UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-13153
Galileo International, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-4156005
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(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
9700 West Higgins Road, Suite 400, Rosemont, Illinois 60018
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(Address of Principal Executive Offices, Including Zip Code)
(847) 518-4000
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Indicate by check mark whether the registrant: (1) had filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
X Yes No
At November 8, 2000, there were 88,741,471 shares of Common Stock,
par value $.01 per share, of the registrant outstanding.
<PAGE>
GALILEO INTERNATIONAL, INC.
QUARTER ENDED SEPTMEBER 30, 2000
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements of Galileo International, Inc.
Condensed Consolidated Balance Sheets as of September
30, 2000 (unaudited) and December 31, 1999 3
Condensed Consolidated Statements of Income for the
quarter and nine months ended September 30, 2000 and
1999 (unaudited) 4
Condensed Consolidated Statements of Cash Flows for
the nine months ended September 30, 2000 and 1999
(unaudited) 5
Condensed Consolidated Statement of Stockholders'
Equity for the nine months ended September 30, 2000
(unaudited) 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 21
PART II - OTHER INFORMATION
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 23
SIGNATURES 24
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30, December 31,
2000 1999
--------- ----------
(Unaudited)
ASSETS
------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 12,412 $ 1,794
Accounts receivable, net 237,469 178,123
Other current assets 45,010 50,533
--------- ----------
Total current assets 294,891 230,450
Property and equipment, at cost:
Land 6,470 6,470
Buildings and improvements 75,842 72,219
Equipment 382,899 354,686
--------- ----------
465,211 433,375
Less accumulated depreciation 285,772 242,498
--------- ----------
Net property and equipment 179,439 190,877
Computer software, net 150,744 160,794
Intangible assets, net 745,743 572,136
Other noncurrent assets 112,814 100,936
---------- ----------
$1,483,631 $1,255,193
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 55,725 $ 48,034
Accrued commissions 43,510 33,722
Income taxes payable 27,772 2,785
Other accrued liabilities 117,757 113,712
Long-term debt, current portion 225,654 121,000
--------- ----------
Total current liabilities 470,418 319,253
Pension and postretirement benefits 77,084 68,466
Deferred tax liabilities 12,258 14,656
Other noncurrent liabilities 25,817 24,833
Long-term debt, less current portion 434,392 434,392
--------- ----------
Total liabilities 1,019,969 861,600
Stockholders' equity:
Special voting preferred stock: $.01 par value;
7 shares authorized; 3 shares issued and outstanding - -
Preferred stock: $.01 par value; 25,000,000 shares
authorized; no shares issued - -
Common stock: $.01 par value; 250,000,000 shares
authorized; 105,198,852 and 105,038,035 shares issued;
89,082,649 and 89,999,435 shares outstanding 1,052 1,050
Additional paid-in capital 682,949 671,615
Retained earnings 345,015 368,843
Unamortized restricted stock grants (2,162) (2,761)
Accumulated other comprehensive income (8,130) (2,866)
Common stock held in treasury, at cost: 16,116,203
and 15,038,600 shares (555,062) (642,288)
--------- ----------
Total stockholders' equity 463,662 393,593
---------- ----------
$1,483,631 $1,255,193
=========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except share data)
<TABLE>
Quarter Nine Months
Ended September 30, Ended September 30,
------------------------ ------------------------
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
<S> <C> <C> <C> <C>
Electronic global distribution services $ 384,932 $ 366,480 $ 1,211,416 $ 1,131,922
Information services 21,003 18,212 60,601 55,583
----------- ----------- ----------- ------------
405,935 384,692 1,272,017 1,187,505
Operating expenses:
Cost of operations 150,337 133,323 439,117 397,768
Commissions, selling and administrative 171,549 154,797 528,296 468,334
Special charge - U.K. integration 1,736 - 1,736 -
Special charge - services agreement - - 19,725 -
Special charge - in-process research
and development write-off - - 7,000 -
----------- ----------- ----------- ------------
323,622 288,120 995,874 866,102
----------- ----------- ----------- ------------
Operating income 82,313 96,572 276,143 321,403
Other income (expense):
Interest expense, net (11,985) (6,543) (33,553) (7,983)
Other, net (274) 233 (5,142) 10,212
----------- ----------- ----------- ------------
Income before income taxes 70,054 90,262 237,448 323,632
Income taxes 32,155 36,014 108,989 129,129
----------- ----------- ----------- ------------
Net income $ 37,899 $ 54,248 $ 128,459 $ 194,503
=========== =========== =========== ============
Weighted average shares outstanding 89,477,763 93,341,447 90,433,621 100,795,596
=========== =========== =========== ============
Basic earnings per share $ 0.42 $ 0.58 $ 1.42 $ 1.93
=========== =========== =========== ============
Diluted weighted average shares outstanding 89,864,316 94,030,532 90,834,642 101,596,075
=========== =========== =========== ============
Diluted earnings per share $ 0.42 $ 0.58 $ 1.41 $ 1.91
=========== =========== =========== ============
See accompanying notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
Nine Months
Ended September 30,
---------------------------
2000 1999
---- ----
Operating activities:
<S> <C> <C>
Net income $ 128,459 $ 194,503
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 157,889 123,391
Write-off of in-process research and development 7,000 -
Gain on sale of assets (341) (9,574)
Deferred income taxes, net (16,325) (5,451)
Changes in operating assets and liabilities,
net of effects from acquisition of businesses:
Accounts receivable, net (49,379) (43,794)
Other current assets 9,650 4,433
Noncurrent assets (1,772) (5,702)
Accounts payable and accrued commissions 12,854 8,355
Accrued liabilities (2,768) (19,881)
Income taxes payable 25,036 15,781
Noncurrent liabilities 12,402 12,267
Other 1,837 598
----------- -----------
Net cash provided by operating activities 284,542 274,926
Investing activities:
Purchase of property and equipment (29,718) (44,114)
Purchase and capitalization of computer software (28,187) (13,863)
Proceeds on sale of assets 621 10,074
Acquisition of businesses, net of $15,551 cash acquired (128,785) -
Other investing activities (27,421) (28,458)
----------- -----------
Net cash used in investing activities (213,490) (76,361)
Financing activities:
Borrowings under credit agreements 184,000 527,000
Repayments under credit agreements (80,000) (75,000)
Repurchase of common stock for treasury (139,616) (595,760)
Dividends paid to stockholders (24,370) (25,791)
Proceeds from exercise of employee stock options, net 457 3,026
Payments of capital lease obligations (96) (27,690)
Other financing activities (477) (128)
----------- -----------
Net cash used in financing activities (60,102) (194,343)
Effect of exchange rate changes on cash (332) (1,184)
----------- -----------
Increase in cash and cash equivalents 10,618 3,038
Cash and cash equivalents at beginning of period 1,794 9,828
----------- -----------
Cash and cash equivalents at end of period $ 12,412 $ 12,866
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
<TABLE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited, in thousands, except share data)
Special
Voting Additional
Preferred Common Paid - in Retained
Stock Stock Capital Earnings
------------- --------------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1999 $ - $ 1,050 $ 671,615 $ 368,843
Comprehensive income:
Net income - - - 128,459
Other comprehensive income (loss), net of tax:
Unrealized holding losses on securities - - - -
Foreign currency translation adjustments - - - -
Other comprehensive income (loss)
Comprehensive income
Amortization of restricted stock grants - - - -
Issuance of 160,817 shares of common stock under
employee stock option plans - 2 455 -
Issuance of stock options upon acquisition of
Trip.com - - 10,879 -
Issuance of 5,499,630 shares of common stock from
treasury to acquire Trip.com - - - (127,917)
Repurchase of 6,577,233 shares of common stock
for treasury - - - -
Dividends paid ($0.27 per share) - - - (24,370)
------------- --------------- ---------- ----------
Balance at September 30, 2000 $ - $ 1,052 $ 682,949 $ 345,015
============= =============== ========== ==========
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited, in thousands, except share data)
Accumulated
Unamortized Other
Restricted Comprehensive Treasury
Stock Grants Income Stock Total
------------- --------------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1999 $ (2,761) $ (2,866) $(642,288) $ 393,593
Comprehensive income:
Net income - - - 128,459
Other comprehensive income (loss), net of tax:
Unrealized holding losses on securities - (741) - (741)
Foreign currency translation adjustments - (4,523) - (4,523)
----------
Other comprehensive income (loss) (5,264)
----------
Comprehensive income 123,195
Amortization of restricted stock grants 599 - - 599
Issuance of 160,817 shares of common stock under
employee stock option plans - - - 457
Issuance of stock options upon acquisition of
Trip.com - - - 10,879
Issuance of 5,499,630 shares of common stock from
treasury to acquire Trip.com - - 226,842 98,925
Repurchase of 6,577,233 shares of common stock
for treasury - - (139,616) (139,616)
Dividends paid ($0.27 per share) - - - (24,370)
------------- --------------- ---------- ----------
Balance at September 30, 2000 $ (2,162) $ (8,130) $(555,062) $ 463,662
============= =============== =========== ==========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
6
<PAGE>
GALILEO INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim condensed consolidated financial
statements of Galileo International, Inc. (herein referred to as the "Company",
"we", "us", and "our") have been prepared pursuant to the rules of the
Securities and Exchange Commission for quarterly reports on Form 10-Q and do not
include all of the information and note disclosures required by generally
accepted accounting principles. The information furnished herein includes all
adjustments, consisting of normal recurring adjustments, which are, in the
opinion of management, necessary for a fair presentation of results for the
interim periods presented. Certain reclassifications have been made to the
condensed consolidated financial statements for the prior year to conform with
the current presentation.
The results of operations for the quarter and nine months ended September
30, 2000 are not necessarily indicative of the results to be expected for the
year ending December 31, 2000.
These financial statements should be read in conjunction with the audited
financial statements and notes to the audited financial statements for the year
ended December 31, 1999 included in the Company's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 10, 2000.
NOTE 2 - BUSINESS ACQUISITIONS AND INVESTMENTS
In 1999, the Company acquired a minority equity interest in TRIP.com, Inc.
("TRIP.com"), an online travel services and technology provider. On March 10,
2000, the Company purchased the remaining 81% ownership interest in TRIP.com for
$214.4 million in a combined cash and stock transaction. The Company paid $104.6
million in cash and issued 5,499,630 shares of Common Stock, previously held in
treasury, valued at $98.9 million. In addition, the Company converted all
outstanding stock options of TRIP.com into the Company's stock options at an
estimated fair value of $10.9 million.
The following unaudited pro forma financial information presents a summary
of consolidated results of operations of the Company and TRIP.com as if the
acquisition had occurred on January 1, 1999 (dollars in millions, except per
share amounts):
7
<PAGE>
Nine Months
Ended September 30,
-------------------
2000 1999
------ ------
Revenues $ 1,274.6 $1,195.5
Net income 122.2 141.7
Basic earnings per share 1.33 1.33
Diluted earnings per share 1.32 1.32
These unaudited pro forma results have been prepared for comparative
purposes only and include adjustments for additional amortization of goodwill
and other intangible assets. Additionally, the pro forma operating results
include pro forma interest expense on the assumed acquisition borrowings to
finance the cash portion of the TRIP.com acquisition; pro forma adjustments to
the provision for income taxes to reflect the effect of non-deductible
amortization of goodwill and other intangible assets; and pro forma adjustments
to the weighted average shares outstanding and diluted weighted average shares
outstanding used in the earnings per share calculations for the issuance of the
Company's Common Stock and the dilutive effect of TRIP.com stock options
outstanding, respectively.
The results of operations reflected in the pro forma information are not
necessarily indicative of the results which would have been reported if the
TRIP.com acquisition had occurred at the beginning of the periods presented, or
of the future operations of the consolidated entities.
On March 8, 2000, the Company acquired Terren Corporation ("Terren"), a
developer of client-server software for business databases, data communications
and information management. The purchase price of this acquisition was $2.6
million, consisting of $1.4 million in cash payments and the assumption of a
$1.2 million note payable. The pro forma effects of this acquisition are not
significant.
On April 14, 2000, the Company acquired Travel Automation Services Limited
("Galileo UK"), the Company's national distribution company in the United
Kingdom, and terminated certain revenue sharing obligations for $30.0 million in
cash. The pro forma effects of this acquisition are not significant.
In connection with all of the above acquisitions, the Company incurred
expenses of $8.3 million, which have been accounted for as part of the purchase
prices. The Company accounted for these acquisitions using the purchase method
of accounting. Accordingly, the costs of these acquisitions were allocated to
the assets acquired and liabilities assumed based on their respective fair
values. Goodwill and other intangible assets related to the cost of these
acquisitions are being amortized over 3 to 20 years. The resulting amortization
is included in cost of operations expenses. The results of operations and cash
flows of TRIP.com, Terren and Galileo UK have been consolidated with those of
the Company from the date of each acquisition.
8
<PAGE>
NOTE 3 - EARNINGS PER SHARE
Basic earnings per share for the quarter and nine months ended September
30, 2000 and 1999 is calculated based on the weighted average shares outstanding
for the period. Diluted earnings per share is calculated as if the Company had
additional Common Stock outstanding from the beginning of the year or the date
of grant for all dilutive stock options, net of assumed repurchased shares using
the treasury stock method. This resulted in an increase in the weighted average
number of shares outstanding for the quarter and nine months ended September 30,
2000 of 386,553 and 401,021, respectively. The increase in the weighted average
number of shares outstanding for the quarter and nine months ended September 30,
1999 was 689,085 and 800,479, respectively.
NOTE 4 - SPECIAL CHARGES
The Company recorded a special charge of $1.7 million ($0.9 million after
tax) during the quarter ended September 30, 2000 related to the integration of
Galileo UK. This special charge was comprised of $1.4 million in severance costs
related to the termination of 29 employees, and $0.3 million in facilities
expenses. As of September 30, 2000, $0.3 million of severance related costs have
been paid and charged against the liability and four employees have been
terminated.
In connection with the Company's 1997 acquisition of Apollo Travel Services
Partnership, the Company entered into an agreement (the "Services Agreement")
with United Airlines, US Airways, and Air Canada (collectively the "Service
Providers") to provide certain marketing services and other support to the
Company in the U.S. and Mexico. In exchange for these services, the Company
agreed to compensate the Service Providers if the Company achieved specific air
segment growth and booking fee price increases over a five-year period. Although
the Company was accruing its estimated price-related liability under the
Services Agreement based upon lower levels of historical and projected pricing,
as a result of the price increase in the U.S. and Mexico that became effective
on January 1, 2000, the Company now expects to owe the full price-related
obligation. On December 30, 1999, the Company was released by United Airlines
from the price-related obligation under the Services Agreement. In turn, GIO
Services, L.L.C. ("GIO Services"), a qualified special-purpose entity, was
created and funded with $97.3 million to assume the liability and pay United
Airlines in July 2002. During the quarter ended March 31, 2000, the Company
reassessed the future benefit of the services provided by US Airways. As a
result, the Company recorded a special charge of $19.7 million and transferred
$27.2 million to GIO Services to provide for payment of the price-related
obligation to US Airways in July 2002. The activities of GIO Services are
strictly limited to payment of these Services Agreement obligations. As a result
of these transactions, the Company has no further payment obligations to United
Airlines and US Airways related to booking fee price increases under the
Services Agreement.
The Company also recorded a special charge of $7.0 million during the
quarter ended March 31, 2000 to write off in-process research and development
costs related to the acquisition of TRIP.com.
9
<PAGE>
The Company recorded special charges of $26.4 million ($15.9 million after
tax) during the quarter ended December 31, 1998 related to a strategic
realignment of the Company's operations in the United Kingdom and, to a lesser
degree, other realignments within the Company. These special charges were
comprised primarily of $15.0 million in severance costs related to the
termination of 399 employees, primarily in the development and marketing groups,
and $11.4 million of other costs, principally related to the closing of the
remaining Swindon, U.K. facilities. As of September 30, 2000, $16.2 million of
severance related costs have been paid and charged against the liability and 373
employees have been terminated. The Company considers the realignment activities
to be substantially complete as of September 30, 2000. Also related to the
closing of Swindon, U.K. facilities, in 1993, the Company, formerly Covia
Partnership, combined with The Galileo Company Ltd. and consolidated its two
data center facilities resulting in the closing of the Swindon, U.K. data
center. In connection therewith, the estimated cost of the consolidation was
charged to expense. During 1999, the Company was successful in assigning a
Swindon, U.K. facility lease at market rates, resulting in recognition of an
$11.3 million ($6.8 million after tax) one-time recovery of previously reserved
facilities expenses. At September 30, 2000 and December 31, 1999, the estimated
remaining liabilities for all of the above mentioned restructuring activities
were $8.3 million and $10.2 million, respectively, and are included in the
accompanying condensed consolidated balance sheets.
NOTE 5 - DEBT
In March 2000, the Company entered into a new $200.0 million 16-month
credit agreement, which was partially utilized on March 10, 2000 to fund the
acquisition of the remaining ownership interest in TRIP.com. In April 2000, the
Company entered into a new $500.0 million credit agreement that expires in July
2001. This new agreement replaces the $200.0 million 16-month credit agreement
entered into in March 2000 and the existing $200.0 million 364-day credit
agreement that was due to expire in July 2000. Facility fees range from 10.0 to
22.5 basis points. As of September 30, 2000, the effective interest rate for
amounts outstanding under the $500.0 million credit agreement was 7.2%.
NOTE 6 - COMMITMENTS & CONTINGENCIES
During 1998, as part of the purchase price of S. D. Shepherd Systems, Inc.
("Shepherd Systems"), the Company recorded a $5.0 million contingent liability
for additional payments, due ratably over five years, based on a calculation of
the relevant calendar year's annual cash flow of Shepherd Systems. At December
31, 1999 the liability related to these payments was included in other
noncurrent liabilities. During the quarter ended June 30, 2000, based upon an
analysis of Shepherd Systems' historical and projected cash flow results, the
Company determined that no payments will be required. Accordingly, the
contingent liability was written-off against the acquisition-related goodwill of
Shepherd Systems.
10
<PAGE>
NOTE 7 - STOCKHOLDERS' EQUITY
For the nine months ended September 30, 2000, the Company accounted for a
$1.2 million unrealized holding loss on available-for-sale marketable equity
securities in accordance with Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities". The
after tax effect of $0.7 million is included as a separate component of
Stockholders' Equity.
On April 21, 2000, the Board of Directors authorized a new $250.0 million
share repurchase program. The Company began purchasing shares under the new
program in June 2000, after completion of its $750.0 million program.
Repurchased shares are held in treasury to provide available shares for possible
resale in future public or private offerings, and for other general corporate
purposes. The purchases are funded through the Company's available working
capital and borrowing facilities. The amount, timing and price of any
repurchases of the Company's Common Stock depend on market conditions and other
factors. For the quarter ended September 30, 2000, the Company repurchased
1,061,733 of its shares in the open market at a total cost of $20.0 million. As
of September 30, 2000, the Company held a total of 16,116,203 shares in
treasury.
As disclosed in Note 2 - Business Acquisitions and Investments, the Company
exchanged 5,499,630 shares of its Common Stock as part of the consideration to
acquire TRIP.com. These shares were reissued from Common Stock held in treasury,
which resulted in a $127.9 million reduction to retained earnings. In addition,
as part of the consideration issued in the acquisition, the Company converted
all outstanding TRIP.com stock options into stock options of the Company
resulting in a $10.9 million increase to additional paid-in capital.
Comprehensive income for the nine months ended September 30, 1999 was
$198.2 million, comprised of net income of $194.5 million, unrealized holding
gains on securities of $4.5 million, and foreign currency translation
adjustments of $(0.8) million.
NOTE 8 - INTEREST IN EQUANT
At September 30, 2000, the Company owned 1,106,564 non-marketable
depository certificates representing beneficial ownership of common stock of
Equant N.V. ("Equant"), a telecommunications company affiliated with Societe
Internationale de Telecommunications Aeronautiques (SITA). If these certificates
were converted into registered common stock of Equant, the market value at
September 30, 2000 would have been $40.6 million. The Company's carrying value
of these depository certificates was nominal at September 30, 2000 and December
31, 1999. Any future disposal of such depository certificates may result in
significant gains to the Company. (1)
-------
(1) See Statement Regarding Forward-Looking Statements on page 20.
11
<PAGE>
NOTE 9 - SUPPLEMENTAL CASH FLOW INFORMATION
Nine Months
(In millions) Ended September 30,
---------------------
Cash paid for: 2000 1999
---- ----
Interest $ 33.8 $ 4.1
Income taxes 100.5 121.1
Non-cash investing and financing activities:
Acquisition of equipment through capital lease 4.5 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Summary
We are one of the world's leading providers of electronic global
distribution services for the travel industry. We provide travel agencies at
approximately 41,200 locations, as well as consumers, corporations and other
subscribers, with the ability to view schedules, availability and fare
information, book reservations and issue tickets for more than 500 airlines. We
also provide our subscriber customers with information and booking capabilities
for major hotel chains, car rental companies, cruise lines and numerous tour
operators throughout the world.
