AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 9, 1997.
REGISTRATION STATEMENT NO. 333-25065
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 3 TO FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TELEGROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
IOWA 4813 42-1344121
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
2098 NUTMEG AVENUE
FAIRFIELD, IOWA 52556
(515) 472-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DOUGLAS A. NEISH
CHIEF FINANCIAL OFFICER
TELEGROUP, INC.
2098 NUTMEG AVENUE
FAIRFIELD, IOWA 52556
(515) 472-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:
JOHN J. KLUSARITZ, ESQ. DENNIS J. FRIEDMAN, ESQ.
MORRIS F. DEFEO, JR., ESQ. CHADBOURNE & PARKE LLP
SWIDLER & BERLIN, CHARTERED 30 ROCKEFELLER PLAZA
3000 K STREET, N.W., SUITE 300 NEW YORK, NY 10112
WASHINGTON, D.C. 20007 (212) 408-5100
(202) 424-7500
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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: [_]
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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.
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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............. $ 43,561
NASD filing fee............................................... 50,000
Nasdaq National Market fee.................................... 38,200
Printing expenses............................................. 350,000
Registrar and Transfer Agent's fees and expenses.............. 10,000
Accountants' fees and expenses................................ 100,000
Legal fees and expenses (not including Blue Sky).............. 375,000
Blue Sky fees and expenses.................................... 5,000
Miscellaneous................................................. 28,239
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Total..................................................... $1,000,000
==========
</TABLE>
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* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Iowa Business Corporation Act confers broad powers upon corporations
incorporated in Iowa with respect to indemnification of any person against
liabilities incurred by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another Corporation or other business entity. These provisions are not
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement or otherwise.
The Company's Second Restated Articles of Incorporation contain a provision
that eliminates the personal liability of the Company's directors to the
Company or its shareholders for monetary damages for breach of fiduciary duty
as a director, except (i) for liability for any breach of the director's duty
of loyalty to the Corporation or its shareholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or knowing violation
of the law, (iii) for any transaction from which the director derived an
improper personal benefit, or (iv) for unlawful distributions in violation of
Section 490.833 of the Iowa Business Corporation Act. Any repeal or amendment
of this provision by the shareholders of the Corporation will not adversely
affect any right or protection of a director existing at the time of such
repeal or amendment.
The Company's Amended and Restated Bylaws contain a provision entitling
officers and directors to be indemnified and held harmless by the Company
against expenses, liabilities and costs (including attorneys' fees) actually
and reasonably incurred by such person, to the fullest extent permitted by the
Iowa Business Corporation Act.
The Company has applied for a director and officer liability policy, under
which each director and certain officers of the Company would be insured
against certain liabilities. In addition, prior to the effectiveness of the
Offering, the Company will enter into indemnity agreements with each of its
officers and directors.
Prior to completion of the Offering, the Company intends to enter into
indemnification agreements with certain of its executive officers and
directors.
Prior to completion of the Offering, the Company intends to enter into
indemnification agreements with certain of its executive officers and
directors (collectively, the "Indemnification Agreements"). Pursuant to the
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terms of the Indemnification Agreements, each of the executive officers and
directors who are parties thereto will be indemnified by the Company to the
full extent provided by law in the event such officer or director is made or
threatened to be made a party to a claim arising out of such person acting in
his capacity as an officer or director of the Company. The Company has further
agreed that, upon a change in control, as defined in the Indemnification
Agreements, the rights of such officers and directors to indemnification
payments and expense advances will be determined in accordance with the
provisions of the Iowa Business Corporation Act and has also agreed that, upon
a potential change of control, as defined in the Indemnification Agreements,
it will create a trust in an amount sufficient to satisfy all indemnity
expenses reasonably anticipated at the time a written request to create such a
trust is submitted by an officer or director.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following paragraphs of this Item 15 describe all offers and sales of
securities by the Company within the last three years which were not
registered under the Securities Act of 1933, other than securities issued in
connection with stock reclassifications, stock dividends or stock splits:
On April 23, 1996, the Company issued 94,707 shares of Class B Common
Stock to Michael Lackman for the aggregate consideration of $20,946.53 paid
by Mr. Lackman with a promissory note in the principal amount of
$20,946.53.
On April 26, 1996, the Company issued 142,061 shares of Class B Common
Stock to Ronald Stakland for the aggregate consideration of $31,419.80 paid
by Mr. Stakland with a promissory note in the principal amount of
$31,419.80.
On August 21, 1996, in connection with the Plan and Agreement of
Reorganization between the Company, George Apple and Telegroup South
Europe, Inc. ("TGSE"), the Company issued 47,832 shares of Class A Common
Stock and made a cash payment to George Apple in exchange for substantially
all of the assets of TGSE.
Amended and Restated 1996 Telegroup, Inc. Stock Option Plan. See
"Management--Amended and Restated 1996 Telegroup, Inc. Stock Option Plan"
incorporated by reference herein from the Prospectus included in Part I of
this Registration Statement.
November 27, 1996 Issuance of Senior Subordinated Notes and Warrants. On
November 27, 1996, the Company completed a $20 million private placement of
its 12.0% Senior Subordinated Notes, together with warrants to purchase 4.0%
of the Company's fully-diluted Common Stock. See "Certain Transactions--
Subordinated Note Placement" and "Description of Capital Stock--Warrants."
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.
ITEM 16(A). EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
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<C> <S> <C>
*1.1 Form of U.S. Underwriting Agreement
*1.2 Form of International Underwriting Agreement
*2.1 Plan and Agreement of Reorganization Between the
Company, George Apple and Telegroup South Europe,
Inc. Dated September 6, 1996
**3.1 Restated Articles of Incorporation of Telegroup, Inc.
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
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<C> <S> <C>
**3.2 Form of Second Restated Articles of Incorporation of
Telegroup, Inc.
**3.3 Bylaws of Telegroup, Inc.
**3.4 Form of Amended and Restated Bylaws of Telegroup, Inc.
*4.1 Form of Common Stock Certificate of Telegroup, Inc.
4.2 Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4
**4.3 Note and Warrant Purchase Agreement dated as of
November 27, 1996
*4.4 Form of Warrant to Purchase Class A Common Stock of
Telegroup, Inc.
**4.5 Indenture dated as of November 27, 1996 between
Telegroup, Inc. and The Chase Manhattan Bank
*5.1 Opinion of Marcus & Thompson, P.C.
**10.1 Loan Agreement Dated as of March 28, 1997 by and
between the Company and American National Bank and
Trust Company of Chicago
**10.2 Amended and Restated 1996 Telegroup, Inc. Stock Option
Plan
**10.3 Form of Employment Agreement between the Company and
Fred Gratzon
**10.4 Form of Employment Agreement between the Company and
Clifford Rees
*10.5 Form of Indemnification Agreement
**10.6 Registration Rights Agreement among Telegroup, Inc.,
Greenwich Street Capital Partners, L.P., Greenwich
Street Capital Offshore Fund, Ltd., TRV Employees
Fund, L.P., The Travelers Insurance Company and The
Travelers Life and Annuity Company Dated as of
November 27, 1996
**10.7 Form of Registration Rights Agreement between the
Company and certain Shareholders of the Company
+10.8 Agreement between Telegroup, Inc. and New T & T Hong
Kong Limited
+10.9 Resale Solutions Switched Services Agreement between
Sprint Communications Company L.P. and Telegroup,
Inc.
*10.10 Form of Employment Agreement between the Company and
John P. Lass
*10.11 Form of Employment Agreement between the Company and
Ronald B. Stakland
*10.12 Form of Employment Agreement between the Company and
Douglas A. Neish
*10.13 Form of Employment Agreement between the Company and
Stanley Crowe
*10.14 Form of Employment Agreement between the Company and
Richard P. DeAngelis
*10.15 Form of Employment Agreement between the Company and
Michael Lackman
*10.16 Form of Employment Agreement between the Company and
Eric E. Stakland
*11.1 Statement Regarding Computation of Per Share Earnings
*21.1 Subsidiaries of Telegroup, Inc.
**23.2 Consent of KPMG Peat Marwick, LLP
*23.3 Consent of Marcus & Thompson, P.C. (to be included in
Exhibit 5.1 to this Registration Statement)
**24.1 Power of Attorney
**27.1 Financial Data Schedule
</TABLE>
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* To be filed by amendment.
** Previously filed.
+ Confidential Treatment is being requested for portions of this document.
The redacted material is being filed separately with the Commission.
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ITEM 16(B). FINANCIAL STATEMENT SCHEDULES.
II--Valuation and Qualifying Accounts (previously filed)
All other schedules are omitted either because they are not applicable or
are not material, or the information presented therein is contained in the
Financial Statements or notes thereto.
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.
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.
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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 FAIRFIELD, STATE OF
IOWA, ON JUNE 9, 1997.
Telegroup, Inc.
By: *
----------------------------
CLIFFORD REES
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
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 JUNE 9, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
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<S> <C>
* Chairman of the Board and Director
- -------------------------------------
FRED GRATZON
* Chief Executive Officer, President
- ------------------------------------- and Director (Principal Executive
CLIFFORD REES Officer)
* Vice President--Finance, Chief
- ------------------------------------- Financial Officer, Treasurer and
DOUGLAS A. NEISH Director (Principal Financial
Officer)
* Director of Finance and Controller
- ------------------------------------- (Principal Accounting Officer)
GARY KORF
Senior Vice President, International
- ------------------------------------- Services and Director
RONALD B. STAKLAND
</TABLE>
* Charles Johansen, 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.
/s/ Charles Johansen Attorney-in-Fact
- ---------------------------------
Charles Johansen
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
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<C> <S> <C>
*1.1 Form of U.S. Underwriting Agreement
*1.2 Form of International Underwriting Agreement
*2.1 Plan and Agreement of Reorganization Between the
Company, George Apple and Telegroup South Europe,
Inc. Dated September 6, 1996
**3.1 Restated Articles of Incorporation of Telegroup, Inc.
**3.2 Form of Second Restated Articles of Incorporation of
Telegroup, Inc.
**3.3 Bylaws of Telegroup, Inc.
**3.4 Form of Amended and Restated Bylaws of Telegroup, Inc.
*4.1 Form of Common Stock Certificate of Telegroup, Inc.
4.2 Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4
**4.3 Note and Warrant Purchase Agreement dated as of
November 27, 1996
*4.4 Form of Warrant to Purchase Class A Common Stock of
Telegroup, Inc.
**4.5 Indenture dated as of November 27, 1996 between
Telegroup, Inc. and The Chase Manhattan Bank
*5.1 Opinion of Marcus & Thompson, P.C.
