice to the other Party. During the pendency of the force majeure, the duties
of the Parties under this Agreement affected by the force majeure condition
shall be abated and shall resume without liability thereafter, except that in
the event of a strike, NET's obligations under Section 30 of the Agreement shall
remain in effect.
Section 22. Non-Exclusive Agreement
------------------------
This Agreement is non-exclusive. NET reserves the right to extend to others the
services provided for herein.
Section 23. EEO Clause
----------
Each party agrees and warrants that, in the performance of this Agreement, it
will not discriminate or permit discrimination in employment against any person
or group of persons on the grounds of sex, race, age, religion, national origin
or handicap in any manner prohibited by the laws of the United States or any
state or local government having jurisdiction.
Section 24. Non-Publicity
--------------
Both NET and Client agree that neither will use the other's name in connection
with promotional, advertising or other marketing material associated with this
Agreement without the written permission of the other. The Parties acknowledge
that this Agreement contains commercially confidential information which may be
considered proprietary by either or both Parties, and agree to limit
distribution of the Agreement to those individuals in their respective
organizations with a need to know the contents of the Agreement. Neither party
shall disclose any of the terms or conditions of this Agreement to any third
party which is not affiliated with either party hereto, except as may
be~required by law, regulation or order of any court or governmental agency, or
pursuant to Exhibit E.
Section 25. Detariffing of Services
-----------------------
NET shall provide interstate and intrastate Billing and Collection Services
pursuant to the terms and conditions of this Agreement and any applicable
intrastate tariffs. At such time as detariffing of NET's
<PAGE>
22
intrastate billing and collection services may take place in any intrastate
jurisdiction in which NET provides billing and collection services, the parties
agree that for such jurisdiction NET shall provide intrastate Billing and
Collection Services to Client under the terms and conditions of this Agreement.
Section 26. Merger Clause
-------------
This Agreement and all exhibits attached hereto constitute the entire Agreement
and understanding between the parties and supersedes all prior understandings,
oral or written agreements, representations, statements, negotiations, proposals
and undertakings with respect to the subject matter hereof.
Section 27. Headings
--------
The headings in this Agreement are for convenience and shall not be construed to
define or limit any of the terms herein or affect the meanings or interpretation
of this Agreement.
Section 28. Independent Contractors
-----------------------
Each party shall perform its obligations hereunder as an independent contractor
and not as the agent, employee or servant of the other party. Neither party nor
any person employed by such party shall be deemed the employee, agent or servant
of the other party or entitled to any benefits available under the plans for
such other Party's employees.
Each party has and hereby retains the right to exercise full control of and
supervision over its own performance of the obligations under this Agreement and
retains full control over the employment, direction, compensation, and discharge
of all employees assisting in the performance of such obligations. Each party
will be solely responsible for all matters relating to payment of such
employees, including compliance with social security taxes, withholding taxes,
and all other regulations governing such matters. Each party will be responsible
for its own acts and those of its own subordinates, employees, agents, and
subcontractors during the performance of that Party's obligations hereunder.
Section 29. Bank Errors
------------
Any late payment resulting from bank error will not be subject to the late
payment charge, provided the sending Party (Party making payment) can verify
that it was not at fault. Rather, the discrepancy will be resolved by the banks
involved. It is the responsibility of the sending Party to notify the banks
involved and coordinate resolution of the discrepancy.
Section 30. Performance
-----------
NET shall maintain a performance level with respect to the Billing and
Collecting services provided hereunder which is consistent with NET's own
performance level in billing and collecting its own charges.
NET and Client shall cooperate with and assist each other in promptly
identifying and correcting problems arising out of NET's provision of billing
services to Client under this Agreement.
<PAGE>
23
Section 31. Third Party Beneficiaries
--------------------------
This Agreement shall not provide any person not a party to this Agreement with
any remedy, claim, liability, reimbursement, cause of action, or other right in
excess of those existing without reference to this Agreement.
Section 32. Executed in Counterparts
--------------------------
This Agreement may be executed in any number of counterparts, each of which
shall be an original; but such counterparts shall together constitute but one
and the same document.
Section 33. Severability
------------
If any provision of this Agreement shall for any reason be held invalid,
unenforceable or void in any respect under the laws of the jurisdiction
governing the entire Agreement, the remainder of the Agreement shall not be
affected thereby and shall continue in full force and effect.
Section 34. Governing Law
----------------
This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts.
Section 35. Most Favored Nation
---------------------
NET represents that all charges for the services described herein are the lowest
rates currently being provided by NET to interexchange carriers. NET also
represents that the other terms and conditions for the services described herein
are not materially different from those currently being provided by NET to
interexchange carriers. If, during the term of this Agreement, NET enters into a
contract with any other interexchange carrier to provide the same services
described herein at a lower rate, or on terms and conditions that are materially
different than those set forth herein, NET will notify Client within fifteen
(15) business days and offer such rates, terms and conditions to Client as soon
as practicable.
Section 36. Changes in State Tariffs
------------------------
In the event that, during the term of this Agreement, any state regulatory
commission significantly changes any material term or condition, excluding rates
and charges, of an intrastate tariff (such as bundling of Inquiry Service with
Bill Rendering), which does not allow for implementation or continuation of
billing and collection services as provided for herein, Client shall have the
right to seek modification to this Agreement. This right must be exercised
within sixty (60) business days of the date of the state regulatory commission
final order. Any disputes concerning the significance of a change required by
any state regulatory commission may be submitted for resolution under Dispute
Resolution procedures described in Section 37 of this Agreement.
Section 37. Dispute Resolution
-------------------
Where this Agreement specifically provides for Dispute Resolution of the issue,
either Party may submit the issue for resolution to an Inter-Company Review
Board ("the Board") consisting of two people (one
<PAGE>
24
representative from NET and one from Client) of at least Vice Presidential
level, or their delegates. Unless otherwise agreed to by the Board, the Board
may consider any written material or oral testimony submitted to it by either
Party, which written material or oral testimony shall be submitted within twenty
(20) business days of a Party's notification that it desires resolution by the
Board. Written material submitted shall be exchanged with the other Party, and
each Party shall have a twenty (20) business day period to comment upon or reply
to the other Party's written material or oral testimony. Within ten (10)
business days following the expiration of the comment period, the Board shall
state in writing to the Parties its resolution of the dispute.
Section 38. List of ICs and/or OSPs
------------------------
In the event that Client is acting as a Clearing Agent for other ICs and/or
OSPs, upon demand, Client will provide NET with the names of those ICs and/or
OSPs it represents for billing and collection service with respect to this
Agreement.
Section 39. Use of Client Specifications
----------------------------
It is understood and agreed between the Parties that any specifications provided
to NET by Client for use by NET in connection with NET's provision of billing
and collection services to Client shall be treated as Client Proprietary
Information, shall not be made available to third parties, and shall be
implemented by NET only as expressly directed by Client, unless agreed to in
writing by Client or as otherwise permitted under Exhibit E of this Agreement.
Unless otherwise agreed to by the Parties, only those specifications which have
been marked to indicate they are proprietary to Client shall be subject to this
provision. Notwithstanding any provisions to the contrary within this Agreement,
NET reserves the right to use programs and systems developed from the Client
specifications to provide services to others, unless the Parties agree
otherwise.
Section 40. Billing Modifications
---------------------
Client shall have the right to submit requests for modifications of NET's
billing and collection services in accordance with the procedures outlined in
the NYNEX Billing and Collection Operations Manual.
Section 41. Term
-----
NET shall commence the provision of Message Ready Billing and Collection Service
on a month-to-month basis. The effective date shall be the earliest of three (3)
months from the signing of the Agreement; or forty-five (45) days after the
first successful processing of a test tape; or upon receipt of the first
accepted live tape from Client.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement:
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
By: /s/ Brian R. Lane
------------------
Name: Brian R. Lane
---------------
Title: Vice President
----------------
Date: 7/3l/95
-----------------
TELCO DEVELOPMENT GROUP OF DELAWARE, INC.
By: /s/ Bryan Rachlin
-------------------
Name: Bryan Rachlin
-----------------
Title: President
-------------
Date: 7/10/95
---------------
<PAGE>
Page 1 of 2
EXHIBIT A
---------
CONTRACT ORDER FORM
-------------------
1. Company Name, state of incorporation and principal place of business:
Introduction (Page 1)
Telco Development Group of Delaware, Inc.
--------------------------------------------
4219 Lafayette Center Drive
--------------------------------------------
Chantilly, Virginia 22021-1209
--------------------------------------------
--------------------------------------------
Incorporated in Virginia
--------------------------------------------
2. Inquiry Service:
Exhibit B
CIC: Additional CIC:
------------- ------------------
NYT NET NYT NET
Yes
---- ----- ----- -----
No X X
----- ----- ----- -----
3. Payment of Purchase Price:
Section 5 (B)(1)
CIC: 457 Additional CIC:
--------- -------------------
NYT NET NYT NET
Standard X X
----- ----- ----- -----
Expedited
----- ----- ----- -----
4. End User contact:
Section 8 (A)(1)
Mark Stodter
-----------------------------------------
Telco Development Group of Delaware, Inc.
-----------------------------------------
4219 Lafayette Center Drive
-----------------------------------------
Chantilly, Virginia 22021-1209
-----------------------------------------
5. Contact for dispute/adjustment in excess of $15,000.00:
Section 8 (C) and Exhibit B
Mark Stodter
-----------------------------------------
Telco Development Group of Delaware, Inc.
-----------------------------------------
4219 Lafayette Center Drive
-----------------------------------------
Chantilly, Virginia 22021-1209
-----------------------------------------
<PAGE>
Page 2 of 2
6. Notice and Demand:
Section 20
Mark Stodter
------------------------------------------
Telco Development Group of Delaware, Inc.
------------------------------------------
4219 Lafayette Center Drive
------------------------------------------
Chantilly, Virginia 22021-1209
------------------------------------------
7. "Term desired, if available":
NYT NET
1 Year
------- -------
2 Years
------- -------
3 Years
------- -------
8. Rates and Charges:
Exhibit D
CIC: 457 Additional CIC:
---------- ----------
NYT NET NYT NET
$.86 per bill
$.01 per message * X X
----- ----- ----- -----
$.25 per message
$.01 per bill ----- ----- ----- -----
* The $.01 per message charge applies only to those messages in excess of an
average of 10 messages per bill.
<PAGE>
Page 1 of 2
EXHIBIT B
---------
INQUIRY SERVICE
---------------
When Client elects to have NET provide Inquiry Service, the following processes
and procedures will be applied. These processes and procedures will
superseded those detailed in Sections (8)(B) and (C) of the Agreement.
1. Inquiry and Adjustment Process
------------------------------
Upon inquiry from a Client End User Customer, NET shall respond in a manner
consistent with the procedures applied by NET on its own behalf for a like or
similar service and in accordance with appropriate regulatory requirements or
directives, if any. Where NET does not sustain a charge as billed, the
following adjustment process applies.
(A) Where available, NET will report each Adjustment via the mechanized LEC/IC
memo. Where the Mechanized LEC/IC memo is unavailable, the following
adjustment process applies.
(B) Without notification to Client, NET may reduce the Client End User Customer
bill in the amount of ten ($10.00) dollars or less (excluding sales taxes,
federal excise taxes and other taxes imposed on Client End User Customers,
if any) per Client End User Customer account, per bill period, which NET
determines should not be sustained upon application of appropriate
inquiry/claim procedures.
(C) NET will notify Client of any reduction to a Client End User Customer bill
in excess of ten ($10.00) dollars (excluding sales taxes, federal excise
taxes and other taxes imposed on Client End User Customers, if any) per
Client End User Customer account, per month, which NET determines should not
be sustained upon application of appropriate inquiry/claim procedures.
(D) In addition to complying with the requirements set forth above, where an
Adjustment amount is over $15,000, NET shall send an additional copy of the
IC/LEC memo to Mark Stodter. Further, NET shall, before making such an
Adjustment, perform the following activities:
(i) Involve appropriate Client managers in the collection effort; and
(ii) In cases involving alleged fraud, NET shall cooperate Keith any
investigation by Client security organization if Client has
contracted with NET to obtain Billing Analysis Services from NET.
After these activities have been completed, NET may adjust the Client End
User Customer's bill and recourse the adjusted amount to the Client. At the
Client's request, NET shall also notify the Client End User Customer in
writing that (1) the disputed amount will be removed from the bill, (2)
Client has not forgiven the charge, and (3) Client may independently pursue
collection remedies.
(E) Adjustments shall be reviewed and approved by NET's management in accordance
with existing NET procedures and authorization levels.
(F) At the time when an account is written off as final uncollectible bad debt,
all charges associated with Client 900 services billed by NET shall be
recoursed to Client and NET shall provide Client with this information as
specified in this section.
<PAGE>
Page 2 of 2
2. Rebilling of Adjusted Charges
------------------------------
(A) Client agrees not to submit for rebilling to NET those charges
associated with any Adjustment made pursuant to Section 1(A)(B) and (C)
above, except that Client may submit such Adjustments for rebilling if
Client has obtained the consent of the Client End User Customer to accept
and pay for the rebilled amount, and Client so notifies NET in writing of
such consent prior to any resubmission to NET. This notice to NET shall
include the date of the contact and the name and telephone number of the
consenting party. Client shall also provide NET with any other information
which supports the rebilling of the adjusted charges. Charges that have been
rebilled shall not be adjusted off the Client End User Customer's bill by
NET, unless the Client End User Customer continues to dispute the charges.
In instances where NET rebills Client charges and the Client End User
Customer continues to dispute the charges, but NET declines to deny service
consistent with NET treatment policy, NET may, following exhaustion of
normal treatment and collection practices, as applicable, adjust the
disputed amount off the Client End User Customer bill in accordance with the
adjustment process set forth in Section 1(A),(B) or (C) above, whichever may
be applicable, and recourse the disputed amount to Client. Any charges that
Client wishes NET to rebill shall be submitted to NET via the LEC/IC Memo in
such format as specified in the NYNEX Billing and Collections Operations
Manual. NET reserves the right to return to Client any Memo which is
illegible, requires clarification, contains errors or for other reasons
which prohibit NET from processing such Memo. In situations where return of
an LEC/IC Memo will adversely affect the Client End User Customer, oral
communication may be used by Client and/or NET in order to provide a prompt
resolution.
(B) In no event shall Client attempt to rebill those adjustments referred to in
Section 1(D) above through NET unless otherwise agreed to by NET in writing.
3. Inquiry Service Price
----------------------
(A) Based upon its records for the most recent six (6) month period prior to
the execution of the Agreement, NET will determine the Inquiry Service Price
using the process detailed in (B) following.
(B) In the event that NET has not provided Inquiry Service to the Client during
the entire six (6) month period prior to the execution of this Agreement,
NET shall charge the Client an initial Inquiry Service Price of $.02 per
message billed for the Client. This rate will apply for the first six months
of the contract. NET may change the Inquiry Service Price thereafter.
In the event NET elects to change the Inquiry Service Price, the new rate
will remain in effect for the following three (3) month period and may be
changed every three (3) months thereafter, if necessary. NET will provide
the Client with the information used to determine any change to the Inquiry
Service Price. The minimum Inquiry Service Price will be $.01 per message.
Client may, at any time without penalty, cancel Inquiry Service upon sixty
(60) days prior written notice to NET. If, after cancellation of Inquiry
Service, Client determines that it wishes to reorder Inquiry Service, Client
will: (1) notify NET of its intention to have NET provide Inquiry Service no
later than six months prior to the date such provision of service is to
begin; and (2) pay the rate that it would have been charged if Client had
not cancelled the service.
(C) In the event that NET agrees to provide Billing and Collection Services
to Client under an additional Carrier Identification Code, a separate
Inquiry Service Price will apply to each additional Carrier Identification
Code and will be determined as detailed in (A) and (B) above.
<PAGE>
Page 1 of 2
EXHIBIT C
-----------
BILLING FOR CLIENT 700/900 SERVICE
----------------------------------
1. Subject to the terms and conditions of this Exhibit and the Agreement
for Interstate Billing and Collection Services ("Agreement") of which
this Exhibit forms a part, NET will provide Interstate Billing and
Collection Services for Client's 700/900 Service or for the 700/900
Service of the ICs and/or OSPs represented by the Client acting as a
Clearing Agent.
2. NET requires that 700/900 Service message detail be in a format that
clearly identifies such charges to the Client End User Customers. This
identification should be in a form easily recognizable by end user
customers, e.g., Sportsphone, Horoscope, etc.
3. With regard to charges for 700/900 Service messages that are recoursed
for the first-time by NET in accordance with Exhibit B, Client shall not
attempt to rebill those charges through NET unless otherwise agreed to
by NET.
4. NET reserves the right to terminate its provision of Interstate Billing
and Collection Services for Client's 700/900 Service calls (or the
700/900 Service calls of the ICs and/or OSPs represented by the Client
acting as a Clearing Agent) upon sixty (60) days' written notice to
Client if NET in its sole discretion determines that billing and
collection for Client's 700/900 Service calls (or the 700/900 Service
calls of the ICs and/or OSPs represented by the Client acting as a
Clearing Agent) adversely impacts the reputation of NET or its public
image and Client is unable to cure the problem within thirty (30) days
from receipt of NET's written notice of its intent to terminate. In the
event of such a termination, the Agreement shall continue in full force
and effect with respect to the provision of Interstate Billing and
Collection Services for Client's other calls. Notwithstanding anything
to the contrary herein, NET shall have no right to terminate its
provision of Interstate Billing and Collection Services for Client's
700/900 Service calls (or the 700/900 Service calls of the ICs and/or
OSPs represented by the Client acting as a Clearing Agent) if such
termination is prohibited by any legislative or regulatory rule, action,
statute or order.
Moreover, Client reserves the right to contest any NET 700/900 billing
policy before any legislative or regulatory body or agency. In addition,
Client reserves the right to propose changes to the policy set forth
herein to NET at any time.
5. Except as provided elsewhere in this Exhibit, NET will provide
Interstate Billing and Collection Services for Client's 700/900 Service
calls (or the 700/900 Service calls of ICs and/or OSPs represented by
the Client acting as a Clearing Agent) in a manner which is consistent
with the guidelines and procedures under which NET bills and collects
its own charges for like or similar type calls.
6. Client further agrees that as a condition of NET rendering billing
services for 700/900 Service calls associated with group access
bridging services (GABS) (e.g., any service which allows telephone
users, for a fee, to call a publicized number to join an ongoing casual
group conversation), Client will perform, or will require entities
acting on its behalf to perform, the following:
(a) With respect to GABS services offered to teens, a monitor
will orally announce that five minutes have elapsed since
the inception of the call and will make an oral announcement
at five minute intervals thereafter.
<PAGE>
Page 2 of 2
(b) As to all other GABS, an audible tone will be employed at ten minute
intervals after the inception of the call.
(c) In connection with GABS teen lines, Client will certify that
moderators on its lines have been trained in facilitating group
conversations and in recognizing and dealing with serious problems
which often affect teenagers.
(d) In connection with all advertising for GABS, each advertisement for
each such service will clearly indicate the price for that service,
both audibly and visually where applicable, including the charge for
a nine minute call and each additional minute thereafter; and will
follow Federal Communications Commission standards and National
Network Guidelines governing advertising to audiences under twelve
(12) years old for all its advertising to audiences under
twenty-four (24) years of age.
(e) An introductory message will be included on all lines that describe
the type of GABS service, restates the cost for a nine minute call
and each additional minute thereafter, and explains the time tone
procedures where applicable.
(f) The audio announcements for GABS advertisement broadcast during time
spots considered to be within time frames that contain programming
directed to children under twelve (12) years of age must be
presented in language that can be understood by children and must
advise children to obtain parental consent before calling.
(g) Whenever technically feasible, Client will block access to its lines
from any NET customer line upon the written request of the customer.
In the event of a conflict between any term and condition set forth in the
Agreement and in this Exhibit, the terms of this Exhibit shall control, only to
the extent of the actual conflict.
<PAGE>
Page 1 of 4
EXHIBIT D
---------
RATES AND CHARGES
-----------------
NET's rates and charges for Interstate Billing and Collection Services are as
follows:
<TABLE>
<S> <C>
(1) Price per Bill $.86
(2) Price per Message Billed $.01 for each message in excess of an
average of 10 messages per bill
(3) Manual Adjustment Charge $10.00/1/
(4) Minimum Charges:
</TABLE>
<TABLE>
<CAPTION>
Length of Contract Annual Minimum Monthly Minimum
- ------------------- ------------------ --------------------
<S> <C> <C>
*1 year $56,011.20 $4,667.60
*2 years $42,008.40 $3,500.70
*3 years $28,005.60 $2,333.80
MONTHLY $2,333.80
</TABLE>
Each of these charges are explained in further detail below.
A. Application of Rates to Intrastate and Interstate Services
------------------------------------------------------------
Provided that interstate messages comprise at least 75% of Client's message
volume, the rates and charges set forth above will be used to determine the
total amount due for both Intrastate and Interstate Billing and Collection
Services. The intrastate portion of this total will be determined by
applying the rates and charges contained in the applicable NET tariff(s) to
the intrastate bill and message volumes./2/ The interstate portion is the
remainder after subtracting the intrastate portion from the total. If the
number of interstate messages is less than 75% of Client's message volume,
then the above rates and charges (excluding the Minimum Charges) shall only
apply to Interstate Billing and Collection Services and Intrastate Billing
and Collection Services shall be provided to Client in accordance with the
rates and charges set forth in the applicable NET tariff(s), unless other-
wise agreed to by NET.
B. Adjustments to Rates and Charges
---------------------------------
In the event that, during the term of this Agreement, the costs assigned to
billing and collection services under Part 69 of the Federal Communication
Commission's Rules are changed as a result of: (1) a change in the FCC's
accounting, separations or access charge rules; (2) a change in federal,
state or local tax laws; or (3) any order or change in a rule or regulation
of any Court
---------
/1/ Manual Adjustment Charge does not apply if NET provides Inquiry Service
to Client in accordance with the provisions of Exhibit B attached
hereto.
/2/ For purposes of this Agreement, intrastate messages are messages
associated with Client End User Customer telephone calls both
originating and terminating within a New England State.
*NOT PRESENTLY AVAILABLE
<PAGE>
Page 2 of 4
or federal, state, or local governmental agency having jurisdiction, and the
increase or decrease is more than $500,000, determined cumulatively on an
annual basis for both NET and New York Telephone combined (the "NYNEX
Telephone Companies" or "NTCs"), a surcharge or surcredit may be applied by
NET to the rates set forth herein. The surcharge or surcredit which may
be applied to Client: (1) shall not exceed Client's proportionate share
among customers of NET's billing and collection services of the assigned
costs; and (2) will be effective with the date that Client would cease to
pay for reassigned costs under the procedure in effect prior to the
reassignment of costs (e.g., the date on which the NYNEX Telephone Companies
would no longer be permitted to charge such costs under access). In any
event the NYNEX Telephone Companies shall be permitted to recover Client's
proportionate share of costs reassigned to the billing and collection
category from the date such costs are reassigned to the billing and
collection category. If it is later determined that such costs should not
have been billed to Client because those costs have been recovered
elsewhere, Client shall be entitled to a credit plus interest at an annual
rate of 18.25 percent. Such credit shall be reflected on the next billing
and collection charges bill issued after it is determined that Client is
entitled to a credit. NET shall notify Client, in writing, of the effective
date of any proposed surcharge or surcredit and, upon request, provide
Client with the calculations used to determine the surcharge or surcredit
Which shall be auditable under the provisions of Section 12 of the
Agreement.
In the event NET imposes a surcharge upon Client, Client shall have the
right to terminate this Agreement, without penalty, provided Client notifies
NET in writing within ninety (90) days from the date of NET's written
notification to Client of the surcharge. If Client elects to terminate, said
termination shall become effective no later than six (6) months from the
date of NET's written notification or such longer period as designated by
Client and Client shall be responsible for payment of the surcharge if such
increase becomes effective prior to termination of service. In the event
that the longer period designated by Client extends beyond the term of this
Agreement, NET agrees to continue providing billing and collection services
to Client for such period under the same terms and conditions and rates and
charges, including the surcharge. NET agrees to cooperate fully with Client
in the planning and implementation of any transition from NET to Client
billing as a result of Client election to terminate this Agreement under
this paragraph. If Client does not elect to terminate as provided herein,
then the surcharge shall become effective in accordance with the above
provisions.
C. Client Right to Renegotiate
---------------------------
If, at any time during the term of this Agreement, NET offers interLATA
telecommunication services beyond those which on the effective date it is
able to offer in any local exchange serving area in which NET provides local
exchange service, and Client's unable to meet its Minimum Charges
obligations substantially due to those next interLATA services, Client shall
have the right to renegotiate those obligations for any affected year.
If, at any time during the term of this Agreement, Client is otherwise
unable to meet its Minimum Charges obligations due to NET acts or omissions,
Client shall have the right to renegotiate those obligations for any
affected year.
D. Price per Bill
--------------
For the purpose of applying this charge, a bill will consist of all pages
bearing the same company logo. If NET agrees to bill some of Client's
charges under an additional Carrier Identification Code, then Client will
pay the rates and charges for those bills issued under
<PAGE>
Page 3 of 4
the additional Carrier Identification Code. The provision of Billing and
Collection Services for Client's additional Carrier Identification Code
shall begin on such date as is mutually agreed to by the parties in writing
and may be cancelled by Client at any time without penalty.
E. Price per Message
-----------------
The per message charge of $.01 applies to each message in excess of an
average of ten (l0) messages per bill. For the purpose of applying this
charge, a bill will consist of all pages bearing the same company logo. The
formula used to determine the number of chargeable messages to which the per
message charge is applied is as follows:
MONTHLY MESSAGES BILLED - [10 x MONTHLY BILL VOLUME] =
CHARGEABLE MESSAGES
If the number of chargeable messages is less than or equal to 0, then no per
message charge applies.
F. Manual Adjustment Charge
------------------------
Client will pay NET $10.00 for each LEC/IC Memo processed by NET for
rebilling of Client charges in accordance with Section 8(B).
G. Minimum Charges
---------------
Client shall pay NET a guaranteed Minimum charge in accordance with the
rate schedule listed above. The amounts billed by NET for Intrastate Billing
and Collection Service will be applied towards the Minimum Charges. The
amount billed to Client each month will be determined using the terms and
formula outlined below. In the event NET agrees to provide Billing and
Collection Services to Client under an additional Carrier Identification
Code, an additional Minimum charge in an amount equal to the monthly
minimum charge stated above will apply. The Client will be responsible for
this amount only during the length of time that NET provides Billing and
Collection for Client.
Defined Terms
- -------------
1. Monthly Minimums - The Monthly Minimum charges set forth above.
----------------
2. Cumulative Minimums - Sum of the Monthly Minimum charges from the beginning
-------------------
of contract up to and including the current month's Monthly Minimum charge.
3. Monthly Actuals - Billing and Collection charges calculated by applying the
---------------
above per bill and per message charges to the current month's bill and
message volumes.
4. Cumulative Actuals - Sum of the Monthly Actuals from the beginning of the
------------------
contract up to and including the current month's Monthly Actual.
5. Cumulative Billed Amount - The sum of the Billed Amounts from the beginning
------------------------
of the contract up to and including the current month's Billed Amount.
6. Billed Amount - The amount billed by NET to Client in a given month for
-------------
Billing and Collection Services.
<PAGE>
Page 4 or 4
Formula
- -------
The Billed Amount in each month shall be the greater of (1) Cumulative Actuals
less the previous month's Cumulative Billed Amount, or (2) Cumulative
Minimums less the previous month's Cumulative Billed Amount. The following
example demonstrates the application of the above formula.
<TABLE>
<CAPTION>
Example
- -------
<S> <C> <C> <C> <C> <C> <C>
Month 1 2 3 4 5 6
----- -- -- -- -- -- --
Minimums (1) 10 10 10 10 10 10
Cumulative Minimums (2) 10 20 30 40 50 60
Actual (3) 5 8 12 18 5 15
Cumulative Actuals (4) 5 13 25 43 48 63
Cumulative Billed (5) 10 20 30 43 50 63
Billed (6) 10 10 10 13 7 13
</TABLE>
In the event NET provides Billing and Collection Services to Client under an
additional Carrier Identification Code, the Billed Amount will be determined
separately for those bills issued under each Carrier Identification Code. The
amounts billed by NET for Inquiry Service will not be included in the
application of the above formula used to determine Client's Billed Amount in
each month.
H. Postage Escalator
-----------------
In the event that, during the term of this Agreement, the U.S. Postal
Service increases the rate for one ounce first class zip sort postage,
Client shall pay NET a percentage of any such increases on a per bill basis.
This percentage will be based upon the relation of the average number of
Client bill page(s) to the total number of pages of an average NET bill
including the Client's bill pages. NET shall notify Client in writing of the
effective date of any postage increases and, upon request, provide Client
with the calculations used to determine same.
<PAGE>
Page 1 of 2
EXHIBIT E
---------
PROPRIETARY lNFORMATION
-----------------------
I. General
-------
This is Exhibit E to the Agreement between NET and Client (hereinafter
"Parties") for the provision of Interstate Billing and Collection Services. It
is recognized by the parties that, in connection with the Interstate Billing and
Collection Services to be provided hereunder, NET and Client will have in their
possession and control, or provide to the other Party, information in the form
of data, reports, computer programs, and other documentation which is
proprietary to NET, to Client, to both, to others, and/or which is considered
confidential with respect to Client End User Customers (hereinafter designated,
"Proprietary Information"). The Parties agree that all such data provided to
the other Party shall be treated as Proprietary and held in confidence by the
Receiving Party, pursuant to the terms of this Agreement.
II. Handling of Proprietary Information
-----------------------------------
Except for information not subject to the terms and conditions herein because of
its prior disclosure or permitted or consented disclosure as described below,
Proprietary Information of one party ("Disclosing Party") that is possessed by
the other party ("Receiving Party") shall be treated in accordance with the
following terms and conditions:
A. The Receiving Party shall put in place and strictly enforce (using all
of its prerogatives, including dismissal of employees or termination of
contracts with its agents or contractors) procedures to ensure that its
employees, contractors or agents are aware of and fulfill the obligation
under this Exhibit to hold the Disclosing Party's Proprietary
Information in confidence.
B. Proprietary Information described previously shall be held in confidence
by the Receiving Party and its employees, contractors or agents, shall
be treated with the same degree of care as the Receiving Party would
treat its own Proprietary Information, and shall not be disclosed to
third persons (but may be disclosed to agents who have a need for it),
shall be used for the purposes stated herein, and may be used or
disclosed for other purposes only upon such terms and conditions as may
be mutually agreed upon by the parties in writing.
C. Each party acknowledges that a Party's Proprietary Information may be
commingled with Proprietary Information of the other party, and
accordingly, the Parties shall, to the extent practicable, use good
faith efforts to ensure that such Proprietary Information shall be
masked or rendered mechanically inaccessible to the other party.
However, there may be instances in which efforts to mask or screen such
Proprietary Information are impracticable, or in which disclosure is
inadvertent. In such instances, the Receiving Party will neither use nor
disclose the Proprietary Information, except as required to fulfill its
obligations under the Agreement and shall put in place procedures as
described above.
D. Each party agrees to give notice to the other party of any demand to
disclose or provide Proprietary Information of said other party to other
persons under lawful process prior to disclosing or furnishing such
Proprietary Information. The Receiving Party agrees to cooperate, if the
Disclosing Party deems it necessary to seek protective arrangements. To
avoid the administrative burdens associated with such advance notice of
protective arrangements, either party may respond to routine customer
requests, legal process or
<PAGE>
Page 2 of 2
arrangements, either party may respond to routine customer requests,
legal process or lawful demand involving the disclosure of Proprietary
Information in accordance with mutually agreed upon policies and
procedures.
E. Either party may disclose or provide Proprietary Information of the
other party to implement, effect and enforce either Party's tariffs, to
comply with the terms and provisions of the Modification of Final
Judgment, or to meet the requirements of a court, regulatory body or
government agency having jurisdiction over either party. However, the
Receiving Party will notify the Disclosing Party so as to give the
Disclosing Party a reasonable opportunity to object to such disclosure.
The Disclosing Party may not unreasonably withhold approval of
protective arrangements provided by any such court, regulatory body or
government agency. Nothing in this Exhibit requires either party to
support or not support the position of any person or entity on the issue
of whether any particular Proprietary Formation is proprietary under
applicable law or this Exhibit.
III. Information Not Subject To Handling Restrictions
------------------------------------------------
Information shall not be deemed confidential or proprietary, and the Receiving
Party shall have no obligation to prevent disclosure of such information, if
such information:
(a) was previously knows to the Receiving Party free of any obligation
to keep confidential, or
(b) is provided to other parties by the Disclosing Party without
restrictions, or
(c) is or becomes publicly available by other than unauthorized
disclosure, or
(d) is independently developed, produced or generated by the Receiving
Park, or
(e) is approved for release by written authorization of the Disclosing
Party.
IV. Applicability of Statutes, Decisions and Rules
----------------------------------------------
A Party's ability to disclose Proprietary Information or use disclosed
Proprietary Information is subject to all applicable statutes, decisions, and
regulatory rules concerning the disclosure and use of such Proprietary
Information which, by their express terms, mandate a different handling of such
Proprietary Information.
<PAGE>
Page 1 of 3
EXHIBIT F
---------
MESSAGE READY BILL MESSAGE SERVICE
----------------------------------
Subject to the terms and conditions of this Exhibit F and the Agreement for
Billing and Collection Services (the "Agreement") of which this Exhibit forms a
part, NET shall provide Message Ready Bill Message Service ("MR Bill Message
Service") to Client.
1. General Service Description:
---------------------------
MR Bill Message Service consists of NET's printing of Client developed Marketing
Messages on the Client bill. Client may request that these messages be printed
in the Spanish language. Such messages will contain informational or promotional
announcements about Client services or about Client sponsored services of third
parties. Client may change its messages on a monthly billing cycle basis,
beginning on the first day of each calendar month and ending on the last day of
the month. The Marketing Message will appear on the first Client page of the NET
bill.
2. Number of Messages:
------------------
NET will print one (1) Marketing Message per bill.
3. Format:
------
Each Marketing Message may contain up to eight (8) lines of text with a maximum
of 75 characters (including spacing and punctuation) per line. Client may
request bolding and underlining of text.
4. Transmission:
------------
Client shall have the right to send up to six (6) different Marketing Messages
per month. For each month that Client purchases MR Bill Message Service, NET
shall upon request by Client, target messages so that only some Client customers
receive them. NET agrees that it will provide targeting, as requested, by:
a. Client Presubscribed customers versus casual users
b. State
c. Class of service
d. NPA/NXX
e. Billing Telephone Number ("BTN")
(BTNs that are to be targeted will be provided by Client by tape.)
f. Toll usage level
g. Call type (e.g., operator assisted)
h. Sampling (every Nth Customer)
With the exception of BTN, NET will provide combinations of up to any three
selection criteria at no additional cost to Client. NET agrees to review
requests for additional targeting, and if acceptable, provide to Client, on a
Time and Cost basis.
5. Review Process:
--------------
Client shall submit its proposed Marketing Messages to NET at least forty-five
(45) calendar days in advance of the first day of the month during which
Client wants the messages to appear. (Fifty-five (55) calendar days in the
case of the first Client Marketing Message submitted by Client under this
Agreement. Within fifteen (15) calendar days of receipt of the messages,
NET shall notify Client whether the messages have been approved. If any messages
are not approved, Client must correct the Marketing Message and resubmit same
to NET within five (5) days. NET shall review the resubmitted message and
<PAGE>
Page 2 of 3
notify Client whether the messages have been approved within (10) calendar days
thereafter. NET will not include on the Customer's bill any messages that have
not been approved by NET at least fifteen (15) days before the beginning of the
month during which the Marketing Message is scheduled to appear.
When regulatory or legal orders require implementation in advance of the above
stated time frames, NET will extend its best efforts to meet the regulatory or
legally ordered implementation date.
NET shall supply Client with a print image copy of the Marketing Message not
less than three (3) business days prior to sending Customer bills with the
Marketing Message.
6. Message Criteria:
-----------------
All Marketing Messages must comply with the following criteria:
- The messages must be consistent with generally accepted industry
standards, such as truth in advertising, and standards with regard to
content and customer awareness.
- The message cannot be used to compare Client's services, directly or
indirectly, through the use of superlative phrases, to those of other
service providers.
- If the message contains rates, the rates shall have been approved or
otherwise permitted to become effective by the appropriate regulatory
commission(s).
- The content of the message may only address telecommunications services
provided by Client.
- The content of the message shall not refer to or imply any direct
competition with a service provided by NET.
- The content of the message can address a generic promotional or
informational need of the customer.
- The content of the message shall not involve any message which is
obscene, indecent, or which might otherwise be regarded as generally
repugnant.
- Where the message requests or requires action by the Client End User
Customer, the message must contain a telephone number that the customer
can utilize for further information regarding the content of the
message.
The following are examples of acceptable and unacceptable phrases for a message:
<TABLE>
<CAPTION>
ACCEPTABLE UNACCEPTABLE
- ---------- ------------
<S> <C>
Great telephone service Greatest telephone service
Low prices Lowest prices
XX has reduced rates XX has the lowest rates
XX has a fiber optic network XX has the best fiber optic network
Use XX 3-way calling away Use XX 3-way calling all the time
from home or office
</TABLE>
NET reserves the right to refuse to print any message which NET, in its sole
discretion, determines is not in compliance with the above criteria or which
could adversely affect the public image and reputation of NET. NET also reserves
the right to discontinue MR Bill Message Service if NET is ordered to do so by
<PAGE>
Page 3 of 3
any court or governmental agency having jurisdiction, if Client fails to comply
with the above message criteria, or if NET, in its sole discretion, determines
that continued provision of the service could adversely affect the public image
or reputation of NET.
7. Liability:
---------
In the event that NET fails to print a Client Marketing Message, NET's total
liability to Client shall be limited to a refund of the amount, if any, actually
paid by Client to NET for printing such message. In the event NET prints a
Client Marketing Message inaccurately and the inaccuracies as printed materially
distort and misrepresent the original message, Client shall be entitled to the
above refund, or at Client's option: 1) NET will use its best efforts to print a
corrected Marketing Message for inclusion in the next bill cycle, and in no
event later than the following bill cycle, at no charge to Client; or 2) NET
will reimburse Client, pursuant to the procedures set forth in Section 13
(Claims), for reasonable expenses for mailing, e.g. postage and paper, incurred
in a customer contact program, as agreed to by NET and Client. Except as
provided above, NET shall not otherwise be liable to Client for any loss, cost,
claim, injury, liability, or expense, including reasonable attorneys' fees,
relating to or arising out of the provision of MR Bill Message Service by NET
related to the specific incident, nor shall NET indemnify Client for any Claims
brought against Client by any third party, relating to or arising out of the
provision of MR Bill Message Service by NET to Client.
8. Conflicts:
---------
The provision of MR Bill Message Service as set forth in this Exhibit F is
subject to all the terms and conditions set forth in the Agreement. In the event
of a conflict between any term and condition set forth in the Agreement and in
this Exhibit, the teams of this Exhibit shall control, only to the extent of the
actual conflict.
<PAGE>
Page 1 of 6
EXHIBIT D
------------
RATES AND CHARGES
-----------------
NET's rates and charges for Interstate Billing and Collection Services are as
follows:
<TABLE>
<S> <C>
(1) Price per Bill $.86
(2) Price per Message Billed $.01 for each message in excess of
an average of 10 messages per bill
(3) Manual Adjustment Charge $10.00 /1/
(4) Minimum Charges:
</TABLE>
<TABLE>
<CAPTION>
Length of Contract Annual Minimum Monthly Minimum
------------------ -------------- ---------------
<S> <C> <C>
*1 year $56,011.20 $4,667.60
*2 years $42.008.40 $3,500.70
*3 years $28,005.60 $2,333.80
MONTHLY $2,333.80
</TABLE>
Each of these charges are explained in further detail below.
A. Application of Rates to
Intrastate and Interstate Services
----------------------------------
Provided that interstate messages comprise at least 75% of Client's
message volume, the rates and charges set forth above will be used to
determine the total amount due for both Intrastate and Interstate
Billing and Collection Services. The intrastate portion of this total
will be determined by applying the rates and charges contained in the
applicable NET tariff(s) to the intrastate bill and message volumes./2/
The interstate portion is the remainder after subtracting the intrastate
portion from the total. If the number
--------------------
/1/ Manual Adjustment Charge does not apply if NET provides Inquiry Service
to Client in accordance with the provisions of Exhibit B attached
hereto.
/2/ For purposes of this Agreement, intrastate messages are messages
associated with Client End User Customer telephone calls both
originating and terminating within a New England State.
* NOT PRESENTLY AVAILABLE
<PAGE>
Page 2 of 6
of interstate messages is less than 75% of Client's message volume, then
the above rates and charges (excluding the Minimum Charges) shall only
apply to Interstate Billing and Collection Services and Intrastate
Billing and Collection Services shall be provided to Client in
accordance with the rates and charges set forth in the applicable NET
tariff(s), unless otherwise agreed to by NET.
B. Adjustments to Rates and Charges
--------------------------------
In the event that, during the term of this Agreement, the costs assigned
to billing and collection services under Part 69 of the Federal
Communication Commission's Rules are changed as a result of: (1) a
change in the FCC's accounting, separations or access charge rules; (2)
a change in federal, state or local tax laws; or (3) any order or change
in a rule or regulation of any Court or federal, state, or local
governmental agency having jurisdiction, and the increase or decrease is
more than $500,000, determined cumulatively on an annual basis for both
NET and New York Telephone combined (the "NYNEX Telephone Companies" or
"NTCs"), a surcharge or surcredit may be applied by NET to the rates set
forth herein. The surcharge or surcredit which may be applied to Client:
(1) shall not exceed Client's proportionate share among customers of
NET's billing and collection services of the assigned costs; and (2)
will be effective with the date that Client would cease to pay for
reassigned costs under the procedure in effect prior to the reassignment
of costs (e.g., the date on which the NYNEX Telephone Companies would no
----
longer be permitted to charge such costs under access). In any event the
NYNEX Telephone Companies shall be permitted to recover Client's
proportionate share of costs reassigned to the billing and collection
category from the date such costs are reassigned to the billing and
collection category. If it is later determined that such costs should
not have been billed to Client because those costs have been recovered
elsewhere, Client shall be entitled to a credit plus interest at an
annual rate of 18.25 percent. Such credit shall be reflected on the next
billing and collection charges bill issued after it is determined that
Client is entitled to a credit. NET shall notify Client, in
<PAGE>
Page 3 of 6
writing, of the effective date of any proposed surcharge or surcredit
and, upon request, provide Client with the calculations used to
determine the surcharge or surcredit which shall be auditable under the
provisions of Section 12 of the Agreement.
In the event NET imposes a surcharge upon Client, Client shall have the
right to terminate this Agreement, without penalty, provided Client
notifies NET in writing within ninety (90) days from the date of NET's
written notification to Client of the surcharge. If Client elects to
terminate, said termination shall become effective no later than six (6)
months from the date of NET's written notification or such longer period
as designated by Client and Client shall be responsible for payment of
the surcharge if such increase becomes effective prior to termination of
service. In the event that the longer period designated by Client
extends beyond the term of this Agreement, NET agrees to continue
providing billing and collection services to Client for such period
under the same terms and conditions and rates and charges, including the
surcharge. NET agrees to cooperate fully with Client in the planning and
implementation of any transition from NET to Client billing as a result
of Client election to terminate this Agreement under this paragraph. If
Client does not elect to terminate as provided herein, then the
surcharge shall become effective in accordance with the above
provisions.
C. Client Right to Renegotiate
---------------------------
If, at any time during the term of this Agreement, NET offers interLATA
telecommunication services beyond those which on the effective date it
is able to offer in any local exchange serving area in which NET
provides local exchange service, and Client is unable to meet its
Minimum Charges obligations substantially due to those new interLATA
services, Client shall have the right to renegotiate those obligations
for any affected year.
If, at any time during the term of this Agreement, Client is otherwise
unable to meet its Minimum Charges obligations due to NET acts or
omissions, Client shall have the right to renegotiate those obligations
for any affected year.
<PAGE>
Page 4 of 6
D. Price per Bill
--------------
For the purpose of applying this charge, a bill will consist of all
pages bearing the same company logo. If NET agrees to bill some of
Client's charges under an additional Carrier Identification Code, then
Client will pay the rates and charges for those bills issued under the
additional Carrier Identification Code. The provision of Billing and
Collection Services for Client's additional Carrier Identification Code
shall begin on such date as is mutually agreed to by the parties in
writing and may be cancelled by Client at any time without penalty.
E. Price Per Message
-----------------
The per message charge of $.01 applies to each message in excess of an
average of ten (10) messages per bill. For the purpose of applying this
charge, a bill will consist of all pages bearing the same company logo.
The formula used to determine the number of chargeable messages to which
the per message charge is applied is as follows:
MONTHLY MESSAGES BILLED - [10 x MONTHLY BILL VOLUME] =
CHARGEABLE MESSAGES
If the number of chargeable messages is less than or equal to 0, then no
per message charge applies.
F. Manual Adjustment Charge
------------------------
Client will pay NET $10.00 for each LEC/IC Memo processed by NET for
rebilling of Client charges in accordance with Section 8(B).
G. Minimum Charges
---------------
Client shall pay NET a guaranteed Minimum charge in accordance with the
rate schedule listed above. The amounts billed by NET for Intrastate
Billing and Collection Service will be applied towards the Minimum
Charges. The amount billed to Client each month will be determined using
the terms and formula outlined below. In the event NET agrees to provide
Billing and Collection Services
<PAGE>
Page 5 of 6
to Client under an additional Carrier Identification Code, an additional
Minimum charge in an amount equal to the monthly minimum charge stated
above will apply. The Client will be responsible for this amount only
during the length of time that NET provides Billing and Collection for
Client.
Defined Terms
-------------
1. Monthly Minimums - The Monthly Minimum charges set forth above.
2. Cumulative Minimums - Sum of the Monthly Minimum charges from the
beginning of contract up to and including the current month's Monthly
Minimum charge.
3. Monthly Actuals - Billing and Collection charges calculated by applying
the above per bill and per message charges to the current month's bill
and message volumes.
4. Cumulative Actuals - Sum of the Monthly Actuals from the beginning of
the contract up to and including the current month's Monthly Actual.
5. Cumulative Billed Amount - The sum of the Billed Amounts from the
beginning of the contract up to and including the current month's Billed
Amount.
6. Billed Amount - The amount billed by NET to Client in a given month for
Billing and Collection Services.
Formula
-------
The Billed Amount in each month shall be the greater of (1) Cumulative
Actuals less the previous month's Cumulative Billed Amount, or
(2) Cumulative Minimums less the previous month is Cumulative Billed Amount.
The following example demonstrates the application of the above formula.
Example
-------
<TABLE>
<CAPTION>
MONTH 1 2 3 4 5 6
<S> <C> <C> <C> <C> <C> <C>
MIN (1) 10 10 10 10 10 10
CUM. MIN. (2) 10 20 30 40 50 60
ACTUAL (3) 5 8 12 18 5 15
CUM. ACTUAL (4) 5 13 25 43 48 63
CUM. BILLED (5) 10 20 30 43 50 63
BILLED (6) 10 10 10 13 7 13
</TABLE>
<PAGE>
Page 6 of 6
In the event NET provides Billing and Collection Services to Client under an
additional Carrier Identification Code, the Billed Amount will be determined
separately for those bills issued under each Carrier Identification Code. The
amounts billed by NET for Inquiry Service will not be included in the
application of the above formula used to determine Client's Billed Amount in
each month.
H. Postage Escalator
-----------------
In the event that, during the term of this Agreement, the U.S. Postal
Service increases the rate for one ounce first class zip sort postage,
Client shall pay NET a percentage of any such increases on a per bill
basis. This percentage will be based upon the relation of the average
number of Client bill page(s) to the total number of pages of an average
NET bill including the Client's bill pages. NET shall notify Client in
writing of the effective date of any postage increases and, upon
request, provide Client with the calculations used to determine same.
<PAGE>
Page 1 of 5
EXHIBIT D
---------
RATES AND CHARGES
-----------------
NET's rates and charges for Interstate Billing and Collection Services are as
follows:
<TABLE>
<S> <C>
(1) Price per Message Billed $.25 for each message
(2) Price per Bill $.01
(3) Manual Adjustment Charge $10.00/1/
(4) Minimum Charges:
</TABLE>
<TABLE>
<CAPTION>
Length of Contract Annual Minimum Monthly Minimum
- ------------------ -------------- ---------------
<S> <C> <C>
*1 year $56,011.20 $4,667.60
*2 years $42,008.40 $3,500.70
*3 years $28,005.60 $2,333.80
MONTHLY $2,333.80
</TABLE>
Each of these charges are explained in further detail below.
A. Application of Rates to
Intrastate and Interstate Services
----------------------------------
Provided that interstate messages comprise at least 75% of Client's
message volume, the rates and charges set forth above will be used to
determine the total amount due for both Intrastate and Interstate
Billing and Collection Services. The intrastate portion of this total
will be determined by applying the rates and charges contained in the
applicable NET tariff(s) to the intrastate bill and message volumes./2/
The interstate portion is the remainder after subtracting the intrastate
portion from the total. If the number
---------------------------
/1/ Manual Adjustment Charge does not apply if NET provides Inquiry Service
to Client in accordance with the provisions of Exhibit B attached
hereto.
/2/ For purposes of this Agreement, intrastate messages are messages
associated with Client End User Customer telephone calls both
originating and terminating within a New England State.
* NOT PRESENTLY AVAILABLE
<PAGE>
Page 2 of 5
of interstate messages is less than 75% of Client's message volume, then
the above rates and charges excluding the Minimum Charges) shall only
apply to Interstate Billing and Collection Services and Intrastate
Billing and Collection Services shall be provided to Client in
accordance with the rates and charges set forth in the applicable NET
tariff(s), unless otherwise agreed to by NET.
B. Adjustments to Rates and Charges
--------------------------------
In the event that, during the term of this Agreement, the costs assigned
to billing and collection services under Part 69 of the Federal
Communication Commissioners Rules are changed as a result of: (1) a
change in the FCC's accounting, separations or access charge rules; (2)
a change in federal, state or local tax laws; or (3) any order or change
in a rule or regulation of any Court or federal, state, or local
governmental agency having jurisdiction, and the increase or decrease is
more than $500,000, determined cumulatively on an annual basis for both
NET and New York Telephone combined (the "NYNEX Telephone Companies" or
"NTCs"), a surcharge or surcredit may be applied by NET to the rates
set forth herein. The surcharge or surcredit which may be applied to
Client: (1) shall not exceed Client's proportionate share among
customers of NET's billing and collection services of the assigned
costs; and (2) will be effective with the date that Client would cease
to pay for reassigned costs under the procedure in effect prior to the
reassignment of costs (e.g., the date on which the NYNEX Telephone
Companies would no longer be permitted to charge such costs under
access). In any event the NYNEX Telephone Companies shall be permitted
to recover Client's proportionate share of costs reassigned to the
billing and collection category from the date such costs are reassigned
to the billing and collection category. If it is later determined that
such costs should not have been billed to Client because those costs
have been recovered elsewhere, Client shall be entitled to a credit plus
interest at an annual rate of 18.25 percent. Such credit shall be
reflected on the next billing and collection charges bill issued after
it is determined that Client is entitled to a credit. NET shall notify
Client, in
<PAGE>
Page 3 of 5
writing, of the effective date of any proposed surcharge or surcredit
and, upon request, provide Client with the calculations used to
determine the surcharge or surcredit which shall be auditable under the
provisions of Section 12 of the Agreement.
In the event NET imposes a surcharge upon Client, Client shall have the
right to terminate this Agreement, without penalty, provided Client
notifies NET in writing within ninety (90) days from the date of NET's
written notification to Client of the surcharge. If Client elects to
terminate, said termination shall become effective no later than six (6)
months from the date of NET's written notification or such longer period
as designated by Client and Client shall be responsible for payment of
the surcharge if such increase becomes effective prior to termination of
service. In the event that the longer period designated by Client
extends beyond the term of this Agreement, NET agrees to continue
providing billing and collection services to Client for such period
under the same terms and conditions and rates and charges, including the
surcharge. NET agrees to cooperate fully with Client in the planning and
implementation of any transition from NET to Client billing as a result
of Client election to terminate this Agreement under this paragraph. If
Client does not elect to terminate as provided herein, then the
surcharge shall become effective in accordance with the above
provisions.
C. Client Right to Renegotiate
---------------------------
If, at any time during the term of this Agreement, NET offers interLATA
telecommunication services beyond those which on the effective date it
is able to offer in any local exchange serving area in which NET
provides local exchange service, and Client is unable to meet its
Minimum Charges obligations substantially due to those new interLATA
services, Client shall have the right to renegotiate those obligations
for any affected year.
If, at any time during the term of this Agreement, Client is otherwise
unable to meet its Minimum Charges obligations due to NET acts or
omissions, Client shall have the right to renegotiate those obligations
for any affected year.
<PAGE>
Page 4 of 5
D. Price per Message
-----------------
The per message charge of $.25 applies to each message billed.
E. Price per Bill
--------------
For the purpose of applying this charge, a bill will consist of all
pages bearing the same company logo. If NET agrees to bill some of
Client's charges under an additional Carrier Identification Code, then
Client will pay the rates and charges for those bills issued under the
additional Carrier Identification Code. The provision of Billing and
Collection Services for Client's additional Carrier Identification Code
shall begin on such date as is mutually agreed to by the parties in
writing and may be cancelled by Client at any time without penalty.
F. Manual Adjustment Charge
------------------------
Client will pay NET $10.00 for each LEC/IC Memo processed by NET for
rebilling of Client charges in accordance with Section 8(B).
G. Minimum Charges
---------------
Client shall pay NET a guaranteed Minimum charge in accordance with the
rate schedule listed above. The amounts billed by NET for Intrastate
Billing and Collection Service will be applied towards the Minimum
Charges. The amount billed to Client each month will be determined using
the terms and formula outlined below. In the event NET agrees to provide
Billing and Collection Services to Client under an additional Carrier
Identification Code, an additional Minimum charge in an amount
equal to the monthly minimum charge stated above, will apply. The
Client will be responsible for this amount only during the length of
time that NET provides Billing and Collection for Client.
Defined Terms
- -------------
1. Monthly Minimums - The Monthly Minimum charges set forth above.
2. Cumulative Minimums - Sum of the Monthly Minimum charges from the
beginning of contract up to and including the current month's Monthly
Minimum charge.
3. Monthly Actuals - Billing and Collection charges calculated by
applying the above per bill and per message charges to the current
month's bill and message volumes.
<PAGE>
Page 5 of 5
4. Cumulative Actuals - Sum of the Monthly Actuals from the beginning of
the contract up to and including the current month's Monthly Actual.
5. Cumulative Billed Amount - The sum of the Billed Amounts from the
beginning of the contract up to and including the current month's Billed
Amount.
6. Billed Amount - The amount billed by NET to Client in a given month for
Billing and Collection Services.
Formula
- -------
The Billed Amount in each month shall be the greater of (1) Cumulative Actuals
less the previous month's Cumulative Billed Amount, or (2) Cumulative Minimums
less the previous month's Cumulative Billed Amount. The following example
demonstrates the application of the above formula.
<TABLE>
<CAPTION>
Example
- -------
<S> <C> <C> <C> <C> <C> <C>
MONTH 1 2 3 4 5 6
MIN. (1) 10 10 10 10 10 10
CUM. MIN. (2) 10 20 30 40 50 60
ACTUAL (3) 5 8 12 18 5 15
CUM. ACTUAL (4) 5 13 25 43 48 63
CUM. BILLED (5) 10 20 30 43 50 63
BILLED (6) 10 10 10 13 7 13
</TABLE>
In the event NET provides Billing and Collection services to Client under an
additional Carrier Identification Code, the Billed Amount will be determined
separately for those bills issued under each Carrier Identification Code. The
amounts billed by NET for Inquiry Service will not be included in the
application of the above formula used to determine Client's Billed Amount in
each month.
H. Postage Escalator
-----------------
In the event that, during the term of this Agreement, the U. S. Postal
Service increases the rate for one ounce of first class zip sort
postage, Client shall pay NET a percentage of any such increases on a
per bill basis. This percentage will be based upon the relation of the
average number of Client bill page(s) to the total number of pages of an
average NET bill including the Client's bill pages. NET shall notify
Client in writing of the effective date of any postage increases and,
upon request, provide Client with the calculations used to determine
same.
<PAGE>
EXHIBIT 10.9
AGREEMENT FOR
INTERSTATE BILLING AND COLLECTION SERVICES
BETWEEN
NEW YORK TELEPHONE COMPANY
AND
TELCO DEVELOPMENT GROUP OF DELAWARE, INC.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
---------------------
<S> <C>
Page
----
Section 1. Certain Defined Terms 1
Section 2. General Service Description 2
Section 3. Types of Calls Billed 4
Section 4. Late Payment Charge 5
Section 5. Settlements and Purchase of Rated Messages 5
(A) Adjustments 5
(B) Payment of Purchase Price 7
(C) Settlement Reports 8
Section 6. Assignment of Rated Messages 8
Section 7. Application of Taxes and Tax-Associated Rate Elements 9
(A) Billing of Taxes and Tax-Associated Rate Elements 9
(B) Filing of Tax Returns 10
(C) Indemnity 10
(D) Indemnity Procedures 11
(E) General Tax Audit Requirements 11
Section 8. Customer Service Procedures 12
(A) Referral Process 12
(B) Adjustment Process 12
(C) Recourse of Disputed Charges 13
Section 9. Collection Services 14
Section 10. Payment Procedures for Interstate Billing and Collection 15
Services
Section 11. Deposits 16
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
Page
----
Section 12. Audits 16
(A) Notice and Scope 16
(B) Frequency 17
(C) Expenses 17
(D) Handling of Materials 17
(E) Requests for Examination 17
Section 13. Claims 17
(A) Notification of Disputed Amounts 17
(B) Payment of Disputed Amount 18
(C) Settlement of Claims 18
(D) Claims Limitation 18
(E) Retention of Supporting Data Concerning Claimed 18
Amount
Section 14. Limitation of Liability 19
Section 15. Termination 19
Section 16. Indemnification 19
Section 17. Proprietary Information 19
Section 18. Amendments and Waivers 20
Section 19. Assignment 20
Section 20. Notice and Demand 20
Section 21. Force Majeure 21
Section 22. Non-Exclusive Agreement 21
Section 23. EEO Clause 21
Section 24. Non-Publicity 21
Section 25. Detariffing of Services 21
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C> <C>
Page
----
Section 26. Merger Clause 22
Section 27. Headings 22
Section 28. Independent Contractors 22
Section 29. Bank Errors 22
Section 30. Performance 22
Section 31. Third Part Beneficiaries 22
Section 32. Executed in Counterparts 23
Section 33. Severability 23
Section 34. Governing Law 23
Section 35. Most Favored Nation 23
Section 36. Changes in State Tariffs 23
Section 37. Dispute Resolution 23
Section 38. List of ICs and/or OSPs 24
Section 39. Use of IC Specifications 24
Section 40. Billing Modifications 24
Section 41. Term 24
Exhibit A - Contract Order Form
Exhibit B - Inquiry Service
Exhibit C - Billing for Client 700/900 Service
Exhibit D - Rates and Charges
Exhibit E - Proprietary Information
Exhibit F - Message Ready Bill Message Service
</TABLE>
-iii-
<PAGE>
AGREEMENT FOR
INTERSTATE BILLING AND COLLECTION SERVICES
BETWEEN
NEW YORK TELEPHONE COMPANY
AND
------------------------
This Agreement is entered into between NEW YORK TELEPHONE COMPANY ("NYT"), a
corporation incorporated under the laws of the State of New York with its
principal place of business in New York, New York, and TELCO DEVELOPMENT GROUP
OF DELAWARE, INC. ("Client"), a corporation incorporated under the laws of the
State of Delaware with its principal place of business in Chantilly, Virginia.
WHEREAS, Client is either an Interexchange Carrier (IC), or an Operator Service
Provider (OSP) or is acting as a Clearing Agent for billing and collection
purposes for certain ICs and/or OSPs;
WHEREAS, Client desires to purchase from NYT, and NYT desires to provide to
Client, interstate and intrastate billing and collection services for Client End
User Customers or, in the case of a Clearing Agent, for the end user customers
of the ICs and/or the OSPs that the Client represents, who are also end user
customers of NYT;
WHEREAS, the terms and conditions governing NYT's provision of intrastate
billing and collection services are set forth in NYT's applicable intrastate
tariffs; and
WHEREAS, the parties desire to set forth the terms and conditions governing NYTs
provision of Interstate Billing and Collection Services.
NOW, THEREFORE, in consideration of the mutual benefits accruing to each party,
the parties hereby covenant and agree as follows:
Section l. Certain Defined Terms
---------------------
As used in this Agreement and in the attached Exhibits which form a part of this
Agreement, and unless otherwise expressly indicated herein, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Adjustment" - A billing amount related to Client End User Customer charges
----------
which is added to or subtracted from the balance due from the Client End User
Customer.
"Calling Card" - A calling card issued by NYT on its own behalf or on behalf of
------------
an Interexchange Carrier.
"Carrier Identification Code (CIC)"- A numeric code which is currently used for
---------------------------------
customers who purchase Feature Group B or Feature Group D Access Service.
"Centralized Message Data System ('CMDS')" - A system used to transfer exchange
----------------------------------------
message interface ("EMI") formatted billing data between the designated
recording/rating company and NYT.
<PAGE>
2
"Client End User Customer" - A telephone user who makes Sent Paid, Operator
------------------------
Assisted, Calling Card, Directory Assistance, International or 700/900 Service
calls routed by Client acting as an IC or an OSP or, in the event the Client is
acting as a Clearing Agent, those telephone users who make any of the
aforementioned call types using any of the ICs or OSPs represented by the
Client.
"Directory Assistance" - A telephone call where IC or OSP support services
--------------------
(either manual or mechanized) are provided to the end user at the end user's
request in order to determine a telephone number.
"Holiday" - Includes New Year's Day, Independence Day, Labor Day, Thanksgiving
-------
Day, Christmas Day, Veterans Day, the first Tuesday after the first Monday in
November (Election Day), and the days when Washington's Birthday, Memorial Day,
Lincoln's Birthday and Columbus Day are legally observed in the State of New
York.
"Host Choice Company" - The local exchange carrier chosen by Client to receive
-------------------
Client data and to process and distribute such data to NYT via CMDS.
"International Calls" - A telephone call originating outside the area covered by
-------------------
the North American Numbering Plan or originating in the United States (including
Hawaii and Alaska) and terminating in any other country except Canada, Mexico,
and the Caribbean.
"Interstate Billing and Collection Services" - Billing and Collection Services
------------------------------------------
as described herein, rendered in connection with Client End User Customer
telephone calls other than telephone calls both originating and terminating
within the State of New York.
"Operator Assisted" - A telephone call where IC or OSP operator support services
-----------------
(either manual or mechanized) are provided to the end user at the end user's
request in order to complete the call.
"Rated Message" - A message, including adjustments, which has been assembled and
-------------
edited by Client (or the ICs and/or OSPs for which the Client is acting as
agent) and to which Client (or the ICs and/or OSPs for which the Client is
acting as agent) has applied its applicable rates and charges, as well as all
applicable taxes as set forth in this Agreement.
"Sent Paid" - A telephone call where the charges are billed to the telephone
---------
number of the originating station.
"700/900 Service" - all dialed using the special access codes of 700 or 900.
---------------
Section 2. General Service Description
---------------------------
NYT shall provide Interstate Billing and Collection Services in accordance with
the terms and conditions set forth in this Agreement, the Order Form attached
hereto as Exhibit A and the other exhibits attached hereto. Additional details
regarding NYI8s billing and collection services are set forth in the NYNEX
Billing and Collections Operations Manual.
Client or the IC/OSP for whom the Client is acting as Clearing Agent shall
record both domestic and international messages originating on its facilities.
For the purpose of this Agreement, international traffic shall include only
those telephone calls which originate outside the area covered by the North
American Numbering Plan or which originate from the United States (including
Hawaii and Alaska) and terminate in any other country except Canada, Mexico and
the Caribbean. Client or the IC/OSP for
<PAGE>
3
whom the Client is acting as Clearing Agent shall assemble, edit and rate those
messages which Client will deliver to NYT pursuant to this Agreement. Such
messages shall be processed by Client's Host Choice Company and delivered as
Rated Messages to NYT in EMI format, via CMDS or magnetic tape, or any other
method as may be mutually agreed upon by the parties in writing.
Client shall not deliver to NYT any Rated Messages which Client does not own.
Notwithstanding the foregoing, in those instances where the Client is acting as
a Clearing Agent for other ICs and/or OSPs, such Rated Messages may not be owned
by the Client- but may be opined by other ICs or OSPs. However, in these
instances, Client represents that it is acting as the agent for the owning IC or
OSP and has full authority to act on behalf of the IC or OSP principal and sell
to NYT the Rated Messages. In this event Client shall not deliver to NYT any
Rated Messages for which Client does not act as an IC or OSP agent. Further,
Client shall not deliver any Rated Messages which Client or ICs and OSPs
represented by Client acting as a Clearing Agent have previously billed to a
Client End User Customer directly. Client shall deliver domestic Rated Messages
to NYT no later than 90 days, and international Rated Messages no later than 120
days, from the date that the Rated Messages were first recorded by Client or
those ICs and OSPs for whom Client is acting as Clearing Agent, unless otherwise
agreed to by NYT in writing.
Within five (5) business days of its receipt of Rated Messages from Client, NYT
shall identify those Rated Messages which it accepts for billing and collection
pursuant to this Agreement ("Accepted Rated Messages"), and those Rated Messages
which are rejected pursuant to this Agreement and shall notify Client of such
acceptance or rejection in writing within five (5) business days of receipt of
such transmission.
Those Rated Messages not accepted in writing, unless accepted for billing and
collection services pursuant to NYT's applicable intrastate tariffs, shall be
deemed rejected, and NYI shall have no obligation to bill or collect said Rated
Messages. NYT may reject a Rated Message if the Rated Message fails anv of the
NYT edits.
NYT shall provide Client with Account Record Keeping which consists
of the updating and retention of all information needed for the billing of
Client End User Customers. NYT shall also provide to Client the error resolution
services and processing for Accepted Rated Messages failing the Account Record
Keeping processing requirements.
NYT will maintain a file of Accepted Rated Messages until such messages are
included in the Client End User Customer's bill in accordance smith NYT's normal
billing cycle.
NYT shall prepare and mail bills to Client End User Customers and shall post
bills as rendered to NYT's accounts receix able in accordance Van ith NYT's
procedures for its oven services. An integrated bill trill be rendered based on
the standard bill format provided by NYT, which still contain charge elements
for both NYT and Client. All charges will be considered owed to NYT and will be
reflected in one total balance due. NYT reserves the right to change the
standard bill format. NYT shall advise Client of any substantive changes in the
standard bill format 30 days prior to the enactment of any such change. When
bill format changes will affect Client systems, NYT will not enact any such
change without notification to Client in writing six months prior to
implementation.
The Client corporate logo will be displayed on the Client pages of the Client
End User Customer bill. "Client" shall be printed on each detail page, as well
as on the sub-totaled line showing total Client charges. If Client provides more
than one Carrier Identification Code (CIC) within one Billing and Collection
Agreement, Client will have option to have a separate logo. If NYT provides
Billing and
<PAGE>
4
Collection Services under separate CIC the bill for each CIC will be displayed
on a separate page of bill and subtotaled separately.
NYT will provide Client with Collection Services in accordance with the
provisions of Section 9 hereof. NYT shall also provide, at the Client's option
as specified in Exhibit A, Inquiry Service in accordance with the provisions of
Exhibit B attached hereto.
The Parties recognize that, despite the best efforts of both Parties, from time
to time errors will occur in the billing and collection process. In such cases,
the Parties agree to fully cooperate in joint efforts including exchange of data
to minimize Client End User Customer billing disruptions as soon as possible.
Each Party will bear its own costs incurred in connection with the above
recovery activities. However, if either Party judges this procedure requires
either Party over time to bear a disproportionate share of the costs, the
Parties Hill mutually agree to an equitable sharing of costs.
Section 3. Types of Calls Billed
---------------------
For Client End User Customers who are also end user customers of NYT, NYT shall
provide to Client Interstate Billing and Collection Services for the following
types of calls:
(a) Sent Paid;
(b) Operator Assisted;
(c) Calling Card;
(d) Directory Assistance;
(e) International; and
(f) 700/900.
NYT shall not be obligated to provide Interstate Billing and Collection Services
for any of the foregoing call types until such time as Client provides to NYT an
acceptable test tape for the type of call to be billed, and has paid all
applicable program development fees, if any.
NYT shall have no obligation to bill for other charges associated Keith such
calls, including but not limited to charges for merchandise, gift certificates,
catalogs, political or charitable contributions, or other services or products,
unless agreed to by NYT in writing. Additional terms and conditions applicable
to 007/900 calls are set forth in Exhibit C.
NYT shall not be obligated to provide Interstate Billing and Collection Services
for any other call type, including but not limited to cellular calls, unless
agreed to by NYT in writing. NYT reserves the right to not bill for calls which
are prohibited by applicable regulations, laws or tariffs, or which contain
matter which, in the sole discretion of NYT, implicitly or explicitly invites,
describes, stimulates, excites, arouses, or otherwise refers to sexual conduct,
or sexual innuendo. NYT also reserves the right at any time to reject or refuse
to bill for any calls if and when directed to do so by a regulatory authority or
if the billing of such calls would, in the sole discretion of NYT, adversely
impact the image and reputation of NYT. No will notify Client in writing of any
condition that results in its refusing to bill calls for the above stated
reasons. If Client is unable to cure the problem within 60 days from receipt of
NYrs written notice, NYT reserves the right to temunate billing for such calls.
The standards NYT applies in deciding whether to bill pursuant to this Section
shall be applied to all Clients for whom NYT provides billing and collection
services and shall be applied consistent with its obligations under Section 30
of this Agreement.
<PAGE>
5
Upon request from Client, NYT will consider providing billing and collection
services for nexv telecommunications services, including non-regulated or
non-tarifftelecommunications services.
Section 4. Late Payment Charge
-------------------
Client or the ICslOSPs for whom the Client is acting as Clearing Agent shall
notify Client End User Customers that amounts payable to NYT may be subject to a
late payment charge on all outstanding amounts which remain unpaid at the time
the next NYT bill is rendered, or at such other time of imposition as may be
determined by NYT. Inclusion of such notice in Client's tariffs or the tariffs
of the ICslOSPs for whom the Client is acting as a Clearing Agent will
constitute adequate notice under this Section. Any such late payment charges
paid by Client End User Customers are the property of NYT. Client shall
indemnify and hold harmless NYT from and against any loss, cost, claim,
liability, damage and expense (including attorney's fees) relating to or arising
out of Client's failure or the failure of the ICs/OSPs for whom the Client is
acting as a Clearing Agent to include and maintain such notice of late payment
charges in its tariffs.
Section 5. Settlements and Purchase of Rated Messages
------------------------------------------
To facilitate its provision of Interstate Billing and Collection Services, NYT
shall purchase Accepted Rated Messages, including the associated Client accounts
receivable.
In the event that NYI~~ agrees to provide Billing and Collection Sernices to
Client under an additional Carrier Identification Code, a separate Settlements
and Purchase of Rated Messages process shall apply for each additional Carrier
Identification Code.
The purchase price ("Purchase Price") to be paid by NYT for the Accepted Rated
Messages shall equal the dollar amount of the Accepted Rated Messages ("Face
Amount of the Accepted Rated Messages") on a per transmission basis, plus or
minus the adjustments set forth below.