We generate revenue from the provision of electronic global distribution
services and information services. During the nine months ended September 30,
2000, we generated 95.2% of our revenue from electronic global distribution
services and 4.8% of our revenue from information services. The following table
summarizes electronic global distribution services revenues by geographic
location as a percentage of the total, and summarizes total booking volumes for
each of the periods indicated. The location of the subscriber making the booking
determines the geographic region credited with the related revenues and
bookings:
12
<PAGE>
Quarter Nine Months
Ended September 30, Ended September 30,
-------------------- -------------------
2000 1999 2000 1999
---- ---- ---- ----
Percentage of Revenue
---------------------
U.S. Market 38.6 % 40.8 % 38.9 % 41.5 %
All Other Markets 61.4 59.2 61.1 58.5
-------------------- -------------------
100.0 % 100.0 % 100.0 % 100.0 %
==================== ===================
Worldwide Bookings
------------------
(in millions)
U.S. Market:
Air 28.2 31.7 91.4 100.3
Car/Hotel/Leisure 5.7 5.9 17.5 17.6
------------------ ------------------
Total Bookings 33.9 37.6 108.9 117.9
All Other Markets:
Air 49.2 48.5 156.9 154.2
Passive Booking Adjustment (1) - - 1.9 -
------------------ ------------------
Adjusted Air 49.2 48.5 158.8 154.2
Car/Hotel/Leisure 1.6 1.5 4.8 4.6
------------------ ------------------
Total Bookings 50.8 50.0 163.6 158.8
Total Worldwide Bookings 84.7 87.6 272.5 276.7
================== ==================
(1) Adjusts for the impact of a July 1999 pricing structure change that reduced
reported passive booking volumes in Japan. In markets outside of Japan, the net
impact to reported passive bookings due to the pricing structure change was
slightly positive. Effective with the quarter ended September 30, 2000, this
adjustment is no longer required as year over year bookings are presented on a
comparable basis.
THIRD QUARTER 2000 COMPARED TO THIRD QUARTER 1999
REVENUES. Revenues increased $21.2 million, or 5.5%, to $405.9 million for
the quarter ended September 30, 2000 from $384.7 million for the quarter ended
September 30, 1999. Our electronic global distribution services revenues grew
$18.4 million, or 5.0%. Total airline booking revenue increased 2.4% over the
quarter ended September 30, 1999 primarily due to booking fee price increases
that went into effect in January 2000 and other yield improvements. Remaining
net increases in our electronic global distribution services revenues were
principally
13
<PAGE>
due to the inclusion of TRIP.com and Galileo UK revenues, and increased sales of
certain advertising and marketing services. Partially offsetting these increases
were lower subscriber fees resulting from a decrease in our U.S. market share
and an increasing trend for travel agencies to utilize their own computer
equipment.
Worldwide bookings decreased 3.3% year over year. International booking
volumes increased 1.5% and U.S. booking volumes decreased 9.8% over the same
period last year. The increase in international booking volumes was driven by
solid growth in many international markets, including double-digit gains in
India, Japan, China and several other markets. These increases were partially
offset by a change in airline behavior that resulted in an increased number of
cancellations of waitlist and other non-ticketed bookings, primarily in Europe
and the Middle East, which reduced net billable segments during the quarter
ended September 30, 2000. We intend to address the revenue impact of these
actions with our 2001 pricing. (1) A threatened pilot strike in Canada and a
reduction in capacity resulting from the merger of two Canadian airlines also
negatively impacted bookings.
The decline in U.S. booking volumes was primarily due to the increasing
impact of a shift in bookings to Internet travel sites, our loss of the Preview
Travel account, the impact of a slowdown in traffic at a major airline customer,
and the slight market share loss attributable to our transition to a new sales
force in 1999. Our U.S. sales force continues to renew business with existing
customers and has recently won significant new business from our competitors. We
are very optimistic about our future growth in U.S. bookings, particularly in
the traditional travel agency channel. (1) However, growth in traditional travel
agency bookings may be mitigated by the accelerating shift of bookings to the
Internet channel where our market share is currently lower. (1) In the Internet
channel, our strategy is to have multiple points of presence by serving as the
booking engine behind several Internet travel sites such as UAL.com,
Biztravel.com and Beyoo.com, and by expanding the presence of our own sites
including TravelGalileo.com and TRIP.com. (1) We believe our strategy will
strengthen our presence in this important channel and lead to profitable
Internet growth. (1)
Our information services revenues grew $2.8 million, or 15.3% over the
quarter ended September 30, 1999 reflecting an increase in revenue from
providing fare quotation services to airlines. Also contributing to the increase
was additional revenue from hosting, network and development services we provide
to a large airline customer.
COST OF OPERATIONS. Cost of operations expenses increased $17.0 million, or
12.8%, to $150.3 million for the quarter ended September 30, 2000 from $133.3
million for the quarter ended September 30, 1999. The increase was primarily
attributable to amortization of goodwill and other intangibles related to the
acquisition of TRIP.com, incremental operating expenses related to the
acquisition of TRIP.com and Galileo UK, and increased network costs related to
our ongoing migration to a single Internet protocol. These increases were
partially offset by lower subscriber maintenance and installation expenses
related to the decrease in subscriber fee revenue noted above, and increased
capitalization of software development expenses.
-----
(1) See Statement Regarding Forward-Looking Statements on page 20.
14
<PAGE>
COMMISSIONS, SELLING AND ADMINISTRATIVE EXPENSES. Commissions, selling and
administrative expenses increased $16.8 million, or 10.8%, to $171.6 million for
the quarter ended September 30, 2000 from $154.8 million for the quarter ended
September 30, 1999. Commissions paid to national distribution companies ("NDCs")
and subscriber incentive payments increased $13.3 million, or 12.4%, to $120.8
million for the quarter ended September 30, 2000 from $107.5 million for the
quarter ended September 30, 1999. The growth in electronic global distribution
services revenues resulted in increased commissions to NDCs, which are generally
based on a percentage of booking fee revenues, and have therefore grown at a
rate consistent with the growth in booking fees by country. Incentive payments,
which are provided to subscribers in order to maintain and expand our travel
agency customer base, increased in the quarter principally due to new and
renegotiated contracts with our subscriber customers. These increases were
partially offset by the elimination of commissions paid to Galileo UK as we no
longer pay commissions but instead incur the direct costs of operating in this
market. Remaining commissions, selling and administrative expenses increased
primarily due to TRIP.com and Galileo UK expenses, partially offset by decreases
in Service Agreement expenses.
SPECIAL CHARGES. We recorded a special charge of $1.7 million during the
quarter ended September 30, 2000 related to the integration of Galileo UK. (See
Note 4 - Special Charges, on page 9, for further discussion of this charge).
OTHER EXPENSE, NET. Other expense, net includes interest expense net of
interest income, foreign exchange gains or losses, and other non-operating
items. Other expense, net increased $5.9 million to $12.2 million for the
quarter ended September 30, 2000 from $6.3 million for the quarter ended
September 30, 1999. This increase was primarily the result of higher interest
expense arising from higher average debt levels in 2000 to fund the acquisition
of TRIP.com and to repurchase Common Stock for treasury. The remaining increase
was primarily due to $0.7 million in foreign exchange losses for the quarter
ended September 30, 2000, resulting from unfavorable euro and British pound
sterling forward contracts and holding losses. The net impact of foreign
currency forward contracts and transactions in 1999 was not material.
INCOME TAXES. Income taxes decreased $3.8 million, or 10.7%, to $32.2
million for the quarter ended September 30, 2000 from $36.0 million for the
quarter ended September 30, 1999. The decrease was a result of lower income
before income taxes for the quarter ended September 30, 2000 compared to the
quarter ended September 30, 1999, partially offset by a higher effective tax
rate. Our effective tax rate was approximately 46% in 2000 and 40% in 1999. This
increase in the effective tax rate was primarily due to non-deductible
amortization of intangibles arising from the acquisition of TRIP.com.
NET INCOME. Net income decreased $16.3 million, or 30.1%, to $37.9 million
for the quarter ended September 30, 2000 from $54.2 million for the quarter
ended September 30, 1999. Net income as a percentage of revenues decreased to
9.3% for the quarter ended September 30, 2000 from 14.1% for the quarter ended
September 30, 1999. The net income and net margin decreases were primarily due
to the amortization of goodwill and other intangibles related to the acquisition
of TRIP.com.
15
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1999
REVENUES. Revenues increased $84.5 million, or 7.1%, to $1,272.0 million
for the nine months ended September 30, 2000 from $1,187.5 million for the nine
months ended September 30, 1999. Our electronic global distribution services
revenues grew $79.5 million, or 7.0%. Total airline booking revenue increased
6.1% over the nine months ended September 30, 1999 primarily due to booking fee
price increases that went into effect in March 1999 and January 2000, and other
yield improvements. Remaining net increases in our electronic global
distribution services revenues were principally due to the inclusion of TRIP.com
and Galileo UK revenues since the date of their respective acquisitions, and
increased sales of certain advertising and marketing services. Partially
offsetting these increases were lower subscriber fees resulting from a decrease
in our U.S. market share and an increasing trend for travel agencies to utilize
their own computer equipment.
Worldwide bookings declined 2.2% year over year. International booking
volumes increased 1.8% and U.S. booking volumes decreased 7.7% over the same
period last year. Adjusting for the impact of a July 1999 pricing structure
change that reduced reported passive booking volumes in Japan, total
international booking volumes increased 3.1% for the nine months ended September
30, 2000. The increase in international booking volumes for the period was
driven by solid growth in many international markets, including double-digit
gains in India, Brazil, and Greece. These increases were partially offset by a
change in airline behavior that resulted in an increased number of cancellations
of waitlist and other non-ticketed bookings, primarily in Europe and the Middle
East, which reduced net billable segments in 2000. We intend to address the
revenue impact of these actions with our 2001 pricing. (1)
The decline in U.S. booking volumes was primarily due to the increasing
impact of a shift in bookings to Internet travel sites, our loss of the Preview
Travel account and the slight market share loss attributable to our transition
to a new sales force in 1999. Our U.S. sales force continues to renew business
with existing customers and has recently won significant new business from our
competitors. We are very optimistic about our future growth in U.S. bookings,
particularly in the traditional travel agency channel. (1) However, growth in
traditional travel agency bookings may be mitigated by the accelerating shift of
bookings to the Internet channel where our market share is currently lower. (1)
In the Internet channel, our strategy is to have multiple points of presence by
serving as the booking engine behind several Internet travel sites such as
UAL.com, Biztravel.com and Beyoo.com, and by expanding the presence of our own
sites including TravelGalileo.com and TRIP.com. (1) We believe our strategy will
strengthen our presence in this important channel and lead to profitable
Internet growth. (1)
Our information services revenues grew $5.0 million, or 9.0% over the nine
months ended September 30, 1999 reflecting an increase in revenue from providing
fare quotation services to airlines. Also contributing to the increase was
additional revenue from hosting, network and development services we provide to
a large airline customer.
-----
(1) See Statement Regarding Forward-Looking Statements on page 20.
16
<PAGE>
COST OF OPERATIONS. Cost of operations expenses increased $41.3 million, or
10.4%, to $439.1 million for the nine months ended September 30, 2000 from
$397.8 million for the nine months ended September 30, 1999. The increase was
primarily attributable to the amortization of goodwill and other intangibles
related to the acquisition of TRIP.com, and increased network costs related to
our ongoing migration to a single Internet protocol. Also, cost of operations
expenses include TRIP.com and Galileo UK expenses subsequent to their respective
acquisition dates. These increases were partially offset by net cost savings
from the 1999 Swindon, U.K. realignment, lower subscriber maintenance and
installation expenses related to the decrease in subscriber fee revenue noted
above, and increased capitalization of software development expenses.
COMMISSIONS, SELLING AND ADMINISTRATIVE EXPENSES. Commissions, selling and
administrative expenses increased $60.0 million, or 12.8%, to $528.3 million for
the nine months ended September 30, 2000 from $468.3 million for the nine months
ended September 30, 1999. Commissions paid to NDCs and subscriber incentive
payments increased $49.6 million, or 15.3%, to $374.1 million for the nine
months ended September 30, 2000 from $324.5 million for the nine months ended
September 30, 1999. The growth in electronic global distribution services
revenues resulted in increased commissions to NDCs, which are generally based on
a percentage of booking fee revenues, and have therefore grown at a rate
consistent with the growth in booking fees by country. Incentive payments, which
are provided to subscribers in order to maintain and expand our travel agency
customer base, increased principally due to new and renegotiated contracts with
our subscriber customers. These increases were partially offset by the
elimination of commissions paid to Galileo UK subsequent to this acquisition as
we no longer pay commissions but instead incur the direct costs of operating in
this market. Remaining commissions, selling and administrative expenses
increased primarily due to TRIP.com and Galileo UK expenses since their
respective acquisition dates, partially offset by decreases in Service Agreement
expenses.
SPECIAL CHARGES. In the first quarter of 2000, we recorded a special charge
of $19.7 million related to the extinguishment of a portion of our liability
arising from our Services Agreement with US Airways. As a result, we have no
further payment obligations to US Airways related to price increases under the
Services Agreement. (See Note 4 - Special Charges, on page 9, for further
discussion of this charge.)
We also recorded a special charge of $7.0 million during the first quarter
of 2000 to write off in-process research and development costs related to our
acquisition of TRIP.com.
In the third quarter of 2000, we recorded a special charge of $1.7 million
related to the integration of Galileo UK. (See Note 4 - Special Charges, on page
9, for further discussion of this charge.)
OTHER EXPENSES, NET. Other expense, net includes interest expense net of
interest income, foreign exchange gains or losses, and other non-operating
items. Other expense, net increased $40.9 million to $38.7 million in expense
for the nine months ended September 30, 2000 from $2.2 million in income for the
nine months ended September 30, 1999. This increase was
17
<PAGE>
primarily the result of higher interest expense arising from higher average debt
levels in 2000 to fund the acquisition of TRIP.com and to repurchase Common
Stock for treasury. Also contributing to the increase was $4.9 million in
foreign exchange losses for the nine months ended September 30, 2000, resulting
from unfavorable euro and British pound sterling forward contracts and holding
losses. The net impact of foreign currency forward contracts and transactions in
1999 was not material. In addition, a $9.4 million gain was recognized in the
first quarter of 1999 from the sale of a portion of the shares we owned in
Equant.
INCOME TAXES. Income taxes decreased $20.1 million, or 15.6%, to $109.0
million for the nine months ended September 30, 2000 from $129.1 million for the
nine months ended September 30, 1999. The decrease was a result of lower income
before income taxes for the nine months ended September 30, 2000 compared to the
nine months ended September 30, 1999, partially offset by a higher effective tax
rate in 2000. Our effective tax rate was approximately 46% in 2000 and 40% in
1999. This increase in the effective tax rate was primarily due to
non-deductible amortization of intangibles arising from the acquisition of
TRIP.com.
NET INCOME. Net income decreased $66.0 million, or 34.0%, to $128.5 million
for the nine months ended September 30, 2000 from $194.5 million for the nine
months ended September 30, 1999. Net income as a percentage of revenues
decreased to 10.1% for the nine months ended September 30, 2000 from 16.4% for
the nine months ended September 30, 1999. The decreases in our net income and
net margin were principally the result of the amortization of intangibles and
the write-off of in-process research and development costs in connection with
the TRIP.com acquisition, and a one-time special charge related to the US
Airways Services Agreement. In addition, the quarter ended March 31, 1999
included an after-tax gain of $5.7 million from the sale of a portion of the
shares we owned in Equant.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $12.4 million and working capital totaled
($175.5) million at September 30, 2000. At December 31, 1999, cash and cash
equivalents totaled $1.8 million and working capital totaled ($88.8) million.
Excluding current portions of long-term debt, working capital totaled $50.1
million and $32.2 million at September 30, 2000 and December 31, 1999,
respectively. Cash and cash equivalents increased $10.6 million during the nine
months ended September 30, 2000 primarily due to cash generated from operations,
partially offset by cash used in investing activities and for repurchases of
Common Stock for treasury.
Net cash used in investing activities for the nine months ended September
30, 2000 principally related to $128.8 million in net cash used to acquire
TRIP.com, Terren and Galileo UK. The remaining investing activities relate to
purchases of mainframe data processing and network equipment, purchases of
computer equipment provided to our travel agency subscribers, and investments in
companies aligned with our strategic direction. Capital expenditures, excluding
the capitalization of internally developed software, were $47.3 million for the
nine
18
<PAGE>
months ended September 30, 2000 compared to $48.1 million for the nine months
ended September 30, 1999.
Net cash used in financing activities for the nine months ended September
30, 2000 included repurchases of Common Stock for treasury totaling $139.6
million and $24.4 million in dividends paid to our stockholders. We paid $0.09
per share cash dividends on February 18, 2000 to stockholders of record as of
February 4, 2000, on May 19, 2000 to stockholders of record as of May 5, 2000,
and on August 18, 2000 to stockholders of record as of August 4, 2000. In April
2000, we entered into a $500.0 million credit agreement that expires in July
2001. This agreement replaced the $200.0 million 16-month credit agreement
entered into in March 2000 and the $200.0 million 364-day credit agreement that
was due to expire in July 2000. During the nine months ended September 30, 2000,
net borrowings under our credit agreements totaled $104.0 million and we had
$275.0 million available under our revolving credit facilities at September 30,
2000.
We expect that future cash requirements will principally be for capital
expenditures, repayments of indebtedness, repurchases of our Common Stock for
treasury, and potential acquisitions that are aligned with our strategic
direction. (1) We believe that cash generated by operating activities will be
sufficient to fund our future cash requirements, except that significant
acquisitions, investments, or share repurchases may require additional
borrowings or other financing alternatives. (1)
In addition to reinvesting a substantial portion of earnings in our
business, we currently intend to pay regular quarterly dividends and to
repurchase additional shares of our Common Stock. (1) On April 21, 2000, the
Board of Directors authorized a new $250.0 million share repurchase program. We
began purchasing shares under the new program in June 2000, after completion of
our $750.0 million program. On October 19, 2000, we declared a cash dividend of
$0.09 per share to be paid on November 17, 2000 to stockholders of record as of
November 3, 2000. The declaration and payment of future dividends, as well as
the amount thereof, and the amount of future repurchases of our Common Stock
beyond authorized amounts are subject to the discretion of our Board of
Directors and will depend upon our results of operations, financial condition,
cash requirements, future prospects and other factors deemed relevant by our
Board of Directors. There can be no assurance that we will declare and pay any
future dividends or repurchase additional shares of our Common Stock. (1)
-----
(1) See Statement Regarding Forward-Looking Statements on page 20.
19
<PAGE>
EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
We will implement the provisions of Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("Statement 133"), which is required to be adopted for financial
statements issued for the fiscal year ending December 31, 2001. Statement 133
standardizes the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, by requiring that an entity
recognize those items as assets or liabilities in the statement of financial
position and measure them at fair value. Management believes that adoption of
Statement 133 will not have a material impact on our financial statements. (1)
STATEMENT OF FORWARD-LOOKING STATEMENTS
Statements in this report that are not strictly historical, including
statements as to plans, objectives and future performance, are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. We have based these
forward-looking statements on our current expectations and projections about
future events. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. These forward-looking statements are subject to risks and
uncertainties that could cause actual events or results to differ materially
from the events or results expressed or implied by the forward-looking
statements. You are cautioned not to place undue reliance on these
forward-looking statements. Risks and uncertainties associated with our
forward-looking statements include, but are not limited to: the loss and
inability to replace the bookings generated by one or more of our five largest
travel agency customers; our ability to effectively execute our sales
initiatives in key markets; our sensitivity to general economic conditions and
events that affect airline travel and the airlines that participate in our
Apollo(R) and Galileo(R) systems; circumstances relating to our investment in
technology, including our ability to timely develop and achieve market
acceptance of new products; our ability to successfully expand our operations
and service offerings in new markets, including the on-line travel market; our
ability to manage administrative, technical and operational issues presented by
our expansion plans and acquisitions of other businesses; our ability to deliver
to Galileo and to outside customers a new, Internet protocol-based network as
planned, and for the cost and within the time frame currently estimated; the
results of our international operations and expansion into developing and new
computerized reservation system ("CRS") markets and other travel distribution
channels, governmental approvals, trade and tariff barriers, and political
risks; the type and number of strategic alternatives, if any, designed to
maximize shareholder value as determined by our Board of Directors; new or
different legal or regulatory requirements governing the CRS industry; and
natural disasters or other calamities that may cause significant damage to our
Data Center facility.
-----
(1) See Statement Regarding Forward-Looking Statements on page 20.
20
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Certain of our expenses are subject to fluctuations in currency values and
interest rates. We address these risks through a controlled program of risk
management that includes the use of derivative financial instruments. To some
degree, we are exposed to credit-related losses in the event of nonperformance
by counterparties to financial instruments, but management does not expect any
counterparties to fail to meet their obligations given their high credit
ratings. (1) We do not hold or issue derivative financial instruments for
trading purposes.