**10.1 Loan Agreement Dated as of March 28, 1997 by and
between the Company and American National Bank and
Trust Company of Chicago
**10.2 Amended and Restated 1996 Telegroup, Inc. Stock Option
Plan
**10.3 Form of Employment Agreement between the Company and
Fred Gratzon
**10.4 Form of Employment Agreement between the Company and
Clifford Rees
*10.5 Form of Indemnification Agreement
**10.6 Registration Rights Agreement among Telegroup, Inc.,
Greenwich Street Capital Partners, L.P., Greenwich
Street Capital Offshore Fund, Ltd., TRV Employees
Fund, L.P., The Travelers Insurance Company and The
Travelers Life and Annuity Company Dated as of
November 27, 1996
**10.7 Form of Registration Rights Agreement between the
Company and certain Shareholders of the Company
+10.8 Agreement between Telegroup, Inc. and New T & T Hong
Kong Limited
+10.9 Resale Solutions Switched Services Agreement between
Sprint Communications Company L.P. and Telegroup,
Inc.
*10.10 Form of Employment Agreement between the Company and
John P. Lass
*10.11 Form of Employment Agreement between the Company and
Ronald B. Stakland
*10.12 Form of Employment Agreement between the Company and
Douglas A. Neish
*10.13 Form of Employment Agreement between the Company and
Stanley Crowe
*10.14 Form of Employment Agreement between the Company and
Richard P. DeAngelis
*10.15 Form of Employment Agreement between the Company and
Michael Lackman
*10.16 Form of Employment Agreement between the Company and
Eric E. Stakland
*11.1 Statement Regarding Computation of Per Share Earnings
*21.1 Subsidiaries of Telegroup, Inc.
**23.2 Consent of KPMG Peat Marwick, LLP
*23.3 Consent of Marcus & Thompson, P.C. (to be included in
Exhibit 5.1 to this Registration Statement)
**24.1 Power of Attorney
**27.1 Financial Data Schedule
</TABLE>
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* To be filed by amendment.
** Previously filed.
+ Confidential Treatment is being requested for portions of this document.
The redacted material is being filed separately with the Commission.
THIS AGREEMENT is made and entered into by and between TELEGROUP,
INCORPORATED, an Iowa corporation with its principal office located at 505
North Third Street, Fairfield, Iowa 52556 (hereinafter "Telegroup"), and NEW
T&T HONG KONG LIMITED of 5/F, New T&T Centre, Harbour City, Tsimshatsui,
Kowloon, Hong Kong ("New T&T").
RECITALS:
WHEREAS, Telegroup is in the business of providing telecommunications
services; and
WHEREAS, Telegroup and New T&T have previously entered into a Facilities
Management Agreement dated 20 October, 1995 ("FM Agreement"), Section
12.4 of which is attached hereto; and
WHEREAS, New T&T has applied to Telegroup for the right to purchase and
resell certain of Telegroup's callback services to the general public;
and
WHEREAS, New T&T has a pre-existing agreement with a third-party
supplier of such services (the "Existing Supplier"); and
WHEREAS, Telegroup has agreed to provide such services pursuant to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
warranties which appear below, and intending to be legally bound thereby,
the parties hereby agree as follows:
1. UNDERTAKING OF THE PARTIES
1.1 Services. Telegroup hereby agrees to provide New T&T with certain dial
tone and call termination services as more particularly described in
Exhibit 1.1 attached hereto (hereinafter the "Services"). New T&T shall
provide at * necessary in connection with the purchase by New T&T of the
Services. All such * supplied by New T&T shall be maintained by New T&T
during the term of this Agreement and shall be used by Telegroup only for
the purpose of supplying the Services to New T&T hereunder.
1.2 Rates. The rates for Services will be established by Telegroup. The
initial rates are set forth in Exhibit 1.2 attached hereto. These rates
may be revised from time to time by Telegroup, subject to the following
conditions:
(a) *
(b) *
*Confidential Treatment Requested. The redacted material has been filed
separately with the Commission.
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(c) In no event shall any rate increase take effect prior to 90
days after the Effective Date of this Agreement.
1.3 Effective Date and Term. The Effective Date of this Agreement shall be
the date upon which it is executed by Telegroup. Except as otherwise
provided herein, the initial term of this Agreement shall end at
midnight on October 16, 1998. Thereafter, it shall be automatically
renewed for successive one year periods, unless terminated by either
Party 60 days prior to the commencement of such renewal period.
1.4 Eligible Traffic. "Eligible Traffic" hereunder shall be international
traffic originating on or passing through New T&T's network using New
T&T's "IDD 007" Service or its equivalent, excluding traffic to The
People's Republic of China or Macau, or traffic which is terminated by:
(a) Hong Kong Telecom International Limited; or
(b) Hong Kong Telephone Company; or
(c) International private lines; or
(d) the existing Supplier.
1.5 Commitment to Make Telegroup the Primary Supplier. During the term of
this Agreement, New T&T shall use reasonable endeavors to insure that
* of its aggregate annual eligible traffic will be terminated by
Telegroup pursuant to this Agreement. At any time during the term of
this Agreement, New T&T shall have the right to supply to Telegroup a
statement, and any reasonable supporting documentation requested by
Telegroup, prepared and signed by New T&T's independent auditors
documenting the percentage of eligible traffic that was terminated by
Telegroup since the previous audit or, in the case of the first such
audit, since the Effective Date hereof (the "audit period"). If it is
thus demonstrated that Telegroup terminated * of the eligible traffic
during the audit period, *.
*Confidential Treatment Requested. The redacted material has been filed
separately with the Commission.
<PAGE>
<PAGE>
1.6 Down Time. If, during the term of this Agreement, Telegroup is unable
to offer the Services to New T&T for a period of time due to technical
problems, that period of time shall not be included as part of the audit
period (as set forth in Section 1.4 hereof) during which the down time
occurred.
1.7 Authority of New T&T. New T&T shall have the authority to provide the
Services to its Hong Kong customers without identifying to such
customers that New T&T is utilizing Telegroup's services, and any
contracts of New T&T with its customers relating to the Services shall be
entered into by New T&T in its own name and for its account.
1.8 Customer Service. New T&T shall be responsible for all end-user customer
service relating to the Services, including gathering accurate and
complete information as to purported difficulties and accurately
educating its end-user customers concerning the Services. Telegroup will
cooperate with New T&T with respect to customer service.
2. PAYMENT TERMS
2.1 Billing. Telegroup will invoice New T&T for the Services on a monthly
basis, and shall, on a weekly basis, provide New T&T with electronic call
detail records of all billable calls. Call charges will apply only to
those calls which are answered at the dialed (destination) end, and will
be calculated from the time the dialed number is answered to
the time either the caller or the called party hangs up (goes on hook),
*. *. In the event of a bona fide dispute relating to the billing
charges, New T&T shall pay the amount not in dispute and shall cooperate
with Telegroup in resolving the disputed portion of the bill.
Notwithstanding the foregoing, payment shall not affect New T&T's rights
to challenge the propriety of payment, but any bills rendered may not be
disputed by New T&T or Telegroup unless such dispute is set forth in
writing within the period of six months after the billing date for the
item or items in question. In the event New T&T fails to pay a bill for
the Services (other than for amounts that are the subject of a bona fide
dispute) that is rendered and due and payable in accordance with the
terms of this Agreement, Telegroup shall have the right, upon 7 calendar
days notice and failure by New T&T to remit full payment within those 7
days, to suspend the Services and to terminate this Agreement.
*Confidential Treatment Requested. The redacted material has been filed
separately with the Commission.
<PAGE>
<PAGE>
2.2 Security Deposit. New T&T acknowledges and agrees that should
Telegroup's billings in relation to the Services exceed an aggregate of *
during the term of this Agreement, Telegroup shall be entitled to call,
as security for the full and faithful performance by New T&T of its
payment and other obligations under this Agreement, a * , which
shall be payable to Telegroup in the event of a failure by New T&T to
meet its payment obligations under this Agreement. The terms and
language of such * shall be in a form and substance agreed by the
parties, which agreement shall not be unreasonably withheld.
3. TERMINATION
3.1 Regulatory Approval. This Agreement shall terminate automatically and
without liability or further obligation on the part of either Party to
the other if, by final order either Party is denied or loses any
necessary authority to provide or resell the Services as contemplated
hereunder, or if such authority is suspended or not renewed, or it
becomes unlawful to provide or resell the Services. If such authority is
lost, suspended or not renewed, or the Services become unlawful with
regard to a portion of the service area, then this Agreement shall
terminate automatically and without liability or further obligation on
the part of either Party to the other with regard only to the service
area concerned. The provisions of this Section 3.1 shall not be
construed to affect any liabilities which arise prior to a termination
hereunder.
3.2 Termination Rights. The following events shall be grounds for immediate
termination of this Agreement, provided that notice of termination is
given within 30 days of the event and that no termination hereunder shall
affect the obligations of one Party to the other for liability arising
prior to such termination:
(a) The failure of New T&T to make payment for the Services within
7 calendar days of receiving notice from Telegroup as set forth
in Section 2.1 hereof; or
(b) The failure by Telegroup to conform to the performance
specifications set out in Exhibit 3.3 within 30 days of being
notified by New T&T of any deficiency in Telegroup's
conformance to those specifications; or
(c) *; or
*Confidential Treatment Requested. The redacted material has been filed
separately with the Commission.
<PAGE>
<PAGE>
(d) The material violation by either Party hereto of any material
term or provision of this Agreement which is not cured within
30 days after notice of default is given; provided, however, if
the nature of the default is such that it cannot reasonably be
cured within such 30-day period, then the Party shall not be
deemed to be in default provided that it commences to cure the
default within such 30-day period and thereafter diligently
completes the cure; or
(e) New T&T determines in good faith that it is no longer
commercially viable to resell the Services in Hong Kong; or
(f) The violation by a Party of any laws or regulations applicable
to the Services and the failure to promptly remedy the
violation after notice; or
(g) The bankruptcy of a Party.
3.3 *.
3.4 The FM Agreement. Telegroup's obligation under Section 12.4 of the FM
Agreement to not offer its own "private label call back services"
through any local system other than the System described in the FM
Agreement shall terminate if:
(a) Telegroup terminates this Agreement on account of nonpayment
by New T&T of its monetary obligations under Section 2.1 of
this Agreement; or
(b) New T&T terminates this Agreement pursuant to Section 3.3
hereof; or
(c) The percentage of eligible traffic terminated by Telegroup in
an audit period, as determined in accordance with the
provisions of Section 1.4 hereof, is *.