(A) Adjustments
------------
The following adjustments shall be made to the Face Amount of the Accepted
Rated Messages to determine the Purchase Price:
(1) Miscellaneous Adjustments
-------------------------
(a) On a monthly basis, the Face Amount of the Accepted Rated Messages
shall be reduced by the amounts which NYT removes from Client End
User Customer balances pursuant to Sections 8(B) and (C) of this
Agreement.
(b) On a monthly basis, the Face Amount of the Accepted Rated Messages
shall be reduced by amounts which NYT is unable to bill to Client
End User Customers as a result of NYT's inability to identify or
locate Client End User Customers.
(c) On a monthly basis, the Face Amount of the Accepted Rated Messages
shall be adjusted for errors made by Client or NOT in prior billing
periods.
(d) On a monthly basis, the Face Amount of the Accepted Rated Messages
shall be adjusted for additions or subtractions, other than late
payment charges provided for in
<PAGE>
6
Section 4, to Client End User Customer balances due for Client services
billed in prior periods.
(2) Uncollectible Adjustments
-------------------------
The Face Amount of the Accepted Rated Messages, plus or minus the
miscellaneous adjustments set forth in Section 5(A)(1) ("Set Adjusted
Amount"), shall be reduced by an amount (the "Factored Uncollectible
Amount") to compensate for the anticipated revenue loss due to the
failure of Client End User Customers to pay NYT. NYT shall determine
the Factored Uncollectible Amount by multiplying the Net Adjusted
Amount by Client's uncollectible factor ("Uncollectible Factor") as
determined below rounded up to the nearest l/l000th.
NYT shall determine an Uncollectible Factor for Client in the following
manner:
(i) Based upon its records for the three (3) month period prior to the
execution of this Agreement, NYT shall determine the amount billed,
including taxes, by NYT to Client End User Customers on final bills
which, after standard collection efforts, are accounted for as
realized uncollectibles (the "Realized Uncollectible Amount"). The
Realized Uncollectible Amount shall be adjusted for payments received
by NYT during said three (3) month period for outstanding final bills
that predate that period and for deposits held by NYT for service
provided to the Client End User Customer where final bills have been
rendered.
(ii) To derive the uncollectible factor, the Realized Uncollectible
Amount shall be divided by the revenues from the three (3) month
period in which the Realized Uncollectible Amount was originally
billed to the end user. These revenues will include the face amount
of the Accepted Rated Messages plus billed taxes and plus or minus
those miscellaneous adjustments stated in Section 5(A)(1).
(iii) The Uncollectible Factor, once determined, shall be used for the
ensuing three (3) month period, at which time a new Uncollectible
Factor shall be computed and used for the succeeding three (3) month
period.
(iv) In the event that NYT has not provided Billing and Collections
Services to Client during the three month period prior to execution
of this agreement, NYT shall apply an initial Uncollectible Factor of
twelve percent (12%).
(v) In the event the term of this Agreement is for two (2) or three (3)
years, after the first year of the Agreement, NYT will determine the
Factored Uncollectible Amount by utilizing a Fixed Uncollectible
Factor from a range of minimum and maximum Uncollectible Factors to
be agreed upon by the parties. The parties will also negotiate a new
true-up adjustment process and procedures for renegotiating the Fixed
Uncollectible Factor and the minimum and maximum Uncollectible
Factors in the event of governmental, regulatory or judicial action
that causes a change in NYT's rate of collection of Client's charges,
together with such other terms and conditions as the parties may
mutually agree upon.
(vi) In the event the parties cannot reach agreement upon new
Uncollectible Factors and procedures as contemplated in subsection
(v) above, then NYT shall continue to determine a new Uncollectible
Factor every three months in accordance with the
<PAGE>
7
methodology specified in subsection (ii) above and the true-up
procedure described in subsection (3) following shall continue to
apply.
(3) True-Up Adjustment
------------------
In order to account for the difference between the Factored
Uncollectible Amount and the Realized Uncollectible Amount for each
three (3) month period, NET shall make a true-up adjustment as follows
(the "True-Up Adjustment"):
If the Factored Uncollectible Amount for any three (3) month period
exceeds the Realized Uncollectible Amount for that same period, NYT
shall add the difference to the Purchase Price. If the Factored
Uncollectible Amount for any three (3) month period is less than the
Realized Uncollectible Amount for that same period, NYT shall subtract
the difference from the Purchase Price.
After each true-up period as described above, the True-Up Adjustment,
either reducing or increasing the Purchase Price, will be made in the
month or months following the month that said True-Up Adjustment is
calculated.
If NYT ceases to render billing and collection services to Client for
any reason, NYT shall make a final True-Up Adjustment to cover the
period from any prior True-Up Adjustment, as follows:
(a) If the Factored Uncollectible Amount for the final true-up period
exceeds the Realized Uncollectible Amount for the final true-up
period, NYT shall, within twelve (12) months of said cessation, pay
to Client an amount equal to said excess; or
(b) If the Factored Uncollectible Amount for the final billing period
is less than the Realized Uncollectible Amount for the final billing
period, Client shall, within twelve (12) months of said cessation,
pay to NYT an amount equal to said difference.
(B) Payment of Purchase Price
-------------------------
(1) Except as provided below, NYT shall pay to Client the Purchase Price,
computed in accordance with Section 5(A), no later than fifty-eight (58)
days from the date the Accepted Rated Messages are accepted by NYT (the
"NYT Payment Date") pursuant to Section 2 of this Agreement Upon written
request from Client, NYT shall advance the payment of the Purchase Price
up to thirty (30) days from the date the Accepted Rated Messages are
accepted by NYT. In return, NYT shall charge Client .0005 per day
simple interest, or the maximum interest rate allowed by law, whichever
is lower, for the number of days advanced times the Purchase Price due
Client (the "Discount"). NYT shall pay Client the Purchase Price, less
the Discount. It is contemplated that payments made hereunder may not
include any applicable True-Up Adjustment, which shall be made at the
appropriate subsequent date.
Payment will result in immediately available funds on the NYT Payment
Date. If the NYT Payment Date falls on a Sunday or on a Holiday
which is observed on a Monday, the NYT Payment Date shall be the
first non-Holiday day following such Sunday or Holiday. If the
NYT Payment Date falls on a Saturday or on a Holiday which is
observed on Tuesday, Wednesday, Thursday or Friday, the NYT
Payment Date shall be the last non-Holiday day preceding such
Saturday or Holiday.
<PAGE>
8
(2) If Client does not receive any portion of the Purchase Price by the NYT
Payment Date, or if any portion of the Purchase Price is received by
Client in funds which are not immediately available to Client, then NYT
shall pay to Client a late payment penalty. The late payment penalty
shall be the portion of the Purchase Price not received by the NYT
Payment Date times a late factor. The late factor shall be the lesser
of:
(a) the highest interest rate (in decimal value) as of the NYT Payment
Date which may be levied by law for commercial transactions in the
State of New York, with interest compounded daily for the number of
days from the NYT Payment Date to and including the date that NYT
actually makes the payment to Client; or
(b) .0005 per day, simple interest for the number of days from the NYT
Payment Date to and including the date that NYT actually makes the
payment to Client.
Any late payment penalty shall be included with the next NYT payment to Client.
(3) NYT Bill conduct an annual lead-lag study during the fourth (4th)
quarter of each calendar year during the term of this Agreement to
measure end user customer payment behavior. The results will be used to
set the Payment Date for the following year. Client shalt have the right
to review the lead-lag data and methodology used by NYT and should such
review reveal an error in determination of the Payment Date, the Payment
Date shall be changed to reflect the corrected lead-lag study results.
(C) Settlement Reports
------------------
For each transmission received from Client, NYT shall provide Client with a
report indicating the total number of messages received in the transmission
and the dollar amount of those messages, the number of rejected messages and
their dollar amount, and the number of Accepted Rated Messages and their
dollar arnount. For each transmission. No shall also provide an Accounts
Receivable Settlement Statement providing all information necessary for
calculating the Purchase Price due to Client.
On a monthly basis, by the eighth business day of the month following the
month under report, NYT will deliver, without charge, to Client a Revenue
Journal report displaying billed revenue, taxes, adjustments and surcharges.
Section 6. Assignment of Rated Messages
----------------------------
Client represents and warrants to NYT that each and every Rated Message which it
shall deliver to NYT under this Agreement is either owned by Client or that
Client is authorized to deliver such Rated Messages to NYT acting in its
capacity as agent for the principal IC or OSP. Further, Client represents and
warrants that to the best of its knowledge the IC and/or OSP for whom it is
acting as agent owns the Rated Messages delivered to the Client. Notwithstanding
the foregoing, Client represents and warrants that each Rated Message delivered
to NYIv shall be delivered free and clear of any and all liens or claims by any
third party, and that at the time of delivery of such Rated Message to NYT, such
Rated Message has not been assigned, pledged, transferred, sold, exchanged, or
otherwise conveyed or encumbered. Upon the request of NYT, Client shall provide
reasonable written assurance to NYT of the foregoing. Any such conveyance or
encumbrance shall be null and void and any breach by Client of its
representation and warranty as set forth herein shall subject Client to all
liabilities, expenses, and costs,
<PAGE>
9
including reasonable attornevs' fees, expended and incurred by NYT in pursuing
exclusive ownership of Rated Messages.
Section 7. Application of Taxes and Tax-Associated Rate Elements
-----------------------------------------------------
(A) Billing of Taxes and Tax-Associated Rate Elements
-------------------------------------------------
(1) NYT agrees on behalf of Client to charge certain taxes as hereinafter
provided. Regardless of whether taxes are computed by NYT or Client or
those ICs and/or OSPs for whom Client is acting as Clearing Agent,
Client is solely responsible for the determination of the appropriate
federal, state and local taxes and tax-associated rate elements,
including sales taxes, federal excise taxes and other taxes imposed on
Client End User Customers ("End User Taxes").
With respect to End User Taxes, NYT shall compute the federal excise
taxes and sales taxes applicable in states within the NOT region to
Client's services. Transmission tapes provided to NYT by Client shall
not include a calculation of federal excise taxes or state sales taxes,
but Client shall provide sufficient information to NYT to enable NYT to
compute and charge the applicable state sales taxes and federal excise
taxes. All other End User Taxes and any other applicable taxes and
tax-associated rate elements shall be computed by Client. Each End User
Tax computed by Client shall be stated separately from, and not
included in, the Rated Messages and all other taxes computed by Client
shall be included as part of the Rated Messages delivered to NYT.
With respect to the federal excise tax, Client hereby directs NYT (i)
to treat as exempt from the federal excise tax those Client End User
Customers who have furnished NYT federal excise tax exemption
certificates in connection Faith their purchase of service from NYT;
and (ii) to compute and charge the applicable federal excise tax to
non-exempt Client End User Customers.
With respect to telephone calls originating in states within the NYT
region, Client hereby further directs NYT (i) to treat as exempt from
the New York sales tax those Client End User Customers who have
furnished NYT sales tax exemption certificates in connection with their
purchases of service from NYT; and (ii) to compute and charge the
applicable state sales tax to non-exempt Client End User Customers.
NYT shall not treat a Client End User Customer as exempt from federal
excise tax or applicable state sales tax for any periods prior to the
actual receipt by NYT of an exemption certificate.
In accordance with the procedures outlined in the Billing Modification
Request section of the NYNEX Billing and Collection Operations Manual,
Client shall advise NYT in writing regarding the application of the
state sales and federal excise tax to new services offered by Client
and Client shall advise NYT whenever any change in state or federal law
requires a change in the computation or application of the federal
excise or state sales tax to Client's services. Client hereby releases
NYT from any and all liability arising out of NYT's compliance with
Client's instructions and directions regarding the imposition,
computation and collection of federal, state and local taxes imposed on
Client End User Customers, including, but not limited to, Client's
direction that NYT treat as exempt from the federal excise tax and/or
state sales tax, those Client End User Customers who have furnished NYT
federal excise tax and/or state sales tax exemption certificates in
connection with their purchase of service from NYT.
<PAGE>
10
(2) NYT shall, at the time it pays the Purchase Price as provided for in
Section 5(B) hereof, pay over to Client all sales taxes, federal excise
taxes and other taxes imposed on Client End User Customers, which NYT
has billed to Client End User Customers on behalf of Client.
(B) Filing of Tax Returns
---------------------
Client shall file all returns for all federal, state and local taxes,
including sales taxes, federal excise taxes and other taxes imposed on
Client End User Customers, or with respect to Client services and shall pay
or remit to the respective taxing authorities all such taxes.
(C) Indemnity
---------
(1) Client agrees to indemnify and hold NYT harmless from and against any
liability or loss resulting from any federal, state or local taxes,
including sales taxes, federal excise taxes and other taxes imposed on
Client End User Customers, and including penalty interest, additions to
tax, surcharges or other charges or expenses including reasonable
attorney's fees, payable or incurred by NYT, as a result of:
(a) the delay or failure of Client to pay any federal, state or local
taxes, including sales taxes, federal excise taxes and other taxes
imposed on Client End User Customers, or file any return or other
information as required by law or this Agreement; or
(b) NYT's compliance With this Agreement, or any determination by,
direction by, or advice of Client, or NYT's use of information
provided by Client in performing any tax-related service hereunder;
or
(c) any tax audit, investigation, or assessment by any governmental unit
or agency Keith respect to Client services billed bv my in
accordance smith this Agreement. In this regard, if any federal,
state or local jurisdiction determines that any tax, including but
not limited to the New York State Gross Earnings Tax, New York State
Gross Income Tax, New York City Utility Tax, and also including
sales taxes, federal excise taxes and other taxes imposed on Client
End User Customers (including interest, penalties and surcharges
thereon) are due from NYT on amounts collected by NYT and remitted
to Client in the forrn of NYT s purchase of accounts receivable or
Accepted Rated Messages pursuant to this Agreement, Client agrees to
be iiable for and indemnify NYT against any such taxes, including
any interest, penalties and surcharges. The indemnity pavable
hereunder shall be payable in all events and Bithout regard to any
determination that NYI is the party obligated to collect and rernit
such tax or other taxes or file the tax returns.
(2) NYT agrees to indemnify and hold harmless Client from and against any
liability or loss resulting from any penalties, interest, additions to
tax, surcharges or other charges or expenses incurred by Client as a
result of:
(a) the willful or gross negligent failure of NYT to compute and charge
taxes in accordance with Section 7(A) of the Agreement, or
(b) the willful or gross negligent failure of NYT to provide the tax
information included in the Settlement Reports provided for under
Section 5(C) of the Agreement.
<PAGE>
-11-
(D) Indemnity Procedures
(1) In the event NYT becomes aware that any taxing jurisdiction is auditing
the Agreement or the services and activities performed pursuant there-
to, NYT shall so notify Client as soon as practicable and periodically
advise Client of the status of such audit. In the event that any taxing
jurisdiction asserts against NYT any claim for which indemnity by Client
may be-required under paragraph 7(C)(1) of this Section("Claim"), NYT
shall so notify Client in writing as soon as practicable. If Client
disagrees with said Claim, Client shall, within ten (10) days after
written notice of such Claim by NYT, direct NYT in writing to protest,
appeal or contest the asserted Claim; provided, however, in the event
NYT is required under the law of the taxing jurisdiction to pay all or
any portion of the asserted Claim prior to protesting, appealing or
contesting said Claim, including interest and penalties thereon Client
shall pay said amount to NYT prior to NYT's filing of said protest,
appeal or contest. In the event NYT refuses to protest, appeal or
contest any Claim after direction by Client to do so, Client shall not
indemnify NYT for said Claim, and NYT shall be responsible for all
amounts due pursuant to the Claim, including interest and penalties
thereon and all other related costs. NYT shall keep Client advised of
the status of any such proceeding, and shall solicit Client's views on
matters of litigation strategy, including the selection of counsel.
Notwithstanding the foregoing, however, NYT shall retain control over
the progress and disposition of anv such protest, appeal, contest,
litigation and proceeding, including the selection of counsel, and shall
pursue same snith due diligence and good faith. In any event, NYT shall
obtain Client's Ad ritten consent prior to settling any Claim.
(2) In the event NYT pays all or any portion of the Claim, and/or incurs
costs incident to contesting such Claim, NYT shall, from time to time,
bill Client for all or any portion of such payments, including interest,
penalties and attorney fees. Client shall pay the entire amount billed
in immediately available funds within thirtv (30) days of the date such
bill was rendered by NYT.
(E) General Tax Audit Requirements
------------------------------
(1) If a governmental authority conducting an audit of Client seeks access
to tax records in the possession of NYT,
(a) NYT shall promptly notify Client, and
(b) to the extent pemitted by law, NYT shall cooperate in any effort
by Client to object to the production of such records and/or seek
protective arrangements with respect to such records.
(2) When any governmental authority conducts an audit of NYT with respect to
taxes for which Client might be required to reimburse NYT,
(a) NYT shall promptly notify Client of any audit matters that arise
which might affect Client; and
(b) NYT shall seek Client's advice in dealing with audit matters that
might affect Client and shall keep Client fully informed as to the
status of such matters, however, NYT will retain control of the
audit.
<PAGE>
12
(3) Each Party shall bear its own expenses with respect to any audit.
Section 8. Customer Service Procedures
---------------------------
(A) Referral Process
----------------
(1) When a Client End User Customer requests direct contact with Client, NYT
shall refer that customer to an 800 number, which Client shall provide
and maintain. If requested by the Client End User Customer, NYT rnay
also furnish such Client End User Customer with the following
information:
Customer Service
4219 Lafayette Center Drive
Chantilly, Virginia 22021-1209
(2) Client shall notify NYT of any changes with respect to the 800 number or
to Client's address as provided above at least thirty (30) days prior to
the effective date of any such change.
(3) To facilitate communications between Client and NYT Customer Service
personnel, Client shall, at Client's cost and expense, provide NYT with
an 800 telephone number.
(B) Adjustment Process
------------------
NYT will adjust Client charges on a Client End User Customer bill at the
direction of the Client. Client will pay NYT $10.00 for each Adjustrnent
processed. Where Client determines that an Adjustment to a Client End User
Customer's bill is warranted, the following process shall apply.
(1) Client shall promptly notify NYT of any Adjustment to a Client End User
Customer bill. Client shall transmit such Adjustments to NYT via the
LEC/IC memo as specified in the NYNEX Billing and Collections Operations
Manual. NYT reserves the right to return to Client any IC/LEC Memo
submitted by Client to NYT, which is illegible, requires clarification,
contains errors or for other reasons which prohibit NYT from processing
such Memo. In situations where return of an IC/LEC Memo will adversely
affect the Client End User Customer, oral communication may be used by
Client and/or NYT in order to provide a prompt resolution. NYT agrees to
use its best efforts to include all Adjustments received from Client in
accordance with NYT'[s normal bill cycle.
(2) Client agrees not to submit for rebilling to NYT those charges
associated with any adjustment made pursuant to Section 8(B)(1) above
except that Client may submit such Accepted Rated Messages for rebilling
provided that Client has obtained the consent of the Client End User
Customer to accept and pay for the rebilled amount, and Client so
notifies NYT in writing of such consent prior to any resubmission to
NYT. This notice to NYT shall include the date of the contact and the
name and telephone number of the consenting party. In the event the
Client End User Customer still refuses to pay the rebilled amount, NYT
may adjust the charge off the Client End User Customer bill and recourse
the disputed charge to Client in accordance with the recourse procedure
set forth in Section 8(C) below.
<PAGE>
-13-
(C) Recourse of Disputed Charges
----------------------------
In accordance with the procedures described in this subsection, NYT may
issue Initial or Final Recourse Memoranda for recourse amounts on live
accounts or on final Client End User Customer bills prior to write-off by
NYT for Client charges billed by NYT which a Client End User Customer
disputes.
(1) NYT shall notify Client of the dispute via an IC/LEC Memo identifying
the amount of the dispute and the Client End User Customer's name,
address and billing telephone number, and accompanied by a record of all
call detail/usage involved, a statement describing the collection
actions taken, if any, any correspondence with the Client End User
Customer relating to the dispute, or other notes relating to the
dispute, and the results of any wire check or premises visit or other
investigation of the dispute. This IC/LEC Memo shall be conspicuously
labeled as an "Initial Recourse Memorandum". If the disputed amount is
more than $15,000, NYT shall also send a copy of the Initial Recourse
Memorandum to Mark Stodter. No disputed amounts shall be recoursed to
Client until thirty (30) days after Client's receipt of the Initial
Recourse Memorandum. Additional recourse requirements are described
below.
(2) When Client sustains disputed amounts, Client shall provide
documentation to NYT to support the charges. In evaluating whether
charges have been adequately supported, NYT shall apply the same
standards that it applies to the support for its position on disputes
concerning its own local and/or intraLATA charges. Charges that have
been adequately supported shall not be recoursed by NYT to Client,
unless the Client End User Customer subsequently notifies NYT that the
Client End User Customer continues to dispute the charges. In instances
where NYT agrees that disputed Client charges are sustained and the
Client End User Customer continues to dispute the charges, but NYT
declines to deny service consistent with NYT treatment policy:
(i) Following exhaustion of normal treatment and collection practices,
as applicable and not less than thirty (30) days after Client's
receipt of the Initial Recourse Memorandum concerning the dispute,
NYT may recourse the disputed amount unilaterally if it is $15,000
or less, after following the procedures set forth in this Section.
If the disputed amount is over $15,000, NYT shall follow the
procedures set forth in subsection (3) below before recoursing the
disputed amount.
(ii) NYT shall advise the Client End User Customer in writing that (1)
the disputed amount will be removed from the bill, (2) Client has
not forgiven the charge, and (3) Client may independently pursue
collection remedies. NYT may then recourse the disputed amount by
preparing and forwarding to Client an adjustment via an IC/LEC
Memorandum identifying the amount of the adjustment, the Client End
User Customer's name, address, and billing telephone number, the
date of the Initial Recourse Memorandum sent to Client about the
dispute, and any communication with the Client End User Customer or
investigation by NYT concerning the dispute since the Initial
Recourse Memorandum. This IC/LEC Memo shall be conspicuously
labeled as a "Final Recourse Memorandum." If the disputed amount is
more than $15,000, NYT shall also send a copy of the Final Recourse
Memorandum to Mark Stodter.
(3) In addition to complying with the requirements set forth in subsection
(2) above, where a disputed amount is over $15,000, NYT shall perform
the following activities, and shall
<PAGE>
-14-
discuss the results of such activities with Client prior to recoursing
the disputed amount to Client:
(i) Involve appropriate Client managers in the collection effort; and
(ii) In cases involving alleged fraud, NYT shall cooperate with any
investigation by Client security organization if Client has
contracted with NYT to obtain Billing Analysis Services from NYT.
After these activities have been completed, and not less than thirty
(30) days after Client's receipt of the Initial Recourse Memorandum
concerning the dispute, NYT may recourse these disputed amounts and
shall notify the Client End User Customer in writing that (1) the
disputed amount will be removed from the bill, (2) Client has not
forgiven the charge, and (3) Client may independently pursue collection
remedies.
NYT shall prepare and forward to Client an IC/LEC Memo containing the
information and associated documentation set forth in subsection (2)
above. This Metno shall be conspicuously labeled as a "Final Recourse
Memorandum".
(4) Notwithstanding any of the foregoing provisions, prior to any recourse,
appropriate levels of NYT's management shall review and approve recourse
of charges to Client in accordance with existing NYT authorization
levels and the provisions of this Section.
(5) In no event shall NYT recourse any disputed amount unless it provides to
Client with the Final Recourse Memorandum the record of all call
details/usage that were removed from the Client End User Customer bill
involved if different from that provided with the Initial Recourse
Memorandum.
(6) At the time when an account is written off as final uncollectible bad
debt, all charges associated with Client 900 services billed by NYT
shall be recoursed to Client and NYT shall provide Client with the
information specified in subsection (2) above.
Section 9. Collection Services
-------------------
NYT shall process bills to Client End User Customers and apply payments and
adjustments to the aggregate amount due NYT on the NYT bill. NYT shall not apply
Client End User Customer payments to specific portions of the NYT bill as may be
directed by any such Client End User Customer (e.g., a direction that the entire
amount paid be allocated to the local exchange service portion of the bill),
except where mandated by regulatory authorities. Partial payments shall be
apportioned in accordance with NYT's existing procedures.
NYI shall provide collection services pursuant to this Agreement in a manner
consistent with the procedures applied by NYT on its own behalf and in
accordance with applicable regulatory requirements. NYT will pursue collections
as single amounts due to NYT unless prohibited by regulatory requirements.
Collection services include, but are not limited to, the preparation and mailing
of account status notices to Client End User Customers with outstanding balance
due amounts. NYT shall provide Client with a copy of its collection procedures
that are in effect as of the date of this Agreement. Any significant
<PAGE>
-15-
changes to the NYT collection procedures shall be communicated to Client at
least three (3) months prior to implementation except as otherwise directed by
regulatory agencies.
In cases where treatment and collection action fails to produce payment of
outstanding amounts, NYT may provide denial of local service, restricting Client
End User Customer access to the network, or a portion of the network, dependent
upon regulatory requirements or network limitations.
In those instances where there is termination of service, NYT will render a
final bill to the Client End User Customer for total charges due and pursue
collection of the final charges. The decision to refer to an outside collection
agency will be made in accordance with NYT"s collection procedures. Amounts
collected by NYT or its agent following declaration of final bad debt on a
Client End User Customer account shall be shared between NYT and Client based on
the apportionment of NYT and Client revenues. Amounts not collected by NYT or
its agent following declaration of final bad debt on a Client End User Customer
account shall be shared between NYT and Client based on the apportionment of
NYT and Client revenues.
Section 10. Payment Procedures for Interstate Billing and Collection Services
------------------------------------------------------------------
NYT will bill Client for its Billing and Collection Services on a monthly basis.
The billing and collection billing schedule will be provided to Client by NYT.
Client will be notified by NYT at least sixty (60) days prior to a billing
schedule change. In the event that NYT agrees to provide Billing and Collection
Services to Client under an additional Carrier Identification Code, a separate
bill will be rendered for each additional Carrier Identification Code.
In order to calculate Client's monthly payment, NYT will apply the rates and
charges detailed in Exhibit D to Client's monthly message and bill volumes.
Client shall pay the stated rates and charges by the same date of the following
month as the billing date so designated on the bill sent by NYT to Client (the
"Client Payment Date") unless the bill is received by Client less than twenty
(20) days prior to that date, in which event the Client Payment Date shall be no
less than twenty (20) days after Client's receipt of the bill. Any payment to
NYT from Client must be accompanied by an indication of the NYT invoice number
being paid.
Payment to NYT by Client must result in immediately available funds on the
Client Payment Date. If the Client Payment Date falls on a Sunday or on a
Holiday which is observed on a Monday, the Client Payment Date shall be the
first non - Holiday day following such Sunday or Holiday. If the Client Payment
Date falls on a Saturday or on a Holiday which is observed on a Tuesday,
Wednesday, Thursday or Friday, the Client Payment Date shall be the last non -
Holiday day preceding such Saturday or Holiday.
If any portion of the payment due from Client for Interstate Billing and
Collection Services is not received by the Client Payment Date or if any portion
of the payment is received by NYT in funds which are not immediately available
to NYT, then a late payment penalty shall be due NYT. The late payment penalty
shall be the portion of the payment due to NYT for Interstate Billing and
Collection Services not received by the Client Payment Date times a late factor.
The late factor shall be the lesser of:
(a) the highest interest rate (in decimal value), as of the Client
Payment Date which may be levied under the applicable law for
commercial transactions within the State of New York, with interest
compounded daily for the number of days from the Client Payment Date
to and including the date that Client actually makes the payment to
NYT; or
<PAGE>
-16-
(b) .0005 per day, simple interest for the number of days from the
Client Payment Date to and including the date that Client actually
makes the payment to NYT.
Any late payment penalty shall be included with the next Client payment due to
NYT.
Section 11. Deposits
--------
In the event Client has not established credit with NYT or does not pay the
billing and collection charges on time, NYT shall have the right to require a
deposit from Client to guarantee payment. The deposit will not exceed the actual
or estimated charges for providing Interstate Billing and Collection Service to
Client for a three month period. Upon termination of service, NYT will credit
the amount of the deposit to the Client's account and any remaining credit
balance Will be refunded. At NYT's option the deposit may be refunded or
credited to Client's account prior to termination of service if the Client has
promptly paid all billing and collection charges for a period of one year.
Client will receive interest on the deposit at the rate set forth in Section
10(a) or (b) above, whichever is lower. The rate will be compounded daily from
the date the deposit is received to and including the date the deposit is
credited to Client's account or is refunded by NYT.
Section 12. Audits
------
(A) Notice and Scope
----------------
(1) Upon forty-five (45) days prior written notice by Client to NYT (or such
shorter period as the parties may mutually agree upon), Client or its
authorized representative shall have the right to commence an Audit (as
defined in subsection (E)(3) below) during normal business hours of such
source documents, systems, records and procedures which, under
recognized accounting practices, contain information bearing upon (i)
the amounts being billed to Client End User Customers by NYT as part of
its provision of Interstate Billing and Collection Services, and (ii)
the charges to Client therefor, and the charges to Client for other
services provided by NYT pursuant to this Agreement.
(2) The written notice of Audit shall identify the date upon which it is to
commence, the location, the Client representatives that will conduct the
Audit, the subject matter of the Audit, and the materials to be
reviewed.
(3) The written notice of Audit shall be directed to NYT's representatives
at the address set forth in Section 20 hereof, or to such other address
as NYT may from time to time stipulate.
(4) NYT may, within thirty (30) days of receipt of Client's notice of Audit,
postpone commencement for a period not to exceed fifteen (15) days,
which shall be set forth in writing by NYT. NYT shall also indicate the
new date for commencement of an Audit.
(5) Client's auditors will present a preliminary oral report of their
findings to NYT prior to their departure. Client will provide a
confirming letter, within thirty (30) days of making its oral report,
setting forth the results of the Audit. If the Audit shows an error, NYT
or Client, as appropriate, shall promptly correct such errors and file
claims, as appropriate. Client shall not be entitled to commence another
Audit on the same subject prior to submission of the letter confirming
conclusion of the Audit, and in accordance with subsection (B) below.
<PAGE>
-17-
(B) Frequency
---------
Not more than one (1) Audit may be conducted in any twelve (12) month period
during the term of this Agreement.
(C) Expenses
--------
Each party shall bear its own expenses in connection with the Audit. Special
data extractions required by Client or its representatives to conduct an
Audit will be paid for by Client. For purposes of this subsection, a
"special data extraction" shall mean programming, clerical, and computer
time required to create an output record (from existing data files) that
cannot normally be created from software programs that are currently
resident on the production program library. NYT will provide Client with a
working area for the Audit. Any other reasonable assistance requested by
Client, such as programming, computer time, clerical assistance, telephones
and copying, will if possible, be provided by NYT at Client's cost and
expense.
(D) Handling of Materials
---------------------
All documents and materials of NYT reviewed by Client in the course of an
Audit shall be deemed proprietary, and their use by Client shall be governed
by Section 17 of this Agreement.
(E) Requests for Examination
------------------------
(1) In addition to Audits, Client may request, from time to time, the
opportunity to conduct an Examination (as defined in subsection (2),
below). NYT will make reasonable efforts to accommodate requests for an
Examination and to cooperate in the conduct of an Examination.
(2) An "Examination" shall, for purposes of this subsection, constitute a
reasonable inquiry on a single issue or a specific topic related to
billing and collection services for a stated reason.
(3) An "Audit" shall, for purposes of this Section, constitute a reasonable
inquiry on more than one issue or specific topic related to billing and
collection services.
(4) Client shall have the right to request an Examination after the
expiration of this Agreement. Said Examination shall be limited to the
following topics: payments from NYT to Client; NYT's charges for billing
and collection services; and any additional billing and collection
reporting provided by NYT to Client after the expiration of the
Agreement.
Section 13. Claims
-------
(A) Notification of Disputed Amounts
--------------------------------
If either Party disputes any portion of the amount due the other Party (as
defined in Sections 5 and 10), the disputing Party shall notify the other
Party in writing of the nature and basis of the dispute. Client may file a
substantiated claim with NYT for billing and collection charges; for revenue
billed, collected and not remitted; and for revenue not billed. NYT may file
a substantiated claim with Client for billing and collection charges or for
billed revenue.
<PAGE>
-18-
(B) Payment of Disputed Amount
--------------------------
If the dispute is not resolved by the Payment Date, the disputing Party
shall pay the undisputed portion of the amount due in accordance with the
settlement terms defined in Sections 5 and 10 and advise the other Party in
writing of its reasons for not paying the disputed amount. If the dispute
arises after the amount due has been paid, the disputing Party shall file
its claim in writing within the time period set forth in subsection (D)
below.
(C) Settlement of Claims
--------------------
If the claim, in whole or in part, ultimately is resolved in favor of the
disputing Party and the disputing Party has paid the full amount due the
other Party, the Disputing Party shall be entitled to payment, with interest
as specified below, from the other Party. If the claim, in whole or in
part, ultimately is resolved against the disputing Party, and the disputing
Party has not paid the full amount due the other Party, then the other Party
shall be entitled to payment, with interest as specified below, from the
Disputing Party. Interest on the claim settlement amount shall be in
accordance with the following:
(1) Interest on Client claims with respect to billing and collection charges
shall be calculated using the actual Payment Date as set forth in
Section 10. Interest on Client revenue claims for amounts billed and
collected but not remitted by NYT shall be calculated using the Payment
Date as set forth in Section 5 preceding. The rate of interest to be
used in both cases is as set forth in Sections 5 and 10.
(2) Interest on revenue claims for amounts not billed by NYT and not
remitted and where access charges have been paid to NYT by Client shall
be calculated using the rate in accordance with Section 5 and the
Payment Date set forth in Section 5. NYT shall reimburse Client for
fifty (50) percent of the interest amount calculated above.
(3) Interest shall not apply on revenue claims for amounts not billed by NYT
and not remitted to Client and where access charges have not been paid
to NYT by Client.
(4) Interest on NYT claims with respect to billing and collection charges
and revenue claims for amounts billed and remitted, where Client was at
fault, shall be calculated as set forth in subsection (C)(1) above.
Any payments due to a Party as a result of a claim resolution shall be remitted,
with interest as defined above, no later than thirty-one (31) calendar days
following resolution.
(D) Claims Limitation
-----------------
Any claim asserted by a Party under Section 13(A) shall be brought to the
attention of the other Party in writing as soon as possible upon discovery
thereof. Failure of the claiming Party to assert in writing to the other
Party any such claim within two (2) years from the date on which the cause
of the claim occurred shall be deemed a waiver of the right to assert that
claim in any judicial or administrative proceeding and furthermore shall bar
recovery under this Agreement.
(E) Retention of Supporting Data Concerning Claimed Amount
------------------------------------------------------
Both Parties shall retain such detailed information as may reasonably be
required for resolution of the claim amount during the pendency of the
claim.
<PAGE>
-l9-
Section 14. Limitation of Liability
-----------------------
Except as provided for in Section 6 (Assignment of Rated Messages) and 7
(Application of Taxes and Tax-Associated Rate Elements), neither party shall be
liable to the other for any loss, cost, claim, injury, liability, or expense,
including reasonable attorneys' fees, relating to or arising out of any ordinary
negligent act or omission by a party. In no event shall either party be liable
to the other for any indirect, special, incidental or consequential damages,
including, but not limited to, loss of profits, income or revenue.
Section 15. Termination
-----------
In the event of a default under or breach of any material term or condition of
this Agreement, the non-defaulting party shall have the right to terminate this
Agreement if the default or breach is not cured within sixty (60) days of the
date that written notice of such default or breach is given by the non-
defaulting party to the defaulting party. Either party shall also have an
immediate right to terminate this Agreement in the event of the other Party's
bankruptcy, liquidation, insolvency or receivership.
Section 16. Indemnification
---------------
Except as otherwise provided in this Agreement, each party (the "Indemnifying
Party") will indemnifv and hold harmless the other party ("Indemnified Party")
from and against any loss, cost, claim, liability damage and expense (including
reasonable attorney's fees) to third parties, relating to or arising out of the
negligence, negligent omission or misconduct by the Indemnifying Party, its
employees, agents, or contractors in the performance of this Agreement. In
addition, the Indemnifying Party will, to the extent of its negligence,
negligent omission or misconduct, defend any action or suit brought by a third
party against the Indemnified Party for any loss, cost, claim, liability, damage
or expense relating to or arising out of negligence, negligent omission or
misconduct by the Indemnifying Party, its employees, agents, or contractors, in
the performance of this Agreement. The Indemnified Party will notify the
Indemnifying Party promptly in writing of any written claims, lawsuits, or
demands by third parties for which the Indemnified Party alleges that the
Indemnifying Party is responsible under this Section, and, if requested by the
Indemnifying Party, will tender the defense of such claim, lawsuit or demand.
The parties will cooperate in every reasonable manner with the defense or
settlement of such claim, demand, or lawsuit. The Indemnifying Party will not
be liable under this paragraph for settlements by the Indemnified Party of any
claim, demand or lawsuit unless the Indemnifying Party has approved the
settlement in advance or unless the defense of the claim, demand, or lawsuit has
been tendered to the Indemnifying Party in writing and the Indemnifying Party
has failed promptly to undertake the defense.
Section 17. Proprietary Information
-----------------------
(1) Attached to this Agreement as Exhibit E and incorporated herein by
reference is the parties' agreement with respect to proprietary
information.
(2) Neither party waives any rights it may have to assert before any
regulatory or judicial forum, with jurisdiction over the subject
matter, that a proposed or actual use of proprietary information is
unlawful or in violation of this Agreement. For purposes of such
claims, both parties submit to the personal jurisdiction of the
federal and state courts of New York and service by mail of any
summons and/or complaint at the addresses provided in Section 20
below shall be deemed sufficient service of process upon the served
party. Should either
<PAGE>
20
party choose to assert a claim that a proposed use of proprietary
information is unlawful or in violation of this Agreement in a
judicial forum, the party asserting such a claim further agrees that
such claim shall be brought only in the state or federal courts of
New York and that party shall not commence any judicial proceedings
outside New York even though personal jurisdiction over the other
party may be proper in other jurisdictions.
Section 18. Amendments and Waivers
----------------------
In addition to the provisions of Exhibit D which specify procedures by which
charges for services under this Agreernent may be changed, no amendment or
waiver of any provisions of this Agreement, and no consent to any default under
this Agreement, shall be effective unless the same shall be in writing and
signed by a duly authorized representative on behalf of the party against whom
such amendment, waiver or consent is claimed except as otherwise provided in
Exhibit D. In addition, no course of dealing or failure of any party to enforce
strictly any term, right or condition of this Agreement shall be construed as a
waiver of such term, right or condition.
Section 19. Assignment
----------
Any assignment by either party to any non-affiliated entity of any right,
obligation or duty, in whole or in part, or of any other interest hereunder,
without the written consent of the other party shall be void. All obligations
and duties of any party under this Agreement shall be binding on all successors
in interest and assigns of such party.
Section 20. Notice and Demand
-----------------
Except as otherwise provided under this Agreement, any notices, demands, or
requests made by either party to the other party shall be in writing and shall
be deemed to have been duly given on the date delivered in person or deposited,
postage prepaid, in the United States mail via Certified Mail, return receipt
requested, and addressed as follows:
To: Telco Development Group of Delaware. Inc.
---------------------------------------------
Mark Stodter
4219 Lafayette Center Drive
Chantilly, Virginia 22021-1209
To: New York Telephone Company
------------------------------
Client Account Manager
NYNEX
2nd Floor
222 Bloomingdale Road
White Plains NY 10605
If personal delivery is selected as the method of giving notice under this
Section, a receipt of such delivery shall be obtained. The address to which such
notices, demands, requests, elections, or other communications may be given by
either party may be changed by written notice given by such party to the other
party pursuant to this Section.
<PAGE>
21
Section 21. Force Majeure
-------------
Neither Party shall be held liable for any delay or failure in performance of
any part of this Agreement to the extent that such failure or delay is caused by
Acts of God, acts of civil or military authority, government regulations,
embargoes, epidemics, war, terrorist acts, riots, insurrections, fires,
explosions, earthquakes, nuclear accidents, floods, strikes, power blackouts,
volcanic action, other major environmental disturbances, unusually severe
weather conditions, inability to secure products or services of other persons or
transportation facilities, or acts or omissions of transportation common
carriers or other causes beyond the control of the Party. If any force majeure
condition occurs, the Party delayed or unable to perform shall give immediate
notice to the other Party. During the pendency of the force majeure, the duties
of the Parties under this Agreement affected by the force majeure condition
shall be abated and shall resume without liability thereafter, except that in
the event of a strike, NYT's obligations under Section 30 of the Agreement shall
remain in effect.
Section 22. Non-Exclusive Agreement
-----------------------
This Agreement is non-exclusive. NYT reserves the right to extend to others the
services provided for herein.
Section 23. EEO Clause
----------
Each party agrees and warrants that, in the performance of this Agreement, it
will not discriminate or permit discrimination in employment against any person
or group of persons on the grounds of sex, race, age, religion, national origin
or handicap in any manner prohibited by the laws of the United States or any
state or local government having jurisdiction.
Section 24. Non-Publicity
-------------
Both NYT and Client agree that neither will use the other's name in connection
with promotional, advertising or other marketing material associated with this
Agreement without the written permission of the other. The Parties acknowledge
that this Agreement contains commercially confidential information which may be
considered proprietary by either or both Parties, and agree to limit
distribution of the Agreement to these individuals in their respective
organizations with a need to know the contents of the Agreement. Neither party
shall disclose any of the terms or conditions of this Agreement to any third
party which is not affiliated with either party hereto, except as may be
required by law, regulation or order of any court or governmental agency, or
pursuant to Exhibit E.
Section 25. Detariffing of Services
-----------------------
NYT shall provide interstate and intrastate Billing and Collection Services
pursuant to the terms and conditions of this Agreement and any applicable
intrastate tariffs. At such time as detariffing of NYT's intrastate billing and
collection services may take place in any intrastate jurisdiction in which NYT
provides billing and collection services, the parties agree that for such
jurisdiction NYT shall provide intrastate Billing and Collection Services to
Client under the terms and conditions of this Agreement.
<PAGE>
22
Section 26. Merger Clause
-------------
This Agreement and all exhibits attached hereto constitute the entire Agreement
and understanding between the parties and supersedes all prior understandings,
oral or written agreements, representations, statements, negotiations, proposals
and undertakings with respect to the subject matter hereof.
Section 27. Headings
--------
The headings in this Agreement are for convenience and shall not be construed to
define or limit any of the terms herein or affect the meanings or interpretation
of this Agreement.
Section 28. Independent Contractors
-----------------------
Each party shall perform its obligations hereunder as an independent contractor
and not as the agent, employee or servant of the other party. Neither party nor
any person employed by such party shall be deemed the employee, agent or servant
of the other party or entitled to any benefits available under the plans for
such other Party's employees.
Each party has and hereby retains the right to exercise full control of and
supervision over its own performance of the obligations under this Agreement
and retains full control over the employment, direction, compensation, and
discharge of all employees assisting in the performance of such obligations.
Each party will be solely responsible for all matters relating to payment of
such employees, including compliance with social security taxes, withholding
taxes, and all other regulations governing such matters. Each party will be
responsible for its own acts and those of its own subordinates, employees,
agents, and subcontractors during the performance of that Party's obligations
hereunder.
Section 29. Bank Errors
------------
Any late payment resulting from bank error will not be subject to the late
payment charge, provided the sending Party (Party making payment) can verify
that it was not at fault. Rather, the discrepancy will be resolved by the banks
involved. It is the responsibility of the sending Party to notify the banks
involved and coordinate resolution of the discrepancy.
Section 30. Performance
-----------
NYT shall maintain a performance level with respect to the Billing and
Collecting services provided hereunder which is consistent with NYT's own
performance level in billing and collecting its own charges .
NYT and Client shall cooperate with and assist each other in promptly
identifying and correcting problems arising out of NYT's provision of billing
services to Client under this Agreement.
Section 31. Third Party Beneficiaries
-------------------------
This Agreement shall not provide any person not a party to this Agreement with
any remedy, claim, liability, reimbursement, cause of action, or other right in
excess of those existing without reference to this Agreement.
<PAGE>
23
Section 32. Executed in Counterparts
------------------------
This Agreement may be executed in any number of counterparts, each of which
shall be an original; but such counterparts shall together constitute but one
and the same document.
Section 33. Severability
------------
If any provision of this Agreement shall for any reason be held invalid,
unenforceable or void in any respect under the laws of the jurisdiction
governing the entire Agreement, the remainder of the Agreement shall not be
affected thereby and shall continue in full force and effect.
Section 34. Governing Law
--------------
This Agreement shall be governed by the laws of the State of New York.
Section 35. Most Favored Nation
-------------------
NYT represents that all charges for the services described herein are the lowest
rates currently being provided by NYT to interexchange carriers. NYT also
represents that the other terms and conditions for the services described herein
are not materially different from those currently being provided by NYT to
interexchange carriers. If, during the term of this Agreement, NYT enters into a
contract with any other interexchange carrier to provide the same services
described herein at a lower rate, or on terms and conditions that are materially
different than those set forth herein, NYT will notify Client within fifteen
business days and offer such rates, terms and conditions to Client as soon as
practicable.
Section 36. Changes in State Tariffs
------------------------
In the event that, during the term of this Agreement, any state regulatory
commission significantly changes any material term or condition, excluding rates
and charges, of an intrastate tariff (such as bundling of Inquiry Service with
Bill Rendering), which does not allow for implementation or continuation of
billing and collection services as provided for herein, Client shall have the
right to seek modification to this Agreement. This right must be exercised
within sixty (60) business days of the date of the state regulatory commission
final order. Any disputes concerning the significance of a change required by
any state regulatory commission may be submitted for resolution under Dispute
Resolution procedures described in Section 37 of this Agreement.
Section 37. Dispute Resolution
------------------
Where this Agreement specifically provides for Dispute Resolution of the issue,
either Party may submit the issue for resolution to an Inter-Company Review
Board ("the Board") consisting of two people (one representative from NYT and
one from Client) of at least Vice Presidential level, or their delegates.
Unless otherwise agreed to by the Board, the Board may consider any written
material or oral testimony submitted to it by either Party, which written
material or oral testimony shall be submitted within twenty (20) business days
of a Party's notification that it desires resolution by the Board. Written
material submitted shall be exchanged with the other Party, and each Party shall
have a twenty (20) business day period to comment upon or reply to the other
Party's written material or oral testimony. Within ten (10)
<PAGE>
-24-
business days following the expiration of the comment period, the Board shall
state in writing to the Parties its resolution of the dispute.
Section 38. List of ICs and/or OSPs
-----------------------
In the event that Client is acting as a Clearing Agent for-other ICs and/or
OSPs, upon demand, Client will provide NYT with the names of those ICs and/or
OSPs it represents for billing and collection service with respect to this
Agreement.
Section 39. Use of Client Specifications
----------------------------
It is understood and agreed between the Parties that any specifications provided
to NYT by Client for use by NYT in connection with NYT's provision of billing
and collection services to Client shall be treated as Client Proprietary
Information, shall not be made available to third parties, and shall be
implemented by NYT only as expressly directed by Client, unless agreed to in
writing by Client or as otherwise permitted under Exhibit E of this Agreement.
Unless otherwise agreed to by the Parties, only those specifications which have
been marked to indicate they are proprietary to Client shall be subject to this
provision. Not withstanding any provisions to the contrary within this
Agreement, NYT reserves the right to use programs and systems developed from the
Client specifications to provide services to others, unless the Parties agree
otherwise.
Section 40. Billing Modifications
----------------------
Client shall have the right to submit requests for modifications of NYT's
billing and collection services in accordance with the procedures outlined in
the NYNEX Billing and Collection Operations Manual.
Section 41. Term
----
NYT shall commence the provision of Message Ready Billing and Collection Service
on a month-tomonth basis. The effective date shall be the earliest of: three (3)
months from the signing of the Agreement; or forty-five (45) days after the
first successful processing of a test tape; or upon receipt of the first
accepted live tape from Client.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement.
NEW YORK TELEPHONE COMPANY
By: /s/ Brian Lane
--------------------
Name: Brian R. Lane
------------------
Title: Vice President
-----------------
Date: 7/31/95
------------------
TELCO DEVELOPMENT GROUP OF DELAWARE, INC.
By: /s/ Bryan Rachlin
--------------------
Name: Bryan Rachlin
------------------
Title: President
-----------------
Date: 7/10/95
------------------
<PAGE>
Page 1 of 4
EXHIBIT D
RATES AND CHARGES
-----------------
NYI's rates and charges for Interstate Billing and Collection Services are as
follows:
(1) Price per Bill $.86
(2) Price per Message Billed $.01 for each message in excess of
an average of 10 messages per bill
(3) Manual Adjustment Charge $10.00/l/
(4) Minimum Charges:
Length of Contract Annual Minimum Monthly Minimum
------------------ -------------- ---------------
*1 year $111,988.80 $9,332.40
*2 years $ 83,991.60 $6,999.30
*3 years $ 55,994.40 $4,666.20
Monthly $4,666.20
Each of these charges are explained in further detail below.
A. Application of Rates to Intrastate and Interstate Services
----------------------------------------------------------
Provided that interstate messages comprise at least 75% of Client's message
volume, the rates and charges set forth above will be used to determine the
total amount due for both Intrastate and Interstate Billing and Collection
Services. The intrastate portion of this total will be determined by
applying the rates and charges contained in the applicable NYT tariff(s) to
the intrastate bill and message volumes./2/ The interstate portion is the
remainder after subtracting the intrastate portion from the total. If the
number of interstate messages is less than 75% of Client's message volume,
then the above rates and charges (excluding the Minimum Charges) shall only
apply to Interstate Billing and Collection Services and Intrastate Billing
and Collection Services shall be provided to Client in accordance with the
rates and charges set forth in the applicable NYT tariff(s), unless
otherwise agreed to by NYT.
B. Adjustments to Rates and Charges
--------------------------------
In the event that, during the term of this Agreement, the costs assigned to
billing and collection services under Part 69 of the Federal Communication
Commission's Rules are changed as a result of: (1) a change in the FCC's
accounting, separations or access charge rules; (2) a change in federal, state
or local tax laws; or (3) any order or change in a rule or regulation of any
Court or federal, state, or local governmental agency having jurisdiction, and
the increase or decrease
-------------------
1 Manual Adjustment Charge does not apply if NYT provides Inquiry Service to
Client in accordance with the provisions of Exhibit B attached hereto.
2 For purposes of this Agreement, intrastate messages are messages
associated with Client End User Customer telephone calls both originating
and terminating within New York State.
* NOT PRESENTLY AVAILABLE
<PAGE>
Page 2 of 4
is more than $500,000, determined cumulatively on an annual basis for both
NYT and New England Telephone combined (the "NYNEX Telephone Companies" or
"NTCs"), a surcharge or surcredit may be applied by NYT to the rates set
forth herein. The surcharge or surcredit which may be applied to Client: (1)
shall not exceed Client's proportionate share among customers of NYT's
billing and collection services of the assigned costs; and (2) will be
effective with the date that Client would cease to pay for reassigned costs
under the procedure in effect prior to the reassignment of costs (e.g., the
date on which the NYNEX Telephone Companies would no longer be permitted to
charge such costs under access). In any event the NYNEX Telephone Companies
shall be permitted to recover Client's proportionate share of costs
reassigned to the billing and collection category from the date such costs
are reassigned to the billing and collection category. If it is later
determined that such costs should not have been billed to Client because
those costs have been recovered elsewhere, Client shall be entitled to a
credit plus interest at an annual rate of 18.25 percent. Such credit shall
be reflected on the next billing and collection charges bill issued after it
is determined that Client is entitled to a credit. NYT shall notify Client,
in writing, of the effective date of any proposed surcharge or surcredit
and, upon request, provide Client with the calculations used to determine
the surcharge or surcredit which shall be auditable under the provisions of
Section 12 of the Agreement.
In the event NYT imposes a surcharge upon Client, Client shall have the
right to terminate this Agreement, without penalty, provided Client notifies
NYT in writing within ninety (90) days from the date of NYT's written
notification to Client of the surcharge. If Client elects to terminate, said
termination shall become effective no later than six (6) months from the
date of NYT's written notification or such longer period as designated by
Client and Client shall be responsible for payment of the surcharge if such
increase becomes effective prior to termination of service. In the event
that the longer period designated by Client extends beyond the term of this
Agreement, NYT agrees to continue providing billing and collection services
to Client for such period under the same terms and conditions and rates and
charges, including the surcharge. NYT agrees to cooperate fully with Client
in the planning and implementation of any transition from NYT to Client
billing as a result of Client election to terminate this Agreement under
this paragraph. If Client does not elect to terminate as provided herein,
then the surcharge shall become effective in accordance with the above
provisions.
C. Client Right to Renegotiate
---------------------------
If, at any time during the term of this Agreement, NYT offers interLATA
telecommunication services beyond those which on the effective date it is
able to offer in any local exchange serving area in which NYT provides local
exchange service, and Client is unable to meet its Minimum Charges
obligations substantially due to those new interLATA services, Client shall
have the right to renegotiate those obligations for any affected year.
If, at any time during the term of this Agreement, Client is otherwise
unable to meet its Minimum Charges obligations due to NYT acts or omissions,
Client shall have the right to renegotiate those obligations for any
affected year.
D. Price per Bill
--------------
For the purpose of applying this charge, a bill will consist of all pages
bearing the same company logo. If NYT agrees to bill some of Client's
charges under an additional Carrier Identification Code, then Client will
pay the above rates and charges for those bills issued
<PAGE>
Page 3 of 4
under the additional Carrier Identification Code. The provision of Billing
and Collection Services for Client's additional Carrier Identification Code
shall begin on such date as is mutually agreed to by the parties in writing
and may be cancelled by Client at any time without penalty.
E. Price per Message
-----------------
The per message charge of $.01 applies to each message in excess of an
average of ten (10) messages per bill. For the purpose of applying this
charge, a bill will consist of all pages bearing the same company logo. The
formula used to determine the number of chargeable messages to which the per
message charge is applied is as follows:
MONTHLY MESSAGES BILLED - [10 x MONTHLY BILL VOLUME] =
CHARGEABLE MESSAGES
If the number of chargeable messages is less than or equal to 0, then no per
message charge applies.
F. Manual Adjustment Charge
------------------------
Client will pay NYT $10.00 for each LEC/IC Memo processed by NYT for
rebilling of Client charges in accordance with Section 8(B).
G. Minimum Charges
---------------
Client shall pay NYT a guaranteed Minimum charge in accordance with the rate
schedule listed above. The amounts billed by NYT for Intrastate Billing and
Collection Service will be applied towards the Minimum Charges. The amount
billed to Client each month will be determined using the terms and formula
outlined below. In the event NYT agrees to provide Billing and Collection
Services to Client under an additional Carrier Identification Code, an
additional Minimum charge in an amount equal to the monthly minimum charge
stated above will apply. The Client will be responsible for this amount
only during the length of time that NYT provides Billing and Collection
for Client.
Defined Terms
- -------------
1. Monthly Minimums - The Monthly Minimum charges set forth above.
---------------
2. Cumulative Minimums - Sum of the Monthly Minimum charges from the beginning
-------------------
of contract up to and including the current month's Monthly Minimum charge.
3. Monthly Actuals - Billing and Collection charges calculated by applying the
---------------
above per bill and per message charges to the current month's bill and
message volumes.
4. Cumulative Actuals - Sum of the Monthly Actuals from the beginning of the
------------------
contract up to and including the current month's Monthly Actual.
5. Cumulative Billed Amount - The sum of the Billed Amounts from the beginning
------------------------
of the contract up to and including the current month's Billed Amount.
6. Billed Amount - The amount billed by NYT to Client in a given month for
-------------
Billing and Collection Services.
<PAGE>
Page 4 of 4
Formula
- -------
The Billed Amount in each month shall be the greater of (1) Cumulative Actuals
less the previous month's Cumulative Billed Amount, or (2) Cumulative Minimums
less the previous month's Cumulative Billed Amount. The following example
demonstrates the application of the above formula.
Example
- -------
MONTH 1 2 3 4 5 6
----- - - - - - -
Minimum (1) 10 10 10 10 10 10
Cumulative Minimum (2) 10 20 30 40 50 60
Actual (3) 5 8 12 18 5 15
Cumulative Actual (4) 5 13 25 43 48 63
Cumulative Billed (5) 10 20 30 43 50 63
Billed (6) 10 10 10 13 7 13
In the event NYT provides Billing and Collection Services to Client under an
additional Carrier Identification Code, the Billed Amount will be determined
separately for those bills issued under each Carrier Identification Code. The
amounts billed by NYT for Inquiry Service will not be included in the
application of the above formula used to determine Client's Billed Amount in
each month.
H. Postage Escalator
-----------------
In the event that, during the term of this Agreement, the U.S. Postal
Service increases the rate for one ounce first class zip sort postage,
Client shall pay NYT a percentage of any such increases on a per bill basis.
This percentage still be based upon the relation of the average number of
Client bill page(s) to the total number of pages of an average NYT bill
including the Client's bill pages. NYT shall notify Client in writing of the
effective date of any postage increases and, upon request, provide Client
with the calculations used to determine same.
<PAGE>
Page 1 of 2
EXHIBIT E
---------
PROPRIETARY INFORMATION
-----------------------
I. General
-------
This is Exhibit E to the Agreement between NYT and Client (hereinafter
"Parties") for the provision of Interstate Billing and Collection Services. It
is recognized by the parties that, in connection with the Interstate Billing and
Collection Services to be provided hereunder, NYT and Client will have in their
possession and control, or provide to the other Party, information in the form
of data, reports, computer programs, and other documentation which is
proprietary to NYT, to Client, to both, to others, and/or which is considered
confidential with respect to Client End User Customers (hereinafter designated,
"Proprietary Information"). The Parties agree that all such data provided to the
other Party shall be treated as Proprietary and held in confidence by the
Receiving Party, pursuant to the terms of this Agreement.
II. Handling of Proprietary Information
-----------------------------------
Except for information not subject to the terms and conditions herein
because of its prior disclosure or permitted or consented disclosure as
described below, Proprietary Information of one party ("Disclosing Party")
that is possessed by the other party ("Receiving Party") shall be treated in
accordance with the following terms and conditions:
A. The Receiving Party shall put in place and strictly enforce (using all of
its prerogatives, including dismissal of employees or termination of
contracts with its agents or contractors) procedures to ensure that its
employees, contractors or agents are aware of and fulfill the obligation
under this Exhibit to hold the Disclosing Party's Proprietary Information in
confidence.
B. Proprietary Information described previously shall be held in confidence by
the Receiving Party and its employees, contractors or agents, shall be
treated with the same degree of care as the Receiving Party would treat its
own Proprietary Information, and shall not be disclosed to third persons
(but may be disclosed to agents who have a need for it), shall be used for
the purposes stated herein, and may be used or disclosed for other purposes
only upon such terms and conditions as may be mutually agreed upon by the
parties in writing.
C. Each party acknowledges that a Party's Proprietary Information may be
commingled with Proprietary Information of the other party, and
accordingly, the Parties shall, to the extent practicable, use good faith
efforts to ensure that such Proprietary Information shall be masked or
rendered mechanically inaccessible to the other party. However, there may be
instances in which efforts to mask or screen such Proprietary Formation are
impracticable, or in which disclosure is inadvertent. In such instances, the
Receiving Party will neither use nor disclose the Proprietary Information,
except as required to fulfill its obligations under the Agreement and shall
put in place procedures as described above.
D. Each party agrees to give notice to the other party of any demand to
disclose or provide Proprietary Information of said other party to other
persons under lawful process prior to disclosing or furnishing such
Proprietary Information. The Receiving Party agrees to
<PAGE>
Page 2 of 2
cooperate, if the Disclosing Party deems it necessary to seek protective
arrangements. To avoid the administrative burdens associated with such
advance notice of protective arrangements, either party may respond to
routine customer requests, legal process or lawful demand involving the
disclosure of Proprietary Information in accordance with mutually agreed
upon policies and procedures.
E. Either party may disclose or provide Proprietary Information of the other
party to implement, effect and enforce either Party's tariffs, to comply
with the terms and provisions of the Modification of Final Judgment, or to
meet the requirements of a court, regulatory body or government agency
having jurisdiction over either party. However, the Receiving Party will
notify the Disclosing Party so as to give the Disclosing Party a reasonable
opportunity to object to such disclosure. The Disclosing Party may not
unreasonably withhold approval of protective arrangements provided by any
such court, regulatory body or government agency. Nothing in this Exhibit
requires either party to support or not support the position of any person
or entity on the issue of whether any particular Proprietary Information is
proprietary under applicable law or this Exhibit.
III. Information Not Subject To Handling Restrictions
------------------------------------------------
Information shall not be deemed confidential or proprietary, and the Receiving
Party shall have no obligation to prevent disclosure of such information, if
such information:
(a) was previously known to the Receiving Party free of any obligation
to keep confidential, or
(b) is provided to other parties by the Disclosing Party without
restriction, or
(c) is or becomes publicly available by other than unauthorized
disclosure, or
(d) is independently developed, produced or generated by the Receiving
Party, or
(e) is approved for release by written authorization of the Disclosing
Party.
IV. Applicability of Statutes, Decisions and Rules
----------------------------------------------
A Party's ability to disclose Proprietary Information or use disclosed
Proprietary Information is subject to all applicable statutes, decisions, and
regulatory rules concerning the disclosure and use of such Proprietary
Information which, by their express terms, mandate a different handling of such
Proprietary Information.
<PAGE>
Pages where confidential treatment
has been requested are stamped
"Confidential Treatment Requested.
The redacted material has been
separately filed with the
Commission," The redacted portions
are indicated by a "(*)".
Exhibit 10.10
AGREEMENT FOR THE PROVISION OF
BILLING AND COLLECTION SERVICES BETWEEN
PACIFIC BELL AND Telco Development Group of Delaware, Inc.
-----------------------------------------
- --------------------------------------------------------------------------------
************
THIS AGREEMENT IS SUBJECT TO THE FOLLOWING AGREED UPON
CONFIDENTIALITY UNDERTAKING (SEE SECTI0N 22 OF THE AGREEMENT):
"The Parties acknowledge that this Agreement contains information which is
commercially confidential and which is considered to be proprietary by either or
both Parties, and agree to limit the distribution of the Agreement to those
individuals within each of their representative organizations with a legitimate
need to know the contents hereof."
May 1 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
May 1 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
TABLE OF CONTENTS
Section Title Page
- ------- ----- ----
Section 1. Definitions 1
Section 2. Scope of Agreement 3
Section 3. Term 5
Section 4. Amendments: Waivers 5
Section 5. Assignments 5
Section 6. Compliance with Laws 5
Section 7. Governing Law 6
Section 8. Third Party Beneficiaries 6
Section 9. Intellectual Property 6
Section 10. Indemnification 6
Section 11. Limitation of Liability 7
Section 12. Taxes and Surcharges 7
Section 13. Taxes--Indemnity and Recourse 9
Section 14. Invoices and Payments 11
Section 15. Deposits and Reserves 13
Section 16. Notices and Demands 15
Section 17. Procedures upon Expiration or Termination 16
Section 18. Force Majeure 16
Section 19. Survival 16
Section 20. Claims Limitation 16
Section 21. Termination and Cancellation 17
Section 22. Confidentiality and Publicity 19
Section 23. Severability 19
Section 24. Audits and Examinations 19
Section 25. Dispute Resolution Procedures 21
May 1 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
TABLE OF CONTENTS
Section Title Page
- ------- ----- ----
Section 26. Headings 21
Section 27. Entire Agreement 21
Section 28. Executed in Counterparts 22
Exhibit A Proprietary Information Agreement
Exhibit B Pacific Bell Billing Guidelines for Information Services Calls
Exhibit C Pacific Bell Billing and Collections Service Implementation
Form
Exhibit D Rate Schedule
May 1 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
AGREEMENT FOR THE PROVISION OF
BILLING AND COLLECTION SERVICES BETWEEN
PACIFIC BELL AND Telco Development Group of Delaware, Inc.
-----------------
This Agreement for the Provision of Billing and Collection Services
Between Pacific Bell and Telco Development Group of Delaware, Inc.
----------------------------------------
("Agreement") is entered into this ________ day of ______, 199_, between Pacific
Bell (herein "Pacific") a California corporation, and Telco Development Group of
--------------------------
Delaware, Inc. (herein "Customer") a Delaware corporation. Pacific and Customer
- ------------- --------
shall hereinafter sometimes be referred to collectively as the "Parties".
WHEREAS, Customer desires to purchase from Pacific, and Pacific
desires to provide to Customer, interstate Billing and Collection Services;
WHEREAS, the terms and conditions governing Pacific's provision of
intrastate Billing and Collection Services are set forth in Pacific's Schedule
Cal. P.U.C. No. 175-T as it is modified over time (the "Intrastate Tariff");
and
WHEREAS, the Parties desire to set forth the terms and conditions
governing Pacific's provision of interstate Billing and Collection Services.
NOW, THEREFORE, IN consideration of the mutual promises contained
herein and other good and valuable consideration, the Parties hereby agree as
follows:
Section 1. Definitions
- ----------------------
As used in this Agreement, the following terms shall have the
following meanings. Terms defined elsewhere in this Agreement shall also
govern all parts of this Agreement. Terms defined in the singular or
plural shall be interchangeable when the context so indicates.
Adjustments - Adjustments include, but are not limited to,
selective changes to specific charges on an end
user's bill, retroactive changes to compensate for
incorrect or incomplete data from a prior month.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 1
<PAGE>
Affiliates - Any corporation or other entity (a) owning
either directly or indirectly, either a majority
of the stock of Pacific or the Customer
("Parent"), or (b) in which a majority of the
ownership interest is held either directly or
indirectly by Parent, Pacific or the Customer.
Amount Due - Amount Due Pacific equals all appropriate
Pacific charges for Billing and Collection Services
billed under this Agreement
Bill Processing - Bill Processing Service is the preparation of
Service bills for telecommunications services, including
without limitation the posting of rated messages to
end user accounts; computation of bill charges and
credits; arrangement of data in print ready format;
and Bill Rendering.
Bill Rendering - The preparation and mailing of bills to the
Customer's End Users, application of taxes and
surcharges, updating of the balance due, receipt
of payments, treatment and collection activity,
and maintenance of end users' billing information.
Business Days - All days except Saturday, Sunday, Pacific and
Customer holidays and designated Pacific and
Customer non-working days.
Carrier Billing - The bill rendered by Pacific to the Customer for
Statement the provision of Services under this
Agreement.
Collection - The standard collection and treatment methods
for collecting payment, including, but not limited
to, suspension and denial of service for
delinquent accounts, and initiation of normal
collection efforts, including legal action.
Customer's - Customer's End User is defined as an end user
End User using a Customer telecommunications service which
Pacific has agreed to bill under this Agreement.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 2
<PAGE>
Customer Message - Charges for any Customer telecommunications
service which Pacific has agreed to bill under
this Agreement. In some contexts the term
"Message" may be used to refer to the details
about a Customer Message that are used in the
billing of the Customer Message.
Denial of - Consists of Pacific, consistent with Regulatory
Service authorization, denying an end user's access to the
network or a portion of the network, in cases of
insufficient payment for certain services for
which Pacific provides billing and collection
services.
Inquiry Service - The answering of end user questions, either
written or verbal, concerning disputed charges,
explaining bills, crediting and adjusting charges,
and claims investigation.
Message Billing - The guiding of a rated Customer Message to a
valid end user account for subsequent Bill
Rendering in accordance with Pacific's own
procedures for handling Pacific's messages and all
relevant Commission requirements. The term
"Message" herein includes the Customer charges for
usage, directory assistance charges, and
Adjustments and credits.
Treatment - Treatment may include, but is not limited to,
the preparation and mailing of account status
notices at established intervals, deposit
requirements, and suspension and denial of
service.
Section 2. Scope of Agreement
- -----------------------------
A. Pacific shall provide Billing and Collection Services (the
"Services") for intrastate telecommunication services by Customer
to end users within the exchange service area of Pacific for whom
Pacific provides local telephone service in accordance with the
terms and conditions contained in the Intrastate Tariff.
B. Pacific shall provide the Services for interstate (including
international) telecommunication services provided by Customer to
end users within the
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 3
<PAGE>
exchange service area of Pacific for whom Pacific provides local
telephone service in accordance with the Intrastate Tariff as it
is modified over time and the terms and conditions contained in
this Agreement. The term "Agreement" shall include the Intrastate
Tariff which is incorporated herein by reference, all present
Exhibits and all Exhibits that in the future are incorporated
into and made a part of this Agreement. Additional details
regarding Pacific's billing and collection services are set forth
in the Pacific Bell Billing and Collections Operating Procedures
Manual. Attached to this Agreement as Exhibits are the following
documents:
Exhibit A Proprietary Information Agreement
Exhibit B Pacific Bell Billing Guidelines for
Information Services Calls
Exhibit C Pacific Bell Billing and Collections Service
Implementation Form
Exhibit D Rate Schedule
C. Additionally, the Parties agree that the terms and conditions
contained in this Agreement shall, to the extent applicable,
supplement the Intrastate Tariff in defining the terms and
conditions for intrastate services. Except as specifically set
forth in Section 2.E below, in the event of any conflict between
the provisions contained in the Intrastate Tariff and the
provisions of this Agreement, the provisions of the Intrastate
Tariff shall prevail. However, the additional procedures and
requirements set forth in this Agreement shall not be deemed to
conflict with the Intrastate Tariff merely because such
additional procedures and requirements are not mentioned in the
Intrastate Tariff.
D. This Agreement shall be subject to changes or modifications
directed by the CPUC or any other duly constituted governmental
authority with appropriate jurisdiction.
E. Customer agrees to pay Pacific for the provision of Services
under this Agreement according to the rates set forth in Exhibit
D. For services provided under this Agreement, the rates set
forth in Exhibit D shall prevail over rates contained in the
Intrastate Tariff. Pacific reserves the right, commencing January
1, 1997, to increase rates for the services provided under this
Agreement on 90 days written notice.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 4
<PAGE>
F. The words "shall" and "will" are used interchangeably throughout
the Agreement. The use of one or the other shall not mean a
different degree of right or obligation for either Party.
Section 3. Term
- ---------------
This Agreement shall become effective on the date first written above
and shall remain in full force and effect until terminated as provided
for in this Agreement.
Section 4. Amendments: Waivers
- ------------------------------
This Agreement may be modified or additional provisions may be added by
written agreement signed by or on behalf of both Parties. No amendment
or waiver of any provision of this Agreement and no consent to any
default under this Agreement shall be effective unless the same shall be
in writing and signed by or on behalf of the Party against whom such
amendment, waiver or consent is claimed. In addition, no course of
dealing or failure of any Party to strictly enforce any term, right or
condition of this Agreement shall be construed as a waiver of such term,
right or condition.
Section 5. Assignments
- -----------------------
Any assignment by either Party of any right, obligation or duty, in
whole or in part, or of any other interest hereunder, without the
written consent of the other Party shall be void, provided, however,
that Pacific may assign its rights and delegate its duties under this
Agreement, either in whole or in part to any present or future
Affiliate. Pacific shall give Customer prior written notice of any such
assignment. In the event of any such assignment, Pacific shall be
released and discharged, to the extent of the assignment, from all
obligations under this Agreement.
Section 6. Compliance with Laws
- -------------------------------
All terms, conditions and operations under this Agreement shall be
performed in accordance with, and are subject to, all applicable state
and federal, legal and regulatory
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 5
<PAGE>
requirements of all duly constituted authorities
Section 7. Governing Law
- ------------------------
This Agreement shall be governed by the local law of the State of
California.