We enter into foreign exchange forward contracts to manage exposure to
fluctuations in foreign exchange rates related to the funding of our European
and Canadian operations. At September 30, 2000, we have entered into foreign
exchange forward contracts that provide for purchases of GBP 2.5 million, CAD
9.9 million, and EUR 7.0 million at various dates throughout the remainder of
2000. At September 30, 2000 and December 31, 1999, the notional principal
amounts of outstanding forward contracts were $16.8 million and $19.6 million,
respectively. The fair value of outstanding forward contracts at September 30,
2000 and December 31, 1999 was $(0.3) million and $0.03 million, respectively.
As of September 30, 2000, we were party to a $500.0 million 16-month credit
agreement and a $400.0 million five-year credit agreement (collectively, the
"Credit Agreements") with a group of banks. Interest on the borrowings may be
either Base Rate, CD Rate or LIBOR Rate based. For the nine months ended
September 30, 2000, the effective interest rate for loans outstanding under the
Credit Agreements was 6.82%. If interest rates had averaged 10% higher in the
first nine months of 2000, our interest expense would have hypothetically
increased by $3.3 million. This amount was calculated by applying the
hypothetical increase to the applicable interest rates and outstanding principal
throughout the nine months ended September 30, 2000.
We have also entered into interest rate swap agreements to convert portions
of our variable rate debt to fixed rate. We account for our interest rate swap
agreements as a hedge of our interest rate exposure. At September 30, 2000 and
December 31, 1999, we had outstanding interest rate swap agreements with a total
notional value of $34.4 million with fixed interest rates averaging 5.87%. The
fair value of outstanding swap agreements at September 30, 2000 and December 31,
1999 was $0.6 million and $1.0 million, respectively.
We are also exposed to equity price risks on the marketable equity
securities we hold for strategic purposes. Assuming a 20% adverse change in the
September 30, 2000 equity prices of our marketable securities, our financial
position would not have been materially affected.
------
(1) See Statement Regarding Forward-Looking Statements on page 20.
21
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
In March 2000, we announced the launch of Quantitude, Inc. ("Quantitude"),
a new, wholly owned telecommunications subsidiary. Quantitude is building an
end-to-end private network on a standard Internet protocol platform (TCP/IP) to
deliver global Internet, virtual private network, and telecommunications network
services to a variety of customers including the Company. Most endpoints are
scheduled to be connected by the end of 2001, and the entire effort is expected
to be completed in three years. (1) We are in the process of transferring asset
ownership of our existing network and network personnel to Quantitude, which
will provide current and future network services to the Company. (1)
In October 2000, our Board of Directors authorized management to explore
strategic alternatives for the Company to maximize shareholder value. Such
alternatives include, but are not limited to, a leveraged buyout or sale to a
strategic buyer. However, we can provide no assurance that any such transaction
will be completed. (1)
-------
(1) See Statement Regarding Forward-Looking Statements on page 20.
22
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
Exhibit Number Exhibit Description
-------------- -------------------
*10.1 Galileo International Management Incentive
Plan - 2000 Plan Summary, as amended
**10.2 Software Development and License Agreement,
dated as of July 5, 2000, between Galileo
International, L.L.C., Electronic Data Systems
Corporation and EDS Information Services L.L.C.
10.3 Amendment No. 5 dated September 1, 2000 to Contract
Tariff Attachment to AT&T OneNet Contract (1)
27.1 Financial Data Schedule
* Management contract or compensatory plan or arrangement.
** Portions of this Exhibit have been omitted pursuant to a request
for confidential treatment. The omitted material has been filed
separately with the Securities and Exchange Commission.
(1) AT&T OneNet Contract dated December 28, 1998, as filed as
Exhibit 10.31 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.
(b) Reports on Form 8-K - No current reports on Form 8-K were filed
for the quarter ended September 30, 2000.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Galileo International, Inc.
Date: November 13, 2000 By: /s/ Cheryl M. Ballenger
---------------------------
Cheryl M. Ballenger
Executive Vice President, Finance,
Chief Financial Officer and
Treasurer
24
<PAGE>
GALILEO INTERNATIONAL, INC.
Exhibit Index
Exhibit Number Exhibit Description
-------------- -------------------
*10.1 Galileo International Management Incentive
Plan - 2000 Plan Summary, as amended
**10.2 Software Development and License Agreement,
dated as of July 5, 2000, between Galileo
International, L.L.C., Electronic Data Systems
Corporation and EDS Information Services L.L.C.
10.3 Amendment No. 5 dated September 1, 2000 to Contract
Tariff Attachment to AT&T OneNet Contract (1)
27.1 Financial Data Schedule
* Management contract or compensatory plan or arrangement.
** Portions of this Exhibit have been omitted pursuant to a request
for confidential treatment. The omitted material has been filed
separately with the Securities and Exchange Commission.
(1) AT&T OneNet Contract dated December 28, 1998, as filed as
Exhibit 10.31 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.
25
<PAGE>
Exhibit 10.1
MANAGEMENT INCENTIVE PLAN - 2000 PLAN SUMMARY
The Plan's Objectives
- To attract, retain, and motivate a top quality management team.
- Focus management's attention and energy on the financial goals
of Galileo International, Inc.
- Create a strong and direct link between cash compensation and
both individual and corporate annual performance.
Plan Overview
Plan Period
The plan period is 1 January, 2000 through 31 December, 2000.
Eligibility
Employees of participating Galileo companies are eligible to
participate in the Management Incentive Plan ("Plan") based upon
duties and responsibilities of their positions and ability to
impact the overall results of Galileo International, Inc.
Individuals with a grade of M3 and above or T9 are eligible.
See the Company Eligibility Table (see Addendum A on page 8) for
a list of participating Galileo companies in the Plan.
Employees may not participate in more than one Company sponsored
incentive plan concurrently. Company-sponsored incentive plans are
plans such as this Management Incentive Plan, Global Profit Sharing
and U.S. Sales Compensation - Subscriber Sales & Support.
|X| The payment terms for each plan will apply respective to the
period of time the employee was a participant of that plan.
Any individual who commences participation after January 1 of
the year is eligible to receive a prorated award, provided all
other requirements are satisfied. Individuals must be participants
in the Management Incentive Plan prior to September 1st to be
eligible for any award for the year.
The Company and/or Compensation Committee of the Board of the
Company reserves the right to remove individual participants from
the Plan indefinitely or during any given year for a reason such as
absence from active employment, individual performance issues or
other reasons affecting their ability to contribute to corporate
results.
|X| In particular, participants on a leave of absence for 8
consecutive months or more during a plan period will not be
eligible for an award for that year.
|X| For leaves of a shorter duration, see the section on
"Calculating Individual Awards".
|X| Notwithstanding the foregoing, employees must be employed by a
participating company on the date an award is paid for a plan
period to be eligible to receive an award under the Plan for
such period.
Incentive Opportunities
Corporate Target and Award Levels
The Chief Executive Officer and the Compensation Committee of
the Board of the Company determine the corporate performance
measure and targets under the Plan.
Bonus payments are based on achievement of individual and
corporate objectives for the plan period as shown in Table 1.
Corporate results determine the percentage of target award
potentially payable to each participant as illustrated in Table 2.
The maximum payout for both the corporate and individual ratings
is 150% of the target incentive potential.
Individual Target and Award Potential
The target incentive potential is based on eligible salary
grades. The salary grade together with local competitive and
Company practice determine the targets.
Awards are calculated using the rate of monthly base pay on
December 31st of the year for which the award is made. If
prorated, the base pay on the last day of work in the previous
position is used.
|X| Base pay for the year is the employee's monthly base salary
multiplied by the number of pay months in the year and fractions
of a month the employee is eligible for participation in the
plan.
The Chief Executive Officer, through his senior executives, is
responsible for developing appropriate individual goals for
participants.
|X| These goals should be established early in the first quarter of
the year and documented. Each objective, typically five or six,
should be weighted to represent its relative importance to the
other objectives. The total of assigned weights must equal 100.
|X| During the year, and as needed, these goals may be reviewed and
modified to continue to support business needs
|X| Significant changes in the goals initially established should be
discussed. To ensure thorough and accurate communication, these
changes should be documented.
Table 1 is used to determine the award payable to each
participant in the year.
|X| A portion of this award is based on corporate results and the
remainder is based on the achievement of individual performance
goals.
|X| The portion of the award attributable to either corporate or
individual results is intended to reflect the relative ability
of individuals at each level to directly affect each set of
results.
Table 1
--------------------------------------------------------------------------
Salary Portion of Award Attributable to
----------------------------------------
----------------------------------------
Title Level Grade Corporate Results Individual Results
--------------------------------------------------------------------------
----------------------------------------
Chief Executive Officer M9 100% 0%
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Executive Vice President M7 100% 0%
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Senior Vice President M6 100% 0%
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Vice President M5 75% 25%
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Senior Director M5 50% 50%
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Director M4 50% 50%
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Senior Manager M3 25% 75%
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Principal Engineer T9 25% 75%
--------------------------------------------------------------------------
------------------------------------------------------------------------
Performance Measures and Standards
Corporate financial performance measures apply in the same way
for all participants. Individual performance measures will vary by
individual.
2000 corporate financial performance for the 2000 Management
Incentive Plan is measured on Earnings Per Share (EPS). Threshold,
target and maximum award levels are shown in Table 2.
Table 2
--------------------------------------------------------------------------
Performance vs 2000 MIP Target Potential Target Award
--------------------------------------------------------------------------
--------------------------------------------------------------------------
94% 50%
--------------------------------------------------------------------------
--------------------------------------------------------------------------
100% 100%
--------------------------------------------------------------------------
--------------------------------------------------------------------------
106% 150%
--------------------------------------------------------------------------
Performance between levels can be interpolated or estimated as
appropriate.
The Company reserves the right to exclude unusual profit or
expense events from the calculation of EPS for this Plan. These
events are unusual items not related to operating performance.
Award Determination
Incentive awards are determined as soon as practicable after the
close of the fiscal year and paid as soon as possible following
Compensation Committee and/or Board approval, as described below.
Approval Process
Bonuses, based on either corporate or individual results, are
not paid if the Company does not meet the threshold level of
corporate financial performance.
Individuals, whose overall personal performance is assessed at
50% of target or less, will not be eligible for any payment,
including the portion attributable to corporate results.
Company Performance
The Board has the authority to approve the Company's financial
performance based on the audited results determined by the
Company's auditor.
Individual Performance
The Board has the authority to approve the total award payout
amount for individual performance.
The Board requires detailed review and approval of award
payments for the Corporate Officers and others with base pay of
US$150,000 or its local equivalent, or more.
Calculating Individual Awards
As soon as practicable after the Plan period, the manager and
participant review the level of achievement of each of the
objectives. The manager assigns a rating to each objective. Based
on the weighting and rating, an overall rating is assigned.
The results are summarized and approved by the Executive or
Senior Vice President, who is responsible for producing and signing
a finalized version documenting the individual and overall results
and sending it to Human Resources.
Human Resources calculates the award amounts and implements
payment.
The following example illustrates the calculation of an award
paid to a participant with a prior year's December 31st base pay of
$100,000 and a target bonus of 35%. Additional assumptions are:
that the individual was in the Plan for the entire calendar year
for which the award is made and was employed at the time of
payment; that the Company's performance is slightly above target
and is paid out at 103.85 and that the individual received a rating
of 90% against individual objectives.
Table 3
-----------------------------------------------------------------------
Portion of Award
Attributable to
---------------------------------
---------------------------------
Bonus Payment Calculation Corporate Individual Award
Results Results Payment
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Actuals 50% 50%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Prior Year's Base 12/31 - $100,000 50,000 50,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Target Level - 35% 35% 35%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Target Performance Level - 100% for both $17,500 $17,500 $35,000
Corporate and Individual Results
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Performance Levels - Award Payment at 103.85 103.85% 90%
Company and 90% of Individual Results
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$18,173.75 $15,750.00 $33,923.75
--------------------------------------------------------------------------------
Participants included for part of the year receive prorated
payments, as explained in the Plan.
Participants promoted during the year receive prorated payments
based on the time spent at each of the one or more target levels
for which they were eligible. The individual's base pay for each
bonus target is used to calculate the award potential.
Participants on leave who are absent from active employment for
less than 8 consecutive months during the plan period remain
eligible for a payment for the period. The eligible base pay for
the period may be prorated based on the amount of time absent from
active employment.
|X| Employees on a leave of less than 3 consecutive months are
eligible for an award payment based on full year participation,
and no proration of base pay will be made.
|X| Employees on a leave of 3 consecutive months but less than 8
consecutive months will be eligible for an award based on their
eligible pay as prorated to reflect that absence. However, the
manager has some discretion to amend the individual's
performance rating in appropriate circumstances as outlined
below.
-- If a leave is taken after objectives are set:
If the participant's objectives were adjusted to reflect the
contribution that s/he was expected to make during the
remaining number months of the Plan year, the manager should
rate him/her against these objectives.
If the participant's objectives were not adjusted as a result
of the leave, leading to the participant receiving a
significantly lower rating than would otherwise be expected,
the manager may recommend an adjustment to the individual
rating to ensure an equitable result is given reflective of
the participant's performance and contribution.
-- If the participant's objectives are established after the
employee returned from
leave:
The objectives should reflect what is expected to be achieved
in the remaining Plan period.
|X| In all cases, of absence exceeding 3 consecutive months, the
individual and corporate awards will be determined using the
participant's prorated base pay.
Award Payment
Participants who leave direct employment with a participating
company for any reason at any time prior to payment being made for
a plan period will forfeit any award that may have been available
for such period under this Plan.
Plan Provisions
The Company reserves the right to amend or terminate the
Management Incentive Plan at any time. In addition, at the sole
discretion of the Company, the Company may amend or adjust the
incentive award amounts under this Plan in recognition of unusual
or nonrecurring events affecting the Company, changes in law or
accounting principles or for any other reason. The decisions of
the Company with respect to the award amounts under this Plan are
final and binding on all parties.
Neither participation in the Plan nor the level of participation
are guaranteed from year to year under the Plan or any similar Plan.
Award payments are subject to statutory deductions including
taxes.
Addendum A
Company Eligibility Table
---------------------------------------------------------------------
Company Business Name Eligibility Date
---------------------------------------------------------------------
---------------------------------------------------------------------
Apollo Galileo USA Partnership 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Apollo Travel Services Mexico S.A. de C.V. 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo Asia Limited 1 January, 2000
(Hong Kong, Philippines and Singapore employees)
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo Belgium S.A. 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo Canada Distribution Systems, Inc. 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo Deutschland GmbH 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo do Brasil & Cia 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo Espana, S.A. 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo France SARL 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo International, Inc. 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo International, L.L.C. 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo International Services, Inc. 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo Latin America Venezuela, C.A. 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo Netherland B.V. 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo Nordiska AB 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo Portugal Limited 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo Switzerland AG 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
The Galileo Company 1 January, 2000
---------------------------------------------------------------------
---------------------------------------------------------------------
Galileo United Kingdom (Travel Automation Services) To Be Determined
---------------------------------------------------------------------
---------------------------------------------------------------------
Quantitude, Inc. To Be Determined
---------------------------------------------------------------------
---------------------------------------------------------------------
S.D. Shepherd Systems, Inc. Ineligible
---------------------------------------------------------------------
---------------------------------------------------------------------
Terren Corporation Ineligible
---------------------------------------------------------------------
---------------------------------------------------------------------
THOR, Inc. Ineligible
---------------------------------------------------------------------
---------------------------------------------------------------------
TRIP.com, Inc Ineligible
---------------------------------------------------------------------
<PAGE>
Exhibit 10.2
Software Development and License Agreement
This Software Development and License Agreement (the "Agreement"),
dated as of July 5, 2000 documents the business relationship between
each of Galileo International, L.L.C., a Delaware limited liability
company ("GI"), Electronic Data Systems Corporation, a Delaware
corporation ("EDS"), and EDS Information Services L.L.C., a Delaware
limited liability company ("EIS"), and describes the terms and
conditions under which EDS will i) perform for GI the software
development services described below and ii) applies to the use by GI
of the EDS proprietary software known as *** (such software and
other software designed, developed, owned, modified or provided by
EDS, as delivered to GI hereunder are referred to in this Agreement as
the "Licensed Program"). The obligations of EDS set forth in this
Agreement will be performed by EDS, itself and through its direct and
indirect wholly-owned subsidiaries, including EIS. All references to
EDS in this Agreement will be deemed to include all such subsidiaries,
and EDS and GI may be referred to in this Agreement individually as a
"party" and together as the "parties".
Background
A. GI operates a global electronic distribution system for the
travel industry and desires to license an *** that includes ***.
GI desires to license *** from EDS and to obtain services on a
time and materials basis from EDS in accordance with the terms
and conditions of this Agreement.
B. EDS has partially developed ***, which can be utilized as a
basis for a ***. EDS is willing to modify and enhance *** to complete
development of a *** that includes *** in accordance with the terms
and conditions of this Agreement.
1. Term. The term of this Agreement will begin on July 5, 2000
(the "Effective Date"), and, unless earlier terminated as
provided in this Agreement, will continue through ***.
Such original term may be extended by mutual written
agreement of the parties. The total elapsed time for completion
of the Services is estimated to be *** from the Effective
Date. EDS will exercise reasonable efforts to complete the
Services (as later defined) in that time. If slippage occurs or
is likely to occur in the completion of the Services, then EDS
agrees to assign additional qualified technical personnel to the
project. Within 30 days after the Effective Date, the parties
will prepare a mutually agreeable development plan with
appropriate milestones and time schedules.
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
This Agreement is subject to approval by GI's board of
directors. In the event such approval is not obtained on July
20, 2000, this Agreement shall terminate and GI shall pay for
Services rendered through the date of termination. The parties
acknowledge that EDS may adjust its "ramp-up" process because of
this contingency, but, unless otherwise agreed in writing, any
adjustments will not change the deadlines specified herein.
2. EDS Services. During the term of this Agreement, EDS will
perform the services, and produce the deliverables, described in
Exhibit A (the "Services" or "EDS Services") utilizing EDS and
GI personnel.
In the event changes are requested by GI which require a change
in scope of the development Services described in Exhibit A, the
parties shall mutually agree in writing to the additional
services prior to any work being performed. Personnel to
perform such services shall be staffed from GI resources, if
possible. EDS resources shall be billed at the rate of ***
per Man Month. A "Man Month" is defined as *** of productive time.
During the term of this Agreement, in the event services in
addition to those described in Exhibit A are desired by GI, the
parties shall mutually agree to additional services prior to any
work being performed. EDS resources shall be billed at the rate
of *** per Man Month, subject to adjustment for inflation as
described in Exhibit C .
Page 1
The personnel provided by EDS to perform the Services shall have
appropriate skills to perform their duties.
3. Program Acceptance. EDS shall use reasonable efforts to deliver
completed source code for each module of the Licensed
Program *** to GI on or before the following dates: ***.
Promptly following GI's receipt of the completed source code
for each module of the Licensed Program ***, GI shall
diligently conduct acceptance tests of the installed Licensed
Program at its premises. The maximum test period shall be
*** from the date of receipt of the source code. If the
Licensed Program performs in accordance with the
acceptance criteria set forth in Exhibit A, then GI shall
accept the Licensed Program in writing; if the Licensed
Program fails to so perform, then GI shall promptly deliver
to EDS a notice stating in reasonable detail the respects in
which the Licensed Program failed to conform.
Notwithstanding the foregoing, problems with the
Licensed Program will be communicated to EDS as they
may be discovered during the acceptance test period. Upon
receipt of the corrected code from EDS for each such module
of the Licensed Program, GI shall promptly retest the
Licensed Software.
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
4. Representatives. During the term of this Agreement, EDS and GI
will each maintain a representative who will be its primary
point of contact in dealing with the other under this Agreement
and will have the authority and power to make decisions with
respect to actions to be taken by it under this Agreement.
Either party may change its representative by giving notice to
the other of the new representative and the date upon which such
change will become effective. In performing its obligations
under this Agreement, EDS will be entitled to rely upon any
routine instructions, authorizations, approvals or other
information provided to EDS by GI's representative or, as to
areas of competency specifically identified by such
representative, by any other GI personnel identified by GI's
representative, from time to time, as having authority to
provide the same on behalf of GI in such person's area of
competency. Unless EDS knew of any error, incorrectness or
inaccuracy in such instructions, authorizations, approvals or
other information, EDS will incur no liability or responsibility
of any kind in relying on or complying with any such
instructions, authorizations, approvals or other information.
5. Reporting. During the performance of the Services, the parties
shall establish a steering committee which shall meet monthly to
review the status of the development project and make any
changes thereto. Additionally, EDS shall deliver informal
written biweekly status reports to GI in a mutually agreeable
format.
6. GI's Role. During the term of this Agreement and in addition to
the other obligations of GI described herein, GI will, at its
own cost and expense, have the obligations to EDS, and retain
the responsibilities, described in Exhibit B. GI acknowledges
and agrees that EDS' ability to timely perform the EDS Services
in accordance with this Agreement is contingent upon GI's timely
performance of those obligations assigned to GI hereunder.