4. INDEMNIFICATION AND LIMITATION OF LIABILITY
4.1 Quality & Timeliness of Services. Telegroup will make its best efforts
to provide continuous and uninterrupted Services hereunder in accordance
with generally applicable industry standards. However, New T&T
specifically acknowledges that Telegroup utilizes the transmission
services of underlying common carriers and does not have control of such
facilities. Except as set forth above in this Section 4.1, Telegroup
makes no representations as to the quality or availability of the
transmission services of its underlying carriers.
*Confidential Treatment Requested. The redacted material has been filed
separately with the Commission.
<PAGE>
<PAGE>
4.2 Indemnification. Each Party (the "Indemnitor") will indemnify the other
(the "Indemnitee"), its directors, officers, employees, agents,
affiliates, subsidiaries, and representatives and save them harmless from
and against any and all claims, actions, damages, liabilities and
expenses, including reasonable attorneys' fees occasioned by any breach
by the Indemnitor, its directors, officers, employees, agents or
representatives, of its obligations hereunder.
4.3 Limitation of Liability. Notwithstanding the foregoing, with respect to
the Services to be provided hereunder by Telegroup, it shall not be
liable to New T&T or to its officers, employees, directors, agents,
affiliates, subsidiaries, representatives, customers or any other third
party, in any respect, for any damages whatsoever unless Telegroup shall
have been directly and solely responsible for such damages and shall not
have used its reasonable efforts to remedy the situation in an effort to
prevent future such damages in the 30 day period after notice of
Telegroup's responsibility shall have been given to it. The parties
acknowledge that, irrespective of whether Telegroup succeeds in effecting
a remedy to the situation, and without limiting either Party's rights
under Section 3.2 hereof, so long as Telegroup shall have used its
reasonable efforts, as aforesaid, to remedy a situation for which it
would otherwise be responsible, Telegroup shall not be liable hereunder.
Notwithstanding the foregoing, in no event shall Telegroup be liable for
money damages for interruptions in the Services, defects in transmission,
or delays which are attributable to the services of underlying carriers,
equipment vendors, software or any other service suppliers, other
persons, or by regulatory or judicial actions.
4.4 Non-Liability of Either Party for Certain Damages. Notwithstanding
anything to the contrary herein, neither Party shall be liable to the
other Party for any special, consequential, or indirect damages arising
out of or in connection with this Agreement, including, but not limited
to loss of profits, business, revenue, good will, or anticipated savings.
4.5 Absolute Limitation of Liability. Notwithstanding anything to the
contrary in this Agreement, the maximum cumulative liability of Telegroup
for all acts or omissions under this Agreement shall be *.
5. NOMINATED REPRESENTATIVES
5.1 Representatives. The Parties' respective representatives are those
described in Exhibit 5.1. Each Party may changes its representative from
time to time by prior notice in writing to the other Party.
5.2 Communications Between Representatives. All communications concerning
the performance of the Agreement shall be conveyed between the Parties'
nominated representatives.
*Confidential Treatment Requested. The redacted material has been filed
separately with the Commission.
<PAGE>
<PAGE>
6. CONFIDENTIALITY
6.1 Confidentiality. New T&T and Telegroup shall keep confidential any
information obtained under or in connection with the Agreement and shall
not disclose the same to any third party without the consent in writing
of the other Party. The provisions of this Section 6.1 shall not apply
to:
(a) Any information in the public domain otherwise than by breach
of the Agreement;
(b) Information in the possession of the receiving Party thereof as
evidenced by a writing or writings dated before any disclosure
as aforesaid;
(c) Information obtained from a third party who is free to disclose
the same; or
(d) Information required to be disclosed by law.
6.2 Disclosure to Employees. New T&T and Telegroup shall disclose
confidential information to employees or representatives on a need to
know basis only and shall ensure that such employees and representatives
are aware of and comply with these obligations as to confidentiality.
7. MISCELLANEOUS
7.1 Whole Agreement. This Agreement represents the entire agreement between
the parties concerning the provision of the Service and shall supersede
all representations, promises and proposals, whether they be oral or
written.
7.2 Waiver. No delay, neglect or forbearance on the part of either Party in
enforcing against the other Party any term or condition of the Agreement
shall either be or be deemed to be a waiver or in any way prejudice any
right of that Party under the Agreement.
7.3 Governing Law. The Agreement shall be construed and interpreted in
accordance with the laws of Hong Kong and the parties hereby agree to
submit to the exclusive jurisdiction of the Courts of Hong Kong.
7.4 Notices. All notices or other communications required or permitted to be
given under this Agreement by any Party to another shall be:
(a) in writing addressed to the address of the intended recipient
at the address set forth above or to such other address as has been
most recently notified by the intended recipient to the Party giving
the notice;
(b) signed by a person duly authorized by the sender; and
(c) deemed to have been given and served:
<PAGE>
<PAGE>
(i) where delivered by hand, at the time of delivery.
(ii) where dispatched by facsimile transmission, twenty four
(24) hours after the time recorded on the transmitting machine
unless:
(aa) within those twenty four (24) hours the intended
recipient has informed the sender that the transmission
was received in an incomplete or garbled form; or
(bb) the transmission report of the sender indicates a
faulty or incomplete transmission; and
(iii) where dispatched by security post, on acknowledgment of
receipt by or on behalf of the recipient, but if such delivery
or receipt is on a day which is not a working day or is later
than 4:00 p.m. (local time) on a working day, the notice shall
be deemed to have been given and served on the next working
day.
7.5 Amendment. Any amendment to this Agreement including the Schedules
shall only be valid when such amendments are recorded in writing and
duly signed on behalf of the parties by their respective authorized
representatives.
7.6 Assignment. Subject to its License, New T&T may with written notice to
Telegroup assign or transfer any or all its rights and obligations under
this Agreement to a related company (as defined in the Companies
Ordinance). Telegroup may assign or transfer all its rights and
obligations under this Agreement to its subsidiary (as defined in the
Companies Ordinance in Hong Kong).<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed the
day and year first written above.
SIGNED for and on behalf of )
New T&T Hong Kong Limited )
by its duly authorized ) ___________________________________
Representative in the presence of: ) Signature of Authorized
Representative )
)
)
)
________________________ )
Signature of Witness )
)
) ___________________________________
) Name of Authorized Representative
) (print)
)
________________________ )
Name of Witness (print) )
)
)
)
SIGNED for and on behalf of )
Telegroup, Incorporated )
by its duly authorized ) ___________________________________
Representative in the presence of: ) Signature of Authorized
Representative )
)
)
________________________ )
Signature of Witness )
) ___________________________________
) Name of Authorized Representative
) (print)
)
)
________________________ )
Name of Witness (print) )
)<PAGE>
<PAGE>
Exhibit A Section 12.4 of the Facilities Management Agreement
12.4 In the event Telegroup, in good faith, determines that it is no longer
commercially viable to offer call back services in Hong Kong through
the System under the terms and conditions set forth in this Agreement,
Telegroup may terminate this Agreement upon 30 days written notice to
New T&T. Nothing herein or elsewhere in this Agreement is intended to
prohibit Telegroup, at any time either during or after the termination
of this Agreement, from installing a similar system for call back
services utilizing a third party in Hong Kong to provide services
similar to those provided by New T&T hereunder; provided, however,
during the term of this Agreement, Telegroup shall not offer not offer
its own "private label call back services" through any other local
system (switch) in Hong Kong other than through the System serviced by
New T&T pursuant to this Agreement. For these purposes, Telegroup's
"private label call back services" means any call back services
utilizing a local switch or system in Hong Kong which is provided
either directly or indirectly by Telegroup or agents to end-user
customers in Hong Kong under the Telegroup name or any other name used
by Telegroup to identify its products.
The parties agree that if Telegroup terminates this Agreement under
this clause 12.4, it will not offer its private label call back
services through any local switch or system in Hong Kong for a 12-month
period unless Telegroup believes that such services may again be
profitable based upon a change in circumstances and Telegroup first
negotiates in good faith for a 30-day period with New T&T with a view
to resuming their relationship with respect to Telegroup's private
label call back services, prior to Telegroup negotiating such an
agreement with a third party for the provision of services to Telegroup
of the kind provided in this Agreement.
<PAGE>
<PAGE>
Exhibit 1.1 The Services
E1.1 Service Description. "Services" means U.S.-originated dial tone and
call termination services to be provided by Telegroup to New T&T where:
(a) Eligible traffic, as defined in Section 1.4 of this Agreement,
generated by New T&T or terminating on New T&T's network will be switched
through Telegroup's network using Telegroup's equipment located in New
T&T's premises in Hong Kong (the "System") pursuant to the FM Agreement;
and
(b) Those services shall be performed by means of a "call back" system
whereby:
(i) *; and
(ii) *; and
(iii) *.
*Confidential Treatment Requested. The redacted material has been filed
separately with the Commission.<PAGE>
<PAGE>
Exhibit 1.2 Rates
New T&T Wholesale Rates in $US from Hong Kong to:
*
*Confidential Treatment Requested. The redacted material has been filed
separately with the Commission.<PAGE>
<PAGE>
Exhibit 3.3 Quality of Service Requirements
E3.3.1 Call Set-Up Time. Call set-up time will be *; provided, however, that
with respect to calls to Russia and the former CIS countries, no
assurances with regard to call set-up time will be given or required.
Notwithstanding the foregoing, in no event will Telegroup be required
to provide call set-up time with respect to calls to any particular
country that is less than the set-up time provided by Hong Kong
Telecom's IDD service *. Call set-up time shall be measured as the
difference between:
(a) the moment when the Telegroup's System receives from New
T&T's switch a valid and complete international destination
number; and
(b) the moment when ringback or busy signal at the destination
end is first heard.
E3.3.2 Voice Quality. Speech clarity, audio continuity and echo suppression
will be of similar quality to normal IDD calls for * of the calls
during any * period. Analysis of these parameters by New T&T shall be
done in good faith, utilizing industry-accepted testing equipment and
procedures, with test reports made available to Telegroup in the event
a claim is made with regard to this sub-exhibit 3.3.2.
E3.3.3 Blocked or Dropped Calls. The percentage of calls blocked or dropped
while in progress by the Telegroup System shall be *.
E3.3.4 System Availability. The availability of the Telegroup System as a
whole should be *. The Telegroup System is considered available when
its normal service, as defined in this Agreement, is maintained.