Section 8. Third Party Beneficiaries
- ------------------------------------
This Agreement shall not provide any person, not a Party to this
Agreement with any remedy, claim, liability, reimbursement, claim of
action, or other right in excess of those existing without reference to
this Agreement.
Section 9. Intellectual Property
- --------------------------------
Except as otherwise expressly provided herein, nothing contained in this
Agreement shall be construed as conferring by implication, estoppel, or
otherwise any license or right under any patent, tradename or copyright
of either Party.
Section 10. Indemnification
- ----------------------------
A. Each Party (the "Indemnifying Party") shall indemnify and hold
harmless the other Party ("Indemnified Party") from and against any
loss, cost,, claim, liability, damage expense (including reasonable
attorney's fees) to third parties, relating to or arising out of
negligence or willful misconduct by the Indemnifying Party, its
employees, agents, or contractors in the performance of this
Agreement or the failure of the Indemnifying Party to perform its
obligations under this Agreement. In addition, the Indemnifying
Party shall, to the extent of its obligations to indemnify
hereunder, defend any action or suit brought by a third party
against the Indemnified Party.
B. The Indemnified Party shall notify the Indemnifying Party
promptly in writing of any written claims, lawsuits, or demand by
third parties for which the Indemnified Party alleges that the
Indemnified Party is or may be responsible under this Section and
tender the defense of such claim, lawsuit or demand to the
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 6
<PAGE>
Indemnifying Party. The Indemnified Party also shall cooperate in
every reasonable manner with the defense or settlement of such claim,
demand, or lawsuit.
C. The Indemnifying Party shall not be liable under this Section for
settlements or compromises by the Indemnified Party of any claim,
demand, or lawsuit unless the Indemnifying Party has approved the
settlement or compromise in advance or unless the defense of the
claim, demand, or lawsuit has been tendered to the Indemnifying Party
in writing and the Indemnifying Party has failed to undertake the
defense.
Section 11. Limitation of Liability
- ------------------------------------
Except as specifically set forth in this Agreement, neither Party shall be
liable to the other for any loss, cost, claim, injury, liability or
expense, including reasonable attorneys' fees relating to or arising out
of any ordinary negligent act or omission by a Party. In no event shall
either Party be liable to the other for any indirect, special, incidental
or consequential damages, including, but not limited to loss of profits,
income or revenue.
Section 12. Taxes and Surcharges
- ---------------------------------
A. Pacific shall, in conjunction with this Agreement, bill applicable
federal, state, or local, sales, use, excise or other Taxes or Tax-
like charges imposed on or with respect to Customer's services
(hereinafter collectively "Taxes") and Surcharges or surcharge-like
charges (hereinafter collectively "Surcharges") to Customer's End
Users. For message charges, where the message originates and
terminates in California, Customer shall indicate whether the message
charge is interstate or intrastate service, and Pacific, using
statutory tax rates, shall compute and bill amounts of applicable
federal and California state and local taxes. For message charges
where the call originate sand terminates outside California, Pacific,
using statutory tax rates, shall compute and bill the amount of
applicable federal taxes only. Taxes and Surcharges not described in
the preceding two sentences shall be billed by Pacific as instructed
in writing by Customer.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 7
<PAGE>
B. Pacific shall bill the specific Taxes and Surcharges listed above in
Section 11.A to end users on Customer's behalf as requested by
Customer. Pacific shall also bill additional Taxes and Surcharges to
end users, as requested in writing by Customer and agreed to by
Pacific.
C. It is recognized by each Party that Pacific is merely acting as
Customer's agent with respect to the calculation, billing and
collection of Taxes and Surcharges hereunder. Pacific shall not be
entitled to retain or receive from Customer any statutory fee or
share of Taxes or Surcharges to which the person collecting such
Taxes or Surcharges may be entitled under applicable law.
D. Customer shall be solely responsible for filing all returns for all
such Taxes with the applicable taxing authority and shall pay or
remit all such Taxes to the applicable taxing authority. Despite the
preceding sentence, Customer and Pacific acknowledge that the
California State Board of Equalization (SBE) staff has raised issues
regarding which Party is responsible for filing Tax returns and
remitting Taxes. Pacific and Customer agree to work with the SBE to
resolve this matter. If necessary, this Agreement shall be modified
to reflect any agreement reached with the SBE.
E. Pacific shall use information in Pacific's possession regarding
Customer End Users' exemption status and geographic location as it
pertains to the calculation, billing and collection of Taxes. If such
information in Pacific's possession is sought by a taxing authority
in conjunction with an audit of Customer, Pacific shall cooperate
with Customer in such audit at Customer's expense, and to the extent
required or allowed by law shall make such information available to
the taxing authority, subject to any applicable legal restrictions.
Pacific shall determine the manner in which such information is made
available.
F. Pacific shall maintain the information pertaining to the calculation,
billing and collection of Taxes from Customer End Users in an
accurate and complete manner
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 8
<PAGE>
commensurate with sound business practices and procedures. Such
information shall be accurate and complete commensurate with sound
business practices and procedures. Furthermore, such information
shall be provided to Customer in accordance with a mutually agreed
upon format and schedule to assist the Customer in filing its Tax
returns. Pacific shall provide to Customer a report of all Taxes
collected on behalf of Customer on a regular basis.
G. Pacific shall establish the Tax exempt status of end users in
conformance with applicable Tax laws. Information regarding end user
Tax exempt status shall remain the exclusive property of Pacific.
H. When Customer advises Pacific that a particular message is Tax
exempt, Pacific shall not calculate or bill Taxes.
I. When Customer does not order Inquiry Service, Customer shall be
responsible for any communications from Customer End Users relating
to Taxes as well as all determinations as to the removal, addition,
or adjustment of Taxes to be billed to Customer End Users.
J . Customer shall be responsible for all communications with taxing
authorities regarding Taxes applicable to Customer charges.
Section 13. Taxes - Indemnity and Recourse
- -------------------------------------------
A. Customer agrees to pay, indemnify, defend, and hold Pacific harmless
from and against any liability or loss resulting from any Taxes,
penalties, interest in addition to Tax, Surcharge or other charges
(including reasonable attorney's fees) payable by Pacific
(hereinafter referred to as "Amounts") as a result of any of the
following:
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 9
<PAGE>
1. the provision by Pacific of Services covered by this Agreement;
2. the delay or failure of Customer, for any reason, to pay any Tax,
Surcharge or other such item covered by this Agreement;
3. the delay or failure of Customer, for any reason, to file any
return or provide other information covered by this Agreement;
4. the reliance by Pacific on any advice, determination or direction
of Customer in Pacific's calculation, billing or collection
services under this Agreement;
5. the delay or failure of Customer to take any action with respect
to any Taxes or other such items under this Agreement unless such
inaction constitutes willful misconduct or gross negligence, or
Pacific knowingly contradicts Customer's written direction; or
6. a determination by the Internal Revenue Service or any other
taxing authority that Pacific is responsible for collecting
Taxes, remitting Taxes or filing returns or other information as
required by law, rule or regulation.
B. Customer also agrees to reimburse Pacific any and all
penalties, interest, additional tax or other charges including
reasonable attorney's fees that Pacific may pay directly or be
obligated to pay as a result of the circumstances enumerated in
Section 13.A above.
C. Consistent with the indemnity provided above in Section 13.A, if
Customer disagrees that any Amounts are payable by Pacific, or
disagrees with an assessment against Pacific of any additional
Amounts as a result of or arising from Pacific's performance of any
obligation under this Agreement, or disagrees with a determination
that any Amounts applicable to Pacific's charges to Customer for
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 10
<PAGE>
services under this Agreement, Customer shall, at its option and
expense (including, if applicable, payment of any such Amounts prior
to final resolution of this issue) have the right to seek
administrative relief, a ruling, judicial review or other appropriate
review as to the applicability of or liability for any such Amounts
or to protest the same and direct any legal challenge, but Customer
shall be liable for any Amounts ultimately determined to be due. When
requested by Customer, Pacific shall reasonably cooperate or
participate with Customer, at the expense of Customer, in any such
proceeding, protest, or legal challenge.
D. Pacific agrees to indemnify, defend and hold Customer harmless from
and against any liability or loss resulting from Amounts incurred by
Customer as a result of the willful or negligent act or negligent
failure to act of Pacific to provide Customer, pursuant to Section
12 - Taxes and Surcharges hereof, accurate and complete information
with which to file its Tax returns and remit payment.
E. Pacific's acting or failing to take any action with respect to any
Amounts which are the subject of this Agreement, unless such action
or inaction constitutes willful misconduct or negligence or unless
such action or inaction is contrary to timely written direction by
Customer provided in this Agreement or otherwise.
Section 14 Invoices and Payments
- ---------------------------------
A. Pacific shall bill the Customer via the Carrier Billing Statement for
Services rendered in accordance with Exhibit D or as otherwise agreed
by the Parties. Invoicing to the Customer shall be on a monthly basis
unless otherwise agreed to by Pacific and the Customer in writing.
Each Carrier Billing Statement shall be for approximately 30 days
depending upon data processing cutoff dates used by Pacific.
1. Pacific will charge the Customer a percentage of fees paid by
Pacific to outside collection agencies ("OCA") in a given month.
This percentage will be the ratio of the total Customer's
charges
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 11
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
recovered after write-off to the total charges recovered after
writeoff. These OCA charges will appear on the Customer's
Carrier Billing Statement.
B. The Carrier Billing Statement is to be received by the Customer no
later than 22 days prior to the due date. The Customer shall have no
less than 22 days from receipt to pay the bill penalty free. The due
date is determined by adding 30 days to the bill date. If the due
date falls on a Saturday, Sunday or bank holiday, payment for the
Amount Due Pacific shall be as follows:
1. If the due date falls on a Sunday or a holiday which is observed
on a Monday, the due date shall be the first non-holiday day
following such Sunday or holiday.
2. If the due date falls on a Saturday or a holiday which is
observed on Tuesday, Wednesday, Thursday, or Friday, the due date
shall be the last non-holiday day preceding such Saturday or
holiday.
C. Any payment received after the due date shall be subject to a Late
Payment Charge. The Late Payment Charge shall be the portion of the
Amount Due Pacific received after the payment date-times a late
factor. The late factor shall be a ( * )% daily charge, not
compounded, or as otherwise mandated by regulatory or governmental
authorities. Any Late Payment Charge shall be included in the next
applicable payment.
D. In the event a payment for Services rendered under this Agreement or
a payment for any other tariffed service provided by Pacific to
Customer is past due, Pacific may on three days written notice, net
any such past due payment against subsequent payment by Pacific on
Customer's accounts receivable.
1. In the event a Customer payment for Services provided under this
Agreement is past due, Customer agrees that Pacific may net such
past due payment against subsequent Customer messages submitted
to Pacific for billing through an authorized billing agent.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 12
<PAGE>
E. Pacific shall not knowingly bill Messages submitted by a Customer as
an authorized billing agent that are from an entity possessing an
outstanding balance due Pacific for billing services. In the event
such Messages are billed by Pacific, Pacific may net any such past
due payment against payments due Customer for Messages from the
entity with the outstanding balance due Pacific.
F. Should the Customer dispute any portion of the Amount Due Pacific,
the Customer shall notify Pacific in writing of the nature and basis
of the dispute as soon as possible and prior to the due date. The
Parties shall use their best efforts to resolve the dispute prior to
the due date.
Section 15. Deposits and Reserves
- -------------------------------------
A. In the event Customer has not established credit with Pacific or has
information services billings that are 25% or greater of its
projected or actual total billed revenue, or has repeatedly failed to
pay Pacific in a timely manner for billing and collection services
provided by Pacific under previous billing agreements, or fails to
pay the charges for the Services provided under this Agreement in a
timely manner, Pacific shall have the right to require a deposit from
Customer to guarantee payment. The deposit shall be the actual or
estimated charges for Services, including amounts for anticipated
Adjustments and uncollectibles, for providing the Service to Customer
for a four month period. The anticipated Adjustments and
uncollectibles shall be based on the greater of Customer's historical
Adjustment and uncollectible figures or Pacific's average figures for
Adjustments and uncollectibles for the Customer's type of
telecommunications services. Pacific reserves the right to increase
the deposit in the event Customer's billing volumes increase to the
extent that the existing deposit no longer represents the actual
charges for Services, over a four month period. Upon termination of
the Service, Pacific shall credit the amount of the deposit to the
Customer's account and any remaining credit balance will be refunded.
At Pacific's option, the deposit may be refunded or credited to
Customer's account prior to termination of the Service if the
Customer has promptly paid all relevant charges for a period of one
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 13
<PAGE>
year. The Customer shall receive interest on the deposit at the rate
established for end user deposits in Rule 7 of Pacific's Schedule
CAL. P.U.C. No. A2.
B. In the event (i) this Agreement is terminated for any reason, (ii)
either Party notifies the other that such Party is terminating this
Agreement, (iii) the dollar amount of Customer Messages purchased
under this Agreement in any month represents a decrease of 50% or
more from the average dollar amount of Customer Messages per month
purchased during the three months immediately preceding such month,
(iv) Customer's End User Adjustment level, excluding Adjustments
arising solely from Pacific's failure to provision Services as set
forth in this Agreement, exceed 15% of the amount billed for Customer
to end users in any one month, or (v) Pacific determines, in its sole
discretion, that the aggregate amount due Customer in respect to
Customer's Messages at any time during the term of this Agreement is
less than the deductions (including but not limited to, Adjustments,
billing and collection charges and net bad debt true-up amounts)
effected by or anticipated to be effected by Pacific under this
Agreement (each of the events (i) - (v) above being referred to as a
"Reserve Event"), then Pacific shall have the right to withhold from
any amount otherwise due Customer on or after the occurrence of the
Reserve Event an amount determined to be sufficient, in Pacific's
sole discretion (the "Reserve") for the purpose of paying. Pacific
amounts owed or anticipated to be owed as a result of any Adjustment,
net bad debt true-up, billing and collection charge or any other
assessment that Pacific may pass through to Customer under this
Agreement.
1. The Reserve shall be held by Pacific in the case of a Reserve
Event described in clause (i) or (ii) of this Section 15.B, for
up to 18 months from the date of the termination of this
Agreement.
2. The Reserve shall be held by Pacific in the case of a Reserve
Event described in clause (iii) - (v) of this Section 15.B, until
such time as Pacific determines, in its sole discretion, that the
Reserve is no longer necessary
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 14
<PAGE>
for the purpose of paying amounts due or anticipated to be owing
to Pacific.
3. Upon expiration of the Reserve Period, Pacific shall pay to
Customer the excess, if any, of such Reserve over the actual end
user Adjustments, net bad debt true-ups, billing and collection
charges or any other assessments that Pacific may pass through to
Customer under this Agreement. In the event the amounts so
withheld are less than the actual end user adjustments, net bad
debt true-ups, billing and collection charges or any other
assessments that Pacific may pass through to Customer under this
Agreement, Customer shall pay Pacific an amount equal to the
difference within 30 days after receipt by Customer of an invoice
from Pacific.
Section 16. Notices and Demands
- -----------------------------------
A. Except as otherwise provided herein, all notices or other
communication hereunder shall be deemed to have been duly given when
made in writing and delivered in person or deposited in the United
States mail, certified mail, postage prepaid, return receipt
requested and addressed as follows:
Customer: Telco Development Group of Delaware, Inc.
-----------------------------------------
4219 Lafayette Center Drive
---------------------------
Chantilly, VA 22102
-------------------
ATTN: Mark Stodter
------------------
Pacific: Pacific Bell
-------- 370 Third Street, Room 416
San Francisco, CA 94107
ATTN: Diane Cevolani, Account Manager
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 15
<PAGE>
B. If personal delivery is selected to give notice, a receipt of such
delivery shall be obtained. The address to which notices or
communications may be given to either Party may be changed by written
notice given by such Party to the other pursuant to this Section.
Section 17. Procedures upon Expiration or Termination
- ------------------------------------------------------
The Parties agree that, upon expiration or termination of this Agreement,
the procedures and requirements in effect under the Agreement at that time
shall be followed in concluding all business remaining between the
Parties.
Section 18. Force Majeure
- --------------------------
Neither Party shall be held liable for any delay or failure in performance
of any part of this Agreement from any cause beyond its control and
without its fault or negligence, such as acts of God, acts of civil or
military authority, government regulations, embargoes, epidemics, war,
terrorist acts, riots, insurrections, fires, explosions, earthquakes,
nuclear accidents, floods, strikes, power blackouts, volcanic action, or
other major environmental disturbances, unusually severe weather
conditions, inability to secure products or services of other persons or
transportation facilities, or acts of omissions of transportation common
carriers.
Section 19. Survival
- ---------------------
Provisions contained in this Agreement that by their sense and context are
intended to survive the expiration or termination of this Agreement hereof
by any Party hereto shall so survive.
Section 20. Claims Limitation
- ------------------------------
No claim or demand under this Agreement may be made or brought by either
Party more than two years after the date of the event that gave rise to
the demand or claim; provided, however, that a demand or claim for
indemnification under this Agreement may be made
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 16
<PAGE>
or brought by a Party for two years after the accrual of the cause of
action for indemnity as set forth in Section 10 - Indemnification and
Section 13 - Taxes Indemnity and Recourse; and provided further that any
claim in the nature of fraud may be brought within three years of discovery
of the existence of such fraud or concealment.
Section 2 1. Termination and Cancellation
- -----------------------------------------
A. Except as otherwise set forth in this Agreement in the event of breach
of any material provision of this Agreement by either Party, the non-
breaching Party shall give the other Party written notice thereof,
and:
1. If such material breach is for non-payment of amounts due and the
breaching Party fails to cure such breach to the non-breaching
Party's reasonable satisfaction within 30 days of receiving such
notice, the nonbreaching Party may terminate this Agreement, and
be entitled to pursue all available legal and equitable remedies
for such breach
2. If such material breach is for any failure to perform in
accordance with this Agreement, which in the sole judgment of the
non-breaching Party, adversely affects the non-breaching Party's
end users, the non-breaching Party shall give notice of the
breach and may, at its sole option, terminate this Agreement 30
days after such notice, if the breach has not been cured to the
non-breaching Party's reasonable satisfaction, and shall be
entitled to pursue all available legal and equitable remedies for
such breach. If such material breach is for any other failure to
perform in accordance with this Agreement, the non-breaching
Party shall give notice of the breach and may, at its sole option
terminate this Agreement 60 days after such notice if the breach
has not been cured to the non-breaching Party's reasonable
satisfaction, and shall be entitled to pursue all available legal
and equitable remedies for such breach.
B. Either Party may, upon 90 days written notice to the other Party,
terminate this Agreement for any reason.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 17
<PAGE>
C. Pacific shall have the right to discontinue Services under the
Agreement under the following conditions:
1. When the total number of complaints, excluding complaints arising
solely from Pacific's failure to provision services as set forth
in this Agreement, received by Pacific's Informal Appeals Group
concerning Customer's services billed by Pacific exceed a
cumulative total of 10 complaints for any three months period,
and the ratio of complaints to all bills rendered for the same
period is greater than one complaint for every 30,000 bills
rendered, or
2. When Customer's End User Adjustment level, excluding Adjustments
arising solely from Pacific's failure to provision services as
set forth in this Agreement, exceeds 15% of the amount Pacific
billed for Customer to end users for two out of three consecutive
months.
3. Prior to the discontinuance of services as set forth above,
Pacific shall inform Customer of the complaints and/or
Adjustments level. Customer shall have 30 days in which to
implement process changes aimed at reducing the excessive level
of complaints and/or Adjustments. In the event Customer fails to
take good faith efforts to reduce the excessive level of
complaints and/or adjustments, Pacific shall provide Customer and
the CPUC a 30-day notification of the date on which Pacific shall
discontinue billing (Termination Notice).
4. In the event Customer's process changes are unable to reduce the
excessive level of complaints and/or Adjustments to the level
consistent with those set forth in Sections C.1 and C.2 above
within 60 days of being notified by Pacific as set forth in
Section C. 3 above, Pacific shall provide Customer and the CPUC a
30-day notification of the date on which Pacific shall
discontinue billing (Termination Notice).
5. Customer may file a complaint with the CPUC and may request a
stay of Pacific's Termination Notice, issued under Sections C.3
or C.4 above, until the CPUC has ruled on the complaint. Unless
the CPUC issues a ruling
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 18
<PAGE>
for a stay of Pacific's Termination Notice, Pacific shall be
permitted to discontinue billing services.
Section 22. Confidentiality and Publicity
- ------------------------------------------
A. All confidential or proprietary information disclosed by either Party
during the negotiations and the term of this Agreement shall be
protected by the Parties in accordance to the terms of the Proprietary
Information Agreement between Pacific and Customer, Exhibit A hereto.
B. Except as otherwise provided in this Agreement, neither Party shall
publish or use the other Party's name, language, pictures or symbols
from which the other Party's name may be reasonably inferred or
implied in any advertising, promotion, or any other publicity matter
relating directly or indirectly to this Agreement without the express
written permission of the other Party.
Section 23. Severability
- -------------------------
In the event that any one or more of the provisions contained herein shall
for any reason be held to be unenforceable in any respect under the laws of
the State of California, such unenforceability shall not affect any other
provision of this Agreement, but this Agreement shall be construed as if
such unenforceable provision or provisions had never been contained herein.
Section 24. Audits and Examinations
- ------------------------------------
A. As used herein "Audit" shall mean a comprehensive review of services
performed under this Agreement; "Examination" shall mean an inquiry
into a specific element or process of services performed under this
Agreement. Upon 60 days written notice by the requesting Party to the
non-requesting Party, the requesting Party shall have the right to
audit and examine, during normal business hours and at reasonable
intervals to be mutually determined, the non-requesting Party's
records, books and documents, as may reasonably contain information
relevant to the operation of this Agreement; provided, however,
neither Party may perform more
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 19
<PAGE>
than one Audit and/or more than one Examination of the other Party
under this Agreement in any 12 month period. Within the above-
described 60 day period, the Parties shall reasonably agree upon the
scope of the Audit or Examination, the documents to be reviewed, and
the time, place and manner in which the Audit or Examination shall be
performed.
B. Each Party shall bear its own expenses occasioned by the Audit or
Examination, provided that the expense of any special data extraction
shall be borne by the requesting Party. Within the above-described 60
day period, the Parties may also agree that, in lieu of an Audit or
Examination by the requesting Party, the nonrequesting Party shall
conduct an internal review and provide the requesting Party with the
results of that review; as a further alternative, the requesting Party
may request that an Audit or Examination be conducted by an outside
auditor. In the event of such outside Audit or Examination, the
requesting Party shall pay the fee of the outside auditor. In the
event that the non-requesting Party requests that the Audit or
Examination be performed by an outside auditor, the requesting Party
shall select and instruct such outside auditor in accordance with the
above agreed-to procedures, and the costs shall be shared equally by
the Parties.
C. Adjustments shall be made or any corrective. action shall commence in
a timely manner following the final audit report for errors or
omissions disclosed by the Audit or Examination and agreed to by the
Parties. All information received or reviewed by the requesting Party
or its authorized representative in connection with the Audit or
Examination is to be considered confidential and is not to be
distributed, provided or disclosed in any form to anyone not involved
in the Audit or Examination or the resolution of its findings (which
may include any dispute resolution proceedings, including but not
limited to arbitration or judicial proceedings), nor is said
information to be used for any other purposes. All information
received or reviewed by the requesting Party or its authorized
representative in connection with any Audit or Examination that the
requesting Party desires to distribute, provide or disclose in any
dispute resolution proceeding shall be subject to protective
arrangements as reasonably agreed to by the Parties. The non-
requesting Party reserves the right to require any nonemployee who is
involved directly or indirectly in any Audit or Examination or the
resolution of its findings as described above to execute a non-
disclosure agreement satisfactory to the non-requesting Party.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 20
<PAGE>
Section 25. Dispute Resolution Procedures
- ------------------------------------------
A. In the event of any disputes between Pacific and Customer with respect
to the terms and conditions of this Agreement, or any subject matter
referred to in or governed by this Agreement, such disputes shall be
settled as follows, except for disputes in which a party seeks
injunctive relief or must file suit in order to avoid expiration of
the applicable statute of limitations.
B. Escalation Procedures - All disputes between the Parties shall be
escalated through normal business procedures to an Intercompany Review
Board consisting of one representative from each company at the vice-
presidential level (or at such lower level as each Party's vice-
president may delegate). Each Party has the right to request and, upon
agreement of the other Party, to review any materials it deems
pertinent to the dispute. The Intercompany Review Board shall consider
any material submitted to it by either Party. Not to exceed 60 days
from the date the dispute arises, each Party shall state in writing
when it has received all materials it desires to review, and 30 days
thereafter the Intercompany Review Board shall state in writing to the
Parties the extent to which it has resolved the dispute. Both Parties
agree to negotiate resolution of such problems in good faith.
Section 26. Headings
- ---------------------
The headings for this Agreement are for convenience only and shall not be
construed to define or limit any of the terms herein or affect the meaning
or interpretation of this Agreement.
Section 27. Entire Agreement
- -----------------------------
This Agreement, including all Exhibits and subordinate documents attached
to or incorporated herein by reference, together constitute the entire
Agreement between the Parties, and supersede all prior oral or written
agreements, representations, statements, negotiations, understanding,
proposals, and undertakings with respect to the subject matter hereof.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 21
<PAGE>
Section 28. Executed in Counterparts
- -------------------------------------
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but
one and the same document.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 22
<PAGE>
IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the date
first written above.
PACIFIC BELL
By [SIGNATURE APPEARS HERE]
-------------------------------------
Title Director
----------------------------------
Date Signed 7-12-96
----------------------------
CUSTOMER Telco Development Group of Delaware, Inc.
----------------------------
By /s/ Bryan Rachlin
-------------------------------------
Title President
----------------------------------
Date Signed 6-15-96
----------------------------
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED 23
<PAGE>
Exhibit A
Proprietary Information Agreement
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
Proprietary Information Agreement
----------------------------------
1. General
-------
It is recognized by the Parties that in connection with the billing and
collection services to be provided hereunder, Pacific and Customer will
exchange information from time to time which is confidential to Customer or
Pacific.
2. Identification of Confidential Information Covered by this Exhibit:
-------------------------------------------------------------------
The types or categories of information intended to be covered by and
protected under these paragraphs shall only include information
specifically designated and stamped "Proprietary" or "Confidential" and
provided by one Party to the other Party (hereinafter, "Confidential
Information").
3. Handling of Confidential Information
------------------------------------
Except for information not subject to the terms and conditions herein
because of its prior disclosure or permitted or consented disclosure as
described below, Confidential Information of one Party ("Disclosing Party")
that is possessed by the other Party ("Receiving Party"), shall be treated
in accordance with the following terms and conditions.
A. The Receiving Party shall put in place and strictly enforce (using all
of its prerogatives, including dismissal of contractors) procedures to
ensure that its employees, contractors or agents are aware of and
fulfill the obligations under this Exhibit A to hold the Disclosing
Party's Confidential Information in confidence.
B. Confidential Information described above shall, consistent with the
terms herein, be held in confidence by the Receiving Party and its
employees, contractors or agents, shall be treated with the same
degree of care as the Receiving Party would treat its own Confidential
Information and, consistent therewith, shall not be disclosed to third
persons but may be disclosed to agents who have a need for it; shall
be used for the purposes stated herein; and may be used or disclosed
for other purposes only upon such terms and conditions as may be
mutually agreed upon by the Parties in writing.
C. Each Party acknowledges that a Party's Confidential Information may be
commingled with information of the other Party. Accordingly the
Parties shall, to the extent practicable, use good faith efforts to
ensure that such Confidential Information shall be masked or rendered
mechanically inaccessible to the other Party. However, there may be
instances in which efforts to mask or screen such Confidential
Information are impracticable,
May 1, 1996 Pacific Bell Proprietary information RESTRICTED
<PAGE>
or in which disclosure is inadvertent. In such instances, the
Receiving Party will neither use or disclose the Confidential
Information, except as required to fulfill its obligations under this
Agreement, and shall put in place procedures as described in the
preceding paragraphs.
D. Each Party agrees to give notice to the other Party of any demand to
disclose or provide Confidential Information of said other Party to
any third party under lawful process, prior to disclosing or
furnishing such Confidential Information, and the Receiving Party
agrees to reasonably cooperate if the Disclosing Party deems it
necessary to seek protective arrangements.
4. Information not Subject to Handling Restrictions
------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary,
Confidential Information shall not be deemed confidential or proprietary
and the Receiving Party shall have no obligation to prevent disclosure of
such Confidential Information if such Confidential Information:
A. Is already known to the Receiving Party;
B. Is or becomes publicly known, through publication, inspection of the
product, or otherwise and through no wrongful act of Receiving Party;
C. Is received from a third party without similar restriction and without
breach of this Exhibit;
D. Is independently developed, produced or generated by Receiving Party;
E. Is furnished to a third party by the Disclosing Party without a
similar restriction on the third party's rights; or
F. Is approved for release by written authorization of the Disclosing
Party.
5. Applicability of Statutes, Decisions and Rules
----------------------------------------------
Notwithstanding any other provision in this Agreement, a Party's ability to
disclose Confidential Information or use disclosed information is subject
to all applicable statues, decisions, and regulatory rules concerning the
disclosure and use of such information which, by their express terms state
the requirements applicable to such information.
6. Return of Destruction of Confidential Information
-------------------------------------------------
Upon request, the Receiving Party will return all Confidential Information
to the Disclosing Party or destroy all such Confidential Information.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
7. Obligations to Maintain Confidentiality - Duration
--------------------------------------------------
The obligations to maintain confidentiality of received Confidential
Information set forth in Paragraph 3 shall survive expiration of the
Agreement of which this Exhibit is a part by a further term of three years.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
Exhibit B
Pacific Bell Billing Guidelines
for
Information Services Calls
May 1, 1996 Pacific Bell Proprietary Information Restricted
<PAGE>
Pacific Bell Billing Guidelines
for
Information Services Calls
Pacific Bell agrees to bill Information Services Calls which are defined as
recorded information programs, interactive information programs, or
programs advertised as being an information or entertainment service for which
the caller pays a charge of any type for making the call.
1. All Information Service Calls must be sent in the 01-01-16 EMI record
layout. The 01-01-16 record layout will be used exclusively for
Information Service Call transactions. As other xx-xx-16 record types are
approved by Bellcore, these also will be accepted after appropriate
testing.
2. The billing record must contain the following information:
The number the end user actually dialed;
The name of the service or a brief description, using a 12
character category as defined/approved by Pacific Bell.
3. The record must carry an indicator to identify the transaction as regulated
or nonregulated.
4. All Information Service Calls will appear in an Information Services
section on the end user bill.
5. The Customer will not send charges for any transactions containing matter
as defined in the California Penal Code 313.
6. The Customer will not send Information Calls that do not adhere to FCC and
CPUC regulations or State and Federal laws.
7. The Customer will establish procedures for promptly resolving all end user
inquiries.
8. The Customer will provide the end user, upon request, with a specific
Information Provider's name, address, and/or telephone number.
9. If the Customer sustains any or all of an Information Service Call charge
and the end user appeals to Pacific Bell to resolve the dispute, Pacific
will issue an adjustment to the end user for the full amount and recourse
the amount of the adjustment with an associated processing charge to the
Customer.
10. The Customer is responsible for blocking end users from their Information
Services at the end user's or Pacific Bell's request.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
11. Consistent with Pacific Bell's tariffs, Pacific will not deny basic
telephone service solely for the end user's failure to pay for Information
Service Calls.
12. The following threshholds must be met:
. the total number of all end user complaints, including those related to
Information Services, will not exceed 1O for any 3 month period and the
ratio of complaints to all bills rendered for the same period is greater
than one complaint per every 30,000 bills, and
. the Customer's adjustment level will not exceed 15% of the amount
billed to end users for 2 out 3 consecutive months.
13. The Customer will not send direct dialed information service calls for
billing that fail to comply with the provisions of this policy, except
where the charge is at a tariffed transport rate and the Customer has no
relationship with the information service other than providing transport.
All calls satisfying this provision will be billed and collected in
accordance with existing agreements.
14. In the event a Customer fails to comply with any provision of this policy,
Pacific Bell will give the Customer written notice of the breach. If the
Customer fails to cure the breach to Pacific Bell's reasonable satisfaction
within 30 days, Pacific Bell may terminate billing for the Customer.
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
Exhibit C
Billing and Collections
Service Implementation Form
May 1, 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
- --------------------------------------------------------------------------------
Exhibit C
Billing and Collections
Service Implementation Form
- --------------------------------------------------------------------------------
Instructions for completing Pacific Bell's Billing and Collections Service
Implementation Form: All information on this form is critical for implementation
--------
of your billing service. Please make sure all questions are complete with as
much detail as possible. Mssing information will cause delays to your
implementation schedule. If you have any questions or do not understand the
information needed please call:
Diane Cevolani at 415-545-7079.
Please Print Clearly or Type Information:
- -----------------------------------------
Company Name: Telco Development Group of Delaware, Inc.
------------------------------------------------------------------
CIC/ABEC: 457 ACNA: TDG CPCN: Date Commission
------- ---------- -----------------------------
issued CPCN: (CPCN, Certificate of Public Convenience and Necessity)
-------------
General Correspondence:
Send to: Name: Mark Stodter
------------------------------------------------------------------
Address: 4219 Lafayette Center Drive Chantilly, VA 22021
--------------------------------------------------------------------
Chantilly, VA 22021
-----------------------------------------------------------------------------
Phone: (703) 631 5655
-----------------------------------------------------------------------
Service Status: [_] New [_] Renewal [xx] Revision [_] Cancellation
I. Service Dates:
--------------
A. Testing Phase Begins:
----------------------
Testing Must Be Completed By: Testing Completed May 1995
--------------
Service Implementation Date:
---------------
II. Testing Contacts: Technical personnel who will produce the test media.
A. Customer Contact: Diane Trip c/o ZPDI
-----------------------------
Telephone: 210-525-6332
-----------------------------
Address: Testing Completed May 1995
-----------------------------
-----------------------------
Fax Number: 210-525-0511
-----------------------------
B. Pacific Bell Contact: Diane Cevolani
-----------------------------------
Address: 370 - 3rd. Street, Room 416, San Francisco, CA
94107
------------------------------------
Telephone: 415-545-7079 Fax Number: 415-545-0473
-----------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Exhibit C
Billing and Collections
Service Implementation Form
- --------------------------------------------------------------------------------
Ill. Service Provisioning Information
--------------------------------
A. Payment of $65,000.00 ( one time set-up fee) must be received along
----------------
with your Billing and Collections Agreement and Service Implementation
Form. Received [xx]
*Bank: * Check number:
______________________ _______________
*For Pacific Bell's internal Use.
- ---------------------------------------------------------------------------
Cancellation Policy: If Billing and Collections Agreement is canceled
within 30 calendar days after receipt of signed Agreement $32,500.00 will
be refunded. If canceled after 30 days from receipt of signed Agreement,
no refund will be granted.@
If service is canceled or discontinued within the initial six (6) month
minimum period, a monthly charge will be applied equal to the average
monthly charge for the time period for which Billing and Collections
Service was provided. @
- ---------------------------------------------------------------------------
B. Billing Data to be transmitted using one of the following methods:
1) Magnetic tape [X] Round Reel x Cassette
-- --
2) CMDS Network [_]
Host Company: Southwestern Bell
---------------------------
3) Data Transmission (ICB) [_]
4) Floppy Disk [_]
5) Network Data Mover (NDM) [X] eff. 6/
(If link is not currently installed, additional costs will apply
for implementation of link.)
6) Sub-CIC foffnat Yes [XX] No [_]
If you will be acting as the authorized billing agent for other
companies you must choose Subordinate Carrier Identification Code
Billing format (Sub-CIC).
C. Frequency of data transmission, designate one:
1) Daily [_]
2) Weekly [XX]
3) Monthly [_]
<PAGE>
- --------------------------------------------------------------------------------
Exhibit C
Billing and Collections
Service Implementation Form
- --------------------------------------------------------------------------------
III. Service Provisioning Information - continued
--------------------------------------------
D. Surcharges: in California the following Surcharges will be applied:
[_] California High Cost Fund Surcharge
[_] Universal Lifeline Telephone Service Surcharge
[_] State Regulatory Fee
[_] CA Relay Service and Communications Devices Fund
1) Apply all California surcharges [x]
2) Do not apply California surcharges [_]
3) Apply Customer surcharges [_]
(Tariff guidelines must be attached,
programming done on ICB)
note: California Surcharges do not apply to non-Certificated Billers
but will be applied to Clearinghouse billers.
E. Bill Format:
1) Standard Bill format will be used:
yes [X] no [_] *
*If no, a Time and Cost will be processed to determine feasibility and
cost for customized bill format. (ICB)
2) Customer's name will be shown on end user's summary bill page as:
[T][E][L][C][O][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
[_][_][_][_][_][_][_][_][_] (Limit 29 characters, including spaces, commas,
etc.).
Print exactly as you want name to appear on the summary page.
<PAGE>
- --------------------------------------------------------------------------------
Exhibit C
Billing and Collections
Service Implementation Form
- --------------------------------------------------------------------------------
III. Service Provisioning Information-continued
------------------------------------------
F. Uncollectible percentage: *
*Will be determined by Pacific Bell after Risk Analysis.
1) Accounts Receivable purchase payments will be transferred by
Automatic Clearinghouse (ACH) for deposit to customer's account.
Please provide the following information:
Bank name: Signet Bank of Maryland
------------------------------------
Bank address: 7799 Leesburg Pike Suite 500
------------------------------------
Falls Church, VA 22043
------------------------------------
------------------------------------
Account Number: 4400355691
----------------------------------
ABA Number: 052000016
----------------------------------
Bank wire number: same
--------------------------------
(These numbers are different. Please provide the correct number for
your use.)
Attention for Bank Name: Cristina DeGuzman
--------------------------------
Phone: (703) 714 5019
-----------------------------------
Attention for Customer Name: Peg Crews
--------------------------------
Phone: (703) 631 5647
--------------------------------
2) Normal cash pay out is 50 days from date of purchase.
* Early Payment of Purchase (25 day pay out) can be requested. This
request is accepted for review after 1 year of billing with Pacific.
Upon review, if approved by Pacific, the payment will be shortened
to 25 days. Our authorized rate of return as interest will be
charged for this Early Payment option.
<PAGE>
- --------------------------------------------------------------------------------
Exhibit C
Billing and Collections
Service Implementation Form
- --------------------------------------------------------------------------------
III. Service Provisioning Information-continued
-------------------------------------------
G. Inquiry, choose one:
1) Inquiry service will be provided by Pacific. [_] No
Pacific Bell's Customer Service Number will appear on the end-user's
bill; "For Questions about your bill ?" Local Business Number will be
displayed.
2) Inquiry service to be provided by Customer. [X] Yes
Indicate Toll-Free Customer Service Number. This number will appear on
end-user's bill as:
"Questions about your bill? " 800- 962-4631
-------------
Hours of operation of your Customer Service Center: 24hours 7 days a
--------------------
week
----
Name of Service Manager: Patricia Davis
----------------------------------
Direct phone number: (703) 631 5638
-------------------------------------
3) Address and telephone number which may be given to end-users who wish
to deal directly with Customer's Inquiry Center:
Name: Customer Service
---------------------------------------
Address: 4219 Lafayette Center Drive
---------------------------------------
Chantilly, VA 22021
---------------------------------------
Telephone: 1-800-962-4631
-------------------------------------
4) Adjustments to the end user's bill will be submitted using the
following method(s):
a)EMI category 41 Credit Records (must include record in test
process): [X]
b)EC Memorandums (additional charges apply for this service): [_]
c)Other, Explain what process will be used, prior approval
---------------
needed: [_]
------
Note: Adjustment checks or any other form of adjustment sent directly to End
User's is a breach of the Agreement and the Tariff.
5/6/96 1/96 Exhibit C
<PAGE>
- --------------------------------------------------------------------------------
Exhibit C
Billing and Collections
Service Implementation Form
- --------------------------------------------------------------------------------
III. Service Provisioning Information-continued
------------------------------------------
5) Toll-free number Pacific can call for your rate verification:
Toll-free 800-962-4631
--------------------------------------------
6) FAX number end user customers can send list of multiple lines to
install blocking for Information Services.
FAX number 703-803-3430
-------------------------------------------
Attn.: Customer Service 22021
-------------------------------------------------
7) Name and Address of person who will receive the following reports:
a) EMI category 45 Records (P382) Adjustments. Sent Monthly.
b) IEC002 (Carrier Notation Report) Sent Monthly.
Send to: Name: PAR Settlements
-------------------------------------------
Address: 4219 Lafayette Center Drive
-----------------------------------------
Chantilly- VA
-----------------------------------------
Phone: (703) 631 5647
-------------------
Return Method: Paper [_] Mag tape [X] Round Reel [X] Cassette Tape [_]
NDM [X]
c) ENE category 46 Records (P380) Write Off Data. Sent Monthly.
Send to: Name: Mark Stodter
-----------------------------------------------
Address: 4219 Lafayette Center Drive
-----------------------------------------------
Chantilly VA 22021
-----------------------------------------------
Phone: 703 631 5655
----------------------------
Return Method: Paper [X] Mag tape [X] Round Reel [_] Cassette Tape [_]
NDM [_]
5/6/96 1/96 Exhibit C
<PAGE>
- --------------------------------------------------------------------------------
Exhibit C
Billing and Collections
Service Implementation Form
- --------------------------------------------------------------------------------
III. Service Provisioning Information-continued
------------------------------------------
H. Bill Message Processing:
1) Billing (production) messages are forwarded to:
Pacific Bell, Attention: Tape Librarian
2525 N. Watney Way
Fairfield, CA 94533
2) After receipt of your production billing media two reports are
generated.
a) Interexchange Carrier Input Processing Report (53A)
Accepted/Rejected messages
Send to: Name: PAR Settlements TDD
------------------------------------------
Address: 4219 Lafayette Center Drive
------------------------------------------
Chantilly, VA 22021
------------------------------------------
Phone: (703) 631 5647
------------------------------------------
b) Carrier Shipment Report. Included with tape returned
with rejected and/or unbillable messages.
Send to: Name: PAR Settlements TDD
------------------------------------------
Address: 4219 Lafayette Center Drive
------------------------------------------
Chantilly, VA 22021
------------------------------------------
Phone: (703) 631 5647
------------------------------------------
c) Such reports should be returned by:
Magnetic Tape [X]Round ReelXCassette_
-
Data Transmission (ICB) [_]
Floppy Disk [_]
NDM [X]
d) Frequency of message return:
Daily [_]
Weekly [XX]
Monthly [_]
5/6/96 1/96 Exhibit C C,7
<PAGE>
- --------------------------------------------------------------------------------
Exhibit C
Billing and Collections
Service Implementation Form
- --------------------------------------------------------------------------------
III. Service Provisioning Information-continued
------------------------------------------
3) Duplicates of the above reports should be sent to:
Company: USBI/ZPDI
------------------------------------------------
Address: 9311 San Pedro Suite 300
------------------------------------------------
San Antonio Texas 78216
------------------------------------------------
------------------------------------------------
Attention: Rick Rainey
------------------------------------------------
Phone Number: 210 366 2149
----------------------------------------------
I. Accounting Reports:
1). Carrier Billing Statement, Monthly . Statement for Billing Services:
(Name on reports limited to 25 characters long)
Send to: Name: Telco Dev Group of Del
-----------------------------------------
C/O:
-----------------------------------------
Address: 4219 Lafayette Center Drive
-------------------------------------
Chantilly, VA 22021
-------------------------------------
Phone: 703 631 5647
--------------------------------------
2). Journal Reports, Daily: (Name on reports limited to 25 characters long)
Send to: Company: Telco Dev Group of Del
-----------------------------------------
C/O:
-----------------------------------------
Address: 4219 Lafayette Center Drive
-------------------------------------
Chantilly, VA 22021
-------------------------------------
Phone: (703) 631 5647
-------------------------------------
5/6/96 1/96 Exhibit C
<PAGE>
- --------------------------------------------------------------------------------
Exhibit C
Billing and Collections
Service Implementation Form
- --------------------------------------------------------------------------------
III. Service Provisioning Information-continued
------------------------------------------
3) Settlement Reports (PARS) Monthly: (Name on reports limited to
25 characters)
Send to: Name: PAR Settlements
--------------------------------------------
C/O: Telco Development Group of Delaware, Inc.
--------------------------------------------
Address: 4219 Lafayette Center Drive
--------------------------------------------
Chantilly VA 22021
--------------------------------------------
Phone: 703 631 5647
--------------------------------------------
4) Mechanized Tax and Financial Settlement Records: **Available 2/96
Option for PAR verification and Tax Remittance. Yes [xx] No [_]
Send to: Name: PAR Settlements
-------------------------------------
Address: Telco Development Group of Delaware
-------------------------------------
4219 Lafayette Center Drive
-------------------------------------
Chantilly VA 22021
-------------------------------------
Phone: (703) 631 5647
-------------------------------------
IV. APPROVALS
1) Authorized signatures:
Print Company name:
Telco Development Group of Delaware, Inc. (Customer)
- -----------------------------------------
hereby authorizes Billing and Collection Services pursuant to the Schedule Cal.
P.U.C. No. 175-T and the Agreement for the Provision of Billing and Collection
Services to which this Service Implementation Form is attached as Exhibit C.
Customer Pacific Bell
Print Name: Bryan Rachlin Print Name: Ms. A.M. Martinz
------------------------ -------------------------------
Signature: /s/ Bryan Rachlin Signature: /s/ A. Martinz
------------------------- --------------------------------
Print Name: Bryan Rachlin Print Name:
------------------------ -------------------------------
Title: President Title: Director, Sales and Service
--------------------------- ----------------------------------
Date: 6/15/96 Date: 7/12/96
---------------------------- ----------------------------------
5/6/96 1/96 Exhibit C C,9
<PAGE>
Exhibit D
Rate Schedule
MAY 1, 1996 Pacific Bell Proprietary information RESTRICTED
<PAGE>
Exhibit D
Rate Schedule
MAY 1, 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
Confidential Treatment Requested.
The redacted material has been
separately filed with the Commission.
Interstate
Rate Schedule
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rates
-----
<S> <C>
Recording
per Customer Message (*)
Assembly and Editing
per Customer Message (*)
Provision of Message Detail
per Record Processed (*)
per Magnetic Tape (*)
Rating Service
per Unit Processed (*)
Additional Rating Service Charge
per unit above capacity order (*)
Provision of rated Transaction Detail
per Record Processed (*)
Data transmission
Interface Development
and Maintenance (*)
Message Billing Charge
per message billed (*)
Transaction Billing Charge
per transaction billed (*)
900 Message Billing Charge
per 900 message billed (*)
</TABLE>
MAY 1, 1996 Pacific Bell Proprietary information RESTRICTED
<PAGE>
Confidential Treatment Requested.
The redacted material has been
separately filed with the Commission.
Interstate
Rate Schedule
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rates
-----
<S> <C>
Bill Rendering Charge
per end user bill rendered each
billing cycle; tiered pricing
based on monthly volumes
Below 50,000 (*)
50,000 - 200,000 (*)
Over 200,000 (*)
Inquiry Service
per message billed (*)
per 900 Message billed (*)
Non-Inquiry Support
Equipment Checks
applicable when no Pacific failure found,
per check basis
0 - 10 (*)
11 - 20 (*)
21 + (*)
Bill Copies
per page (*)
Customer Requested Adjustments
per adjustment session (*)
Recourse Adjustments
per adjustment session (*)
Mechanized Adjustment Processing Charge
per final bill account
(for 900 charges only) (*)
</TABLE>
MAY I, 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
Confidential Treatment Requested.
The redacted material has been
separately filed with the Commission.
Interstate
Rate Schedule
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rates
-----
<S> <C>
Miscellaneous Services
per hour, excludes cost of materials (*)
(for non-inquiry support)
Development Charges
- Basic rate
per hour or fraction thereof,
(applicable to work performed
within Pacific's normal work
schedule and using the
normal work force). (*)
- Premium rate
per hour or fraction thereof,
(applicable to work performed
outside Pacific's normal work
schedule and using the normal
work force) (*)
Central Processing Unit
per hour or fraction thereof (*)
End User Account Activity
per mechanized service order (*)
Sub-CIC File Change
per sub-CIC (*)
</TABLE>
All other billing and collection services requested by the Customer shall be
ordered from the Interstate Tariff, Schedule F.C.C. No. 128, or arranged through
separate agreement.
MAY 1, 1996 Pacific Bell Proprietary Information RESTRICTED
<PAGE>
Pages where confidential treatment has been requested are stamped
"Confidential Treatment Requested. The redacted material has been
separately filed with the Commission." The redacted portions are
indicated by an "(*)"."
Agreement Number: Exhibit 10.11
CASUAL BILLING SERVICES AGREEMENT WITH
CUSTOMER PROVIDED INQUIRY
BETWEEN
TELCO DEVELOPMENT GROUP OF DELAWARE, INC.
AND
THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY
telcodev/02/24/95 PROPRIETARY INFORMATION Page 1
<PAGE>
Agreement Number:
TABLE OF CONTENTS
ARTICLE I - GENERAL TERMS AND CONDITIONS
- ----------------------------------------
1.1 Effective Date, Term and Termination
1.2 Confidential Information
1.3 Governmental Compliance
1.4 Publicity
1.5 Severability
1.5 Amendments; Waivers
1.7 Independent Contractors
1.8 Force Majeure
1.9 Liabilities
1.10 Indemnification
1.11 Governing Law
1.12 Executed in Counterparts
1.13 Headings
1.14 Entire Agreement
1.15 Notices and Demands
1.16 Third-Party Beneficiaries
1.17 Delegation and Assignment
ARTICLE 2 - SERVICE DESCRIPTION
- -------------------------------
2.1 Definitions
2.2 Bill Processing Service
2.3 Data Retention
telcodev/02/24/95 PROPRIETARY INFORMATION Page 2
<PAGE>
Agreement Number:
ARTICLE 3 - COMPENSATION
- ------------------------
3.1 Rates and Charges
3.2 Charges and Payments for Billing Service
3.3 Determination of Payment Date
3.4 Uncollectible Percentage and Purchase of Rated Messages
3.5 Final True-Ups in the Event of Termination
3.6 Minimum Payment Amount
3.7 Certain Federal, State and Local Tax
ARTICLE 4 - PROGRAM DEVELOPMENT
- -------------------------------
SCHEDULE1
- ---------
EXHIBIT A
- ---------
EXHIBIT B
- ---------
telcodev/02/24/95 PROPRIETARY INFORMATION Page 3
<PAGE>
Agreement Number:
CASUAL BILLING SERVICES AGREEMENT WITH
CUSTOMER PROVIDED INQUIRY
between
TELCO DEVELOPMENT GROUP OF DELAWARE, INC.
and
THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY
This Agreement (Agreement), dated February 09, 1996 is entered into by and
--------
between Telco Development Group of Delaware, Inc., (Customer) a Delaware
corporation with its principal place of business at 4219 Lafayette Center Drive,
Chantilly, Virginia 22021, and The Southern New England Telephone Company (SNET)
a corporation specially chartered by the General Assembly of the State of
Connecticut with its principal place of business at 227 Church Street, New
Haven, Connecticut. SNET and Customer may be referred to herein individually as
a "Party or collectively as "the Parties".
WHEREAS, SNET provides interstate and intrastate Casual Billing Services;
and,
WHEREAS, Customer is in the telecommunications business and has requested,
and desires to subscribe to, certain of SNET's Billing Services for its Contract
Messages as that term is defined herein; and,
WHEREAS, Customer has an end user inquiry response operation and desires to
perform end user inquiry functions for the messages billed to end users pursuant
to this Agreement;
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, SNET and Customer hereby covenant and mutually agree as follows:
telcodev/02/24/95 PROPRIETARY INFORMATION Page 4
<PAGE>
Agreement Number:
Article 1
General Terms and Conditions
----------------------------
1.1 Effective Date, Term and Termination
1.1.1 This Agreement shall be effective on the date first set forth above
and shall continue in effect for an initial one (1) year term. Thereafter this
Agreement shall continue in effect until terminated by either Party on six (6)
months' written notice, or as otherwise provided herein.
1.1.2 If Customer fails to comply with this Agreement or any applicable
Federal or State laws or regulation, SNET may terminate this Agreement or may
terminate the billing for any particular messages or may take inquiry functions
back, at SNET's discretion, if after notice of a breach of this Agreement from
SNET, Customer fails, within seven (7) days of such notice, to provide
satisfactory proof that Customer has cured the breach and is in compliance with
this Agreement. Such termination shall be effective on seven (7) days written
notice to Customer.
1.1.3 In the event that SNET's provision of Billing Services to Customer
under this Agreement may, in SNET's judgment, result in end user complaints,
SNET may terminate this Agreement on thirty (30) days' written notice to
Customer.
1.2 Confidential Information
Any specifications, customer lists, tapes, technical information, or otherwise
(hereinafter Information) furnished by either Party to the other Party shall
remain the property of the disclosing Party. Unless such Information was
previously known to the
telcodev/02/24/95 PROPRIETARY INFORMATION Page 5
<PAGE>
Agreement Number:
1.2 Confidential information - (continued) receiving Party free of any
obligation to keep it confidential or has been or is subsequently made public by
the disclosing Party or a third party, it shall be kept confidential by the
receiving Party and shall not be disclosed to any third party. Upon request of
the disclosing Party, or if not requested, at the end of this Agreement, the
receiving Party shall either return the Information to the disclosing Party, or
certify in writing to the disclosing Party that such Information has been
destroyed. The nondisclosure requirements of this section shall not apply to
information requested as a part of judicial or regulatory process.
1.3 Governmental Compliance
This Agreement is subject to and each Party shall comply with all federal, state
county and local laws, regulations, government agency orders or decisions and
codes, and shall obtain permits and certificates where needed. It is understood
by the Parties that the Connecticut Department of Public Utility Control or the
Federal Communications Commissions may have jurisdiction over some of, or some
portion of, the Service, and the Parties agree to abide by the terms of any
applicable regulations, orders, decisions or tariffs approved or issued by
either or both of such regulatory authorities.
1.3.2 All obligations under this Agreement shall be performed in
compliance with those statutes, government agency orders, and regulations
prohibiting discrimination against any employee or applicant for employment
because of race, color, religion, sex, national origin, age, or handicap. Where
required by law, certificates of compliance shall be provided.
telcodev/02/24195 PROPRIETARY INFORMATION Page 6
<PAGE>
Agreement Number:
1.4 Publicity
Both Parties agree that any publicity, including but not limited to advertising,
sales promotion and press releases, which use or imply the name or logo of the
other Party or its customers concerning this Agreement or the performance of
this Agreement shall be mutually agreed upon in writing by the Parties prior to
the release of said publicity.
1.5 Severability
In the event that any one or more of the provisions contained herein shall for
any reason be held to be unenforceable in any respect under the laws of the
jurisdiction governing this entire Agreement, such unenforceability shall not
affect any other provision of this Agreement, but this Agreement shall be
construed as if such unenforceable provision or provisions had never been
contained herein.
1.6 Amendments; Waivers
1.6.1 This Agreement may be amended only by written agreement signed by
authorized representatives of both Parties; except that Exhibits A and B,
attached hereto and incorporated herein by reference, may be amended at any time
on thirty (30) days'written notice by SNET to Customer, with such notice serving
as the amendment hereto; and further that Schedule 1, attached hereto and
incorporated herein by reference, may be amended not more than once annually on
sixty (60) days' written notice by SNET to Customer, with such notice serving as
the amendment hereto; and further that the Operating Procedures, incorporated
herein by reference, may be modified at any time on thirty (30) days' prior
written notice by SNET to Customer; and further, this Agreement shall be
considered amended immediately to the extent necessary to comply with changes in
the applicable laws, rules, or regulations.
telcodev/02/24/95 PROPRIETARY INFORMATION Page 7
<PAGE>
Agreement Number:
1.6.2 No waiver of any provisions of this Agreement and no consent to any
default under this Agreement shall be effective unless the same shall be in
writing and signed by or on behalf of the Party against whom such waiver or
consent is claimed.
1.7 Independent Contractors
Each Party shall perform its obligations hereunder as an independent contractor
and not as the agent, employee or servant of the other Party, and neither Party
nor any person furnished by such Party shall be deemed employees, agents or
servants of the other Party or entitled to any benefits available under the
plans for such other Party's employees.
1.8 Force Majeure
Neither Party shall be held liable for any delay or failure in performance of
any part of this Agreement from any force majeure condition, including acts of
God, acts of civil or military authority, government regulations, embargoes,
epidemics, war, terrorist acts, riots, insurrections, fires, explosions,
earthquakes, nuclear accidents, floods, strikes, power blackouts, unusually
severe weather conditions, inability to secure products or services of other
persons or transportation facilities, or acts or omissions of transportation
common carriers, or other causes beyond its reasonable control whether or not
similar to the foregoing conditions.
1.9 Liabilities
SNET MAKES NO WARRANTY WITH RESPECT TO ITS PROVISION OF SERVICE UNDER THIS
AGREEMENT, EITHER EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS ALL SUCH
WARRANTIES INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. IN NO EVENT
telcodeWO2/24/95 PROPRIETARY INFORMATION Page 8
<PAGE>
Agreement Number:
1.9 Liabilities - (continued)
SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER.
1.10 Indemnification
To the extent not prohibited by law, and except as otherwise provided herein,
each Party shall indemnify, and hold harmless the other Party, from and against
any loss, cost, claim, injury or liability brought by a person not a party or an
affiliate under this Agreement which relates to or arises out of the gross
negligence or intentional acts or omissions of the indemnifying Party or its
employees, agents or contractors in the performance of this Agreement.
1. 1 1 Governing Law
This Agreement shall be deemed to be a contract made under and shall be
interpreted under the laws of the State of Connecticut.
1.12 Executed in Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be an original; but such counterparts shall together constitute but one
and the same document.
1.13 Headings
The headings and numbering of sections and paragraphs in this Agreement are
for convenience only and shall not be construed to define or limit any of the
terms herein or affect the meaning or interpretation of this Agreement.
telcodev/02/24/95 PROPRIETARY INFORMATION Page 9
<PAGE>
Agreement Number:
1.14 Entire Agreement
This Agreement, including Exhibits A and B, and Schedule 1 hereto, and the
Operating Procedures, a copy of which has been provided to Customer, constitutes
the entire Agreement between the Parties and supersedes all prior oral or
written agreements, representations, statements, negotiations, understandings,
proposals and undertaking with respect to the subject matter hereof.
1.15 Notices and Demands
1.15.1 Except as otherwise provided herein, all notices which may be given
by any Party to the other Party shall be in writing and shall be deemed to have
been duly given on the date delivered in person or deposited, postage prepaid,
in the United States Mail via Certified Mail Return Receipt Requested, or sent
via telex, cable, Customer Mail, or the day after delivery to an overnight
courier, or upon confirmation of a facsimile followed by an original copy sent
via United States Mail or overnight courier, or personally delivered with return
receipt requested, and addressed as follows:
THE SOUTHERN NEW ENGLAND CUSTOMER:
TELEPHONE COMPANY:
Manager - Contracts Mark Stodter
530 Preston Avenue Telco Development Group of Del., Inc.
Meriden, Connecticut 06450 4219 La a@yette Center Drive
Fax: 203-634-4812 Chantilly, VA 2zo2i
1.15.2 The address to which such notices may be given by either Party may
be changed by written notice given by such Party to other Party pursuant to this
Section 15.
telcodev/02/24/95 PROPRIETARY INFORMATION Page 10
<PAGE>
Agreement Number:
1.16 Third-Party Beneficiaries
This Agreement shall not provide any person not a Party to this Agreement with
any remedy, claim, liability, reimbursement, cause of action or other right in
excess of those existing without reference to this Agreement.
1.17 Delegation and Assignment
1.17.1 Neither Party may assign, transfer, or sell its rights under this
Agreement, or delegate its obligations hereunder, without the prior written
consent of the other Party, except that SN ET may, without the prior written
consent of Customer, assign this Agreement to its parent or a subsidiary or to a
subsidiary of its parent; provided, however, that each Party may subcontract
work to be performed by it to the extent such Party subcontracts such work in
the ordinary course of its own business, it being understood that,
notwithstanding any such subcontract, each Party shall remain liable for the
prompt performance of its obligations under this Agreement.
1.17.2 Subject to the above restrictions, the provisions of this Agreement
shall be binding upon and shall inure to the benefit of the Parties and their
permitted assigns and successors.
telcodev/02/24/95 PROPRIETARY INFORMATION Page 11
<PAGE>
Agreement Number:
Article 2
Service Description
-------------------
2.1 Definitions
2.1.1 "Billing Service" is the provision of "Bill Processing Service"
which includes Bill Processing Per Message, Bill Processing Per Bill Rendered,
Receipt of Rated Customer Message Detail Transmitted via CMDS, NDM, tape or
cartridge, and Program Development Per Hour.
2.1.2 "Bill Processing Per Message" is the receipt of rated Customer
message detail (charges or credits) via magnetic tape or cartridge (without tape
or cartridge return), posting of rated messages, and receipt of payments.
Treatment and collection of moneys due is also included.
2.1.3 "Bill Processing Per Bill Rendered" is the compiling of Customer
charges or credits and distribution of bills to end users.
2.1.4 "Receipt of Rated Customer Message Detail Transmitted via CMDS or
NDM" is the receipt and entry to the SNET billing system of Customer provided
rated message detail.
2.1.5 "Program Development Per Houe' is the design and implementation of
customized changes requested by Customer.
2.1.6 "EMI Category 41 Credit Messages" are the message type used by
Customer to effect end user credits resulting from Customees performance of
Inquiry.
telcodev/02/24/95 PROPRIETARY INFORMATION Page 12
<PAGE>
Agreement Number:
2.2 Bill Processing Service
2.2.1 Customer Responsibility
2.2.1.1 Message Regulatory Compliance
Customer will provide to SNET for Bill Processing Service its Contract Messages
billed within SNET's operating area. Customer shall submit only messages for
billing which are acceptable under federal, state and local laws and
regulations. Customer and the service providers for which Customer submits
messages to SNET for billing must comply with all applicable laws and
regulations including but not limited to equal access dialing capabilities and
the Telephone Disclosure and Dispute Resolution Act ("TDDRA"). Customer must
also comply with the Operating Procedures.
2.2.1.2 Contract Message Definition
Except for those calls where billing is contrary to any law, rule or regulation,
or where the call type is excluded from billing under this Agreement, including
but not limited to call types identified in Exhibit B, Contract Messages include
intrastate messages (Customer is responsible for insuring certification has been
received to provide such service in Connecticut), interstate and international
messages of the following call types: operator serviced messages (third party
and collect), calling card messages where the calling card numbers are telephone
number based, directory assistance messages, 900 messages (SNET's 900 Guidelines
are attached hereto as Exhibit B, and may be updated from time to time), 1OXXX
messages generated in equal access areas in Connecticut and EMI Category 41
Credit Messages. . This Agreement shall not be interpreted to require
performance by SNET where in its good faith judgment such performance would be
contrary to any laws, rules or regulations. Any addition to Contract Messages
to include call types not listed herein will require advance notice to SNET and
will be billed only at SNET's discretion.
telcodev/02/24/95 PROPRIETARY INFORMATION Page 13
<PAGE>
Agreement Number:
2.2.1.3 Excluded Messages
Customer may not submit for processing any previously disputed calls, any 900
call as outlined in Exhibit B, any 800 information services calls or any
reformatted versions of an 800 information service call, or any call types which
are not billable pursuant to any laws, rules, or regulations. SNET maintains an
edit for EMI RT 16 calls to ensure that 800 presubcription information services
messages are not delivered to SNET for billing to end users on SNET's bill.
Customer shall properly code to ensure that no such messages are submitted for
processing. Failure to comply with the provisions of this Agreement as it
relates to 800 type messages or any other message types, for which SNET notifies
Customer that it will not accept for billing, shall be cause for Termination of
this Agreement pursuant to Section 1. 1.2.
2.2.1.4 Message Delivery to SNET
Customer will record, assemble, edit and rate its Contract Messages for SNET,
and will deliver such messages to SNET at intervals and in accordance with SNET
specifications and SNET's Operating Procedures.
2.2.1.5 Inquiry Requirements
Customer Provided Inquiry enables direct discussion by Customer with the end
user to facilitate call recognition and/or negotiation of adjustments to the
billed amount. Customer in its performance of inquiry shall comply with all
laws, rules, and regulations including but not limited to the dispute resolution
procedures set forth in TDDRA. Customer inquiry procedures are subject to SNET
review and approval prior to the implementation of Customer Provided Inquiry.
Customer shall implement any changes to its procedures requested by SNET within
the time period required by SNET. Customer shall notify SNET of any pending
changes
telcodev/02/24/95 PROPRIETARY INFORMATION Page 14
<PAGE>
Agreement Number:
2.2.1.5 Inquiry Requirements - (continued) to its procedures in advance of
implementation by Customer. Customer and its employees, agents, and contractors
shall at all times comply with SNET's Code of Conduct. Customer and Custome@s
employees shall respond to end user inquiries as outlined in Customers
procedures and shall not threaten end users with events or actions which are
unenforceable or illegal.
Customer shall provision a toll free 800 telephone number, which can be accessed
by SNET end users who originate calls from either within Connecticut or from
outside Connecticut. Customer shall staff its inquiry operation with sufficient
staff to avoid prolonged wait times. Customers inquiry representatives shall be
available during the hours of, at a minimum, 11 a.m. EST and 7 p.m. EST, Monday
through Friday.
2.2.1.6 Recourse of End User Disputed Amounts
The term "End User dispute" means an end user refusal to pay Customer charges
based on an assertion by the end user that the end user is not liable for those
charges. Customer shall immediately offer and provide a full credit to an end
user who disputes any 900 type calls. For all other disputes, Customer shall
provide full or partial adjustments as necessary to satisfy the end user.
2.2.1.6.1 If SNET is contacted by an end user regarding Customers messages,
SNET shall process the contact as follows:
telcodev/02/24/95 PROPRIETARY INFORMATION Page 15
<PAGE>
2.2.1.6.1 - (continued)
Agreement Number:
SNET shall direct the end user to contact Customer for resolution. However, if
the end user has been unable to reach Customer or requests SNET to advise
Customer to contact the end user, SNET will issue a LEC Memo conspicuously noted
"Initial Dispute" identifying the amount of the dispute and the end users name,
address and billing telephone number, and accompanied by a record of all call
detail/usage involved.
Customer will, upon receipt of an SNET initiated LEC Memo noted "Initial
Dispute", immediately contact the end user and settle the dispute to the end
users satisfaction, including the provision of a full or partial adjustment, as
needed. Customer will return the LEC Memo with a notation indicating the date
the end user dispute was resolved and the date the adjustment credit amount, if
any, will be forwarded to SNET for processing.
If SNET does not receive any correspondence, action, or inquiry from Customer in
response to an Initial Dispute LEC Memo, within thirty (30) days after any such
Memo is provided to Customer, SNET shall generate an adjustment to the end users
account and recourse the disputed amount to Customer.
2.2.1.6.2 SNET Direct Handling of End User Disputes
SNET will immediately issue end user adjustments and recourse such amount to
Customer under situations including but not limited to the following:
1) the end user refuses to contact Customer directly and demands that SNET
provide the adjustment directly
2) the end user advises SNET that an adjustment request has been denied
telcodev/02/24/95 PROPRIETARY INFORMATION Page 16
<PAGE>
Agreement Number:
2.2.1.6.2 (continued)
3) the end user is dissatisfied with Customers proposed adjustment
amount.
SNET will advise Customer of such action by issuing a LEC Memo conspicuously
marked "Customer Demand". No additional action by Customer is required, since
the adjustment will have already been made by SNET.
2.2.1.6.3 Customer Generated Adjustments
Customer shall advise the end user that adjustments will appear in the Call
Detail Section of the next SNET end user bill. EMI Category 41 Credit Messages
are the only acceptable method to affect end user adjustments.
2.2.1.6.4
If SNET generates an adjustment to an end user account pursuant to Section
2.2.1.6.1 or 2.2.1.6.2, above, SNET shall advise the end user that:
1) the disputed amount will be removed from the bill,
2) Customer has not forgiven the charge, and
3) Customer may independently pursue collection remedies.
2.2.2 SNET Responsibility
SNET will provide Bill Processing Service for Customers Contract Messages
that have occurred during the sixty (60) days immediately preceding their
receipt by SNET from Customer, subject to SNET's ability to process such
messages consistent with this Agreement, its specifications and Operating
Procedures.
telcodev/02/24/95 PROPRIETARY INFORMATION Page 17
<PAGE>
Agreement Number:
2.2.3 Unbillable Messages
Any messages that are more than sixty (60) days old when received by SNET,
are of call types excluded from billing under this Agreement, including but not
limited to call types identified in Exhibit B, or are attributable to an end
user account which is no longer a live account, shall be returned to Customer as
unbillable messages.
2.2.4 Forecasts and Bill Capacity
Starting on the effective date hereof and every six (6) months thereafter,
Customer shall use its best efforts to furnish SNET its forecast of the Contract
Messages to be processed during the following six (6) month period.
2.3 Data Retention
SNET shall maintain data associated with billing Customer Messages for the
retention period that it currently uses for retention of its own data of a
similar kind as may be required by applicable law.
telcodev/02/24/95 PROPRIETARY INFORMATION Page 18
<PAGE>
Agreement Number:
Article 3
Compensation
------------
3.1 Rates and Charges
3.1.1 SNET shall charge Customer, and Customer shall pay rates and charges
for Billing Services in accordance with the rates and charges contained in
Schedule 1, attached hereto and incorporated herein by reference, and the
procedures contained in Exhibit A hereto.
3.1.2 Any undisputed charges not paid within thirty (30) days of the
appropriate payment dates as set forth in Exhibit A hereto shall be cause for
termination of this Agreement by either Party on fifteen (15) days' written
notice if full payment is not received within such fifteen (15) day period.
3.2 Separate Charges and Payments for Billing Services
The Parties agree that charges and payments between SNET and Customer for
Billing Services shall be charged and paid separately from charges and payments
for any other services which the Parties may from time to time provide to each
other, unless otherwise agreed.
3.3 Determination of Payment Date
With respect to the purchase of Messages for which SNET provides Bill
Processing Service, the Payment Date shall be determined in accordance with
Section 1.3 of Exhibit A.
telcodev/02/24/95 PROPRIETARY INFORMATION Page 19
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission
Agreement Number:
3.4 Uncollectible Percentage and Purchase of Rated Messages
3.4.1 SNET will purchase the accounts receivable from Customer at an
amount based on the value of the rated messages received, net of adjustments, as
enumerated in Section 1 of Exhibit A.
3.4.2 Except as otherwise set forth in Exhibit A, Section 1.1.B.2, the
uncollectible percentage will be, (*)% for the first nine (9) months of this
Agreement. The first true-up adjustment will take place at the end of the ninth
month of this Agreement. A quarterly true-up will be performed thereafter as
set forth in Section 1 of Exhibit A.
3.5 Final True-Ups in the Event of Termination
In the event either Party terminates Billing Services under this Agreement, it
is agreed that final true-ups for uncollectibles and end user adjustments will
be performed for twelve (12) months following the termination of Billing
Service.
3.6 Service Establishment Charge and Minimum Payment Amount
Customer agrees to pay SNET a (*) Service
Establishment Charge on the date this Agreement is executed. Service shall not
commence until SNET has received payment of the Service Establishment Charge.