7. Grant of License. On or about the date GI secures its board of
directors' approval of this Agreement, GI shall so notify EDS in
writing, and EDS will provide to GI one then-current copy of the
source code version of the Licensed Program and one "as is" copy
of any documentation relating to the Licensed Program. Upon
acceptance of each of the *** modules of the Licensed Program as
described in Exhibit A, EDS will provide
to GI one copy of the source code version of the Licensed
Program and reasonably complete functional and operational
documentation for the Licensed Program (the "Documentation").
Beginning upon acceptance of the Licensed Program and, unless
this License is terminated earlier pursuant to Section_15, GI
will have a *** right and license to ***, and otherwise use
and operate the Licensed Program in *** for *** and to use
the Documentation, only and all in accordance with the terms
and
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
conditions of this License. In the event GI desires to operate
the Licensed Program ***, GI may request a grant of such
rights which shall not be unreasonably withheld. GI accepts
responsibility for (a)
Page 2.
the functional specifications and performance criteria
necessary to meet GI's requirements (b) the installation
of the Licensed Program, and (c) the use of the Licensed Program.
8. Restrictions on Use. During the term of this License, GI will
comply with the restrictions on use of the Licensed Program set
forth in this Section 8.
(a) Scope of Use. The Licensed Program and the Documentation
will be utilized (i) by GI only in connection with its
provision of *** and (ii) only by GI employees,
customers,
suppliers or contractors who are directly involved in the
use or maintenance of the Licensed Program on GI's behalf
and who are subject to confidentiality provisions no less
restrictive than those set forth in this License. For
purposes of this Agreement, GI agrees that its customers
shall not include ***. Use of the Licensed Program by
affiliates of GI shall be
considered authorized use so long as such affiliate is
wholly owned or controlled by GI.
(b) Disclosure. GI will not, and will not permit any other person
to, disclose, display, loan, publish, transfer (whether by
sale, assignment, exchange, gift, operation of law or
otherwise), license, sublicense, copy or otherwise
disseminate the Licensed Program or the Documentation, in
whole or in part, to any third party without the prior
written consent of EDS or unless otherwise expressly
permitted in this Section 8. GI will not, and will not
permit any other person to, recreate the Licensed Program.
(c) Proprietary Rights Notices. GI will not alter, conceal or
remove any copyright, trade secret, patent, proprietary or
other legal notice contained on or in the Licensed Program
or the Documentation. GI will include or create on or in
all copies of the Licensed Program and the Documentation
the exact form of any such notices. Such notices are not
required to appear on any screen displays when the
Licensed Program is executed.
(d) Safeguards. The Licensed Program and the Documentation are
being disclosed by EDS to GI in confidence. GI will
implement and maintain precautions, no less rigorous than
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
those GI uses to protect its own confidential information,
but in no event less than reasonable precautions, to
safeguard the Licensed Program and the Documentation so
that no unauthorized persons have access to the Licensed
Program or the Documentation and that no persons
authorized to have such access will take any action that
would violate the confidentiality obligations of this
License if taken by GI. GI will promptly report to EDS
any actual or suspected violation of the confidentiality
obligations of this License. GI will, at its expense,
take such steps as EDS may request to remedy any such
violation, including retrieving any portion of the
Licensed Program or the Documentation that is being used,
or is otherwise possessed, in breach of this License, and
will pay or reimburse EDS for all expenses that EDS incurs
which are related to the remedy of any such violation.
(e) Injunctive Relief. GI acknowledges and agrees that the Licensed
Program and the Documentation are the valuable property
and trade secrets of EDS, that any violation by GI of the
confidentiality obligations of this License would cause
EDS irreparable injury for which it would have no adequate
remedy at law and that, in addition to any other remedies
that EDS may have, it will be entitled to preliminary and
other injunctive relief against any such violation. This
Section 8(e) will not limit either party's right to seek
injunctive relief for any other violation of this License,
including a breach of Section_11.
9. Payment.
(a) Services. In consideration for the performance of the EDS
Services, GI will pay EDS on a time and materials basis at
the rates set forth in Exhibit C and in accordance with
the terms set forth therein.
Page 3.
reflecting the amount owed to EDS by GI for the previous
month, with such supporting documentation as GI reasonably
requests, and GI will pay the invoiced amount by the 15th
day following receipt by GI of the invoice.
(b) License. For the license of the Licensed Program and the
Documentation, GI will pay to EDS the amounts, and in
accordance with the schedule, set forth in Exhibit C.
(c) Time of Payment. All amounts will be payable to EDS by check or
by ACH (for amounts less than $1,000,000) or Wire Transfer
(for amounts of $1,000,000 or more), in accordance with
payment instructions provided by EDS from time to time, so
as in each case to constitute immediately available funds
by 12 noon, Plano, Texas time, on the payment date no
matter what the method of payment. Any past due amounts
will bear interest until paid at a rate of interest equal
<PAGE>
to the lesser of (i) the prime rate established from time
to time by Citibank of New York plus two percent or (ii)
the maximum rate of interest allowed by applicable law.
(d) Out-of-Pocket Expenses. GI will pay or reimburse EDS for all
reasonable out-of-pocket expenses, including travel and
travel-related expenses (in accordance with GI's travel
guidelines), incurred by EDS in the performance of the
EDS Services. EDS will invoice GI separately for all such
out-of-pocket expenses, which invoice and appropriate
supporting documentation will be sent by EDS to GI after
EDS incurs such expenses.
(e) Taxes. There will be added to any charges under this Agreement,
or separately billed, and GI will bear the cost of and
either pay to EDS, or reimburse EDS for the payment of,
amounts equal to any and all present or future taxes,
assessments, duties, permits, tariffs, fees and other
charges of any kind, however designated, assessed, charged
or levied now or hereafter, including state, local, sales,
use, property, gross receipts, provincial transaction,
value-added, goods and services, excise or similar taxes,
or other taxes or amounts of whatever nature or in lieu
thereof, and all additions to taxes, penalties, fines,
interest or similar liabilities imposed in connection
therewith, arising from or imposed on this Agreement, the
transactions arising hereunder or the services, products,
materials or other property or resources, or their use,
provided hereunder or otherwise used in connection
herewith, excluding income taxes that are based on or
measured by EDS' net income.
10. Employees. The EDS personnel performing the EDS Services will
be and remain the employees of EDS, and EDS will provide for and
pay the compensation and other benefits of such employees,
including salary, health, accident and workers' compensation
benefits and all taxes and contributions which an employer is
required to pay relating to the employment of employees. During
the term of the Agreement and for a period of 12 months
thereafter, neither party will solicit, directly or indirectly,
for employment or employ any employee of the other who is or was
involved in the performance of the EDS Services without the
prior written consent of the other.
11. Confidentiality. In addition to the terms and conditions of
Section 8, EDS and GI will have the confidentiality obligations
set forth in Exhibit D.
12. Warranties and Additional Covenants. EDS and GI will have the
obligations relating to warranties and additional covenants set
forth in Exhibit E.
13. Ownership. For all purposes, EDS will be considered the
owner of the Licensed Program and the Documentation and of all
copyright, trade secret, patent, moral and other intellectual
property rights contained or evidenced therein. Each party will
<PAGE>
retain all rights in any software, ideas, concepts,
know-how, development tools, techniques or any other proprietary
material or information that it owned or developed prior to
the date of this Agreement, or acquired or developed after the
date of this Agreement without reference to or use of the
intellectual property of the other party. All software that is
licensed by a party from
Page 4.
vendor. Subject to any third party rights or restrictions, EDS
will own all intellectual property rights in or related to all
deliverables that are developed and delivered under this
Agreement (the "Deliverables"). Notwithstanding anything to the
contrary in this Agreement, each party (i) will retain all right,
title and interest in and to all know-how, methodologies,
processes, technologies, algorithms or software development
tools used in performing this Agreement which are based on trade
secrets or proprietary information of such party, are developed
or created by or on behalf of such party without reference to or
use of the intellectual property of the other party, or are
otherwise owned or licensed by such party (collectively,
"Tools"), (ii) subject to the confidentiality obligations set
forth in Exhibit D, will be free to use the ideas, concepts,
methodologies, processes and know-how which are developed or
created in the course of performing this Agreement and may be
retained by such party's employees in intangible form, all
of which constitute substantial rights on the part of such
party in the technology developed as a result of performing
under this Agreement, and (iii) will retain ownership of any
software or Tools owned by such party that are used in producing
the Deliverables and become embedded in the Deliverables. No
licenses will be deemed to have been granted by either party to
any of its patents, trade secrets, trademarks or copyrights,
except as otherwise expressly provided in this Agreement.
Nothing in this Agreement will require EDS or GI to
violate the proprietary rights of any third party in any
software or otherwise. The provisions of this Section 13 will
survive the expiration or termination of this Agreement for
any reason. For all purposes, GI will be considered the owner
of all modifications GI makes to the Licensed Program and the
Documentation subsequent to Acceptance and of all copyright,
trade secret, patent, moral and other intellectual property
rights contained or evidenced therein.
14. Mediation; Arbitration. Any dispute, controversy or claim
arising under, out of, in connection with or in relation to this
Agreement, or the breach, termination, validity or
enforceability of any provision hereof (a "Dispute"), if not
resolved informally through negotiation between the parties,
will be submitted to non-binding mediation. The parties will
mutually determine who the mediator will be from a list of
mediators obtained from the American Arbitration Association
office located in the city determined as set forth below in this
Section 14 (the "AAA"). If the parties are unable to agree on
the mediator, the mediator will be selected by the AAA. If any
<PAGE>
Dispute is not resolved through mediation, it will be resolved
by final and binding arbitration conducted in accordance with
and subject to the Commercial Arbitration Rules of the AAA then
applicable. One arbitrator will be selected by the parties'
mutual agreement or, failing that, by the AAA, and the
arbitrator will allow such discovery as is appropriate,
consistent with the purposes of arbitration in accomplishing
fair, speedy and cost effective resolution of disputes. The
arbitrator will reference the rules of evidence of the Federal
Rules of Civil Procedure then in effect in setting the scope of
discovery, except that no requests for admissions will be
permitted and interrogatories will be limited to identifying (a)
persons with knowledge of relevant facts and (b) expert
witnesses and their opinions and the bases therefor. Judgment
upon the award rendered in any such arbitration may be entered
in any court having jurisdiction thereof. Any negotiation,
mediation or arbitration conducted pursuant to this Section 14
will take place in New York. Other than those matters involving
injunctive relief or any action necessary to enforce the award
of the arbitrator, the parties agree that the provisions of this
Section 14 are a complete defense to any suit, action or other
proceeding instituted in any court or before any administrative
tribunal with respect to any Dispute or the performance of the
EDS Services by EDS. Nothing in this Section 14 prevents the
parties from exercising their right to terminate this Agreement
in accordance with Section 15.
15. Termination.
(a) Termination for Cause. If either party materially
defaults in the performance of any of its obligations
under this Agreement, which default (a) if of a
non-monetary nature, is not substantially cured within 30
days after notice is given to the defaulting party
specifying the default or, with respect to those defaults
that cannot reasonably be cured within 30 days, should
the defaulting party fail to proceed within 30 days
to commence curing the default and thereafter to proceed
with all reasonable diligence to substantially cure
the default, or (b) if of a monetary nature, is not
cured within 10 days after notice is given to the
defaulting party specifying the default, the party not in
default may, by giving written notice thereof to the
Page 5
defaulting party, terminate this Agreement upon not less
than 60 days prior written notice.
(b) Termination for Bankruptcy and Related Events. Subject
to Title 11, United States Code, if either party
becomes or is declared insolvent or bankrupt, is the
subject of any proceedings relating to its liquidation,
insolvency or for the appointment of a receiver or
similar officer for it, makes an assignment for
<PAGE>
the benefit of all or substantially all of its
creditors or enters into an agreement for the
composition, extension or readjustment of all or
substantially all of its obligations, then the other
party may, by giving written notice thereof to such
party, terminate this Agreement as of a date specified
in such notice of termination
(c) Termination for Delayed Completion. In the
event the *** module of the Licensed Program has not
passed the acceptance tests by *** (as
described in Exhibit A), GI has the right to terminate
this Agreement upon *** written notice. In the
event the *** module of the Licensed Program has
not passed the acceptance tests by *** (as described
in Exhibit A), GI has the right to terminate this
Agreement upon *** written notice.
(d) Termination for Convenience. GI may terminate this
Agreement for convenience at any time after *** from
the Effective Date, upon *** prior written notice ***.
(e) Effect of Expiration or Termination. Upon the expiration
or termination of this Agreement for any reason, GI will
pay EDS for all services provided and expenses incurred
through the effective date of such expiration or
termination. Further, in addition to any other rights
that either party may have, the license granted herein
will terminate, and GI will (i) promptly return to EDS all
copies of the Licensed Program and the Documentation in
GI's possession and completely erase the Licensed Program
from GI's computer system; and (ii) execute and deliver to
EDS a written certification that GI has complied with the
requirements of this Section_15 and no longer retains any
material relating to the Licensed Program or the
Documentation.
(f) Remedies for Failure to Perform. Subject to Section
15(a), if EDS materially defaults in the performance of
the Services or fails to substantially perform the
Services described on Exhibit A, then GI may elect, in
addition to any other remedy available to it, upon written
notice to EDS, to (i) terminate the Agreement as described
in Section 15(e) and, subject to Section 17, receive from
EDS an amount equal to that paid to EDS for the Services
of which EDS is in default or has failed to substantially
perform ; or (ii) continue development of the Licensed
Program itself with an equitable reduction of the license
fee based on the cost of completion of the Licensed
Program; ***.
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
Expiration or termination of this Agreement for any
reason will not release either party from any
liabilities or obligations of this Agreement which (i)
the parties have expressly agreed will survive any such
expiration or termination or (ii) remain to be performed
or by their nature would be intended to be applicable
following any such expiration or termination.
16. Indemnities. EDS and GI will have the indemnity obligations set
forth in Exhibit F.
17. Liability.
(a) General Limitation. Except for amounts owed,
breaches of the confidentiality obligations and
claims relating to personal injury and property
damage, each party's liability to the other for any
Page 6.
demonstrable direct damages arising out of or related to
this Agreement, regardless of the form of action that
imposes liability, whether in contract, equity,
negligence, intended conduct, tort or otherwise, will be
limited to and will not exceed, in the aggregate for all
claims, actions and causes of action of every kind and
nature, the sum of ***.
(b) Limitation on Other Damages. In no event will the measure
of damages payable by either party include, nor will
either party be liable for, any amounts for loss of
income, profit or savings or indirect, incidental,
consequential, exemplary, punitive or special damages of
any party, including third parties, even if such party has
been advised of the possibility of such damages in
advance, and all such damages are expressly disclaimed.
18. Excused Performance. Neither party will be deemed to be in
default hereunder, or will be liable to the other, for failure
to perform any of its non-monetary obligations under this
Agreement for any period and to the extent that such failure
results from any event or circumstance beyond that party's
reasonable control, including acts or omissions of the other
party or third parties, natural disasters, riots, war, civil
disorder, court orders, acts or regulations of governmental
bodies, labor disputes or failures or fluctuations in electrical
power, heat, light, air conditioning or telecommunications
equipment or lines, or other equipment failure, and which it
could not have prevented by reasonable precautions or could not
have remedied by the exercise of reasonable efforts.
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
19. Export Regulations. Each party shall comply with all applicable
United States government laws, regulations, orders or other
restrictions regarding export from the United States of computer
hardware, software, technical data or derivatives of such
hardware, software or technical data. Each Party will reasonably
cooperate with the other and will provide to the other promptly
upon request any end-user certificates, affidavits regarding
re-export or other certificates or documents as are reasonably
requested to obtain approvals, consents, licenses and/or permits
required for any payment or any export or import of products or
services under this Agreement. The provisions of this Section
19 will survive the expiration or termination of this Agreement
for any reason.
20. Right to Engage in Other Activities. GI acknowledges and agrees
that EDS may provide information technology services for third
parties at any EDS facility that EDS may utilize from time to
time for performing the EDS Services. The parties contemplate
that each party may wish to license the Licensed Program or
portions thereof to third parties. Accordingly, each party may
market the Licensed Program and ***. Subject to *** and to the
restrictions on the disclosure of confidential information
set forth in Exhibit D, nothing in this Agreement will
impair EDS' right to acquire, license, market, distribute,
develop for itself or others or have others develop
for EDS similar technology performing the same or similar
functions as the Licensed Program.
21. Notices. All notices under this Agreement will be in writing
and will be deemed to have been duly given if delivered
personally or by a nationally recognized courier service, faxed
or mailed by registered or certified mail, return receipt
requested, postage prepaid, to the parties at the addresses set
forth herein. All notices under this Agreement that are
addressed as provided in this Section 21, (a) if delivered
personally or by a nationally recognized courier service, will
be deemed given upon delivery, (b) if delivered by facsimile,
will be deemed given when confirmed and (c) if delivered by mail
in the manner described above, will be deemed given on the fifth
business day after the day it is deposited in a regular
depository of the United States mail. Either party may change
its address or designee for notification purposes by giving
notice to the other of the new address or designee and the date
upon which such change will become effective.
Page 7.
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
22. Public Relations and Marketing References. No media release,
public announcement or similar disclosure relating to this
Agreement or its subject matter shall be issued by either party
without the other party's approval of the content of such
release, announcement or disclosure prior to its release. This
provision does not alter the restrictions on the disclosure of
confidential information set forth in Exhibit D and, subject to
Exhibit D, will not be construed so as to delay or restrict
either party from disclosing any information required to be
disclosed in order to comply with any applicable laws, rules or
regulations. Notwithstanding the foregoing, each party will
have the right to list the name of the other party or to make
general references to the basic nature of the relationship
between the parties under this Agreement. However, neither
party will have the right to describe generally the type of
services being provided by EDS to GI under this Agreement in
such party's promotional and marketing materials, including
print, internet, radio, cable and broadcast mediums, without
first obtaining the other party's approval.
23. ***.
24. Audit Rights.
(a) General. Employees of each party and its auditors who are
from time to time designated by such party and who agree
in writing to the security and confidentiality obligations
and procedures reasonably required by the other party will
be provided with reasonable access to enable them to
conduct audits of the other's performance of matters
relevant to this Agreement, including (i) verifying the
accuracy of EDS' charges to GI, (ii) verifying that the
Services are being provided in accordance with this
Agreement, and (iii) verifying the transaction numbers
from which the royalty fees are determined. In any
sublicense of the Licensed Program to a third-party, each
party shall retain the right to audit such third-party's
use of the Licensed Program in order to verify the
transaction numbers on which the royalty fees are based.
(b) Procedures. Such audits may be conducted once a year
during reasonable business hours; provided, however, that
the parties may agree to more frequent audits as deemed
reasonably necessary. The requesting party will provide
the other party with prior written notice of an audit.
The responding party will cooperate in the audit, will
make the information reasonably required to conduct the
audit available on a timely basis and will assist the
designated employees of the requesting party or its
auditors as reasonably necessary. If the requesting party
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
requests resources beyond those resources then assigned to
the account team under this Agreement who are able to
provide reasonable assistance of a routine nature in
connection with such audit, such resources will be
provided at the requesting parties expense. Records that
support EDS' performance of the Services and other matters
relevant to this Agreement will be retained in accordance
with the party's retention guidelines. Notwithstanding
anything to the contrary in this Agreement, neither party
will be required to provide access to its proprietary
data. All information learned or exchanged in connection
with the conduct of an audit, as well as the results of
any audit, is confidential and will be subject to Section
11.
(c) Results. Following an audit, the requesting party will
conduct an exit conference with the other party to discuss
issues identified in the audit and will give the other
party a copy of any portion of the audit report pertaining
to such party. The parties will review each audit issue
and will determine (i) what, if any, actions will be taken
in response to such audit issues, when and by whom and
(ii) which party will be responsible for the cost of
taking the actions necessary to resolve such issues. Any
such determination will be based on the following
criteria: (A) who the owner of the original deficiency
is; (B) who has contractual responsibility for the
improvement of internal controls; and (C) who owns the
standards against which the audit is done. If any audit
reveals that a party has underreported the number of
transactions by ten percent (10%) or more, then that party
shall bear the cost of the audit.
Page 8.