E3.3.5 Telegroup Support. Telegroup shall make available to New T&T a means
of accessing qualified technical support staff 24 hours per day, 365
days per year. Telegroup shall be required to respond to problem
reports and restore service outages according to the following
schedule:
(a) *.
(b) *.
E3.3.6 Answer Supervision. As soon as possible, and in any event by no later
than March 15, 1996, Telegroup shall install and have ready for use by
New T&T software that will enable the System to deliver answer
supervision to New T&T's switch. "Answer supervision" means a mutually
acceptable electronic signal which identifies in real time the moment
at which the dialed number delivered to the System by New T&T is
answered by the called party.
*Confidential Treatment Requested. The redacted material has been filed
separately with the Commission.<PAGE>
<PAGE>
Exhibit 5.1 Nominated Representatives
For Telegroup:
Mr. Ronald B. Stakland
Senior Vice President, International Development
Telegroup, Inc.
505 North Third Street
Fairfield, IA 52556
USA
For New T&T:
Mr. Raymond Mok
Director, Finance & Business Administration
5/F, New T&T Centre
Harbour City
Tsimshatsui, Kowloon
Hong Kong
RESALE SOLUTIONS SWITCHED SERVICES AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into by and between SPRINT
COMMUNICATIONS COMPANY L.P. ("Sprint"), and Telegroup, Inc. ("Customer").
Sprint and Customer are "Parties" hereto.
In consideration of the mutual promises contained herein, the Parties agree as
follows:
1. DEFINITIONS. Capitalized terms appearing in bold print are defined in
Exhibit 1.
2. CONFIDENTIALITY. During the Term and thereafter, neither Party shall
disclose any terms of this Agreement, including pricing, or Proprietary
Information of the other Party. Proprietary Information shall remain the
property of the disclosing Party. A Party receiving Proprietary Information
shall: (i) use or reproduce such information only when necessary to perform
this Agreement; (ii) provide at least the same care to avoid disclosure or
unauthorized use of such information as it provides to protect its own
Proprietary Information; (iii) limit access to such information to its
employees or agents who need such information to perform this Agreement; and
(iv) return or destroy all such information, including copies, after the need
for it has expired, upon request of the Disclosing Party, or upon termination
of this Agreement.
Because of the unique nature of Proprietary Information, a breach of this
paragraph may cause irreparable harm for which monetary damages may be
inadequate compensation. Accordingly, in addition to other available
remedies, a Party may seek injunctive relief to enforce this paragraph.
3. TERM. If this Agreement is executed by Sprint prior to the first day
of the month, then the Term shall commence on the first day of the following
month; otherwise, the Term shall commence on the first day of the second month
following the month in which it is executed by Sprint. The Term will continue
after commencement for the period specified in Attachment A.
4. TERMINATION FOR CAUSE.
4.1 A Party may terminate this Agreement upon the other Party's failure to
cure any of the following within 30 days following written notice thereof: (a)
the (i) insolvency, corporate reorganization, arrangement with creditors,
receivership or dissolution of the other Party; or (ii) institution of
bankruptcy proceedings by or against the other Party; (b) assignment or
attempted assignment of the Agreement or any interest therein, except as
permitted by Paragraph 24 hereof; (c) change in control of the defaulting
Party without the other Party's prior written consent, which consent shall not
be unreasonably withheld; (d) a final order by a government entity with
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
appropriate jurisdiction that a Service or the relationship hereunder is
contrary to law or regulation; or (e) breach of any provision herein not
otherwise referred to in Paragraph 4.
4.2 Sprint may terminate this Agreement immediately and without notice if
Customer fails to cure a breach as provided in Paragraph 8 or breaches a
provision of Paragraph 17 or 18.
4.3 Customer may terminate the Agreement upon 30 days written notice if
special rate adjustments exceed the maximum provided in paragraph 16.
4.4 Upon termination of this Agreement a Party may recover from the other
all sums it is owed at the time of termination.
5. TERMINATION WITHOUT CAUSE; EARLY TERMINATION CHARGE.
5.1 Customer may terminate this Agreement at any time without cause upon 90
days prior written notice to Sprint and payment to Sprint of the Early
Termination Charge in Subparagraph 5.2.
5.2 Service will be discontinued the first business day of the fourth month
after such notice of termination.
5.3 Carrier Transport Base Rates and Promotional Discounts are based on
Customer's agreement to purchase Service for the entire Term. It is difficult
if not impossible to calculate Sprint's loss if Customer terminates the
Agreement pursuant to Subparagraph 5.1 prior to the end of the Term.
Therefore, to compensate Sprint for such loss, and not as a penalty, Customer
shall pay Sprint an Early Termination Charge in the event of such termination.
The Early Termination Charge shall equal 50% of the sum of the Minimum
Commitment for each month remaining in the Term when Service is discontinued
pursuant to Subparagraph 5.1. The Early Termination Charge shall be paid
within 30 days after the notice provided pursuant to Subparagraph 5.1.
6. APPLICATION OF TARIFFS; INTERSTATE ADJUSTMENT.
6.2 Interstate and international Service shall be provided pursuant to
Tariff as supplemented by this Agreement. In the event of a conflict between
this Agreement and any Tariff, the Tariff shall control.
6.2 Intrastate Service is provided pursuant to Tariff in every respect.
Promotional Discounts will not apply to intrastate Service. An Interstate
Adjustment may be applied based on intrastate usage as provided in Attachment
D. The Interstate Adjustment shall be based on intrastate usage at the
Product Hierarchy Level and will equal the difference between (a) such usage
priced at Tariff less Tariff discounts and (b) such usage priced at the
Interstate Adjustment Rate in Attachment D less Discount One discounts. The
Interstate Adjustment for a given month shall not exceed interstate billing
for such month.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
6.3 Customer shall pay all Tariff charges including, without limitation,
fixed charges, feature charges, enhanced 800 charges, access facility charges,
installation and other non-recurring charges.
6.4 Sprint may modify or withdraw Tariffs from time to time, which may
include discontinuation of any Service without Sprint's liability.
7. RELATIONSHIP OF PARTIES. Neither this Agreement nor the provision of
Service creates a joint venture, partnership or agency between Sprint and
Customer. Customer is the service provider with respect to End Users. Sprint
is merely a supplier to Customer with no relationship to End Users.
8. USE OF NAME AND MARKS. This Agreement confers no right to use the name,
service marks, trademarks, copyrights, patents or CIC of either Party except
as expressly provided herein. Neither Party shall take any action which would
compromise the registered copyrights or service marks of the other.
Sprint's name is proprietary and nothing herein constitutes a general license
authorizing its use. Customer may not (a) promote or advertise Sprint's name
or capabilities to End Users or prospective End Users; (b) attempt to sell its
service using Sprint's name; or (c) represent to End Users or prospective End
Users that they would be Sprint customers or that they may obtain Sprint
service from Customer.
Sprint shall provide Customer written notice of a breach of this paragraph.
Customer shall use its best efforts to immediately cure such breach, advising
Sprint of its actions. If, in Sprint's opinion, Customer fails to effect a
cure within 30 days of Sprint's notice, then Sprint may, at its option,
terminate the Agreement pursuant to Subparagraph 4.2.
Sprint's provision of Network Extension Service may result in End Users being
notified by their LEC that Sprint is their designated PIC. Therefore, to
avoid confusion and potential "slamming" complaints, Sprint hereby authorizes
Customer to use Sprint's name under the following conditions to provide End
Users from whom Customer has obtained a PIC Authorization with a fulfillment
piece containing the following Notice (the "Notice"):
We want to affirm how ___ will provide your long distance service.
Although ___ will provide your invoice and customer service, we use major
national carriers to actually carry your long distance calls.
After subscribing to our service, you may receive a notice from your
local phone company which says that your long distance "Carrier of
Choice" is Sprint. _____ has selected Sprint as the long distance
network provider it will use to handle your calls. That selection was
based on your quality and price requirements. If you have any questions
about your order, please call our toll free customer service number, 1-
00-___-____.
If Customer subscribes to Sprint Express, calls placed by End Users to the
Sprint ITFS number will be answered "Sprint operator." This may cause
confusion if the End User does not know its calls are being carried on the
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Sprint network. Therefore, to avoid such confusion, Sprint hereby authorizes
Customer to provide End Users who use Sprint Express with a fulfillment piece
containing the following notice (the "Sprint Express Notice"): "International
call origination may be provided by a Sprint operator." Sprint may withdraw
consent to use the Sprint Express Notice upon 10 days written notice.
Customer shall obtain Sprint's prior written approval of any fulfillment piece
in which the Notice or the Sprint Express Notice will appear.
9. SERVICE. Services provided hereunder are described in Exhibit 2.
10. LEGAL COMPLIANCE; REMEDIES FOR NON-COMPLIANCE.
10.1 Customer represents and warrants that (a) it has obtained all licenses
and regulatory authority necessary to operate as contemplated herein and (b)
it will not submit an End User ANI for activation without obtaining and
maintaining a proper PIC Authorization.
10.2 If, in Sprint's opinion, Customer breaches this paragraph, Sprint may
(a) terminate this Agreement pursuant to Subparagraph 4.1(e), (b) reject End
User ANIs submitted by Customer for placement under its account, and/or (c)
discontinue Promotional Discounts. If Sprint elects option (b) or (c), it
will resume accepting ANIs and/or reinstate Promotional Discounts only after
Customer produces evidence satisfactory to Sprint that it has cured its
breach.
11. CUSTOMER RESPONSIBILITIES.
11.1 Customer shall not be relieved of any obligation hereunder by virtue
of the fact that Service is ultimately used by End Users.
11.2 Customer shall produce for Sprint's inspection, at Customer's expense,
any PIC Authorization within 48 hours after Sprint's oral or written request,
or within any shorter period required by a LEC or regulatory agency. If
Customer fails to comply with this subparagraph then Sprint may (a)
discontinue Promotional Discounts and/or (b) refuse to activate additional
ANIs under a Customer's account.
11.3 Customer shall reimburse Sprint for any charge assessed by a LEC for
processing a PIC request initiated by Customer and pay Sprint a PIC Assessment
Fee equal to 25% of such charge.
11.4 Customer shall be solely responsible for End User solicitation,
service requests, creditworthiness, customer service, billing and collection.
11.5 Customer shall be financially liable for usage generated by each End
User ANI activated by Sprint until such ANI is presubscribed to another IXC.
Customer may request Sprint to block Network Extension Service to an ANI upon
the End User's failure to pay Customer, subject to Customer's prior
certification to Sprint that it has given the End User any notice required by
law. Customer shall reimburse Sprint for expenses incurred to block an ANI.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
11.6 Customer shall be solely liable for amounts it cannot collect from End
Users, and billing adjustments it grants End Users, including adjustments for
fraudulent charges, directory assistance or any other form of credit.