In addition, Customer payment for Billing Services shall be subject to and
Customer will pay SNET a Minimum Monthly Payment Amount of (*)
. In the event that the changes for SNET's provisions of
Billing Services is not equal to or in excess of the Minimum Monthly Payment
Amount at the end of any given month, SNET shall bill Customer the Minimum
Monthly Payment Amount for that month in lieu of the payment calculated in
accordance with Exhibit A.
telcodev/02/24/95 PROPRIETARY INFORMATION Page 20
<PAGE>
Agreement Number:
3.7 Certain Federal, State and Local Tax
3.7.1 SNET will be responsible for calculating the amount to be billed to
each end user for federal excise tax and Connecticut state sales tax and will
include such amount on each end users bill. Customer may elect to remit federal
excise tax directly to the federal government or elect to have SNET remit.
Customer must remit Connecticut state sales tax directly. Any other applicable
taxes to be billed to the end user will be the sole responsibility of Customer,
and must be included in the Customers message detail.
3.7.2 Except as otherwise provided herein, each Party shall file, to the
extent permitted by law, all returns for federal, state or local sales, use,
excise, gross receipts or other taxes or tax-like fees imposed on or with
respect to its services, and pay or remit all such taxes to the imposing
authority.
3.7.3 SNET shall determine and maintain in its records for each end user
for whom messages are billed under this Agreement the tax exempt status of each,
in accordance with its general record keeping standards and practices.
3.7.4 SNET shall furnish to Customer such information as may be required
by Customer to file its tax returns, according to mutually agreed to formats and
schedules.
3.7.5 SNET shall not be entitled to return or receive from Customer any
standing fee or share of any taxes for which the person collecting such taxes is
entitled under applicable law.
telcodev/02/24/95 PROPRIETARY INFORMATION Page 21
<PAGE>
Agreement Number:
Article 4
Program Development
-------------------
4.1 SNET may from time to time have to undertake program development unique to
Customer in order to provide Billing Services to Customer. Any such program
development will be undertaken at hourly rates as set forth on Schedule 1 and
according to the terms and conditions of this Article 4, and such additional
specifications as the Parties may agree to.
4.2 To the extent that any software developed pursuant to this Agreement
constitutes a new stand-alone software package or program, as differentiated
from an update to, or enhancement of, a pre-existing software package, program
or system, it shall be the exclusive property of Customer, and SNET shall not be
entitled to employ the new stand alone software package or program in the
provision of Billing Services for any other person.
4.3 To the extent that any software developed pursuant to this Agreement
constitutes an update to, or enhancement of, a pre-existing software package,
program or system, it shall be deemed to be the property of SNET.
4.4 Nothing in this Article 4 shall be deemed to divest SNET of any interests
it held in relevant software prior to the commencement of development work
pursuant to this Agreement.
telcodev/02/24/95 PROPRIETARY INFORMATION Page 22
<PAGE>
Agreement Number:
4.5 Nothing in this Article 4 shall be construed to limit SNET's rights to use,
market, disclose or otherwise exploit for its own purposes, general know-how and
expertise not involving proprietary, trade secret or business information of
Customer.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
duly executed for it and on its behalf as of the day and year first above
written.
TELCO DEVELOPMENT GROUP THE SOUTHERN NEW ENGLAND
OF DELAWARE, TELEPHONE COMPANY
By:/s/ Bryan Rachlin By:/s/Michael P. Phelan
Name: Bryan Rachlin Name: Michael P. Phelan
Title: President Title: VP Network Marketing & Sales
Date: 02/09/1996 Date: 2/19/96
APPROVED AS TO
FORM /S/[SIGNATURE ILLEGIBLE]
telcodev/02/24/95 PROPRIETARY INFORMATION Page 23
<PAGE>
Confidential Treatment Requested. The redacted
material has been separately filed with the
Commission.
Agreement Number:
Schedule 1
Billing Services Agreement
SCHEDULE1
Rates and Charges
Bill Processing Services
Bill Processing Per Message $ (*)
Bill Processing Per Bill Rendered $ (*)
Receipt of Rated Customer Message $ (*)
Detail Transmitted via CMDS
Receipt of Rated Customer Message
Detail transmitted via NDM $ (*)
Program Development Per Hour $ (*)
telcodev/02/24/95 PROPRIETARY INFORMATION Page 1
<PAGE>
Agreement Number:
Exhibit A
Billing Services Agreement
EXHIBIT A
Settlement Terms
----------------
Section 1: Accounts Receivable - SNET will purchase accounts receivable for
messages billed to Customer end user accounts under this Agreement
in accordance with the provisions of this Exhibit A.
1.0 Formula For Calculation of Amount Due Customer
----------------------------------------------
SNET will use the following formula for calculation of the dollar amount due
Customer for the purchase of accounts receivable:
Amount of Rated Messages Received Recourse Adjustments - SNET
Initiated Uncollectible Bad Debt Allowance Quarterly
Uncollectible True-up Amount Unbillables
+ Federal Excise Tax (if Customer to remit directly)
+ CT state sales tax (Customer required to remit directly)
Amount Due Customer
Where:
A. Amount of Rated Messages Received is the net amount of the charge
and credit messages received by SNET from Customer for billing.
B. Recourse Adjustments - SNET Initiated are the amounts debited or
credited for end user adjustments required by extraordinary
circumstances e.g. to facilitate resolution of end user
complaints.
C. Uncollectible Bad Debt Allowance is an amount deducted on the
Purchase of Accounts Receivable Statement to compensate for
losses resulting from failure of the end user to pay final bill
amounts due. Derivation of the Uncollectible Bad Debt Allowance
is set forth in Section 1.1 below.
telcodev/2/24/95 PROPRIETARY INFORMATION Page 1
<PAGE>
Agreement Number:
Exhibit A
1.0 Formula For Calculation of Amount Due Customer - (continued)
----------------------------------------------
D. Quarterly Uncollectible True-up Amount reflects the amount by
which the Uncollectible Bad Debt Allowance differs from the net
realized uncollectibles.
E. Unbillable messages are messages which cannot be posted to an end
user account.
F. Amount Due Customer represents the Net Purchase amount for
Accounts Receivable.
1.1 Derivation of Uncollectible Bad Debt Allowance
----------------------------------------------
For each purchase of accounts receivable, SNET shall subtract from the total
accounts receivable an amount for uncollectibles, subject to the following
process:
A. Initial Factor
Unless otherwise stated in the Agreement or in this Exhibit A, the
uncollectible factor in effect on the effective date of the Agreement shall
be used until the next calendar quarter, and shall be revised for each
calendar quarter thereafter.
B. Factor Calculation
B.1 Except as provided in B.2 below, the uncollectible factor will be
determined by dividing Customers realized uncollectible by
Customees total end user revenue billed for the prior quarter.
B.2 If 900 Service messages received for processing represent thirty
percent (30%) or more of the total volume of messages received for
processing (without editing) during a given calendar month,
telcodev/2/24/95 PROPRIETARY INFORMATION Page 2
<PAGE>
Agreement Number:
Exhibit A
1.1 Derivation of Uncollectible Bad Debt Allowance - (continued)
----------------------------------------------
B.2 (continued)
then the uncollectible factor shall be ten percent (1 0%) or the
factor calculated pursuant to B. 1 above, if the factor calculated
pursuant to B. 1 above is greater than ten percent (1 0%).
C. Total Realized Uncollectible
The total realized uncollectible is the amount of final customer bills
remaining unpaid after SNET's standard collection efforts are completed.
(Deposits held by SNET are applied to final bills when rendered.) This
amount reduced by any payments received by SNET for outstanding
uncollectibles from prior periods equals the total net realized
uncollectible.
D. Net Realized Uncollectible
Customees net realized uncollectible is computed monthly by applying an
apportionment percentage for Customer as determined by SNET's monthly
uncollectible apportionment study to the total realized uncollectible for
the month.
E. Factor Development
The following table reflects the months used in the uncollectible bad debt
factor development and months to which such factor shall apply.
<TABLE>
<CAPTION>
Uncollectible
<S> <C> <C> <C>
Realized Total Amount Billed Factor Applied
for months of: for months of: to months of:
Oct, Nov, Dec Jul, Aug, Sep Jan, Feb, Mar
Jan, Feb, Mar Oct, Nov, Dec Apr, May, Jun
Apr, May, Jun Jan, Feb, Mar Jul, Aug, Sep
Jul, Aug, Sep Apr, May, Jun Oct, Nov, Dec
</TABLE>
telcodev/9/19/95 PROPRIETARY INFORMATION Page 3
<PAGE>
Agreement Number:
Exhibit A
1.1 Derivation of Uncollectible Bad Debt Allowance - (continued)
----------------------------------------------
E. Factor Development - (continued)
If the factor calculated pursuant to section 1. B. 1 is above ten percent
(10%), this higher factor shall remain in effect for a given quarter and
shall not be reduced to ten percent (10%) until the calculated
uncollectible factor is less than or equal to ten percent (10%) for three
consecutive months.
1.2 Uncollectible True-up
---------------------
1.2.1 Except as otherwise provided in 1.2.2 below, if the net realized
uncollectibles differ from the factored amount withheld from billed revenues, a
true-up amount shall be calculated and either billed or remitted to the
Customer, as appropriate. The true-up amount shall be calculated by the end of
the month following the close of each quarter.
1.2.2 If 900 Service messages received for processing represent thirty
percent (30%) or more of the total volume of messages received for processing
(without editing) during a given calendar month (900 first month of purchase)
then the total of all uncollectible bad debt allowance amounts shall be accrued
for twelve (12) months. This twelve (12) months of allowance amounts shall be
compared to the total amount of Customers realized uncollectibles for all months
prior to the true-up. The true-up shall be calculated on the twenty-fourth
(24th) month following the 900 first month of purchase. Subsequent true-ups
shall be calculated every twelve (12) months for the prior twelve (12) month
period.
telcodev/2/24/95 PROPRIETARY INFORMATION Page 4
<PAGE>
Agreement Number:
Exhibit A
1.2.3 Final True-ups at Termination
Upon termination of this Agreement, SNET shall withhold additional
amounts thereby establishing a reserve to offset any service related costs
and/or charges that may occur after settlement of Customees final submission of
Contract Messages. If the uncollectible bad debt allowance withheld for the
Quarter prior to termination notice is less than the highest amount withheld
during any Quarter during the previous eighteen (18) months, SNET shall reduce
the Final purchase of accounts receivable by the difference. During the period
of one (1) year following the settlement of Customees final submission of
messages, SNET shall subtract from the reserve amount any subsequent service
related charges and/or Customers Net Realized Uncollectible amounts. In the
event that the service related charges and/or Customers Net Realized
Uncollectible amounts exceed the reserve during such one (1) year period, SNET
shall invoice Customer for such excess. SNET shall, one (1) year following the
settlement of Customer's final submission, provide Customer with a final
accounting and remit any remaining amounts withheld or shall invoice Customer as
appropriate
1.3 Payment Date
------------
The amount due Customer from SNET will be payable on the payment date which is
determined by adding (i) fifteen (15) days, and (ii) the interval determined
from the most current lead lag cash working capital study, to (iii) the date
when Customers Messages are processed by SNET. SNET's average length of time
between SNET's end user bill day and its receipt of and funds availability of
end user payment shall be updated from time to time on SNET's
telcodev/2/24/95 PROPRIETARY INFORMATION Page 5
<PAGE>
Agreement Number:
Exhibit A
1.3 Payment Date - (continued)
------------
actual history. If the payment date would cause payment to be due on a
Saturday, Sunday or bank Holiday, payment for the net purchase amount will be
due to the Customer as follows:
A. If such payment date falls on a Sunday or on a Holiday which is
observed on a Monday, the payment date shall be the first non-Holiday
day following such Sunday or Holiday.
B. If such payment date falls on a Saturday or on a Holiday which is
observed on Tuesday, Wednesday, Thursday, or Friday, the payment date
shall be the last non-Holiday day preceding such Saturday or Holiday.
1.4 Payment Method
--------------
Any payment to the Customer from SNET will be transmitted by SNET to Customer
such that the funds will be available to Customer on the payment date.
1.5 Assignment of Accounts Receivable
---------------------------------
Customer is prohibited from assigning, transferring, selling, exchanging, or
giving the accounts receivable to any other entity or person. Any such
assignment, transfer, sale, exchange or gift is null and void and will subject
Customer to all liabilities, expenses, costs including attorney's fees expended
and incurred by SNET in pursuing exclusive ownership to the accounts receivable.
telcodev/2/24/95 PROPRIETARY INFORMATION Page 6
<PAGE>
Agreement Number:
Exhibit A
Section 2: Payments to SNET for Billing Service
2.0 Calculation of Amount Due SNET
------------------------------
The amount due SNET is calculated based on the rates contained on Schedule 1,
multiplied times the appropriate unit amounts for each month.
2.1 Payment Date
------------
The amount due SNET from the Customer is due the same date in the month
following the bill date unless the bill is received by the Customer less than 15
days prior to that date, in which case the due date shall be no less than 15
days after the Customers receipt of the bill provided. If the payment date
would cause payment to be due on a Saturday, Sunday or bank Holiday payment for
the amount due SNET will be as follows:
A. If such payment date falls on a Sunday or on a Holiday which is
observed on a Monday, the payment date shall be the first non-Holiday
day following such Sunday or Holiday.
B. If such payment date falls on a Saturday or on a Holiday which is
observed on Tuesday, Wednesday, Thursday, or Friday, the payment date
shall be the last non-Holiday day preceding such Saturday or Holiday.
2.2 Payment Method
--------------
Any payment to SNET from the Customer of one hundred thousand dollars
($100,000) or more must be transmitted by the Customer to a bank account
designated by SNET (to be provided to the Customer by SNET) by electronic
funds transfer such that the funds will be available to SNET on the payment
telcodev/2/24/95 PROPRIETARY INFORMATION Page 7
<PAGE>
Agreement Number:
Exhibit A
2.2 Payment Method - (continued)
-------
date. Any payment to SNET from Customer less than one hundred thousand dollars
($100,000) may be paid by check or draft to the payee's address (to be provided
to the Customer by SNET) or by electronic funds transfer to a bank designated by
SNET.
2.3 Timeframe for Bill Issuance
---------------------------
Statements (bills) detailing the amount due SNET will be sent to the Customer at
least fifteen (15) days prior to the payment date to allow the Customer
adequate time to process the payment. Any changes to the billing schedule will
be provided to the Customer at least sixty (60) days prior to the change.
Customers bill will be mailed to Customer at the following address, subject to
change on written notice by Customer:
TITLE: Network Billing
-------
4219 Lafayette Center Drive
ADDRESS:
Chantilly, VA 22021
-------------------
telcodev/2/24/95 PROPRIETARY INFORMATION Page 8
<PAGE>
Agreement Number:
Exhibit B
Exhibit B includes the following:
900 Service Guidelines
Information Services Guidelines
telcodev/2/24/95 PROPRIETARY INFORMATION Page 1
<PAGE>
Agreement Number:
Exhibit B
900 Service Guidelines
The following guidelines apply to SNET's provision of Billing Services for 900
Message types.
900 Program Content Specifically Excluded from Billing Service
- --------------------------------------------------------------
Adult Matter
------------
Adult Matter is defined as matter which in SNET's opinion is sexually
suggestive in any way or contains matter which, in the sole opinion of
SNET, implicitly or explicitly invites, describes, stimulates, excites,
arouses or otherwise refers to sexual conduct or innuendo. Matter means
live or recorded messages or programs.
Damaging to End User Relationship
---------------------------------
Damaging to End User Relationship means programs whose content is deemed
damaging to SNET's corporate image or to SNET's relationship with its end
users.
Customer's Responsibility for Program Content
---------------------------------------------
Provision of 900 Billing Services include the requirement that Customer
provide SNET with documentation (e.g., guidelines, procedures,
methodologies, monitoring capabilities, etc.) that illustrate its ability
to reasonably insure that specifically excluded messages are not forwarded
for billing.
SNET's Program Content Review
-----------------------------
SNET does not require Customer to submit new programs for approval.
However, in the event that Customer elects to submit a program for
approval, the request must include a taped copy of the program or
illustrative script and any associated promotional materials. SNET will
make a good faith effort
telcodev/2/24/95 PROPRIETARY INFORMATION Page 2
<PAGE>
Agreement Number:
Exhibit B
SNET's Program Content Review - (continued)
- ----------------------
to provide approval/rejection status within ten (10) business days. Pre-billing
approval should not be construed to preclude a decision to refuse billing at a
later date.
Obeectionable Program Content
- -----------------------------
In the event that SNET receives complaints regarding 900 service message
content, which after investigation by SNET is deemed to be objectionable, then
SNET will notify Customer's designated contact that billing will not be provided
for the program. The Customer is responsible for insuring that any message
forwarded for billing after the notification date do not contain messages for
the unacceptable 900 program.
telcodev/2/24/95 PROPRIETARY INFORMATION Page 3
<PAGE>
Agreement Number:
Exhibit B
Information Services Guidelines
900 Calling
- -----------
SNET's billing for information services is limited to the 900 special access
code.
Presubscribed or Comparable Billing Arrangements
- ------------------------------------------------
SNET does not provide billing for information services via a presubscription or
comparable billing arrangement.
800 Calling
- -----------
SNET does not provide billing for information services completed to 800 numbers.
Additionally, SNET does not provide billing for information services calls
completed to domestic or international locations as a result of call choices
offered during a call placed to an 800 number.
The billing of any other 800 number calls requires SNET's review and shall be
billed at SNET's discretion.
telcodev/2/24/95 PROPRIETARY INFORMATION Page 4
<PAGE>
Pages where confidential treatment has
been requested are stamped "Confidential
Treatment Requested. The redacted material
has been separately filed with the Commission."
The redacted portions are indicated by a "(*)".
Exhibit 10.15
AGREEMENT FOR THE
PROVISION OF BILLING AND COLLECTION SERVICES
FOR
CLEARING AGENTS
BETWEEN
TELCO DEVELOPMENT GROUP OF DELAWARE
AND
U S WEST COMMUNICATIONS, INC.
DATED: APRIL 01, 1995
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
1
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C> <C>
Section Page
------- ----
I. Purpose of this Agreement 3
II. Scope of this Agreement 4
III. Responsibilities/Representations 5
IV. Provision of Billing and Collection Services 7
V. Development Charge(s)/Service Commitment 8
VI. Prices/Payment 10
VII. Dispute Resolution 11
VIII. Audit 13
IX. Limitation of Liability/and Warranty 15
X. Data Retention 17
XI. Indemnification 18
XII. Taxes 18
XIII. Purchase of Accounts Receivable 22
XIV. Limitations Period 22
XV. Term and Termination of Agreement 23
XVI. Proprietary and Confidential Information 23
XVII. Force Majeure 26
XIII. Default 26
XIX. Amendments; Waivers 27
XX. Assignment 27
XXI. Notice and Demands 27
XXII. Third-Party Beneficiaries 28
XXIII. Governing Law 28
XXIV. Confidential Status 28
XXV. Lawfulness of Agreement 29
XXVI. Entire Agreement 29
XXVII. Headings 29
</TABLE>
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
2
<PAGE>
AGREEMENT FOR THE
PROVISION OF BILLING AND COLLECTION SERVICES
FOR CLEARING AGENTS
This Agreement for the Provision of Billing and Collection Services for
Clearing Agents (hereinafter "Agreement") is entered into this 1st day of April,
1995, between U S WEST Communications, Inc. a Colorado Corporation and Malheur
Home Telephone Company, an Oregon corporation (hereinafter referred to as
"USWC") and Telco Development Group of Delaware, a Delaware corporation
(hereinafter referred to as "Customer"), acting through their authorized
representatives.
WHEREAS, Customer shall act as a clearing agent", as that term is more
fully described herein, for several interexchange carriers (such interexchange
carriers shall be hereinafter referred to as Customer's "Clients"), and
WHEREAS, Customer, on behalf of its Clients, intends to purchase from
USWC and USWC intends to provide to Customer Billing and Collection Services
(hereinafter referred to as "Services") for certain End User accounts, as
described in Exhibit A, and
WHEREAS, ongoing account maintenance for End User accounts billed by
Customer's Clients and those billed by USWC is intended to be accomplished
through the exchange of record interfaces, and
WHEREAS, effective January 1, 1987, USWC interstate Services provided
to Customer is provided on an untariffed, contractual, basis;
NOW, THEREFORE, in consideration of the mutual benefits accruing to
each party, the parties hereby covenant and agree as follows:
I. Purpose of this Agreement
-------------------------
A. The purpose of this Agreement is to set forth terms and conditions
pursuant to which USWC will provide Services to Customer as a clearing
agent; provided however, that said Services shall be limited to
Customer's, or Customer's Clients', basic toll or message telephone
service ("MTS") or MTS related services. For purposes of this Agreement,
MTS shall mean telephone calls that access Customer's, or Customer's
Clients', toll facilities outside the local calling area within a state
or a point within a state to a
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
3
<PAGE>
point outside that state. Such telephone calls shall be referred to as
"messages". This Agreement shall not include Services for any non-toll
or non-MTS messages, including, but not limited to telegrams, cable-
grams, voice messaging, 900/700 or 800 pay-per-call services or audiotex
services; however, USWC may provide Services for non toll or non-MTS
messages and records under separate terms and conditions mutually agreed
upon by the parties and included in an individual attachment to this
Agreement.
B. Customer may send its own messages and/or its Clients' messages to USWC
for Services. These messages may originate from one or more possible
Clients of Customer. Both parties agree and understand that USWC will
provide Services to Customer under one carrier identification code and
that the use of the word Customer shall refer to a single billing entity
that encompasses Customer and its Clients as a whole.
C. Customer understands and agrees that the messages submitted to USWC for
billing, by Customer, shall be treated as a single billing entity for
all Services, including, but not limited to, billing, collections and
adjustments and that USWC shall not provide Client account detail. In
addition, Customer shall assume all responsibility for any internal
record keeping among Customer's Clients.
II. Scope of this Agreement
-----------------------
A. A description of the Services to be provided by USWC to Customer is set
forth in Exhibit A, Billing and Collection Services; Exhibit B,
Settlement Terms; Exhibit C, Price List; Exhibit D, USWC's Treatment and
Collection Policy; and Exhibit E, The Provision of Billing and
Collection Services of EMI Credit Records attached hereto and
incorporated herein by reference. USWC undertakes to offer its Services
only to those entities which can utilize the Services as specifically
described in this Agreement.
B. The parties recognize that the Services to be provided by USWC are
dynamic in nature and that new and/or revised Services may need to be
added or amended to conform to changes in business circumstances or
regulatory or other legal requirements. The parties agree to negotiate
in good faith with respect to such new or proposed changes.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
4
<PAGE>
III. Responsibilities/Representations
--------------------------------
A. Customer represents and warrants that its Clients understand the extent
of Services provided under this Agreement and that no Services will be
provided to Customer's Clients by USWC. The parties recognize and agree
that Customer is acting as a "clearing agent". Customer describes its
role as a "clearing agent" for certain interexchange carriers with whom
Customer has established a contractual relationship. Customer will
submit to USWC its own MTS messages for billing or those messages for
which Customer has established a contractual right to bill.
B. Customer represents and warrants that its Clients shall use commercially
reasonable efforts at all times to give prompt, courteous and efficient
service to End Users, shall be governed in all dealings with such End
Users by the highest standards of honesty, integrity and fair dealing,
including compliance with all applicable laws, ordinances and
regulations, and shall do nothing which would tend to discredit,
dishonor, reflect adversely upon, or in any manner injure the reputation
of USWC or the Services covered by this Agreement and the quality image
associated with USWC or such Services. In addition, Customer represents
and warrants that its Clients will comply with all of the following in
the course of providing operator assisted calls:
1. prior to the commencement of charging, identify the provider of
service (using the provider name that will appear on the End User's
bill), for each call Clients respond to, thereby giving the End
User a reasonable opportunity to terminate the call without
incurring a charge;
2. upon an End User's request, quote accurate rates and charges prior
to placing the End User's call, thereby giving the End User a
reasonable opportunity to terminate the call without incurring a
charge;
3. rate each message from the origination point/city of the End User's
call to the destination point/ city of the End User's call,
notwithstanding that Clients may route the call to another carrier
for completion; Clients must specifically agree not to rate any
message from a point/city other than the origination point of the
End User's call;
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
5
<PAGE>
4. agree to send USWC billing details that accurately identify the
messages that were originated e.g. calling card, collect, etc;
5. provide a prompt and efficient response and resolution to End User
inquiries, including toll-free access to Clients' service locations
and adequate facilities and personnel to handle such inquiries;
6. provide expeditious handling and connection to the appropriate
agency for emergency calls. Clients may handle emergency services
directly or may contract with other providers of emergency
services;
7. grant USWC the right to use Customer's name on each page of the End
User's bill which contains Clients' charges, as well as, Customer's
logo when provided by Customer.
8. grant USWC the right to include an informative message to the End
User defining the relationship between USWC and Customer. In the
event a regulatory agency requires that the provider of service be
identified on the End User's bill in a specific state(s) then
Customer may order the Custom Request Service described in Exhibit
C.1 or select some other option as may be given by the regulatory
agency.
C. Customer represents and warrants that there are no agreements between
Customer and its Clients that would cause Customer to breach any term,
condition or obligation of this Agreement.
D. Customer represents and warrants that it is the sole owner of the accounts
receivable to be purchased by USWC pursuant to Section XIII, below.
E. Customer represents and warrants that it has its Clients' written
permission to disclose to USWC any and all information necessary for USWC
to perform Services hereunder. Further, Customer and its Clients agree to
furnish any and all information, in a timely manner, as may be required by
a regulatory agency pursuant to Section XVI below.
F. Prior to USWC's commencement of Services hereunder, Customer shall provide
USWC with a valid carrier identification code ("CIC") issued by Bell
Communications Research, Inc. ("Bellcore") for billing identification
unless waived in writing by USWC.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
6
<PAGE>
G. Customer understands that it is the responsibility of Customer to exclude
any non-toll or non-MTS messages or other messages not covered under this
Agreement, as described in Section I above, when submitting messages for
Services under this Agreement; provided, however, that non-toll and non-MTS
messages shall be covered under separate terms and conditions as referred
to in Section I above.
H. Customer agrees to comply with all applicable federal, state, and local
laws, rules, regulations, court orders, and governmental agency orders.
I. Customer's failure (including the failure of one of its Clients), at any
time, to comply with the requirements of this Section will constitute a
breach of this Agreement, and will entitle USWC to cancel this Agreement
pursuant to Section XVIII, and to invoke any other remedies available in
law or equity. In addition, Customer will indemnify and hold harmless USWC
from and against any claim by any third parties including, but not limited
to, Customer's Clients and Clients' End Users. In such event, Customer
agrees to pay any and all fines imposed on USWC and the provisions of
Section XI shall apply.
IV. Provision of Billing and Collection Services
--------------------------------------------
A. USWC interstate Services shall be provided in accordance with the terms and
conditions of this Agreement.
B. USWC Intrastate Services shall be provided in accordance with the
Intrastate Access Service Tariffs (hereinafter "Intrastate Tariff") and the
terms and conditions of this Agreement, which shall supplement the tariff
to the extent not in conflict or inconsistent therewith. To the extent of
any conflict or inconsistency between this Agreement and an Intrastate
Tariff, the provisions of the Tariff shall control for so long as the
intrastate Services remain tariffed and, thereafter, shall be provided in
accordance with this Agreement.
C. Monthly charges shall be on the basis of usage, if applicable, multiplied
by the price elements as set forth in Exhibit C.
D. In the event of a Federal Communications Commission ("FCC") order or any
state regulatory order which may cause USWC an increase in the cost for
providing intrastate and interstate Services, USWC reserves the
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
7
<PAGE>
right to modify its rates for intrastate and interstate Services
retroactive to the effective date of such order. In such event, Customer
reserves the right to terminate this Agreement upon 30 days written notice
to USWC.
V. Developmental Charge(s)/Service Commitment
------------------------------------------
A. USWC consists of three distinct operating territories Central (including
Malheur Home Telephone Company), Eastern and Western (hereinafter each
operating territory shall be individually referred to as "USWC Territory").
B. Customer understands and agrees that USWC requires a start-up fee
("Developmental Charge") for each CIC that is implemented and for each USWC
Territory that is implemented. Such Developmental Charge shall be due and
payable prior to the implementation date for each USWC Territory at the
then current Developmental Charge. Any Developmental Charges paid prior to
the execution of this Agreement shall be applied towards the total amount
due. In the event USWC requires that Customer submit its messages under an
Alternate Billing Entity Code ("ABEC") separate from Customer's CIC, solely
for the purpose to facilitate its own requirements with respect to
Services, USWC will not apply a Developmental Charge for such ABEC;
however, if Customer has unique requirements that would necessitate a
separate ABEC, developmental charges shall apply as described in Exhibit A,
the Custom Request Service.
C. For purposes of this Agreement the implementation date shall mean the date
when USWC receives, from Customer, the first live billing data to be billed
to the End Users after the effective date of this Agreement.
D. Customer understands and agrees that USWC requires an annual minimum
(hereinafter "Service Commitment") for each CIC that is implemented. For
purposes of this Section, USWC will not require a separate Service
Commitment for an ABEC when such ABEC is required solely to facilitate
USWC's requirements with respect to providing Services and will apply the
actual charges for such ABEC towards the Service Commitment due for the
CIC(s) implemented as described below. If Customer has unique requirements
that would necessitate a separate ABEC, then a Service Commitment will be
required for each ABEC under the same terms as required for each CIC. Such
Service Commitment is required for Customer's actual charges incurred for
Services rendered to Customer as follows: 1) if Services are provided in
one USWC Territory, the Service Commitment
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
8
<PAGE>
is $40,000 each year, and 2) if Services are provided other USWC
Territories a Service Commitment of $10,000 is required each year for each
additional USWC Territory in addition to the $40,000 Service Commitment
required for the first USWC Territory. The Service Commitment will be due
and payable as follows:
1. If the actual charges incurred by Customer for each USWC Territory do not
meet or exceed the Service Commitment, USWC will conduct a true-up at the
end of the twelve month period beginning with the first USWC Territory
implemented (hereinafter "First Settlement Period"). Such true-up will be
calculated as follows: (1) if USWC implements all USWC Territories on the
same implementation date then the entire Service Commitment is due no later
than the First Settlement Period; or (2) in the event Services are
implemented on different dates the $40,000 Service Commitment for the first
USWC Territory and the Service Commitment(s) for any additional USWC
Territories will be prorated for the First Settlement Period.
2. Each year during the term of this Agreement, USWC will invoice Customer on
the anniversary date of the First Settlement Period for the difference
between the total Service Commitment due and the actual recurring and non-
recurring charges incurred by Customer each year during the term of this
Agreement across all USWC Territories. Developmental charges paid by
Customer will be applied to the First Settlement Period. Customer agrees to
pay USWC any amounts due in accordance with the provisions of Section VI
below.
3. Upon termination of this Agreement, the Service Commitment will be prorated
using the number of days beginning with the previous settlement period to
the date of termination. USWC will invoice Customer for the difference
between the total Service Commitment due and the actual recurring and non-
recurring charges incurred by Customer across all USWC Territories. Such
amount will be invoiced to Customer and is due and payable in accordance
with the provisions of Section VI below.
4. If termination of this Agreement occurs twelve months after the effective
date of this Agreement, or sooner, USWC will conduct a true-up as follows:
1) USWC will prorate the Service Commitment beginning with each
implementation date, for each USWC Territory, to the date of termination;
and 2) will calculate the difference between the total Service Commitment
due and the actual recurring and non-recurring charges (including
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
9
<PAGE>
Developmental Charges) paid by Customer across all USWC Territories. Such
amount will be invoiced to Customer and is due and payable in accordance
with the provisions of Section VI below.
E. If Customer has an agreement in effect with USWC and is currently
purchasing Services from USWC, this Agreement will supersede such agreement
and the Service Commitment will apply as described above and the
Development Charges will apply if applicable.
VI. Prices/Payment
--------------
A. Except as specified in Section IV of this Agreement, and except for
Services provided pursuant to an Intrastate Tariff (to the extent the
tariff rates differ from the prices specified in Exhibit C), all Services
provided pursuant to this Agreement shall be provided at the prices
specified in Exhibit C. Furthermore, Customer understands that USWC is
currently filing new price lists or tariff rates for Services in the
individual states. If Customer elects Option 1, as described in Exhibit A,
II, Customer understands that the rates for Interstate Services will become
effective on the first date stated above and the rates for Intrastate
Services will become effective as each tariff filing is approved or the
price list filing is completed in the individual states. If Customer elects
Option 2, as described in Exhibit A, II, the rates for both Interstate and
Intrastate Services will become effective as each tariff filing is approved
or the price list filing is completed in the individual states.
B. Customer's payment shall be due on the payment due date reflected on USWC's
invoice. Upon advance written notification to Customer, USWC reserves the
right, at its sole discretion, to deduct (net) any amounts past due and
owing USWC for any Services provided to Customer, from any funds or
proceeds due Customer from USWC, arising from accounts receivable
settlements. USWC is not required to deduct (net) amounts past due to
prevent Customer from being in default of this Agreement.
C. If a payment would be due on a Saturday, Sunday or bank holiday, payment
for the amount due USWC will be as follows:
1. If such payment date falls on a Sunday or on a holiday which is
observed on a Monday, the payment date shall be the first non-holiday
day following such Sunday or holiday.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
10
<PAGE>
Confidential Treatment Requested. The
redacted material has been separately
filed with the Commission.
2. If such payment date falls on a Saturday or on a holiday which is
observed on Tuesday, Wednesday, Thursday, or Friday, the payment date
shall be the last non-holiday day preceding such Saturday or holiday.
D. Any payment received by USWC after the payment date or any payment received
in funds which are not immediately available to USWC on the payment date
will be subject to a late payment penalty. If late payment charges are not
permitted by local jurisdiction for this Service, this provision shall not
apply. If applicable, the late payment penalty shall be the portion of the
amount due USWC received after the payment date, times a late factor of
(*) per day compounded daily for the number of calendar days from the
payment date to and including the date that Customer actually made the
payment to USWC, which would result in an annual percentage rate of (*).
E. Any late payment resulting from bank error will not be subject to the late
payment penalty provided Customer can verify that it was not at fault. It is
the responsibility of Customer to notify the banks involved for resolution
of the bank error.
F. Any dispute associated with Customer's payment shall be governed by the
provisions of Section VII. of this Agreement. Should the dispute not be
resolved by the Payment Date of the amount due, Customer shall,
notwithstanding the continuing existence of the dispute, pay the billed
amount in accordance with the terms defined in this Agreement.
VII. Dispute Resolution
------------------
In the event of any dispute between USWC and Customer with respect to the
terms and conditions of this Agreement, or any subject matter referred to
in or governed by this Agreement, except disputes in which a party seeks
equitable relief, then such disputes shall be settled as follows:
A. Escalation Procedures
---------------------
All disputes between the parties with respect to any subject listed in the
preceding paragraph shall be escalated through normal business procedures
to the officer level prior to the commencement of any arbitration
proceeding.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
11
<PAGE>
B. Arbitration
1. As between the parties hereto, all questions as to rights and
obligations arising under the terms of this Agreement and the Intrastate
Tariffs are subject to binding arbitration.
2. Either party may make a demand for binding arbitration by filing with
the other a demand in writing signed by an officer of the complaining
party.
3. The parties may agree upon one arbitrator, but in the event that they
cannot agree, there shall be three, one named in writing by each of the
parties within ten (10) business days after demand for arbitration is
given and a third chosen by the two appointed. Should either party
refuse or neglect to join in the appointment of the arbitrator(s) or to
furnish the arbitrator(s) with any papers or information demanded, the
arbitrator(s) are empowered by both parties to proceed ex party.
4. Arbitration shall take place in the principal headquarters city of the
party against whom the demand for arbitration has been filed and a
single hearing before the arbitrator(s) of the matter to be arbitrated
shall take place at the time and place within said city as is selected
by the arbitrator(s). The arbitrator(s) shall select such time and place
promptly after his/her (or their) appointment, provided that the time
scheduled for the hearing shall not be later than thirty (30) business
days after the date of appointment of the arbitrator(s). The
arbitrator(s) shall give written notice thereof to each party at least
ten (10) business days prior to the date so fixed. In the event a panel
of three arbitrators is necessitated by the parties' inability to agree
upon a single arbitrator, such notice of the time and place of the
hearing shall also identify the third member of the panel.
At the hearing, any relevant evidence may be presented by either party,
and the formal rules of evidence applicable to judicial proceedings
shall not govern. Evidence may be admitted or excluded in the discretion
of the arbitrator(s). Said arbitrator(s) shall hear and determine the
matter and shall execute and acknowledge a binding decision in writing
and
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
12
<PAGE>
cause a copy thereof to be delivered to each of the parties within ten
(10) business days of the hearing date.
5. The determination of the panel shall be by majority vote, with each
arbitrator having a single vote. The award rendered by the arbitrator
(or the majority if more than one) shall be final, and judgment may be
entered upon it in accordance with applicable law in any court having
jurisdiction.
6. Prior to the scheduled hearing date, the parties shall agree on
procedures to be used in connection with the arbitration, except as they
may conflict with the specific provisions contained in this Section VII.
To the extent the parties cannot agree upon procedures, the arbitration
shall be conducted in accordance with the Commercial Rules of The
American Arbitration Association (AAA) but not necessarily under the
auspices of the AAA.
7. The costs of such arbitration shall be borne equally by the parties;
provided, however that each party shall bear its own expense in
prosecuting or defending a claim; and provided further that the
arbitrator(s) shall assess the costs and expenses of an arbitration
proceeding against a party if the arbitrator(s) determines that the
prosecution or defense of a claim was frivolous in nature.
VIII. Audit
-----
A. For purposes of this Section, an audit or review shall mean a
comprehensive audit/review encompassing multiple services and multiple
departments (hereinafter "Audit"). An Audit of USWC by Customer may
consist of an Audit of USWC's operations on information described in
paragraph C. below; an Audit of Customer by USWC may consist of an Audit
of Customer's operations on information described in paragraph D. below.
Each party may conduct not more than two (2) Audits in any twelve (12)
month period during the term of this Agreement over all three USWC
Territories. If an Audit is requested in only one or two USWC
Territories, it shall be counted as one Audit. For purposes of this
Section, an examination shall mean an inquiry on a single issue or a
specific topic ("Examination(s)"). Examinations shall be limited to a
total of three Examinations in any twelve (12) month period during the
term of this Agreement regardless if the request is in one or more USWC
Territories. Examinations
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
13
<PAGE>
may be conducted as needed, subject to the agreement of the party being
examined, which shall not be unreasonably denied. Both parties agree that
the Audit or Examination shall be limited to the subject matter outlined
in the written notification as described in paragraph B. below. Any claim
resulting from an Audit or Examination must be supported by a
statistically valid sample.
B. In requesting an Audit or Examination, the requesting party shall give no
less than forty-five (45) days written notice of intent to Audit or to
commence an Examination. Such notice shall identify whether the
requesting party will perform an Audit or Examination, the date upon
which the Audit or Examination is to commence, the location, the
requesting party's representatives, the subject matter of the Audit or
Examination, specific materials to be reviewed including the number and
type of accounts, type of message details, and the time period covering
the materials or records subject to the Audit or Examination. The parties
shall mutually agree on the commencement date and subject matter of such
Audit or Examination; such agreement shall be reduced to writing.
C. The right to conduct an Audit or Examination of USWC, as described in
this paragraph, is limited to Customer and shall not be extended to
Customer's Clients. Upon written notice by Customer to USWC, Customer
shall have the right, through its authorized representative, to conduct
an Audit or Examination pursuant to Paragraph B. above, all such records
and accounts as may under recognized accounting practices contain
information bearing upon (i) amounts being billed to Customer's Clients'
End Users by USWC as part of its provision of Services to Customer, and
(ii) the charges to Customer for such Services. The information subject
to the Audit or Examination will be limited to the period of time for
which the Service(s) were provided. All information received or reviewed
by Customer or its authorized representative is considered confidential
and is not to be distributed, provided or disclosed in any form to anyone
not involved in the Audit or Examination, nor is such information to be
used for any other purpose. USWC shall not be required to produce
directly to Customer's auditors source documents which contain
information relating to other entities for whom USWC is providing
Services other than Customer's Clients'. Where source documents contain
information relating to one or more entities commingled with information
relating to Customer's Clients', USWC shall provide and Customer shall
accept extracts of such documents or masked
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
14
<PAGE>
documents which contain only information pertinent to Customer's
Clients'.
D. Upon reasonable written notification by USWC to Customer, USWC or its
authorized representatives shall have the right to commence an Audit or
Examination pursuant to Paragraph B. above, of such source documents,
systems, records and procedures as may, under recognized accounting
practices, contain information bearing upon the content of billing
records sent by Customer to USWC for billing, including but not limited
to, the types and ages of billing records. Such billing records shall be
limited to the messages submitted to USWC, by Customer, for billing
purposes.
E. All costs incurred by USWC, on behalf of Customer, during the course of
an Audit or Examination of Customer's records, as ordered by a third
party, will be the responsibility of Customer. A detailed estimate will
be prepared based upon Customer's written notice and/or specifications
supplied by Customer in accordance with the terms described in Exhibit A,
Consulting Service. The estimate provided to Customer via certified mail
will be valid for a period of thirty (30) days from the date the estimate
was received by Customer. The estimate and any subsequent revisions must
be approved in writing by Customer prior to USWC performing such services
or Customer incurring any costs.
F. Adjustment to the charges payable to either party under this Agreement or
the Intrastate Tariffs shall be made to correct errors or omissions
disclosed by the Audit or Examination if mutually agreed to by the
Parties or directed through arbitration. Corrective action shall be
initiated within thirty (30) days of the mutually agreed upon resolution
of a claim or of an arbitrator's award.
IX. Limitation of Liability/and Warranty
------------------------------------
A. USWC agrees to use reasonable efforts to provide Services hereunder in
the same manner as it provides for its own like billing and collection
services. Customer and USWC agree to use best efforts to provide each
other verbal notification immediately upon discovery of billing errors
followed by written notification within thirty (30) days. Such written
notification shall contain detailed information to aid in identifying the
cause of the billing error and its correction. USWC agrees to extend its
best efforts to correct billing errors within thirty (30) days of
notification (by Customer) or discovery (by USWC).
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
15
<PAGE>
Where meeting the thirty (30) day objective is not possible, USWC will
notify Customer of the expected resolution date. The above described
warranty is the only warranty provided in connection with this Agreement.
THIS WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ALL OTHER EXPRESS AND
IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY.
B. Customer will pay USWC for the correction of billing errors caused by any
inaccurate or incomplete Customer instructions whether written or verbal.
Further, Customer will pay for the correction of billing errors resulting
from billing details passed to USWC that are not accurately identified or
any other billing error resulting from Customer's failure to perform in
accordance with Section III.
C. Absent knowing and willful misconduct, USWC's total liability and
Customer's sole and exclusive remedy for any loss, cost, claim, injury,
liability, or expense, including reasonable attorneys' fees, regardless
of theory, shall be limited to the actual damages as follows:
1. If USWC, due to its error or omission, loses, damages or destroys
Customer's Clients' recorded messages while providing Services and
USWC cannot bill or rebill the messages, USWC will estimate the
volume of the messages and associated revenue based on the most
comparable previously known values less uncollectibles and charges
for Services commensurate with such revenue. Where the most
comparable values are unknown the estimated revenue associated with
such unbilled messages will be mutually agreed upon.
2. If USWC, due to its error or omission, fails to process the
Customer's Clients' messages or processes the messages incorrectly,
the parties agree that USWC will promptly, upon correction of the
billing system error, reprocess the messages. If, however, in the
judgment of either party some or all of such reprocessing will not be
done within ninety (90) days from the initial receipt of the messages
and is determined unfeasible from an economic, technical or marketing
perspective, such party can request that some or all of the
reprocessing not be done. If both parties agree not to reprocess,
USWC shall pay to Customer an amount equal to the estimated revenue
associated with such unbilled messages as described
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
16
<PAGE>
above less uncollectibles and charges for Services commensurate with
such revenue.
3. When USWC discovers or is notified in a timely manner that, due to
its error or omission, incomplete Billing Information Services detail
has been provided to Customer, USWC will make every reasonable effort
to recover and provide the detail to Customer at no additional
charge.
D. Upon payment of any revenue to Customer under Paragraph C, above, USWC
shall be entitled to recover charges for Services commensurate with such
revenue.
E. In the event the parties cannot agree that reprocessing is feasible or
cannot agree on a revenue settlement, the parties agree to utilize
Exhibit B, Sections B.10, B.11 and B.12 to resolve the dispute.
F. USWC assumes no liability for accuracy of messages recorded by Customer's
Clients and provided by Customer to USWC for billing.
G. Customer's liability to USWC (as distinct from Customer's obligation to
pay for Services provided pursuant to this Agreement) for any loss, cost,
claim, injury, liability, or expense, including reasonable attorneys'
fees, regardless of theory, shall be limited to the amount of actual
damages incurred.
H. The parties may be liable to each other for any indirect or special
damage arising out of or in connection with knowing or willful
misconduct. In no other event shall either party be liable to the other
for consequential damages.
X. Data Retention
--------------
Customer agrees to retain copies of all files transmitted or in any other
fashion forwarded to USWC for a minimum of ninety (90) calendar days
after date of original transmission to USWC. Customer further agrees to
retransmit or reforward files upon request of USWC at no cost to USWC.
Such retransmission or reforwarding will take place no later than three
(3) calendar days from receipt of a request from USWC. However, in the
event that the original transmission cannot be received by USWC due to
transmission system failure, improperly formatted data on the file, or
other reason, Customer will
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
17
<PAGE>
immediately retransmit the file upon correction of the problem causing
the failure.
XI. Indemnification
---------------
A. Customer will indemnify and hold harmless USWC from and against any loss,
cost, claim, liability, damage expense (including reasonable attorney's
fees) to third parties (including, but not limited to, Customer's Clients
and Clients' End Users), relating to or arising out of negligence or
misconduct by Customer or its Clients, its employees, agents, or
contractors in the performance of this Agreement or in the manner of
providing services to its own End Users. In addition, Customer will, to
the extent of its negligence or misconduct, defend any action or suit
brought by a third party against USWC for any loss, cost, claim,
liability, damage or expense relating to or arising out of negligence or
misconduct by Customer or its Clients, their employees, agents, or
contractors, in the performance of this Agreement.
B. USWC will notify Customer promptly in writing of any written claims,
lawsuits, or demand by third parties for which USWC alleges that the
Customer is responsible under this section and tender the defense of such
claim, lawsuit or demand to Customer.
XII. Taxes
-----
A.1 General Provisions: Customer (or Customer's Client(s)) shall be liable
-------------------
for all Federal, state, or local sales, use, excise, gross receipts, or
other taxes or tax-like fees, imposed on or with respect to Customer's
(or Customer's Client(s)) services (hereinafter referred to "Tax(es)",
including Taxes imposed directly on USWC and relating to Customer's (or
Customer's Client(s)) services. Customer shall, where permissible by law,
file returns or reports relating to such Taxes, and pay or remit all such
Taxes and other items to the appropriate taxing authority.
A.2 USWC shall use the same tax practice and procedures (including exemption
procedures) to apply, bill, and collect taxes on new and existing
services that are the subject of this Agreement that it uses or would use
to apply Taxes on similar or comparable USWC services rendered to other
non-exempt customers of USWC, unless notified in writing to do otherwise.
However, USWC shall not bill Taxes, the effect of which are passed on to
End User customers pursuant to tariff or accepted state regulatory
practice, unless Customer (or Customer's
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
18
<PAGE>
Client(s)) has filed with the appropriate regulatory commission or other
agency tariffs or notice that will authorize such pass-on. In such event,
Customer will provide USWC with sufficient notice and documentation to
implement such pass-on. Customer has the right to review USWC's tax
procedures and supporting documentation. USWC will implement any tax law
changes into its procedures as required by applicable tax law, however,
in no instance shall USWC be given less than sixty (60) days to implement
such changes.
A.3 Customer understands and agrees that USWC is merely providing Services
with respect to the billing and collection of Taxes hereunder. USWC shall
not be responsible for billing any foreign state taxes associated with a
jurisdiction outside of USWC's operating territory to Customer (or
Customer's Client(s)) services unless billing information, with respect
to such Taxes, is provided to USWC by Customer.
A.4 When notified by Customer to change its tax procedures with respect to
applying and billing Taxes on Customer (or Customer's Client(s))
services, USWC shall, within the constraints imposed by its billing
system, implement such tax procedures as Customer advises and charging
Customer for the costs of such change; provided that USWC shall pay for
any change required in order to ensure that its billing system properly
accounts for all taxes if such change also applies to all USWC End Users.
To the extent USWC's billing system cannot accommodate such requested
change without significant modifications, USWC shall continue to use the
same tax procedures it uses for similar or comparable USWC services,
again excepting tariffed or regulatory approved tax items as described in
Paragraph A.2 above, and will be held harmless by Customer for using such
procedures except in the case of gross or willful negligence. In no event
shall USWC be liable for anything other than penalties that may apply,
and Customer (or Customer's Client(s)) shall be liable for Taxes and
interest owed.
A.5 USWC shall not be entitled to retain or receive from Customer any
statutory fee or share of Taxes to which the person collecting such Taxes
is or may be entitled under applicable law.
A.6 USWC shall use the same tax exemption status with respect to Customer (or
Customer's Client(s)) End Users as it uses for its own customers, and to
the extent necessary, furnish to Customer copies of such information as
may be
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
19
<PAGE>
in its possession regarding tax exemptions of End Users and services
related to Customer (or Customer's Client(s)), but without warranty as to
accuracy or completeness.
A.7 USWC shall furnish to Customer on a monthly basis all information and
reports reasonably necessary for Customer (or Customer's Client(s)) to
file its tax returns, according to delivery schedules provided to USWC by
Customer, from time to time, that are mutually agreed upon by the
Parties. Such information and reports shall be in the format normally
used by USWC in the preparation of its own tax returns unless mutually
agreed otherwise. Customer (or Customer's Client(s)) shall file all
returns for all such Taxes with the applicable taxing authority and pay
or remit all such Taxes to the applicable taxing authority. USWC shall
have no responsibility for the filing of returns of payments of Taxes.
B.1 Taxes - Indemnity and Recourse: Customer (or Customer's Client(s)) shall
-------------------------------
be responsible for payment of all Taxes imposed on Services performed by
USWC under this Agreement, the cost of which were not part of the price
agreed upon for such Services under this Agreement. Should any Federal,
State or local jurisdiction determine that any such additional Taxes are
due by USWC as a result of USWC's performance of any obligation under
this Agreement, USWC will so advise Customer, allow Customer to
participate in the audit process regarding such issue, and secure
Customer's concurrence prior to making any remittance of said Tax to the
jurisdiction. Customer (or Customer's Client(s) agrees to be liable for
any such Tax, interest, penalties and surcharge, but retains the right to
protest the assessment. If Customer disagrees with any assessment of
Taxes due by USWC or disagrees with an assessment of any additional Tax
penalty, surcharge and interest due by USWC as a result of USWC's
performance of any obligation under this Agreement, Customer shall, at
its option and expense (including payment of any such assessment prior to
final resolution of the issue), have the right to seek a ruling as to the
applicability of any such Tax or to protest any assessment and
participate in any legal challenge to such assessment, but shall be
liable for any Tax, penalty, surcharge and interest ultimately determined
to be due. USWC shall, when requested by Customer and at Customer's
expense, cooperate or participate with Customer in any such proceeding,
protest or legal challenge.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
20
<PAGE>
B.2 Customer (or Customer's Client(s)) will indemnify, hold harmless, and
defend (at Customer's expense) USWC from and against any liability
resulting from any Taxes, penalties and interest, loss, cost, claim,
liability, damage, cause of action, or expense (including reasonable
attorney's fees) relating to or arising out of Customer's (or Customer's
Client(s)) failure (to the extent not attributable to a negligent act or
omission of USWC) to pay any Tax or file any return as required by law or
to comply with any applicable tax laws or regulations, or relating to
USWC's obligations concerning Taxes, including Taxes imposed directly on
USWC and relating to Customer's (or Customer's Client(s)) services, in
accordance with this Agreement. If Customer disagrees with an assessment
of any additional Taxes, penalty, addition to Tax, surcharge, or interest
due by USWC as a result of USWC's performance of any obligation under
this Agreement, or disagrees with a determination that an additional
charge is applicable to USWC's billing to Customer for Services under
this Agreement, Customer shall, at its option and expense (including, if
required by law, payment of any such assessment prior to final resolution
of the issue) have the right to seek administrative relief, a ruling,
judicial review (original and appellate level), or other appropriate
review (in a manner deemed appropriate by Customer), as to the
applicability of any such Taxes, penalties, interest or additional
charges, or to protest any assessment and direct any legal challenge to
such assessment, but shall be liable hereunder for any such amount
ultimately determined to be due. Notwithstanding the above, such
indemnity is conditioned upon USWC providing Customer notification (such
notification to be provided within five (5) business days of receipt by
USWC's Tax Department of said assessment) of any proposed assessment of
any additional Taxes, penalty or interest due with respect to this
Agreement. USWC shall, when requested by Customer and at Customer's
expense, cooperate or participate (but not control) with Customer in any
such proceeding, protest or legal challenge and if USWC's participation
is not requested by Customer, USWC may participate (but not control), at
its own expense, in any such proceeding, protest or legal challenge.
B.3 USWC agrees to indemnify, hold harmless, and defend at USWC's expense,
Customer from and against any liability or loss arising from additional
Taxes and interest (including reasonable attorney's fees) incurred by
Customer as a result of:
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
21
<PAGE>
B.3.1 the willful failure of USWC to provide Customer, pursuant to Section
XII hereof, accurate and complete information with which to file its
Tax returns and remit payment; or
B.3.2 the willful failure of USWC to accurately calculate and bill
appropriate Taxes pursuant to Section XII hereof.
B.4 USWC agrees to indemnify, hold harmless, and defend at USWC's expense,
Customer from and against any liability or loss arising from additional
penalties incurred by Customer as a result of:
B.4.1 negligent failure of USWC to provide Customer, pursuant to Section
XII hereof, accurate and complete information with which to file its
Tax returns and remit payment; or
B.4.2 the negligent failure of USWC to accurately calculate and bill
appropriate Taxes pursuant to Section XII hereof.
C.1 Taxes - Gross Receipts Taxes: As a supplier of billing and collection
----------------------------
services, USWC is billing Customer's (or Customer's Client(s)) revenues
for a specific fee. USWC shall not report these billings as its own
receipts for gross receipts tax purposes or any other tax purpose.
XIII. Purchase of Accounts Receivable
-------------------------------
USWC will purchase from Customer its accounts receivable that arise from
bills rendered by USWC to End Users. The purchase of accounts receivable
will be limited to Amounts Due Customer (as described in Exhibit B,
Section B.2) when USWC provides Services for Customer. USWC's purchase
of Customer's accounts receivable shall be with full recourse as set
forth in Exhibit B.
XIV. Limitations Period
------------------
No claim or demand under this Agreement, including demands made under
the arbitration section hereof, or any other demand or claim with
respect to this Agreement may be made or brought by either party more
than two years after the date of the event that gave rise to the demand
or claim except that: 1) the limitation period herein shall not apply to
claims for revenue due Customer from its End Users to the extent USWC
has collected and retained such revenue; 2) a demand or claim for
indemnification under
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
22
<PAGE>
this Agreement may be made or brought by a party for two years after the
accrual of the cause of action for indemnity; and 3) any claim in the
nature of fraud or concealment may be brought within two years of
discovery of the existence of such fraud or concealment.
XV. Term and Termination of Agreement
---------------------------------
A. This Agreement will become effective on the day written above and shall
continue through March 31, 1996, unless both parties mutually agree, in
writing, to terminate or renew this Agreement earlier.
XVI. Proprietary and Confidential Information
----------------------------------------
A. General Provisions: Designation of Proprietary Information. In
-----------------------------------------------------------
connection with the Services to be provided by USWC to Customer
hereunder, USWC and Customer may find it necessary or beneficial for a
party to disclose to or receive from the other party, specifications,
files, drawings, data, records, reports, computer programs or other
technical and business information ("Proprietary Information") which the
disclosing party considers proprietary and confidential.
1. For the purpose of this Agreement the following shall be Proprietary
Information of the disclosing party:
a. All traffic and usage data internally generated by Customer or
its Clients or USWC in the normal conduct of providing services,
e.g., exchange access, information access or other
telecommunications or information services.
b. Except as otherwise specifically provided for in this Agreement,
all tools and materials including, but not limited to, software,
files, data bases, design documents and reports used by the
disclosing party to produce data pursuant to this Agreement.
2. For the purpose of this Agreement the following shall be Proprietary
Information of USWC:
a. All End User account information except account information that
Customer purchases from USWC under a separate agreement.
b. All information associated with USWC-owned public telephones.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
23
<PAGE>
3. For the purpose of this Agreement the following shall be Proprietary
Information of Customer:
a. Any lists that Customer may provide to USWC that contain the
names of Customer's Clients.
B. Protection of Proprietary Information. With respect to Proprietary
-------------------------------------
Information provided to the receiving party under this Agreement, the
receiving party agrees to:
1. hold the Proprietary Information in confidence and to protect it to the
same degree it protects its own proprietary and confidential
information;
2. restrict disclosure of the Proprietary Information solely to those
employees, contractors and agents of the receiving party (and its
affiliates) with a need to know, and not disclose it to any third
party; provided, however, that Customer may disclose Client's own End
User Account Information to its Client that provided services to the
End User;
3. those employees, contractors and agents of their obligations with
respect to the Proprietary Information; and
4. use the Proprietary Information only for the purposes of this
Agreement, except as may otherwise be mutually agreed upon in writing.
Each party acknowledges that in the performance of Services hereunder,
a party's Proprietary Information may be commingled with Proprietary
Information of the other party or with the Proprietary Information of
third parties. Accordingly, the parties shall, to the extent
practicable, use good faith efforts to ensure that such Proprietary
Information shall be masked or rendered mechanically inaccessible to
other party. However, there may be instances in which efforts to mask
or screen such Proprietary Information are impracticable, or in which
disclosure is inadvertent. In such instances, the receiving party will
neither use or disclose the Proprietary Information except as required
to fulfill its obligations pursuant to this Agreement.
C. Information Not Subject to Section XVI. The receiving party shall have no
--------------------------------------
obligation to preserve the proprietary nature of any information which:
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
24
<PAGE>
1. was previously known to the receiving party free of any obligation to
keep it confidential, or
2. is disclosed to third parties by the disclosing party without
restriction, or
3. is or becomes publicly available by other than unauthorized
disclosure, or
4. is independently developed by the receiving party, Information shall
not be deemed to be in the public domain or in the receiving party's
possession or knowledge merely because such information is embraced by
more general information in the public domain or in the receiving
party's possession or knowledge.
D. Requests for Information. In the event either party is requested or required
(by oral question, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar legal process) to disclose
Proprietary Information of the other, or Client, to any lawfully constituted
authority, it is agreed that the party requested or required to furnish the
Proprietary Information will provide the other party with timely notice in
order for that party to seek a protective order. To avoid the administrative
burdens associated with such advance notice of protective arrangements,
either party may respond to routine Customer requests, legal process or
lawful demand involving the disclosure of Proprietary Information. A party
may disclose or provide Proprietary Information of the other party to
implement, effect and enforce the party's tariffs or to meet the
requirements of a court, regulatory body or government agency having
jurisdiction over the party; provided that, the party making the disclosure
shall notify the other party so as to give that party a reasonable
opportunity to object to such disclosure. A party may not unreasonably
withhold approval of protective arrangements provided by any such court,
regulatory body or government agency. Nothing in this Section requires
either party to support or not support the position of any person or entity
on the issue of whether any particular Proprietary Information is
proprietary under applicable law or this Agreement.
E. The provisions of this Section XVI shall survive the termination of this
Agreement, and, at the same time of termination, the receiving party shall,
if practicable and
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
25
<PAGE>
upon request, return the Proprietary Information of the disclosing party
which is in tangible form.
XVII. Force Majeure
-------------
A. Neither party shall be held liable for any delay or failure in
performance of any part of this Agreement from any cause beyond its
control and without its fault or negligence, such as acts of God, acts of
civil or military authority, government regulations, embargoes,
epidemics, war, terrorist acts, riots, insurrections, fires, explosions,
earthquakes, nuclear accidents, floods, strikes, power blackouts,
volcanic action, other major environmental disturbances, unusually severe
weather conditions, inability to secure products or services of other
persons or transportation facilities, or acts or omissions of
transportation common carriers (collectively referred to as "Force
Majeure Conditions").
B. If any such Force Majeure Condition occurs and results in a delay or
failure in performance of any part of a party's obligations under this
Agreement for more than sixty (60) calendar days, the other party may, by
written notice given to the party whose performance was delayed or who
failed to perform, immediately terminate that part of this Agreement that
shall be affected by such delay or failure to perform, without penalty.
XVIII. Default
-------
A. In addition to all other rights and remedies provided herein or at law or
equity, either party shall have the right to cancel this Agreement in
whole or in part, without any further obligation to the other (excepting
obligations incurred prior to the effective date of cancellation) if the
other party is in breach or default of this Agreement and such breach
continues for thirty (30) days after written notification.
B. Customer's failure to perform any of its obligations under this Agreement
including, but not limited to, any representation or warranty made by
Customer herein that is misleading or materially inaccurate shall be
deemed to be a default.
C. A Party may cure a material breach by taking all of the following steps:
(1) notifying the nonbreaching party, in writing, that the breaching
party wishes to cure the breach and continue the Agreement; (2)
terminating any breaching acts, omissions, or behaviors; (3) correcting
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
26
<PAGE>
any existing breaches including, but not limited to, paying any charges
due under this Agreement; and (4) providing security reasonably
satisfactory to the nonbreaching party, (which may or may not include the
provisions set forth in Section V.) for example, a performance bond in an
appropriate amount. Any material breach must be cured expeditiously and
within the thirty (30) day notice period.
XIX. Amendments: Waivers
-------------------
This Agreement or any part thereof or any Exhibits hereto or documents
referred to herein may be modified or additional provisions may be added
by written agreement signed by or on behalf of both parties. No amendment
or waiver of any provision of this Agreement and no consent to any
default under this Agreement shall be effective unless the same shall be
in writing and signed by or on behalf of the party against whom such
amendment, waiver or consent is claimed. In addition, no course of
dealing or failure of any party to strictly enforce any term, right or
condition of this Agreement shall be construed as a waiver of such term,
right or condition.
XX. Assignment
Any assignment by either party or any right, obligation or duty, in whole
or in part, or of any other interest hereunder, without the written
consent of the other party, which shall not be unreasonably withheld,
shall be void; provided however, that such consent is not required from
Customer when the proposed assignment is to be made to any parent,
subsidiary of parent, affiliate or successor of USWC. All obligations and
duties of any party under this Agreement shall be binding on all
successors in interest and assigns of such party.
XXI. Notice and Demands
------------------
Except as otherwise provided under this Agreement, all notices, demands,
or requests which may be given by any party to the other party shall be
in writing and shall be deemed to have been duly given on the date
delivered in person or deposited, postage prepaid, in the United States
mail, and addressed as follows:
Notice
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
27
<PAGE>
To Customer:
------------
Mark Stodter
Telco Development Group of Delaware
4219 Lafayette Center Drive
Chantilly, Virginia 22021
To USWC
Sam Radetsky
U S WEST Communications, Inc.
1801 California, Room 2110
Denver, Colorado 80202
If personal delivery is selected as the method of giving notice under
this section, a receipt of such delivery shall be obtained. The address
to which such notices, demands, requests, elections or other
communications is to be given by either party may be changed by written
notice given by such party to the other party pursuant to this Agreement.
XXII. Third-Party Beneficiaries
-------------------------
This Agreement shall not provide any person not a party to this
Agreement, specifically including, but not limited to, Customer's
Clients, with any remedy, claim, liability, reimbursement, claim of
action or other right in excess of those existing without reference to
this Agreement.
XXIII. Governing Law
-------------
This Agreement shall be governed by the substantive laws of the State of
Colorado.
XXIV. Confidential Status
-------------------
The parties acknowledge that this Agreement contains commercially
confidential information which may be considered proprietary by either or
both parties, and agree to limit distributions of the Agreement to those
individuals in their respective organizations with a need to know the
contents of the Agreement. Customer may, however, use the terms of this
Agreement in its contracts with its Clients provided that such contracts
incorporate the same confidentiality provisions of this Section XXIV. The
parties further agree to seek commercial confidential status for the
Agreement with any regulatory commission
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
28
<PAGE>
with which the Agreement must be filed to the extent such a designation
can be secured.
XXV. Lawfulness of Agreement
-----------------------
This Agreement and the parties' actions under this Agreement shall comply
with all applicable federal, state, and local laws, rules, regulations,
court orders, and governmental agency orders. If a court or a
governmental agency with proper jurisdiction determines that this
Agreement, or a provision of this Agreement is unlawful, this Agreement
or that provision of this Agreement, shall terminate. If a provision of
this Agreement is so terminated but the parties legally, commercially,
and practicably can continue this Agreement without the terminated
provision, the remainder of this Agreement shall continue in effect.
XXVI. Entire Agreement
----------------
This Agreement and any Exhibits, Attachments or Schedules attached
hereto, constitute the entire understanding between the parties and
supersede all prior understandings, oral or written representation,
statements, negotiations, proposals and undertakings with respect to the
subject matter hereof.
XXVII. Headings
The headings in this Agreement are for convenience and shall not be
construed to define or limit any of the terms herein or affect the
meaning or interpretation of this Agreement.
SIGNATURE PAGE FOLLOWS
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
29
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first written above.
TELCO DEVELOPMENT GROUP U S WEST COMMUNICATIONS, INC.
OF DELAWARE
By: /s/ Bryan Rachlin By: /s/ C. E. Osborn
------------------------ -------------------------
Printed Name: Bryan Rachlin Printed Name: C. E. Osborn
--------------
Title: President Title: Vice President-Diversified
---------------- Carrier Markets
Date: 3/27/95 Date: 3-28-95
----------------- --------------------------
MALHEUR HOME TELEPHONE COMPANY
By: /s/ James C. Jensen
----------------------------
Printed Name: James C. Jensen
------------------
Title: President
-------------------------
Date: 04/17/95
--------------------------
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
30
<PAGE>
EXHIBIT A
BILLING AND COLLECTION SERVICES
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
31
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
SECTION PAGE
- ------- ----
<S> <C>
Definitions 33
General
- -------
General Terms and Conditions 35
Services
- --------
I Custom Request 36
II Message-Based Billing 37
III Non-Message Based Billing 40
IV End User Account Activity 41
V Ancillary 42
VI Message Investigation 43
VII Billing Analysis 44
VIII Billing Information 47
IX Media Provisioning 48
X Consulting 50
</TABLE>
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
32
<PAGE>
DEFINITIONS
Accounts Receivable
- -------------------
An account evidencing a legally enforceable right to payment for services,
rendered by Customer, or its Clients, and lawfully billed as charges on the USWC
End User bill.
Adjustments - End User
- ---------------------
End User Adjustments are issued to debit or credit lawfully billed charges on
the End User bill.
AMA
- ---
Automatic Message Accounting (AMA) is the process of capturing and storing the
basic billing details of messages on magnetic tape.
Billing Evasion
- ---------------
Actions with the intent to circumvent or evade the proper charges, in whole or
in part, resulting from telecommunications services.
Billing Service Charges
- -----------------------
USWC's charges to Customer for each of the Services provided for under this
Agreement.
CARE/ISI
- ---------
Customer Account Record Exchange/Industry Standard Interface (CARE/ISI) is a
current nationally standard format for providing data in a mechanized mode.
Casual Use Call
- ---------------
An End User call originated by dialing 10XXX.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
33
<PAGE>
DEFINITIONS
(continued)
End User
- --------
When End User is used throughout this Agreement, it shall be identified by one
or more of the following elements:
1) Account level.
The End User has selected one of Customers' Clients as its primary
interexchange carrier at the account level for one or more working lines,
or has designated Customer's Client as such by allocation or other process.
2) Line level.
The End User has selected one of Customers' Clients as its primary
interexchange carrier at the individual line level, or has designated
Customer's Client as such by allocation balloting process .
3) Casual Use.
An End User who occasionally makes a call, via one of Customers' Clients,
by dialing 10XXX or other dialing pattern is considered an End User at the
account level for a single line account and at the line level for a
multiline account.
End User Bill Date
- ------------------
The date which appears on the End User bill.
Exchange Message Interface (EMI)
- -------------------------------
An industry standard format used for the exchange of message data between
Customer and USWC for the purpose of applying debit or credit amounts to the End
User accounts.
Implementation Date
- -------------------
The date which USWC is capable to begin processing Customer's data.
Individual Case Basis (ICB)
- ---------------------------
A non-standard Services offering for which no fixed recurring or non-recurring
charge has been set.
Treatment and Collection of End User Accounts
- ---------------------------------------------
Activities performed to collect End User amounts due billed by USWC on behalf of
Customer.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
34
<PAGE>
GENERAL TERMS AND CONDITIONS
----------------------------
USWC offers numerous services listed in this Exhibit A. USWC will provide only
those services which Customer has ordered and which are listed in Exhibit C.
Customer may request additional services pursuant to Section XIX of this
Agreement.
Customer may request modifications to the basic services described herein;
however, such modifications shall be in accordance with the Custom Request
Services.
Services and prices were established assuming standard implementation as
determined by USWC. A Customer may request Services that are not specifically
addressed in this description or may request modification to the Services
described, such requests are commonly referred to as "Custom Requests". Custom
Requests will be reviewed to determine the feasibility of implementing the
requested service or modification, see page A-1. In such cases where USWC agrees
to fulfill the Customer's request, the specific terms, conditions and prices
will be determined on an individual case basis (hereinafter referred to as
"ICB") with each Customer and included in the Agreement and/or Agreement
addenda.
All rights, title and interest in and to all designs, studies, plans,
specifications, programs and software developed for a Custom Request Service is
and shall remain the property of USWC. Customer and its Clients obtain no
ownership rights to such "material" or the software or documentation developed
as a result of its work on a Custom Request.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
35
<PAGE>
I. CUSTOM REQUEST SERVICE
Description
- -----------
Custom Request Service is the provision of new products, services or changes to
existing products or services in response to a Customer's request and for which
no standard price has been established. All Custom Requests will be reviewed by
USWC to determine the feasibility of implementing the request and USWC reserves
the right to deny any request. Where USWC agrees to provide the Custom Request
Service, an estimate will be prepared based upon user needs document and/or
specifications supplied by Customer. USWC, at the request of Customer, may
prepare the user needs documents and/or specifications at prices set forth in
the Consulting Service.
The estimate will include prices for non-recurring (developmental) and, if
applicable, recurring prices. The costs used in developing price estimates
include, but are not limited to; machine time, programming (coding), system
design, system development, project system testing, business office methods and
procedures development, order writer training, service representative training,
miscellaneous hardware requirements (e.g. disks, tape, cartridges, computer
ports, etc.).
USWC will process Customer's (or Client's) End User credit amount(s) as
described in Exhibit E, The Provision of Billing and Collection Services of EMI
Credit Records.
Scheduling of actual implementation date for Customer's Custom Request is
dependent upon USWC's overall scheduling load and upon Customers approval of
USWC'S estimate. Upon provision of a price estimate, changes to the
specifications may require a revised specifications document and may result in a
new price estimate and/or implementation date.
Price Application and Provisioning Parameters
- ----------------------------------------------
1. The prices used to establish the Custom Request Service will be developed
on an ICB. The price estimate provided to Customer will be valid for a
period of thirty (30) days from the date of the written estimate.
2. A non-recurring charge is applied for each EMI credit record/message type
for which Customer orders.
Notice
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
36
<PAGE>
II. MESSAGE BASED BILLING SERVICE
Description
- -----------
USWC will provide Message Based Billing Service on the condition that USWC
purchases the Accounts Receivable with a provision for uncollectible recourse.