25. Other. Where agreement, approval, acceptance or consent of
either party is required by this Agreement, such action will not
be unreasonably withheld or delayed. The parties are
independent contractors, and this Agreement will not be
construed as constituting either party as partner, joint
venturer or fiduciary of the other. If any provision (other
than a provision relating to any payment obligation) of this
Agreement or the application thereof to any persons or
circumstances is, to any extent, held invalid or unenforceable,
the remainder of this Agreement or the application of such
provision to persons or circumstances other than those as to
which it is invalid or unenforceable will not be affected
thereby, and each provision of this Agreement will be valid and
enforceable to the extent permitted by law. Nothing in this
Agreement may be relied upon or will benefit any party other
than EDS and GI. This Agreement (a) will be governed by the
substantive laws of the State of Texas (without giving effect to
any choice-of-law rules that may require the application of the
laws of another jurisdiction), (b) may not be assigned by either
party without the prior written consent of the other (except
that EDS will have the right to perform the EDS Services itself
<PAGE>
and through its direct and indirect wholly-owned subsidiaries
and to subcontract to unaffiliated third parties portions of the
EDS Services, so long as EDS remains responsible for the
obligations performed by any of its subsidiaries or
subcontractors to the same extent as if such obligations were
performed by EDS employees), (c) may not be changed or modified
orally or through a course of dealing, but only by a written
amendment or revision signed by the parties and (d) together
with the exhibits attached hereto (each of which is incorporated
into this Agreement by this reference), constitutes the entire
agreement of the parties with respect to the subject matter
hereof, superseding any previous or contemporaneous
representations, understandings or agreements with respect
thereto.
In Witness Whereof, the parties have duly executed and delivered this
Agreement by their duly authorized representatives as of the date
first set forth above.
GALILEO INTERNATIONAL, L.L.C. ELECTRONIC DATA SYSTEMS
CORPORATION
By: /s/ Cheryl Ballenger By: Timothy M.
Pruitt
Title: CFO Title: Client
Executive
Address: 9700 W. Higgins Address: Suite 500, 621 NW 53
Street
Rosemont, IL Boca Raton, FL 33487
Date: 7/21/00 Date:
7/18/2000
EDS INFORMATION SERVICES
L.L.C.
By: Timothy M. Pruitt
Title: Client
Executive
Address:
Date:
7/18/2000
61520v1
Page 9
<PAGE>
Exhibit A
EDS Services
This Exhibit A sets forth the deliverables and Services EDS will
perform for GI under this Agreement.
SERVICES
In accordance with the specifications set forth below, EDS shall
develop an *** that includes ***, using as
a basis its pre-existing *** software. Services shall include the
following, as such may be more specifically described in the Agreement:
|X| Project planning/scheduling
|X| Preparation of Development Plan, in cooperation with GI
(including target dates and deliverables)
|X| Architecting
|X| High level and detail design
|X| Coding
|X| Assist GI in configuring and maintaining development and testing
infrastructure
|X| Test Planning - determine test conditions/scripts/anticipated
responses (except for the acceptance test)
|X| Building and maintaining test database/s for all data subjects -
static/current data, incorporating test conditions
|X| Testing - Unit, Package/String/Integration, Performance/Stress,
System - (all aspects except Acceptance)
|X| Managing software including change control
|X| Software performance tuning
|X| Resolving errors
|X| Reporting project status
|X| Documenting the system - functional and operational
|X| Transferring knowledge to GI (including training, as described
below)
|X| Managing the development project tasks, which includes directing
GI team members
|X| Deliver software packages
|X| Provide support assistance
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
1.1 SPECIFICATIONS
The following documents contain the specifications that define the
required functionality and data management requirements of the
Licensed Program:
Functional Specification for *** Pricing (Attachment 1 to
Exhibit A)
Functional Specification for *** Pricing (Attachment 2 to
Exhibit A)
Functional Specification for *** (Attachment 3 to Exhibit A)
Data Management Specification (Attachment 4 to Exhibit A)
1.2 ACCEPTANCE CRITERIA
The following document defines the Acceptance Criteria for the
Licensed Program.
A - 1
Acceptance Criteria (Attachment 5 to Exhibit A)
TRAINING
At the commencement of this project and prior to being assigned to
perform Services, GI development personnel will be required to attend
training, at GI expense, in *** and/or ***. EDS will assist GI
in arranging these classes.
EDS and GI shall cooperate during the performance of the Services to
provide training and transfer of knowledge to GI personnel to enable
GI to independently operate and maintain the Licensed Program.
For example, GI personnel will obtain training and transfer of
knowledge by attending and participating in orientation training,
architectural overview sessions, participation in the development and
testing of the system and review and development of documentation. In
addition, EDS will provide GI personnel detailed design and program
reviews of any components of the Licensed Program that GI personnel
were not sufficiently involved in to enable them to independently
operate and maintain.
During the period after acceptance of the *** module of the
Licensed Program and prior to acceptance of the *** module,
the parties agree to coordinate all maintenance changes to the
Licensed Program.
A - 2
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
Exhibit B
GI's Role
B-1. Development Infrastructure. GI shall provide (at the times and
places specified in the development plan, the infrastructure
reasonably necessary for EDS' performance of the Services,
including, but not limited to, the following:
- Developer and Tester Workstations for GI personnel
- IBM PC 300PL 600 MHz Pentium III
- 128 MB RAM
- 20 GB Hard drive
- CD ROM
- 17" Color Monitor
- Keyboard
- Mouse
- 10/100 Mbps Ethernet adapter
- Windows 98
- Office 97
- License for *** development software
- License for Hummingbird software
- Development and Test System Servers
- 2 Sun Microsystems Enterprise 4500 Servers with 10 400 Mhz
processors each with:
- 8 Megabytes cache per processor
- 20 GB of main memory
- 4 18GB 10,000RPM hard drives
- 1 Gigabit Ethernet adapter
- 19" Color monitor
- Keyboard
- CDROM
Note: For development and testing purposes, GI shall provide Sun
Microsystems servers using the UltraSparc II or Ultrasparc III
processor technology (or new or higher capacity Sun Microsystems
servers).
- 1 Network Appliances Cluster f760 disk storage system with 200
GB of usable space
- 1 CISCO Ethernet Switch with suitable number of Gigabit and
10/100 Ethernet ports.
- T1, routers, firewalls and peripheral equipment for connectivity
to development and test systems between the EDS facilities in
Miami, Florida and the GI facilities in Denver CO.
- 1 HP Laserjet 8000 DN for use by GI personnel
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
B-2. Hardware. GI will provide to EDS access to such items of GI
hardware and related equipment (including personal computers,
terminals, printers, remote job entry workstations and similar
equipment), as well as telecommunications lines and equipment,
at the GI or EDS facilities as EDS reasonably requests in
connection with the performance by EDS of the EDS Services.
B - 1.
B-3. Lack of Infrastructure or Inability to Access. If for any reason
(including a determination that the costs and expenses
associated with obtaining consents, licenses or other rights or
with finding an alternative solution are unreasonable) GI
declines or is unable to provide to EDS the above-described
development infrastructure or the right to access any hardware,
related equipment or software for any reason, EDS will be
relieved of those of its obligations under this Agreement that
are affected by such lack of infrastructure or access rights,
and the parties will mutually agree in writing on any
appropriate adjustments to this Agreement, whether with respect
to the scope of the EDS Services, EDS' charges or otherwise.
B-4. Personnel Resources. GI will provide and make available to EDS
appropriate management and technical personnel of GI who will
work with EDS and will perform, on a timely basis, those
activities referenced in Exhibit A, under the direction and
guidance of EDS. Such technical personnel shall provide up to
*** Man Months of developer time. If additional GI developer
time is needed, provision of such resources shall be subject to
GI's consent, which consent shall not unreasonably be withheld.
In addition to technical personnel, other functional (i.e.,
faring and testing) expertise will be provided by GI. In
addition, GI will cooperate with EDS through making available
such personnel, management decisions, information,
authorizations, approvals and acceptances in order that EDS'
performance of the EDS Services may be properly, timely and
efficiently accomplished.
B-5 Data Sources. GI shall be responsible for all expenses
associated with data sources for GI's customers and shall grant
EDS access to subscription information obtained from the data
sources identified in the Data Management Specifications.
B - 2
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
Exhibit C
Payment
I. LICENSE FEES:
The fee for the Licensed Program shall be *** payable as follows:
-------------------------------------------------------------------------
*** MODULE *** MODULE
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Amount Due Date Amount Due Date
-------------------------------------------------------------------------
-------------------------------------------------------------------------
*** ***
-------------------------------------------------------------------------
-------------------------------------------------------------------------
*** Upon Acceptance *** Upon Acceptance
-------------------------------------------------------------------------
-------------------------------------------------------------------------
*** Semi-annually, *** Semi-annually,
commencing 6 months commencing 6 months from
from the date of the date of Acceptance
Acceptance and ending and ending when the
when the aggregate aggregate amount of
amount of *** *** has been
has been fully paid. fully paid.
-------------------------------------------------------------------------
1 Notwithstanding the foregoing, in the event that Acceptance by
GI of the *** module of the Licensed Program has not
occurred by *** (the *** Target Date"), then
payment of this and all subsequent installments of the License
Fee applicable to such module shall be deferred until Acceptance
of the *** module by GI; and an amount equal to ***
for each 30-day period from the *** Target Date until
Acceptance of the *** module by GI shall be credited
against future installments of the License Fee. In the event
Acceptance occurs prior to the *** Target Date, EDS shall
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
receive a bonus of *** for each 30-day period between the
date of Acceptance and the *** Target Date.
2 In the event that Acceptance by GI of the *** module
of the Licensed Program has not occurred by *** (the
*** Target Date"), then payment of this and all
subsequent installments of the License Fee applicable to such
module shall be deferred until Acceptance of the ***
module by GI; and an amount equal to *** for each 30-day
period from the *** Target Date until Acceptance of
the *** module by GI shall be credited against future
installments of the License Fee. In the event Acceptance occurs
prior to the *** Target Date, EDS shall receive a
bonus of *** for each 30-day period between the date of
Acceptance and the *** Target Date.
"Acceptance" is defined as the module complying in all material
aspects with the acceptance criteria document described in
Exhibit A Attachment 5 or GI's use of the Licensed Program in a
production environment.
II. ***.
C - 1
The provisions of this Section II will survive the expiration or
termination of this Agreement for any reason.
GI's EXISTING *** CUSTOMERS:
-------------------------------------------------------------------------
***
EDS EXISTING *** CUSTOMERS:
***
C - 2.
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
III. SERVICES:
The rate for each EDS personnel performing the Services shall be
*** per Man Month, plus reasonable expenses as described in the
Agreement.
There shall be a maximum aggregate total of *** Man Months,
exclusive of project managers and contingent upon GI's
compliance with its staffing requirements set forth in Exhibit
B, billable to GI. In the event additional resources are needed
to complete the Services in a timely manner, the performance of
the Services shall continue at no additional cost to GI (other
than the reimbursement of expenses) until ***, at
which time GI shall pay for the Services at the above-specified
rate, subject to a cap of *** per month for each undelivered
module of the Licensed Program.
IV. Annual Rate Adjustments Using Hewitt Index. The parties
acknowledge and agree to use the percent change in "Total Cash
Compensation" for Systems Integration Job Families (the "Percent
Change") as the basis for annual adjustments to rates to be paid
by GI to EDS under this Agreement for additional EDS Services
described in Section 2 (the "Hewitt Index Adjustable Charges"),
as the Percent Change is either reported in the Hewitt
Associates Index for Total Cash Compensation (the "Index") or as
such Systems Integration Job Families information is otherwise
made available by the management consulting firm of Hewitt
Associates LLC (or another comparable measure published or made
available by a mutually agreeable source should the Index no
longer be published, the content or format of the Index
substantially change or Hewitt Associates LLC no longer make
comparable Systems Integration Job Families information
available). Beginning on September 1, 2001 and for each
September 1 thereafter during the term of this Agreement, an
adjustment to the Hewitt Index Adjustable Charges will be made
by increasing or decreasing the Hewitt Index Adjustable Charges
by the Percent Change, using the Index as of September 1, 2000
as the basis for measuring the Percent Change. If an adjustment
is not made on a September 1 for any reason, then the basis for
measuring the Percent Change for the following September 1 will
be same as the basis for measuring the Percent Change for the
September 1 on which no adjustment was made. The parties
acknowledge and agree that EDS will adjust the Hewitt Index
Adjustable Charges and will advise GI of such adjustment in
writing so that the new charges will amend this Agreement and
become effective on the applicable September 1. If no
adjustment is made on a September 1 for any reason, EDS will
advise GI in writing of such fact.
C - 3
***Certain terms have been omitted pursuant to a request for confidential
treatment, and the omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
Exhibit D
Confidentiality
D-1. Scope of Obligation. Except as otherwise expressly provided in
this Agreement, EDS and GI each agrees that (a) all information
communicated to it by the other and identified as confidential,
whether before or after the date hereof, (b) all information
identified as confidential to which it has access in connection
with the EDS Services, whether before or after the date hereof,
and (c) this Agreement and the parties' rights and obligations
hereunder, will be and will be deemed to have been received in
confidence and will be used only for purposes of this Agreement,
and each of EDS and GI agrees to use the same means as it uses
to protect its own confidential information, but in no event
less than reasonable means, to prevent the disclosure and to
protect the confidentiality thereof. No such information will
be disclosed by the recipient party without the prior written
consent of the other party; provided, however, that each party
may disclose this Agreement and the other party's confidential
information to those of the recipient party's attorneys,
auditors, insurers (if applicable), subcontractors and full
time employees who have a need to have access to such
information in connection with their employment (or engagement,
if applicable) by the recipient party, so long as the recipient
party requires, in the case of its attorneys, auditors and
insurers, that each of them execute a confidentiality agreement
containing terms and conditions no less restrictive than those
set forth in this Exhibit D and advises, in the case of its
subcontractors and employees, each such subcontractor and
employee of the confidentiality obligations set forth in this
Exhibit D. In any event, compliance by each of the persons
referenced in the preceding sentence with the confidentiality
obligations set forth in this Exhibit D will remain the
responsibility of the party employing or engaging such persons.
D-2. Exceptions. The foregoing will not prevent either party from
disclosing information that belongs to such party or (i) is
already known by the recipient party without an obligation of
confidentiality other than under this Agreement, (ii) is
publicly known or becomes publicly known through no unauthorized
act of the recipient party, (iii) is rightfully received from a
third party, (iv) is independently developed without use of the
other party's confidential information or (v) is disclosed
without similar restrictions to a third party by the party
owning the confidential information. If confidential
information is required to be disclosed pursuant to a
requirement of a governmental authority, such confidential
information may be disclosed pursuant to such requirement so
long as the party required to disclose the confidential
information, to the extent possible, provides the other party
with timely prior notice of such requirement and coordinates
with such other party in an effort to limit the nature and scope
of such required disclosure; provided, however, that, in the
<PAGE>
event of a tax audit, (A) notice of a disclosure requirement in
connection therewith will not be given, and (B) the parties will
use commercially reasonable efforts to ensure that any
confidential information that is subject to a valid request for
delivery of a copy of such information (including a copy of this
Agreement) to the taxing authority is not subject to further
disclosure by it (such as by marking such information as a trade
secret). If confidential information is required to be
disclosed in connection with the conduct of any mediation or
arbitration proceeding carried out pursuant to Section 13 of
this Agreement, such confidential information may be disclosed
pursuant to and in accordance with the approval and at the
direction of the mediator or arbitrator, as the case may be,
conducting such proceeding. Upon written request of the
disclosing party at the expiration or termination of this
Agreement for any reason, all documented confidential
information (and all copies thereof) of the disclosing party
will be returned to the disclosing party or will be destroyed,
with written certification thereof being given to the disclosing
party. The provisions of this Exhibit D will survive the
expiration or termination of this Agreement for any reason.
D - 1
<PAGE>
Exhibit E
Warranties and Additional Covenants
E-1. Services. EDS represents and warrants that all EDS Services
will be performed in a professional and workmanlike manner.
E-2. GI Information. GI represents and warrants that the information
furnished by GI to EDS on which EDS based the description of the
EDS Services and the charges to be paid by GI therefor, in each
case as set forth in this Agreement, is accurate and complete in
all material respects.
E-3. Viruses. Each party will use commercially reasonable measures
to screen any software provided or made available by it to the
other party hereunder for the purpose of avoiding the
introduction of any "virus" or other computer software routine
or hardware components which are designed (i) to permit access
or use by third parties to the software of the other party not
authorized by this Agreement, (ii) to disable or damage hardware
or damage, erase or delay access to software or data of the
other party or (iii) to perform any other similar actions.
E-4. Disabling Codes. EDS will not, without informing GI's
representative, knowingly insert into the software used by it
hereunder any code or other device which would have the effect
of disabling, damaging, erasing, delaying or otherwise shutting
down all or any portion of the EDS Services or the hardware,
software or data used in performing the EDS Services. EDS will
not invoke such code or other device at any time, including upon
expiration or termination of this Agreement for any reason,
without GI's prior written consent.
E-5. Problem Resolution Support. EDS will provide support
assistance to GI at no charge for 30 days following the
Acceptance of each module of the Licensed Program (the 'Support
Period'). During the Support Period if GI is unable to resolve a
problem, GI will contact EDS who will provide technical
direction and support for the resolution of the problem.
E-6. Authority; No Conflict. Each party warrants that it is
authorized to enter into this Agreement and that its performance
thereof will not conflict with any other agreement by which it
is bound.
E-7. Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
EXHIBIT E, EDS MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS
OR IMPLIED, REGARDING ANY MATTER, INCLUDING THE MERCHANTABILITY,
SUITABILITY, ORIGINALITY, FITNESS FOR A PARTICULAR USE OR
PURPOSE, OR RESULTS TO BE DERIVED FROM THE USE, OF ANY
INFORMATION TECHNOLOGY SERVICE, SOFTWARE, HARDWARE OR OTHER
MATERIALS PROVIDED UNDER THIS AGREEMENT, OR THAT THE OPERATION
OF ANY OF THE FOREGOING WILL BE UNINTERRUPTED OR ERROR-FREE.
E- 1
<PAGE>
Exhibit F
Indemnities
F-1. Claims Relating to Personal Injury and Property Damage.
(a) General. EDS and GI each will be responsible for any and all
claims, actions, damages, liabilities, costs and expenses,
including reasonable attorneys' fees and expenses (collectively,
"Losses"), to their respective tangible personal or real property
(whether owned or leased), and each party agrees to look only to
its own insuring arrangements (if any) with respect to such
Losses. EDS and GI each will be responsible for Losses for the
death of or personal injury to any person (including any employee
of either party) and Losses for damages to any third party's
tangible personal or real property (whether owned or leased), in
accordance with the law of the jurisdiction in which such Loss is
alleged to have occurred. Subject to Section 16 of this
Agreement and the procedures set forth below in Section F-4, each
party will indemnify and defend the other party from any and all
Losses arising out of, under or in connection with claims for
which the indemnitor is responsible under the preceding sentence.
(b) Waiver of Subrogation. EDS and GI waive all rights to recover
against each other for any Loss to their respective tangible
personal property (whether owned or leased) from any cause
covered by insurance maintained by each of them, including their
respective deductibles or self-insured retentions. EDS and GI
will cause their respective insurers to issue appropriate waivers
of subrogation rights endorsements to all property insurance
policies maintained by each Party. Each Party will give the
other written notice if a waiver of subrogation is unobtainable
or obtainable only at additional expense. If the Party receiving
such notice agrees to reimburse the other Party for such
additional expense, the other Party will obtain such waiver of
subrogation. If a waiver is unobtainable or if a Party elects
not to pay the additional expense of a waiver, then neither Party
nor their insurers will waive such subrogation rights.
F-2. Infringement Claims.
(a) General. Subject to Section 16 of this Agreement, the
limitations set forth below in this Section F-2 and the
procedures set forth below in Section F-4, EDS and GI each agrees
to defend the other party against any third party action to the
extent that such action is based upon a claim that the software
(other than third party software) or confidential information
provided by the indemnitor, or any part thereof, (i) infringes a
copyright perfected under United States statute, (ii) infringes a
patent granted under United States law or (iii) constitutes an
unlawful disclosure, use or misappropriation of another party's
trade secret. The indemnitor will bear the expense of such
defense and pay any Losses that are attributable to such claim
finally awarded by a court of competent jurisdiction.
<PAGE>
(b) Exclusions. Neither EDS nor GI will be liable to the other for
claims of indirect or contributory infringement. The indemnitor
will have no liability to the indemnitee hereunder if (i) the
claim of infringement is based upon the use of software provided
by the indemnitor hereunder in connection or in combination with
equipment, devices or software not supplied by the indemnitor or
used in a manner for which the software was not designed, (ii)
the indemnitee modifies any software provided by the indemnitor
hereunder and such infringement would not have occurred but for
such modification, or uses the software in the practice of a
patented process and there would be no infringement in the
absence of such practice, or (iii) the claim of infringement
arises out of the indemnitor's compliance with specifications
provided by the indemnitee and such infringement would not have
occurred but for such compliance.