11.7 Customer shall comply with Sprint's network interface procedures when
it orders its own access facilities.
12. SERVICE ACTIVATION. Sprint will use reasonable efforts to provide
switched Service within 15 days, and dedicated Service within 30 days,
following Customer's order, or the requested delivery date, whichever is
later. These deadlines will be extended by the time it takes to address
activation errors or obtain from Customer a complete and accurate order or PIC
Authorization. Customer shall reimburse Sprint for LEC imposed fees resulting
from a request to expedite Service.
13. PRICING; FORWARD PRICING; GENERAL CONDITIONS.
13.1 Pricing. Resale Solutions Base Rates and Promotional Discounts are
contained in the Attachments hereto.
13.2 Prices in Lieu of Other Discounts. Resale Solutions Base Rates and
Promotional Discounts are extended in lieu of any other Tariff or contractual
discount, special pricing, or discount term plan. Discounts upon discounts
are only permitted if expressly provided for herein.
13.3 Prices Contingent on Performance. Resale Solutions Base Rates and
Promotional Discounts are contingent on Customer's full performance of all
terms of the Agreement. If Customer fails to pay the undisputed portion of an
invoice pursuant to Paragraph 17, all Service for which payment is past due
may, at Sprint's option, be priced at Resale Solutions Base Rates.
13.4 Per Minute Charges. Resale Solutions Base Rates are invoiced based on
Per Minute Charges utilizing the Rate Periods and Billing Increments in
Attachment B.
13.5 Non-Bell Switched Origination, Termination and 800 Origination
Charges. Customer shall pay the charges specified in Attachment B for each
originating minute and each terminating minute of an interstate call that
originates and/or terminates in a Non-Bell Service Area.
13.6 Switched Origination, and Termination Charges. Customer shall pay the
charges specified in Attachment B for each originating minute and each
terminating minute of an interstate call.
13.7 Promotional Pricing Levels. Customer will receive Discount One and
Discount Two discounts applied only to Rate Elements as provided in
Attachments C and D.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
13.8 Forward Pricing. As a transition to the pricing hereunder, Discount
Two discounts may be based for a period of time on the greater of Customer's
actual Discount Two Monthly Volume of Service or a specified Forward Pricing
Volume of Service. The Forward Pricing Volume of Service and the period
during which it may be applied are specified in Attachment A.
13.9 Pricing Contingent on Primary Carrier Status. Pricing hereunder is
contingent on Customer utilizing Sprint as its Primary Carrier for the Primary
Carrier Services listed in Attachment A.
If 800 Service is a Primary Carrier Service then Customer shall (a) designate
Sprint as its Primary Carrier in the 800 Service Management System database
for all interstate 800 traffic that is not originated directly by Customer and
(b) maintain access facilities sufficient to send at least 99% of its traffic
to Sprint with no more than 2% blockage during the peak busy hour of
Customer's average business day.
If Resale Connect One Plus is a Primary Carrier Service then 90% of all End
User ANIs under Customer's control shall be placed PICed to Sprint during the
Term.
If Resale Direct Extension is a Primary Carrier Service then 90% of all
Dedicated Access End Users under Customer's control shall be placed on the
Sprint network during the Term.
If Resale Direct is a Primary Carrier Service then Customer shall maintain
access facilities sufficient to send to Sprint at least 99% of the traffic
Customer does not terminate itself.
Customer shall produce, within 30 days following Sprint's request, evidence
acceptable to Sprint that it is in compliance with this subparagraph. Failure
to maintain Sprint as Primary Carrier on any Primary Carrier Service will
result in Service being provided hereunder at Carrier Transport Base Rates for
the remainder of the Term. Customer may select a temporary back-up carrier
for any period during which it is affected by a Sprint network outage.
14. SURCHARGES.
14.1 Minimum Commitment Surcharge. Any month Customer fails to meet the
Minimum Commitment stated on Attachment A, Customer shall pay a surcharge for
Service provided during such month equal to 25% of the difference between the
Minimum Commitment and Customer's Net Usage. The Minimum Commitment shall not
relieve Customer of any credit or security obligation hereunder.
14.2 LEC Cap Surcharge. Any month Customer exceeds the Maximum Non-Bell
Traffic Percentage specified in Attachment B for any Service type, Customer
shall pay Sprint the per minute surcharge for such Service specified in
Attachment B for each minute above the Maximum Non-Bell Traffic Percentage
that originates from or terminates to a Non-Bell Service Area. Maximum
Non-Bell Traffic Percentages will be calculated independently for originating
and
terminating minutes at each Product Hierarchy Level.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
14.3 Minimum Average Time Requirement Surcharge. Any month Customer fails
to equal or exceed the Minimum Average Time Requirement specified in
Attachment B for Services specified in Attachment B, then Customer shall pay
Sprint a per minute surcharge on such usage equal to (a) the per minute
surcharge specified in Attachment B multiplied by (b) the difference between
(i) the number of minutes the Service was used and (ii) the number of calls
using the Service multiplied by the Minimum Average Time Requirement. This
surcharge shall be calculated at each Product Hierarchy Level.
14.4 Noncomplete Call Structure. Any month Customer exceeds the Maximum
Noncomplete 800 Call Percentage for interstate Resale Direct Toll Free, Resale
Direct Toll Free Extension, and/or interstate Resale Connect Toll Free traffic
as stated on Attachment B, Customer shall pay Sprint a surcharge equal to the
amount stated in Attachment B for each Noncomplete 800 Call in excess of the
Maximum Noncomplete 800 Call Percentage. This surcharge shall be calculated
at each Product Hierarchy Level.
14.5 Minimum Port Usage Surcharge. Any month Customer fails to equal or
exceed the Minimum Port Usage per Active Resale DirectPort as stated on
Attachment A, Customer shall pay Sprint a surcharge on its Ultra WATS usage
equal to the difference between (a) Customer's actual Net Usage for Resale
Direct Service and (b) the Minimum Port Usage multiplied by the total number
of Active Resale Direct Ports. This surcharge shall be calculated at each
Product Hierarchy Level.
15. SERVICE CHARGES. Customer shall pay Sprint a $25 service charge for
each End User ANI or 800 number Customer submits for activation (a) that
Sprint determines lacks a proper PIC Authorization or (b) that requires Sprint
to disconnect or transfer such ANI or 800 number from Sprint's data base
before placing it within Customer's CTIS hierarchy. However, the service
charge provided for in 15(b) will be waived if such End User ANIs, or 800
numbers, do not exceed 15% of the total ANIs, or 800 numbers, submitted by
Customer during the previous 90 days.
16. SPECIAL RATE ADJUSTMENTS.
16.1 Sprint may, after 60 days notice to Customer, adjust the price of
Service provided hereunder to reflect changes in international net settlements
or currency exchange rates.
16.2 Sprint will adjust the price of Service provided in Paragraph 13.6
bi-annually, on the first day of January and July. The adjustment will
reflect
changes in statewide average per-minute originating and Terminating interstate
LEC access charges imposed on Sprint.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
16.3 Customer may terminate this Agreement pursuant to Paragraph 4.3 if (a)
Customer establishes that statewide average per-minute originating and
terminating access charges in a given state have decreased more than five
percent during the previous six months and (b) Sprint neither (i) adjusted the
price of Service to reflect a decrease in access charges at any time during
the previous six months or (ii) adjusted the price of Service to reflect a
decrease in access charges within 60 days following the date Customer
demonstrates that such charges have decreased.
17. PAYMENT FOR SERVICE.
17.1 Payment Obligation. Customer shall pay Sprint for Service pursuant to
the terms of this Agreement and applicable Tariffs.
17.2 Call Detail. Sprint will provide Customer with a call detail media
containing Customer's Service usage. Sprint may, at its option, and without
liability to Customer, modify the format of the call detail media following 30
days written notice to Customer.
17.3 Payment Procedure. Sprint will invoice Customer monthly for Service
provided hereunder. Invoices shall be due and payable upon receipt.
Undisputed charges for Service that are not paid within 30 days after
Customer's receipt of the invoice shall be past due. Interest will be charged
on past due amounts beginning the 31st day following Customer's receipt of the
invoice at a rate equal to the lesser of 18% per annum or the maximum rate
allowed by law.
The price of Service is exclusive of applicable taxes. Resale Solutions Base
Rates and Promotional Discounts are contingent on Customer providing Sprint
with certificates from appropriate taxing authorities exempting Customer from
taxes that would otherwise be invoiced hereunder.
17.4 Billing Disputes. If Customer in good faith disputes any invoiced
amount, it shall submit to Sprint, within 30 days following receipt of the
invoice, full payment of the undisputed portion of the invoice and written
documentation identifying and substantiating the disputed amount. If the
Parties, in good faith, cannot resolve the dispute within a reasonable period
of time, then the dispute shall be settled by arbitration pursuant to
Paragraph 22.
18. PAYMENT SECURITY. Provision of Service is contingent on credit
approval by Sprint. Upon request by Sprint, Customer shall provide Sprint
with financial statements, or other indications of Customer's financial
circumstances. If Customer's financial circumstances or payment history is or
becomes unacceptable to Sprint, then Sprint may require a deposit, irrevocable
letter of credit or other form of security acceptable to Sprint. Customer's
failure to provide such security within 20 days following Sprint's request
shall constitute a default under Subparagraph 4.2.
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19. INDEMNIFICATION. Each Party (as "Indemnitor") shall indemnify, defend
and hold harmless the other Party (as "Indemnitee") from and against any and
all liabilities, costs, damages, fines, assessments, penalties and expenses
(including reasonable attorney's fees) resulting from (a) breach of any
provision in this Agreement by Indemnitor, or its employees or agents, or (b)
any misrepresentation or illegal act of Indemnitor, its employees or agents,
arising out of the Indemnitor's performance hereunder.
Customer shall indemnify, defend and hold Sprint harmless from and against any
and all liabilities, costs and damages (including reasonable attorney's fees)
resulting from any claim arising out of: (i) use of Service by Customer to
extend its service to End Users; (ii) use of Service by Customer or End Users;
(iii) libel, slander, or patent or trademark infringement arising from the
combination or use of Service with Customer provided service or facilities; or
(iv) Customer's marketing, advertising, sales or promotional activities.
20. LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING
LOSS OF PROFITS, LOSS OF CUSTOMERS OR GOODWILL ARISING FROM THE RELATIONSHIP
OR CONDUCT OF BUSINESS HEREUNDER.