USWC reserves the right to reject any messages that are submitted to USWC ninety
(90) days or later after the date of message and will return such messages to
Customer as unbillable messages.
A. Bill Processing is the preparation of billing data to be included on the
---------------
End User bill. Bill Processing includes toll master file processing,
posting of rated messages and rate elements, maintenance of accounts, and
pre billing unidentified message investigation.
1. MTS Message-Billed Processing is a billing service for an End User
-----------------------------
account where individual messages or groups of messages are posted to
the account and listed on the bill rendered to the End User.
2. Bulk Message-Billed Processing is a billing service for an End User
------------------------------
account having a WATS access line or WATS-type service access line
where individual messages are NOT posted to the account and NOT listed
on the bill rendered to the End User. A bulk-billed message is a
Customer message which is used to develop Customer bulk-billed charge.
B. Bill Rendering is the preparation of the bill, maintenance of the End User
--------------
data base, performing purchase of accounts receivable settlements, mailing
of the bill to the End User, processing payments, and collection services.
C. Call Handler Labeling is the printing of the name of Customer's Client on
---------------------
the End User bill identifying Client as the carrier handling the End User
call with traffic separated by line number.
D. Inquiry Service is the handling of telephone calls or correspondence from an
---------------
End User(s) regarding charges billed for the Customer's Clients' service.
Inquiry Service also includes the application of credits and adjustments to
End User accounts. If Customer purchases Standard Inquiry Service and the
End User refuses to pay certain sustained charges, USWC will not knowingly
adjust these charges
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
37
<PAGE>
Confidential Treatment Requested. The
redacted material has been separately
filed with the Commission.
without prior notification to Customer. If Customer purchases Limited
Inquiry Service and the End User refuses to pay certain sustained charges,
USWC may adjust these charges without prior notification to Customer.
Customer may change its selection for Inquiry Service with written notice
to USWC on or before October 1st of each calendar year. Such change will be
effective January 1st of the following year.
E. NonStandard Data Entry is the transforming of a non-standard message into
----------------------
Exchange Message Interface (EMI) format (industry standard) in order to
process. It includes editing and verification that required data is
present.
Price Application and Provisioning Parameters
- ---------------------------------------------
1. Bill Processing charges apply on a per message basis.
2. Non-Standard Data Entry charges apply on an individual case basis (ICB). (If
Customer provides USWC messages in EMI format this charge does not apply.)
3. Customer must elect either Option 1 or Option 2 for MTS Services as follows:
OPTION 1, Bill Processing charges apply on a per message basis by state on a
monthly basis. The rate of (*) will be applied in each state when
Customer submits (*) average messages per bill. The rate of (*) will
apply in each state when Customer submits 14.5 or more average messages per
bill. At the end of each calendar year, USWC will take a composite average
of messages per bill and will apply the applicable rate described above. If
this results in a more favorable rate to Customer than the actual charges
billed, Customer will receive the benefit of the lower rate. Message Bill
Processing shall be provided only if Customer purchases Bill Rendering. The
Bill Rendering charge is applied on a per bill basis.
OPTION 2, the Bill Processing rate of (*) will be applied on a per
--------
message basis. Bill Processing includes charges for Bill Rendering for
Option 2 only.
3. Bill Processing shall only be provided if Customer purchases Bill Rendering.
The Bill Rendering charge is applied on a per bill basis. If all prefixes
contained in a billing period are to be rescheduled, USWC will notify
Customer in a timely manner of such rescheduling.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
38
<PAGE>
Confidential Treatment Requested. The
redacted material has been separately
filed with the Commission.
4. The charge for Bill Rendering always includes Bill Production plus Data
Base Maintenance unless Data Base Maintenance is purchased under Account
Maintenance Service (see Ancillary Services).
5. A set up charge for Call Handler Labeling is applied to establish this
service and a charge for each table update is applied per occurrence.
6. When rated message detail is data-transmitted to or received from an
exchange telephone company or a Customer location a charge for the
transmission in addition to the charge for the record will apply.
7. When rated message detail is entered on magnetic tape to be provided to a
Customer the per tape charge applies for each tape and the per message
charge applies for each message processed.
8. USWC shall perform Inquiry Service pursuant to its Inquiry Guidelines.
Customer may elect either Limited or Standard Inquiry Service. The rate for
Inquiry Service is applied on a per message basis.
9. USWC shall perform collection services pursuant to its current treatment
and collection procedures.
10. Customized billing charges will be determined on an (*).
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
39
<PAGE>
Confidential Treatment Requested. The
redacted material has been separately
filed with the Commission.
III. NON-MESSAGE BASED BILLING SERVICE
Description
- -----------
USWC will provide Non-Message Based Billing Services for Customer's (or
Client's) MTS, excluding any non-MTS, as those terms are described in Section 1
of this Agreement. Further, USWC will provide Non-Message Based Billing Services
on the condition that USWC purchase the Accounts Receivable with a provision for
uncollectible recourse.
Non-Message Based Billing Service includes:
a. Bill Rendering includes editing and rating, rendering of bills, receiving
--------------
payments, maintenance of accounts and collection services.
b. Inquiry Service is the handling of telephone calls or correspondence from an
---------------
End User(s) regarding charges billed for the Customers' Clients' service.
Inquiry Service also includes the application of credits and adjustments to
End User accounts. USWC will provide Inquiry Service only on the condition
that Customer purchases Non-Message Based Bill Rendering.
Price Application and Provisioning Parameters
- ---------------------------------------------
1. Bill Rendering charge applies per bill rendered.
2. For Non-Message Based Bill Rendering an End User account is a Customer
record which has a unique name and address and billing number identification
assigned by USWC to which a Non-Message Based Bill is rendered.
3. If all prefixes contained in a billing period are to be rescheduled, USWC
will notify Customer in a timely manner prior to such rescheduling.
4. When ordered by Customer, Inquiry charges apply per bill rendered.
5. USWC shall perform collection services pursuant to its current treatment and
collection procedures.
6. Customized billing charges will be determined on an (*).
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
40
<PAGE>
IV. END USER ACCOUNT ACTIVITY SERVICE
(This service is optional and may be purchased as needed)
Description
- -----------
End User Account Activity Service provides Customer the ability to add, change,
or delete information and/or receive a status on its Clients' End Users'
accounts.
There are three (3) general categories of service associated with End User
Account Activity: Service Order, Transmittal and Adjustment.
A. Service Order
-------------
1. Residence: a service order generated on a residence End User's account
----------
requested as a result of Customer placing a call to a USWC designated
customer service location.
2. Business: a service order generated on a business End User's account as
--------
a result of Customer placing a call to a USWC designated customer
service location.
B. Transmittal
-----------
1. Residence: a transmittal processed on a residence account as a result
---------
of a written or mechanically transmitted request from Customer to a
USWC designated customer service location.
2. Business: a transmittal processed on a business account as a result of
--------
a written or mechanically transmitted request from Customer to a USWC
designated customer service location.
C. Adjustment: issuance of an End User adjustment at the direction of Customer
----------
on Customer's Clients business or residence End User account.
Price Application and Provisioning Parameters
- ---------------------------------------------
1. For each service order and transmittal processed, the per unit charge
applies. An End User adjustment charge applies for each adjustment
processed.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
41
<PAGE>
V. ANCILLARY SERVICES
(This service is optional and may be purchased as needed)
Description
- -----------
Ancillary Services are additional products that enhance the primary
billing and collection services. Ancillary Services include Marketing Message
and Account Maintenance.
A. Marketing Message is a message containing one (1) to ten (10) lines of
-----------------
information/advertisement on Customer's Detail of Charges page of the End
User's bill. Marketing Message will be printed only when Customer's toll is
present. Messages shall be reviewed by USWC's legal and public policy staff
for approval. This product is not available in all locations.
B. Account Maintenance includes: (1) Maintenance of USWC's billing system data
-------------------
base for internal business use by Customer. Request for use of this service
for any other purpose will be evaluated by USWC to determine if such request
will be offered for said purpose and the price will be negotiated and (2)
Marking of a particular End User account within USWC's billing system at the
specific request of Customer.
Price Application and Provisioning Parameters
- ---------------------------------------------
1. Marketing Message is available only to Customers who purchase Bill Rendering
from USWC. Account Maintenance is available to Customers who do not purchase
Bill Rendering.
2. Marketing Message set-up charge applies for each message requested. The per
unit charge applies per bill containing the message.
3. Account Maintenance includes an ICB setup charge for Marking.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
42
<PAGE>
VI. MESSAGE INVESTIGATION SERVICES
(This service is optional and may be purchased as needed)
Description
- -----------
Upon request of Customer, USWC will provide Message Investigation Services for
those messages specifically identified by Customer. The Message Investigation
group will investigate and review post billed messages to determine proper
billing and identify suspected fraud.
Price Application and Provisioning Parameters
- ---------------------------------------------
There is no minimum period for which Customer must order Message Investigation
Services.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
43
<PAGE>
VII. BILLING ANALYSIS SERVICE
(This service is optional and may be purchased as needed)
Description
- -----------
Billing Analysis Service provides for the detection, investigation, and
deterrence of billing evasion activities. USWC can further provide services such
as consultation, advice and training on handling billing evasion.
A. Detection
---------
The provision of services to identify and report to Customer any suspected
billing evasion activities involving the use of its Clients' telephone
facilities.
B. Investigation
-------------
The provision of services to collect evidence and document billing evasion
activities. It includes the service to coordinate the investigative
activities between Customer and law enforcement agencies.
Investigation is also the provision of services to investigate and obtain
restitution for billing evasion activities. It includes, but is not
restricted to, calling card fraud, third number billing fraud, remote
access fraud, and theft of service by wire.
C. Deterrence
----------
The provision of services to 1) contact and interview parties identified in
billing evasion activities, 2) recover devices or materials used in billing
evasion activities, in accordance with legal process, 3) review service for
possible suspension of service over Customer's Clients' access lines
identified in billing evasion activities, and 4) assist in publicizing
billing evasion deterrence.
D. Consultation
------------
USWC has security personnel available to advise Customer on any aspect of
an investigation. These services may include advice on conducting assorted
types of interviews, using information furnished by the Message
Investigation Center, providing general advice on an investigation that is
stalemated.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
44
<PAGE>
E. Training
--------
USWC provides training to Customer representatives on various aspects of
billing analysis.
F. Miscellaneous Charges
---------------------
Miscellaneous charges incurred by USWC on behalf of Customer such as out-
of-pocket expenses for travel shall be charged to Customer.
Price Application and Provisioning Parameters
- ---------------------------------------------
1. Detection
---------
Detection charges associated with the Continuous Scan and the Documentation
Scan include only the cost of attaching and operating the appropriate
equipment. The Continuous Scan provided will be charged on a per office per
week basis. The Documentation Scan provided will be charged on a per line
per occurrence basis.
Reports produced by USWC are secured, protected, and reviewed only with
those with a need to know and delivered to the authorized Customer security
representative in a mutually agreed upon manner and on a mutually agreed
upon schedule.
Reports produced by USWC for Customer and the information contained on
reports will remain the property of Customer. Copies may be provided to the
authorized Customer security representative but will not be released to any
other person or company without the consent of Customer security
representative except under legal process. Customer agrees that the reports
and the information contained therein shall be used for investigative
purposes only.
The minimum period for Detection Service for which charges shall apply will
be determined on an ICB.
2. Investigation
-------------
Investigative Service charges include the analyzation and preparation of
the reports generated from Detection Service as well as from any other
investigative means. All Investigative Services shall be charged on a per
hour basis with the exception of Preservation of Evidence which shall be
charged on a per week basis.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
45
<PAGE>
3. Deterrence
----------
Deterrence Services shall be charged on a per hour basis.
4. Consultation
------------
Consultation shall be charged on a per hour basis.
5. Training
--------
Training shall be charged on a per hour basis.
6. Miscellaneous Charges
---------------------
Miscellaneous Charges shall be charged on an ICB.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
46
<PAGE>
VIII. BILLING INFORMATION SERVICE
(This service is optional and may be purchased as needed)
Description
- -----------
Billing Information Service is the provision of information to Customer from
USWC End User records, billing files and account data bases. USWC will provide
Billing Information Services as mutually agreed upon between Customer and USWC.
Information is defined as any entry in the records or data bases which is not
identified as proprietary to USWC or to another entity for which USWC provides
Services. An entry that is proprietary to any other entity will not be provided.
An entry listed as proprietary to USWC will be protected by USWC.
Information may include but is not necessarily limited to the following:
- Customer's Clients message detail for an End User message.
- Account detail for an End User.
- Customer's service and equipment detail for an End User.
Price Application and Provisioning Parameters
- ---------------------------------------------
1. When Billing Information Service is requested by Customer, USWC will
determine on an ICB its capability to meet the request.
2. Charges may include, but are not limited to:
a. A non-recurring charge for hours required to define, design, develop,
test and maintain the necessary programs (see Exhibit C, I.).
b. Recurring charges for the ongoing provision of the requested data.
c. Recurring charges for media provisioning.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
47
<PAGE>
IX. MEDIA PROVISIONING SERVICE
(This service is optional and may be purchased as needed)
Description
- -----------
Media Provisioning is the transfer of data between USWC and Customer's primary
location or a location designated by Customer. The data will be provided in an
industry standard format e.g., EMR/EMI or CARE/ISI.
Media Provisioning includes:
A. Magnetic Tapes which USWC creates to send to Customer, or its designee,
--------------
will be furnished in the following standards:
- Standard IBM/OS header and trailer
- 9 track 6250 or 1600 BPI
- EBCDIC character set
- Odd Parity
B. Cartridges will be created by USWC for Customer or its designee. Cartridges
----------
utilize IBM 3480 technology with the following standards:
- Standard IBM/OS header and trailer
- 18 track: 38,000 BPI
- EBCDIC character set
Cartridges which are produced for sending to Customer will be mailed via
U.S. Mail.
C. Data Transmission is the exchange of data between USWC and Customer or its
-----------------
designees via facilities furnished and/or paid for by USWC.
D. Delivery for Media Provisioning will be via U. S. Mail except for that
--------
which is delivered via data transmission. Special requests, such as
overnight delivery by USWC to Customer, shall be charged to Customer on an
ICB.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
48
<PAGE>
Price Application and Provisioning Parameters
- ---------------------------------------------
1. A per tape charge shall apply regardless of the amount of data contained on
the magnetic tape. If Customer wants the tape and reel returned, USWC will
send it COD via regular U.S. mail. The same parameters that apply for
Magnetic Tapes apply to Cartridges.
2. Data Transmission charges are applied on a per record basis for data
exchanged when USWC provides the dedicated or dial-up facilities. This
applies on both an incoming and outgoing basis, e.g., messages for billing
that USWC sends and/or receives via the Centralized Message Data System
(CMDS) network. If the facilities are provided and/or paid for by Customer,
the Data Transmission charge does not apply.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
49
<PAGE>
X. CONSULTING SERVICE
(This service is optional and may be purchased as needed)
Description
- -----------
Consulting Service is the professional and/or technical advice provided to
Customer. This service may include, but is not limited to; education classes,
assistance in business activities, assistance in the preparation of a user needs
document, development and coordination of user specifications or for other such
needs.
Price Application and Parameters
- --------------------------------
1. Consulting service charges are based on a level of expertise required as
determined by USWC. Services rendered may include, but are not limited to;
Support (Clerical), Subject Matter Expertise, Technical Support, and Travel
Expenses.
2. The per hour charge applies for the work performed during normal work
schedule and at any location.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
50
<PAGE>
EXHIBIT B
ACCOUNTS RECEIVABLE
SETTLEMENT TERMS
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN9411180011
BCCA-TELCO DEVELOPMENT GROUP
51
<PAGE>
ACCOUNTS RECEIVABLE
SETTLEMENT TERMS
Definitions
- -----------
Accounts Receivable: An account evidencing a legally enforceable
right to payment for services rendered by
Customer, or its Clients, and lawfully billed
as charges on the USWC End User Bill.
Customer Uncollectible Factor: A percentage, developed from a ratio of
Customer's historical written-off final
account uncollectibles to the total of
billed revenues, taxes, adjustments and
rebilled amounts used to estimate Customer's
actual uncollectibles written-off on final
bills.
Lag Study: A study which determines the average time
from the End User bill date to when End User
remits payment.
Purchase of Accounts Receivable The statement sent to Customer each month by
Settlement Statement: USWC summarizing the amount due Customer or
USWC for the Purchase of Accounts Receivable
settlement.
Realized Final Account
Uncollectibles: Actual uncollectible amounts written-off
Customer End User final bills for failure of
the End User to pay lawfully billed charges.
Total Billed Revenues: The billed revenues for all messages, plus
total billed taxes, plus or minus total
applied correct charges and uncollectible post
billing adjustments and associated tax.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
52
<PAGE>
Uncollectible Bad Debt An amount withheld from the settlement as an
Allowance: uncollectible reserve to offset future actual
uncollectible amounts written-off Customer's
End User final bills.
Uncollectible True-Up: An amount calculated on a quarterly basis
that is equal to the difference between the
estimated Uncollectible Bad Debt Allowance,
deducted on the Purchase of Accounts
Receivable Statements, and actual Realized
Final Account Uncollectibles.
Weighted Average A single date during a settlement month which
Payment Date: indicates the date that all Customer message
revenues were calculated as having been
received and processed by USWC. The
calculation is based on actual revenue and
process dates of individual tapes or
transmissions.
Section 1. General
-------
1.2 In connection with providing Services to Customer under this
Agreement, USWC agrees to purchase the accounts receivable of
Customer as set forth in this Exhibit B. For purposes of this
Exhibit B, the provisions of Article I.B. of this Agreement shall
apply; whereby, all purchase of accounts receivable settlement
functions, described in this Exhibit B. will be provided to and
identified by Customer only.
1.2 At the option of USWC, USWC reserves the right to reformat
reports, with respect to Customer's Accounts Receivable statement.
Section 2. Calculation of Amount Due Customer/ USWC
----------------------------------------
2.1 Subject to the provisions of Section VI of this Agreement, USWC will
calculate the Amount Due Customer or USWC in the
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
53
<PAGE>
Purchase of Accounts Receivable ("PAR") settlements each month under this
Agreement, using the following formula:
A + B + (-) C + (-) D (-) E + (-) F = G
G - H + (-) I + (-) J + (-) K = L
Amount Due Customer/USWC = L
Where:
A. NET BILLABLE REVENUE:
The calculation of the amount of revenue received that is eligible to
be billed (net billable revenue) by USWC. Net Billable Revenue is
calculated by subtracting Unbillable Revenue Returned (those messages
that fail USWC edits) from Gross Message Revenue Received.
B. REBILLED REVENUE:
The amount of previously billed and adjusted revenue rebilled to
another End User during the settlement period.
C. OTHER OPERATING REVENUE BILLED:
The amount of revenue billed during the settlement period other than
toll revenues or expanded billing service revenues. Certain taxes are
considered Other Operating Revenue.
D. BILLED TAXES:
The amount of federal, state and local taxes billed by USWC on behalf of
Customer during the settlement period.
E. END USER BILLING ADJUSTMENTS:
The amount of billing adjustments (and associated tax adjustments)
applied to End User accounts during the settlement period. These
adjustments are recoursed back to Customer.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
54
<PAGE>
F. PRIOR PERIOD SETTLEMENT ADJUSTMENTS:
The amount added to or subtracted from the current month's Purchase
of Accounts Receivable (PAR) Settlement Statement relating to changes
to the previous month's PAR Statement(s).
G. SUBTOTAL:
The sum of Net Billable Revenues (Line A), Rebilled Revenue (Line B),
Other Operating Revenue Billed (Line C), Billed Taxes (Line D), End
User Billing Adjustments (Line E) and Prior Period Settlement
Adjustments (Line F).
H. UNCOLLECTIBLE BAD DEBT ALLOWANCE:
The amount withheld to offset future realized written-off uncollectible
amounts on End User accounts. The Uncollectible Bad Debt Allowance
amount is calculated by multiplying Line G. Subtotal, by the appropriate
uncollectible factor. (refer to Section 4.2). If Line G is a negative
amount the Uncollectible Bad Debt Allowance will be zero (0).
I. UNCOLLECTIBLE TRUE-UP AMOUNT:
This reflects the quarterly true-up of the difference between previously
deducted amounts on Line H. Uncollectible Bad Debt Allowance and
subsequently realized written-off uncollectible amounts on End User
accounts including the appropriate amount of interest (refer to Section
5.5.1). This Uncollectible True-up will be included on the Purchase of
Accounts Receivable Statement for January, April, July and October
settlements.
J. LATE PAYMENT CHARGES:
The amount due Customer or USWC for late payment penalties associated
with Purchase of Accounts Receivable Statement settlement transactions.
K. MISCELLANEOUS:
The amount of any adjustments or charges to which an Uncollectible
Bad Debt Allowance factor would not apply.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
55
<PAGE>
L. AMOUNT DUE Customer/USWC:
The amount due Customer or USWC for the settlement period. It is
calculated by netting the PAR Statement Subtotal (Line G),
Uncollectible Bad Debt Allowance (Line H), Uncollectible True-up
Amount (Line I) and any Late Payment Charges (Line J) and any
Miscellaneous (line K). A negative amount would indicate the amount
Customer owes USWC.
2.2 One (1) monthly settlement will be performed in each USWC Territory after
the closing of the journal month in each of those locations.
2.3 In the event that a PAR settlement for a month yields a negative Amount
Due Customer, USWC will net that amount against any amounts due Customer
from other USWC Territories for the same settlement period. In the event
that a PAR settlement yields a negative Amount Due Customer for two (2) or
more consecutive PAR settlements over all USWC Territories, Customer shall
make payment to USWC for the full amount of all outstanding PAR
settlements pursuant to Section 6.
2.4 USWC reserves the right, at its sole discretion, to deduct (net) any
amounts past due and owing USWC for any Services provided to Customer,
from any funds or proceeds due Customer from USWC, from the accounts
receivable settlements.
Section 3. Recourse Adjustments
--------------------
3.1 USWC's purchase of Customer's Accounts Receivable shall be with full
recourse to the extent expressly provided under the terms of this
Agreement. Recourse Adjustments are Customer End User adjustments that are
billed amounts which USWC removes from End User balances in accordance
with Customer requests and as outlined in Exhibit D. Recourse Adjustments
include:
3.1.1 Correct Charge Adjustments
Customer or USWC initiated adjustments due to billing errors, calls not
completed, incorrect length of call, incorrect rates, poor
transmission, wrong number, or other Customer's Clients service
failures.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
56
<PAGE>
3.1.2 Live Account Uncollectible
Uncollectible direct charges (unpaid monies due Customer from End
Users) on Live accounts.
3.1.3 Direct Uncollectible Additional Charges
Direct Uncollectible Additional Charges (DUAC) are amounts on Customer
revised entity final bills that are incurred after the date the
Customer has been notified to deny the account.
When technology permits, DUAC amounts will be identified as
unbillables, rejected to Customer immediately and USWC will not
purchase revenue amounts in the PAR settlement for DUAC amounts.
Section 4. Calculation of Customer Uncollectible Bad Debt Allowance
--------------------------------------------------------
4.1 For each monthly settlement, USWC will multiply the subtotal line on the
Purchase of Accounts Receivable Statement by the Customer Uncollectible
Factor to determine the Customer Uncollectible Bad Debt Allowance for that
settlement month.
4.2 Customer Uncollectible Factor is calculated as follows:
4.2.1 Until a full calendar quarter of Customer Realized Final Account
Uncollectibles and associated Total Billed Revenues are available
USWC will calculate Customer Uncollectible Bad Debt Allowance by
applying a surrogate Customer Uncollectible Factor of four percent
(4%).
4.2.2 When a full calendar quarter of Customer Realized Final Account
Uncollectibles and associated Total Billed Revenues are available,
USWC will calculate Customer Uncollectible Bad Debt Allowance by
applying a Customer Uncollectible Factor calculated as follows:
A. Each study period, USWC will determine from its records, using
USWC's procedures, the Realized Final Account Uncollectible
amount. This sum is the dollar amount of Customer charges lawfully
billed on End User final bills which remain uncollected after
standard collection efforts are completed and denial of service
accomplished where available.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
57
<PAGE>
B. The Realized Final Account Uncollectible amount will be adjusted
for payments received by USWC for outstanding Customer End User
final bill amounts that were declared uncollectible and any End
User billing adjustments applied to the account. The Realized
Final Account Uncollectible amount will not include uncollectible
late payment charges applied to the End User bill.
C. The Customer Realized Final Account Uncollectible amount (as
described in sub-paragraph a. above) will be divided by the net
amount of billed revenues, adjustments, taxes, and recharges from
a study period prior to the Customer Realized Final Account
Uncollectible study period to calculate Customer's Uncollectible
Factor. Currently, the USWC uncollectible amounts are based on a
six-month lag.
D. In order to calculate Customer's uncollectible factor, the
Realized Final Account Uncollectible amounts are divided by the
Total Billed Revenues which billed six months earlier than the
Realized Final Account Uncollectible amounts.
E. USWC will utilize the same Customer Uncollectible Factor on the
monthly (PAR) settlements for purposes of calculating the
Uncollectible Bad Debt Allowance for a calendar quarter. After
which time, a new Customer Uncollectible Factor will be developed
for use in the next calendar quarter.
4.2.3 USWC reserves the right to revise the Customer Uncollectible
Factor, when appropriate, or the method of calculating the
Customer Uncollectible Factor upon thirty (30) days written notice
to Customer.
Section 5. Uncollectible True-Up
---------------------
5.1 USWC will prepare uncollectible true-ups for each USWC Territory following
the end of each calendar quarter.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
58
<PAGE>
5.2 Initial True-up
5.2.1 Upon commencement of Services, USWC will prepare an uncollectible
true-up, for Customer, following the first calendar quarter in
which Services are performed, regardless if Services are performed
for the entire calendar quarter. The net true-up amount, including
interest as described in Section 5.5.1, will be reflected on the
Uncollectible true-up Amount line of Customer's PAR Statement. In
the event there are no uncollectibles and no reserves withheld, a
true-up will not be performed.
5.2.2 The above procedure will be performed each calendar quarter. Until
the six-month lag period has elapsed, no reserves will be available
for netting against uncollectible written-off amounts.
5.3 Periodic True-up
5.3.1 An Uncollectible True-Up will be performed for each calendar
quarter for the differences between the Customer Uncollectible Bad
Debt Allowance determined in Section 4 and the resulting Customer
Realized Final Account Uncollectible amount determined in Section
4.2.2 Paragraph B. True-Ups will be performed by USWC to remit
previous over-deductions to Customer from USWC and to flow previous
under-deductions to USWC from Customer. USWC will calculate the
difference between the Customer Realized Final or Entity Account
Uncollectibles written-off during the most recent calendar quarter
and the amounts withheld in reserve. USWC will calculate interest
on the net true-up amount using the interest factor set forth in
Paragraph 5.3.2 below.
5.3.2 USWC will include the True-Up amount and related interest amounts
on the April, July, October and January PAR settlement statements.
USWC will submit documentation supporting the calculation of the
True-Up amount by the fifteenth (15th) work day of the following
months, i.e., May, August, November and February.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
59
<PAGE>
5.4 End of Agreement True-Ups
5.4.1 USWC will perform End of Agreement True-Ups for each calendar
quarter for a total of four calendar quarters following the
calendar quarter in which Customer terminates Services with USWC.
This provision is intended to ensure neither party benefits
financially from uncollectibles realized after the life of this
Agreement.
5.5 True-up Interest Rate
5.5.1 Uncollectible True-Ups amounts will be subject to the time value of
money interest rate due to temporary dislocations of financial
resources resulting from the Uncollectible True-Up procedures. The
time value of money interest rate will be represented by the
Federal Reserve AA dealer commercial paper rate as of the last work
day of the appropriate month for ninety (90) day commercial paper.
Section 6. Payment Date
------------
6.1 For any PAR settlement, the Payment Date for the payment of the Amount Due
Customer or USWC shall be the date determined by a Weighted Average
Payment Date of message revenue received from Customer and processed by
USWC during the settlement month plus the average number of days until
expected billing plus the number of days calculated in the most recent End
User Payment Lag Study.
6.2 If such payment date falls on a Sunday or on a holiday which is observed
on a Monday, the payment date shall be the first non-holiday day
following such Sunday or holiday.
6.3 If such payment date falls on a Saturday or on a holiday which is observed
on Tuesday, Wednesday, Thursday, or Friday, the payment date shall be the
last, non-holiday day preceding such Saturday or holiday.
6.4 In the event there are no message revenues received from Customer during a
calendar month or if the PAR settlement yields a negative Amount Due as
described in Section 2.3 above, the payment date for the Amount Due
Customer/USWC will be the last business day of the month following the PAR
settlement month.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
60
<PAGE>
Section 7. Payment Method
--------------
7.1 Any payment to Customer from USWC or to USWC from Customer of one hundred
thousand dollars ($100,000) or more must be transmitted by USWC or
Customer to a designated bank account of Customer or USWC by electronic
funds (wire or ACH) transfer. Any payment to Customer from USWC or to
USWC from Customer less than one hundred thousand dollars ($100,000)
shall be paid by check or draft to the payee's lockbox address. Payment
must result in immediately available funds upon receipt by the other
party. Any portion of the Amount Due Customer or USWC, received by
Customer or USWC in funds which are not immediately available to Customer
or USWC on the payment date, will be subject to a late payment penalty.
Section 8. Late Payment Penalty
--------------------
8.1 Any amounts owing by Customer or USWC, which does not comply with the
payment methods set forth in Section 7 will be subject to a late payment
penalty. The late payment penalty shall be the portion of the Amount Due
Customer or USWC (as defined in Section 2) received after the Payment Date
times an interest factor. The late payment interest factor is 0.000310 per
day compounded daily for the number of calendar days from the Payment Date
to and including the date that USWC or Customer actually made the payment
to the other party, which would result in an annual percentage rate of
12%.
Section 9. Late Payment Resulting From Bank Error
--------------------------------------
9.1 Any late payment resulting from bank error will not be subject to the late
payment penalty provided the sending party (party making payment) can
verify that it was not at fault. It is the responsibility of the sending
party to notify the banks involved and coordinate resolution of the
discrepancy.
Section 10. Notification of Disputed Accounts Receivable Amount
---------------------------------------------------
10.1 Should either party dispute any portion of the amount due; said party
shall notify the other party in writing of the nature and basis of the
dispute within a reasonable period of time from the date of discovery of
that which gave rise to the dispute. The substantiated claim should be
provided by the claiming party with sufficient detail to allow
investigation by the other party.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
61
<PAGE>
Section 11. Payment of Disputed Accounts Receivable Amount
----------------------------------------------
11.1 Should the dispute not be resolved by the Payment Date, the PAR
settlement amount shall be due and payable in full as described in
Section 7 above. The claiming party reserves the right to have claim
against the other party for reimbursement until the dispute is resolved.
Section 12. Ultimate Settlement of Disputed Accounts Receivable Amount
----------------------------------------------------------
12.1 In the event that either party files a substantiated claim, the receiving
party will have thirty (30) days from the notification date, or other
mutually agreed period, to acknowledge receipt of the claim and inform
the notifying party of the claim status. Should the claim, in whole or in
part, ultimately be resolved in favor of the claiming party, that party
shall be entitled to a refund, with interest, from the other party to the
extent the claim was sustained. The amount of said refund, including
interest, shall be an amount equal to the sustained claim amount plus
interest calculated using the late payment penalty formula, set forth in
Section 8 above.
12.2 If the claim is received within six (6) months of the PAR settlement
date, the interest will be calculated by applying the interest factor set
forth in Section 8 above from the PAR settlement payment date through the
claim resolution and remittance date.
12.3 If the claim is received after six (6) months of the PAR settlement date,
the interest will be calculated by applying the interest factor set forth
in Section 8 above from receipt of the claim notification through the
claim resolution and remittance date.
12.4 Payment must result in immediately available funds on the Payment Date.
The total amount of the refund, with interest, shall be paid no later
than thirty-one (31) business days after written notice to the claiming
party that the claim has been resolved.
Section 13. Retention of Supporting Data Concerning Disputed Amount
-------------------------------------------------------
13.1 Both parties shall retain such detailed information as may reasonably be
required for resolution of the disputed amount during the duration of the
dispute.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
62
<PAGE>
EXHIBIT C
PRICE LIST
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
63
<PAGE>
<TABLE>
<CAPTION>
SERVICES REQUESTED BY CUSTOMER
================================================================================
<S> <C> <C>
MESSAGE BASED BILLING * Option 1 X
* Call Handler Label X
- --------------------------------------------------------------------------------
NON-MESSAGE BASED BILLING
- --------------------------------------------------------------------------------
END USER ACCOUNT ACTIVITY X
- --------------------------------------------------------------------------------
ANCILLARY
- --------------------------------------------------------------------------------
MESSAGE INVESTIGATION
- --------------------------------------------------------------------------------
BILLING ANALYSIS
- --------------------------------------------------------------------------------
BILLING INFORMATION
- --------------------------------------------------------------------------------
MEDIA PROVISIONING X
- --------------------------------------------------------------------------------
CONSULTING
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
TELCO DEVELOPMENT GROUP ACCEPTED BY
OF DELAWARE U S WEST COMMUNICATIONS, INC.
By: /s/ Bryan Rachlin By: /s/ C. E. Osborn
--------------------------- -----------------------------
Printed Name: Bryan Rachlin Printed Name C. E. Osborn
----------------- --------------------
Title: President Title: Vice President-Diversified
------------------------ --------------------------
Carrier Markets
-------------------------
Date: 3/27/95 Date: 3-28-95
------------------------- ---------------------------
MALHEUR HOME TELEPHONE COMPANY
By: /s/ James C. Jensen
-----------------------------
Printed Name: James C. Jensen
-------------------
Title: President
--------------------------
Date: 04/17/95
---------------------------
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
64
<PAGE>
I. CUSTOM REQUEST SERVICE
PRICE LIST
The prices used to establish the Custom Request Service will be developed on an
individual case basis. The price estimates provided to Customer will be valid
for a period of thirty (30) days from the date of the written estimate.
Examples of cost elements used in developing price estimates are machine time,
programming (coding), system design, system development, project system testing,
business office methods and procedures development, order writer training,
service representative training, miscellaneous hardware requirements (e.g.
disks, tape, cartridges, etc.).
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
65
<PAGE>
Confidential Treatment Requested. The
redacted material has been separately
filed with the Commission.
II. MESSAGE BASED BILLING SERVICE
PRICE LIST
<TABLE>
<CAPTION>
SERVICE NAME UNIT PRICE PER UNIT
------------ ---- --------------
A. MTS Services
Prior to Tariff approval in each state.
---------------------------------------
<S> <C> <C> <C>
Message Billed Processing message (*)
Bill Production bill (*)
Date Base Maintenance bill (*) [1]
Option 1
--------
1. Message Bill Processing
a. Average of 1-14.49 message (*) **
messages per bill
b. Average of 14.5 or more
messages per bill message (*) **
2. Bill Rendering bill (*) **
B. Call Handler Labeling per USWC Territory [1]
---------------------
Table Update Charge per occurrence (*)
C. Non-Standard Data Entry ICB
</TABLE>
** These rates will become effective in accordance with Section VI.A of the
Agreements
[1] SETUP CHARGES
-------------
In addition to the above rates, setup charges apply and will be provided upon
receipt of specifications for Message Based Billing Service.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
66
<PAGE>
Confidential Treatment Requested. The redacted
material has been seperatley filed with the
Commission
<TABLE>
<CAPTION>
III. END USER ACCOUNT ACTIVITY SERVICE
PRICE LIST
SERVICE NAME UNIT PRICE PER UNIT
<S> <C> <C>
A. Service Order - Manual Intervention
a. Residence Service Order (*)
b. Business Service Order (*)
B. Transmittal - Manual Intervention (#)
a. Residence Per Order (*)
Processed
b. Business Per Order (*)
Processed
C. Adjustment(#) (*)
a. Manual Adjustment
</TABLE>
NOTE: (#) processing of mechanized orders and adjustments to be determined on a
time and cost basis.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
67
<PAGE>
Confidential Treatment Requested. The redacted
material has been seperatley filed with the
Commission
IV. MEDIA PROVISIONING SERVICE
PRICE LIST
SERVICE NAME UNIT PRICE PER UNIT
- ------------ ---- --------------
A. Magnetic Tape Tape (*)
B. Cartridges Cartridge (*)
C. Data Transmission Per Record (*)
Transmitted or
Record Rec'd
D. Delivery Actual
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
68
<PAGE>
EXHIBIT D
USWC's TREATMENT AND COLLECTION POLICY
U S WEST PROPRIETARY
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
69
<PAGE>
USWC'S TREATMENT AND COLLECTION POLICY
DEFINITIONS
Dial Tone Denial
- ----------------
The interruption of the End User's dial tone restricting the End User's ability
to make local or long distance calls by using its telephone.
End User Directed Payment
- -------------------------
End User's ability to determine which entity or entities should receive a
payment and how much of the payment each entity should receive.
Entity
- ------
Any company that shares the USWC bill.
Entity Treatment
- ----------------
Ability to perform collection activity for each entity on an individual basis.
RTA
- ---
Remove from Treatment Amount (RTA) represents the dollar amount which an
entity/account may have owing before it is considered to be treatable. When the
amount owing is below the RTA amount, the account is removed from collection
activity.
D.1 GENERAL
-------
Treatment and Collection activity is initiated by USWC under the terms of
this Agreement as collection activities for non-paying End Users on behalf
of Customer.
D.2 END USER BILL
-------------
A. End Users shall be advised of their payment direction rights and of
the default payment allocation method in a terms and conditions
statement printed on the reverse page of the bill.
B. The End User bill will indicate the previous balance and the total
amount owing at the account level.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
70
<PAGE>
C. The End User bill will identify a "pay by date" for payment of total
amount owing on an account level.
D.3 LIVE TREATMENT AND COLLECTION
-----------------------------
A. In central offices, where technologically feasible, Entity Specific
Treatment will apply. Live treatment decision criteria for a given End
User account is the same for all interexchange carrier customers.
Remove from treatment amount ("RTA") shall vary dependent upon End User
customer risk or non-risk credit classification as determined by USWC.
A Deny Notice is generated when an entity(s) (including the carrier
entity) RTA criteria has been exceeded on a given End User account. All
entities at risk will be displayed on the same Deny Notice and only one
Deny Notice is issued to an End User in a billing month.
B. In a full Service Denial Central Office, a Deny Notice is generated
when the account level RTA criteria has been exceeded on a given End
User. The Deny Notice identifies the total amount owing for the account
(all entities).
D.4 DENIAL
------
Denial activity will be dependent upon the restriction capability of the
central office for the End User.
A. Entity Specific Treatment
-------------------------
1. Entity Specific Treatment (EST) shall be used for Customer's End
User accounts served out of central offices that have technology to
deny only 1+ dialing.
2. In the event that Customer elects to provide its own denial
capability, USWC shall follow USWC's Treatment and Collection
Procedures to the point of denial and then refer the denial
function to Customer. When the End User account is current and
secured, as appropriate, USWC will notify Customer and Customer may
restore service to the End User.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
71
<PAGE>
3. When an End User account has been denied by Customer, using its own
denial, USWC shall continue treatment on Customer's portion of the
account, including issuing entity final bills and performing collection
functions associated with collection of entity final billing.
B. FULL SERVICE DENIAL
-------------------
Full Service Denial is the restriction of access to telephone network
service (1+ and local).
1. USWC shall utilize Full Service Denial on behalf of Customer in a given
central office unless EST is available in that office or until the
State Public Utility Commission (PUC) directs that local service denial
be discontinued on behalf of interexchange carriers.
C. NO ENTITY SPECIFIC DENIAL OR FULL SERVICE DENIAL
------------------------------------------------
In the event that USWC is mandated by a State PUC to discontinue use of Full
Service Denial on behalf of other companies in a given state, and entity
specific denial is not available, USWC will send a collection letter to the
End User advising that permission for continued use of Customer's network
has been terminated. Customer shall be notified of USWC's action.
D.5 PAYMENT ALLOCATION
------------------
A. End Users shall have the right to direct application of payments to
specific entity payables. In the absence of such End User payment
designation, USWC shall apply payments to the receivables using a pro
rata method. This pro rata is a percentage of payment for each entity
receivable based on the amount owing the entity to the total amount
owed on the account. The percentage established for each entity shall
be used as the percentage of the payment applied to each entity
receivable.
B. In the event a PUC in a specific state directs USWC to use another
method for designating End User payments, Customer understands and
agrees that USWC shall comply with such PUC direction.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
72
<PAGE>
D.6 ADMINISTRATION OF CUSTOMER'S RESIDENCE AND END USER DEPOSITS
------------------------------------------------------------
A. USWC will request a deposit on existing residential End User accounts
in either or both of the following situations:
1. Prior to the restoration of service, when the account has been
either Full Service Denied for non-payment of local service for
total account charges, or when access to long distance has been
restricted.
2. Prior to the restoration of service when an entity final bill has
been rendered and paid.
B. On behalf of Customer, USWC may request deposits from residential End
Users as a collection step in treatment when, in the judgement of the
collection manager, there is sufficient risk of increased
uncollectibles for Customer.
C. If USWC requests a deposit on behalf of Customer, the amount of the
deposit will be two times the actual monthly charges for Customer's
services. If, on an existing account, USWC determines the carrier
deposit is not sufficient, USWC will negotiate for a larger deposit on
behalf of Customer.
D. USWC may request a deposit for new residential End Users subscribing to
Customer if any of the following conditions exist:
1. The End User has not paid an outstanding long distance bill
prepared by USWC.
2. The End User's previous service was disconnected for any of the
following reasons:
(a) nonpayment
(b) abandoned service
(c) bankruptcy
(d) protect revenue
3. The End User's credit information, after verification, is proven
to be false or invalid.
4. When USWC is running credit checks within an automated credit
system and the scoring indicates the End User's credit is at
"risk".
Notice
-------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
73
<PAGE>
5. When USWC requests a deposit on behalf of Customer, as described
in subparagraph 4 above, a deposit is required based on the amount
set by the State(s) PUC and tariff.
D.7 ADMINISTRATION OF CUSTOMER'S BUSINESS END USER DEPOSITS
-------------------------------------------------------
A. USWC may request deposits from business End Users as a collection
step, using the same criteria used to obtain deposits from its own
customers of local exchange service, when in the judgement of USWC
there is sufficient risk of increased uncollectibles.
B. When performing collection activities, USWC may determine to reduce a
deposit and partially refund an amount if the End User(s)' toll usage
dollars decrease and have remained decreased.
C. USWC may request deposits from new business End Users subscribing to
Customer when; (1) the End User has other existing business service
working twelve (12) months or more with the same owner(s), i.e. sole
proprietorship, partners, corporation; or (2) the End User had
previous business service working within the last twelve (12) month
period with the same owner(s). In such event, USWC will review the
following account information: treatment history, credit
classification, date of installation, same business ownership, and
average account toll usage. If USWC determines a deposit is warranted
after review of the above information, Customer's deposit will be two
times the average monthly toll usage of the previous or other service.
D. If the End User had no previous business service or has no other
existing business services or the previous business service was
disconnected over twelve (12) months ago, or the previous business
service information is unknown, USWC will obtain a deposit equal to
two (2) times the estimated monthly Customer usage or estimated bulk
usage.
D.8. DISPOSITION OF CUSTOMER'S ENTITY DEPOSITS
-----------------------------------------
A. Deposits negotiated and secured by USWC, on behalf of Customer, will
be maintained in the event of unpaid Customer charges. USWC will
return and refund Customer's deposit to the End User using the same
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
74
<PAGE>
criteria it uses for all other customers of billing and collection
services.
B. Deposits that are retained by USWC accumulate simple interest or at
commission prescribed interest rates. At the time of Customer or total
account disconnection, USWC will apply the deposit (including
interest) to Customer's receivables for the End User.
D.9 FINAL TREATMENT AND COLLECTIONS
-------------------------------
A. Where EST is available, USWC shall have the mechanical ability to
final one or several entities while the rest of the account remains in
live status (unless the USWC entity goes final). When applicable,
mechanized final collection functions shall be performed on Customer
entity finals which shall be written off using the same parameters as
USWC uses on an account level. Customer entity final bills are issued
separate from live account bills on the regular bill date.
B. Final account treatment shall be provided at the total account level
for full disconnection (Full Service Denial). Final accounts shall be
accounted for by entity (including Customer). End users shall be
allowed to direct payments to entities on their finaled accounts.
However, the return document provided with the final bill will not
include provisions for payment direction.
D.10 CUSTOMER END USER DISPUTED BILLED AMOUNTS
-----------------------------------------
A. A dispute is a claim whereby an End User is refusing to pay a specific
Customer charge(s) and which cannot be resolved by USWC.
B. USWC will refer the End User to Customer for resolution of disputed
billed amounts. USWC will send a carrier memorandum to Customer
advising Customer of the refusal to pay. Customer will have thirty
(30) days, from the date the carrier memorandum is issued to contact
the End User to resolve the claim. USWC will make no attempt to adjust
the disputed amount until the thirty (30) day time period has elapsed
unless Customer has advised USWC to adjust the disputed amount (prior
to the thirty (30) day time frame). USWC will pursue normal treatment
practices on behalf of Customer for
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
75
<PAGE>
collection of amounts due minus the disputed amounts. If USWC does not
receive any type of response from Customer at the end of the thirty
(30) day time period, USWC will adjust (recourse) the Customer
specific charge(s) in dispute as a "Refusal to Pay".
C. If Customer advises USWC that charges have been sustained, the USWC
collection office will:
1. Where Customer provides its own denial, USWC will pursue normal
treatment and collection procedures up to the point of denial and
then refer the denial function to Customer.
2. USWC will, following exhaustion of normal treatment and
collection procedures not to include denial, if the amount is
under the "RTA" and the End User still advises USWC of refusal to
pay, USWC will then remove the amount from the bill which the End
User refuses to pay. The amount associated with any adjustment
will be reviewed by the proper USWC management in accordance with
the then current USWC procedures prior to being recoursed to
Customer.
D.11 BANKRUPTCY
----------
A. USWC will file proofs of claim and amended proofs of claim on behalf
of Customer when, in USWC's discretion, the filing of a proof of a
claim is likely to result in the claim being paid.
B. USWC shall request deposits on behalf of Customer in accordance with
Section 366 of the Bankruptcy Reform Act.
C. USWC shall not represent Customer or its Clients in any hearings,
creditors' committee meetings or other court matters regarding either
the filed proofs of claim or deposit requests.
D.12 POLITICAL ACCOUNTS
------------------
A. USWC shall require security on all political accounts billed by USWC on
behalf of Customer.
B. When Customer's portion of a given political account receivable is
considered uncollectible, it shall be subject to final bill recourse and
handled in accordance with Exhibit B.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
76
<PAGE>
C. Customer shall be responsible for filing reports, as required by the
FCC, regarding security on Customer's political accounts. USWC shall
prepare such reports upon request from Customer at Customer's expense.
D. USWC shall not represent Customer or its Clients in any court or
agency matter.
D.13 GENERAL
-------
Notwithstanding Section XIX of this Agreement, USWC may modify the
operational procedures for treatment and collection upon thirty (30) days
written notice to Customer.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
77
<PAGE>
EXHIBIT E
PROVISION OF BILLING AND COLLECTION SERVICES
OF EMI CREDIT RECORDS
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
78
<PAGE>
EXHIBIT E
THE PROVISION OF BILLING AND COLLECTION SERVICES
OF EMI CREDIT RECORDS
Section 1. General
-------
1.1 USWC will provide billing and collection services for EMI credit
records, as defined below, for Customer's MTS and MTS related services
for the purpose of reducing the amount(s) reflected on Customer's End
User accounts. In addition, if Customer has signed an agreement for
Expanded Billing Services, the provisions of this Exhibit E shall apply
for EMI credit records of Expanded Services ("non-MTS") messages
submitted. All of the terms and conditions set forth in the Agreement
shall apply except as modified in this Exhibit E. To the extent of any
conflict or inconsistency between the Agreement and this Exhibit E, the
provisions of this Exhibit E shall control.
Section 2. Definitions
-----------
2.1 EMI Credit Records:
Bellcore approved exchange message interface ("EMI") records, which
consist of multiple record-message types, designed for the purpose of
sending and billing credit amounts to End User accounts.
Section 3. Obligations of the Parties
--------------------------
3.1 Customer agrees to submit to USWC its End Users' credit amount(s) via
the EMI Credit Records.
3.2 USWC will process Customer's End User credit amount(s) and Customer
agrees to pay USWC the message bill processing rate, as set forth in
Exhibit C of the Agreement, for each message processed.
3.3 Customer understands and agrees that each time Customer requires a new
record-message type, Customer will submit an order in accordance with
the Custom Request Service as described in Exhibit A. Further, Customer
understands and agrees to pay USWC a non-recurring charge for each EMI
credit record/message type that Customer has ordered in each USWC
Territory.
3.4 USWC will purchase from Customer its accounts receivable as described in
Exhibit B of the Agreement and will deduct (net) all End User MTS credit
amounts processed from the
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
79
<PAGE>
MTS debit amounts purchased and all End User non-MTS credit amounts
processed from the non-MTS debit amounts purchased on the Purchase of
Accounts Receivable ("PAR") settlement statement.
3.5 In the event USWC cannot bill an EMI Credit Record, USWC will recourse
such credit amount(s) back to Customer which will result in a reduction
of Customer's unbillables; such unbillable credit amount will reduce the
total unbillable debit amount.
3.6 Customer understands and agrees that any credit amount submitted to USWC
for processing may not be removed or adjusted on the End User bill.
Section 4. Limitation of Liability
-----------------------
4.1 USWC's liability, if any, for errors or omission shall be strictly
limited to an amount equal to USWC's billing and collection charges for
specific EMI Credit Records for which the errors or omission occurred.
Such limited liability shall only arise when the error or omission is
due solely because of the gross negligence or willful misconduct of
USWC.
4.2 In the event Customer submits duplicate End User credit amounts to USWC
for processing, Customer understands that such credit amounts will be
processed and Customer is liable for the rates described in Section 3.2
above.
4.3 In the event USWC performs Inquiry Service on behalf of Customer, any
credit amounts in question will be sustained. If the credit amount in
question cannot be resolved, the End User will be referred to Customer
and an Inquiry charge will be applied as set forth in Exhibit C of the
Agreement.
Notice
------
The information contained herein should not be disclosed to unauthorized
persons. It is meant for use by authorized representatives of Telco Development
Group and U S WEST only.
DEN-941118-0011
BCCA-TELCO DEVELOPMENT GROUP
80
<PAGE>
AMENDMENT NO. 1
TO THE AGREEMENT FOR THE PROVISION OF
BILLING AND COLLECTION SERVICES
FOR CLEARING AGENTS
This Amendment No. l is made a part of the Agreement for the Provision
of Billing and Collection Services for Clearing Agents ("BCS Agreement"), dated
April l, 1995 by and between U S WEST Communications, Inc., a Colorado
corporation and Malheur Home Telephone Company, an Oregon corporation,
(hereinafter "USWC") and Telco Development Group of Delaware, a Delaware
corporation (hereinafter "Customer") acting through their authorized
representatives.
WHEREAS, Customer desires and USWC agrees to streamline the Purchase of
Accounts Receivable ("PAR") settlement process by discontinuing the
uncollectible bad debt allowance adjustment and the uncollectible true-up as
those terms are defined in Exhibit B of the BCS Agreement, Accounts Receivable
Settlement Terms; and
WHEREAS, Customer desires and USWC agrees that USWC will hold an
uncollectible reserve amount as described below; and
WHEREAS, Customer and USWC agree to report the realized uncollectible
bad debt amounts on the monthly PAR settlement statements; and
WHEREAS, the BCS Agreement provides that it may be amended by the
parties pursuant to Section XIX, Amendments; Waivers;
NOW THEREFORE, in consideration of the mutual benefits accruing to each
party, the parties hereby agree to amend Exhibit B as follows:
I. Section 2, Calculation of Amount Due Customer/USWC is hereby amended as
follows:
Line H of the formula, "Uncollectible Bad Debt Allowance" is deleted in
its entirety and replaced with new language as follows:
H. Combined Bad Debt/Adjustment Allowance. An amount withheld from
the settlement as an uncollectible reserve to offset future
actual uncollectible amounts written-off Customer's End User
final bills. The Adjustment Allowance is applicable only to
Expanded Services under separate terms and conditions.
Line I of the formula "Uncollectible True-Up Amount" is deleted in its
entirety and replaced with new language as follows:
I. Realized Final Account Uncollectibles. Actual uncollectible
amounts written-off Customer End User final bills for failure of
the End User to pay Customer's billed charges for the settlement
period.
Amendment to: Den-941118-0011/c/lh
7/01/95
1
<PAGE>
II. USWC shall discontinue the application of the Uncollectible Bad Debt
Allowance, as that term is defined in Exhibit B, and shall replace that
application with recoursing the Realized Final Account Uncollectibles.
Therefore, Section 4 is hereby deleted in its entirety and replaced with
the following:
Section 4. Recourse of Realized Final Account Uncollectibles
-------------------------------------------------
4.1 Prior to the July l995 PAR settlement statement, USWC will
determine an uncollectible reserve amount for the time period
between January l, l995 through June 30, 1995 in accordance with
the provisions of Section 4 prior to this Amendment. Such
uncollectible reserve amount will be adjusted to align with current
uncollectible bad debt amounts (hereinafter "Reserve").
4.2 Effective with the July l995 PAR Statement, USWC will report the
Realized Final Account Uncollectibles on the monthly PAR
Statements.
4.3 On a quarterly basis, USWC will track a six month average
uncollectible bad debt amount based on the most current twelve (12)
months of Realized Final Account Uncollectibles. If the difference
between the average uncollectible bad debt amount and the Reserve
is greater than ten percent (l0%) of the Reserve or is greater
than one hundred thousand dollars ($100,000), such difference will
be added or subtracted from the Reserve and will be reflected on
the following PAR Statement.
4.4 USWC reserves the right to review uncollectible bad debt amounts
more frequently than on a quarterly basis and to make an adjustment
in accordance with the provisions described above.
III. For the months of October, November and December of 1994, USWC will
perform a final true-up on the difference between the amounts held in
reserve against the total Realized Final Account Uncollectibles reported
for April, May and June of 1995 in accordance with the provisions of
Exhibit B, Section 5, Uncollectible True-Up. Effective following the
July l995 PAR settlement statement, USWC shall discontinue the
Uncollectible True-Up process; therefore, Section 5, Uncollectible True-
Up is deleted in its entirety.
IV. A new Section 5 entitled, "Settlements At Termination" is added and
incorporated herein as follows:
Section 5. Settlements At Termination
--------------------------
In the event Customer discontinues submitting its messages for
billing and/or the BCS Agreement is terminated, USWC will
prepare PAR settlements each month for twelve months. During
such time, the Reserve amount will be used to offset future
settlement amounts due USWC. Any amounts left in Reserve will be
Amendment to: Den-941118-0011/c/lh
7/01/95
2
<PAGE>
credited to Customer and any amounts remaining will be settled between
the parties. If, during the final twelve months, a PAR settlement
amount due USWC is not covered by the amount in Reserve, Customer
agrees to pay the amount due USWC by the payment due date.
V. Section 8, Late Payment Penalty is amended to add a provision for the time
value of money interest rate. The new heading and the addition of a new
subsection shall read as follows:
8.2 Except for the provisions of Section VI, Prices/Payment and Section
8.1 herein, any amounts owed by Customer or USWC may be subject to the
time value of money interest rate due to temporary dislocations of
financial resources. The time value of money interest rate will be
represented by the Federal Reserve AA dealer commercial paper rate as
of the last work day of the appropriate month for ninety (90) day
commercial paper.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
be executed as of the last date signed below.
Telco Development Group of Delaware U S West Communications, Inc.
/s/ Bryan Rachlin /s/ Clarence E. Osborn
- ----------------------------------- -----------------------------------
Signature Signature
Bryan Rachlin Clarence E. Osborn
- ----------------------------------- -----------------------------------
Printed Name Printed Name
President V.P. - Diversified Carrier Markets
- ----------------------------------- -----------------------------------
Title Title
8/1/95 8/8/95
- ----------------------------------- -----------------------------------
Date Date
Malheur Home Telephone Company
/s/ Clarence E. Osborn
-----------------------------------
Signature
Clarence E. Osborn for Jim Jensen
-----------------------------------
Printed Name
V.P. Diversified Carrier Markets
-----------------------------------
Title
8-8-95
-----------------------------------
Date
Reviewed By
US West Law Department
Date 8-9-95
[SIGNATURE APPEARS HERE]
-------------------------
<PAGE>
EXHIBIT 10.15
AMENDMENT
This Amendment is made a part of the Agreement for the Provision of Billing and
Collection Services for Clearing Agents ("BCS Agreement"), dated April 1, 1995,
by and between U S WEST Communications, Inc., a Colorado corporation and Malheur
Home Telephone Company, an Oregon corporation, (hereinafter "USWC") and Telco
Development Group of Delaware, a Delaware corporation (hereinafter "Customer")
acting through their authorized representatives.
WHEREAS, the BCS Agreement expires March 31, 1996; and
WHEREAS, the parties desire to extend the term of the BCS Agreement; and
WHEREAS, the BCS Agreement provides that it may be amended by the parties
pursuant to Section XIX,
NOW THEREFORE, the parties agree as follows:
The term of the BCS Agreement and all of its terms, conditions and prices
shall be extended for a period of two years, not to extend beyond March 31,
1998.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the last date signed below.
TELCO DEVELOPMENT GROUP U S WEST COMMUNICATIONS, INC.
OF DELAWARE
/s/ Bryan Rachlin /s/ Sam Radetsky
- ------------------------ ------------------------
Signature Signature
Bryan Rachlin Sam Radetsky
- ------------------------ ------------------------
Printed Name Printed Name
President Account Executive
- ------------------------ ------------------------
Title Title
6/6/96 6/6/96
- ------------------------ ------------------------
Date Date
<PAGE>
Pages where confidential treatment has been
requested are stamped "Confidential Treatment
Requested. The redacted material has
been separately filed with the Commission."
The redacted portions are indicated by a
"(*)."
Exhibit 10.16
STANDARD AGREEMENT FOR THE PROVISION
OF TELECOMMUNICATIONS SERVICE
ARTICLE I
GENERAL PROVISIONS
TABLE OF CONTENTS
Page No.
--------
SECTION I Scope 1
SECTION II Methods and Practices 1
SECTION III Definitions 1
SECTION IV Protection of Proprietary Information 4
SECTION V Restoration of Service in the Event of Outages 5
SECTION VI Liability for Outage 6
SECTION VII Exchange of Information 6
SECTION VIII Preservation of Rights of the Owner 6
SECTION IX Independent Contractors 7
SECTION X Force Majeure 7
SECTION XI Compliance with Employment Laws 7
SECTION XII Billing Arrangements 7
SECTION XIII Deposit 9
SECTION XIV Claims Procedures 10
SECTION XV Dispute Escalation Procedures 12
SECTION XVI Compliance Monitoring 14
SECTION XVII Review Procedures 14
SECTION XVIII Termination 16
SECTION XIX Assignment 16
SECTION XX No Rights to Third Party 17
SECTION XXI Indemnification 17
i
<PAGE>
STANDARD AGREEMENT FOR THE PROVISION
OF TELECOMMUNICATIONS SERVICE
ARTICLE I
GENERAL PROVISIONS
TABLE OF CONTENTS (continued)
Page No.
--------
SECTION XXII Notice 17
SECTION XXIII Governing Law 18
SECTION XXIV Severability 18
SECTION XXV Amendments; Waivers 18
SECTION XXVI Titles and Headings 19
SECTION XXVII Intellectual Property 19
SECTION XXVIII Publicity 19
SECTION XXIX Compliance 19
SECTION XXX Executed in Counterparts 19
EXHIBIT 1 Index of Articles 21
ii
<PAGE>
Article 1
Telco
ARTICLE I
GENERAL PROVISIONS
This Article between United Telephone Company of Florida, "United," and Telco
Development Group, Inc., "Telco," sets forth the terms, conditions and
compensation for the provision of certain telecommunication services as
hereafter described. This Article 1 shall become effective as of the date Telco
receives certification by the state of Florida and is null and void until such
certification is received. In consideration of the mutual promises herein
contained, the parties agree as follows:
SECTION I
SCOPE
This Agreement covers certain services provided by United to Telco. The services
subject to this Agreement and the terms and conditions pursuant to which they
will be supplied by United to Telco are defined in this and the various other
articles of this Agreement. Those other articles and their application to
Article I may be modified from time to time, and those in effect are identified
in Exhibit 1 to Article I and any mutually agreed upon additions to Exhibit 1.
Where any article to this Agreement specifically defines terms, conditions or
standards different from those identified in Article I, such terms, conditions
or standards shall control. This Agreement specifies the terms, conditions and
compensation under which United will provide services to Telco for use in
Telco's business. It also specifies the terms that govern the protection of
proprietary information provided by either party pursuant to this Agreement.
This Agreement also establishes review, claims, and dispute resolution
procedures and is intended to supplement (a) other agreements between the
parties, (b) applicable tariffs, and (c) memoranda of understanding between the
parties.
SECTION II
METHODS AND PRACTICES
United agrees to provide the services described in this Agreement in a manner
that equals or exceeds the accepted industry performance standards for network
quality, planning, maintenance, and testing in effect during the term of this
Agreement, unless the parties otherwise agree. Whenever an article specifically
defines performance standards, such standards shall govern the services provided
pursuant to that article and shall supersede the general provisions of this
section.
SECTION III
DEFINITIONS
For purposes of this Agreement, the definitions of terms shall be as described
below:
1. Access Service means services used in the origination or termination of
--------------
interexchange telecommunications.
1
<PAGE>
Article 1
Telco
2. Agreement means Article I - General Provisions, and all other articles
---------
(including exhibits and attachments) that are in effect at a given
time.
3. Audit/Review means an on-site visit for the purpose of reviewing the
------------
records and procedures of a party to this Agreement, relative to the
provisioning of a service.
4. Claim means written notification from one of the parties that billing
-----
rendered or revenue remitted is in error (based on evidence provided by
that party and verifiable by the other party). A claim may affect the
revenues or expenses of either party.
5. Claim Amount means an estimate of the principal dollar amount of the
------------
claim (excluding any penalty charges).
6. Claim Number means a unique identifier assigned by the party initiating
------------
the claim for the purpose of identifying and tracking a claim.
Audit/Review findings which constitute a claim shall be assigned a
claim Number.
7. Compensation means the amount of money due from Telco to United or from
------------
United to Telco for services provided under this Agreement.
8. Concurred Claim means when the parties reach agreement on the terms
---------------
of settlement for a claim.
9. Data Request means the comprehensive list of data elements, reports,
------------
systems, bills, etc. to be examined during an on-site review.
10. Dispute means an unresolved claim requiring formal, written escalation
-------
for resolution.
11. Exchange or Local Exchange means a geographic area within which a
-------- --------------
telephone company may provide telephone exchange service as defined in
Section 3 (r) of the Communications Act of 1934, as amended, 47 U.S.C.
153 (r).
12. Inquiry means a verbal or written communication between the parties to
-------
initiate the investigation or clarification of certain items or
procedures.
13. Intraexchange means within the exchange.
-------------
14. IntraLATA Telecommunications means telecommunications within a LATA.
----------------------------
15. Interexchange means between exchanges and may, depending upon
-------------
applicable tariffs, include extended area services and
toll services.
16. InterLATA Telecommunications means telecommunication services offered
----------------------------
between LATAs.
2
<PAGE>
Article 1
Telco
17. Investigation means the review of a single issue or a specific topic
-------------
relating to the provisioning of a service.
18. LATA or Local Access and Transport Area means a geographic area
---- -------------------------------
encompassing one or more local exchange areas within which a Bell
Operating Company or its successor may provide telecommunications
services, plus associated independent telephone company exchanges. LATA
also means a geographic area encompassing one or more local exchange
areas within which an independent telephone company or companies, not
associated with a Bell Operating Company LATA, provide
telecommunications services and which for the purpose of exchange
access service are treated as a single access service area.
19. Late Payment Charge means the interest which may be added to amounts
-------------------
owing resulting from settlement of claims or disputes, or as a result
of payment not being rendered by the payment due date.
20. Nonowner means the party that has contracted for a service under this
--------
Agreement.
21. Notice of Dispute means a written notice so designated, which
-----------------
identifies the dispute and initiates formal escalation, consistent with
the procedures and requirements set forth herein.
22. Owner means the party owning and providing a particular service under
-----
this Agreement.
23. Party means United or Telco, or both, as the context shall require.
-----
24. Payee means the party submitting a bill to the other party.
-----
25. Payor means the party to which a bill is submitted by the other party.
-----
26. Point of Presence (POP) means the location(s) within a LATA at which a
-----------------------
carrier obtains access service.
27. Resolved Claim means a claim that has been resolved as a result of
--------------
concurrence and receipt/verification of the settlement amount or by
withdrawal of the claim by the originator.
28. Respondent means the party against which a claim is made.
----------
29. System of Telco means the interexchange switching, recording, operator
---------------
service and transmission facilities owned by Telco or leased by Telco
from others that route, switch, assist and transport United's traffic
(excluding facilities leased by United to others).
30. System of United means the interexchange switching, recording, operator
----------------
service and transmission facilities owned by United or leased by United
3
<PAGE>
Article 1
Telco
from others, that route, switch, assist and transport United's traffic
(excluding facilities leased by United to others).
31. Telecommunications means the transmission, emission or reception of
------------------
information, signals, or messages between or among points specified by
the user.
SECTION IV
PROTECTION OF PROPRIETARY INFORMATION
Any information, including but not necessarily limited to, specifications,
drawings, sketches, models, samples, data, computer programs and other software
or documentation of one party that is furnished or available or otherwise
disclosed to the other party pursuant to this Agreement ("Proprietary
Information") shall be deemed the property of the disclosing party. Any
information intended to be covered by the provisions of this section must be
specifically designated in writing or appropriately marked designating its
proprietary status. Proprietary information shall be subject to the following
terms and conditions:
A. Proprietary information shall be returned to the disclosing party upon
request. Unless proprietary information was previously known to the
receiving party free of any obligation to keep it confidential, or has
been or is subsequently made public by an act not attributable to the
receiving party, or is explicitly agreed to in writing not to be
regarded as confidential, it: (a) shall be held in confidence by the
receiving party and its employees, contractors and agents; (b) shall be
disclosed only to those employees, contractors, agents, or affiliates
who have a need for it in connection with this Agreement and shall be
used only for such purposes; and (c) may be used for other purposes
only upon such terms and conditions as may be agreed upon in writing by
Telco and United. If information marked Proprietary and given to the
receiving party was previously known to the receiving party, and if the
receiving party had no obligation to keep such information
confidential, the receiving party shall immediately notify the
disclosing party of such prior knowledge. Neither party shall disclose,
disseminate or release any proprietary information to anyone who is not
an employee, contractor, agent or affiliate having a need for it in
connection with this Agreement unless otherwise agreed upon in writing
prior to any such disclosure, dissemination or release. The receiving
party shall require any person not its employee or affiliate to whom it
discloses proprietary information to sign an agreement to protect that
proprietary information to the same extent the receiving party is
obliged to protect that proprietary information under this section.
Such an agreement shall be signed prior to disclosing any proprietary
information to the person not an employee or affiliate of the receiving
party.
4
<PAGE>
Article 1
Telco
B. Neither party shall be held liable for any errors or omissions in any
proprietary information or for any loss or damage arising out of the
other party's use of any such proprietary information. Nothing in this
Agreement shall require or prohibit the payment of an appropriate fee
by one party to the other party for the use of any proprietary
information covered by this Agreement.
C. Each party agrees to give notice to the other party of any demands to
disclose or provide proprietary information under lawful process prior
to disclosing or furnishing such proprietary information, and agrees to
cooperate in seeking reasonable protective arrangements requested by
the other party. In addition, any party may disclose or provide
information of the other party requested by a government agency having
jurisdiction over the party; provided that the party makes all
reasonable efforts to obtain protective arrangements satisfactory to
the party owning the proprietary information; and provided further that
the party owning the proprietary information may not unreasonably
withhold approval of the protective arrangements.
D. No rights whatsoever are granted, by license or otherwise, by this
Agreement with respect to proprietary information, except as needed for
the purposes of this Agreement or as authorized by the disclosing party
in writing.
E. In the event either party discloses, disseminates or releases any
proprietary information received from the other party outside the terms
of this Agreement, the other party may refuse to provide any further
proprietary information, and may demand prompt return of all
proprietary information previously provided to such party; such refusal
to provide any further proprietary information shall not constitute a
breach of this Agreement. These provisions are in addition to any other
remedies the party may have.
Interconnection standards that either party has a legal obligation
(independent of this Agreement) to provide to the other party shall not
be considered proprietary information for purposes of this Agreement.
The provisions of this section shall remain in effect for one (1) year
after termination of this Agreement unless otherwise agreed in writing
by both parties.
SECTION V
RESTORATION OF SERVICE IN THE EVENT OF OUTAGES
Restoration of service resulting from service outages due to equipment failures,
human error, fire, natural disaster, acts of God, or similar occurrences shall
be provided as follows. Restoration priority shall be afforded to those network
elements and services affecting national security or emergency preparedness
capabilities and those affecting public safety, health and welfare as those
elements and services are identified by the appropriate
5
<PAGE>
Article 1
Telco
government agencies. All other service shall be restored as expeditiously as
practicable.
SECTION VI
LIABILITY FOR OUTAGE
The liability of United in connection with the services provided to Telco under
this Agreement shall be limited to a credit for outage time unless the outage is
the result of gross negligence or willful misconduct by United, its employees,
agents, or contractors. Such credit shall be limited to an amount equal to that
portion of the charges owing under this Agreement from Telco to United and
attributable to the services provided by United for the duration of the outage
and shall be based on a proportionate reduction of such charges. Any claim or
demand for credit as a result of any such outage shall be waived unless
presented in writing within one (1) year after the date of the outage.
SECTION VII
EXCHANGE OF INFORMATION
This Agreement provides for the exchange of certain information by the parties
and the provision of services and facilities hereunder and administration of
this Agreement. Also, each party to this Agreement shall provide to the other
party data in sufficient detail to meet the other party's needs in support of
jurisdictional separations, access/service planning and interLATA network
planning requirements. Any request for data should include an explanation of
intended use. Where any such information is not otherwise required to be
provided under this Agreement and is not otherwise developed by any party, such
party may consider furnishing such information upon the other party's agreement
to pay the reasonable expenses of developing such information. Upon written
request, each party shall provide information reasonably necessary to enable the
other party to estimate charges under this Agreement for the following twelve
(12) months; however, unless otherwise agreed, such information need not be
furnished more frequently than semiannually.
In the event that any data or information exchanged or provided pursuant to or
in contemplation of this Agreement, that is an estimate or forecast or is based
on an estimate or forecast, turns out to be inaccurate, neither party shall have
any liability to the other party or any other person, in the absence of willful
misconduct. In addition, the party providing any estimate or forecast shall not
be bound by such estimates, forecasts and information with respect to future
terms and rights under this Agreement.
SECTION VIII
PRESERVATION OF RIGHTS OF THE OWNER
Neither the provision of any services by United to Telco under this Agreement,
nor the payment by Telco for such services, shall create or vest in Telco any
easement, ownership, or property rights of any nature in any facilities used to
provide service under this Agreement.
6
<PAGE>
Article 1
Telco
SECTION IX
INDEPENDENT CONTRACTORS
Each party agrees that it shall perform its obligations hereunder as an
independent contractor and not as the agent, employee or servant of the other
party. Each party has and hereby retains the right to exercise full control of
and supervision over its own performance of the obligations under this
Agreement.