(c) Additional Remedy. If software or confidential information
becomes the subject of an infringement claim under this Section
F-2, or in the indemnitor's opinion is likely to become the
subject of such a claim, then, in addition to defending the claim
and paying any damages and attorneys' fees as required above in
this Section F-2, the indemnitor may, at its option and in its
sole discretion, (A) replace or modify the software or
confidential information to make it noninfringing or cure any
claimed misuse of another's trade secret, provided it retains its
functionality and performance or (B) procure for the indemnitee
the right to continue using the software or confidential
information pursuant to this Agreement. Any costs associated
with implementing either of the above alternatives will be borne
by the indemnitor but will be subject to Section 17 of this
Agreement. If neither alternative is pursued by, or (if pursued)
is available to, the indemnitor, (x) the indemnitee will return
such software or confidential information to the indemnitor and
(y) if requested by the indemnitee in good faith, the parties
will negotiate, pursuant to Section 14 of this Agreement but
subject to Section 17 of this Agreement, to reach a written
agreement on what, if any, monetary damages (in addition to the
indemnitor's obligation to defend the claim and pay any damages
and attorneys' fees as required above in this Section F-2) are
reasonably owed by the indemnitor to the indemnitee as a result
of the indemnitee no longer having use of such software or
confidential information. The payment of any such monetary
damages will be the indemnitee's sole and exclusive remedy for
the inability of the indemnitor to implement either of the above
alternatives.
F-3 Third Party Indemnification of EDS. Without limiting EDS' liability to
GI under this Agreement, each of the Parties acknowledge that by
entering into and performing its obligations under this Agreement EDS
will not assume and should not be exposed to the business and
operational risks associated with GI's business, and GI therefore
agrees, subject to Section 17 of this Agreement and the procedures set
forth below in Section F-4, to indemnify and defend EDS and hold EDS
harmless from any and all third party Losses arising out of the conduct
of GI's business, including the use by GI of the Services.
<PAGE>
F-4. Procedures. The indemnification obligations set forth in this Exhibit
F will not apply unless the party claiming indemnification: (a)
notifies the other promptly in writing of any matters in respect of
which the indemnity may apply and of which the notifying party has
knowledge, in order to allow the indemnitor the opportunity to
investigate and defend the matter; provided, however, that the failure
to so notify will only relieve the indemnitor of its obligations under
this Exhibit F if and to the extent that the indemnitor is prejudiced
thereby; and (b) gives the other party full opportunity to control the
response thereto and the defense thereof, including any agreement
relating to the settlement thereof; provided, however, that the
indemnitee will have the right to participate in any legal proceeding
to contest and defend a claim for indemnification involving a third
party and to be represented by legal counsel of its choosing, all at
the indemnitee's cost and expense. However, if the indemnitor fails to
promptly assume the defense of the claim, the party entitled to
indemnification may assume the defense at the indemnitor's cost and
expense. The indemnitor will not be responsible for any
settlement or compromise made without its consent, unless the
indemnitee has tendered notice and the indemnitor has then refused to
assume and defend the claim and it is later determined that the
indemnitor was liable to assume and defend the claim. The indemnitee
agrees to cooperate in good faith with the indemnitor at the request
and expense of the indemnitor.
Exhibit 10.3
Printed in U.S.A.
AT&T COMMUNICATIONS Contract Tariff No. 10906
Adm. Rates and Tariffs 1st Revised Title Page
Bridgewater, NJ 08807 Cancels Original Title Page
Issued: August 31, 2000 Effective: September 1, 2000
Original Tariff Effective: January 9, 1999
CONTRACT TARIFF NO. 10906
TITLE PAGE
C
This Contract Tariff applies to AT&T Software Defined Network
Services; AT&T Concert Virtual Network Service; AT&T Concert Inbound
Service; AT&T 800 Services; AT&T Private Line Services; AT&T InterSpan
Frame Relay Service; AT&T International Satellite Service; AT&T Local
Channel Services and AT&T Conference Services for interstate or
foreign communications in accordance with the Communications Act of
1934, as amended.
Telecommunication services provided under this Contract Tariff are
furnished by means of wire, radio, satellite, fiber optics or any
suitable technology or combination of technologies.
Adm. Rates and Tariffs 5th Revised Page 1
Bridgewater, NJ 08807 Cancels 4th Revised Page 1
Issued: October 30, 2000 Effective: October 31, 2000
CONTRACT TARIFF NO. 10906
CHECK SHEET
The Title Page and Pages 1 through 28 inclusive of this tariff are
effective as of the date shown. Original and revised pages as named
below contain all changes from the original tariff pages that are in
effect on the date shown.
Number of Revision Number of
Revision Number of Revision
Page Except as Indicated Page Except as
Indicated Page Except as Indicated
Title 1st 11
1st 22 1st
1 5th* 12
1st 23 3rd*
4 1st 13
1st 24 1st
5 1st 13.1
Orig 24.0 Orig
5.1 Orig 14
4th* 24.1 1st
6 1st 14.1
Orig 24.2 1st
6.1 Orig 15
2nd 24.3 1st
7 5th* 16
3rd 25 4th*
8 1st 16.1
1st* 26 Orig
9 2nd 17
2nd 27 Orig
10 1st 18
1st 28 1st*
19 1st
21 1st
New or revised page
TABLE OF CONTENTS
Page
Check Sheet........................................................ 1
List of Concurring, Connecting and Other Participating Carriers.... 1
Explanation of Symbols - Coding of Tariff Revisions................ 1
Trademarks and Service Marks....................................... 2
Explanation of Abbreviations....................................... 2
General Provisions................................................. 3
Contract Summary................................................... 4
LIST OF CONCURRING, CONNECTING AND OTHER PARTICIPATING CARRIERS
Concurring Carriers - NONE
Connecting Carriers - NONE
Other Participating Carriers - NONE
EXPLANATION OF SYMBOLS - Coding of Tariff Revisions
Revisions to this tariff are coded through the use of symbols. These
symbols appear in the right margin of the page. The symbols and their
meanings are:
R - to signify reduction.
I - to signify increase.
C - to signify changed regulation.
T - to signify a change in text but no change in rate
or regulation.
S - to signify reissued matter.
M - to signify matter relocated without change.
N - to signify new rate or regulation.
D - to signify discontinued rate or regulation.
Z - to signify a correction.
Other marginal codes are used to direct the tariff reader to a
footnote for specific information. Codes used for this purpose are
lower case letters of the alphabet, e.g., x, y and z. These codes may
appear beside the page revision number in the page header or in the
right margin opposite specific text.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 2
Bridgewater, NJ 08807 Cancels Original Page 2
Issued: April 28, 2000 Effective: May 1, 2000
TRADEMARKS AND SERVICE MARKS - The following marks, to the extent, if
any, used throughout this tariff, are trademarks and service marks of
AT&T Corp.
Trademarks Service Marks
None ACCUNET
DATAPHONE
InterSpan
MEGACOM
OneNet
READYLINE
USADirect
EXPLANATION OF ABBREVIATIONS
Adm. - Administrator
CISD - Customer's Initial Service Date
GMUC - Gross Monthly Usage Charges
GSDN - Global Software Defined Network
IOCs - Inter Office Channels
kbps - kilobits per second
MARC - Minimum Annual Revenue Commitment
Mbps - Megabits per second
OneNet - Software Defined Network Integrated Outbound and
Inbound Optional Discount Plan
SDN - Software Defined Network
GENERAL PROVISIONS
I. Term Start Date and Customer's Initial Service Date - For the
Services Provided under this Contract Tariff, the date on which the
term of this Contract Tariff begins is referred to as the Term Start
Date (TSD), which shall be the first day of the Customer's 1st full
billing month following the Customer's Initial Service Date (CISD) for
the AT&T SDN Services/AT&T 800 Services. The rates and discounts
specified in this Contract Tariff will apply commencing at the CISD.
For AT&T SDN Services/AT&T 800 Services and associated AT&T
Terrestrial 1.544 Mbps Local Channel Services and AT&T Concert VNS,
Concert Inbound Service and AT&T Conference Services the CISD can be
no sooner, but can be later, than: (1) the first day of the first full
billing month following the later of the Contract Tariff Effective
Date (CTED) or the date on which AT&T accepts the Customer's order for
the Services Provided hereunder ("Acceptance Date"), when the later of
such dates is on or before the 10th of a month, or (2) the first day
of the second full billing month following the later of the CTED or
the Acceptance Date, when the later of such dates is after the 10th of
a month. For AT&T Private Line Services, AT&T InterSpan Frame Relay
Service, AT&T International Satellite Service and AT&T Local Channel
Services, the CISD is the date that the Customer begins service under
this Contract Tariff.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs Original Page 3
Bridgewater, NJ 08807
Issued: January 8, 1999 Effective: January 9, 1999
** All material on this page is new. **
GENERAL PROVISIONS (continued)
II. Detariffing - If during the term of this Contract Tariff, the
AT&T Tariffs referenced herein ("Applicable AT&T Tariffs") are
detariffed in whole or in part pursuant to a statutory change, order
or requirement of a governmental or judicial authority of competent
jurisdiction, then following such detariffing:
(i) the terms and conditions for the Services Provided will remain the
same as those in this Contract Tariff, except that the relevant terms
and conditions contained in the Applicable AT&T Tariffs will remain
the same as those in effect as of the date AT&T detariffs in whole or
in part those Applicable AT&T Tariff provisions, and will be
incorporated as part of this Contract Tariff, and
(ii) the rates for the Services Provided will be:
(a) to the extent Applicable AT&T Tariff provisions remain filed
and effective, those rates specified in such Applicable AT&T
Tariff provisions, as amended from time to time; and
(b) to the extent that this Contract Tariff contains specific
rates or rate schedules that would apply in lieu of (or in
addition to) the rates or rate schedules in Applicable AT&T
Tariffs, such specific Contract Tariff rates and rate schedules;
and
(c) to the extent Applicable AT&T Tariff provisions are
detariffed, and (b) preceding does not apply, those rates
specified in the applicable AT&T Price Lists, as amended from
time to time.
In all cases (a, b or c), the applicable rates shall continue to be
subject to any discounts, waivers, credits, and restrictions on rate
changes that may be contained in this Contract Tariff. Where rates
and rate changes (both increases and decreases) would have been
calculated by reference to a tariff rate that has been detariffed,
rates and rate changes shall instead be calculated during the term of
this Contract Tariff by reference to applicable AT&T Price Lists and
(to the extent changes to tariff rates were permitted under this
Contract Tariff) AT&T shall have the right to change its Price Lists
from time to time.
All references to the AT&T Tariffs in this Contract Tariff shall be
construed to mean the AT&T Tariffs specified herein, as well as the
documents which will replace those tariffs, including the AT&T Price
Lists, when AT&T cancels those tariffs.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 4
Bridgewater, NJ 08807 Cancels Original Page 4
Issued: August 31, 2000 Effective: September 1, 2000
CONTRACT TARIFF NO. 10906
1. Services Provided
A. AT&T Software Defined Network (SDN) Services (AT&T Tariff F.C.C.
No. 1)
B. AT&T Concert Virtual Network Service (Concert VNS) and Concert
Inbound Service (Concert IS) (AT&T Tariff F.C.C. No. 1)
C. AT&T 800 Services (AT&T Tariff F.C.C. Nos. 2 and 14)
D. AT&T Private Line Services (AT&T Tariff F.C.C. No. 9)
The International AT&T Private Line Services to Canada and Mexico
consist of IOCs and associated components which include Office
Functions, Office Connections and Channel Options.
E. AT&T InterSpan Frame Relay Service (FRS)(AT&T Tariff F.C.C. No. 4)
F. AT&T International Satellite Service (AT&T Tariff F.C.C. No. 7)
G. AT&T Local Channel Services (AT&T Tariff F.C.C. No. 11)
H. AT&T Conference Services (AT&T Tariff F.C.C. No. 1)
The Customer must identify with each order for AT&T Conference
Services that such services are to be provided under this Contract
Tariff.
2. Contract Term; Renewal Options - The term of this Contract Tariff
(CT) is 6 years and 6 months. This CT may be renewed in its entirety
for an additional 1 year period at the rates, terms and conditions
then in effect under this CT, provided AT&T receives in writing, the
Customer's order to renew at least 45 days prior to the last day of
the initial term. The Minimum Total Revenue Commitment (MTRC) for the
renewal term is $12,500,000. Provided the Customer has met the MTRC
for the renewal term, the Customer may discontinue this CT upon thirty
days written notice at any time during the renewal term.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 5
Bridgewater, NJ 08807 Cancels Original Page 5
Issued: August 31, 2000 Effective: September 1, 2000
3. Minimum Commitments/Charges
A. Minimum Annual Revenue Commitment - The Minimum Annual Revenue
Commitment (MARC) for the AT&T Services provided under this CT is as
follows:
CT TERM YEAR YEAR 1 YEAR 2 YEAR 3 YEAR 4
MARC $40,000,000 $25,000,000 $25,000,000 $25,000,000
CT TERM YEAR YEAR 5 YEAR 6 Months 73-78
MARC $25,000,000 $25,000,000 $12,500,000
Beginning at the end of year 2 of the CT Term, and upon written notice
to AT&T at least 30 days prior to any anniversary of the TSD, the
Customer may elect to reduce the MARC where the Customer and AT&T are
unable to agree regarding the appropriateness of rates for the
Services Provided in light of changes in technology, regulatory
requirements or marketplace conditions. Thereafter, the MARC for the
current year of the CT Term shall be reduced by an amount equal to 10%
multiplied by the number of months remaining in the current year of
the CT Term divided by 12, and the MARC for subsequent years of the CT
Term, if any, shall also be reduced by 10%. The MARC shall not be
reduced more than $2,500,000 in any year of the CT Term. The MARC
cannot be lower than $18,700,000. The Customer may make this election
to reduce the MARC only once during any 12-month rolling period. The
Customer may not, however, reduce the MARC pursuant to this paragraph
if (1) the Customer is not current in payment to AT&T for all
undisputed charges due under this CT, or if (2) the Customer did not
satisfy the MARC during the previous year. The Customer may not elect
to reduce the MARC in the last 6-month period of the CT Term.
The MARC will be satisfied by the "MARC-eligible charges" which are
the total of the following charges:
(1) Gross Monthly Usage Charges (GMUC) as specified in the SDN
Integrated Outbound and Inbound Option Discount Plan (OneNet) in AT&T
Tariff F.C.C. No. 1, as amended from time to time, (including
undiscounted recurring charges for AT&T SDN Services Optional
Features, AT&T 800 Services Optional Features and AT&T Advanced 800
Service), and Concert Inbound Service GMUCs for the Services provided
under this CT;
(2) the undiscounted recurring charges incurred by the Customer for
AT&T Private Line Services consisting of the following Domestic
services: ACCUNET Spectrum of Digital Services (ASDS), ACCUNET T1.5
Service, ACCUNET T32 Service, ACCUNET T45 Service, ACCUNET Fractional
T45 Service, DATAPHONE Digital Services (DDS), ACCUNET Primary Rate
Interface (PRI), ACCUNET SONET T155 Service, AT&T Private Line SONET
OC12 Services;
(3) the undiscounted recurring charges incurred by the Customer for
AT&T International Private Line Services consisting of the following:
Voice Grade Private Line Service-Overseas Half Channels, International
ACCUNET T1.5 Service-Canada, International ACCUNET T1.5
Service-Mexico, International ACCUNET T45 Service-Canada, International
ACCUNET 2.048 Mbps Service-Mexico, International ASDS-Canada,
International ASDS-Mexico, International DDS-Canada, International
DDS-Mexico, International ACCUNET Digital Services-Half Channel, and
International Full Channel Service-Overseas;
Certain regulations previously found on this page can now be found
on Page 5.1
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs Original Page 5.1
Bridgewater, NJ 08807
Issued: August 31, 2000 Effective: September 1, 2000
T
3.A. Minimum Annual Revenue Commitment (continued)
(4) the undiscounted recurring charges for AT&T InterSpan Frame Relay
Service and AT&T Regional Frame Relay;
(5) the undiscounted recurring charges for AT&T International
Satellite Service consisting of: AT&T International Satellite Shared
Earth Station Service-Half Channel;
(6) the undiscounted recurring charges for AT&T Local Channel Services
consisting of: AT&T Voice Grade Local Channel Services, AT&T Digital
Data Local Channel Services, AT&T ACCUNET Generic Digital Access
Services, AT&T Terrestrial 1.544 Mbps Local Channel Services, AT&T
Terrestrial 45 Mbps Local Channel Services, AT&T Fractional
Terrestrial 45 Mbps Local Channel Services,
(7) the GMUCs for the AT&T Conference Services consisting of the
following: Audio-Teleconference Bridge-Dial-Out Conference-Domestic
and International, Meet-Me Bridge Arrangement Options 2 and 3-Domestic
and International, AT&T Event TeleConference Service-Domestic and
International (including charges for AT&T Conference Services Optional
Features as agreed to by AT&T and the Customer); and
Certain regulations on this page formerly appeared on Page 5.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 6
Bridgewater, NJ 08807 Cancels Original Page 6
Issued: August 31, 2000 Effective: September 1, 2000
3.A. Minimum Annual Revenue Commitment (continued)
(8) AT&T Wireless Service (AWS) ordered under a separate contract
between the Customer and AT&T through the Corporate Digital Advantage
(CDA) Program, in approved AWS Markets only, limited to the following:
(a) Detail Billing Charges, (b) charges for additional Cellular
Service features (excluding enhanced features), (c) one-time charges
for Service Activation, conversion and charges for changing rate
plans, (d) Monthly Access Charges, (e) Home Airtime Charges, (f)
Roaming Airtime Charges (and roaming surcharges) incurred while
roaming in AWS Markets, (g) AT&T 10288 Cellular Long Distance calls
associated with the CDA program.
(9) alternative communications capabilities, which have been ordered
under a separate contract between the Customer and AT&T, and which
have been designated by AT&T in writing to the Customer prior to the
Customer signing an order for this Contract Tariff.
(10) the undiscounted recurring charges incurred by the Customer for
AT&T ACCU-Ring Network Access Service which have been ordered under a
separate contract between the Customer and AT&T, excluding Special
Construction Charges and Individual Case Basis contracts.
In the event of a chronic network outage for Service Provided under
this CT, which results in the Customer's inability to meet the MARC
for the current year of the CT Term, the Customer may elect to reduce
the MARC for the remainder of the CT Term by the undiscounted amount
of the affected contributing service which experienced the chronic
outage. The Customer must give AT&T thirty days written notice of its
intent to reduce the MARC.
If, on any anniversary of the TSD and at the end of the CT Term or
renewal term, the Customer has failed to satisfy the MARC/MTRC, the
Customer will be billed a shortfall charge in an amount equal to 50%
of the difference between the MARC and the total of the actual
MARC-eligible charges incurred for that year, or the last 6-month
period of the CT Term, as applicable.
4. Contract Price - AT&T reserves the right to increase or decrease
from time to time the rates for the Services Provided under this CT,
regardless of any provisions in this CT that would otherwise stabilize
rates or limit rate increases, relating to charges imposed on AT&T
stemming from an order, rule or regulation of the Federal
Communications Commission or a court of competent jurisdiction,
concerning: (i) payphone use charges, and (ii) presubscribed
interexchange carrier charges ("PICCs"). AT&T will make rate
adjustments under this provision as necessary. However, the Customer
will receive Connected Pricing for AT&T SDN Integrated Outbound and
Inbound Optional Discount Plan as specified in AT&T Tariff F.C.C. No.
1, as amended from time to time.
A. The Contract Price for the AT&T Services provided under this CT
is the same as the undiscounted Recurring and Nonrecurring Rates and
Charges specified in AT&T Tariffs listed in Section 1., preceding, as
amended from time to time, except for those Rates specified in Section
7., following.
Certain material previously found on this page can now be found on
Page 6.1.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs Original Page 6.1
Bridgewater, NJ 08807
Issued: August 31, 2000 Effective: September 1, 2000
5. Discounts - The following discounts are the only discounts for the
Services Provided under this Contract Tariff. No other discounts
apply.
A. AT&T SDN Services/AT&T 800 Services - The Customer will receive
the following discounts, each month, in lieu of those provided by the
OneNet Discount Option Plan. These discounts will be applied in the
same manner as the OneNet Discount Option Plan as specified in AT&T
Tariff F.C.C. No. 1, as amended from time to time.
Discount
applied to
International
Discount applied to SDN Usage &
Domestic SDN and Domestic Concert VNS
For Gross Monthly & International 800 GMUCs (U.S. to
Usage Charges of: Services Usage foreign)
Between $0 and $999,999,999 43.0% 38.0%
over $999,999,999 00.0% 00.0%
Certain material on this page formerly appeared on Page 6.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 5th Revised Page 7
Bridgewater, NJ 08807 Cancels 4th Revised Page 7
Issued: October 30, 2000 Effective: October 31, 2000
5. Discounts (continued)
B. AT&T Private Line and AT&T Local Channel Services
1. The Customer will receive the following discounts, each month,
in lieu of the MultiService Volume Pricing Plan (MSVPP) discounts.
These discounts will be applied in the same manner as the MSVPP
discounts as specified in AT&T Tariff F.C.C. Nos. 9 and 11, as amended
from time to time.
Service Components Discount
Domestic ASDS 9.6/56/64 kbps 46%
Domestic ASDS 128 kbps and above 54%
Domestic DDS 63%
Domestic ACCUNET T1.5 70%
Domestic ACCUNET T32 65%
Domestic ACCUNET T45 65%
Domestic ACCUNET Fractional T45 70%
AT&T VGLCs and AT&T DDLCs at speeds of 9.6 kbps & below 40%
(all USOCs)
AT&T DDLCs at speeds of 56/64 kbps (all USOCs) 40%
AT&T ACCUNET GDA at speeds of 9.6/56/64 kbps 40%
AT&T Terrestrial 1.544 Mbps Local Channel Service 38%
(excluding the components in Section 5.C., following)
2. The Customer will receive the following discounts, each month,
on the Monthly Recurring Charges for which is in lieu of any other
discounts.