21. WARRANTIES. WARRANTIES AND REMEDIES SET FORTH IN THE AGREEMENT AND
SPRINT'S TARIFFS ARE THE ONLY WARRANTIES AND REMEDIES WITH RESPECT TO THE
SERVICE, AND ARE IN LIEU OF ANY OTHER WARRANTY, WRITTEN OR ORAL, STATUTORY,
EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
22. ARBITRATION. Any dispute arising out of or relating to the Agreement
will be finally settled by arbitration in accordance with the rules of the
American Arbitration Association. The arbitration will be governed by the
United States Arbitration Act, 9 U.S.C. Sec. 1, et seq., and judgment upon the
award rendered by the arbitrator(s) may be entered by any court with
jurisdiction. The arbitration will be held in the Kansas City, MO
metropolitan area.
23. NOTICES. Notices, requests or other communications (excluding
invoices) hereunder shall be in writing and sent by certified mail addressed
as follows:
If to Sprint: Sprint Communications Company
5420 LBJ Freeway, Suite 1700
Dallas, TX 75240
Attention: Vice President-Wholesale Services
With copy to: Sprint Communications Company
8140 Ward Parkway
Kansas City, MO 64114
Attention: Vice President Law-Marketing/Sales
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If to Customer: ______________________________________
______________________________________
______________________________________
Attention: _____________________________
24. ASSIGNMENT. Neither this Agreement nor any right or obligation
hereunder may be assigned or delegated to any other entity without the prior
written consent of the other Party, which consent shall not be unreasonably
withheld.
25. EXCUSABLE DELAY. In the event of an Excusable Delay the performance
obligations of the Parties hereunder shall be suspended and the Term shall be
extended for a period of time equal to the length of such delay; provided,
however, the affected Party shall promptly notify the other Party of the
nature of the delay and the estimated time that it will continue. If an
Excusable Delay continues for more than 90 days and has a material adverse
impact on the other Party, such other Party may, at its option and upon
written notice to the other Party, terminate this Agreement without liability
other than payment for Service provided prior to termination. Notwithstanding
the foregoing, neither Party may invoke this paragraph with regard to any
event listed in Paragraph 4 or to delay performance of Paragraphs 17 or 18.
26. CAPTIONS. Captions of the paragraphs and subparagraphs herein are for
convenience only, are not part of the Agreement and shall not define or limit
any of the Agreement's terms.
27. CHOICE OF LAW. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Kansas.
28. RULES OF CONSTRUCTION. No rule of construction requiring
interpretation against the draftsman shall apply in the interpretation of this
Agreement.
29. ENTIRE AGREEMENT. This Agreement, together with the attached Exhibits
and Attachments, represents the entire agreement of the Parties with respect
to the subject matter hereof and supersedes all other agreements between the
Parties relating to the Service.
30. MODIFICATION OF AGREEMENT. This Agreement, including its Exhibits and
Attachments, may be amended, modified or supplemented only by a separate
written document executed by both Parties with the formality of this
Agreement.
31. WAIVER OF TERMS. No term or provision herein shall be waived, and no
breach or default excused, unless such waiver or consent is in writing and
signed by the Party to which it is attributed. No consent by a Party to, or
waiver of, a breach or default by the other, whether express or implied, shall
constitute a consent to, or waiver of, any subsequent breach or default.
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32. PARTIAL INVALIDITY. If any provision of this Agreement shall be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate or render the Agreement unenforceable, but rather the Agreement
shall be construed as if not containing the invalid or unenforceable
provision. However, if such provision is an essential element of this
Agreement, the Parties shall promptly attempt to negotiate a substitute
thereof.
33. CUMULATIVE REMEDIES. Except as otherwise provided herein, the
remedies provided for in this Agreement are in addition to any other remedies
available at law or in equity.
34. EXPIRATION OF OFFER. Sprint's offer to enter into this Agreement
shall be withdrawn if the Agreement is not executed by both Parties within 45
days after the Proposal Date stated on Attachment A.
EXECUTED and made effective as provided herein.
________________________ SPRINT COMMUNICATIONS COMPANY L.P.
(Customer)
By: _____________________ By: ___________________________________
R. Michael Franz
Title: ____________________ President, Wholesale Services Group
Date: ____________________ Date: __________________________________
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EXHIBIT 1
DEFINITIONS
Capitalized terms appearing in bold print in the Agreement, its Exhibits and
Amendments are defined as follows:
"Active Resale Direct Port" means a Customer access port (DS-0 equivalent)
connected to Sprint and activated as Resale Direct Service.
"ANI" means a calling telephone number identification which is forwarded to an
IXC by a LEC as a call is placed.
"Associated Location" means a physical premise to or from which Sprint
provides Service which is (a) owned or leased by Customer; (b) occupied by a
business in which Customer has an equity interest of at least a 25%; or (c)
occupied by a franchisee of Customer.
"Attachment" means a supplement attached to, and a part of, the Agreement.
"Billing Increment" means a Tariffed billing increment, unless otherwise
stated in Attachment B.
"Calling Card" means a card issued to an End User in Customer's name
containing an authorization code that the End User may use to originate calls
over Sprint's network as provided in Exhibit 2.
"Resale Connect FONcard Services" means a Service consisting of a Sprint
authorization code incorporated into Customer's Calling Card which, together
with Customer's service enhancements, is provided to End Users for use in
originating calls over Sprint's network as provided in Exhibit 2.
"Resale Solutions Base Rates" means the prices provided herein for Resale
Solutions Service.
"Resale Solutions Service" means switched Service purchased under the
Agreement and invoiced under CTIS.
"CIC" means an IXC carrier identification code.
"CTIS" means Sprint's Carrier Transport Invoicing System.
"Day Rate Period" means the Tariff day rate period unless otherwise specified
herein.
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"Discount One" means a Rate Element specific discount that (1) is based on
Customer's Discount One Monthly Volume of Service and (2) is applied to usage
at the Service Hierarchy Level that has been priced at Resale Solutions Base
Rates.
"Discount One Monthly Volume of Service" means the volume of Customer's
monthly usage, at each Product Hierarchy Level, for a specific Rate Element
priced at Resale Solutions Base Rates.
"Discount Rate Period" means the Tariff international discount rate period
unless otherwise specified herein.
"Discount Three" means a Rate Element specific discount that (1) is based on
Customer's Discount Three Monthly Volume of Service and (2) is applied at the
Product Hierarchy Level or the Service Hierarchy Level to interstate or
international usage to the LATAs or countries specified in Attachment C.
"Discount Three Monthly Volume of Service" means the volume of Customer's
monthly usage, at the Product Hierarchy Level or Service Hierarchy Level, of
interstate or international minutes to the specific LATAs or countries
identified in Attachment A and priced based on the usage levels and Rate
Periods specified in Attachment C.
"Discount Two" means a Rate Element specific discount that (1) is based on
Customer's Discount Two Monthly Volume of Service and (2) is applied to usage
at the Service Hierarchy Level that has been priced at Resale Solutions Base
Rates less Discount One discounts.
"Discount Two Monthly Volume of Service" means the volume of Customer's
monthly usage, at the Master Hierarchy Level, of all Resale Solutions
Services, including directory assistance Services, priced at Resale Solutions
Base Rates after the application of Discount One discounts, but prior to the
application of Discount Two discounts. Discount Two Monthly Volume of Service
does not include Resale Solutions Service charges that are not based on usage,
Clearline Service charges, Private Line charges, any charge associated with
access (dedicated or non-dedicated), facilities charges, any usage related
fixed charge, any non-recurring charge such as installation charges, taxes,
surcharges, transfer fees, or interest.
"Early Termination Charge" means the charge imposed for terminating the
Agreement prior to expiration of the Term as provided in Paragraph 5 thereof.
"Economy Rate Period" means the Tariff international economy rate period.
"End User" means a customer of Customer to whom Sprint extends Network
Extension Service at a Non-Associated Location.
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"Evening Rate Period" means the Tariff evening rate period unless otherwise
specified herein.
"Excusable Delay" means any event that prevents a Party from performing its
obligations hereunder and that is beyond the reasonable control and without
the fault or negligence of such Party.
"Exhibit" means a supplement attached to, and a part of, the Agreement.
"Forward Pricing Volume of Service" means the volume of service specified in
Attachment A upon which Discount Two discounts may be based as provided in
Subparagraph 13.8 of the Agreement.
"Interstate Adjustment" means the adjustment under Subparagraph 6.2 to the
invoice for interstate usage that is based on the level of intrastate usage.
"Interstate Adjustment Rate" means the rate identified in Attachment D that is
used to determine the Interstate Adjustment as provided in Subparagraph 6.2.
"IXC" means interexchange carrier.
"LEC" means local exchange carrier.
"Master Hierarchy Level" means billing hierarchy level 1.
"Maximum Noncomplete 800 Call Percentage" means, for each month, for each
Service type, the ratio, expressed as a percentage, of (i) the aggregate
number of Noncomplete 800 Calls during such period divided by (ii) the
aggregate number of 800 calls during such period. This percentage shall be
calculated at each Product Hierarchy Level.
"Maximum Non-Bell Traffic Percentage" means, for each month, the ratio,
expressed as a percentage, of (i) the number of minutes during such period
that originate from, or terminate in, a Non-Bell Service Area, divided by (ii)
the total number of minutes during such period. Maximum Non-Bell Traffic
Percentages will be calculated independently for originating and terminating
minutes at the Product Hierarchy Level.
"Minimum Average Time Requirement" means the minimum average call duration,
expressed in minutes, for Services as specified in Attachment B. Minimum
Average Time Requirement calculations will be made at each Product Hierarchy
Level.
"Minimum Commitment" means the minimum monthly usage commitment stated on
Attachment A. The calculation to determine whether Customer has met the
Minimum Commitment shall be based on Customer's invoiced Net Usage.
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"Minimum Port Usage" means the minimum Net Usage for Resale Direct Service
stated on Attachment A that Customer shall generate per Active Resale Direct
Port.
"Network Extension Service" means Service that Sprint extends to the
Non-Associated Location of an End User.
"Net Usage" means the monthly amount invoiced for use of a Service net of
Discount One, Discount Two and Discount Three discounts. Net Usage includes
the following as they apply to particular Services: monthly per-minute usage
charges invoiced under the Agreement; route advance charges; real time ANI
charges; switched origination and termination charges; directory assistance
charges; Minimum Average Time Requirement Surcharges; Noncomplete Call
Surcharges; FONcard surcharges; and LEC Cap Surcharges.