SECTION X
FORCE MAJEURE
Neither party shall be held liable for any delay or failure in performance of
any part of this Agreement from any cause beyond its control and without its
fault or negligence such as acts of God, acts of civil or military authority,
government regulations, embargoes, epidemics, war, terrorist acts, riots,
insurrections, fires, explosions, earthquakes, nuclear accidents, floods,
strikes, power blackouts, volcanic action, lightning, other major environmental
disturbances, unusually severe weather conditions, inability to secure products
or services of other persons or transportation facilities, destruction of or
damage to facilities (i.e., cable cuts), or acts or omissions of transportation
common carriers.
SECTION XI
COMPLIANCE WITH EMPLOYMENT LAWS
All obligations under this Agreement shall be performed in compliance with all
applicable laws prohibiting discrimination against any employee or applicant for
employment because of race, color, religion, sex, national origin, age or
handicap. Where required by law, certificates of compliance shall be provided.
Each party shall comply with the provisions of the Fair Labor Standards Act of
1938, as amended, and all other applicable federal, state and local laws
governing employment.
SECTION XII
BILLING ARRANGEMENTS
Amounts of compensation for services provided under this Agreement shall be as
specified in the articles. Applicable taxes shall be in addition to the
compensation amounts. The following billing arrangements apply for all
compensation due under this Agreement, unless otherwise specified in the
articles. Bills or statements will be rendered monthly for all services and
facilities provide.
Bills will be payable thirty (30) calendar days from the bill date (as printed
on the bill), subject to the holiday treatment described below. Bills are to be
issued by United such that Telco's receipt is twenty (20) calendar days prior to
the required payment date to allow adequate time for processing. Bills not
issued within this time frame will not be subject to the late payment penalty
discussed below for the number of days the bill was late. The payor
7
<PAGE>
Confidential Treatment Requested. The redacted
material has been seperately filed with the
Commission
Article 1
Telco
will use its best efforts to pay the bill by the due date and is responsible for
proving that the bill was received late should the payor request that the late
payment penalty be waived. In assessing late payment penalties, it is the
responsibility of the payee to prove that the bill was rendered and transmitted
so as to provide reasonable assurance that the bill would be received by the
payor twenty (20) calendar days or more in advance of the payment date.
Payment must result in immediately available funds on or before the required
payment date unless the required payment date is on a weekend or holiday
observed by the remitting or receiving bank. In such cases, payment in
immediately available funds will be due as follows:
(a) If such payment date falls on a Sunday or holiday which is observed on
a Monday, the payment date shall be the first nonholiday following such
Sunday or holiday;
(b) If such payment date falls on a Saturday or on a holiday which is
observed on Tuesday, Wednesday, Thursday or Friday, the payment date
shall be the last nonholiday preceding such Saturday or holiday.
Unless agreed to otherwise, any payment of one hundred thousand dollars
($100,000) or more must be transmitted by electronic funds transfer. Each bill
must be accompanied by a reference number having up to ten characters. Each
payment must be accompanied by the reference number(s) for the bill(s) for which
the payment is received.
Any payment received after the required payment date, any payment received in
funds which are not immediately available as specified above, or any portion of
the amount due that is not received by the required payment date, will be
subject to a late payment charge, except as provided below. It is the
responsibility of United to prove that Telco failed to make payment on or before
the required date.
The late payment charge shall be the portion of the amount due, either received
or currently outstanding after the payment date multiplied by a late factor. The
late factor shall be (*) per day, compounded daily for the number of
calendar days from the required payment date to and including the date of
payment in immediately available funds or the highest interest rate (in decimal
value) which may be levied by law for commercial transactions in the state in
which the service is provided, whichever is lower.
United will include billing for late payment charges in the succeeding bill for
the related services or facilities.
Except as specified otherwise, any late payment by electronic funds transfer
resulting from bank error will not be subject to the late payment charge if the
payor verifies that it was not at fault. The discrepancy will be resolved by the
banks involved. It is the responsibility of the payor to notify the banks
involved and coordinate resolution of the discrepancy. Repeated errors by the
sending party's bank will result in reimposition of late payment charges on the
sending party.
8
<PAGE>
Article 1
Telco
If either party disputes any portion of a bill or statement amount, that party
shall notify the other party in writing of the nature and basis of the dispute,
according to the claims and dispute resolution procedures outlined in this
Agreement. The parties shall use their best efforts to resolve the dispute prior
to the required payment date.
If the dispute is not resolved by the required payment date, the payor shall,
notwithstanding the continued existence of the dispute, pay the bill or
statement amount in accordance with settlement terms specified above, but payor
shall reserve its claim against the other party for reimbursement after the
dispute.
If the claim, in whole or in part, ultimately is resolved in favor of the payor,
it shall be entitled to a refund from the other party. The amount of the refund
shall be an amount equal to the sustained claim amount plus interest calculated
from the date the payor pays the bill to the date the money is refunded, for
claims found in favor of the payor which are filed within six (6) months of the
payment date. For claims filed after six (6) months from the payment date,
interest will be paid from the claim date to the date the money is refunded to
the payor. This period shall include the payment date of the refund. Payment
must result in immediately available funds on the payment date of the refund.
The total amount of the refund shall be paid no later than thirty (30) calendar
days after written notice is given to both parties that the claim has been
sustained.
If Telco fails to pay any amount due within thirty (30) calendar days of the due
date, United reserves the right to discontinue the provisions of the service to
Telco at any time thereafter, upon thirty (30) calendar days written notice by
Certified U.S. Mail to the person designated in Section XXIV of this article. In
the case of such discontinuance, all applicable charges, including termination
charges, shall become due. If United does not discontinue the provision of the
services involved on the date specified in the thirty (30) calendar days notice,
and Telco's noncompliance continues, nothing contained herein shall preclude
United's right to discontinue the provision of the services to Telco without
further notice.
SECTION XIII
DEPOSIT
Prior to, or at any time after the provision of a service to Telco, each
individual United company may require Telco to make a deposit to be held as a
guarantee of the payment of rates and charges. Such deposit may not exceed the
actual or estimated rates and charges for the service for a two (2) month
period, plus the amount of any termination charges attributable to the service.
The fact that a deposit has been made in no way relieves Telco from complying
with regulations as to payment of bills.
When Telco has been provided notice that a deposit is required prior to the
provisioning of a service or facility, such deposit amount shall be paid in full
prior to United's activation of the service or facility. In the event
9
<PAGE>
Article 1
Telco
where a service or facility is currently operational and United determines a
deposit is required, United will provide notice to Telco of a deposit request,
identifying the amount of deposit being requested and the reason for such action
by United. In this instance, United's request for a deposit will be based solely
on Telco's record of performance relative to the contractual obligations of the
applicable service provided by United. Telco will be required to remit the
deposit in full within thirty (30) calendar days of United's deposit request and
shall be subject to all other requirements and actions regarding payments to
United.
When the provision of the service to Telco is terminated, the amount of the
deposit will be credited to Telco's account and any credit balance which may
remain will be refunded. Telco will receive interest in accordance with the
rules of the regulatory agencies in the state where the service or facility is
provided.
SECTION XIV
CLAIMS PROCEDURES
When questions arise relative to payment for services provided, both parties
agree to use the procedures described below to resolve such questions in a
timely and efficient manner.
A. Inquiry. Routine communications between the parties concerning
--------
potential errors are considered inquiries, not claims. Inquiries are
resolved in normal practice through telephone calls, routine business
meetings or written communications. The purpose of an inquiry is to
acquire additional information. Both parties agree to provide in a
timely manner the necessary assistance in the investigation and
resolution of inquiries. An inquiry may address, but is not necessarily
limited to, the following:
(a) Usage volumes and missing data.
(b) Identification of potential billing errors.
(c) Unexplained checks or bulk adjustments.
(d) Additional investigation required to substantiate a claim or
back-billing.
(e) Discrepancies between revenue and access volumes.
If an investigation results in acknowledgment of an error by both parties, the
error will be rectified. Where the resolution requires an exchange of monies,
the inquiry, if resolved at the inquiry stage, will be documented, or the
originator of the inquiry will file a claim for the purpose of documenting the
activity taken to resolve the discrepancy and identifying the dollar amount
involved. Procedures established below for the processing of a claim will take
effect in these instances.
B. Origination of a Claim. In the event that an issue cannot be resolved
-----------------------
via an inquiry, and verifiable evidence is available to support a
claim, either party may submit an issue as a claim to the other party.
10
<PAGE>
Article 1
Telco
All claims will originate from and be provided to the designated
representative of each party. All claims will be submitted in writing
with both an appropriate tracking number identified on the face of the
written notice and adequate documentation provided as may be reasonably
required by either party to investigate, substantiate and facilitate
resolution of the claim.
If either party believes that claims are being originated which are
based on questionable criteria, that party may request the
establishment of a joint United/Telco forum to discuss the process or
data quality concerns at issue.
C. Acknowledgment. Within ten (10) business days the respondent will
---------------
verbally acknowledge receipt of a claim. If the respondent cannot
respond by the expected claim response date (as identified in the claim
and established at thirty (30) calendar days from the date of issuance
of the claim), it will so inform the originator at the time of
acknowledgment and both parties will mutually agree to a later response
date.
D. Claim Response. The parties agree to actively pursue a response to the
---------------
claim by the claim response date. In the event that the claim is
concurred in by the respondent, the claim response will include the
following:
(a) Claim Number
(b) Concurred Date
(c) Concurred Amounts of Adjustment
(d) Calendarized Period for Adjustment
(e) Expected Adjustment Date
(f) Penalty charge requirements (where applicable)
(g) Method of Payment (e.g.,)
- Bill (detail of adjustment)
- Check
- Wire Transfer
- PARS
E. Claim Resolution. A claim will remain open until all issues are
-----------------
resolved or a portion is withdrawn by the claimant or concurred in by
the parties through further negotiation or are resolved through the
dispute escalation procedures. Claims are for the principal dollar
amount only. Penalty charges, in accordance with the terms of this
Agreement and any applicable tariffs may apply to a claim. Claims are
resolved when the originator verifies payment and sends a copy of the
11
<PAGE>
Article 1
Telco
claim to the respondent marked "Resolved." The originator of a claim
will make every effort to verify payment of a concurred claim amount
within thirty (30) calendar days of receipt of the payment.
F. Denial of Claim. If the respondent finds that a claim is not
----------------
meritorious, the respondent will deny the claim by notice in writing to
the originator. The originator may choose to withdraw the claim and so
notify the respondent in writing within thirty (30) calendar days. If
the originator chooses to pursue the claim, both parties may meet to
negotiate or pursue resolution of the claim through the dispute
escalation procedures.
SECTION XV
DISPUTE ESCALATION PROCEDURES
Claims that are not resolved may be escalated by either party. These procedures
are to be followed in an attempt to resolve disputes expeditiously and fairly
without the need to resort to formal adjudicatory measures.
A. Notice of Dispute. Either party may invoke the dispute escalation
------------------
procedures by initiating director level or higher written
correspondence to the designated representative of the other party.
Notices of dispute shall be clearly marked as such and shall contain
all information necessary to pursue resolution of the dispute.
B. Dispute Response. The party to which the Notice of Dispute is directed
-----------------
shall respond in writing no later than fifteen (15) days from the date
of receipt of the Notice of Dispute. Such response shall state the
party's position in detail.
C. Dispute Resolution. If the designated representatives of the parties
-------------------
cannot reach agreement on resolution of the dispute within thirty (30)
business days of the issuance of the response to the Notice of Dispute,
either party may elect immediate referral to the respective company's
executive management.
D. Mediation. If negotiations between the companies' executive management
----------
do not result in resolution of the dispute within twenty (20) business
days of the date of referral, then prior to filing any judicial action
and within fourteen (14) days from the expiration of the executive
management review, either party may demand nonbinding mediation by
issuing a Notice of Mediation to the designated representative of the
other party. Both parties agree to pursue a mediated resolution of the
dispute in good faith. The Notice of Mediation shall be clearly marked
as such and contain the information necessary to pursue resolution of
the dispute. The originator of the Notice of Mediation shall arrange to
have the notice delivered within twenty-four (24) hours of issuance.
12
<PAGE>
Article 1
Telco
Unless otherwise agreed to by the parties, the designated
representatives of the parties shall agree upon an independent mediator
within five (5) business days. Said mediator shall be an individual
who, unless the parties otherwise mutually agree, has never been
employed, directly or indirectly, by either of the parties or their
affiliates. If the parties cannot agree upon a mediator, then within
the same five (5) business day period each shall appoint an independent
representative, one who has never been employed, directly or
indirectly, by either of the parties or their affiliates, and these two
(2) independent representatives, within five (5) business days of their
appointment, shall appoint the mediator. The mediator shall set the
time for a meeting to be held with the designated representative of
each party. The designated representatives shall be empowered to
resolve the dispute on behalf of the parties and may be accompanied by
an attorney. A meeting shall take place within thirty (30) days of the
date of the appointment of the mediator and shall be held in a location
agreed to by the parties and the mediator.
The mediator shall control the procedural aspects of the mediation,
including the time and place of each session, the agenda for each
session, whether a session shall be a separate meeting between the
mediator and a party or a joint meeting with both parties and the
projected date for the conclusion of the mediation process. At any time
following the initial joint meeting, either party may withdraw from the
mediation by written notice to the mediator and the other party.
The mediator shall attempt to mediate the dispute and bring the parties
to a resolution of the issue. Failing this, the mediator, at the
conclusion of the mediation process, shall provide to the parties
within ten (10) days his/her opinion of the appropriate resolution of
the dispute. This opinion is not binding on either party and may not be
used by either party in any future proceeding.
The mediation process shall be treated as a compromise negotiation for
purposes of the Federal Rules of Evidence and State Rules of Evidence.
The mediator shall be disqualified as a witness, consultant or expert
in any pending or future action relating to the subject matter of the
mediation, including those between persons not parties to the
mediation.
Within five (5) business days of receipt of the mediator's opinion,
each party's designated representative shall meet one final time to
resolve the dispute. If they are unable to do so, both parties are free
to pursue available legal remedies.
The entire mediation process is confidential. The parties and the
mediator shall not disclose to third parties (1) information disclosed
by either party during the mediation process or (2) information
regarding the mediation process itself, including any settlement terms.
13
<PAGE>
Article 1
Telco
If any party subject to the terms and conditions of this mediation
provision fails or refuses to appear at and participate in a mediation
meeting after due notice, the mediator may hear and determine the
controversy upon evidence produced by the appearing party.
The mediation costs shall be borne equally by each party, except that
each party shall bear the cost of presenting its case at mediation. The
mediator's compensation rate will be determined at or before
appointment. At the time of the mediator's appointment, the mediator
shall be required to execute an agreement in a form mutually agreeable
to the parties, which agreement will set forth, among other things, the
mediator's duties, obligations and compensation.
E. Payment Upon Resolution of Dispute. Where resolution of a dispute
-----------------------------------
requires the exchange of monies, payment of the disputed amount will be
made pursuant to the negotiated settlement. Payment will include
applicable penalty charges.
F. Course of Business. Unless otherwise agreed in writing, the parties
-------------------
shall continue to provide service, honor all other commitments under
this Agreement, and continue to make payments in accordance with this
Agreement during the course of dispute resolution pursuant to the
provisions of this section.
SECTION XVI
COMPLIANCE MONITORING
Telco shall have the right to visit any service provision location annually upon
reasonable notice to United to ensure that the terms of the Agreement are being
met. Visitation rights shall include the right to inspect the facilities of the
other party and, upon thirty (30) calendar days written notice, to review
worksheets, performance or service plan data, and documents used in the
preparation of bills for services provided to Telco. Visitation rights will not
be afforded Telco in those instances where audit or review activities will
provide adequate assurance that the terms of the Agreement are being met or
where a visit to the premise by Telco would compromise United's ability to
protect the proprietary information of other customers of United. Expenses
incurred by United for facilitating this monitoring function may be assessed to
Telco as identified in the individual articles to this Agreement.
SECTION XVII
REVIEW PROCEDURES
The following procedures establish the parameters agreed to by both parties for
the conduct of an audit of the telecommunications services identified in Exhibit
1 of this article. Audit rights and the services to which they apply are further
defined in the other articles to this Agreement. In an effort to minimize the
number of on-premise visits, the parties agree to the combination of subjects
for an individual review (for example, Billing and Collection and Revenues).
14
<PAGE>
Article 1
Telco
A. Review Periods and Frequency. Unless agreed otherwise in any additional
-----------------------------
articles under this Article I, neither party may conduct more than one
(1) on-site audit/review per calendar year in each of the party's
operating entities. Periods available for review shall include any
period not previously reviewed by the parties and not exceeding
twenty-four (24) months prior to the scheduled review. Unless mutually
agreed by the parties, the on-site review will not exceed two (2)
consecutive weeks in duration. Subsequent reviews will not occur until
such time as the reviewer's previous review is closed, unless mutually
agreed by the parties.
B. Notification of Review and Response. At least forty-five (45) calendar
------------------------------------
days prior to any review, the party requesting the review will provide
the other party with written notification outlining the following:
(a) General subject matter to be reviewed (e.g., Billing and
Collection, Revenues).
(b) Proposed period to be reviewed.
(c) Proposed review start and end date.
(d) Review personnel (inclusive of names and titles).
(e) Data Request outlining the areas to be reviewed.
(f) Information and resources required to perform the review.
(g) Location.
The party to be reviewed will respond in writing to the requesting
party's notification within thirty (30) calendar days of receipt to
confirm the schedule and identify the host review team personnel.
C. Pre-Review Meeting or Conference Call. The parties agree to conduct a
--------------------------------------
Pre-review meeting or conference call prior to the on-site review to
discuss procedural details and to clarify the Data Request and
information requirements. The request for a pre-review meeting or
conference call will usually be included in the review requester's
notification letter or in the party to be reviewed's response.
D. Postponement of the Review Date. If the party to be reviewed elects to
--------------------------------
postpone the commencement date, it will so advise the requesting party
in writing within fifteen (15) calendar days of receipt of the notice.
The party to be reviewed will state the reason for the postponement and
propose a new commencement date.
E. Post-Audit/Review Meeting. At the completion of the on-site portion of
--------------------------
the review, the party requesting the review will conduct a
post-audit/review meeting. The purpose of this meeting will be to
disclose any findings from the review and identify any open issues.
F. Final Audit/Review Findings Report. Forty-five (45) calendar days after
-----------------------------------
the conclusion of the review, the reviewing party shall provide a
formal report of the audit/review findings. The final report shall
15
<PAGE>
Article 1
Telco
contain all relevant findings from the audit/review, including any
findings that might result in the submission of a claim. The final
report shall specify any corrective action desired and identify any
applicable revenue impacts. The final report shall be the reviewing
party's final response.
G. Response to Final Report. The reviewed party shall respond within
-------------------------
forty-five (45) calendar days after receipt of the audit/review final
report. The response shall detail any corrective action taken and,
where applicable, respond to identified revenue impacts and identify
the method of compensation to the reviewing party.
H. Review Resolution Statement. The reviewing party will forward a review
----------------------------
resolution statement to the reviewed party within forty-five (45)
calendar days after receipt of the response to final report. The review
resolution statement shall attest to the receipt and completeness of
the response to final report and formally declare closure of the
review.
I. Nonconcurrence. If a party disagrees with all or part of the findings
---------------
from the review, it may submit a claim to the other party. Claims will
be handled in accordance with the claims procedures identified in this
Agreement or applicable articles to this Agreement.
SECTION XVIII
TERMINATION
This Agreement will continue in effect until all articles under this Agreement
are terminated. Each article, except this Article I, contains its own
termination provision and may be terminated separately. The entire Agreement,
including all articles, may be terminated by either party by giving written
notice to the other party equal to the longest notice of termination period
specified in the articles in effect.
SECTION XIX
ASSIGNMENT
Except as otherwise expressly provided in this Agreement, the assignment of any
right, obligation or duty, in whole or in part, or of any other interest under
this Agreement without the written consent of the other party shall be void. A
party may assign its rights, obligations, duties, or interests under this
Agreement to its respective affiliates without the consent of the other party.
If any affiliate of either party shall succeed to that portion of the business
of such party that is responsible for, or entitled to, any rights, obligations,
duties or other interests under this Agreement, such affiliate may succeed to
those rights, obligations, duties and interests of such party under this
Agreement. In the event of any succession under this section, the successor
shall expressly undertake in writing to the other party the performance and
liability for those obligations, duties and interests as to which it is
16
<PAGE>
Article 1
Telco
succeeding as a party to this Agreement, and the party shall thereafter be
relieved of such obligations, duties and interests except for matters arising
out of events occurring prior to the date of such undertaking.
SECTION XX
NO RIGHTS TO THIRD PARTY
This Agreement shall not be deemed to provide third parties with any remedy,
claim, right of action, or other right.
SECTION XXI
INDEMNIFICATION
The indemnification provisions of this section shall apply to all matters
arising under this Agreement.
To the extent not prohibited by law, each party shall indemnify the other and
hold it harmless against any loss, cost, claim, injury, or liability relating to
or arising out of negligence or willful misconduct by the indemnifying party or
its agents or contractors in connection with the indemnifying party's
performance under this Agreement; provided, however, that any indemnity for any
loss, cost, claim, injury or liability arising out of or relating to errors or
omissions in the provision of communication facilities or services under this
agreement shall be limited to a credit allowance as otherwise specified in this
Agreement. The indemnifying party agrees to defend any suit brought against the
other party for any such loss, cost, claim, injury or liability. The indemnified
party agrees to notify the other party promptly, in writing, of any claims,
lawsuits or demands for which the other party is responsible under this section
and to cooperate in every reasonable way to facilitate defense or settlement of
claims. The indemnifying party shall not be liable under this section for
settlement by the indemnified party of any claim, lawsuit or demand if the
indemnifying party has not approved the settlement in advance unless the
indemnifying party has had the defense of the claim, lawsuit or demand tendered
to it in writing and has failed to assume such defense.
No claims under this section, or claims with respect to charges under this
Agreement or adjustments of such charges, or any other claims with respect to
this Agreement may be made more than two (2) years after the date of the event
that gave rise to the claim; provided, however, that claims for indemnity under
this section may be made within two (2) years of the accrual of the cause of
action for indemnity.
SECTION XXII
NOTICE
Except as otherwise provided under this Agreement or in the attachments or
exhibits hereto, all notices, demands, or requests shall be deemed to have been
duly given when made in writing and delivered in person or deposited in the
United States mail, certified mail, postage prepaid, return receipt requested;
sent via telex; cable; electronic mail or facsimile and addressed as follows:
For Telco:
17
<PAGE>
Article 1
Telco
Mark Stodter
Telco Development Group, Inc.
Lafayette Business Center
4206 Technology Court
Chantilly, VA 22021
For United:
Account Executive
United Telephone Company of Florida
P.O. Box 165000
Altamonte Springs, FL 32716-5000
or to such other address as either party may specify by written notice to the
other.
SECTION XXIII
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the state of Florida.
SECTION XXIV
SEVERABILITY
If any provision of this Agreement is held invalid, unenforceable or void, the
remainder of the Agreement shall not be affected thereby and shall continue in
full force and effect.
SECTION XXV
AMENDMENTS; WAIVERS
The various articles of this Agreement, including exhibits and schedules
attached thereto and incorporated by reference, constitute the entire Agreement
between the parties, and supersede all prior oral and written agreements,
representations, undertakings or proposals with respect to the subject matter
hereof.
In addition, no course of dealing or failure of either party to enforce any
provision of this Agreement shall be construed as a waiver of such provision or
any other rights under this Agreement. If a party fails to enforce any provision
of this Agreement, it is still the responsibility of both parties to continue to
comply with all provisions of this Agreement.
The parties may amend or modify any part of this Agreement. Such action shall
not constitute a modification or change of any other part of this Agreement,
unless explicitly stated in such Agreement.
18
<PAGE>
Article 1
Telco
SECTION XXVI
TITLES AND HEADINGS
Titles, headings and table of contents of articles and sections of this
Agreement have been inserted for convenience of reference only. They shall not
define, modify or restrict the meaning or interpretation of the terms or
provisions of this Agreement.
SECTION XXVII
INTELLECTUAL PROPERTY
Except as expressly provided herein, nothing contained in this agreement shall
be construed as conferring by implication, estoppel, or otherwise, any license
or right under any patent, trade name or copyright of either party.
SECTION XXVIII
PUBLICITY
Unless otherwise mutually agreed upon, neither party shall publish or use the
other party's name, language, pictures or symbols from which the other party's
name may be reasonably inferred or implied in any advertising, promotion, or any
other publicity matter relating directly or indirectly to this Agreement.
SECTION XXIX
COMPLIANCE
Where required, United and Telco shall ensure compliance with all necessary
rules, licenses and approvals that may be in effect in the local, state and
interstate jurisdictions that are required in the provisioning and performance
of services and facilities covered under this Agreement. Telco and United agree
that other such rules could be developed. Both parties will implement the
necessary controls to assure that the other party is held harmless from any
claims of violations of such rules, licenses and approvals outside of its
responsibility and shall indemnify that party for attorney's fees and all costs
directly related to violations of such rules, licenses and approvals.
SECTION XXX
EXECUTED IN COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same document.
The parties have executed this Article I through their authorized
representatives on the date set forth below their signatures. The articles in
effect as denoted in the Index of Articles constitute the entire Agreement
between the parties. Any other existing General Provision Agreements in effect
between the parties applicable to the subject matter of this Article I - General
Provisions Agreement and covering the period subsequent to the effective date of
this Article I, shall be of no force or effect for the time period beginning
with the effective date of this Article I; except that Telco
19
<PAGE>
Article 1
Telco
shall remain obligated to pay United for any services rendered under these
other General Provision Agreements while they were in effect.
WITNESS: UNITED TELEPHONE COMPANY
OF FLORIDA
/s/ Mary Lou Hunt /s/ Louis Carrion
- --------------------------- -------------------------------
By: Louis Carrion
Title: Director-Marketing &
Sales
Date: January 3, 1994
-------------------------
WITNESS: TELCO DEVELOPMENT GROUP, INC.
/s/ Henry G. Luken III
- --------------------------- -------------------------------
Typed name: HENRY G. LUKEN III
-------------------
Title: CEO
------------------------
Date: January 17, 1994
-------------------------
20
<PAGE>
Article 1
Telco
Exhibit 1
EXHIBIT 1 TO ARTICLE I
LIST OF ARTICLES
This Exhibit to Article 1 is effective as of the date certification is received
by Telco from the state of Florida. The following Articles are in effect as of
the date of executive of this exhibit and constitute the entire agreement
between the parties:
Article
Number Description
------- -----------
1 General Provisions
8 Billing and Collection Services
21
<PAGE>
Article VIII
Billing and Collection Services
- --------------------------------------------------------------------------------
STANDARD AGREEMENT FOR THE PROVISION
OF
BILLING AND COLLECTION
SERVICES
BETWEEN
UNITED TELEPHONE COMPANY OF FLORIDA
AND
TELCO DEVELOPMENT GROUP, INC.
- --------------------------------------------------------------------------------
<PAGE>
SUPPLEMENT NO. 2
BILLING AND COLLECTION SERVICES
BETWEEN
UNITED TELEPHONE COMPANY OF FLORIDA
AND
TELCO DEVELOPMENT GROUP, INC.
This Supplement No. 2 is issued to add language to Article 8 to place both
United and Telco in compliance with Florida Public Service Commission rules and
Florida State Statutes.
Attachment D, Section I, Paragraph D-3 is changed to read as follows:
Telco agrees that it will only deliver to United for billing messages
originating in United's service area that are handled by companies authorized
and certified by the Florida Public Service Commission to do business in the
state of Florida and messages originating outside of United's service territory
from carriers authorized to operate in the state of origination by appropriate
state regulatory authorities.
The parties have executed this Supplement No. 2 through their authorized
representatives on the dates set forth below their signatures.
WITNESS: UNITED TELEPHONE COMPANY OF FLORIDA
/s/ Doris A. Brinkman /s/ George V. Head
- ----------------------- ------------------------------------
George V. Head
Title: Vice President-Carrier &
Enhanced Service Markets
Date: 10-19-94
-------------------------------
WITNESS: TELCO DEVELOPMENT GROUP, INC.
/s/ Mark Brown /s/ Henry G. Luken
- ----------------------- ------------------------------------
Typed name: Henry G. Luken
------------------------
Title: COB
------------------------------
Date: 11/4/94
-------------------------------
<PAGE>
Article VIII
Billing and Collection Services
Standard Agreement for the Provision
of Telecommunications Services
-------------------
Article VIII
Billing and Collection Services
Table of Contents
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PURPOSE OF AGREEMENT 1
SECTION I Term 1
SECTION II General Provisions 2
SECTION III Purchase of Accounts Receivable 4
SECTION IV Filing of Revised Intrastate Tariffs 4
SECTION V Reservations of Rights 5
SECTION VI Limitation of Liability 6
SECTION VII Billing Information 6
SECTION VIII Equitable Remedies 6
SECTION IX Notice and Demands 6
SECTION X Confidential Treatment 7
SECTION XI Independent Contracts 7
SECTION XII Force Majeure 7
SECTION XIII Compliance with Employment Laws 8
SECTION XIV Resolution of Disputes 8
SECTION XV Indemnification 9
SECTION XVI Amendments; Waivers 10
SECTION XVII Assignment 10
</TABLE>
i
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
Standard Agreement for the Provision
of Telecommunications Services
Article VIII
Billing and Collection services
Table of Contents (continued)
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
SECTION XVIII Third-Party Beneficiaries 10
SECTION XIX Governing Law 10
SECTION XX Entire Agreement 11
SECTION XXI Executed in Counterparts 11
SECTION XXII Severability 11
SECTION XXIII Headings 11
</TABLE>
Exhibits to Purpose of Agreement
- --------------------------------
EXHIBIT A Additional Terms and Conditions
EXHIBIT B Rates and Charges
Attachments to Article VIII:
- ----------------------------
ATTACHMENT A Definition of Terms
ATTACHMENT B Standard B&C Operating Procedures
ATTACHMENT C Product Development Procedures
ATTACHMENT D Product Offering - Casual Caller
ATTACHMENT E Product Offering - Provision of Management Information
11/12/93
<PAGE>
Article VIII
Billing and Collection Services
PURPOSE OF AGREEMENT
This Agreement is for the provision of Billing and Collection services
(hereinafter the "Agreement") between United Telephone Company of Florida herein
referred to as "United" and Telco Development Group, Inc. herein referred to as
"Telco." United and Telco shall each hereinafter sometimes be individually
referred to as the "party" and collectively referred to as the "parties."
This Agreement specifies the rights and obligations of each party hereto with
respect to the provision by United of customer billing and collection services
for interexchange services and 900 services provided by Telco to customers
within the exchange service area of United.
I. TERM
This Agreement shall become effective as of the date Telco receives
certification by the state of Florida and is null and void until such
certification is received. This Agreement shall be in effect for a period of
two (2) years from date certification is received by Telco. Renewal shall be
automatic for the same period as the original agreement. Either party may
elect to terminate this Agreement for any reason upon ninety (90) days
written notice to the other party. In the event that any of the following
should occur, either party may elect to terminate upon thirty (30) days
written notice, identifying the reason(s) for early termination to the other
party, and provided that said termination is not inconsistent with the terms
of any applicable tariff:
1) A material element of this Agreement (which in the opinion of one of the
parties adversely affects that party) is either not implemented as
required in this Agreement or is changed.
2) Any regulatory action that results in either party's inability to provide
the service in the manner and for the rates and charges outlined in this
Agreement.
In the event that United chooses to terminate this Agreement according to the
procedures identified above, Telco will not be subject to any applicable
termination charges; otherwise, all applicable termination charges shall apply-
In the event of breach of any provision of this Agreement by either party, the
nonbreaching party may elect to terminate upon thirty (30) days written notice
after identifying the breach, and provided that the termination is not
inconsistent with the terms of any applicable tariff; unless:
A) this is the first occurrence of this breach, and
B) such breach is rectified prior to the expiration of the thirty (30)
days or the breaching party has taken the appropriate steps to rectify
the breach to the satisfaction of the breached party.
1
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
In the event of termination by United resulting from a continuing Telco breach
of this Agreement, all applicable termination charges shall apply.
Termination of this Agreement will result in the termination of all billing and
collection services to Telco provided hereunder and as identified in the
attachments.
II. GENERAL PROVISIONS
A. Commencing on the effective date except as otherwise noted herein,
United shall provide all interstate and intrastate billing and
collection services pursuant to the terms and conditions of this
principal Agreement and the exhibits hereto and any applicable
intrastate tariffs.
B. United shall perform for Telco, billing and collection services that
may include recording of toll messages, processing of rated toll
messages, the preparation of bills for message-billed service, mailing
of statements of the amounts due for end user interexchange service
received from Telco, and the collection of monies due from the end
users. Said billing and collection services may also include handling
of customer inquiry, maintenance of accounts, treatment of accounts,
message investigation, centralized toll investigation and billing
analysis services. The specific product offerings/services Telco
intends to purchase under this Agreement and their application to
Article VIII are identified as attachments and listed in the Index of
Attachments to this Agreement.
C. The parties adopt the following documents:
1. Additional Terms and Conditions for the Provision of Billing and
Collection Services, attached hereto and incorporated herein as
Exhibit A,
2. Rates and Charges for Billing and Collection Services attached
hereto and incorporated herein as Exhibit B,
3. Operating Entities for Telco, attached hereto and incorporated
herein as Exhibit C, and
4. operating Entities for United attached hereto and incorporated
herein as Exhibit D.
D. In the event of any conflict between provisions contained in the
exhibits hereto and the provisions of an effective intrastate tariff,
the provisions of the tariff shall control. However, it is the
intention of the parties that the exhibits hereto, to the extent not
in conflict with the provisions of an effective revised intrastate
tariff, supplement such tariff, supply necessary operational practices
and are to be construed to the extent possible in harmony with the
tariff.
2
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
E. The term "principal agreement" as used herein shall refer to this document
consisting of twenty-two (22) sections.
Except where expressly provided otherwise, the term "Agreement" as Used
herein shall include the principal agreement and all present exhibits and
attachments thereto and, upon adoption and incorporation herein, all future
exhibits.
F. Except where expressly provided otherwise, the definitions contained in
the principal agreement or the exhibits shall govern all parts of the
Agreement.
G. The words "shall" and "will" are used interchangeably throughout the
Agreement. The use of one or the other shall not mean a different degree
of right or obligation for either party.
H. The procedures for ordering and receiving the services provided hereunder
and the performance obligations of the parties are set forth in Attachment
B - Standard B&C Operating Procedures attached hereto. Deviations from
these procedures may be required as a result of the particular B&C product
offering being ordered by Telco. Telco will be provided advance notice of
these deviations along with their inclusion in the product offering
attachment.
I. Specialized services and development of products within the scope of this
Agreement will be provided on an individual case basis (ICB) and according
to the procedures as specified in Attachment C - Product Development
Procedures. Specialized services and development of products which are
outside the scope of this Agreement may be performed for Telco by United
as may be mutually agreed to by the parties. Such agreement may
constitute an amendment to this Agreement and shall control the
proprietary nature of an ownership interests in such products and
services.
J. United will maintain a performance level with respect to the billing and
collection of Telco charges that is consistent with United's own service
measurement criteria applied to bill and collect its own charges. Telco
will maintain a performance level with respect to the quality and accuracy
of messages provided to United for collection consistent with United's own
message rating and recording standards and experience with denial and
write-off of individual messages.
K. Telco hereby recognizes United's right to disconnect the end user's
service for nonpayment in accordance with United's established procedures
and as may be permitted by law or regulation. Telco also agrees to hold
United harmless when acting in conjunction with these procedures or as
established by requirements of law or regulation. Either party shall
retain the right to pay an end user's full bill if in that party's sole
judgment, denial of service to the particular end user would be
detrimental to the party'B customer service image or financial position.
3
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
L. Sufficient data associated with the performance of services hereunder
shall be maintained for the longestof the following periods:
- the retention time required by law for maintaining federal, state
and local tax information,
- the time required by law or regulation in order to substantiate or
reconstruct end user invoices,
- or the retention time currently used by United for its own billing
information in compliance with legal or regulatory rulings.
M. United may restrict Telcols access to customer information based on
regulatory requirements, customer contracts, and company
nondisclosure policies. In no event shall United allow Telco access to
customer information where that customer does not subscribe to or use the
services of Telco in accordance with the definition of Telcols customer in
Attachment A to this Agreement.
III. PURCHASE OF ACCOUNTS RECEIVABLE
United will purchase from Telco its accounts receivable that arise from bills
rendered by United to Telco customers. The purchase of accounts receivable will
be limited to amounts due Telco when United provides bill rendering service for
Telco. United's purchase of Telcols accounts receivable shall be with
adjustments, payment procedures and interest. Telco warrants that it has title
to the accounts receivable purchased by United. Telco agrees not to assign,
transfer, sell, exchange or give its accounts receivable related to the services
to any other entity or person.
IV. FILING OF REVISED INTRASTATE TARIFFS
A. To the extent that modification of any of United's tariffs is necessary
to effectuate any of the provisions of this Agreement, except for
billing and collection rate restructuring, or billing and collection
rate level change, United shall file all necessary tariff revisions as
soon as, using best efforts, is practicable following the effective
date. United shall also use its best efforts to obtain regulatory
approval of such revisions for effectiveness at the earliest practicable
date. Telco agrees to support United's filing efforts before any
regulatory body in this regard and further agrees to notify United prior
to the submission of any comments to the filing and review the contents
of such prepared contents with United. To the extent that any such
tariff filings are in support of Telco billing and collection conversion
activities, Telco agrees to forego any action, intervention or
otherwise, that would impede the ability of United to gain approval for
any such filing so long as such filing is consistent with the terms and
conditions of this Agreement.
B. If United elects to file revised intrastate tariffs, United will so
advise Telco not less than thirty (30) days prior to filing and shall
4
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
review the details of such proposed filings with Telco prior to their
submission to the Florida Public Service Commission (FPSC) to enable
Telco to determine whether they will permit United to provide intrastate
billing and collection services to Telco in conformity with the
Agreement.
V. RESERVATION OF RIGHTS
A. In the event that 1) during the term of this Agreement, the Florida
Public Service Commission substantially changes the terms or conditions
contained in United's intrastate tariff governing the provision of
intrastate services provided for herein, or 2) during the approval
process of any amendments to the intrastate tariff, imposes any other
requirements) on Telco and/or United condition 1) and 2) referred to
hereinafter individually and collectively as "FPSC Modification") which
does not, in the judgment of Telco and United, allow for implementation
or continuation of billing and collection services as contemplated
herein, Telco shall have the right, upon sixty (60) days' written notice,
to terminate this Agreement; provided, however, such right must be
exercised consistently with any limitations upon termination contained in
the intrastate tariff. Such right must be exercised within sixty (60)
business days of the date of the FPSC final order. Telco shall not
unreasonably withhold its consent to minor changes required in the
intrastate tariff or in the amendments thereto by the FPSC.
B. Except as otherwise provided in Section IV (A) preceding, by entering
into this Agreement, neither party waives, releases or compromises any
rights it may have to argue, in any federal or state regulatory
proceeding (or in any judicial appeal following such a proceeding), in
support of or in opposition to, any position regarding 1) accounting for
deregulated or detariffed billing and collection services, 2) removal
from regulated accounts of expenses and investment associated with
deregulated or detariffed billing and collection services, and/or 3) any
other issue pertinent to regulation or deregulation of costs which were,
are now, or may in the future be associated with the provision of billing
and collection services. Each party expressly reserves all of its rights
in connection with such matters.
C. At such time as detariffing of United's intrastate billing and collection
service may take place, the parties agree that the terms and conditions
contained in Exhibit A for interstate billing and collection services
shall apply with respect to detariffed intrastate billing and collection
services, and that United's intrastate billing and collection services
thereafter shall be provided in accordance with this Agreement and terms
and conditions of the exhibits attached hereto and incorporated herein.
Upon detariffing or deregulation, United agrees to limit the rates for
intrastate billing and collection services to be consistent with the
contracted rates for
5
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
interstate billing and collection services unless otherwise agreed
between the parties. Such rates shall continue for the remainder of
the term of this Agreement.
VI. LIMITATION OF LIABILITY
Each party's liability to the other (as distinct from a party's obligation to
pay for services provided pursuant to this Agreement) for any loss, cost,
claim, injury, liability or expense, including reasonable attorneys' fees,
relating to or arising out of any negligent act or omission in its performance
of this Agreement (not involving gross negligence or knowing and willful
misconduct) shall be limited to the amount of direct damage actually incurred.
Absent such gross negligence or knowing and willful misconduct, neither party
shall be liable to the other for any indirect, special, or consequential damage
of any kind whatsoever. For purposes of the above limitation or liability in
cases not involving gross negligence or knowing and willful misconduct, "direct
damages" are defined to include 1) in the case of data or information supplied
to Telco, United's charges for such data or information, and 2) in the case of
data or information which is the basis for rendition of bills to Telcol's
customers, United's charges for such data or information and, to the extent
United's act or omission precludes rendition of bills, the unbillable revenue
directly attributable to United's act or omission.
VII. BILLING INFORMATION
Attached to this Agreement as Attachment B is the parties' agreement with
respect to information relating to billing and collection services. Anything
to the contrary in Attachment B notwithstanding, it is specifically understood
and agreed by the parties that customer account information transferred by
United to Telco, may be used by either party for any lawful business purpose;
provided, such purpose is not prohibited by any applicable law, rule,
regulation or judicial or regulatory order. Neither party waives any rights it
may have to assert before any regulatory or judicial forum with jurisdiction
over the subject matter that a proposed or actual use of information is not for
a lawful business purpose.
VIII. EQUITABLE REMEDIES
In the event of a breach, or threatened breach, of any provision of this
Agreement, the parties agree that the harm suffered by the injured party should
not be compensable by monetary damages alone and, accordingly, that the injured
party shall, in addition to other available legal or equitable remedies, be
entitled to an injunction against such breach or threatened breach without the
necessity of posing a bond.
IX. NOTICE AND DEMANDS
Except as otherwise provided under this Agreement or in the attachments or
exhibits hereto, all notices, demands, or requests shall be deemed to
6
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
have been duly given when made in writing and delivered in person or
deposited in the United States mail, certified mail, postage prepaid,
return receipt requested; sent via telex; cable, electronic mail or
facsimile and addressed as follows:
Telco:
Mr. Mark Stodter
Telco Development Group, Inc.
Lafayette Business Park
4206 Technology Court
Chantilly, VA 22021
United:
Account Executive
Sprint/United Telephone-Florida P.0. Box 165000
Altamonte Springs, FL 32716-5000
The addresses to which such notices, demands, requests or other
communications may be changed by written notice given by such party to the
other party pursuant to this section.
X. CONFIDENTIAL TREATMENT
The parties acknowledge that this Agreement contains commercially confidential
information that may be considered proprietary by either or both parties, and
agree to limit distribution of this Agreement to those individuals in their
respective corporations or affiliate corporations with a need to know the
contents of this Agreement. Neither party will disclose the terms,
conditions, rates or charges applicable under this Agreement to any
unaffiliated third party except pursuant to regulatory rule or judicial
process. The parties further agree to seek commercial confidential status for
this Agreement with any regulatory commission with which this Agreement must
be filed to the extent such a designation can be secured.
XI. INDEPENDENT CONTRACTORS
Each party agrees that it shall perform its obligations hereunder as an
independent contractor and not as the agent, employee or servant of the other
party.
XII. FORCE 14AJEURE
Neither party shall be held liable for any delay or failure in performance of
any part of this Agreement from any cause beyond its control and without its
fault or negligence such as acts of God, acts or civil or military authority,
government regulations, embargoes, epidemics, war, terrorist acts, riots,
insurrections, fires, explosions, earthquakes, nuclear accidents, floods,
strikes, power blackouts,
7
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
volcanic action, other major environmental disturbances, unusually severe
weather conditions, inability to secure products or services of other
persons or transportation facilities, or acts or omissions of
transportation common carriers (collectively referred to as "Force Majeure
Conditions").
XIII. COMPLIANCE WITH EMPLOYNENT LAWS
All obligations under this Agreement shall be performed in compliance with all
applicable legislation and government agency orders and regulations prohibiting
discrimination against any employee or applicant for employment because of race,
color, religion, sex, national origin, age or handicap. Where required by law,
certificates of compliance shall be provided.
Each party shall comply with the provisions of the Fair Labor Standards Act of
1938, as amended, and all other applicable federal, state and local law
governing employment.
XIV. RESOLUTION OF DISPUTES
A. The parties agree that they shall attempt to resolve all disputes
arising out of the provisions of this Agreement through informal
discussions or negotiations prior to resorting to arbitration. At any
time following the commencement of any such discussions or
negotiations, if either party believes that such discussions or
negotiations are not likely to result in a reasonable resolution of the
dispute, it may send to the other party, at the address provided in
Section X for notices, a written statement of the issue or problem
being discussed or negotiated. If the dispute has not been resolved
with twenty (20) days after the mailing of the letter referred to in
the preceding sentence, either party shall have the right to serve a
written demand for arbitration upon the other and thereby commence
binding arbitration in accordance with the provisions of this section.
The mailing of the letter referred to in the second preceding sentence
and the passage of sixty (60) days from the mailing of such letter
shall be conditions precedent to the commencement of any arbitration
proceeding hereunder.
B. Within five (5) business days of delivery of a demand, each party shall
designate an arbitrator. The two (2) designated arbitrators shall then
select a third arbitrator to complete the full arbitration panel within
ten (10) business days, or as otherwise agreed.
C. The arbitration panel shall commence hearings within sixty (60) days
of the selection of the panel, unless the parties or the arbitration
panel agree upon a delayed schedule of hearings. Each party may send
out requests to compel document production from the other. Disputes
concerning the scope of document production and enforcement of the
document requests shall be subject to agreement by the parties, or may
be ordered by the arbitrators to the extent economical and
8
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
reasonable. All discovery requests shall be subject to the proprietary
rights and rights of privilege of the parties; and the arbitrators shall
adopt procedures to protect such rights. Except where contrary to the
provisions set forth in this Agreement, the rules of the American
Arbitration Association (AAA) shall be applied to all matters of
procedure, including discovery; provided, however, that the arbitration
need not be conducted under the auspices of the AAA, in which event the
fee schedule of the AAA shall not apply. The arbitrators may obtain
independent legal counsel to aid in their resolution of legal questions
presented in the course of arbitration to the extent they consider that
such counsel is absolutely necessary to the fair resolution of the
dispute, and to the extent that it is economical to do so considering
financial consequences of the dispute.
D. If the arbitrators selected by each party cannot agree upon a third
arbitrator within twenty (20) days, either party may apply to any court
having jurisdiction over this Agreement to select the neutral arbitrator.
If either party fails to appoint an arbitrator within the time period set
forth, the other party may apply to any court having jurisdiction over
this Agreement to compel arbitration, and that court shall be empowered
to select the failing party's arbitrator.
E. If any party subject to the terms of this arbitration provision fails or
refuses to appear at and participate in an arbitration hearing after due
notice, the arbitration panel may hear and determine the controversy upon
evidence produced by the appealing party.
F. The arbitration costs shall be borne equally by each party except as
follows: Each party shall bear the cost of presenting its case at
arbitration and each party shall pay the bill of the arbitrator it
selected.
G. Unless otherwise agreed in writing, the parties shall continue to
provide service, honor all other commitments under this Agreement and
continue to make payments in accordance with this Agreement during the
course of dispute resolution pursuant to the provisions of this
section.
XV. INDEMNIFICATION
A. The indemnification provisions of this section shall apply to all
matters arising under this Agreement except that indemnification or
limitation of liability or related provisions contained in other
sections of this Agreement shall be controlling and take precedence
over this Section 1.
B. To the extent not prohibited by law, each party shall indemnify the
other and hold it harmless against any loss, cost, claim, injury, or
9
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
liability relating to or arising out of negligence or willful
misconduct by the indemnifying party or its agents or contractors in
connection with the indemnifying party's provision of facilities or
other performance of this Agreement. The indemnifying party under
this section agrees to defend any suit brought against the other party
for any such loss, cost, claim, injury or liability. The indemnified
party agrees to notify the other party promptly, in writing, of any
written claims, lawsuits, or demands for which the other party is
responsible under this section and to cooperate in every reasonable
way to facilitate defense or settlement of claims. The indemnifying
party shall not be liable under this section for settlement by the
indemnified party of any claim, lawsuit, or demand if the indemnifying
party has not approved the settlement in advance unless the
indemnifying party has had the defense of the claim, lawsuit or demand
tendered to it in writing and has failed to assume such defense.
XVI. ANENDNENTS; WAIVERS
This Agreement or any part thereof, including exhibits or documents referred
to herein, may be modified or additional provisions may be added by written
agreement signed by or on behalf of the parties. No amendment or waiver of
any provision of this Agreement and no consent to any default under this
Agreement shall be effective unless the same shall be in writing and signed by
or on behalf of the party against whom such amendment, waiver or consent is
claimed. In addition, no course of dealing or failure of any party to
strictly enforce any term, right or condition of this Agreement shall be
construed as a waiver of such term, right or condition.
XVII. ASSIGNMENT
Any assignment by any party of any right, obligation or duty, in whole or in
part, or of any other interest hereunder, without the written consent of the
other party shall be void. All obligations and duties of any party under this
Agreement shall be binding on all successors in interest and assigns of such
party.
XVIII. THIRD-PARTY BENEFICIARIES
This Agreement shall not provide any person not a party to this Agreement with
any remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement.
XIX. GOVERNING LAW
This Agreement shall be governed by the domestic laws of the state of Florida.
10
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
XX. ENTIRE AGREEMENT
This Agreement, including any exhibits and/or attachments hereto, constitutes
the entire understanding between the parties and supersedes all prior
understandings, oral or written representations, statements, negotiations,
proposals and undertakings with respect to the subject matter hereof.
XXI. EXECUTED IN COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same document.
XXII. SEVERABILITY
If any provision of this Agreement is held invalid, unenforceable or void, the
remainder of the Agreement shall not be affected thereby and shall continue in
full force and effect.
XXIII. HEADINGS
The headings in this Agreement are for convenience and shall not be construed to
define or limit any of the terms herein or affect the meaning or interpretation
of this Agreement.
The parties have executed this Article VIII through their authorized
representatives on the date set forth below their signatures. The articles in
effect as denoted in the Index of Articles constitute the entire Agreement
between the parties.
WITNESS: UNITED TELEPHONE COMPANY OF FLORIDA
/s/ Mary Lou Hunt /s/ Louis Carrion
- ----------------- --------------------
By: Louis Carrion
Title: Director-Marketing & Sales
Date: January 3, 1994
WITNESS: TELCO DEVELOPMENT GROUP, INC.
- ------------------ /s/ Henry G. Luken, III
-----------------------
By: Henry G. Luken III
Title: CEO
Date: January 17, 1994
<PAGE>
Article VIII - Exhibit A
Billing and Collection Services
EXHIBIT A
FOR
ADDITIONAL TERMS AND CONDITIONS
FOR THE PROVISION OF
BILLING AND COLLECTION SERVICES TO
TELCO DEVELOPMENT GROUP, INC.
12/15/93
<PAGE>
Article VIII - Exhibit A
Billing and Collection Services
EXHIBIT A
TABLE OF CONTENTS
Page No.
--------
SECTION I. Undertakings 1
SECTION II. Services 1
SECTION III. Other Terms and Conditions 5
i
11/12/93
<PAGE>
Article VIII
Billing and Collection Services
EXHIBIT A
ADDITIONAL TERMS AND CONDITIONS
FOR THE PROVISION OF
BILLING AND COLLECTION SERVICES TO
TELCO DEVELOPMENT GROUP, INC.
I. UNDERTAKING
This Exhibit A provides additional terms and conditions for the provision
of billing and collection services in the interstate jurisdiction and,
together with any applicable United intrastate billing and collection
tariff, provides additional terms and conditions for the provision of
billing and collection services in the intrastate jurisdiction as specified
below.
II. SERVICES
United shall provide the following services;
A. Recording for Long Distance Services (hereinafter sometimes referred
to as "LDS" or "LDS Services"), specified as follows:
1. Recording shall be provided on an NPA/NXX basis. United will
provide recording for Feature Group D on a type of call basis.
Type of call as used herein means LDS.
B. Billing Service for LDS services as specified in Attachment B of
Article VIII.
1. United will provide Billing Service as ordered including
recording, message provisioning (extraction), transmission of
messages to third parties, acceptance of transmittal messages
from third parties, assembly, editing, rating of messages;
preparation of bills for message-billed service, mailing of
statements of the amounts due for service received from Telco and
the collection of deposits and monies due from the customers;
and, when necessary, LDS account establishment, posting of rated
messages and rate elements, rendering of bills, collection of
deposits, receiving payments, maintenance of accounts, treatment
of accounts, and message investigation.
C. Billing Analysis Services as ordered for LDS services is the provision
of detection, investigation and deterrence of billing evasion
activities as defined and described in Attachment B to the Agreement.
D. Conversion services as from time to time requested by Telco via the
Product Development process, which shall consist of consultation,
exchanges of information, programming and other services necessary to
assist Telco in converting from United performance of billing and
1
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
collection services to Telco performance of billing and collection
services. Such conversion services shall include, without limitation,
one or more transfers of account information to be agreed upon by the
parties, for any or all Telco customers for which United is performing
billing and collection services.
E. Continued billing and collection services to Telco following the
conversion of LDS billing from United's billing system to Telco's
billing system.
F. Application of Taxes to Telco Customers
1. Billing of Taxes
a. United will calculate applicable federal, state, local and
city taxes on the same basis it applies and collects taxes
on its own services. Telco may review United tax procedures
and will provide reasonable notice to United in advance of
any instructions for changes in procedures with respect to
Telco services.
b. Telco will advise United in writing of changes in the law
affecting application, billing, recording and collection of
taxes on existing services.
c. Telco will advise United in writing of tax procedures with
respect to application, billing, recording and collection of
taxes on new services, including any changes in the law
affecting taxes on such services.
d. United agrees to implement changes or new procedures as
instructed by Telco and as agreed between the parties.
United will strive to make requested changes within thirty
(30) days of notification.
e. The party remitting the taxes shall be entitled to retain or
receive any statutory fee or share of taxes to which the
person collecting such taxes is entitled under applicable
law.
2. Tax Exemptions
a. United, in its performance of services hereunder, will
correctly determine the exemption status of its customers
and properly maintain exemption certificates. To the extent
permitted by law, and except as it may require a change as
provided for in the succeeding subsection, Telco will rely
upon United's exemption certificates as a basis for
exempting customers from taxes on Telco services.
b. If a taxing authority determines that Telco may not properly
rely upon United's exemption certificates, Telco may request
a
2
<PAGE>
Article VIII
Billing and Collection Services
listing of exempt customers (including pertinent customer
account, customer contact and tax status information) and
may request estimates of United's charges for United to
secure exemption certificates with respect to Telco
services.
c. Telco may review information relating to a customer's
exemption status and require that United reverse the exempt
status for purposes of Telco services if Telco deems it
necessary.
d. United will be liable for any audit assessments if the
exemption status of customers is not reversed in accordance
with correct and timely instructions issued by Telco, and
appropriate exemption certificates given to United by
customer.
3. Filing of Tax Returns
When United system capabilities exist, Telco may file returns for
taxes imposed on or with respect to Telco services and pay or
remit such taxes and other items and any applicable interest or
penalties. United shall furnish to Telco on a timely basis all
information in United's possession reasonably necessary for Telco
to file its tax returns.
4. Indemnity
Telco agrees to defend, indemnify and hold United harmless from
and against any claim, expense, liability or loss resulting from
any tax, penalty, fine, interest, additions to tax, surcharges or
other charges or expenses payable or incurred by United as a
result of:
a. The delay or failure of Telco, for any reason, to pay any
tax or such other item or file any return or other
information as required by law or this Agreement;
b. United complying with this Agreement or with any
determination or direction by or advice of Telco or using
information provided by Telco in performing any tax-related
service hereunder; or
c. Any audit or investigation by any governmental unit or
agency with respect to said taxes on Telco services for
which Telco is responsible under this Agreement.
Such indemnity shall be provided to United on an after-federal-
tax basis (that is, net of tax to the extent that charges or
expenses covered under this subsection are deductible, creditable
or subject to write-off by United). The indemnity payable
hereunder shall be payable in all events and without regard to
any determination that United is the party obligated to collect
and remit such taxes or file the tax returns.
3
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
5. Taxes Imposed on Services Performed by United
If any federal, state or local jurisdiction determines that
additional sales, use or other taxes (including interest,
penalties or surcharges thereon) are due with respect to service
provided by United under this Agreement which have not been paid,
United will so advise Telco. When United is at fault, United
shall be liable for any such tax, interest, penalties or
surcharge, but retains the right to protest the assessment.
If Telco disagrees with any assessment of taxes due by United or
disagrees with an assessment of any additional tax, penalty,
surcharge or interest due by United as a result of United's
performance of any obligation under this Agreement, Telco shall,
at its option and expense (including payment of any such
assessment prior to final resolution of the issue), have the
right to seek a ruling as to the applicability of any such tax or
to protest any assessment and participate in any legal challenge
to such assessment, but shall be liable for any tax, penalty,
surcharge or interest ultimately determined to be due. United
shall, when requested by Telco and at Telco's expense, cooperate
or participate with Telco in any such proceeding, protest or
legal challenge.
6. Notwithstanding any other provision of this subsection (F),
United shall indemnify Telco against any tax liability
(including, but not limited to, any penalty, surcharge or
interest) which is the result of United's willful misconduct or
gross negligence.
7. General Tax Audit Requirement
If any governmental authority advises United that it intends to
audit records in United's possession with respect to taxes that
Telco might be required to pay or for which Telco might be
required to reimburse United, United shall:
a. Promptly notify Telco.
b. If any governmental authority requests United to disclose
such records in United's possession, custody or control,
United shall notify Telco of such request immediately upon
receipt of such request. If Telco objects to such disclosure
of records and United voluntarily withholds said records
from disclosure at Telco's request, Telco agrees to hold
United harmless from any liability resulting directly or
indirectly from said nondisclosure;
c. To the extent permitted by law, allow Telco to participate
on an equal basis with United with respect to an audit of
Telco records, and United will;
4
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
d. Keep Telco fully informed as to the progress of the audit.
Each party shall bear its own expenses with respect to any
such audit.
III. OTHER TERMS AND CONDITIONS
A. Billing Performance
l. Timeliness of Message Billing
United agrees to use its best efforts to bill all Telco messages
so that ninety-eight (98) percent of all Telco messages are
billed on the next customer bill rendered after the message is
recorded.
2. This Timeliness Standard applies: (i) when United performs all
billing functions, including, but not limited to, recording,
assembly and editing, rating and billing; (ii) when Telco sends
rated messages to United for billing; and (iii) a combination of
(i) and (ii).
3. When Telco is rating messages which United is to bill, Telco
shall send such messages to United using mechanized data transfer
on every Telco processing day. Telco shall send such messages to
the United processing center mutually agreed to by United and
Telco.
4. Telco may at its discretion monitor and report to United on its
performance measured against the Telco Timeliness Standard.
United agrees that in the event it fails to meet Telco's
Timeliness Standard, it shall discuss its performance with Telco
and shall use its best efforts to resolve any problem areas and
to improve its performance so as to perform in compliance with
the Telco Timeliness Standard. Disputes between Telco and United
regarding the resolution of problem areas and improvement of
United's performance may be submitted for resolution under the
Dispute Resolution provisions of the Agreement.
5. Telco shall have the right to audit, pursuant to Section V of the
Agreement, any data provided by United to measure United's
performance with respect to the Telco Timeliness Standard.
B. Timeliness of Post-Billing Adjustments
1. United agrees to use its best efforts to process all post-billing
adjustments received from Telco in accordance with Telco's
standards. Telco Timeliness Standard is that ninety-eight (98)
percent of all post-billing adjustment be included on the next
customer bill rendered.
5
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
2. When Telco sends United post-billing adjustment information, such
information will be delivered by Telco to United on an Exchange
Carrier ("EC") memorandum. Such post-billing adjustments will be
delivered to a United processing center to be mutually agreed to
by United and Telco.
3. Telco may at its discretion, monitor and report to United on its
performance measured against the Telco Timeliness Standard.
United agrees that, in the event that it fails to meet the Telco
Timeliness Standard, it shall discuss its performance with Telco
and shall use its best efforts to resolve any problem areas and
to improve its performance so as to perform in compliance with
Telco Timeliness Standard. Disputes between Telco and United on
resolution of problem areas and improvement of United's
performance may be submitted for resolution under the Dispute
Resolution provision of this Agreement.
4. If Telco finds that the number of post-billing adjustments billed
on time is more than two (2) percent below the percentage
reported by United based on a random sample of bills, Telco shall
have the right to audit reports produced by United for the
measurement of the Timeliness Standard. Audit criteria will be
jointly established and agreed to by Telco and United.
D. Monitoring for United Billing and Collection Services
United shall provide Telco with the information described below and shall
take the actions described below concerning both ongoing United billing and
collection activities and changes that affect United's billing and
collection activities.
l. Ongoing Recording Activities
a. For each United office that records (or that, according to
United's recording system, should be recording) Telco LDS
usage, United shall ascertain whether Telco messages are
recorded correctly at that office.
b. Upon request from Telco, United shall make available its
procedures to Telco for ascertaining that Telco messages
have been recorded as anticipated and shall make such
revisions to those procedures, and develop such additional
procedures, as Telco may reasonably request.
c. If United discovers that Telco messages are not being
recorded at any United recording office as anticipated,
United shall immediately notify Telco and shall immediately
investigate and take immediate action to correct any failure
in its recording
6
12/15/93
<PAGE>
Article VIII
Billing and Collection Services
system. United shall keep Telco advised of the progress of
its investigation and of the results of any corrective
action it takes.
2. Other Ongoing Billing and Collection Activities
a. United shall ascertain on a daily basis that all other
aspects of its billing and collection processes are
functioning correctly.
b. United shall review with Telco its procedures for complying
with paragraph (2)(a) preceding, and shall make such
revisions to those procedures and develop such additional
procedures, as Telco may reasonably request.
c. If United discovers that there is a malfunction in its
billing and collection processes, United shall immediately
notify Telco and shall immediately investigate and take
action to correct any malfunction. United shall keep Telco
advised of the progress of its investigation and of the
results of any corrective action it takes.
3. Major United System Changes
a. United shall provide Telco six (6) months' advance written
notice of major system changes that might affect the billing
and collection of Telco charges, including but not limited
to major changes to (i) service ordering procedures; (ii)
customer bill format; (iii) message processing systems; and
(iv) other United systems.
b. Upon request by Telco, United shall review with Telco its
plans for preimplementation testing of the system changes
described in paragraph (3) (a) preceding and shall notify
Telco of any problem that appears in the course of such
testing and of the steps taken to correct it.
E. Forwarding of United-Recorded LDS Messages
Beginning with Telco's rating of LDS messages, United shall send LDS
message recorded data in a mutually agreed upon EMI format ("data") to
Telco (other than data from messages recorded by Telco) in accordance
with the Telco performance specifications. Any United performance
deficiencies shall be handled in accordance with the provisions
pertaining to the filing of claims.
7
12/15/93
<PAGE>
Article VIII - Exhibit B
Billing and Collection Services
EXHIBIT B
RATES AND CHARGES
11/12/93
<PAGE>
Article VIII - Exhibit B
Billing and Collection Services
EXHIBIT B
AGREEMENT FOR THE PROVISION OF
BILLING AND COLLECTION SERVICES
BETWEEN
UNITED AND TELCO
RATES AND CHARGES
TABLE OF CONTENTS
Page No.
--------
A. Interstate Rates and Charges 1
B. Intrastate Rates and Charges 1
C. Rate and Charge Schedules 1
D. Effective Date of Rates and Charges 3
E. Postage Escalation Factor 3
i.
11/12/93
<PAGE>
Confidential Treatment Requested. The redacted
material has been seperatley filed with the
Commission
Article VIII - Exhibit B
Billing and Collection Services
FIRST REVISED EXHIBIT B
AGREEMENT FOR THE PROVISION OF
BILLING AND COLLECTION SERVICES
BETWEEN
UNITED AND TELCO DEVELOPMENT GROUP, INC.
RATES AND CHARGES
A. INTERSTATE RATES AND CHARGES
This Exhibit B sets forth the rates and charges to be paid to United by Telco
in the interstate jurisdiction for billing and collection services provided
under this Agreement. Payments to be made under this Agreement shall be made
in accordance with the specific requirements of Attachment B.
B. INTRASTATE RATES AND CHARGES
This Exhibit B sets forth the rates and charges to be paid to United by
Telco in the intrastate jurisdiction for billing and collection services
provided under this Agreement. Rates and Charges for intrastate billing and
collection services which are required to be purchased pursuant to any
applicable intrastate tariff/price list are subject and shall be charged in
accordance with such applicable intrastate tariff/price list. The provision
of such rates and charges in this Agreement is for information purposes
only.
C. RATE AND CHARGE SCHEDULES
Rate Element Interstate Intrastate
------------ ---------- ----------
Recording per message (*) (*)
Rating - per message (*) (*)
Bill Processing - per message (*) (*)
Bill Rendering - per bill (*) (*)
Inquiry - per message (*) (*)
Bill Processing and Rendering with (*) (*)
Inquiry - per message
Message Provision per record (*) (*)
Data Transmission per record (*) (*)
IC/EC Memo (*) (*)
(*)
02/16/95
<PAGE>
Confidential Treatment Requested. The redacted
material has been seperatley filed with the
Commission
Article VIII - Exhibit B
Billing and Collection Services
Rate Element Interstate Intrastate
- ------------ ---------- ----------
Tape Charges - per tape (*) (*)
Program Development (*) (*)
Outside Collection Expenses (*) (*)
Bill Message
with selectivity - per bill (*) (*)
without selectivity - per bill (*) (*)
Bill Insert
Volumes
- -------
(*) (*) (*)
(*) (*) (*)
(*) (*) (*)
(*) (*) (*)
(*) (*) (*)
(*) (*) (*)
End User Account Activity Charge (EUAAC)
per separate service order (*) (*)
per combined service order (*) (*)
Billing Analysis
Security - per hour (*) (*)
CTI - per hour (*) (*)
(*)
2
02/16/95
<PAGE>
Confidential Treatment Requested. The redacted
material has been seperatley filed with the
Commission
Article VIII - Exhibit B
Billing and Collection Services
D. Effective Date of Rates and Charges
A11 interstate and intrastate rates and charges set forth in this
Agreement shall be effective as of the date Telco receives certification
by the state of Florida.
E. Postage Escalation Factor
A postage escalation factor of (*) percent of any increases during
the term of this Agreement in the United States postal rate applicable
to the mailing of United bills shall be applied to revise the bill
rendering rate element. For any increase to the rate for the predominant
postal category used for mailing United bills, the following amount
shall be added to the bill rendering rate:
Postal increase amount x (*) percent (rounded to the nearest
tenth of one cent)
Nothing in this Agreement means, is intended to mean or shall be
construed to mean that Telco shall be obligated to pay any portion of
the postage charges for bills to customers where such bills do not
include any charges for Telco services.
Accepted:
TELCO DEVELOPMENT GROUP, INC.
By:
----------------------------
Title:
-------------------------
Date:
-------------------------
3
02/16/95
<PAGE>
Article VIII - Attachment A
Billing and Collection Services
ATTACHMENT A
TO
ARTICLE VIII
DEFINITION OF TERMS
11/12/93
<PAGE>
Article VIII - Attachment A
Billing and Collection Services
ATTACHMENT A
TO ARTICLE VIII
DEFINITION OF TERMS
Adjustment-
Any addition or subtraction to the amounts due or payable to an end user
invoice, billing and collection services invoice, or purchase of accounts
receivable statement.
AMA-
Automatic Message Accounting Recording refers to AMA recording. It consists
of storage on magnetic tape or another acceptable medium of the basic
billing details of messages.
Amount Due United-
Amount due United equals all appropriate billing and collection charges
billed under contract or any applicable tariffs.
Assembly-
Assembly is the aggregating of the recorded message details to create
individual messages for rating.
Billing Analysis Services-
Billing analysis service is the provision of detection, investigation and
deterrence of billing evasion activities.
Billing Evasion-
The term "billing evasion activities" (e.g., message billing abuse and/or
network use) denotes actions in association with the use of an access line
(e.g., customer line or trunk, coin telephone line or other access line or
trunk provided by United) where there is intent to circumvent or evade the
proper charges in whole or in part for use of telecommunications services
over the access line, or to conceal the points of origin or termination of
telecommunications services.
Billing and Collection Charges-
United charges Telco for the billing and collection functions supporting
United's billing of Telco messages and/or services. These charges are
referred to as billing and collection charges.
Business Day-
All days except Saturdays, Sundays, United holidays and designated United
nonworking days.
1
11/12/93
<PAGE>
Article VIII - Attachment A
Billing and Collection Services
Bill Insert-
A Telco prepared separate page of informational, promotional, or legally
required communication to its United billed end user customers which is
inserted by United with the end user invoice.
Bill Message Service-
A billing service where individual end user customer messages originating
from Telco are posted to the account on Telco's billing statement rendered
to the end user customer.
Bill Processing-
The receipt, guiding and posting of rated messages to the proper end user
account in preparation for creation of the end user bill. In addition, this
rate element includes account establishment, master file maintenance and
prebilling message investigation.
Bill Rendering-
Preparation and mailing of statements of amounts due from the end user
customer for services received from Telco as well as receipt of payment,
check cashing and collection and treatment activities.
Bill to Number (BTN)-
The primary customer number representing the customer account responsible
for receiving an invoice. The BTN may link multiple actual telephone lines
for billing purposes but is not necessarily an actual dialable number.
Casual Caller-
A customer that utilizes the Telco network on an occasional basis.
Associated telephone numbers information will only be provided where Telco
services are utilized by these particular numbers. Telco services utilized
in this manner include:
(i) 10XXX;
(ii) Operator-assisted access (e.g., collect, third number);
(iii) Usage billed to a United calling card;
(iv) 1+
Credit/Adjustments-
A full or partial refund of toll or other charges given to a customer. May
or may not relate to a particular call in a particular cycle.
2
11/12/93
<PAGE>
Article VIII - Attachment A
Billing and Collection Services
Centralized Toll Investigation (CTI)-
The centralized toll investigation ("CTI") is responsible for investigation
of messages which are either unbillable to a customer (prebilling errors)
or which have been disputed by a customer (post-billing uncollectibles).
Errors are caused by operator error, service order problems, wiring errors
(COs), fraud, etc.
Customer Bill Date-
The date of the United customer bill upon which recurring and non-recurring
charges to the customer are based.
Customer Bill Format-
Customer bill format consists of the design of the billing media in a
manner that will convey to the customer the charges for telephone service
in a clear and understandable format.
Customer Name and Address (CNA)-
A service whereby the listing name and listing address of the end user
customer is requested and used for the sole purpose of investigating the
billing of charges to the proper end user.
Customer Account Record Exchange (CARE)-
Standard interface for use by local exchange companies (LECs) and
interexchange carriers (ICs) for exchange of customer account information.
Standard record layouts and function are provided by an industry
association known as the Ordering and Billing Forum (OBF) operating as a
voluntary organization.
Data Transmission-
The process of transferring messages and/or records between Telco and
United via different modes of transmission (e.g., CMDS, NDM, magnetic
tape). Data transmission charges apply as follows:
1. Record Transfer: This rate applies on a per-record basis for all
---------------
records either transmitted to or received from Telco regardless of
transfer medium (i.e., tape, electronic transfer, etc.).