Service Components Discount
AT&T Terrestrial 45 Mbps Local Channels 28%
X 2nd Revised Page 7 was not incremented to 3rd Revised Page in the
material which was filed under Transmittal No. 7933 and became
effective on 8/31/00. This filing corrects that error.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 8
Bridgewater, NJ 08807 Cancels Original Page 8
Issued: August 31, 2000 Effective: September 1, 2000
5. Discounts (continued)
C. AT&T Terrestrial 1.544 Mbps Local Channel Services - The Customer
will receive the following discounts, each month, on the Monthly
Recurring Charges for AT&T Terrestrial 1.544 Mbps Local Channels and
the associated Access Coordination Functions included in this Section
which are in lieu of the discounts specified in Section 5.B.,
preceding.
Service Components Discount
24 Channel Terrestrial 1.544 Mbps Local Channels under an 38%
Access Value Plan (AVP)** and associated Access Coordination
Function
**An AVP is available to Customers that connect their AT&T
Terrestrial 1.544 Mbps Local Channel Service to an AT&T Switched
Service or multiplexor provided under this Contract Tariff. An AVP
allows the Customer the use of all of the 24 channels in an AT&T
Terrestrial 1.544 Mbps Local Channel.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 2nd Revised Page 9
Bridgewater, NJ 08807 Cancels 1st Revised Page 9
Issued: August 31, 2000 Effective: September 1, 2000
5. Discounts (continued)
D. AT&T InterSpan Frame Relay Services
1. The Customer will receive a discount of 50%, each month, in lieu
of the FRVPP discounts. This discount will be applied to the sum of
the Domestic Access Port Monthly Charges, and to the FRVPP-Eligible
FRS Charges in the same manner as the FRVPP discounts as specified in
AT&T Tariff F.C.C. No. 4, as amended from time to time. This discount
does not apply to the Alaska PVC Charges specified in Section 7.,
following.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 10
Bridgewater, NJ 08807 Cancels Original Page 10
Issued: August 31, 2000 Effective: September 1, 2000
5. Discounts (continued)
E. AT&T International Satellite and International AT&T Private Line
Services
1. The Customer will receive the following discounts each month on
the undiscounted recurring charges for service components for AT&T
International Satellite Service and International AT&T Private Line
Services provided under this CT.
Service Components Discount
International Voice Grade Private Line Service-Overseas Half 30%
Channel
International ACCUNET T1.5 Service-Canada 50%
International ACCUNET T1.5 Service-Mexico 50%
International ACCUNET T45 Service-Canada 50%
International ACCUNET 2.048 Mbps Service-Mexico 50%
International ASDS Canada-64 kbps and below 30%
International ASDS Canada-128 kbps and above 40%
International ASDS-Mexico-64 kbps and below 30%
International ASDS-Mexico-128 kbps and above 40%
International DDS-Canada 40%
International DDS-Mexico 40%
International ACCUNET Digital Services-Half Channel 50%
International Satellite Shared Earth Station Service-Half 45%
Channel
2. The Customer will receive a 40% discount, each month, on AT&T
International Full Channel Service-Overseas which are in lieu of any
other discounts.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 11
Bridgewater, NJ 08807 Cancels Original Page 11
Issued: August 31, 2000 Effective: September 1, 2000
5.E. AT&T International Satellite and International AT&T Private Line
Services (continued)
3. The Customer will also receive the following discounts in any
month that the Customer's total undiscounted charges for the
"MARC-eligible" AT&T International Private Line and AT&T International
Satellite Services and AT&T International Full Channel
Service-Overseas, AT&T Tariff F.C.C. Nos. 7 and 9 service components
provided under this CT exceed $200,000. This additional discount will
be determined based on the total monthly undiscounted charges as
specified below and will be applied to the entire eligible charges for
that month as shown in the following example: If the Customer's total
monthly undiscounted charges for the "MARC-eligible" AT&T
International Private Line Services and AT&T International Satellite
Service and AT&T International Full Channel-Overseas are $300,000, and
the discount to be applied is 3%, then the Customer will receive a
discount amount of $9,000 ($300,000 x .03 = $9,000). The amount of
such additional discount, if any, will be applied as a credit to the
Customer's bill for the "MARC-eligible" AT&T International Private
Line and AT&T International Satellite Services and AT&T International
Full Channel Service-Overseas provided under this Contract Tariff.
Total Monthly Charges Discount
$0 up to $200,000 0%
over $200,000 up to $300,000 3%
over $300,000 up to $400,000 5%
over $400,000 up to $500,000 10%
over $500,000 12%
F. AT&T Conference Services - For AT&T Dial-Out/Operator Assisted
Conference Calls a 40% discount will apply, each month, for the
Audio-Teleconference Bridge transport for Canada, Mexico and
International Gross Monthly Usage Charges (excluding charges
associated with AT&T Event Teleconference Services).
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 12
Bridgewater, NJ 08807 Cancels Original Page 12
Issued: August 31, 2000 Effective: September 1, 2000
6. Classifications, Practices and Regulations
A. Except as otherwise provided in this CT, the rates and
regulations that apply to the Services Provided specified in
Section 1., preceding, are as set forth in the Applicable AT&T Tariffs
that are referenced in Section 1., preceding, as such tariffs are
amended from time to time.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 13
Bridgewater, NJ 08807 Cancels Original Page 13
Issued: August 31, 2000 Effective: September 1, 2000
6. Classifications, Practices and Regulations (continued)
C. Promotions, Credits and Waivers - The Customer is ineligible for
any promotions, credits or waivers for the Services Provided under
this CT, which are filed or which may be filed in the AT&T Tariffs
specified in Section 1., preceding, except for the Advanced 800
Feature Routing Plan Option as specified in AT&T Tariff F.C.C. No. 2,
as amended from time to time.
The following credits and waivers will be applied to the Customer's
bill subject to the following limitations: (1) all credits and
waivers apply only to the Services Provided under this CT and as
specified below; (2) any waiver not applied by the end of the CT will
be declared null and void; (3) installation and monthly charge waivers
apply only to new and existing service components (unless otherwise
specified below) and do not apply to service components disconnected
and reconnected after the CISD; (4) the service components must remain
in service for a minimum period of 12 months (unless otherwise
specified below); and (5) the credits/waivers under this section do
not apply to Bandwidth Manager Service (BMS/BMS-E), Access Protection
Service (APC) and Network Protection Service (NPC). If any of the
installed services components are disconnected prior to the end of the
minimum retention period, AT&T will bill the Customer for the amount
of the charges that had been waived under this section for each
service component disconnected. Any such bill must be paid by the
Customer within 90 days.
The following charges, as specified in the AT&T Tariffs listed in
Section 1., preceding, as amended from time to time, are waived.
1.Nonrecurring Charges
(a) The SDN Service Establishment Charge, not to exceed $10,000
over the CT Term.
(b) The Service Establishment Charges for new AT&T MEGACOM 800
Services Routing Arrangements.
(c) The Installation Charge for Primary Rate Interface (PRI)
Office Functions.
(d) Network Remote Access (NRA) Options: The nonrecurring
Installation Charges for NRA I, II, and IV.
(e) The Installation Charges for ASDS, ACCUNET T1.5, ACCUNET T32,
ACCUNET T45 and ACCUNET Fractional T45 Services MSVPP-eligible service
components and associated Function Connections. For Years 1-3
following TSD, the minimum period of 12 months does not apply if the
Customer elects to continue the components in other AT&T services.
(f) The Installation Charges on service components for
International ASDS-Canada, International ASDS-Mexico, International
ACCUNET T1.5 Service-Canada, International ACCUNET T1.5
Service-Mexico, International ACCUNET T45 Service-Canada and
International 2.048 Service-Mexico. For Years 1-3 following TSD, the
minimum period of 12 months does not apply if the Customer elects to
continue the components in other AT&T services.
(g) ACCUNET T1.5 Service Access Connections associated with the
AT&T SDN and AT&T 800 Services provided under this Contract Tariff.
(h) The Installation Charges for FRVPP-Eligible FRS Components and
Domestic Access Ports. For Years 1-3 following TSD, the minimum
period of 12 months does not apply if the Customer elects to continue
the components in other AT&T services.
Certain regulations previously found on this page can now be found
on Page 13.1.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs Original Page 13.1
Bridgewater, NJ 08807
Issued: August 31, 2000 Effective: September 1, 2000
6.C.1. Nonrecurring Charges (continued)
(i) The Installation Charges for AT&T Local Channel Services
MSVPP-eligible service components (excluding AT&T Terrestrial
1.544 Mbps Local Channels subscribed to under an Access Value
Arrangement (AVA) or an Access Value Plan (AVP)), but including those
local channels and Access Coordination Functions as specified in
Section 5.C., preceding.
(j) AT&T will waive the Set-up Charge for each called station
established on the conference with the assistance of an operator.
(k) AT&T will waive the nonrecurring Charge for each Meet-Me
Bridge arrangement.
Certain regulations on this page formerly appeared on Page 13.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 4th Revised Page 14
Bridgewater, NJ 08807 Cancels 3rd Revised Page 14
Issued: October 30, 2000 Effective: October 31, 2000
6.C.1. Nonrecurring Charges (continued)
(l) The Installation Charges for each AT&T ACCUNET SONET T155
Service and AT&T Private Line SONET OC12 Services Access Connection
and Function Connection as specified in AT&T Tariff F.C.C. No. 9,
provided such service components are associated directly with the
Services provided under this CT.
(m) The Installation Charges for AT&T Concert Inbound Services.
2. Recurring Charges
(a) 50% of the PRI Office Function recurring Monthly Charge.
(b) The recurring Monthly Charges for each ACCUNET T1.5 Access
Connection, M-24 Multiplexing Office Functions and ASDS and DDS Access
Connections as specified in AT&T Tariff F.C.C. No.9, as amended from
time to time, and Access Coordination Functions as specified in AT&T
Tariff F.C.C. No. 11, as amended from time to time, associated with
AT&T Terrestrial 1.544 Mbps Local Channel Services, 64 kbps and below
ACCUNET GDA and Voice Grade Local Channel Services and 64 kbps and
below DDLC Services provided under this CT, provided such service
components are associated directly with the Services provided under
this CT. There is no minimum retention period associated with this
waiver.
(c) The recurring Monthly Charges for each MSVPP-eligible service
component for DDS Subrate Data Multiplexors and ASDS Subrate Data
Multiplexors (excluding Access Connections to AT&T Switched Services)
as specified in AT&T Tariff F.C.C. No.9, as amended from time to
time. There is no minimum retention period associated with this
waiver.
(d) The recurring Monthly Charges for each Analog and Digital
Multipoint Charge, as specified in AT&T Tariff F.C.C. No. 9, as
amended from time to time, for each Customer Premise on a local
channel service for which the Access Coordination Function (ACF) is
provided by AT&T. There is no minimum retention period associated
with this waiver.
(e) The recurring Monthly Charges for ACCUNET T45 Access
Connections and ACCUNET T45 M-28 Multiplexing Office Functions as
specified in AT&T Tariff F.C.C. No. 9, as amended from time to time
and associated Access Coordination Functions as specified in AT&T
Tariff F.C.C. No. 11, as amended from time to time, associated with
AT&T Terrestrial 45 Mbps Local Channel Services provided under this
CT, provided such service components are associated directly with the
Services Provided under this CT. There is no minimum retention period
associated with this waiver.
3. Recurring, Nonrecurring and Usage Charges
(a) Under the Term Plan Feature Package: The $50.00 per 800 number
Monthly Charge is waived. The maximum total charge to be paid by the
Customer over this CT Term, for the $25.00 nonrecurring Installation
Charge, for each installation or change per 800 number, is $1,000 per
Billing Account. There is no minimum retention period associated with
this waiver.
(b) Split Access Flexible Egress Routing (SAFER): For AT&T SDN
Services, the per primary SDN central office Special Access Line
Grouping nonrecurring Installation Charge is waived for no more than
25 Special Access Line Groupings, and the recurring Monthly Charge per
AT&T Terrestrial 1.544 Local Channel or equivalent at the primary SDN
central office is waived for the first 6 full billing months. For
AT&T MEGACOM 800 Services, the nonrecurring Installation Charge per
800 Number per Customer Location is waived for no more than 25 800
numbers.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs Original Page 14.1
Bridgewater, NJ 08807
Issued: August 31, 2000 Effective: September 1, 2000
** All material on this page has been deleted. **
Certain regulations on this page formerly appeared on Page 14.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 2nd Revised Page 15
Bridgewater, NJ 08807 Cancels 1st Revised Page 15
Issued: August 31, 2000 Effective: September 1, 2000
6.C.4. Credits (continued)
(a)
(b)
(c) AT&T will apply a credit of $223,500 in the 27th, 39th and 51st full
billing months following the TSD provided that: (i) the Customer is
current in all payments to AT&T and (ii) the Customer has satisfied
the MARC for the previous year. If the Customer discontinues this CT
for any reason prior to the expiration of the CT Term and incurs a
Termination Charge as specified in Section 6.D.3., following, AT&T
will bill the Customer, at the time of discontinuance, the entire
amount of the credits received. Any such bill must be paid by the
Customer within 90 days.
(d)
(e)
(f)
(g) AT&T will apply a credit, not to exceed a total of $20,000 for
each year of the CT Term and not to exceed a total of $10,000 for the
last 6-month period of the CT Term, equal to the charges associated
with the Recurring and Nonrecurring Charges of any new AT&T Services
not previously subscribed to by the Customer during the CT Term which
are provided under this Contract Tariff. The credit, if any, will be
applied in the 13th, 25th, 37th, 49th, 61st, 73rd and 78th full
billing months following the TSD.
(h) AT&T will apply a credit against charges billed under this CT
equal to the installation charges incurred by the Customer for AT&T
Regional Frame Relay Service FRVPP-eligible service components during
the CT Term.
Certain regulations previously found on this page can now be found
on Page 16.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 3rd Revised Page 16
Bridgewater, NJ 08807 Cancels 2nd Revised Page 16
Issued: August 31, 2000 Effective: September 1, 2000
6. Classifications, Practices and Regulations (continued)
D. Discontinuance - In lieu of any Discontinuance With or Without
Liability provisions that are specified in the AT&T tariffs referenced
in Section 1., preceding, the following provisions shall apply.
1. The Customer may discontinue this CT prior to the end of the CT
Term, provided the Customer replaces this CT with other AT&T Services
or another AT&T CT for AT&T Tariffed Interstate Services having: (i)
an equal or greater new annualized MARC for the "MARC-eligible
Services" specified in Section 3., preceding, and (ii) a new term equal
to or greater than the remaining term, but not less than 3 years. The
Customer will also be billed a Shortfall Charge equal to: the
difference between (1) the prorated MARC for the year, or the last
6-month period of the CT Term, as the case may be, in which the
Customer discontinues and (2) the total of the actual MARC-eligible
charges incurred for that year or 6-month period, as the case may be,
provided the amount in (2) is less than the amount in (1).
2.
3. The Customer may discontinue this CT without liability for a
Termination Charge in the event of a breach by AT&T of its obligations
under this CT that materially impairs the Customer's use of the
Services Provided. The Customer must give AT&T 60 days prior written
notice, citing in detail the breach forming the forming the basis for
the discontinuance, and this CT will be discontinued on the 60th day
thereafter unless AT&T cures the breach within said notice period. In
the event of such discontinuance, the Customer shall remain liable for
usage and shortfall charges (if any) incurred prior to the effective
date of discontinuance.
(a) At the end of the CT Term, should the Customer elect to
exercise the renewal option specified in Section 2, preceding, the
Customer may discontinue this CT at anytime after the 84th month,
provided (1) the Customer is current in payment to AT&T for all
tariffed telecommunications services provided under this CT; (2) the
Customer has satisfied a minimum revenue commitment of $12,500,000 in
Tariffed Services as specified in this CT; and (3) notifies AT&T in
writing, no less than 30 days prior to the effective date of
discontinuance.
4. If the Customer discontinues this CT for any reason other than
specified in Sections 6.D.1.,6.D.3, and 6.D.3.a above, prior to the
expiration of the CT Term, a Termination Charge will apply. If the
Customer discontinues during Years 1 through 6 of the CT Term, the
Termination Charge will be an amount equal to the sum of (1) 35% of
the unsatisfied MARC for the year in which the Customer discontinues
this CT plus (2) 35% of the MARC for each year remaining in the CT
Term plus (3) 35% of the unsatisfied MARC for the last 6-month period
of the CT Term. If the Customer discontinues during the last 6-month
period of the CT Term, the Termination Charge will be an amount equal
to 35% of the unsatisfied MARC for the last 6-month period of the CT
Term. However, the Customer will also be billed an amount as
specified in Section 6.C.4.(c), preceding.
Certain regulations on this page formerly appeared on Page 15.
Certain material previously found on this page can now be found on
Page 16.1.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 16.1
Bridgewater, NJ 08807 Cancels Original Page 16.1
Issued: October 30, 2000 Effective: October 31, 2000
6. Classifications, Practices and Regulations (continued)
E. Other Requirements
1. AT&T will provision up to twenty (20) Access Ports per month (at
speeds of 64 kbps and below) within twenty-two (22) calendar days.
AT&T will provision 95% of the remaining Access Ports (not to exceed
thirty-seven (37) Access Ports per month) within twenty-seven (27)
calendar days.
AT&T will provision Access Ports in excess of those specified above
within the standard interval of thirty (30) calendar days.
The Customer will designate each Access Port to be provisioned within
the twenty-two (22) calendar day interval, the twenty-seven (27)
calendar day interval of the standard thirty (30) calendar day
interval.
F. Availability - This Contract Tariff is available only to
Customers who: (1) concurrently order this CT only once, either by
the Customer or any Affiliate of the Customer, which is any entity
that owns a controlling interest in either the Customer or an
Affiliate of the Customer, or any entity in which a controlling
interest is owned by either the Customer or an Affiliate of the
Customer and (2) ordered service in a previous availability period or
who orders service within 30 days after October 31, 2000, for initial
installation of the Services Provided under this CT within 30 days
after the date ordered.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 2nd Revised Page 17
Bridgewater, NJ 08807 Cancels 1st Revised Page 17
Issued: August 31, 2000 Effective: September 1, 2000
7. Rates
A. SDN Rate Schedules - The rates listed below apply for all
Mileages & Bands and for all rate periods and are stabilized for the
CT Term.
Initial Each Additional
Rates Schedules 18 Seconds or 6 Seconds or
Fraction Fraction
A, A-PV $0.0348 $0.0116
B(a), B-PV(a), B(b), B-PV(b) $0.0207 $0.0069
C(a), C(b), C-PV $0.0160 $0.0053
E $0.0303 $0.0101
G $0.1062 $0.0354
H1 $0.0390 $0.0130
H2 $0.0540 $0.0180
K $0.0363 $0.0121
L $0.1272 $0.0424
P $0.2424 $0.0808
B. AT&T 800 Service Rate Schedules - The rates listed below apply
for all Service Areas and for all rate periods and are stabilized for
the CT Term.
Per Hour of Use
AT&T MEGACOM 800 Service-Domestic $4.16
AT&T 800 READYLINE Service-Domestic $6.94
1. AT&T Automatic Number Identification (ANI)/Charge Number Service
- The following Usage Charge will apply during the CT Term.
Usage Charge
- per caller number information delivered $.005
2. AT&T Courtesy Transfer - The following Usage Charge will apply
during the CT Term.
Usage Charge
- per Completed Call $.025
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 18
Bridgewater, NJ 08807 Cancels Original Page 18
Issued: August 31, 2000 Effective: September 1, 2000
7. Rates (continued)
C. AT&T MEGACOM 800 Service-International
1. AT&T MEGACOM 800 Service-Canada - The following rates for Canada
are stabilized for the CT Term.
RATES
DAY RATE EVENING RATE NIGHT
RATE
Mon-Fri Mon-Fri /Sat-Sun
Mon-Sun
8AM-6PM 6PM-12Mid/8AM-12Mid 12Mid-8AM
Initial Each Add'l Initial Each Add'l Initial Each
Add'l
Rate 30 Secs 1 Sec 30 Secs 1 Sec 30 Secs 1 Sec
Step or Frac't or Frac't or Frac't or Frac't or Frac't or
Frac't
1-6 $0.1228 $0.0041 $0.1228 $0.0041 $0.1228 $0.0041
2. AT&T MEGACOM 800 Services-Overseas
Initial Each Additional Second
Country/Area 30 Seconds or Fraction Thereof
United Kingdom $0.1830 $0.0061
D. AT&T 800 READYLINE Service-International
1. AT&T 800 READYLINE Service-Canada - The following rates for
Canada are stabilized for the CT Term.