"Night/Weekend Rate Period" means the Tariff night/weekend rate period unless
otherwise specified herein.
"Noncomplete 800 Call" means an attempted Resale Connect Toll Free, Resale
Direct Toll Free, or Resale Direct Toll Free Extension call that is not
completed to the called number for any reason.
"Non-Associated Location" means any physical premise to or from which Sprint
provides Service that is not an Associated Location.
"Non-Bell Service Area" means the geographic service area of any "independent"
LEC which is not a Bell Operating Company.
"Off Peak Rate Period" means (a) the Evening Rate Period and the Night/Weekend
Rate Period for interstate traffic and (b) the Discount Rate Period and
Economy Rate Period for international traffic.
"Peak Rate Period" means (a) the Day Rate Period for interstate traffic and
(b) the Standard Rate Period for international traffic.
"Per Minute Charge" means the per minute charge for service as set forth in
Exhibit C based on Rate Periods and Billing Increments stated in Attachment B.
"PIC" means primary interexchange carrier.
"IC Authorization" means an End User's selection of a PIC that meets the
requirements of federal and state law.
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"Primary Carrier" means the IXC designated by Customer as its first routing
choice and primary overflow carrier.
"Primary Carrier Service" means the Service specified in Attachment A for
which Sprint shall be Customer's Primary Carrier.
"Product Hierarchy Level" means the fifth level in the Customer billing
hierarchy, and is directly above the Service Hierarchy Level which ties like
Services together for purposes of reporting. Each Product Hierarchy Level is
considered independently for calculation and application of Discount One, LEC
Cap Surcharge, Minimum Average Time Requirement Surcharges, Noncomplete 800
Call Surcharges and Minimum Port Usage Surcharges.
"Promotional Discounts" is a collective reference to Discount One, Discount
Two, Discount Three and Interstate Adjustments.
"Proposal Date" means the date indicated on Attachment A that the Agreement is
offered by Sprint to Customer.
"Proprietary Information" means (a) written information of a Party which is
clearly and conspicuously marked as proprietary or confidential or which is
accompanied by written notice that such information is confidential, or (b) a
verbal communication which is subsequently confirmed in writing to the other
Party as confidential or proprietary information which (i) is maintained in
confidence and secrecy by the disclosing Party, (ii) is valuable to the
disclosing Party because of such confidence or secrecy, and (iii) is subject
to the disclosing Party's reasonable efforts to maintain such confidentiality
and secrecy. Proprietary Information shall not include information which (1)
is at any time in the public domain other than through wrongdoing on the part
of an entity owing a duty of confidentiality to the Disclosing Party, (2) is
within legitimate possession of the receiving Party without obligation of
confidentiality, (3) is lawfully received from a third party having rights
therein without restriction of the right to disseminate the information, (4)
is independently developed without breach of any obligation of confidentiality
through parties without access to or knowledge of such Proprietary
Information, (5) is disclosed with prior written approval of the other Party,
(6) is transmitted after the disclosing Party has received written notice from
the receiving Party that it does not desire to receive further Proprietary
Information, or (7) is obligated to be produced under order of a court of
competent jurisdiction.
"Rate Element" means a jurisdictional element of the rate for a particular
Service. For example, Resale Direct rates consist of separate Rate Elements
for interstate, intrastate, Canada, Mexico domestic, Mexico international,
other international, and directory assistance usage.
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"Rate Periods" is a collective reference to the Day Rate Period. Discount
Rate Period, Economy Rate Period, Evening Rate Period, Night/Weekend Rate
Period, Off Peak Rate Period, Peak Rate Period, and Standard Rate Period.
"Service" means the service identified in the Exhibits and Attachments that
Sprint shall provide and Customer shall purchase hereunder.
"Service Hierarchy Level" means the sixth and lowest level in the Customer's
billing hierarchy.
"Standard Rate Period" means the Tariff standard rate period for international
Service unless otherwise specified herein.
"Tariff(s)" means any applicable tariff filed by Sprint with the Federal
Communications Commission for interstate or international Service (including
Tariff revisions) and/or any applicable tariff filed with a state regulatory
commission for intrastate Service. Should Sprint no longer file Tariffs in
order to provide Service, then Tariff shall mean the standard rate tables and
terms and conditions that replace such Tariffs.
"Term" means the term of the Agreement as provided in Paragraph 3 thereof.
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EXHIBIT 2
SERVICES
The following Services are provided pursuant to the Agreement:
1. OUTBOUND SERVICE.
1.1 RESALE DIRECT and RESALE DIRECT EXTENSION. Resale Direct and Resale
Direct Extension is provided hereunder for switched outbound traffic with
interstate or international termination that originates over dedicated special
access (DS-1 or DS-3) circuits.
1.2 RESALE DIRECT. Resale Direct is Service subscribed to, and paid for,
by Customer that originates from an Associated Location. Carrier Ultra WATS
may be obtained only by a carrier with its own CIC.
1.3 RESALE DIRECT EXTENSION. Resale Direct Extension is Service subscribed
to, and paid for, by Customer but connected directly to a Non-Associated
Location.
1.4 RESALE CONNECT ONE PLUS. Resale Connect One Plus is provided hereunder
for switched access outbound traffic utilizing Feature Group D protocol having
interstate or international termination.
2. TOLL FREE SERVICE.
2.1 RESALE DIRECT TOLL FREE and RESALE DIRECT TOLL FREE EXTENSION. Resale
Direct Toll Free and Resale Direct Toll Free Extension is provided hereunder
for Customer switched inbound traffic with interstate or international
origination that terminates over dedicated special access (DS-1 or DS-3)
circuits.
2.2 RESALE DIRECT TOLL FREE. Resale Direct Toll Free is Toll Free Service
subscribed to, and paid for, by Customer that terminates to an Associated
Location. Resale Direct Toll Free may be obtained only by a carrier with its
own CIC.
2.3 RESALE DIRECT TOLL FREE EXTENSION. Resale Direct Toll Free Extension
is Toll Free Service subscribed to, and paid for, by Customer but connected
directly to an Non-Associated Location.
2.4 RESALE CONNECT TOLL FREE. Resale Connect Toll Free is provided
hereunder for switched inbound traffic, terminating on Feature Group D
protocol, having interstate or international origination.
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2.5 INTERNATIONAL TOLL FREE ORIGINATION. International Toll Free Service
("ITFS") shall be provided subject to availability. Because of a limited
quantity of Toll Free numbers in some countries, Sprint may, as it deems
appropriate, after 30 days notice, disconnect any ITFS number which does not
generate at least 60 minutes of usage during any period of three consecutive
months. ITFS traffic must be terminated directly in the continental U.S. If
reorigination occurs, ITFS traffic is subject to foreign PIT interruption and
is beyond Sprint's control. ITFS Service shall be provided pursuant to
Tariff, including rates, discounts and Toll Free number charges, unless
otherwise provided herein.
3. FONVIEW. FONview is not available for Service billed under CTIS.
4. DIRECTORY ASSISTANCE
4.1 INTERSTATE. Interstate directory assistance provided hereunder must
have a domestic origination over Customer's circuits. Sprint may modify
directory assistance prices provided in the Agreement to reflect changes in
LEC directory assistance charges.
4.2 INTERNATIONAL. International directory assistance is provided pursuant
to Tariff. International directory assistance must have a domestic
origination over Customer's circuits and request numbers must be located in
the countries listed in Sprint's FCC Tariff 1, Section 2.1. International
directory assistance may be obtained by calling a Sprint operator who will
request the number from the appropriate country's international operator.
Sprint may modify directory assistance prices provided in the Agreement to
reflect changes in directory assistance charges of other countries.
4.3 TOLL-FREE DIRECTORY LISTINGS. Customer's Toll Free numbers shall not
be eligible for any toll-free directory listing at Sprint's expense.
5. RESALE CONNECT FONCARD SERVICE.
5.1 Resale Connect FONCard Service consists of an authorization code issued
by Sprint which Customer will incorporate into a Calling Card. The Calling
Card, together with Customer provided service enhancements, will be provided
in Customer's name to End Users who may use the card to originate calls over
Sprint's network in the contiguous U.S. and selected countries. Sprint will
transport Customer's Calling Card traffic with the same quality as Sprint
FONcard traffic.
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5.2 Availability. Resale Connect FONCARD Service is provided subject to
(a) availability and compatibility of facilities, (b) Customer fulfillment,
and (c) 800 access origination, which Customer agrees may be withheld by
Sprint in certain LATAs because of facility constraints.
5.3 Activation. Sprint will provide Customer with activated authorization
codes to be imprinted on Customer's Calling Cards. The codes will be provided
within 30 days following Customer's request and notice to Sprint of Customer's
fulfillment vendor.
5.4 Toll Free Access. Customer may elect Calling Card access to a Sprint
operator using either a "Generic" or "Branded" Toll Free access number. The
operator response to a Generic Toll Free call will be similar to: "Long
Distance, may I help you?" Calls to a Branded access number will be answered
by an operator assigned exclusively to Customer. Operator response to Branded
access calls will be similar to: "(Customer) Long Distance Operator."
Customer shall pay a non-recurring charge for establishing account access as
provided in Attachment B.
5.5 Service Representative. Sprint will designate a representative to
provide Customer service. This representative will not be available for
direct contact by End Users.
5.6 Non-Emergency Deactivation. Sprint will advise Customer of the process
for requesting non-emergency deactivation of an authorization code. Sprint
may periodically deactivate unused authorization codes to minimize potential
fraud. Sprint will notify Customer of any such deactivation. Emergency
deactivation is provided for in Subparagraph 5.9 of this Attachment.
5.7 Remedy for Service Failure. Notwithstanding anything to the contrary
in Subparagraph 4.1(e) of the Agreement, Customer's sole and exclusive remedy
for failure of a particular Resale Connect FONcard Service shall be
discontinuation of the affected Service subject to Paragraph 25 of the
Agreement.
5.8 Customer Obligations. Customer shall, at Customer's expense: (a)
design, manufacture and distribute its Calling Cards; (b) solicit End Users in
its own name in compliance with Paragraph 8 of the Agreement; (c) address End
User service requests; (d) determine End User creditworthiness; (e) define its
relationship with End Users relative to its Calling Card service by tariff or
contract; (f) provide Calling Card fulfillment using a bonded fulfillment
vendor; (g) supply its fulfillment vendor with necessary End User information;
(h) maintain its own End User data base; (i) provide End User customer
service, billing and collection; (j) maintain its own End User customer
service number, which shall be printed on each Calling Card; (k) establish
internal Calling Card management procedures; (l) monitor for fraud and code
abuse; and (m) cooperate and interface with Sprint to prevent fraud or code
abuse as provided herein.