2. Tape Transfer: This rate is applied on a per-tape basis and is
-------------
comprised of the cost of the tape or cartridge, courier costs,
administrative and processing costs.
Denial of Service-
Denial of service consists of temporary suspension of a customer's access
to the network or a portion of the network in cases of insufficient
payment.
3
11/12/93
<PAGE>
Article VIII - Attachment A
Billing and Collection Services
Detariffed Billing and Collection Services
Detariffed billing and collection services constitute the ability by United
to provision billing and collection services to Telco without prior
submission, review or approval of such services by the appropriate
regulatory body, including, but not limited to, terms and conditions and
prices for such services. Although such services may be detariffed in
certain jurisdictions, some jurisdictions may require the filing of billing
and collection contracts with the appropriate regulatory body and pricing
may be subject to additional regulatory pricing constraints.
Detection Activities-
Detection is the provision of equipment by United to identify and collect
information on billing evasion activities. Such equipment may be located in
United premises or offices or may be attached to access lines.
Deterrence Activities-
Deterrence is the contacting and interviewing of parties identified in
billing evasion activities, the recovery by legally authorized personnel of
devices or material used in billing evasion activities, the service review
for possible suspension of service over access lines identified in billing
evasion activities and publicity assistance in publicizing billing evasion
deterrence.
EC/IC Memorandum-
The mechanized or manual document(s) issued by Telco and used to convey
information between Telco and United relating to billing and collection
services (i.e., adjustments, wire checks, duplicate bill requests or
provisioning of Telco services) for Telco's residential and business
customers.
Editing-
Editing is the verification of the aggregated message data (resulting from
the assembly process) which ensures accordance with standard format.
End User Customer of Telco-
A United customer that is also recognized within United's billing systems
as a customer of Telco, either via the equal access selection process
(PIC), as a result of United's billing for use of Telco's network or
service within the last six (6) months (casual), or as being designated
within United's billing system as having ordered a service of Telco's.
4
11/12/93
<PAGE>
Article VIII - Attachment A
Billing and Collection Services
End User Account Activity Charges (EUAAC) -
Those charges billed to Telco for the establishment of a new or additional
service to an end user customer's account. These charges will be billed
according to different rates for the following:
1. Separate Request is when service order activity occurs for the sole
----------------
purpose of establishing a new or additional end user Telco service.
2. Combined Request is when service order activity occurs for the purpose
----------------
of establishing a new or additional end user Telco service in
conjunction with service order activity for United.
Examination -
An examination means a review of United, conducted by Telco, which shall
constitute an inquiry on a single issue or a specific topic related to this
Agreement based on factual documentation of a potential discrepancy. By way
of illustration only, and not by way of limitation, an examination may
consist of an inquiry into the following issues or topics: uncollectibles,
adjustments or IC invoice of billing and collection charges.
Exchange Message Interface (EMI) -
Industry standard file layouts for data transmission of message data as
developed for industry standard and administered/distributed by Bellcore.
Final Customer Bill -
A final customer bill is a bill rendered to a customer for outstanding
amounts for Telco services following disconnection of all associated
services.
Information -
Information including, but not limited to, specifications, drawings,
sketches, models, samples, data, computer programs and other software or
documentation, whether written or oral, of one party and proprietary to
that party, that is furnished or available or otherwise disclosed to the
other party.
Inquiry -
Response to end user questions regarding charges for end user services,
application of credits and adjustments to end user accounts, review of
customer messages removed from the bill and post-billing message
investigation.
5
11/12/93
<PAGE>
Article VIII - Attachment A
Billing and Collection Services
Investigation -
Investigation is the provision of investigative services to collect
evidence to document that billing evasion activities are occurring, prepare
reports, preserve evidence and supply expert witness analysis and
testimony.
LDS -
Long distance service.
LEC -
Local Exchange Carrier ("LEC") refers to any exchange telephone company.
Marketing Message -
An invoice printed promotional, informational, or legally required
communication from Telco to its customers. Messages are printed on standard
Telco invoices for any given month and occupy the customer information
section in Telco's bill page(s).
Message Provisioning -
The division of recorded messages from the billing process for the purpose
of providing these messages to an outside party. Message provisioning rates
are applied on a per-message basis.
MTS Rating (Message Processing) -
Message Telephone Service (MTS) rating is defined as the computing of
applicable charges for each customer message based on the schedule of end
user rates as provided to United by Telco.
Network Data Mover (NDM) -
A communication protocol used to transfer data files.
NPA -
Assigned three-digit code containing an "O" or "1" as the second digit,
which normally represents a large geographical area if part of a dialable
telephone number. If part of a nondialable telephone number (card, mobile,
ship-to-shore) it will be a fictitious number assigned by the company. Also
known as area code.
NXX -
An assigned three-digit code which normally represents a local phone
company central office switch if part of a dialable telephone number. If
6
11/12/93
<PAGE>
Article VIII - Attachment A
Billing and Collection Services
part of a nondialable telephone number (card, mobile, ship-to-shore), it
will be a fictitious number assigned by the company. Also known as
exchange.
Order of Magnitude ("OM") -
The OM represents a request from Telco to obtain a high level programming
charge estimate for a specific system enhancement request. The high level
estimate shall be used by Telco to determine the feasibility of pursuing
the enhancement through a time and cost request and does not constitute a
price commitment on the part of United.
Program Development -
A request by Telco to United for specific system enhancements, as
procedurally defined in Attachment C.
Promotions -
Opportunities for customers to receive certain discounts and/or special
rates based on Telco's qualifying criteria.
Promotional Message -
A message placed on the invoice of Telco's customer providing information
relative to a Telco's promotion. It differs from a marketing message in
that it can contain both static and dynamic data.
Recording Services -
Recording service includes recording, assembly and editing, and provision
of recorded customer message detail. Recording is provided twenty-four (24)
hours a day, seven (7) days a week.
Revenue Accounting Office (RAO) -
A standard designation of a local phone company. Used in conjunction with
EMI and CARE to identify the specific phone company who sent or shall
receive given transactions. A large company may have multiple data centers
or divisions within the company with different RAOs.
Taxes -
All taxes, including local, state, federal, excise and any other applicable
surcharge that may be applied to Telco's services.
Time and Cost Estimate -
The function undertaken by United for the projection of man hours, time
lines and costs for the design, programming, testing and implementation of
the Telco requested system enhancement.
7
11/12/93
<PAGE>
Article VIII - Attachment A
Billing and Collection Services
Treatment Services-
The various activities involved in pursuing collection from a customer
whose account is in arrears. May include, but is not limited to, letters,
phone calls and collection agency involvement.
Uncollectible-
Uncollectible is defined as the end user Telco bad debt revenue losses
resulting from failure of the end user to pay legally earned service
revenues which United has written off as uncollectible after rendering a
final bill.
Uncollectible True Up-
The settlement of actual collected monies from previous cycles which were
determined to be collectible or uncollectible, depending on the
circumstance. May be a positive adjustment for recoveries in excess of
previous net write-off reduction or a negative one for write-offs greater
than previously reported.
Working Telephone Number (WTN)-
The actual recording telephone number assigned to a particular phone for
service may or may not be the number receiving the bill (billing telephone
number (BTN)). Also known as recording telephone number (RTN).
Write-off-
A financial function of moving a customer who is uncollectible from active
accounts receivable to an uncollectible status. These dollars then become
trackable for tax purposes as part of the company's profit/loss.
8
11/12/93
<PAGE>
Article VIII - Attachment B
Billing and Collection Services
ATTACHMENT B
TO
ARTICLE VIII
STANDARD BILLING AND COLLECTION
OPERATING PROCEDURES
11/12/93
<PAGE>
Article VIII - Attachment B
Billing and Collection Services
ATTACHMENT B
STANDARD BILLING AND COLLECTION
OPERATING PROCEDURES
TABLE OF CONTENTS
Page No.
--------
Billing and Collection Functional Services 1
A. Procedures for End User Contacts, Inquiries and Billing
Adjustments 10
Exhibit A-1 End User Contact Procedures for Customer/Inquiry
and Billing Adjustment 12
B. Procedures for Provision of Billing Analysis Services 14
C. Transmission or Tape Delivery Procedures 16
Exhibit C-1 Tape Transmittal Form 19
Exhibit C-2 Telco Contact Procedures 20
Exhibit C-3 Telco Message Processing Guidelines 21
D. Invoice Formats 22
E. Settlement and Payment Procedures 23
Exhibit E-1 Purchase of Accounts Receivable (PARS) 27
Exhibit E-2 PARS Statistical Report Calculations 28
Exhibit E-3 Monthly Payment Due Date Calculations 29
F. Provisions for Uncollectibles 31
G. Auditing Procedures 33
H. Bill Messaging Procedures 34
I. Bill Insert Procedures 36
J. United/Telco Contacts 40
Exhibit J-1 Telco Contacts 41
Exhibit J-2 United Contacts 42
11/12/93
<PAGE>
Article VIII - Attachment B
Billing and Collection Services
BILLING AND COLLECTION FUNCTIONAL SERVICES
A. Recording
1. Recording is the recording of the details of Telco messages.
2. Recording is the entering on magnetic tape or other acceptable media the
details of Telco messages originated through switched access service for
which answer and disconnect supervision has been received. Recording is
provided twenty-four (24) hours a day, seven (7) days a week.
3. United will provide recording in association with the offering of Feature
Group D switched access service for customer messages that can be
recorded by United-provided automatic message accounting ("AMA")
equipment.
4. United will provide recording in its operating territory. This service
will be provided on an end office basis and for Feature Group D switched
access service on a type of call basis.
5. As ordered by Telco, United will record Telco's messages that are
originated by the customer in the United service area. The recording
equipment will be provided at locations selected by United.
6. United recording of Telco's message detail will be handled on existing as
well as new AMA systems.
7. United recorded message detail shall be in accordance with the standard
AMA definition for a given recording device.
8. Charges rendered to Telco for recording performed by United may be
rendered only for completed calls originated by the Telco customer.
9. Telco will provide such signals as may be required for the proper
operating of United's AMA equipment used to perform the detail
recordings.
10. Telco's message data determined to be lost, damaged or destroyed as a
result of a United recording failure will be recovered by United at no
charge. In the event the data cannot be recovered by United, United will
estimate the messages and associated revenue based upon the method
described in subsection A 10.3. This estimate will be used to adjust the
amount due Telco.
10.1 Partial Loss - United shall review its daily controls to determine
if data has been lost. When it is known that there has been a
partial loss, actual message and minute volumes shall be reported,
if possible. Where actual data area is not available, a full day
shall be estimated for the recording entity, e.g.,
1
12/15/93
<PAGE>
Article VIII - Attachment B
Billing and Collection Services
recorder group, DMS office, OSPS base unit. The partial loss is then
determined by subtracting recorded data from the estimated total day
business.
10.2 Complete Loss - Estimated message and minute volumes for each loss
consisting of an entire AMA tape lost in transit, lost after
receipt, degaussed before processing, received blank or unreadable,
etc., shall be reported.
10.3 Estimated Volumes - From message and minute volume reports for the
entity experiencing the loss, United shall secure message/minute
counts for the four (4) corresponding days of the weeks preceding
that in which the loss occurred. United shall then compute an
average of these volumes. Messages and associated minutes will be
separated between interstate, intrastate and international. United
shall apply the appropriate average revenue per message ("ARPM") to
estimated message volume to arrive at the estimated loss revenue. If
Telco is performing any billing, Telco shall participate in
establishing the ARPM.
Exception:
1. If the day of loss is not a holiday but one (or more) of the
preceding corresponding days is a holiday, use additional
preceding weeks in order to procure volumes for four (4)
nonholidays.
2. If the loss occurs on a weekday which is a holiday (except
Christmas), use volumes from the four (4) preceding Sundays.
3. If the loss occurs on Mother's Day or Christmas, use volumes from
that day in the preceding year (if available).
11. United will provide recording to maintain a performance level consistent
with United's service measurement criteria.
12. Recording provided to Telco by United is an auditable component of billing
and collection services as defined in the principal agreement.
13. Charges rendered to Telco by United for recording are set forth in the
recording services rate element specified in Exhibit B and any applicable
tariffs.
B. Assembly and Editing
1. Assembly and editing is the aggregation of the recorded Telco message
details to create individual messages and the verification that the
data required for rating is in a mutually agreed upon EMI format and
on a mutually agreed upon time schedule.
2
12/15/93
<PAGE>
Article VIII - Attachment B
Billing and Collection Services
2. Assembly and editing will be performed by United on all United recorded
messages regardless of the recording technique used according to the
processing schedule established by United.
3. Editing processing will be performed by United for Telco messages according
to current United's editing procedures.
4. Telco message data failing the assembly and editing process will be
corrected by United in accordance with existing United procedures.
5. Charges rendered to Telco by United for assembly and editing may be rendered
only for completed calls originated by a Telco customer.
6. United will, at the option of Telco, provide Telco with assembly and editing
output data. The data will be provided in a mutually agreed upon EMI format
and on a mutually agreed upon time schedule.
7. Provision of Telco's message detail is the provision of magnetic tapes
containing the assembled and edited Telco message detail and, when required
by Telco, sorting the message detail and data transmitting the assembled and
edited Telco message detail to Telco. The recorded detail will be available
to Telco according to a mutually agreeable time schedule.
8. Telco message detail determined to be lost, damaged or destroyed as a result
of a United assembly and editing processing outage will be recovered, if
possible, by United. In the event this data cannot be recovered by United,
United will estimate the messages and associated revenue based upon
parameters defined in Section A-10. This method will be applied on a
consistent basis, subject to modifications agreed to by United and Telco.
This estimate will be used to adjust the amount due Telco.
9. In the event Telco requests data that has previously been successfully
provided by United, the data will be reprovided to Telco at a charge. In
addition, reprovisioning of data, if available, to Telco due to United's
malfunction shall be performed by United at no charge to Telco.
10. United will provide assembly and editing to maintain a performance level
consistent with United's service measurement criteria.
11. Assembly and editing provided to Telco by United is an auditable component
of billing and collection services.
3
12/15/93
<PAGE>
Article VIII - Attachment B
Billing and Collection Services
12. Charges rendered to Telco by United are included in the recording
services rate element specified in Exhibit B and any applicable
tariffs.
C. Rating
1. United will provide message rating services for Telco's messages. Rating
of Telco's messages is the computing of applicable charges for each Telco
message based on the Telco schedule of rates.
2. Telco messages to be processed may be Telco messages from United's
recording service or other Telco messages furnished by Telco.
3. A record of Telco's call detail is required to provide message rating
service. Where Telco requests United to provide recording service, those
recorded details will be used as the input. Where Telco provides the call
details, the records shall be in the mutually agreed upon EMI format and
delivered to the location specified by United.
4. United will develop Telco's schedule of rates into a rating process on a
mechanized or manual basis as appropriate.
5. Changes in the rate structure for Telco services to be billed may require
a change in the rating program and/or procedures. The conditions and the
period of time required to make such changes will be determined on an
individual order basis. Program development charges will apply to
designing, developing, testing and maintaining the necessary program
changes.
6. In the event Telco requests United to implement rating changes under an
accounting order pending final approval, the charges for this record
keeping function will be determined on an individual case basis.
7. When United provides message rating services for Telco's messages that
will be distributed to another LEC for billing purposes, United shall
also include local and/or state taxes on the same basis it rates its own
messages for this revenue as part of the message rating service provided
for Telco.
8. Telco's messages that United processes that cannot be rated in accordance
with Telco's rate schedule will be investigated by the CTI unit in the
United operating entity and disposed of in a manner consistent with the
handling of United's messages.
9. Telco's message detail determined to be lost, damaged or destroyed as a
result of a United rating processing outage will be recovered, if
possible, by United. In the event the data cannot be recovered by United,
United will estimate the messages and associated revenues
4
12/15/93
<PAGE>
Article VIII - Attachment B
Billing and Collection Services
based upon the parameters defined in Section A.10. This method will be
applied on a consistent basis, subject to modifications agreed to by
United and Telco. This estimate will be used to adjust the amount due
Telco.
10. United will provide rating to maintain a performance level consistent
with United's service measurement criteria.
11. Rating provided to Telco by United is an auditable component of billing
and collection services as defined in Section VI (B) of the principal
agreement.
12. Charges rendered to Telco by United are included in the rating element
specified in Exhibit B and any applicable tariffs.
D. Message Data Transmission
1. United will provide message data transmission to Telco as described in
subsections (A) and (B) below. This service will consist of the
transmission of rated or unrated Telco message data (including adjustment
data):
A. From one United location to another location in United for billing or
subsequent transmission.
B. To a location specified by Telco.
2. United will maintain tracking data based upon "received from" and "sent
to" entity locations.
3. Telco message data determined to be lost, damaged or destroyed as a
result of a message data transmission processing outage will be recovered
by United at no charge. In the event the data cannot be recovered by
United, United will estimate the messages and associated revenues based
upon parameters defined in Section A-10. This method will be applied on a
consistent basis, subject to modifications agreed to by United and Telco.
This estimate will be used to adjust the amount due Telco.
4. In the event Telco requests data that has previously been successfully
provided by United, the data, if available, will be reprovided to Telco
at a charge.
E. Bill Rendering
1. United will provide bill rendering to Telco for those customers for which
United establishes an account on behalf of Telco, maintains an account
and has Telco usage or a balance due Telco. Rendering of bills is the
preparation and mailing of statements of the amounts due from the
customer for customer message billed services.
5
12/15/93
<PAGE>
Article VIII - Attachment B
Billing and Collection Services
2. United will bill rated Telco messages to the appropriate customer
accounts. United will bill to a customer other Telco message-billed
service charges, such as time and rate charges and subscription charges
when it receives an order for such services from Telco. Other Telco
message-related charges, such as directory assistance, will be billed to
the customer based on Telco's message data received from rating service
or from Telco. United will make adjustments to customer balances due as a
result of the credits authorized by Telco.
F. Payment and Remittance Processing
1. United will provide payment and remittance processing services for all
customers for which United provides bill rendering for Telco. Payment and
remittance processing includes the receipt of customer payments for Telco
charges and the maintenance of balances for all customers for which
United provides bill rendering for Telco.
2. United will apply all customer payments to a single balance due on a
customer account. Customer specified application of payments will not be
permitted except where mandated by a state commission.
3. Telco adjustment transactions will be processed by United against a
single balance due on a customer account.
4. United will provide payment and remittance processing to maintain a
performance level consistent with United's service measurement criteria.
5. Payment and remittance processing provided to Telco by United is an
auditable component of billing and collection services as defined in
Section VI (B) of the principal agreement.
6. Charges rendered to Telco by United for payment and remittance processing
are included in the bill rendering rate element specified in Exhibit B
and any applicable tariffs.
G. Treatment
1. United will provide treatment services in an attempt to control or
collect appropriate outstanding balance due amounts for high current toll
or previously billed customer charges.
2. United will perform treatment services for Telco consistent with the
treatment of United's charges and regulatory requirements.
3. The treatment provided to Telco by United is an auditable component of
billing and collection services as defined in Section VI (B) of the
principal agreement.
6
12/15/93
<PAGE>
Article VIII - Attachment B
Billing and Collection Services
4. Charges rendered to Telco by United for treatment services are included
in the bill rendering rate element specified in Exhibit B and any
applicable tariffs.
H. Denial of Service
1. United will provide denial of service, restricting customer access to the
network in cases of insufficient payment where not prohibited by law or
regulation.
2. United will determine the necessity for denying customer access by a
United procedure consistent with regulatory requirements.
3. The procedures used by United to determine denial status will utilize a
single balance due amount consistent with regulatory requirements.
4. United will make a good faith effort to notify Telco of a pending service
denial on an account which, in the view of United's employees, may be a
sensitive account to Telco. This notification is expressly for the
purpose of alerting Telco to the financial jeopardy of the account in
order that appropriate action may be taken by Telco to protect their
financial interests. The contact will be made by telephone to the Telco
office which normally interfaces with the United operating entity. The
previously defined steps will in no way alter the United treatment of
this account. United will provide positive notification prior to denial
on any accounts specified in writing by Telco.
5. Denial of service provided to Telco by United is an auditable component
of billing and collection services.
6. Charges rendered to Telco by United for denial of services are included
in the bill rendering rate element specified in Exhibit B and any
applicable tariffs.
I. Collection
1. Collection procedures will be utilized by United to obtain past due
customer revenue owed to Telco. These activities will begin following
unsuccessful treatment and writing off an account or a portion of the
account as uncollectible and shall include referral of the account to an
outside collection agency.
1.1 Amounts collected by United or its agent shall be shared between
United and Telco based on an apportionment of the actual United and
Telco billed revenues, except where otherwise required by a
regulatory agency. Outside collection expenses associated with the
recovery of customer amounts actually collected shall be allocated
between United and Telco based on the amounts actually recovered and
allocated to United and
7
12/15/93
<PAGE>
Article VIII - Attachment B
Billing and Collection Services
Telco. These outside collection expenses will appear on the next
billing and collection invoice rendered to Telco following recovery
of these amounts. Outside collection activities may be performed by
United or an outside collection agency.
1.2 United will utilize the same steps and procedures to collect Telco
charges as it does on its own behalf in collecting its own accounts.
1.3 Telco will be provided reasonable notice in advance of any material
changes to the United collection procedures which might affect Telco
accounts.
2. Collection procedures of United shall be provided in a manner consistent
with all valid regulatory requirements and laws.
J. Customer Bill Format
1. An integrated bill with charge elements for both United and Telco will
be implemented by United. All charges will be considered owed to United
and will be reflected in one (1) total balance due.
United will review the requested bill format items as referenced in this
section, but not necessarily limited to these items, and reserves the
right to either reject or implement format changes. United will consider
implementation of each of the requested items contingent upon the
following:
a. Bill size (i.e., number of pages),
b. Readability of the bill,
c. Potential for customer confusion as a result of the changes,
d. Mutual agreement of any changes,
e. Approval of appropriate program development changes,
f. Existing software and hardware capabilities, and
g. The interests of United and other IXC customers.
2. Telco's corporate logo shall be displayed on Telco pages of the customer
bill according to Telco's specifications or as mutually agreed to by the
parties. "Telco" shall be printed on each detail page as well as on the
subtotaled line showing total Telco charges. Any changes will be made
according to terms and conditions separately negotiated.
3. The integrated bill will contain one (1) payment document with one (1)
total amount due and one (1) return envelope.
8
12/15/93
<PAGE>
Article VIII - Attachment B
Billing and Collection Services
4. Entries will be assembled by entity, i.e. United, Telco and IXC charges
but not necessarily in that order.
5. When requested by Telco and to the extent not prohibited by applicable
law, rule or regulation, Telco billing inquiry account contact numbers
will be displayed on the appropriate page of the customer bill on terms
and conditions separately negotiated.
6. Where charges for multiple entities are contained on the bill, bill
details for Telco will begin on a new page. The last page of Telco
details on the bill will not include entries for any other entity.
7. Telco charges will be subtotaled separately from all other long
distance charges with the exception of OCPs.
8. Charges rendered to Telco by United for customer bill format are
included in the bill rendering rate element specified in Exhibit B and
any applicable tariffs.
9
12/15/93
<PAGE>
Article VIII - Attachment B Article A
Billing and Collection Services
SECTION A
PROCEDURES FOR END USER CONTACTS,
INQUIRY, AND BILLING ADJUSTMENTS
I. End User Inquiries
A. Where United provides end user inquiry services, these services will be
comprised of accepting and resolving end user inquiries or claims
regarding the billing of MTS and MTS-like services. The inquiry services
will include the adjusting and message investigation of charges billed
to Telco's end user.
B. United's representatives will use existing operating procedures while
performing end user inquiry services (Exhibit A-1).
C. For the purpose of this Agreement, all references herein to the terms
"adjustment" or "adjusting" shall be defined as removal of a toll from
an end user's bill and return of that toll to Telco after investigation
has been completed and it has been determined that the toll message
cannot be rebilled.
II. Direct Referrals
A. Certain situations will require that end user inquiries or claims be
directly referred to Telco. Unless otherwise agreed, the following
inquiries must be referred directly to Telco.
A.1 A request to speak directly to a specific representative or position,
e.g., president, vice president of Telco. For example, an end user
calling a United representative with such a request would be advised
that Telco has provided a special number for the handling of such
inquiries or requests. The end user would then be referred to the
appropriate number.
A.2 A request to establish, change, or discontinue a service offered by
Telco.
A.3 An inquiry about special promotions or specific service programs when
prior arrangements have been made between United and Telco for the
handling of such inquiries. For example, an end user calling a United
representative and inquiring if Telco plans to increase the number of
days on which reduced rates are offered, e.g., Mother's Day, Father's
Day, etc. or if Telco plans to offer optional calling plans/special
promotions.
B. For end user convenience and employee contact time efficiencies,
United and Telco will limit the quantity of telephone numbers used for
the end user referral process. Telco's telephone referral numbers will
be made available to all of United's end user contact employees.
10
12/15/93
<PAGE>
Article VIII - Attachment B Section A
Billing and Collection Services
III. United and Telco
A. In order to minimize end user dissatisfaction and expedite the
resolution of service and adjustment claims, United and Telco will
establish appropriate lines of communication to address specific
nonroutine situations (Section J).
IV. End User Adjustments
A. United will be responsible for contacts and arrangements with Telco's
end users concerning the adjustments and message investigation of
Telco's charges.
B. United's existing toll claim procedures will be used to resolve toll
claims and inquiries. The same procedures used by United for its own
charges will be used for Telco's charges (Exhibit A1).
C. Toll adjustments will be reflected by carrier on the payment and
adjustment line of the detail page for payments and adjustments. The
total amount due will be derived from United and various carrier
subtotals that represent the end user's monthly telephone charges.
Credit balances will net against the end user's total amount due shown
on the summary page.
V. Centralized Toll Investigation
A. United will use existing centralized toll investigation procedures to
resolve pre and post bill processing problems, inquiries or claims.
B. Prebilling errors, e.g., NXX transposition errors, prevent toll
message data from billing directly to the end user's account. The
centralized toll investigation unit, in accordance with United's
parameters established for such investigations will, when possible,
correct and resubmit the toll message data for billing.
C. If United's end user contact representative is unable to satisfy the
end user's post billing inquiry or claim due to the need for
additional information, the end user will be advised of the
appropriate amount to deduct and the claim will be forwarded to the
centralized toll investigation unit for resolution. United will,
within available investigative parameters, take all action required to
properly bill the call, i.e. obtaining customer name and address (CNA)
information (if Telco provides United an appropriate CNA ID number),
listings and returns, calling the distant party, etc.
D. Toll message charges including adjustments for rejects, unbillables,
post billing adjustments and uncollectibles will be supported with
call detail and will be returned to Telco in accordance with Section C
of these procedures.
11
12/15/93
<PAGE>
Article VIII - Attachment B Section A
Billing and Collection Services Exhibit A-1
END USER CONTACT PROCEDURES FOR
CUSTOMER/INQUIRY AND BILLING ADJUSTMENT
I. Purpose
The purpose of this procedure is to document the responsibilities of the
parties in handling end user customer inquiry and adjustments to billed
messages. These procedures will generally be followed by United.
II. General
A. These procedures reflect United's general practices for inquiry and
adjusting end user accounts for toll rating problems or end user toll
denial claims.
B. Toll adjustments will be reflected by carrier on the payment and
adjustment line of the detail page for payments and adjustments of the
end user's bill.
C. The total amount due will be shown on the summary page and is derived
from United and other carrier subtotals. Credit balances will net
against the end user's total amount due shown on the summary page.
III. Billing Adjustment Procedures
A. The current toll adjustment will be utilized to credit an account as a
result of a toll dispute and to transmit information to United's
centralized toll investigation (CTI) group as an aid in their
investigation process.
B. An adjustment will be prepared when an end user customer contacts
United, disputes a charge and through preliminary investigation it is
determined the dispute is valid.
C. If the dispute involves the amount charged for the toll or the number
of minutes billed, United will credit the full amount of the toll and
rebill the corrected amount on the next bill. Uncollected, unbilled and
post billing adjustment messages will be returned to Telco on a monthly
basis.
D. If the end user customer claims a wrong number was reached or a call
was not completed, the following criteria will apply:
D.1 If the call is two (2) minutes or less and a subsequent call to a
similar number does not exist, an attempt will be made to sustain
the call. If unable to sustain the call, an adjustment for the full
amount of the toll will be prepared.
D.2 If the call is two (2) minutes or less and a subsequent call to a
similar number exists, the end user customer's claim will be
12
12/15/93
<PAGE>
Article VIII - Attachment B Section A
Billing and Collection Services Exhibit A-l
substantiated and an adjustment for the full amount of the toll
will be prepared.
D.3 If the call is over two (2) minutes, United will discuss with the
end user customer that the number of minutes indicates the call was
completed. If unable to sustain, an adjustment for the full amount
of the toll will be processed by United.
E. If the end user customer claims a cut-off or poor transmission, an
adjustment will be prepared.
F. If the end user customer denies all knowledge of a call, the following
criteria will apply:
F.l Stress the accuracy of the equipment if the call is direct distance
dialed (DDD).
F.2 Ask if other end user customers in the household/business might
have made the call.
F.3 Question the possibility of visitors or unusual circumstances
prompting the necessity of the call.
F.4 Check the listing of the distant number if within the local
operating company area. If outside the local operating company
area, the customer name and address bureau (CNA) will be contacted
if end user customer requests listing.
F.5 If unable to sustain through preliminary investigation, an
adjustment for the full amount of the toll will be prepared. Under
United's existing parameters for carrier billing services, United
will immediately write-off calls which meet its current criteria
for automatic write-offs (see note). A11 other calls will be
forwarded to CTI for investigation.
NOTE: The exception process to determine whether a call(s) will undergo
automatic write-off is four dollars (S4.00) for one (l) call, and
eight dollars (S8.00) for a combination of calls. Calls not
meeting this criteria will be forwarded to CTI for investigation.
13
12/15/93
<PAGE>
Article VIII - Attachment B Section B
Billing and Collection Services
SECTION B
PROCEDURES FOR PROVISION OF BILLING ANALYSIS SERVICES
I. Billing Analysis
A. United's centralized toll investigation and security groups will
provide detection, investigative and deterrence services to assist in
the effort to prevent and control billing evasion activities such as
toll fraud.
II. Detection Services
A. Upon written request from Telco and within existing guidelines, United
will provide detection services by providing the equipment necessary to
identify and collect information on billing evasion activities, i.e.,
detection of equipment which would permit the fraudulent bypass of toll
recording equipment.
B. Reports of detection service results will be provided at the written
request of Telco's authorized representative and will remain the
property of United.
C. Telco will authorize detection services on an individual, end user
basis. Charges for United's provision of detection service are listed
in Exhibit B to Article VIII. United will obtain approval from Telco's
security representative prior to initiating a case.
D. Detection reports produced by United will be secured, protected and
reviewed only with those with a need to know and delivered to Telco's
representative in a mutually agreeable manner on a mutually agreeable
schedule.
E. The detection service report will include, for a signaling irregularity
observed, the following:
E.1 The calling NPA and telephone number (i.e., XXX-NXX-XXXX),
E.2 The called number (i.e., country code, NPA and telephone number
recorded by telephone company billing equipment) if available,
E.3 Signaling irregularity data, including set up number where
appropriate,
E.4 The holding time of the call if available, and
E.5 The time and date of the call if available.
14
12/15/93
<PAGE>
Article VIII - Attachment B Section B
Billing and Collection Services
III. Investigative Services
A. United will provide investigative services for the collection of
evidence to document billing evasion activities, prepare identification
reports and affidavits, preserve evidence, supply expert witness
analysis and testimony and coordinate services where appropriate.
Charges for United's provision of investigative service(s) are listed
in Exhibit B to Article VIII. United will obtain approval from Telco's
security representative prior to initiating a case.
B. As a function of investigative services, United will analyze suspected
fraud referrals to ascertain:
B.1 That referral criteria have been met. Referral criteria will be
mutually agreed upon by Telco and United.
B.2 That a bill fraud situation is represented by a referral.
B.3 That investigation of the referral might lead to some form of
deterrence.
IV. Deterrence Services
A. United will provide deterrence services for contacting and interviewing
parties identified in billing evasion activities, the recovery by
legally authorized personnel of devices or materials used in billing
evasion activities, the service review for possible suspension of
service over access lines identified in billing evasion activities and
publicity assistance in publicizing billing evasion deterrence. Charges
for United's provision of deterrence service(s) are listed in Exhibit B
to Article VIII. United will obtain approval from Telco's security
representative prior to initiating a case.
B. United and Telco will designate and identify authorized representatives
who will be responsible for protecting the information provided by
United.
V. General
A. United will not prematurely terminate detection, investigative or
deterrence services as ordered by Telco if United begins to incur costs
for services which are not specifically described in the access service
tariffs or have not been previously anticipated or defined. Instead,
United may, on a per-case basis, charge up to two hundred dollars
(S200) miscellaneous expenses without concurrence from Telco within the
limits of the contract. For miscellaneous expenses over two hundred
dollars (S200), United must obtain concurrence from the authorized
representative of Telco. Billing documentation will be provided to
Telco for approved miscellaneous expenses.
15
12/15/93
<PAGE>
Article VIII - Attachment B Section C
Billing and Collection Services
SECTION C
TRANSMISSION OR TAPE DELIVERY PROCEDURES
I. Purpose
The purpose of this procedure is to document the responsibilities of the
parties in transmitting data.
II. Transmission Medium
For the purpose of exchanging message detail, summary records and other
pertinent data files, United and Telco shall use the network data mover
(NDM) communication protocol, magnetic tape or other transmission medium,
which may include paper, that may become available and as mutually agreed
to in writing by both parties. In all instances, magnetic tape shall be
the backup medium.
III. Responsibilities of Telco
A. Telco will directly send or arrange to provide to United via the agreed
to transmission medium, messages in the industry standard Exchange
Message Interface (EMI) format. All transmissions will contain a unique
obligation ID (serial number). A tape transmittal form, Exhibit C-1,
will accompany all tapes.
B. Telco agrees not to transmit erroneous or other message detail that
Telco knows would result in adverse end user customer reactions. Telco
agrees not to transmit messages occurring more than one hundred eighty
(180) days prior to the transmittal date, except where law or
regulation dictate otherwise. Telco also agrees not to transmit any
messages that have been previously billed to end user customers and
were determined to be uncollectible.
C. Telco is responsible for providing United contact names, mailing
addresses and telephone numbers for confirmation of communications
between United and Telco as required in Exhibit C-2, Contact/Procedures
for Transmissions. Telco also agrees to provide United the same detail
with respect to the return of messages that United cannot reasonably
bill to end user customers. Such contacts may be changed as required by
Telco with thirty (30) days advance written notification.
D. Telco agrees to maintain copies of message transmissions for a period
of ninety (90) days and will provide United copies of this detail upon
request and without charge in the event transmissions are lost, damaged
or otherwise cannot be processed by United.
E. United reserves the right to provide payment on certain messages
instead of billing the end user customer. Such use of this option will
normally occur when an end user customer is presubscribed to Telco and
16
12/15/93
<PAGE>
Article VIII - Attachment B Section C
Billing and Collection Services
calls one of United's customer service offices. United, in such
instances, may pay the charges to Telco on behalf of the end user
customer.
IV. Responsibilities of United
A. United agrees to act in accordance with industry standards regarding
the acceptance, processing and communication with Telco in the handling
of current types of message data processed. New requirements will be
addressed via the PON process.
B. United agrees to process message transmissions within three (3)
business days of receipt.
C. Receipt/Processing Confirmation
C.1 Upon receipt of a message transmission, United agrees to provide
confirmation of receipt to Telco within one (1) business day or
receipt.
C.2 United agrees to confirm the processing of message transmissions
within five (5) business days after successful completion of
message processing providing the following information:
- Telco's carrier code
- Telco's carrier transmission identification
- Total messages and revenue as found on the batch record
- Total messages and revenue accumulated from the message detail
- Total misdirected messages and revenues
D. In the event that United is unable to process such transmission, United
agrees to inform Telco of the reason the transmission could not be
processed. In situations where the accumulated messages and revenues,
per the message detail records, disagree with the control totals on the
trailer record, the accumulated messages and revenue from the message
detail will prevail. No accounting for these differences other than the
written confirmation provided in this subparagraph shall be submitted
to Telco.
E. United will be responsible for rejecting and returning to Telco any
transmissions that contain errors in excess of United's error
threshold. United will provide verbal notice to Telco in the event such
transmissions cannot be processed. Notification will be provided to
Telco's contact specified in Exhibit C-2. Telco agrees to accept such
returned transmissions and no liability shall attach to United under
the terms of this Agreement.
F. United will be responsible for returning to Telco any messages that
cannot reasonably be billed. Such messages will be returned via paper
or other mutually agreed to medium within thirty (30) days or less of
17
12/15/93
<PAGE>
Article VIII - Attachment B Section C
Billing and Collection Services
the initial system processing entry date. Telco agrees to accept such
returned messages and no liability shall attach to United under the
terms of this Agreement.
G. United will be responsible for the posting of Telco messages to the end
user's records. In the event an end user customer cannot be located on
United's records, United will be responsible for continued efforts to
post such messages (recycling) for the same period of time that United
recycles its own messages. Messages that cannot be posted to a United
customer account may be returned to Telco and no liability shall attach
to United under the terms of this Agreement.
H. Any transmission received from Telco which is determined to be
unreadable, contain bad data of which no portion can be processed by
United's billing systems, and/or otherwise damaged, will be returned to
Telco for recovery. United will not be held liable for transmissions
received in this condition.
I. Telco message detail determined to be lost, damaged or destroyed as a
result of United's processing will be recovered, if possible, by
United. In the event the data cannot be recovered by United, United
will request a back-up transmission from Telco. Telco will be required
to maintain back-up tapes for ninety (90) days from original
transmission to United. After ninety (90) days from original
transmission, if the back-up tape cannot be provided or is unusable,
then United will estimate the messages and associated revenues based
upon known values, using a method which is mutually agreeable to Telco
and United. This method will be applied on a consistent basis subject
to modification agreed to by Telco and United. This estimate will be
used to increase the amount due to Telco and the amount due United for
billing and collection.
J. All tapes once received and processed by United will be disposed of at
United's discretion.
K. United will pursue, upon request of Telco, the implementation of
processing capabilities for Bellcore EMI industry standard formats that
are not currently accepted by United. Telco's responsibility relative
to compensation to United for this development effort will be
dependent, at United's sole discretion, upon the market requirements
for this format.
L. United will notify Telco prior to the implementation of any significant
changes in processing or procedures which would affect Telco's
messages. Such notification shall also include adopting changes to
Bellcore EMI formats.
M. See Exhibit C-3 for message processing guidelines for unbilled
messages.
18
12/15/93
<PAGE>
Article VIII - Attachment B Section C
Billing and Collection Services Exhibit C-1
TAPE TRANSMITTAL FORM
TELCO DEVELOPMENT GROUP, INC.
A copy of the form to accompany tape(s)
Date: _________________________
Billing center approval: _______________________
Tape Voucher Obligation ID Total Messages Total Revenue
- ------------ ------------- -------------- -------------
______________ ______________ ______________ ______________
______________ ______________ ______________ ______________
______________ ______________ ______________ ______________
______________ ______________ ______________ ______________
______________ ______________ ______________ ______________
______________ ______________ ______________ ______________
Tapes should be processed in sequential order as listed above.
These tapes are being forwarded to: UNITED TELEPHONE COMPANY OF FLORIDA
Receipt Conformation: ____________________ Date: __________________
19
12/15/93
<PAGE>
Article VIII - Attachment B Section C
Billing and Collection Services Exhibit C-2
TELCO DEVELOPMENT GROUP, INC.
CONTACT/PROCEDURES
FOR TRANSMISSIONS
I. Confirmation of Data Receipt/Processing;
A. Data Receipt
In the event of tape transmission, a signed and dated copy of the tape
transmittal will be sent by facsimile to Telco within one (1) business
day or receipt. When electronic transmission is used, the transmission
medium will provide confirmation of receipt.
B. Message Processing
To be provided within five (5) business days after successful
completion of message processing to Telco's confirmation representative
specified in Section J.
II. Error Handling
Report detailing rejected/errored messages will be mailed to Telco's
confirmation representative as specified in Section J.
20
12/15/93
<PAGE>
Article VIII - Attachment B Section C
Billing and Collection Services Exhibit C-3
TELCO DEVELOPMENT GROUP, INC.
MESSAGE PROCESSING GUIDELINES
Messages coming from Telco for bill processing must be packed with the 202203
and 202204 header and trailer as specified in the Exchange Message Interface
(EMI) specifications.
MISDIRECTED MESSAGES
Messages will be returned to Telco as misdirected if the following criteria are
not met:
A. The billing exchange is a United exchange or connecting company
exchange.
B. United must have accepted an order form pursuant to an agreement with
Telco for billing services.
C. Telco's carrier code must appear in the detail records and header and
trailer records.
A misdirected message listing will be created for messages that do not meet the
above criteria.
EDIT AND ERROR CODES
If the number of messages that reject exceeds the percentage that is set by
United, the entire batch will not be accepted for further processing. United
agrees to identify the reason for a rejected batch and notify Telco of the
errors. It will be the responsibility of Telco to correct such errors and
retransmit the entire batch to United.
UNBILLABLES
Messages for which no customer can be found will be returned to Telco. If agreed
to with Telco, unbillable and denied messages that are under a specified dollar
amount may be written off and not returned to Telco. Until United begins listing
standard EMI return codes, United will provide return codes, descriptions and
definitions to Telco.
DUPLICATES
Duplicate batches or records for unbilled messages will be automatically dropped
from the system and will be returned to Telco via an agreed upon medium.
21
12/15/93
<PAGE>
Article VIII - Attachment B Section D
Billing and Collection Services
SECTION D
INVOICE FORMATS
I. End User
A. United will bill toll messages placed by the end user customers of
Telco and forwarded to United by Telco for billing and collection
activities.
B. Telco's toll message data and charges will appear in standard detail,
i.e. date call was made, place call made to, telephone number called,
etc., and will be printed on United's bill stock paper.
C. Telco will have its own separate page(s) for messages billed. Taxes
applied to Telco tolls will be included in the "Summary of Taxes"
section of the customer's bill.
D. Telco understands that billing pages will be printed in ascending
numerical order of carrier identification code. This order of
presentation may be changed by United upon United's providing notice to
Telco.
E. A summary page will provide a single balance due for call carriers'
tolls, presented with United's charges for local, equipment, directory
and intraLATA services. Telco's toll detail will be subtotaled at the
end of Telco's separate page detail.
F. United will bill Telco's toll messages to end users in accordance with
United's normal billing schedule.
G. United will retain billed toll message data for the period of time
consistent with applicable regulatory or legal requirements. Upon
request and mutual agreement, United will retain billed toll message
data longer than the applicable regulatory or legal requirements.
H. Any costs associated with subsequent modifications to Telco's logo will
be at Telco's expense and based on expenses incurred by United for
facilitating the changes (ICB).
II. Telco
A. United will bill Telco for services rendered under the terms of this
Agreement or applicable tariff. Invoicing to Telco will be on a monthly
basis unless otherwise mutually agreed to by United and Telco.
B. Detail of the charges will be included on United's billing and
collection invoice by specific rate element.
C. Billing information will be segregated between interstate and
intrastate.
22
12/15/93
<PAGE>
Article VIII - Attachment B Section E
Billing and Collection Services
SECTION E
SETTLEMENT AND PAYMENT PROCEDURES
I. Purpose
The purpose of this section is to document the procedures between the
parties to this Agreement for the settlement of funds for billing and
collection services.
II. General
United will settle funds with Telco for messages as billed to end user
customers. The net amount due will be determined by netting messages
billed, applicable taxes, if any, and adjustments as set forth in III (B)
below. United will also be entitled to withhold from funds due Telco a
reserve for anticipated uncollectibles expected to be incurred from end
user customers and to apply the incurred uncollectibles against such
reserves when realized.
United will reconcile quantity of messages received for rating from
Telco's third party vendor to the number of messages resulting in rated
messages or errors. United will also reconcile the rated message quantity
and value of messages rated by United plus prerated messages received to
payments and adjustments on a monthly basis. Adjustments for rejects,
unbillables, post billing adjustments and uncollectibles will be supported
by call level detail.
III. Responsibilities of United
A. United agrees to provide a purchase of accounts receivable statement,
e.g., Exhibits E1 and E2, to Telco monthly.
B. The purchase of accounts receivable statement shall include at a
minimum the following information:
Exhibit E-1 -
------------
1. IXC - The name of the IXC to which the statement applies.
2. Company - The name of the United company or group performing the
services pursuant to this Agreement.
3. Reporting Location I.D. - The four-digit code representing United.
4. Date - The date the statement was prepared.
23
12/15/93
<PAGE>
Article VIII - Attachment B Section E
Billing and Collection Services
5. Payment Date - See paragraph C below.
6. Claim Number(s) - The number assigned to non-recurring claims.
7. Billed Revenue - The amount of the associated end user billing.
8. Bill Adjustments - The amount of the adjustments applied to end user
customer bills for messages previously billed.
9. Total Accounts Receivable - The amount of billed revenue net of
billing adjustments.
10. Uncollectible Bad Debt - The amount withheld by United representing
an estimate of future anticipated uncollectibles.
11. Late Payment Charge - The amount due Telco as a result of late
payment by United.
12. Amount Due IXC - The net amount due Telco.
13. Certified Correct - The name and telephone number of the United
person approving the statement.
Exhibit E-2 -
-----------
14. Message Telephone Service - The number of messages, minutes and
associated revenue billed to end user customers by sent paid (SP),
third number (3#), credit card (CC), collect (COL) and coin paid
(CNPD) categories which support the billed revenue totals (see B.7)
shown on the first page of the statement.
15. Other Toll Service Revenues - The number of messages, minutes and
associated revenue billed to end user customers for other toll
services (i.e., directory assistance) which support the billed
revenue totals (see B.7) shown on the first page of the statement.
C. Payment Procedures
United will pay Telco the net amount due for the delivered messages it
has purchased as described herein. The net amount due Telco will be
remitted to Telco on a monthly basis.
1. If such payment date would cause payment to be due on a Saturday,
Sunday or a bank holiday, payment for the net amount will be due to
Telco as follows:
2. If such payment date falls on a Sunday or on a holiday which is
observed on a Monday, the payment date shall be the first non-holiday
day following such Sunday or holiday. If such payment date falls on a
Saturday or a holiday which is observed on Tuesday, Wednesday,
24
12/15/93
<PAGE>
Article VIII - Attachment B Section E
Billing and Collection Services
Thursday or Friday, the payment date shall be the last non-holiday
day preceding such Saturday or holiday.
D. Payment Date Calculation
1. Monthly settlement with Telco shall be governed by the weighted
payment date calculation method described below and as illustrated in
Exhibit E3. The payment date calculation form shall be used to
calculate a single monthly payment to Telco for the purchase of
Telco's receivables. The calendar date shall be conveyed to United's
treasury for payment of the amount due to Telco.
2. The weighted payment due date calculation shall be based on United's
end user billing cycle numbers. Telco shall be forwarded a copy of
the monthly payment due date calculation form with the purchase of
accounts receivable settlement statement.
3. The payment due date calculation form provides backup information by
company/state for the weighted settlement dates displayed on the
monthly purchase of accounts receivable. The format has the following
column headings.
ID: Reporting location identification number
OTC: Operating company code (i.e., UTF, UTS, etc.)
YEAR: Two-digit year (YY)
MONTH: Two-digit month (MM)
3.1 Column A: Bill Cycle - The two-digit billing cycle number as
described.
3.2 Column B: Net Amount Due - The net amount payable to Telco for
the appropriate billing cycle activity.
3.3 Column C: Weighted Amount - The weighted settlement amount. This
is calculated by multiplying the Bill Cycle (Column A) by the net
amount due (Column B).
3.4 Line D: Total Net Amount Due The sum of all cycle subtotals for
net amount due (Column B).
3.5 Line E: Total Weighted Amount Due The sum of all cycle subtotals
for weighted amount (Column C).
3.6 Line F: Weighted Settlement Date The weighted settlement payment
date used on the monthly purchase of accounts receivable. This
date is calculated by dividing the total weighted amount (Line E)
by the total net amount due (Line D).
25
12/15/93
<PAGE>
Article VIII - Attachment B Section E
Billing and Collection Services
This result is truncated to a whole number. The resulting whole
number represents the day in the following month when payment for
the current monthly billing shall be made. This date shall be
adjusted for holidays and weekends as set forth in this
Attachment B. Section C forward.
4. The monthly payment due date calculations, e.g., Exhibit E-3, shall
be forwarded to the appropriate contacts as set forth in Section J
for Telco no later than eight (8) calendar days after the last
billing cycle included in the monthly settlement. A copy of the
purchase of accounts receivable reports as set forth and illustrated
as Exhibit E-1 shall be forwarded with the actual payment of the
amount due unless payment is via electronic funds transfer (EFT). If
payment is via EFT, then United shall clearly identify the
appropriate purchase of accounts receivable statement associated with
payment on the EFT notice.
E. A late payment charge may be assessed by either Telco or United if
payment receipt date is determined to be outside of the calculated due
date. The late payment charge will be calculated by applying a late
factor against the delinquent amount for the number of days from the
payment due date until the actual payment receipt date. The late factor
shall be 0.000590 per day, compounded daily or the highest interest
rate (in decimal value) which may be levied by law for commercial
transactions in the state in which the service is provided, whichever
is lowest. Any late payment resulting from a bank error will not be
subject to the late payment charge.
IV. Responsibilities of Telco
A. Telco will be responsible for receiving the purchase of accounts
receivable statement and notifying United within five (5) business days
of receipt of any dispute relative to the payment date.
B. Telco shall provide United the following information before United
becomes liable for the submission of purchase of accounts receivable
statements or any payments. Telco may change these contacts as needed
with sixty (60) days advance written notification to United or shorter
period if agreed to by both parties.
B.1 Contact name, mailing address and telephone number for sending the
purchase of accounts receivable statement.
B.2 Contact name, mailing address and telephone number for mailing
payments via check.
B.3 Contact name and such other banking information as is necessary to
effect wire transfers.
26
12/15/93
<PAGE>
Article VIII - Attachment B Section E
Billing and Collection Services Exhibit E-1
For illustrative purposes only
IXC: ______________________________
PURCHASE OF ACCOUNTS RECEIVABLE
Company: Date:
Reporting Location ID: Payment Date:
Claim Numbers(s)
Billed Revenue
Interstate $
Intrastate $
Tax
Federal $
State and Local $
Billing Adjustments
Interstate $
Intrastate $
Tax
Federal $
State and Local $
Total Accounts Receivable $
Uncollectible - Bad Debt
Interstate $
Intrastate $
Tax
Federal $
State and Local $
Unbillables
Late Payment Charge $
Amount Due IXC $
CERTIFIED CORRECT: _____________________
TELEPHONE NUMBER: _____________________
27
12/15/93
<PAGE>
Article VIII - Attachment B Section E
Billing and Collection Services Exhibit E-2
For illustrative purposes only
IXC:______________________________________________
PURCHASE OF ACCOUNTS RECEIVABLE STATISTICAL REPORT
Company: Date:
Reporting Location ID: Payment Date:
Claim Number(s):
- -------------------------------------------------------------------------------
MESSAGES MINUTES ADJUSTMENTS BILLED
-------- ------- ----------- ------
Message Telephone Service:
_________________________
Interstate $
SP $
3# $
CC $
COL $
CNPD $
Intrastate $
SP $
3# $
CC $
COL $
CNPD $
Other Toll Service Revenues:
_____________________________
Interstate $ $
Intrastate $ $
28
12/15/93
<PAGE>
Article VIII - Attachment B Section E
Billing and Collection Services Exhibit E-3
For illustrative purposes only
MONTHLY PAYMENT DUE DATE CALCULATIONS
PURCHASE OF ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(A) (B) (C)
BILL NET AMOUNT WEIGHTED
ID OTC YEAR MONTH CYCLE DUE AMOUNT
____ ____ ____ _____ _____ $_________ $________
_____ _________ ________
_____ _________ ________
_____ _________ ________
_____ _________ ________
_____ _________ ________
_____ _________ ________
TOTALS ________(D) ________ (E)
WEIGHTED SETTLEMENT DATE _______ (F)
</TABLE>
29
12/15/93
<PAGE>
Confidential Treatment Requested. The redacted
material has been seperatley filed with the
Commission
Article VIII - Attachment B Section E
Billing and Collection Services Exhibit E-3
For illustrative purposes only
MONTHLY PAYMENT DUE DATE CALCULATIONS
PURCHASE OF ACCOUNTS RECEIVABLE
(A) (B) (C)
BILL NET AMOUNT WEIGHTED
ID STATE YEAR MONTH CYCLE DUE AMOUNT
TX69 TX 90 05 01 (*) (*)
10 (*) (*)
15 (*) (*)
TOTALS (*)(D) (*)(E)
WEIGHTED SETTLEMENT DATE 7 (F)
KS37 KS 90 05 01 (*) (*)
10 (*) (*)
15 (*) (*)
20 (*) (*)
TOTALS (*)(D) (*) (E)
WEIGHTED SETTLEMENT DATE 8 (F)
30
12/15/93
<PAGE>
Article VIII - Attachment B Section F
Billing and Collection Services
SECTION F
PROVISIONS FOR UNCOLLECTIBLES
I. General
A. Uncollectible is defined as the end user Telco bad debt revenue losses
resulting from failure of the end user to pay legally earned service
revenues and which United has written off as uncollectible after
rendering the final bill.
B. The uncollectible factor is designed to estimate an amount representing
the uncollectible revenues United expects to be realized as
uncollectible in future time periods. The factor is applied to the
total amount of Telco service billed to end user customers, net of
adjustments, as part of the purchase of accounts receivable process.
C. The uncollectible factor is applicable only for services included in
this Agreement.
II. Time Period
A. The initial uncollectible factor will be established at the specific
rate in effect and will be effective as of the date denoted in the
applicable product offering attachment for provision of the B&C
service. An uncollectible factor will be computed by United every study
period thereafter based on United's uncollectible experience for all
Telco messages billed by United. The new estimate for the ensuing true-
up period will be the result of actual uncollectibles realized for the
preceding period. Any difference between the estimated uncollected
amount and the actual uncollectible amount for true-up period will be
settled between the parties based on the true-up procedures below and
included in the Uncollectible - Bad Debt calculations of Exhibit E-1.
III. Uncollectible Factor Computation
A. The uncollectible factor for anticipated uncollectibles will be
determined by reviewing 100 percent of accounts that are written off as
uncollectible by United for the preceding three-month period.
IV. Uncollectible True-Up
A. If the uncollectible factors used between study periods produces a
result that differs from realized uncollectibles, a true-up amount will
be calculated and either withheld or remitted quarterly to Telco as
appropriate.
31
12/15/93
<PAGE>
Article VIII - Attachment B Section F
Billing and Collection Services
V. Collection of Bad Debt Amounts
A. Amounts collected by United or its agent following declaration of final
bad debt on an account shall be shared between United and Telco based
on an apportionment of actual United and Telco billed revenues, except
where otherwise required by a regulatory agency.
B. Collection expenses associated with the recovery of end-user amounts
actually collected following declaration of final bad debt, shall be
shared between United and Telco based on the percentage of the amounts
actually recovered by the various service providers. These collection
expenses will appear on the next Billing and Collection invoice
rendered to Telco following recovery of these amounts.
32
12/15/93
<PAGE>
Article VIII - Attachment B Section G
Billing and Collection Services
SECTION G
AUDITING PROCEDURES
I. The purpose of this procedure is to document the responsibilities of the
parties in monitoring the controls for services provided under this
contract.
II. On-Site Audit
A. United agrees to cooperate with Telco for purposes of performing an on-
site audit of United's billing procedures as requested by Telco. United
agrees to permit Telco to use independent auditors to perform audits on
Telco's behalf. Such audits may not be performed at a frequency of more
than annually unless agreed to by both parties. Should specific areas
of potential discrepancy be identified by either party between formal
audits, United and Telco will work in good faith to resolve such
discrepancy.
B. United will be responsible for the provision of office space to conduct
such audit and will provide, for a fee, other office services as
requested by Telco., e.g. source document copies, telephone, etc.
C. United will not be required to produce such records beyond the scope of
the services provided under this contract and will maintain as
confidential information relative to similar services provided other
interexchange carriers as well as United's financial data.
D. Telco agrees to establish an audit period in writing forty-five (45)
days in advance of the on-site visit. The notice of audit shall
identify the date upon which it is requested to commence, the number of
representatives, the subject matter of the audit, the period covered
and the materials to be reviewed. Within fifteen (15) days of receipt
of Telco's notice of audit, United may, for good cause, postpone the
commencement of the audit for a period not to exceed sixty (60) days
beyond the expiration of the forty-five (45) day notice period. If
United elects to postpone the commencement date, it shall advise Telco
in writing, indicate the need for the postponement and specify the
postponed date for commencement. Upon completion of the on-site audit,
Telco agrees to close such audit period from future audits relative to
the specific subject matter of the audit and hold United harmless from
any liability for control weaknesses not uncovered by Telco's auditors
for that period.
E. Telco agrees to provide United written notification of items uncovered
by the audit and include a statement reflecting the release of
liability for items not uncovered for the audit period.
F. Telco's right to access information for audit purposes is limited to
data not in excess of one (1) year in age. Once this period has been
audited, specific subject matter of the audit for this period is
unavailable for future audits.
33
12/15/93
<PAGE>
Article VIII - Attachment B Section H
Billing and Collection Services
SECTION H
BILL MESSAGING PROCEDURES
I. The purpose of this procedure is to identify the capabilities of the bill
messaging product and associated responsibilities for the provisioning of
this service. Each request for this service will be provided via the
product development procedure as noted in Attachment C in Article VIII.
II. Product Description
A. The bill message product provides the ability to place messages on
Telco's bill page within the United customer's bill. The message
product that is available is comprised of marketing messages which
appear in Telco's customer information area of the bill. The customer
information area is a section of the bill immediately following the
long distance detail and can accommodate up to three (3) marketing
messages totaling ten (10) lines of print, sixty-six (66) characters
per line.
III. Bill Message Capabilities
A. A Telco message will be printed only when a customer bill page is
produced for Telco. United will not produce a bill page simply for the
purpose of printing Telco's bill message.
B. Selectivity criteria is available to target messages to selected
customer groups where the appropriate information is maintained in
United's billing system(s). These selectivity parameters include the
following:
1) Adjustment activity
2) PIC to Telco
3) EMI message type
4) EMI rate class
5) EMI record type
6) Length of toll call
7) Total dollar value of billed toll
8) Originating or terminating NPA/NXX
9) Customer type - business, residence
10) Jurisdiction - interstate, intrastate, international
11) Toll connect time
12) Service and equipment code, (i.e., one-party residential
touch-tone customer)
13) Optional calling plan
14) Casual caller
15) Calling card holders
C. A maximum of five (5) selectivity criteria per message is available.
For example, residential customers with international traffic, a
34
12/15/93
<PAGE>
Article VIII - Attachment B Section H
Billing and Collection Services
calling card, adjustments and those who subscribe to an optional calling
plan could be targeted. When more than one (1) criterion is used, only
those customers meeting all criteria will receive the message.
D. A maximum of three (3) messages will be accepted from Telco per bill
cycle with all or any combination of messages appearing on a single
customer's bill, provided the total number of lines does not exceed ten
(10).
IV. Requirements/Content Criteria
A. Messages must meet the size restrictions previously specified. All
messages shall be provided by Telco to United for review thirty (30)
days in advance of the first bill cycle which is to include the
particular message.
B. United may reject any message within ten (10) days of receipt if, in
its opinion, the message:
1) is untrue or misleading,
2) contains any reference to other ICs specifically by name,
3) infers endorsement by United or may result in a negative impact on
United's image,
4) does not comply with any current applicable legal and regulatory
requirements for bill messages, or
5) conflicts with any United business need.
35
12/15/93
<PAGE>
Article VIII - Attachment B Section I
Billing and Collection Services
SECTION I
BILL INSERT PROCEDURES
I. The purpose of this procedure is to identify the capabilities of the bill
insert product and associated responsibilities for the provisioning of
this service. Each request for this service will be provided via the
product development procedures as noted in Attachment C, Article VIII.
II. Product Description
A. The bill insert product allows Telco to advertise to customers via an
insert in the customer's bill. Telco is permitted one (1) insert slot
per month, per NXX.
III. Bill Insert Capabilities
A. The customer base for United's insert product is Telco's PIC'd
customer. Customers may receive an insert if they have no Telco billing
for a particular month.
B. Inserts can be targeted to select customer groups based on the
following selectivity criteria where appropriate information is
maintained in United's billing system(s):
- adjustment activity
- EMI message type
- EMI rate class
- EMI record type
- length of toll call
- total dollar value of billed toll
- originating or terminating NPA/COC
- customer type - business, residence
- jurisdiction - interstate, intrastate, international
- toll connect time
- Service and equipment type, i.e., one-party residential touch-tone
customer
- optional calling plan
C. If a selectivity parameter for an NXX is used, only that targeted group
within the NXX will receive an insert since one slot per NXX is
available.
IV. Requirements/Content Criteria
A. Telco will provide its own inserts which shall be in compliance with
the size and weight specifications in Section V following. Telco shall
provide to United for content review a sample insert thirty (30) days
in advance of the first bill cycle which is to include that particular
insert. United will respond to Telco no later than twenty (20) days
36
12/15/93
<PAGE>
Article VIII - Attachment B Section I
Billing and Collection Services
prior to the first bill cycle if there is a problem with the insert
which may result in rejection. The final inserts must be sent to the
appropriate United data center and must be received ten (10) days in
advance of the first billing cycle in which the insert will be
included. Telco must provide six (6) months' notice of its insert
schedule when possible. There will be a cancellation fee if Telco
cancels a slot without ninety (90) days prior written notice.
B. United may reject an insert if, in its opinion, the insert:
1) Is untrue or misleading,
2) contains any reference to other ICs specifically by name,
3) interferes an endorsement by United or may result in a negative
impact to United's business and/or image,
4) promotes business other than Telco's line of business,
5) does not comply with any current applicable legal and regulatory
requirements for bill inserts, or
6) conflicts with United's business needs.
V. Size and Weight Specifications
A. The following is a list of the minimum required specifications for all
billing inserts:
1. Minimum size and maximum size
a. The minimum size that can be inserted is six and three-quarters
inches (6-3/4") in length and two and three-quarter inches (2-3/4")
in width.
b. The maximum size that can be inserted is seven and five-eighths
inches (7-5/8") in length and three and three-quarter inches
(3-3/4") in width.
c. Size Variations. Because of reasons pertaining to machine breakdown
and setup, it is preferred that inserts of a common size be used as
often as possible. The optimum size would be seven inches (7") in
length and three and one-half inches (3-1/ 2") in width. It is of
utmost importance that individual insert sizes not vary. A variance
tolerance of one thirty-second inch (l/32") will be allowed. United
will contact Telco concerning any inserts that do not comply.
37
12/15/93
<PAGE>
Article VIII - Attachment B Section I
Billing and Collection Services
2. Insert Thickness and Weight
a. The minimum thickness here is a single page insert which should be
printed on paper of no less weight than sixty (60) pound offset.
b. Maximum thickness. It is permissible to have a single fold (double
thickness), in which case the weight of the paper used should be
considered in relationship to the number of inserts that are being
inserted because of postage weight breakdown. A letter fold can be
used (triple thickness). The paper weight here should not exceed
sixty (60) to seventy (70) pound offset.
c. Minimum weight. The minimum weight of paper used for inserts should
be no less than a sixty (60) pound offset. Thinner weight paper does
not run well on the billing inserter.
d. Maximum weight. Inserts printed on paper having a weight of no less
than sixty (60) pounds and varying in weight up to ninety (90)
pounds, which is index paper, usually run well on the billing
inserter. Inserts printed on index paper having a weight of more
than ninety (90) pounds may not process through United's inserters.
Index paper should always be singular thickness.
3. Insert Quality
a. Flatness. All inserts must be perfectly flat and free of any curl in
both the length and width of the insert. Inserts having a curled lip
where they are folded or inserts that are bowed either way in length
or width will not run on the billing inserter.
b. Singularity. All inserts must be kept singular of each other whether
they are folded, printed or moistened back gum paper, or bumper
strip gum paper. One of the most common problems encountered with
folded inserts is one (1) insert folded inside of another.
c. Gum paper. On moistened back gum paper, dampness from printing or
weather conditions can cause these inserts to stick together. On
bumper strip material, too much gum will sometimes ooze to the edges
when they are pressure clamped and cut, thus causing the inserts to
stick together or bind in the insert station. Too little gum may
cause the paper backing to pull loose as the insert is suction
pulled.
d. Perforations. Perforations must be made strong enough and in areas
on the insert so that they will not separate as the machine suction
and gripper pulls the insert from the insert station.
38
12/15/93
<PAGE>
Article VIII - Attachment B Section I
Billing and Collection Services
All of the above problems cause machine stoppages, jams, etc., and
must be held to a minimum.
e. Staples and glued tabs should not be used.
4. Packing of Inserts
a. Binding. The best and most preferred method of packaging inserts is
to bind each stack (approximately four (4) inches in height) with a
narrow paper band. Binding with rubber bands is permitted provided
the rubber band is put around the package only once in such a manner
that it does not make an indenture in the insert. Small packages of
inserts can be wrapped with shrink-wrap.
b. Direction. All inserts (especially folded inserts) must be faced the
same way so that the closed end of the fold is in the same
direction. Facing each individual stack of inserts opposite for
packaging purposes is permissible when each stack is banded.
c. Stacking in boxes. All inserts should be placed flat in boxes (not
on ends) in order to keep them as free of curl as possible. Box size
should be of such nature that the box when fully packed does not
exceed sixty (60) to seventy (70) pounds.
5. Shipping of Inserts
a. Box type. Inserts should be packed in heavy duty cardboard boxes
which will not crush in shipment.
b. Large quantities. Due to limited space in our stockroom, we will not
be able to store more than two (2) pallets of inserts at a time.
c. Insert request letters. The insert letter should indicate the
procedure to be followed when the insertion schedule is completed.
We will assume that the excess inserts are to be discarded unless
indicated otherwise on the letter.
39
12/15/93
<PAGE>
Article VIII - Attachment B Section J
Billing and Collection Services
SECTION J
UNITED/TELCO CONTACTS
The following Exhibits J-1 and J-2 represent Telco and United contact
representatives regarding administration of this agreement. Individuals
administering the contract for both Telco and United may be changed without
amending the contract. Both United and Telco shall provide the names of these
individuals as outlined in Exhibits J-1 and J-2 and updated by both United and
Telco as their respective contact lists change. As updates occur, the party
making a change will notify the other party of the change and copies of the
updated contact list will be provided to the other party for their use.
40
12/15/93
<PAGE>
Article VIII - Attachment B Exhibit J-1
Billing and Collection Services
BILLING AND COLLECTION CONTACTS
UNITED TELEPHONE COMPANY OF FLORIDA
The company address and phone number apply to all of the contacts listed below:
United Telephone Company of Florida
P. O. Box 165000
Altamonte Springs, FL 32716-5000
(407) 889-6000
Billed Settlement Sheets: Ms. Susan Altman
Staff Manager-Carrier Billing
Mail Code 5283
(407) 889-6333
United's Invoice to Ms. Susan Altman
(name of company): Staff Manager-Carrier Billing
Mail Code 5283
(407) 889-6333
Order Placement: Ms. Deborah D. Jewell
Account Executive
Mail Code 5324
(407) 889-6410
Customer Service/Inquiry: Mr. Richard A. Warner
Manager-Residential Market Support
Mail Code 5374
(407) 889-6893
Contract Administration/ Ms. Deborah D. Jewell
Services Issues: Account Executive
Mail Code 5324
(407) 889-6410
Toll Processing: Ms. Deborah A. Terry
Staff Manager-Message Processing
Mail Code 5283
(407) 889-6229
Treasury: Mr. Robert T. Crocker
Assistant Treasurer
Mail Code 5272
(407) 889-6032
41
12/15/93
<PAGE>
Article VIII - Attachment B Exhibit J-2
Billing and Collection Services
BILLING AND COLLECTION CONTACTS
TELCO DEVELOPMENT GROUP, INC.
The company address and phone number apply to all of the contacts listed below:
Telco Development Group, Inc.
Lafayette Business Center
4206 Technology Court
Chantilly, VA 22021
703-631-5655
Billed Settlement Sheets: Mark Stodter
703-631-5655
United's Invoice to Mark Stodter
Order Placement: Mark Stodter
Customer Service/Inquiry: Mark Stodter
Contract Administration Mark Stodter
Toll Processing:
Treasury:
United payments, via check, should be sent to:
Telco Development Group, Inc.
Lafayette Business Center
4206 Technology Court
Chantilly, VA 22021
United payments, via U.S. Mail or overnight, should be directed to:
Telco Development Group, Inc.
Lafayette Business Center
4206 Technology Court
Chantilly, VA 22021
42
<PAGE>
Article VIII - Attachment B Exhibit J-2
Billing and Collection Services Page 1 of 2
BILLING AND COLLECTION CONTACTS
TELCO DEVELOPMENT GROUP, INC.
The company address and phone number apply to all of the contacts listed below:
Telco Development Group, Inc.
4219 Lafayette Center Drive
Chantilly, VA 22021
703-631-5655
Billed Settlement Sheets: ZPDI/Billing Management
Telco Development Group, Inc.
9311 San Pedro, Suite 400
San Antonio, TX 78216
Attention: Danny Moore
Tax Reports: Telco Development Group, Inc.
4219 Lafayette Center Drive
Chantilly, VA 22021
Attention: Beth Progar
Confirmation Statements: ZPDI/Billing Management
Telco Development Group, Inc.
9311 San Pedro, Suite 400
San Antonio, TX 78216
Attention: Rick Raney
Rejected Tapes and ZPDI/Billing Management
Report: Telco Development Group, Inc.
9311 San Pedro, Suite 400
San Antonio, TX 78216
Attention: Rick Raney
Order Placement: Telco Development Group, Inc.
4219 Lafayette Center Drive
Chantilly, VA 22021
Attention: Mark Stodter
Telephone: 1-703-631-5655
Customer Service/Inquiry: Mark Stodter
Contract Administration: Mark Stodter
United payments via check, US mail or overnight should be directed to:
Telco Development Group, Inc.
4219 Lafayette Center Drive
Chantilly, VA 22021
42
07/10/93
<PAGE>
Article VIII - Attachment B Exhibit J-2
Billing and Collection Services Page 2 of 2
United wire payments should be directed to:
SIGNET Maryland
7700 Wisconsin Avenue
Bethesda, MY 20814
Name: Telco Development Group of Delaware, Inc.
Account No. 440 0355691
ABA No. O52000016
43
07/10/93
<PAGE>
Article VIII - Attachment C
Billing and Collection Services
ATTACHMENT C
TO
ARTICLE VIII
PRODUCT DEVELOPMENT PROCEDURES
11/12/93
<PAGE>
Article VIII - Attachment C
Billing and Collection Services
ATTACHMENT C
PRODUCT DEVELOPMENT PROCEDURES
Page No.
--------
SECTION I. General 1
SECTION II. Responsibilities of Both Parties 1
SECTION III. Purchase Order Request 1
SECTION IV. Purchase Order Processing 4
SECTION V. Purchase Request Defects 4
SECTION VI. Reservation of Rights 4
SECTION VII. Purchase Order Processing Stages 4
Exhibit 1 - Purchase Order Request 7
i
11/12/93
<PAGE>
Article VIII - Attachment C
Billing and Collection Services
ATTACHMENT C
TO ARTICLE VIII
PRODUCT DEVELOPMENT PROCEDURES
I. GENERAL
The intent of these procedures is to identify the steps required by Telco
and United when a change is requested by Telco to the billing and
collection services provided. These changes consist of, but are not
necessarily limited to billing changes, nonbilling changes, requests for
interface provisioning, marketing messages and procedural changes. A11
correspondence relative to the rendering of billing services as currently
being provided should be forwarded to the representative with
responsibility for order placement as denoted in Section J of Attachment B
to Article VIII.