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Customer shall provide Sprint with all order authorizations, service
applications and information that Sprint requires to establish and maintain
Resale Connect FONcard Service and proper invoicing.
Customer shall be liable for (a) all usage charged to an activated
authorization code after the Code is provided to Customer or its agent, (b)
non payment by End Users, and (c) billing adjustments granted to End Users as
provided in Subparagraph 11.6 of the Agreement.
Customer shall indemnify and hold Sprint harmless from any claim or damages
resulting from Sprint's deactivation of an authorization code at Customer's
request.
5.9 Code Abuse; Fraud; Emergency Deactivation. Sprint and Customer will
cooperate to deter Calling Card fraud and code abuse. Sprint will monitor
usage of Customer Calling Cards to detect fraud or code abuse in the same
manner that it monitors FONcard usage of its own customers. This activity
will not create any liability on the part of Sprint resulting from code abuse
or fraud. Customer shall be liable for all usage charged to an activated
authorization code that results from fraud or code abuse.
Sprint will notify Customer of (a) the process Customer may use to obtain
emergency deactivation of a lost or stolen Calling Card and (b) the process
Sprint will use to notify Customer of suspected fraud or code abuse.
Customer shall maintain a 7 day per week, 24 hour per day, contact that Sprint
will immediately notify if fraud or code abuse is suspected. Customer shall
advise Sprint within 30 minutes after receiving such notice whether it wants
the authorization code deactivated. If Sprint is unable to reach Customer's
contact, or if Customer fails to respond to Sprint's notice within 30 minutes,
Sprint may, in its discretion, deactivate the authorization code and advise
Customer of its actions. Sprint shall incur no liability for such
deactivation.
Sprint shall be liable for calls charged to an authorization code after a
period of 4 hours following an appropriate emergency deactivation request.
Requests for credit pursuant to this subparagraph shall be supported by
appropriate documentation. Sprint will investigate and, in its discretion,
either approve or reject such requests. Notwithstanding anything in Paragraph
18 of the Agreement, the amount of any credit request under this subparagraph
shall not be deducted as a disputed charge prior to payment of an invoice.
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Attachment A-1
A.3. Term of Agreement: 12 months.
A.13.8. Forward Pricing - Forward Pricing Volume of Service
Not applicable
A.13.9. Primary Carrier Requirement. Customer shall utilize Sprint as its
Primary Carrier for the following Primary Carrier Services
Not applicable
A.14.1. Minimum Commitment:
Carrier Transport Monthly Carrier Transport Monthly
Months Net Usage Commitment+ International
------ ----------------------- Net Usage Sub-commitment
------------------------
1-6 * *
7-12 * *
+Upon achieving * in Cumulative Carrier Transport Net
Usage, no Carrier Transport Monthly Net Usage Commitment will be
required. Upon achieving * in Cumulative International
usage, no International and Sub-commitment will be required.
A.14.5. Minimum Port Usage: * Minimum Net Direct Usage Per Port
Promotional ACF/COC/EFC Charges
All ACF Charges will be per applicable tariff.
Monthly recurring COC charges will be * per port.
Monthly recurring EPC charges will be * per port when Customer
utilizes Sprint's entrance facilities.
*Confidential treatment requested. The redacted material has been separately
filed with the Commission
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Attachment A-2
A.14.6 International Forecast Surcharge. To enable Sprint to adequately
forecast demand for international capacity, Customer must provide
Sprint with a forecast of projected usage (referred to as the
"International Usage Forecast") to any country to which Customer
anticipates generating more than * MOUs during any month
(referred to as a "High Usage Country").
Sprint reserves the right to impose a monthly surcharge on usage to
each High Usage Country equal to * for each MOU(s) above *
MOUs to such country if Customer does not submit an International
Usage Forecast, or (b) above * of the usage to such country that
is forecasted in Customer's International Usage Forecast. Sprint
will give Customer at least * days written notification prior to
imposing the surcharge.
During the Term of Agreement the Customer may submit in writing an
amended International Usage Forecast showing any increase in
anticipated usage. Sprint shall have * days to review
the amendment and notify Customer in the event any of the increased
usage projections exceed Sprint's network capacity to a particular
country. As part of said notification, for each country, Sprint
shall inform Customer of how many MOUs are available to the
Customer on Sprint's network.
If during the term of the Agreement, Sprint's network is not able
to handle the traffic volume to any country as agreed to in
response to Customer's International Usage Forecast, then the
Minimum Usage Commitments shall be proportionally reduced as agreed
to in writing by both parties.
A.34. Proposal Date: October 31, 1996
International Usage Forecast
Country Minutes/Month
------- -------------
*Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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Attachment B-1
B.13.4. Billing Increments/Usage Periods for Per Minute Charges.
Service will be invoiced based on Per Minute Charges utilizing
Tariffed Rate Periods and Tariffed Billing Increments, unless
specifically set forth below:
<TABLE>
<CAPTION>
Initial Additional
Service Type/ Billing Increment Billing Increment
Rate Element (sec) (sec)
<S> <C> <C>
Interstate Direct & Direct Extension * *
Canada Term, Direct & Direct Extension * *
Mexico US Element Direct &
Direct Extension * *
Mexico Int'l. Element Direct
& Direct Extension * *
Other Int'l Direct & Direct Extension * *
Interstate Connect One Plus * *
Canada Term. Connect One Plus * *
Mexico US Element Connect One Plus * *
Mexico Int'l. Element Connect One Plus * *
Other Int'l Connect One Plus * *
Interstate Direct Toll Free &
Direct Toll Free Ext. * *
Canada Orig. Direct Toll Free &
Direct Toll Free Ext. * *
Mexico Direct Toll Free &
Direct Toll Free Ext. * *
Other Int'l Direct Toll Free &
Direct Toll Free Ext. * *
Caribbean Direct Toll Free &
Direct Toll Free Ext. * *
Interstate Connect Toll Free * *
Canada Orig. Connect Toll Free * *
Mexico Connect Toll Free * *
Other Int'l. Connect Toll Free * *
Caribbean Connect Toll Free * *
Interstate Connect FONcard * *
</TABLE>
*Confidential treatment requested. The redacted material has been separately
filed with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
B.13.5. Non-Bell Switched Origination/Termination/Toll Free Origination
Charge. Customer shall pay the following charges for each minute of
a switched interstate call originating or terminating in a Non-Bell
Service Area:
Not Applicable.
B.13.6. Switched Origination/Termination/Toll Free Origination Charge.
Customer shall pay the following charges for each minute of a
switched interstate:
Direct - The Termination Charge on Attachment B-3 will be
applied to all terminating minutes
Direct Toll Free - The Origination Charge on Attachment B-3
will be applied to all originating minutes
Connect One Plus - The Termination Charge on Attachment B-3
will be applied to all minutes, and the Origination Charge on
Attachment B-3 will be applied to all minutes
Connect Toll Free - The Termination Charge on Attachment B-3
will be applied to all minutes, and the Origination Charge
on Attachment B-3 will be applied to all minutes
Connect Foncard - Not Applicable
Direct Extension - Not Applicable
Direct Toll Free Extension - Not Applicable
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment B-2
<TABLE>
<CAPTION>
B.14.2. LEC CAP MAXIMUM NON-BELL TRAFFIC.
Maximum Originating Maximum Terminating Non-Bell
Service Type Non-Bell Traffic % Non-Bell Traffic % Surcharge
<S> <C> <C> <C>
Direct N/A N/A N/A
Direct Toll Free N/A N/A N/A
Connect One Plus N/A N/A N/A
Connect Toll Free N/A N/A N/A
Connect FONcard * * *
Direct Extension N/A * *
Direct Toll Free
Ext * N/A *
</TABLE>
B.14.3. MINIMUM AVERAGE CALL DURATION: MINIMUM AVERAGE TIME REQUIREMENT
(MATR) SHALL NOT APPLY UNLESS SPECIFICALLY SET FORTH BELOW:
<TABLE>
<CAPTION>
Service Type MATR MATR Surcharge
<S> <C> <C>
Interstate Direct &
Direct Extension * *
Interstate Connect One Plus * *
Interstate Direct Toll Free
& Direct Toll Free Ext. * *
Interstate Connect Toll Free * *
</TABLE>
<TABLE>
B.14.4 MAXIMUM NONCOMPLETE CALL PERCENTAGE.
<CAPTION>
Direct Toll Free, Direct Toll Free Maximum
Extension, and Connect Toll Free Noncomplete Toll Per Call
Usage Type (Rate Element) Free Call Percentage Surcharge
<S> <C> <C>
Intrastate/Interstate * *
International/Canadian * *
</TABLE>
*Confidential treatment requested. The redacted material has been separately
filed with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
PROMOTIONAL MONTHLY RECURRING TOLL FREE CHARGES:
Customer's Monthly Recurring Connect Toll Free service charge will be
* per Connect Toll Free account per month.
Customer's Toll Free numbers (Connect Toll Free, Direct Toll Free, and
Direct Toll Free Extension) requiring Toll Free Directory Assistance
Listings will be charged an additional Monthly Recurring Charge of *
per month per Toll Free number requiring such listing.
TOLL FREE DATABASE QUERY CHARGE
Customer's Toll Free Database Query charge will be * per domestic
Direct Toll Free Call.
*Confidential Treatment requested. The redacted material has been separately
filed with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment B-3
SWITCHED ORIGINATION AND SWITCHED TERMINATION PER MINUTE CHARGES
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment C-1
Interstate Connect One Plus, Connect Toll Free, Connect FONCARD,
Direct Extension, and Direct Toll Free Extension LATA Groups
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment C-2
Interstate Switched Network Extension
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED
<PAGE>
<PAGE>
Attachment C-3
Interstate Dedicated Network Extension
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED
<PAGE>
<PAGE>
Attachment C-4
Interstate Carrier Dedicated Service
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment C-5
Canada Terminating Service
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment C-6
Mexico Terminating Service
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment C-7
Mexico Originating Service
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment C-8
Other International Base Rates
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment C-9
Other International Base Rates
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment C-10
Other International Base Rates
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment C-11
Other International Base Rates
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment C-12
Other International Toll Free Services (ITFS-US Inbound)
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED<PAGE>
<PAGE>
Attachment D-1
Interstate Adjustment (Intrastate)
*
*Confidential Treatment Requested.
The redacted material has been separately filed
with the Commission.
SPRINT PROPRIETARY INFORMATION - RESTRICTED