II. RESPONSIBILITIES OF BOTH PARTIES
Both parties agree to put forth their best effort in complying with the
procedures as stated and ensuring proper communication towards this end. It
is noted that United will not pursue the support of requests from Telco
without the proper authorization and direction as specified in these
procedures.
III. PURCHASE ORDER REQUEST (Exhibit 1)
It will be the responsibility of Telco to communicate its requirements to
United using a purchase order request, similar to Exhibit 1 attached, which
will include the purchase order information. All Telco requests will be
forwarded to the group manager Telco (as identified in Section J-1 of
Attachment B to Article VIII) for distribution to United. The development
of a purchase order request by Telco results in an evaluation by United and
the incurrence of costs by United towards this end. The purchase order
request is for the purpose of establishing the necessary controls to track
changes to the current billing services provided or requests for billing
information. Therefore, normal day-to-day correspondence will not require
the generation of a purchase order request. United reserves the right to
evaluate all correspondence received from Telco as to its substance and
intent in order to determine if the correspondence results in modifications
to the current billing services being provided or requires an extraordinary
effort towards the collection of data in support of a request by Telco.
Subsequent to this evaluation, United may request the submission of a
purchase order request by Telco if deemed appropriate. The following
purchase order request information is required:
A. PURCHASE ORDER DATE (prominently displayed in the heading) - the date of
issuance of the purchase order request must be noted on the face of the
correspondence. This date will be used for tracking purposes to ensure
timely response to requests.
1
11/12/93
<PAGE>
Article VIII - Attachment C
Billing and Collection Services
B. PURCHASE ORDER SUBJECT (prominently displayed in the heading) - a brief
line of verbiage describing the subject matter of the request.
C. PURCHASE ORDER NUMBER (prominently displayed in the heading) - the
purchase order number is generated by Telco with the issuance of a
request and provides the necessary controls for tracking requests from
Telco. This control number ensures appropriate communication and timely
response to the request. The purchase order number consists of fourteen
(14) characters with intelligence provided by each character as follows:
Digits 1-3 two-digit month, last digit of the year indicating date
generated (e.g., June, 1990 = 060
4-5 two-digit numeric indicating the sequence number of the
request generated by Telco during that period, i.e., 04)
6-7 Telco's internal use. Default to "UN" if unused.
8-9 two-digit alpha characters indicating the jurisdiction of
the request. Codes are as follows:
" " -- intrastate (two-digit state abbreviation)
"ZZ" -- interstate
"XX" -- interstate and intrastate
"YY" -- multi-state
"WW" -- international
10 one-digit indicating type of service for which the request
applies. Codes are as follows:
"M" -- MTS change
"A" -- billing information - MTS
"W" -- WATS change
"B" -- billing information - WATS
"N" -- new service
"z" -- miscellaneous
11-13 ACNA code for Telco per industry standards
14 one-digit numeric indicating the iteration of this request.
May be used for updated and/or clarified specifications
relating to the same request.
Sample purchase order number: 060-04-UN-ZZ-M-ABC-1
D. TELCO CONTACT NAME AND PHONE
The individual or individuals responsible for ensuring the coordination
of this request on behalf of Telco. When multiple contact individuals
2
11/12/93
<PAGE>
Article VIII - Attachment C
Billing and Collection Services
apply, Telco will provide contact name and phone by area of
responsibility. At a minimum, contacts should be provided for the
overall coordination of the request as well as responsiveness to
technical questions relating to the specifications.
E. REQUIRED/TARIFF DATE(s)
The date (if applicable) for which the requested change or new service
is required to be operational as a result of regulatory requirements
(i.e., tariff filing date, tariff effective date, anticipated tariff
effective date). Should this request not fall under regulatory scrutiny,
please provide the date desired for this change or new services and a
brief description justifying this date. These dates will be used to
assist in prioritizing the resources of United.
F. PURCHASE ORDER TYPE
United will require Telco to clearly mark on the cover page of the
purchase request whether the request is a:
"BILLING CHANGE"
"NONBILLING CHANGE"
"INTERFACE REQUEST" or
"NEW SERVICE."
Telco, in addition, must clearly specify on the face of the purchase
request, the manner in which the request is to be pursued:
"ORDER OF MAGNITUDE ESTIMATE"
"TIME AND COST ESTIMATE"
"PREAUTHORIZED DEVELOPMENT AND IMPLEMENTATION"
This information will also assist United in prioritizing resources
towards the pursuit of the request.
G. PURCHASE ORDER REQUEST SPECIFICATIONS
The purchase order request will be a complete source of information
pertaining to Telco's expectations and output performance objectives.
Technical information must be of a nature to allow implementation of the
request by United with minimal additional interaction with Telco's
technical staff. For illustrative purposes only, a complete package may
contain the following:
G.1 Business requirements
G.2 Illustrative tariff
G.3 Methods and procedures
G.4 Bill format
G.5 Testing criteria objectives
G.6 Other performance criteria
3
11/12/93
<PAGE>
Article VIII - Attachment C
Billing and Collection Services
IV. PURCHASE ORDER PROCESSING
United defines the stages of the purchase order process as:
A. ORDER OF MAGNITUDE ESTIMATE
B. TIME AND COST ESTIMATE
C. PREAUTHORIZED DEVELOPMENT AND IMPLEMENTATION ESTIMATE
Definitions and process description are provided in Section VII of this
Attachment C.
V. PURCHASE REQUEST DEFECTS
Any defects or deviations to the purchase order found before or during the
order of magnitude estimate, time and cost, or preauthorized estimate will
be resolved in writing by Telco to the satisfaction of both parties.
Defect shall be defined as:
Omissions, inaccuracies, inconsistencies or other elements of the
purchase request that cause the request to be open to
interpretation/dispute by either party.
Deviations to the request are defined as:
Alterations or compromises to the form and/or content of the original
request as a result of mutually negotiated changes to the original
request. Such deviations will be in the best interest of both parties
with the overall objective of achieving implementation of the request
in the most efficient and cost effective manner. Deviations mutually
agreed upon shall supersede the original specifications.
VI. RESERVATION OF RIGHTS
Neither the provision of services hereunder nor the payment by Telco for
such services shall create or vest in Telco any ownership or property
rights of any nature. United reserves the right to request a resubmission
of the total purchase order package as a result of changes or additions
that materially alter the original request.
VII. PURCHASE ORDER PROCESSING STAGES
A. ORDER OF MAGNITUDE
Telco may from time to time request an order of magnitude (OOM) for a
project. An OOM will be used to provide Telco with a general idea as to
the size, complexity and development schedule for a project. OOMs will be
used to gauge the feasibility of a project. United will be asked to
respond within two (2) weeks of receipt of a request for an OOM. As OOMs
will be accompanied by minimal documentation, United will
4
11/12/93
<PAGE>
Article VIII - Attachment C
Billing and Collection Services
be asked to provide their best professional opinion as the project scope
and size. OOMs will not be used to initiate work; OOMs will be followed
by a time and cost request.
B. TIME AND COST ESTIMATE
1. United will receive program modification and/or enhancement
specifications from Telco detailing the requirements for billing
through a time and cost estimate request (Request). Each request
will be assigned a unique purchase order number. United will
acknowledge receipt of the request within one (1) business day.
2. United will develop a response to the request by outlining time and
cost requirements to Telco to design, develop, test and implement
the system software in the form of a time and cost estimate. The
time and cost estimate will then be forwarded to Telco for review
and approval within thirty (30) calendar days of receipt by United
--------
but no later than thirty-five (35) calendar days from Telco's
--------
request date and prior to United's initiation of project. Estimates
will be valid for forty-five (45) calendar days after receipt by
Telco. When Telco fails to notify United within this time frame, the
time and cost estimate shall be considered void.
3. United will provide to Telco a percentage of the estimate for each
step: design, coding, testing and implementation.
4. Telco will review the time and cost estimate prepared by United for
the project. Telco will approve, amend or withdraw the time and cost
request in writing upon review of the time and cost estimate.
5. Telco and United will agree upon a time and cost estimate for each
request submitted by Telco. Telco will pay the agreed upon price.
6. Charges will be billed to Telco on a monthly basis after
authorization. All charges associated with an approved time and cost
estimate must be billed to Telco within ninety (90) business days
after implementation of program modification or enhancement or Telco
is not responsible for such charges. Notification of implementation
will be provided to Telco within two (2) business days of
implementation via hard copy or electronic transmission.
7. Upon receipt of Telco's written approval of a time and cost
estimate, United will develop the system software necessary to meet
Telco's specifications as agreed.
8. United will perform the necessary software design, development and
testing functions to ensure software system is operable to Telco's
specifications.
5
11/12/93
<PAGE>
Article VIII - Attachment C
Billing and Collection Services
9. Within ten (10) business days or receipt of a request for time and
cost estimate, United and Telco representatives will meet to
cooperatively discuss specifics of the request and testing
requirements. United will initiate this meeting. It is the intent
that the meeting will look at all possible options for satisfaction
of the requirement(s) and that the best option for the least cost
will be chosen. At that time, if there is mutual agreement that a
request is complex, the estimate due date may be extended to a
mutually agreed upon date. When modifications to time and cost
requests are required, United will make its best effort to provide
an estimate in twenty-one (21) calendar days but in no event longer
than thirty (30) calendar days. If revisions to the specifications
are a result of the discussion session and/or for clarification,
there will be no charge for the time and cost revision. There will
be no charge for the time and cost estimates that are not accepted.
These procedures apply only to those requests received after the
contract date.
10. United will continually consult with Telco for clarification of
specifications during software design, development, testing and
implementation stages.
C. Preauthorized Development and Implementation
1. In certain instances, Telco may issue a preauthorized development and
implementation request and specify a maximum dollar limit per
preauthorization request. Upon receipt of a request of this type,
United will begin development and implementation efforts while
concurrently developing a time and cost estimate and will implement
monthly billings to Telco for recovery of costs as incurred in
relation to the request. If United's costs should exceed the
preauthorized limits with adequate notice being given to Telco,
United will pursue further authorization for billing these charges
via the time and cost process. A face-to-face meeting will be held if
appropriate.
2. If Telco should cancel an authorized or preauthorized request after
receipt by United, Telco shall compensate United for any reasonable
expense incurred for processing or development work prior to
cancellation up to the amount of the authorization or
preauthorization.
6
11/12/93
<PAGE>
Article VIII - Attachment C
Billing and Collection Services
EXHIBIT 1 OF ATTACHMENT C
PURCHASE ORDER REQUEST
Date:________________________________________________________
To: United Telephone Company of Florida
Purchase Order Number:_______________________________________
Purchase Order Type:_________________________________________
Required/Tariff Date(s):_____________________________________
Contact:_____________________________________________________
Detail Specifications:
(Insert company name)________________________________________
_____________________________________________________________
By:
7
11/12/93
<PAGE>
Article VIII - Attachment D
Casual Caller Billing and Collection
ATTACHMENT D
TO
ARTICLE VIII
PRODUCT OFFERING - CASUAL CALLER
11/12/93
<PAGE>
Article VIII - Attachment D
Casual Caller Billing and Collection
ATTACHMENT D
TO
ARTICLE VIII
PRODUCT OFFERING - CASUAL CALLING BILLING AND COLLECTION
Page No.
--------
SECTION I Product Description 1
SECTION II Provision of Management Information 5
Exhibit l 6
i
11/12/93
<PAGE>
Article VIII - Attachment D
Casual Caller Billing and Collection
SECTION I
PRODUCT DESCRIPTION
I. CASUAL CALLER BILLING AND COLLECTION SERVICE
This Attachment D, effective as of the date Telco Development Group, Inc.
receives certification from the state of Florida, between "United" and
"Telco," sets forth the terms and conditions for the provision of casual
caller billing and collection service as hereinafter described. In
consideration of the mutual promises herein contained the parties agree as
follows:
A. General Description of Service
Telco purchases bill processing, bill rendering and inquiry service from
United, as specified in Telco's service order to United, along with
certain other services identified in this Attachment D (at their
option).
B. Obligations of United
1. United shall perform for Telco, casual caller billing and collection
services which include processing of rated toll messages, the
preparation of bills for message-billed service, mailing of
statements of the amounts due for end user long distance service
received from Telco, collection of monies due from the end users,
handling of customer inquiry, maintenance of accounts, treatment of
accounts, message investigation, centralized toll investigation and
other services ordered by Telco and identified in this Attachment D.
2. United will process messages only to Telco's carrier identification
code (CIC). Delivered messages will be on an "as processed" basis
and will normally represent traffic for more than one billing cycle.
United will, upon receipt of this traffic, process it in such a way
as it may be included on an end user's next invoice from United
according to United's normally scheduled billing cycle.
3. A total of Telco's end user billing charges will be presented and
included in the invoice total along with all other charges being
billed by United. Federal, state, Local and city taxes will be
calculated by United in the same manner United calculates its own
taxes for Telco charges to end user customers as specified in
Article VIII, Exhibit A.
4. United will purchase the delivered messages on an "as billed" basis.
Payment by United will be made pursuant to terms specified in
United's operating procedures. United will post invoices as rendered
to its accounts receivable and will perform certain collections,
treatment and customer service functions as specified herein or in
the operating procedures.
1
12/15/93
<PAGE>
Article VIII - Attachment D
Casual Caller Billing and Collection
5. United understands that Telco's requirements in connection with
these services may change over time and agrees to cooperate with
Telco to develop modified or additional services on a mutually
agreeable basis.
C. Liability of United
1. United's liability to Telco for any loss, cost, claim, injury,
liability or expense, including reasonable attorneys' fees, relating
to or arising out of any negligent act or omission in its
performance of this product offering (not involving gross negligence
or knowing and willful misconduct) shall be limited to the amount of
direct damage actually incurred.
2. United shall not be liable to Telco for any indirect, special or
consequential damage of any kind whatsoever.
3. For purposes of the above limitation on liability in cases not
involving gross negligence or knowing and willful misconduct,
"direct damages" are defined in the case of data or information
which is the basis for rendition of bills to Telco's customers and
precludes rendition of bills, the revenue which would have been due
Telco but for United's act or omission. To the extent that United
has fulfilled its obligation under this contract, United will charge
Telco all appropriate charges.
D. Obligations of Telco
1. Telco will record traffic, domestic or international, and assemble,
edit and rate such traffic billable to end users within United's end
office serving areas.
2. Telco will send to United, via tape or other agreed to transmission
medium, messages which have been rated by Telco and presented to
United in EMI record format. These rated messages will be delivered
to United on a scheduled basis and will be designated with Telco's
carrier identification code (CIC) only.
3. Messages delivered to United by Telco will be solely related to
customers residing within United's territory. United will not bill
any customers to which United does not ordinarily render bills.
E. Liability of Telco
1. Telco shall be liable for payment, when due, of all bills rendered
by United to Telco as compensation for the services provided under
this Attachment D Casual Caller Product Offering as ordered by
Telco.
2
12/15/93
<PAGE>
Article VIII - Attachment D
Casual Caller Billing and Collection
2. Telco shall be liable for meeting all minimums for the service where
applicable and as agreed to by the parties. In the event these
minimums are not met during normal processing and within the
established period, Telco will compensate United such that the
minimums are achieved.
F. Compensation
1. Compensation for services provided for in this Attachment D shall be
established at the rate(s) provided in Article VIII, Exhibit B.
Rates and charges for intrastate billing and collection services
which are required to be purchased pursuant to any applicable
intrastate tariff or price list are subject to and shall be charged
in accordance with such applicable tariff or price list. The
provision of such rates and charges in this Agreement is for
informational purposes only. United reserves the right to change its
established rates or request changes in the tariffed rate(s) upon
sixty (60) days notice to Telco. Other activities relating to
compensation may be pursued by United as denoted in Article VIII .
2. Where Telco requests additional services, United will either advise
Telco of individual case basis (ICB) charges associated with
provision of these services or request an extension of time in which
to respond within thirty (30) days of Telco's request. ICB charges
must be acknowledged and accepted in writing by Telco prior to
performance by United.
3. Applicable taxes shall be in addition to the above compensation
amounts.
4. Special services desired by Telco and not normally provided will be
evaluated and administered utilizing the procedures in this Article
VIII under Attachment C Product Development Procedures.
G. Term of Product Offering
1. The term of this Attachment D shall commence with the effective date
of this Attachment D and shall be coextensive with the period in
which United performs billing and collection services for Telco
relative to this product offering.
2. Termination rights and obligations for this product offering shall
be as set forth in Article VIII, Section I, Term of Article, except
that termination of this Attachment D will not result in the
termination of Article VIII or any other billing and collection
product offerings that may also be provided to Telco.
3
12/15/93
<PAGE>
Article VIII - Attachment D
Casual Caller Billing and Collection
H. Method of Operation
1. The procedures for receiving the services provided hereunder and the
performance obligations of the parties are set forth in Attachment B
Standard Billing and Collection Operating Procedures.
2. Terms for ordering the Casual Caller Product offering are identified
in Exhibit 1 to this Attachment D. The executed order shall be a
part of this Agreement.
4
12/15/93
<PAGE>
Article VIII - Attachment D
Casual Caller Billing and Collection
SECTION II
PROVISION OF MANAGEMENT INFORMATION
The following information may, upon request, be made available to Telco in
support of the casual caller product offering. See Attachment E of this Article
VIII for descriptions.
1. Detail disposition of unbillable and denied tolls
2. Duplicate toll
3. Toll error listing
5
12/15/93
<PAGE>
Article VIII - Attachment D
Casual Caller Billing and Collection
EXHIBIT 1
TO
ATTACHMENT D
TO
ARTICLE VIII
PRODUCT OFFERING CASUAL CALLER
Telco Development Group, Inc.
Lafayette Business Park
4206 Technology Court
Chantilly, VA 22021
-------------------------------------------
United Telephone Company of Florida
This is an order for the casual caller product offering from United as
identified above. United's acceptance of this order is contingent upon Telco
providing United with an acceptable test tape within fifteen (15) days of this
order.
In the event Telco elects to terminate this service, as provided for in Section
I of Attachment D, and the termination occurs prior to expiration of the term,
the termination liability shall be the minimum monthly charge for the remaining
months of the contract term. A service initiation fee of two thousand dollars
(S2,000) for setup and testing is payable upon placement of a new order for
service and is nonrefundable.
/s/ SIGNATURE APPEARS HERE
---------------------------------
By:
Title: CEO
---------------------------------
Date: .January 17, 1994
---------------------------------
6
12/15/93
<PAGE>
Article VIII - Attachment E
Management Information
ATTACHMENT E
TO
ARTICLE VIII
PRODUCT OFFERING
PROVISION OF MANAGEMENT INFORMATION
11/12/93
<PAGE>
Article VIII - Attachment E
Management Information
ATTACHMENT E
TO
ARTICLE VIII
PRODUCT OFFERING
PROVISION OF MANAGEMENT INFORMATION
Page No.
--------
SECTION I Provision of Management Information 1
11/12/93
<PAGE>
Article VIII - Attachment E
Management Information
SECTION I
PROVISION OF MANAGEMENT INFORMATION
The following information may, upon request, be made available to Telco in
support of the casual caller and full billing and collection product offering.
DETAIL DISPOSITION OF UNBILLABLE AND DENIED TOLLS
Provides EMI detail of unbillable and denied tolls with reason codes that are
returned to Telco. This information may be supplied to Telco via paper, tape or
NDM.
DUPLICATE TOLLS/INFORMATION
Provides EMI detail of duplicate tolls that have been deleted from the system.
TOLL ERROR LISTING
Provides EMI detail message for messages that do not pass United's prerating
edits. This information may be supplied to Telco via paper, tape or NDM.
11/12/93
1
<PAGE>
EXHIBIT 10.28
DGI Technologies, Inc. Lease No. 941001
1810 N. Glenville Dr., Suite 116
Richardson, Texas 75081
LESSOR
LESSEE: Telco Communications Group, Inc. SUPPLIER OF EQUIPMENT:
4219 LaFayette Center Drive
Chantilly, VA 22021-1214 DGI Technologies, Inc. (DGI)
Attention: Bryan K. Rachlin
EQUIPMENT DESCRIPTION: as set forth in Schedule A attached hereto and made a
part hereof.
EQUIPMENT LOCATION, IF OTHER THAN ABOVE: 1522 N.W. 23rd Avenue, Fort
---------------------------
Lauderdale, FL 33311
- ---------------------
RENTAL PAYMENT INFORMATION:
No. of Months: 36 Monthly Rental Payment: $4,436.00 Tax: $0
Total Payment: $4,436.00
DOWN PAYMENT: $37,000.00
DATED: October 1, 1994
---------------
================================================================================
1. EQUIPMENT, COMMENCEMENT OF LEASE AND RENTAL PAYMENTS. Lessor leases to
Lessee and Lessee rents from Lessor the equipment listed in Schedule A attached
hereto and made a part hereof (the "Equipment") in accordance with and subject
to the terms and conditions of this agreement (the "Lease"). Lessee shall pay
to the Lessor the "Down Payment" specified above in advance prior to shipment of
the equipment to the Lessee. This Lease shall commence on the date (the
"Commencement Date") Lessor's Acceptance Supplement in the form of attached
Schedule B hereto and made a part hereof is signed by Lessee. Rental payments
shall begin on the Commencement Date and shall be made without offset or
deduction of any kind, at the office of Lessor, unless otherwise directed in
writing by Lessor, on the first day of each month immediately following the
Commencement Date for the term hereof as indicated above ("Rent Payment Date").
In addition to the Monthly Rental Payments specified above, on the Commencement
Date, unless the Commencement Date occurs on the first day of a calendar month.
Lessee shall pay to Lessor an amount equal to the daily lease rate (1/30th of
the first month's rental) for the Equipment from the date Lessee executes
Lessor's Acceptance Supplement to the last day of such month.
2. SELECTION AND ACCEPTANCE OF EQUIPMENT AND WARRANTY. Lessee acknowledges
that it has selected the Equipment from the supplier named on the face hereof
("Supplier") on the basis of its standard Warranty as follows: DGI warrants the
product of DGI's manufacture to be free from defects in workmanship and material
for a period of 12 months from Delivery. In the event the product is not as
warranted at time of delivery, DGI agrees to, at its option, repair or replace
at its factory any equipment so as to make the equipment conform to this
warranty or take back the product and refund the purchase price therefor,
provided: (a) notice of the claimed defect is given in writing within twelve
(12) months after delivery of the product; and (b) the defective equipment is
returned to DGI at its factory, transportation prepaid, in accordance with DGI's
instructions; and (c) an inspection of the returned equipment by DGI at its
factory indicates the defect was not caused by abuse or improper use,
maintenance, repair, installation, or alteration by other than DGI or its
authorized services center; and (d) the equipment has not been connected
directly or indirectly to an apparatus not registered to the extent required in
Part 68 of the FCC Rules and Regulations. Any equipment not of DGI's
manufacture shall be subject to the warranty of the manufacturer or supplier
thereof. THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER
<PAGE>
WARRANTIES, WHETHER EXPRESSED OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THE FOREGOING SHALL
CONSTITUTE BUYER'S SOLE RIGHTS AND REMEDIES UNDER THIS WARRANTY WITH RESPECT TO
DEFECTIVE PRODUCT OR SERVICE. IN NO EVENT SHALL DGI BE LIABLE FOR INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE OF OR THE
INABILITY TO USE THE PRODUCT OR SERVICE. Lessee confirms that it is satisfied
that the Equipment is suitable to its purposes. Lessee agrees to accept the
Equipment when delivered in working condition and authorizes Lessor to insert
herein the serial number and other identifying date of the Equipment.
3. TITLE OF LESSOR; RECORDING, LOCATION AND IDENTIFICATION OF EQUIPMENT.
Lessee will not change or remove any insignia or letter which is on the
Equipment at the time of delivery thereof or which is thereafter placed thereon
indicating Lessor's or Lessor's successor in interest (the "Owner") ownership
thereof, and at any time during the Lease, upon request of Lessor, Lessee shall
affix to the Equipment, at its own expense and in a prominent place, labels
stating that the Equipment, at its own expense and in a prominent place, labels
stating that the Equipment is owned by Lessor or Owner. Lessor is hereby
authorized by Lessee, at Lessee's expense, to cause this Lease or any statement
or other instrument in respect to this Lease showing the interest of Lessor in
the Equipment to be filed; agrees to execute and deliver any instrument
reasonably requested by Lessor for such purpose; appoints Lessor (or its
Assignee) as its attorney to sign such instruments on behalf of Lessee with the
same force and effect as if signed by Lessee; authorizes Lessor to file such
instruments signed only by Lessor where permitted by law; shall at its expense
protect and defend Lessor's or Owner's titled against all persons claiming
against or through Lessee; shall at all times keep the equipment free and clear
from any legal process or other encumbrance whatsoever and shall give Lessor
immediate written notice thereof and shall indemnify Lessor from any loss caused
thereby Lessee agrees not to affix the Equipment to realty so as to change its
nature to real property and that the Equipment shall always remain and be deemed
personal property; and shall not make any alterations, additions, or
improvements to the Equipment without the prior written consent of Lessor, which
will not be unreasonably withheld; and shall keep the Equipment at the location
shown on the face hereof; and shall not remove the Equipment from such location
without the prior written consent of Lessor, which consent shall not be
unreasonably withheld provided that such location is within the Continental
U.S.A. in a State which has adopted the Uniform Commercial Code.
4. ASSIGNMENT. Lessee shall not sell, assign, or create any security interest
in this Lease or any interest herein without the prior written consent of
Lessor. Lessee acknowledges and understands that the terms and conditions of
this Lease have been fixed by Lessor in anticipation of its being able to
transfer its interest in the Equipment and assign its interest under this Lease
to a bank or other financial institution ("Assignee") and Lessee agrees that
Lessor may sell, transfer, assign or grant one or more security interests in
this Lease or Equipment, in whole or in part without notice to Lessee. Any such
Transferee or Assignee shall not be obligated to perform any of the obligations
of Lessor hereunder. Lessee shall recognize each such sale, transfer,
assignment or security interest in accordance with the terms and conditions
thereof and shall not assert against the Assignee or transferee any defense,
counterclaim, or offset whatsoever, whether by reason of breach of this Lease or
otherwise, which it may or might now have or hereafter acquire as against Lessor
(Lessee reserving its right to have recourse directly against Lessor on account
of any such defense, counterclaim or offset).
5. TAXES AND INDEMNITY. Lessor intends the Monthly Rental Payments hereunder
to be net to Lessor, and Lessee shall comply with all laws with respect to and
agrees to pay, and to indemnify and hold Lessor harmless from, all license fees,
assessments, and sales, use, property, excise, and other taxes and charges
(other than those measured by Lessor's net income) now or hereafter imposed by
any governmental body with respect to (a) the Equipment or its possession,
ownership, use or operation or (b) this Lease or the consummation of the
transactions herein contemplated.
6. CARE AND USE OF EQUIPMENT; REDELIVERY. Lessee will cause the Equipment to
be operated in accordance with the manufacturer's or Supplier's instructions or
manuals, by competent and duly qualified personnel
<PAGE>
only and in compliance with all laws, regulations, and the insurance policies
which Lessee is required to maintain hereunder. Lessee will at its expense
maintain the Equipment in good repair, condition and working order and furnish
all parts, mechanism, devices, and servicing required thereto so that the value
and condition thereof will at all times be maintained, fair wear and tear
excepted. All such parts, mechanisms, and devices shall immediately, without
further act, become part of the Equipment for all purposes of this Lease without
cost to Lessor. Lessee will not alter or add to the Equipment without Lessor's
prior written consent which will not be unreasonably withheld. Lessee grants to
Lessor the right to inspect the Equipment during normal business hours. At the
expiration of this Lease, Lessee shall pursuant to Lessor's instruction and at
Lessee's expense, redeliver the Equipment to an address specified by Lessor in
the same condition as received, less fair wear and tear. Lessee agrees that
upon the expiration or earlier termination of this Lease, Lessee will perform
all acts and bear all expenses as may be required to cause the Equipment to be
eligible for Supplier maintenance, at standard rates, and that the Equipment
will remain under a Supplier maintenance agreement, at standard rates, during
the term of this Lease and any renewals hereof.
7. INSURANCE. Lessee at its sole expense shall keep the Equipment insured
against all risks of loss or damage from every cause whatsoever for not less
than the full replacement value of such Equipment as specified on the attached
Schedule A provided that the amount of such insurance shall be sufficient so
that neither Lessor nor Lessee will be considered a co-insurer. Lessee shall be
liable for any deductible amount contained in any such insurance policy. Lessee
also shall carry public liability insurance in a reasonable amount, both
personal injury and property damage, covering the Equipment but not less than
$500,000/$1,000,000 for personal injury and $500,000 for property damage
liability. All insurance for loss or damage shall provide that losses, if any,
shall be payable to Lessor, and such liability insurance shall be in the joint
names of Lessor and Lessee. Lessee shall provide Lessor with certificates of
insurance or other written evidence that such insurance has been obtained and
any such insurance policy shall contain the agreement of the insurance company
to give Lessor thirty (30) days written notice before such policy will be
altered or canceled. Lessor, however, shall be under no duty to ascertain the
existence or adequacy of such insurance. The proceeds of such insurance,
whether resulting from loss or damage of any item of the Equipment, return of
premium or otherwise, shall be applied, at the option of Lessor, toward the
repair or replacement of such item or payment of the obligations of Lessee
hereunder. Lessee hereby irrevocably appoints Lessor as its attorney-in-fact to
make claim for, receive payment of, and execute and endorse all documents,
checks or drafts received in payment for loss or damage or return of premium
under any such insurance policy. All insurance required hereunder shall be with
such insurance companies as are reasonably satisfactory to Lessor.
8. OTHER COVENANTS, WARRANTIES, AND ASSURANCES OF LESSEE. Lessee hereby
agrees that its obligation to pay all rent and other amounts payable hereunder
and to perform its duties with respect hereto shall be absolute and
unconditional under any and all circumstances, including, without limitation the
following: (a) any setoff, counterclaim, recoupment, defense, or other right
which Lessee may have against Lessor, the Supplier of the Equipment or anyone
else for any reason whatsoever, (b) any defect in the condition, design, title,
operation, or fitness for use, or any damage to or loss of the Equipment, (c)
any insolvency, bankruptcy, reorganization, or similar proceedings by or against
Lessee, or (d) any other event or circumstances whatsoever, whether or not
similar to any of the foregoing. Each rent or other payment made by Lessee
hereunder shall be final and Lessee will not seek to recover all or any part of
such payment from Lessor for any reason whatsoever. Lessee agrees that the
application, statements, and financial reports submitted by it to Lessor are
material inducements to the execution by Lessor of this Lease, and Lessee
warrants that such applications, statements, and reports are and all information
hereafter furnished by Lessee to Lessor will be true and correct in all material
respects as of the date submitted. Lessee agrees to procure for Lessor, in form
acceptable to Lessor, such documents as Lessor may reasonably request; warrants
that this Lease has been duly authorized by all necessary corporate action and
that no provision of this Lease is inconsistent with Lessee's charter, by-laws,
or any loan or credit agreement or other instrument to which Lessee is a party
or by which Lessee or its property may be bound or affected.
9. PERFORMANCE BY LESSOR OF LESSEE'S OBLIGATIONS. In the event Lessee shall
fail to comply with any provision of this Lease. Lessor shall have the right,
but not the obligation, to effect such compliance on behalf of Lessee, in which
case all moneys spent by and expenses of Lessor in effecting such compliance
shall be
<PAGE>
deemed to be additional rental and shall be paid by Lessee to Lessor at the
next Rent Payment Date, together with interest thereon at the lesser of the rate
of eighteen (18%) percent per annum or the highest rate permitted by law until
paid.
10. RISK OF LOSS. Lessee hereby assumes the entire risk of loss, damage, or
destruction of the Equipment, whether or not covered by insurance, commencing
with the execution of the Acceptance Supplement covering the Equipment by
Lessee, and no such loss, damage, or destruction shall relieve Lessee of any of
its obligations hereunder. In the event Lessee shall reject the Equipment or
this Lease shall fail, for any reason whatsoever, to become effective, Lessee
hereby agrees that all obligations of Lessor to Supplier with respect to the
Equipment shall be deemed those of Lessee and (b) to indemnify and hold Lessor
harmless from any and all liability, damages, and expenses including a
reasonable attorney's fee arising therefrom. If any Equipment shall be lost,
stolen, destroyed, damaged beyond repair or rendered permanently unfit for
normal use for any reason, or in the event of any condemnation, confiscation,
seizure or requisition of title to or use of any Equipment (each of the
foregoing being hereinafter called "Loss") Lessee shall (subject to Lessor's
option to replace the Equipment utilizing the proceeds of any insurance received
by Lessor, as provided in Paragraph 7 hereof) promptly pay to Lessor an amount
equal to the sum of (i) all rent and other amounts due and owing hereunder,
whereupon Lessor will transfer to Lessee, without recourse or warranty, all of
Lessor's right, title and interest in such Equipment. If any Equipment is
damaged as the result of an event not constituting a Loss. Lessee shall
promptly cause such item to be repaired or replaced in accordance with the
provisions of Paragraph 7 hereof.
11. DEFAULT AND REMEDIES. If (a) Lessee shall fail to make any payment of
rent or other amount owing hereunder when due; (b) Lessee shall fail to perform
or observe any other term, covenant, or provision hereunder, (c) any
representation or warranty made by Lessee herein or in any document or
certificate furnished Lessor in connection herewith shall prove to be incorrect
at any time; (d) Lessee shall suspend, dissolve, or commence to liquidate its
business or sends a notice of an intended bulk sale; (e) a warrant of attachment
or execution is issued against Lessee; (f) Lessee shall become insolvent or
bankrupt or make an assignment for the benefit of creditors or consent to the
appointment of a trustee or receiver, (g) a trustee, receiver, or liquidator
shall be appointed for Lessee or for all or a substantial part of Lessee's
assets or property or for the Equipment; (h) bankruptcy, reorganization,
arrangement, insolvency, dissolution, or liquidation proceedings shall be
instituted by or against Lessee (each of the foregoing being herein called an
"Event of Default") or an Event of Default shall have occurred and be continuing
to regard to any other lease between the parties hereto, then at the option of
Lessor and without notice or demand, all rent and other amounts then due or
thereafter accruing under this Lease shall become immediately due and payable,
and Lessor shall have the right to the extent permitted by law; (i) to recover
all sums so due or thereafter accruing hereunder; (ii) demand that Lessee, and
Lessee shall at its expense upon such demand, return the Equipment promptly to
Lessor in the manner and condition required by and otherwise in accordance with
the provisions of Paragraph 6 hereof as if the Equipment were being returned at
the expiration of its term of lease hereunder, or Lessor, at its option, may
with notice and due process of law enter upon the premises where the Equipment
is located and take possession of and remove the Equipment, all without
liability to Lessor for damage to property or otherwise; (iii) sell the
Equipment at public or private sale, with or without notice to Lessee or
advertisement, or otherwise dispose of, hold, use, operate, lease to others, or
keep idle the Equipment as Lessor may determine, all free and clear of any
rights of Lessee and without any duty to account to Lessee with respect to such
action or inaction or for any proceeds with respect thereto; (iv) by written
notice to Lessee, demand that Lessee pay and Lessee shall pay to Lessor, as
liquidated damages for loss of a bargain and not as a penalty, on the Rent
Payment Date specified in such notice, an amount equal to the Fair Market Sales
Value of such Equipment; and (v) Lessor may exercise any other right or remedy
which may be available to it under applicable law or proceed by appropriate
court action to enforce the terms hereof or to recover damages for the breach
hereof or to rescind this Lease. In addition, Lessee shall be liable for all
legal fees, taxes, governmental charges, and other costs and expenses incurred
by reason of the occurrence of any Event of Default or the exercise of Lessor's
remedies with respect thereto, including placing any Equipment in the condition
required by Paragraph 6 hereof. The above remedies, to the extent permitted by
law, shall be deemed cumulative and may be exercised concurrently or separately
or in connection with the enforcement of any right or remedy hereunder and the
exercise of any one remedy shall not be deemed to be an election of such remedy
or to preclude the exercise of any other remedy. To the extent permitted by
law, Lessee waives any rights now hereafter
<PAGE>
conferred by Statute or otherwise which may require Lessor to sell, lease, or
otherwise use the Equipment in mitigation of Lessor's damages or which may
otherwise limit or modify any of Lessor's rights or remedies hereunder. Whenever
any payment is not made when due hereunder, Lessee shall pay interest on such
amount at the lesser of (18%) percent per annum or the highest interest rate
permitted by law, until paid.
12. NO WAIVER. No omission or delay by Lessor at any time to enforce any
right or remedy reserved to it, or to require performance of any of the terms,
covenants, or provisions hereof by Lessee at any time, shall be a waiver of any
such right or remedy to which Lessor is entitled, nor shall it in any way affect
the right of Lessor to enforce such provisions thereafter. Nothing contained
herein shall operate to release Lessee until the full amount of the rentals due
and to become due and all other sums to be paid hereunder have been paid in
full.
13. FURTHER ASSURANCES. Lessee will, at its expense, promptly and duly
execute and deliver to Lessor such further documents and assurances and take
such further action as Lessor may from time to time request in order to more
effectively carry out the intent and purpose of this Lease and to establish and
protect the rights, interests, and remedies intended to be created in favor of
Lessor hereunder, including, without limitation, the execution and filing of
financing statements and continuation statements with respect to the Equipment
and this Lease.
14. NOTICES. All notices and other communications required to be given to any
part hereunder shall be in writing and hand delivered or mailed by certified
mail, return receipt requested, to such party at its address set forth above or
at such other address as it may designate to the other parties in the manner
provided.
15. FAIR MARKET SALES VALUE. As used in this Lease, "Fair Market Sales Value"
of any Equipment shall mean such value to Lessor net of all expenses and costs
whatsoever which would be incidental to the reclamation of the Equipment and the
sale thereof as determined (at Lessee's expense) by an independent appraiser
selected by Lessor, provided, however, that (a) the "Fair Market Sales Value" of
any Equipment shall be zero if Lessor is unable to promptly recover possession
of the Equipment from Lessee, and (b) if Lessor shall have sold any Equipment,
the "Fair Market Sales Value" thereof shall be the net proceeds of such sale
after deducting all costs and expenses incurred by Lessor in connection
therewith.
16. DEPRECIATION INDEMNITY. If as a result of any act or failure to act of
Lessee, Lessor or Owner or Assignee, shall not be eligible for the full use of
the years (or portions thereof) in which this Lease is in effect for the
depreciation or cost recovery deduction with respect to the depreciable or cost
basis of the Equipment in its hands which is based on a method of depreciation
or cost recovery selected by it and provided by Sections 167(b)(2), (3) or (4)
or Section 168(b) or successor provisions of the Internal Revenue Code of 1986,
then Lessee agrees to pay to Lessor or its transferee or assignee (as the case
may be), upon demand, a such which after the deduction of all taxes required to
be paid by Lessor or its transferee or assignee in respect of the receipt
thereof, shall be equal to the increase in tax on account of the failure to
obtain the benefit of a depreciation or cost recovery deduction of the aforesaid
basis, together with any interest or penalty which may be assessed in connection
with any of the foregoing. The provisions of this Paragraph 16 shall survive the
expiration or earlier termination of this Lease only as to events occurring or
tax liabilities arising out of this Lease with respect to the Equipment during
the term hereof.
17. QUIET ENJOYMENT. Lessor expressly covenants with Lessee that each
transferee or assignee of Lessor, as a condition to the consummation of any
transaction described herein above, shall expressly covenant, and by its
execution hereof Lessor does hereby expressly covenant that so long as no Event
of Default, is defined herein and as set forth in Paragraph 11 hereof, has
occurred and is continuing, and notwithstanding the bankruptcy or insolvency of
Lessor or any such transferee or assignee, such person shall not disturb
Lessee's quiet and peaceful possession and use of the Equipment for its intended
purpose.
<PAGE>
18. MISCELLANEOUS. This Lease contains the entire agreement between the
parties respect to the Equipment, and may not be altered, modified, terminated,
or discharged except by a writing signed by the party against whom such
alternation, modification, termination or discharge is sought; shall be binding
when accepted by Lessor, upon the parties, their successors, representatives,
and assigns; shall be deemed to have made in the State of Texas and, except for
local recording acts, shall be governed by, and construed in accordance with,
the laws of the State of Texas. Lessee waives, insofar as permitted by law,
trial by jury and right of counterclaim, offset, or defense in any action
between the parties. No provision of this Lease which may be deemed
unenforceable shall in any way invalidate any other provision hereof, all of
which shall remain in full force and effect.
19. JURISDICTION. The parties hereto consent to the jurisdiction in any Court
of the State of Texas, and the United States District Court for the Northern
District of Texas for all purposes in connection with any action or proceeding
commenced between the parties hereto, the subject matter of which relates to any
controversy or claim arising out of, under, or relating to this Lease or the
breach thereof. The parties further consent that any process or notice of
motion in connection therewith may be served by certified mail, return receipt
request, or personal service, within or without the State of Texas, provided a
reasonable time for appearance is allowed.
20. COUNTERPARTS. The single executed counterpart of this Lease marked
"Original" shall be the Original and all counterparts hereof shall be marked
"Duplicate". To the extent that this Lease constitutes "chattel paper" (as
defined in the applicable Uniform Commercial Code), no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the Original.
21. EXTENSION AND TERMINATION. So long as no Event of Default shall have
occurred and be continuing under this Lease and unless Lessee shall have given
Lessor not less than thirty (30) days written notice, prior to the expiration
date of this Lease, this Lease shall be extended on a month-to-month basis
pursuant to the same terms and conditions set forth under this Lease. The
Lessee also has the option to purchase the equipment for $1.00 by notifying the
Lessor within 30 days prior to the expiration date of this Lease.
WITNESS our hands and seals this 1 day of October , 1994.
-------- -------------
LESSEE: Telco Communications Group, Inc. LESSOR: DGI Technologies, Inc.
By: /s/ Donald A. Burns By: /s/ Lyle B. Coffman
----------------------------- ---------------------------------
Name: President Name: Lyle B. Coffman
--------------------------- --------------------------------
Title: President Title: President & COO
-------------------------- ------------------------------
<PAGE>
SCHEDULE A
Agreement of Lease No. 941001
------
DGI Technologies Group, Inc., Lessor
to
Telco Communications Group, Inc., Lessee
Description of Equipment:
- -------------------------
The following equipment manufactured by DGI Technologies, Inc.:
<TABLE>
<CAPTION>
Quantity Model Description Serial Number
- -------- ------ ------------ -------------
<S> <C> <C> <C>
1 DIF-2060 Digital Interface Frame R002730
Consisting of:
32 DTI-2000 Digital Trunk Interface Cards R002351, R002480, R002403, R002441,
R002411, R002405, R002437, R002476,
R002410, R002695, R002691, R002690,
R002694, R002390, R002692, R002693,
R002705, R002704, R002702, R002703,
R002700, R002696, R002699, R002698,
R002596, R002709, R002711, R002741,
R002707, R002706, R002710, R002708
24 DTD-2010 Digital Tone Detector Cards R002534, R002526, R002524, R002533,
R002527, R002529, R002501, R002514,
R002528, R002522, R002518, R002523,
R002552, R002563, R002566, R002554,
R002555, R002553, R002580, R002579,
R002581, R002575, R002578, R002572
8 DBT-2050 Digital Bus Terminator Cards R002666, R002110, R002643, R002446,
R002649, R002652, R002656, R002667
12 MP-8 Microprocessor Cards R002781, R002782, R002783, R002784
R002785, R002786, R002787, R002788,
10 DPI-2070 PCMI Interface Cards R002767, R002768, R002769, R002770,
R002771, R002772, R002773, R002774,
R002775, R002776
4 DPC-2090 PCMI Clock Cards R002777, R002778, R002779, R002780
Replacement Value: $185,000.00
- ------------------
</TABLE>
<PAGE>
EXHIBIT 10.28
SCHEDULE B
Agreement of Lease No. 94 1 001
ACCEPTANCE SUPPLEMENT
---------------------
Commencement Date: October 1, 1994
ORIGINAL
Expiration Date: September 1, 1997
THIS ACCEPTANCE SUPPLEMENT is executed and delivered by DGI Technologies, Inc.
("Lessor") and Telco Communications Group, Inc. ("Lessee") pursuant to and in
accordance with Equipment Schedule No. A to Lease Agreement dated October 1,
1994 (the "Lease") between Lessor and Lessee. Terms defined in the Lease shall
have their defined meanings when used herein.
A. The Equipment covered by this Acceptance Supplement consists of the
following items manufactured by DGI Technologies, Inc. as listed in Schedule A
of the Lease.
B. Lessee confirms that said Equipment has been delivered to it, duly
assembled and installed in good working order and condition, at the location
specified in the Lease.
C. Lessee hereby: (a) confirms that said Equipment is of the size,
design capacity and manufacture selected by it; (b) irrevocably accepts said
Equipment as-is, where-is for all purposes of the Lease as of the Commencement
Date set forth above.
D. The term of the lease of said Equipment under the Lease shall
commence as of the Commencement Date set forth above and unless earlier
terminated pursuant to the provisions of the Lease, shall expire on the
Expiration Date set forth above.
E. As rent for said Equipment throughout the term of the Lease, Lessee
shall pay to Lessor in accordance with the terms of the Lease the sum of
$159,696.00 in 36 monthly installments of $4,436.00 per month commencing
---------
October 1, 1994 to and including September 1, 1997.
- --------------- ------------------
F. All of the provisions of the Lease are hereby incorporated by reference in
this Acceptance Supplement to the same extent as if fully set forth herein.
APPROVED AND AGREED TO by the parties hereto as of the Commencement Date set
forth above.
LESSEE: LESSOR:
Telco Communications Group, Inc. DGI Technologies, Inc.
By: /s/ Donald A. Burns BY: /s/ Lyle B. Coffman
------------------------- -------------------------
Donald A. Burns/President Lyle B. Coffman/President
and COO
<PAGE>
EXHIBIT 10.31
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of the 10th
day of July, 1996 between Telco Communications Group, Incorporated, a Virginia
corporation (the "Company"), and Donald A. Burns (the "Executive").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to be employed by the Company, on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties agree as follows:
1. Employment.
----------
(a) The Company hereby employs the Executive as President and Chief
Executive Officer and the Executive hereby accepts such employment, on the terms
and subject to the conditions hereinafter set forth. The Company will use its
best efforts to include Executive in its slate of candidates for membership on
the Company's Board of Directors (the "Board") and the Executive Committee, if
any.
(b) Executive shall report directly to the Board, and shall perform
such duties consistent with his positions as President and Chief Executive
Officer pursuant to the direction of the Board.
(c) Attention and Effort. The Executive shall be required to devote
--------------------
his full business time, attention and effort to the company's business and
affairs except for vacation time and reasonable periods of absence due to
sickness, personal injury or other disability and shall perform diligently such
duties as are customarily performed by executives in similar positions with
companies similar in character or size to the Company, all subject to the
direction of the Board, together with such other duties as may be reasonably
requested from time to time by the Board, which duties shall be consistent with
his positions as set forth above. The Executive agrees to use all of his skills
and business judgment and render services to the best of his ability to serve
the interests of the Company. Subject to the terms of Section 6, this shall not
preclude Executive from serving on community and civic boards, participating in
industry associations, pursuing his personal financial and legal affairs, or
otherwise engaging in other activities, so long as such activities do not
unreasonably interfere with his duties to the Company.
<PAGE>
(d) Support Services. The Executive shall be entitled to all of the
----------------
administrative, operational and facility support customary for a similarly
situated executive. This support shall include, without limitation, a suitably
appointed private office, a secretary or administrative assistant, and payment
of or reimbursement for reasonable cellular telephone expenses, business, travel
and entertainment expenses, expenses of the Executive maintaining his
professional license and standing and any and all other business expenses
reasonably incurred on behalf of or in the course of performing duties for the
Company, all in accordance with the expense reimbursement policies established
from time to time by the Company. The Executive agrees to provide such
documentation of these expenses as may be reasonably required.
2. Term. Subject to the provisions for termination hereinafter provided,
----
the Term shall begin on the date hereof, shall continue through the fifth
anniversary of the date hereof, and shall automatically renew each year unless
notice of termination is given by either party hereto at least three hundred
sixty (360) days prior to the end of each annual renewal term.
3. Compensation.
------------
Throughout the Term the Company shall pay or provide, as the case may
be, to the Executive the compensation and other benefits and rights set forth in
this Section 3.
(a) The Company shall pay to the Executive a "Base Salary," payable in
accordance with the Company's usual pay practices (and in any event no less
frequently than monthly), of $400,000 per annum. The Board shall annually
review Executive's Base Salary in light of the Base Salaries paid to other
executives of the Company and the performance of the Executive and the Company
and may, in its discretion, increase such Base Salary by an amount it determines
is appropriate. Once Executive's Base Salary is increased, it shall not
thereafter be reduced.
(b) The Company shall pay to the Executive bonus compensation for each
fiscal year, or part thereof that he is employed by the Company, at the
discretion of the Board, provided that such bonus shall be commensurate with
other bonuses paid to employees of the Company and shall take into account the
total compensation paid to executives of other companies which would be
competitive for Executive's services.
(c) The Company shall provide medical, hospitalization, disability and
dental insurance for Executive, his spouse and eligible family members, subject
to and in accordance with the Company's policy, the proportion of the cost
thereof to be borne by the Company and the Executive to be in accordance with
such policy.
(d) The Executive shall participate in all retirement and other benefit
plans of the Company generally available from time to time to employees of the
Company and for which the Executive qualifies under the terms thereof (and
nothing in this Agreement shall, or shall be
-2-
<PAGE>
deemed to, in any way affect the Executive's right and benefits thereunder
except as expressly provided herein).
(e) The Executive shall be entitled to at least twenty two (22) days of
vacation allowance each year and a sick leave allowance as provided under the
Company's vacation and sick leave policy for executive officers.
(f) The Executive shall be entitled to participate in any equity or
other employee benefit plan that is generally available to senior executive
officers, as distinguished from general management, of the Company, at the
highest level provided for any employee. The Executive's participation in and
benefits under any such plan shall be on the terms and subject to the conditions
specified in the governing document of the particular plan.
4. Permanent Disability.
--------------------
(a) For purposes of this Agreement, the Executive's "Permanent
Disability" shall be deemed to have occurred one day after one hundred eighty
(180) days in the aggregate during any consecutive twelve (12) month period, or
one day after one hundred twenty (120) consecutive days, during which one
hundred eighty (180) or one hundred twenty (120) days, as the case may be, the
Executive, by reason of his physical or mental disability or illness, shall have
been unable to discharge fully his duties under this Agreement.
(b) If either the Company or the Executive, after receipt of notice of
the Executive's Permanent Disability from the other, disputes that the
Executive's Permanent Disability shall have occurred, the Executive shall
promptly submit to a physical examination by the chief of medicine of any major
accredited hospital in the metropolitan Washington, D.C. area and, unless such
physician shall issue his written statement to the effect that, in his opinion,
based on his diagnosis, the Executive is capable of resuming his employment and
devoting his full time and energy to discharging fully his duties hereunder
within thirty (30) days after the date of such statement, such Permanent
Disability shall be deemed to have occurred on the day above specified.
5. Termination.
-----------
(a) The Executive's employment under this Agreement and the Term shall
be terminated immediately on the death of the Executive and may be terminated by
the Board, with the concurrence of the Chairman of the Board (or the Vice
Chairman of the Board):
(i) at any time after the Permanent Disability of the Executive;
(ii) at any time for "Cause" (as defined below); or
(iii) at any time without Cause.
-3-
<PAGE>
For purposes hereof, Cause shall mean:
(A) Active participation by the Executive in fraudulent conduct
against the Company, a felony involving moral turpitude, an act or
series of deliberate acts which were not taken in good faith by
Executive and which, in the reasonable judgment of the Board, results
or will likely result in material injury to the business, operations or
business reputation of the Company, or an act or series of acts
constituting willful malfeasance or gross misconduct or the Executive's
continued willful failure to perform any of his duties under this
Agreement.
(B) A substantial and continual refusal by Executive in breach of
this Agreement to perform the duties, responsibilities or obligations
assigned to Executive pursuant to the terms hereof, which breach has
not been cured (if it is of a nature that can be cured) to the Board's
reasonable satisfaction within ten (10) days after the Company gives
written notice thereof to the Executive;
(C) Excessive absenteeism by the Executive; provided that
absenteeism (i) related to illness or otherwise covered by Section 4(a)
hereof, (ii) required to be permitted under applicable federal or state
laws, or (iii) permitted under Company policy, shall not be deemed to
be excessive; or
(D) The voluntary resignation of the Executive without "Good
Reason" (as defined below) and without the prior consent of the Board.
Executive shall be permitted to respond and defend himself before the Board
within thirty (30) days after delivery to Executive of written notification of
any proposed termination for Cause which specifies in detail the reasons for
such termination. If the majority of the members of the Board (excluding
Executive) do not confirm that the Company had grounds for a "Cause"
termination, Executive shall have the option to treat his employment as not
having terminated or as having been terminated pursuant to a termination without
Cause.
(b) Termination by Death. If the Executive's employment is terminated
--------------------
by death, the Executive's estate shall be entitled to receive (i) life insurance
benefits pursuant to any life insurance purchased by the Company, (ii) a pro
rata portion of the bonus applicable to the calendar year in which such
termination occurs, payable when and as such bonus is determined under Section
3(b) but no less than a pro rata portion of Executive's bonus for the prior
year, (iii) other benefits, payable within ninety (90) days after the date of
death, accrued by him hereunder up to and including the date of Executive's
death and (iv) reimbursement for all expenses incurred by Executive pursuant to
Section 1(d) prior to his death.
(c) Termination for Cause. If the Executive's employment is terminated
---------------------
by the Company for Cause, the Company shall not have any other or further
obligations to the Executive under this Agreement (except (i) as may be provided
in accordance with the terms of
-4-
<PAGE>
retirement and other benefit plans pursuant to Section 3(d), (ii) as to that
portion of any unpaid Base Salary and other benefits accrued and earned under
this Agreement through the date of such termination, (iii) as to benefits, if
any, provided by any insurance policies in accordance with their terms, and (iv)
reimbursement for all expenses incurred by Executive pursuant to Section 1(d)
prior to his termination). In addition, if the Executive's employment is
terminated by the Company for Cause at any time during the Term, the Executive
shall immediately forfeit any and all other unvested stock rights and stock
options and other such unvested incentives or awards previously granted to him
by the Company. The foregoing sentence shall be in addition to, and not in lieu
of, any and all other rights and remedies which may be available to the Company
under the circumstances, whether at law or in equity.
(d) Termination without Cause. If the Executive's employment is
-------------------------
terminated by the Company without Cause, the Executive shall be entitled to
receive (i) severance compensation equal to what would have been his Base Salary
under Section 3(a), payable at such times as his Base Salary would have been
paid if his employment had not been terminated (or, at the election of the
Executive, in a lump sum without discount), for the longer of one (1) year or
the remainder of what would have been the Term (but not longer than three (3)
years, (ii) other benefits, payable within ninety (90) days after the date of
such termination, accrued by him hereunder up to and including the date of such
termination, (iii) continuation of the insurance provided by the Company
pursuant to Section 3(c) for the longer of one (1) year and the remainder of the
Term (but not longer than three (3) years), or if not available a lump sum
payment of an amount equal to the fair value of such insurance, (iv) a pro rata
portion of the bonus applicable to the calendar year in which such termination
occurs, payable when and as such bonus is determined under Section 3(b), but no
less than a pro rata portion of Executive's bonus for the preceding calendar
year, and (v) reimbursement for all expenses incurred by Executive pursuant to
Section 1(d) prior to his termination.
(e) Termination for Permanent Disability. If the Executive's employment
------------------------------------
is terminated by the Company for Permanent Disability, the Executive shall be
entitled to receive (i) severance compensation equal to what would have been his
Base Salary under Section 3(a) for the longer of one (1) year or the remainder
of what would have been the Term (but not longer than three (3) years), payable
at such times as his Base Salary would have been paid if his employment had not
been terminated (or, at the election of the Executive, a lump sum without
discount), less any disability insurance benefits pursuant to any disability
insurance provided by the Company or purchased by Executive, the cost of which
is reimbursed by the Company, which are payable in respect of the period after
such termination, (ii) other benefits, payable within ninety (90) days after
termination for Permanent Disability, accrued by him hereunder up to and
including the date of termination for Permanent Disability, (iii) continuation
of the insurance provided by the Company pursuant to Section 3(c) for the longer
of one (1) year and the remainder of the Term (but not longer than three (3)
years), or if not available a lump sum payment of an amount equal to the fair
value of such insurance, (iv) a pro rata portion of the bonus applicable to the
calendar year in which such termination occurs, payable when and as such bonus
is determined under Section 3(b), but no less than a pro rata portion of
Executive's bonus
-5-
<PAGE>
for the preceding calendar year, and (v) reimbursement for all expenses incurred
by Executive pursuant to Section 1(d) prior to his termination.
(f) Termination by Executive for Good Reason. If the Executive
----------------------------------------
terminates his employment for "Good Reason", the Executive shall be entitled to
receive (i) severance compensation equal to what would have been his Base Salary
under Section 3(a), payable at such times as his Base Salary would have been
paid if his employment had not been terminated (or, at the election of the
Executive, in a lump sum without discount), for the longer of one (1) year and
the remainder of what would have been the Term (but not longer than three (3)
years), (ii) a pro rata portion of the bonus applicable to the calendar year in
which such termination occurs, payable when and as such bonus is determined
under Section 3(b), but no less than a pro rata portion of Executive's bonus for
the preceding calendar year, (iii) other benefits, payable within ninety (90)
days after the date of such termination, accrued by him hereunder up to and
including the date of such termination and (iv) reimbursement for all expenses
incurred by Executive pursuant to Section 1(d) prior to his termination. "Good
Reason" means a termination of Executive's employment by Executive within
ninety (90) days following (i) a reduction in Executive's annual Base Salary or
incentive compensation or equity participation opportunity, (ii) a material
reduction in Executive's positions, duties and responsibilities or reporting
lines from those described in Section 1 hereof, or (iii)a change in the location
of the Company's headquarters or of the office of the Executive from the
Washington, D.C.metropolitan area or (iv) a material breach of this Agreement by
the Company. Notwithstanding the foregoing, a termination shall not be treated
as a termination for Good Reason (i) if Executive shall have consented in
writing to the occurrence of the event giving rise to the claim of termination
for Good Reason or (ii) unless Executive shall have delivered a written notice
to the Board within thirty (30) days of his having actual knowledge of the
occurrence of one of such events stating that he intends to terminate his
employment for Good Reason and specifying the factual basis for such
termination, and such event, if capable of being cured, shall not have been
cured within ten (10) days of the receipt of such notice.
(g) Mitigation. The Executive is not required to mitigate the amount
----------
of any payments to be made by the Company pursuant to this Agreement following
his termination by seeking other employment or otherwise. In addition, the
amount of any post-termination payments provided for in this Agreement shall not
be reduced by any remuneration earned by the Executive during the period
following the termination of his employment as a result of employment by another
employer or otherwise after the date of termination of his employment with the
Company.
6. Covenants and Confidential Information.
--------------------------------------
(a) The Executive acknowledges the Company's reliance on and
expectation of the Executive's continued commitment to performance of his duties
and responsibilities during the Term. In light of such reliance and expectation
on the part of the Company, during the periods hereafter specified in Section
6(b), the Executive shall not, directly or indirectly, do or suffer either of
the following:
-6-
<PAGE>
(i) Own, manage, control or participate in the ownership,
management or control of, or be employed or engaged by or otherwise
affiliated or associated as a consultant, independent contractor or
otherwise with, any other corporation, partnership, proprietorship, firm,
association or other business entity engaged in the business of, or
otherwise engage in the business of, marketing or providing
telecommunication services within the United States in competition with the
Company; provided, however, that the beneficial and/or record ownership of
not more than four and nine-tenths percent (4.9%) of any class of publicly
traded securities of any entity shall not be deemed a violation of this
covenant; or
(ii) Disclose, divulge, discuss, copy or otherwise use or suffer to
be used in any manner, other than in accordance with the Executive's duties
hereunder, any confidential or proprietary information relating to the
Company's business, prospects, finances, operations, properties or
otherwise to its particular business or other trade secrets of the Company,
it being acknowledged by the Executive that all such information regarding
the business of the Company compiled or obtained by, or furnished to, the
Executive while the Executive shall have been employed by or associated
with the Company is confidential and/or proprietary information and the
Company's exclusive property; provided, however, that the foregoing
restrictions shall not apply to the extent that such information:
(A) is clearly obtainable in the public domain;
(B) becomes obtainable in the public domain, except by reason of
the breach by the Executive of the terms hereof; or
(C) is required to be disclosed by rule of law or by order of a
court or governmental body or agency.
(b) The applicable periods shall be: (i) so long as the Executive is an
employee of the Company; (ii) as to clause (ii) of Section 6(a), at any time
after the Executive is no longer an employee of the Company; and (iii) upon the
payment by the Company to the Executive of $1,000,000 in cash as severance
(which shall be paid at termination) in addition to payments otherwise required
under this Agreement, for a period of three years after termination of
employment for Cause or for Permanent Disability or without Good Reason.
(c) The Executive agrees and understands that the remedy at law for any
breach by him of this Section 6 will be inadequate and that the damages flowing
from such breach are not readily susceptible to being measured in monetary
terms. Accordingly, it is acknowledged that the Company shall be entitled to
immediate injunctive relief and may obtain a temporary order restraining any
threatened or further breach. Nothing in this Section 6 shall be deemed to
limit the Company's remedies at law or in equity for any breach by the Executive
of any of the provisions of this Section 6 which may be pursued or availed of by
the Company.
-7-
<PAGE>
(d) THE EXECUTIVE HAS CAREFULLY CONSIDERED THE NATURE AND EXTENT OF THE
RESTRICTIONS UPON HIM AND THE RIGHTS AND REMEDIES CONFERRED UPON THE COMPANY
UNDER THIS SECTION 6, AND HEREBY ACKNOWLEDGES AND AGREES THAT THE SAME ARE
REASONABLE IN TIME AND TERRITORY, ARE DESIGNED TO ELIMINATE COMPETITION WHICH
OTHERWISE WOULD BE UNFAIR TO THE COMPANY, DO NOT STIFLE THE INHERENT SKILL AND
EXPERIENCE OF THE EXECUTIVE, WOULD NOT OPERATE AS A BAR TO THE EXECUTIVE'S SOLE
MEANS OF SUPPORT, ARE FULLY REQUIRED TO PROTECT THE LEGITIMATE INTERESTS OF THE
COMPANY AND DO NOT CONFER A BENEFIT UPON THE COMPANY DISPROPORTIONATE TO THE
DETRIMENT TO THE EXECUTIVE.
(e) The Executive acknowledges that the Executive's obligations under
this Section 6 shall survive in accordance with paragraph (b) above regardless
of whether the Executive's employment by the Company is terminated, voluntarily
or involuntarily, by the Company or the Executive, with Cause or without Cause,
or the Executive with or without Good Reason.
7. Indemnification. During the Term, the Company shall indemnify
---------------
Executive and hold Executive harmless from and against any claim, loss or cause
of action arising from or out of Executive's performance as an officer, director
or employee of the Company or any of its subsidiaries or in any other capacity,
including any fiduciary capacity, in which Executive serves at the request of
the Company to the maximum extent permitted by applicable law. If any claim is
asserted hereunder with respect to which Executive reasonably believes in good
faith he is entitled to indemnification, the Company shall pay Executive legal
expenses (or cause such expenses to be paid) on a monthly basis, provided that
Executive shall reimburse the Company for such amounts if Executive shall be
found by a court of competent jurisdiction not to have been entitled to
indemnification. In addition, the Company agrees to provide Executive with
coverage under a directors and officers liability insurance policy.
8. Miscellaneous.
-------------
(a) The Executive represents and warrants that he is not a party to any
agreement, contract or understanding, whether employment or otherwise, which
would restrict or prohibit him from undertaking or performing employment in
accordance with the terms and conditions of this Agreement.
(b) The provisions of this Agreement are severable and if any one or
more provisions may be determined to be illegal or otherwise unenforceable, in
whole or in part, the remaining provisions and any partially unenforceable
provision to the extent enforceable in any jurisdiction nevertheless shall be
binding and enforceable.
-8-
<PAGE>
(c) The rights and obligations of the Company under this Agreement shall
inure to the benefit of, and shall be binding on, the Company and, if in
connection with a transfer of substantially all of its business, its successors
and assigns, and the rights and obligations (other than obligations to perform
services) of the Executive under this Agreement shall inure to the benefit of,
and shall be binding upon, the Executive and his heirs, personal representatives
and assigns.
(d) Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the Voluntary Labor Arbitration Rules of the American Arbitration
Association, and the arbitration shall be held in the metropolitan Washington,
D.C. area. The arbitrator shall be acceptable to both the Company and
Executive. If the parties cannot agree on an acceptable arbitrator, the dispute
shall be heard by a panel of three (3) arbitrators, one appointed by each of the
parties and the third appointed by the other two arbitrators. Judgment upon the
award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof. The arbitrator or arbitrators shall be deemed to
possess the powers to issue mandatory orders and restraining orders in
connection with such arbitration; provided, however, that nothing in this
Section 8(d) shall be construed so as to deny the Company the right and power to
seek and obtain injunctive relief in a court of equity for any breach or
threatened breach by the Executive of any of his covenants contained in Section
6 of this Agreement.
(e) All notices and other communications required or permitted under this
Agreement shall be in writing, and shall be deemed properly given if delivered
personally, mailed by registered or certified mail in the United States mail,
postage prepaid, return receipt requested, sent by facsimile, or sent by Express
Mail, Federal Express or other nationally recognized express delivery service,
as follows:
If to the Company or the Board:
Telco Communications Group, Incorporated
4219 Lafayette Center Drive
Chantilly, VA 22021-1209
Attn: General Counsel
Fax Number: (703) 803-3430
With a copy to:
Swidler & Berlin, Chartered
3000 K Street, N.W.
Suite 300
Washington, D.C. 20007
Attn: John J. Klusaritz, Esq.
Fax Number: (202) 424-7643
-9-
<PAGE>
If to the Executive:
Donald A. Burns
1835 Vernon Street, N.W.
Washington, D.C. 20009
With a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, N.Y. 10022
Attn: Robert F. Quaintance, Jr.
Fax Number: (212) 909-6836
Notice given by hand, certified or registered mail, or by Express Mail, Federal
Express or other such express delivery service, shall be effective upon actual
receipt. Notice given by facsimile transmission shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices by facsimile
transmission shall be confirmed promptly after transmission in writing by
certified mail or personal delivery.
Any party may change any address to which notice is to be given to it by
giving notice as provided above of such change of address.
(f) The failure of either party to enforce any provision or provisions of
this Agreement shall not in any way be construed as a waiver of any such
provision or provisions as to any future violations thereof, nor prevent that
party thereafter from enforcing each and every other provision of this
Agreement. The rights granted the parties herein are cumulative and the waiver
of any single remedy shall not constitute a waiver of such party's right to
assert all other legal remedies available to it under the circumstances.
(g) This Agreement supersedes all prior agreements and understandings
between the parties as to the subject hereof and may not be modified or
terminated orally. No modification or attempted waiver shall be valid unless in
writing and signed by the party against whom the same is sought to be enforced.
(h) This Agreement shall be governed by, and construed in accordance with
the provisions of, the law of the State of Virginia, without reference to
provisions that refer a matter to the law of any other jurisdiction. Each party
hereto hereby irrevocably submits itself to the non-exclusive personal
jurisdiction of the federal and state courts sitting in Virginia; accordingly,
subject to the provisions for arbitration provided in Section 8(d), any
justiciable matters involving the Company and the Executive with respect to this
Agreement may be adjudicated only in a federal or state court sitting in
Virginia.
-10-
<PAGE>
(i) All payments required to be made by the Company hereunder to the
Executive shall be subject to the withholding of such amounts relating to taxes
and other government assessments as the Company may reasonably determine it
should withhold pursuant to any applicable law, rule or regulation.
(j) Captions and section headings used herein are for convenience and are
not a part of this Agreement and shall not be used in construing it.
(k) Where necessary or appropriate to the meaning hereof, the singular
and plural shall be deemed to include each other, and the masculine, feminine
and neuter shall be deemed to include each other.
(l) If the Company fails to make any payment to Executive within ten (10)
days of the date due, the payment shall be made with interest from the date due
to the date of payment, at the rate, compounded annually, from time to time
specified as its prime rate by Citibank, N.A.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first set forth above.
TELCO COMMUNICATIONS GROUP,
INCORPORATED, a Virginia corporation
By: /s/ Bryan Rachlin
---------------------------------
Name: Bryan Rachlin
----------------------------
Title:
---------------------------
/s/ Donald A. Burns
------------------------------------
DONALD A. BURNS
-11-
<PAGE>
EXHIBIT 11.1
TELCO COMMUNICATIONS GROUP, INC.
SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
WEIGHTED AVERAGE NUMBER OF SHARES
The weighted average number of shares of common stock and common stock
equivalents, after adjusting for the 425-to-1 stock split, was determined as
follows:
Outstanding options for common stock have been included in the calculation of
common and common equivalent shares outstanding using the treasury stock method
based on an assumed initial public offering price of $16 per share as the market
price for all periods presented.
(amounts in thousands except per share data)
<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Common Stock:
Shares outstanding beginning of period 20,188 20,864
Shares issued during period, net (1) 217 0
SEC SAB 83 shares (2) 5,961 5,961
------- -------
26,366 26,825
Common Stock Equivalents:
Options (3) 365 935
Warrants (4) 398 682
------- -------
763 1,617
Weighted average number of shares 27,129 28,442
Net Income (loss) 2,006 10,765
Net Income (loss) per share $0.07 $0.38
</TABLE>
(1) Weighted average shares acquired, net of repurchase of shares
(2) Shares and employee options issued June 14, 1995 to June 13, 1996 7,094
Less shares reacquired under treasury stock method 1,133
-----
Net SAB 83 shares 5,961
=====
(3) Options granted, less shares reacquired under treasury stock method,
on a weighted average basis
(4) Represents warrant held by Signet Media Capital Group to purchase
682,082 shares of common stock at a nominal exercise price.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 MAR-31-1996
<CASH> 936,771 1,300,284
<SECURITIES> 0 0
<RECEIVABLES> 59,595,401 83,135,500
<ALLOWANCES> 3,771,413 7,136,748
<INVENTORY> 0 0
<CURRENT-ASSETS> 59,091,410 79,439,301
<PP&E> 31,005,198 33,678,316
<DEPRECIATION> 3,478,485 4,885,903
<TOTAL-ASSETS> 87,123,970 108,927,984
<CURRENT-LIABILITIES> 30,730,420 38,925,172
<BONDS> 0 0
0 0
0 0
<COMMON> 25,000 25,000
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 87,123,970 108,927,984
<SALES> 215,375,486 91,927,548
<TOTAL-REVENUES> 215,375,486 91,927,548
<CGS> 133,727,834 54,729,975
<TOTAL-COSTS> 133,727,834 54,729,975
<OTHER-EXPENSES> 60,399,173 29,716,400
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,951,975 1,065,942
<INCOME-PRETAX> 19,342,442 6,848,951
<INCOME-TAX> 7,531,592 3,134,539
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 10,764,912 3,280,692
<EPS-PRIMARY> 161.91 48.92
<EPS-DILUTED> 0 0
</TABLE>