RATES
DAY RATE EVENING RATE NIGHT
RATE
Mon-Fri Mon-Fri /Sat-Sun
Mon-Sun
8AM-6PM 6PM-12Mid/8AM-12Mid 12Mid-8AM
Initial Each Add'l Initial Each Add'l Initial Each
Add'l
Rate 30 Secs 1 Sec 30 Secs 1 Sec 30 Secs 1 Sec
Step or Frac't or Frac't or Frac't or Frac't or Frac't or
Frac't
C
1-6 $0.1491 $0.0049 $0.1491 $0.0049 $0.1491 $0.0049
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 19
Bridgewater, NJ 08807 Cancels Original Page 19
Issued: August 31, 2000 Effective: September 1, 2000
7. Rates (continued)
E. International Calling Capability - Following are the AT&T SDN
International Calling Capability Usage Rates to the Countries listed
below, applicable under this CT. These rates are stabilized for the
CT Term.
1. U.S. Mainland Usage Rates - The following schedules are used to
rate calls between stations in the U.S. Mainland and stations in the
country/area specified below. Rates apply for all days of the week
including holidays. Unless otherwise specified, the Initial Period
(IP) is 18 seconds, or fraction thereof, and the Additional Period
(AP) is 6 seconds, or fraction thereof.
(i) Canada Rate Schedule - This schedule applies to Customer
Dialed calls to stations in Canada using dedicated access.
RATES
PEAK OFF-PEAK
8AM-6PM 6PM-8AM
Initial Each Add'l Initial Each Add'l
18 Seconds 6 Seconds 18 Seconds 6 Seconds
Rate Mileage or Fraction or Fraction or Fraction or Fraction
1-4000 $0.0363 $0.0121 $0.0363 $0.0121
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs Original Page 20
Bridgewater, NJ 08807
Issued: January 8, 1999 Effective: January 9, 1999
** All material on this page is new. **
7. Rates (continued)
(ii) Mexico Rate Schedules - These schedules apply to Customer
Dialed calls to stations in Mexico using dedicated access.
(I.) Mexico Schedule 1 Rates - The following rates are for calls
to the point of connection at the international boundary.
RATES
PEAK OFF-PEAK
7AM-7PM 7PM-7AM
Initial Each Add'l Initial Each Add'l
18 Seconds 6 Seconds 18 Seconds 6 Seconds
Rate Mileage or Fraction or Fraction or Fraction or Fraction
1-10 $0.0000 $0.0000 $0.0000 $0.0000
11-22 $0.0000 $0.0000 $0.0000 $0.0000
23-55 $0.0000 $0.0000 $0.0000 $0.0000
56-124 $0.0000 $0.0000 $0.0000 $0.0000
125-292 $0.0000 $0.0000 $0.0000 $0.0000
293-430 $0.0000 $0.0000 $0.0000 $0.0000
431-925 $0.0000 $0.0000 $0.0000 $0.0000
926-3000 $0.0000 $0.0000 $0.0000 $0.0000
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 21
Bridgewater, NJ 08807 Cancels Original Page 21
Issued: August 31, 2000 Effective: September 1, 2000
7.E.1.(c)I.(ii) Mexico Rate Schedules (continued)
(II.) Mexico Schedule 2 Rates - The following rates apply to
the Customer Dialed Stations (DS) calls (as defined in Section
24.1.2.B.2.(a) of AT&T Tariff F.C.C. No. 27) between the point of
connection at the international boundary and the locations in Mexico.
The Initial Period is 1 minute, or fraction thereof, and the
Additional Period is 1 minute, or fraction thereof.
RATES
RATE CLASS OF PEAK RATE OFF-PEAK RATE
TABLE SERVICE IP AP IP AP
1-3 DS $0.19 $0.14 $0.19 $0.14
4-6 DS $0.52 $0.39 $0.52 $0.39
7-8 DS $0.68 $0.50 $0.68 $0.50
(iii) Other Countries Rates - Dial Stations using dedicated
access. The Peak and Off-Peak time periods for the countries listed
below are as specified in AT&T Tariff F.C.C. No. 1.
Initial Period Add'l Period
Country Peak Off-Peak Peak Off-Peak
United Kingdom (including $0.0363 $0.0363 $0.0121 $0.0121
the Channel Islands, England,
Isle of Man, Northern Ireland,
Scotland and Wales)
Belgium $.1248 $.1248 $.0416 $.0416
Brazil $.1887 $.1887 $.0629 $.0629
China, People's
Republic of $.2844 $.2844 $.0948 $.0948
Denmark $.1248 $.1248 $.0416 $.0416
Finland $.1248 $.1248 $.0416 $.0416
France $.0945 $.0945 $.0315 $.0315
Germany, Federal
Republic of $.0945 $.0945 $.0315 $.0315
Hong Kong $.1500 $.1500 $.0500 $.0500
Italy $.1065 $.1065 $.0355 $.0355
Norway (including
Svalbard) $.1026 $.1026 $.0342 $.0342
Philippines $.1983 $.1983 $.0661 $.0661
Portugal (including
Azores and Madeira Islands) $.1248 $.1248 $.0416 $.0416
Singapore, Republic of $.1356 $.1356 $.0452 $.0452
Spain (including Balearic
Islands, Canary Islands,
Ceuta and Melilla) $.1209 $.1209 $.0403 $.0403
Sweden $.0963 $.0963 $.0321 $.0321
Switzerland $.0963 $.0963 $.0321 $.0321
Taiwan $.1644 $.1644 $.0548 $.0548
Venezuela $.1695 $.1695 $.0565 $.0565
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 22
Bridgewater, NJ 08807 Cancels Original Page 22
Issued: August 31, 2000 Effective: September 1, 2000
7.E.1.(c)I.(iii) Other Countries Rates (continued)
(iv) Canada Rate Schedule - This schedule applies to Customer
Dialed calls to stations in Canada using switched access.
RATES
PEAK OFF-PEAK
8AM-6PM 6PM-8AM
Initial Each Add'l Initial Each Add'l
18 Seconds 6 Seconds 18 Seconds 6 Seconds
Rate Mileage or Fraction or Fraction or Fraction or Fraction
1-4000 $0.0555 $0.0185 $0.0555 $0.0185
(v) Mexico Rate Schedules - These schedules apply to Customer
Dialed calls to stations in Mexico using switched access.
(I.) Mexico Schedule 1 Rates - The following rates are for calls
to the point of connection at the international boundary.
RATES
PEAK OFF-PEAK
7AM-7PM 7PM-7AM
Initial Each Add'l Initial Each Add'l
18 Seconds 6 Seconds 18 Seconds 6 Seconds
Rate Mileage or Fraction or Fraction or Fraction or Fraction
1-10 $0.0000 $0.0000 $0.0000 $0.0000
11-22 $0.0000 $0.0000 $0.0000 $0.0000
23-55 $0.0000 $0.0000 $0.0000 $0.0000
56-124 $0.0000 $0.0000 $0.0000 $0.0000
125-292 $0.0000 $0.0000 $0.0000 $0.0000
293-430 $0.0000 $0.0000 $0.0000 $0.0000
431-925 $0.0000 $0.0000 $0.0000 $0.0000
926-3000 $0.0000 $0.0000 $0.0000 $0.0000
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 3rd Revised Page 23
Bridgewater, NJ 08807 Cancels 2nd Revised Page 23
Issued: October 30, 2000 Effective: October 31, 2000
7.E.1.(c)I.(v) Mexico Rate Schedules (continued)
(II.) Mexico Schedule 2 Rates - The following rates apply to the
Customer Dialed Stations (DS) calls (as defined in Section
24.1.2.B.2.(a) of AT&T Tariff F.C.C. No. 27) between the point of
connection at the international boundary and the locations in Mexico.
The Initial Period is 1 minute, or fraction thereof, and the
Additional Period is 1 minute, or fraction thereof.
RATES
RATE CLASS OF PEAK RATE OFF-PEAK RATE
TABLE SERVICE IP AP IP AP
1-3 DS $0.19 $0.14 $0.19 $0.14
4-6 DS $0.52 $0.39 $0.52 $0.39
7-8 DS $0.68 $0.50 $0.68 $0.50
(vi) Other Countries Rates - Dial Stations using switched access.
The Peak and Off-Peak time periods for the countries listed below are
as specified in AT&T Tariff F.C.C. No. 1.
Initial Period Add'l Period
Country Peak Off-Peak Peak Off-Peak
United Kingdom (including the $.0555 $.0555 $.0185 $.0185
Channel Islands, England, Isle
of Man, Northern Ireland,
Scotland and Wales)
Belgium $.1392 $.1392 $.0464 $.0464
Brazil $.2031 $.2031 I $.0677 $.0677
China, People's
Republic of $.2988 $.2988 $.0996 $.0996
Denmark $.1392 $.1392 $.0464 $.0464
Finland $.1392 $.1392 $.0464 $.0464
France $.1089 $.1089 $.0363 $.0363
Germany, Federal
Republic of $.1089 $.1089 $.0363 $.0363
Hong Kong $.1644 $.1644 $.0548 $.0548
Italy $.1209 $.1209 $.0403 $.0403
Norway (including
Svalbard) $.1122 $.1122 $.0374 $.0374
Philippines $.2127 $.2127 $.0709 $.0709
Portugal (including
Azores and Madeira Islands) $.1392 $.1392 $.0464 $.0464
Singapore, Republic of $.1500 $.1500 $.0500 $.0500
Spain (including Balearic
Islands, Canary Islands,
Ceuta and Melilla) $.1353 $.1353 $.0451 $.0451
Sweden $.1107 $.1107 $.0369 $.0369
Switzerland $.1107 $.1107 $.0369 $.0369
Taiwan $.1788 $.1788 $.0596 $.0596
Venezuela $.1839 $.1839 $.0613 $.0613
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 24
Bridgewater, NJ 08807 Cancels Original Page 24
Issued: August 31, 2000 Effective: September 1, 2000
7. Rates (continued)
F. AT&T InterSpan Frame Relay Service - Following are the AT&T
InterSpan Frame Relay Service rates that apply in lieu of the rates
specified in AT&T Tariff F.C.C. No. 4. The below rates are stabilized
for the CT Term.
I.(a) Port Charges Table
Additional
Additional Puerto Rico/US
Domestic Hawaii Virgin Islands Port
Port Port Port Port Installa-
Speed Monthly Monthly Monthly tion
kbps Charge Charge Charge Charge
56 $ 250.00 $ 500.00 $ 500.00 $ 500.00
64 $ 250.00 $ 575.00 $ 575.00 $ 575.00
128 $ 470.00 $1,250.00 $1,250.00 $1,250.00
192 $ 520.00 $2,060.00 $2,060.00 $2,060.00
256 $ 550.00 $2,870.00 $2,870.00 $2,870.00
320 $ 760.00 $3,530.00 $3,530.00 $3,530.00
384 $ 820.00 $4,200.00 $4,200.00 $4,200.00
448 $ 950.00 $4,720.00 $4,720.00 $4,720.00
512 $1,040.00 $5,250.00 $5,250.00 $5,250.00
576 $1,170.00 $5,590.00 $5,590.00 $5,590.00
640 $1,230.00 $5,930.00 $5,930.00 $5,930.00
704 $1,270.00 $6,280.00 $6,280.00 $6,280.00
768 $1,300.00 $6,620.00 $6,620.00 $6,620.00
1544 $2,090.00 $7,170.00 $7,170.00 $7,170.00
(b) Permanent Virtual Circuits - Domestic PVC Charges Table
----------------------------------------------------------
Asymmetrical Symmetrical
PVC CIR PVC Monthly PVC Monthly
kbps Charge Charge
----------------------------------------------------------
----------------------------------------------------------
4 $ 4.88 $ 9.27
----------------------------------------------------------
----------------------------------------------------------
8 $ 6.21 $ 11.38
----------------------------------------------------------
----------------------------------------------------------
16 $ 8.43 $ 16.02
----------------------------------------------------------
----------------------------------------------------------
32 $ 16.86 $ 32.03
----------------------------------------------------------
----------------------------------------------------------
48 $ 25.29 $ 48.05
----------------------------------------------------------
----------------------------------------------------------
56 $ 33.72 $ 64.06
----------------------------------------------------------
----------------------------------------------------------
64 $ 33.72 $ 64.06
----------------------------------------------------------
----------------------------------------------------------
128 $ 67.44 $ 128.13
----------------------------------------------------------
----------------------------------------------------------
192 $ 101.15 $ 192.19
----------------------------------------------------------
----------------------------------------------------------
256 $ 134.87 $ 256.25
----------------------------------------------------------
----------------------------------------------------------
320 $ 168.59 $ 320.32
----------------------------------------------------------
----------------------------------------------------------
384 $ 202.31 $ 384.38
----------------------------------------------------------
----------------------------------------------------------
448 $ 236.03 $ 448.45
----------------------------------------------------------
----------------------------------------------------------
512 $ 269.74 $ 512.51
----------------------------------------------------------
----------------------------------------------------------
576 $ 303.46 $ 576.58
----------------------------------------------------------
----------------------------------------------------------
640 $ 337.18 $ 640.64
----------------------------------------------------------
----------------------------------------------------------
704 $ 370.90 $ 704.70
----------------------------------------------------------
----------------------------------------------------------
768 $ 404.61 $ 768.77
----------------------------------------------------------
----------------------------------------------------------
832 $ 438.33 $ 832.83
----------------------------------------------------------
----------------------------------------------------------
896 $ 472.05 $ 896.90
----------------------------------------------------------
----------------------------------------------------------
960 $ 505.77 $ 960.96
----------------------------------------------------------
----------------------------------------------------------
1024 $ 539.49 $ 1025.02
----------------------------------------------------------
----------------------------------------------------------
1536 $ 813.44 $ 1545.54
----------------------------------------------------------
Certain material previously found on this page can now be found on
Page 24.0.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs Original Page 24.0
Bridgewater, NJ 08807
Issued: August 31, 2000 Effective: September 1, 2000
T
7.F.I.(b) Permanent Virtual Circuits(continued)
II. FRS Domestic Access Port Charges - When the service
components specified below are ordered together as a unit at the same
location, the Customer will be billed the following in lieu of the
individual service component charges:
(b) Domestic Access Port (a Domestic Access Port consists of one
Domestic Port, one Access Connection, one Digital Local Channel, and
one Access Coordination Function).
Domestic Access Port Domestic Access
Port
Domestic Access Port Monthly Charge Installation
Charge
56/64 kbps $424.16 $800.00
Certain material on this page formerly appeared on Page 24.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 24.1
Bridgewater, NJ 08807 Cancels Original Page 24.1
Issued: August 31, 2000 Effective: September 1, 2000
7.F. AT&T InterSpan Frame Relay Service Rates (continued)
III. AT&T International End-to-End (E2E) Frame Relay Service
(FRS) - The charges for E2E FRS consist of Non-Recurring Charges and
Monthly Charges for Domestic Ports, Global Ports, Non-US Ports and E2E
PVCs. An E2E FRS network must contain at least one PVC connecting to
a Domestic Port or a Global Port in the US.
A. Non-US Port - A Non-US Port is required to connect to an E2E
PVC in the international locations specified in Section 14.12.1., of
AT&T Tariff F.C.C. No. 4 as amended from time to time.
1. Non-US Port Type I - Non-US Port Type I Ports are required to
connect E2E PVCs between international locations. The following
Monthly Recurring Charges for Non-US Ports Type I will apply during
the CT Term.
(a) Non-US Port Type I Recurring Charges Table:
Regions 6, 16, 26
Port Monthly Monthly Monthly
Speed Charges: Charges: Charges:
kbps Region 6 Region 16 Region 26
56/64 $ 323.00 $ 323.00 $ 323.00
128 $ 538.00 $ 538.00 $ 538.00
192 $ 856.00 $ 856.00 $ 856.00
256 $1,232.00 $1,232.00 $1,232.00
384 $1,744.00 $1,744.00 $1,744.00
512 $2,156.00 $2,156.00 $2,156.00
768 $2,876.00 $2,876.00 $2,876.00
1024 $3,424.00 $3,424.00 $3,424.00
1536 $4,382.00 $4,382.00 $4,382.00
1920 $5,478.00 $5,478.00 $5,478.00
1984 $5,478.00 $5,478.00 $5,478.00
2048 $5,478.00 $5,478.00 $5,478.00
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 24.2
Bridgewater, NJ 08807 Cancels Original Page 24.2
Issued: August 31, 2000 Effective: September 1, 2000
7.F.III.A. Non-US Port (continued)
2. Non-US Port Type II - Provides connection capability within a
single country. The following Monthly Recurring Charges for Non-US
Ports Type II will apply during the CT Term.
(a) Non-US Port Type II Recurring Charges Table: Region A
Port Monthly
Speed Charges
kbps Region A
56/64 $ 306.00
128 $ 465.00
192 N/A
256 $ 709.00
384 N/A
512 $1,052.00
768 N/A
1024 $1,626.00
1536 $1,993.00
1920 $1,993.00
1984 $1,993.00
2048 $1,993.00
3. E2E PVC - An E2E PVC is an end-to-end, full channel logical
connection between the US and an international location, or between
international locations. E2E PVCs are available only in a two-way
configuration. An E2E two-way PVC provides full two-way
connectivity. E2E PVCs may be connected to Domestic Ports or Global
Ports in the US and to Non-US Ports in international locations.
(a) E2E PVC Recurring Charges - The following Recurring Monthly
Charges will apply for each 1-Way portion of a 2-way E2E PVC as
specified in the following E2E PVC Recurring Charges Tables during the
CT Term.
E2E PVC Recurring Charges Table: Bands 1, 6, B
E2E 1-Way E2E 1-Way E2E 1-Way E2E
PVC PVC Monthly PVC Monthly PVC Monthly
CIR Charges: Charges: Charges:
kbps Band 1 Band 6 Band B
4 $ 30.00 $ 645.00 $ 16.00
8 $ 48.00 $ 846.00 $ 22.00
16 $ 73.00 $ 1,097.00 $ 34.00
24 $ 98.00 $ 1,398.00 $ 42.00
32 $ 123.00 $ 1,640.00 $ 50.00
48 $ 153.00 $ 2,090.00 $ 58.00
56/64 $ 196.00 $ 2,370.00 $ 66.50
96 $ 256.00 $ 3,183.00 $ 101.00
128 $ 267.00 $ 3,586.00 $ 117.00
192 $ 306.00 $ 5,039.00 $ 175.00
256 $ 367.00 $ 6,004.00 $ 234.00
384 $ 514.00 $ 8,907.00 $ 351.00
512 $ 685.00 $11,822.00 $ 467.00
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 24.3
Bridgewater, NJ 08807 Cancels Original Page 24.3
Issued: August 31, 2000 Effective: September 1, 2000
7.F. Rates (continued)
IV. Alaska PVC - An Alaska PVC is a logical connection to an
Alaska location. An Alaska PVC is a two-way half channel PVC that
connects to a two-way half channel PVC furnished by another Carrier or
administration in Alaska to provide full two-way connectivity. An
Alaska PVC can be connected to a Global or a Domestic Port.
A. Alaska PVC Installation Charges - The following Installation
Charges will apply for the installation of each Alaska PVC during the
CT Term.
Installation
Charge
per PVC $0.00
B. Recurring Charges - The following Recurring Monthly Charges will
apply for each Alaska PVC, during the CT Term.
Alaska PVC Charges Table
Alaska Alaska
Two-Way Two-Way
Half Channel Half Channel
PVC PVC
Monthly Monthly
PVC CIR Charge PVC CIRkbps Charge
kbps
4 $36.30 448 $543.40
8 $49.50 512 $620.95
16 $90.20 576 $697.95
32 $180.95 640 $776.05
48 $270.05 704 $853.60
56/64 $315.70 768 $931.15
128 $346.50 832 $1,008.70
192 $351.45 896 $1,086.25
256 $360.80 960 $1,164.35
320 $451.00 1024 $1,241.90
384 $465.30
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 4th Revised Page 25
Bridgewater, NJ 08807 Cancels 3rd Revised Page 25
Issued: October 30, 2000 Effective: October 31, 2000
7. Rates (continued)
I. AT&T Private Line Services - The following AT&T Private Line
rates will apply during the CT Term, in lieu of those specified in
AT&T Tariff F.C.C. No. 9, as amended from time to time.
1. ACCUNET Spectrum of Digital Services
(a) Inter Office Channel
MONTHLY CHARGES
Mileage PER CHANNEL
Band USOC Fixed Per Mile
- per 9.6 kbps IOC 1+ 1LNVX $230.00 $0.29
- per 56/64 kbps IOC 1+ 1LNVX $230.00 $0.29
2. AT&T ACCUNET T1.5 Service
(a) Inter Office Channel
MONTHLY CHARGES
Mileage PER CHANNEL
Band USOC Fixed Per Mile
- per 1.5 Mbps IOC 1+ 1LNVX $3,500.00 $3.95
(b) Beginning in month 19 following CISD, the following rates
apply for new T1 IOC's installed.
MONTHLY CHARGES
Mileage PER CHANNEL
Band USOC Fixed Per Mile
- per 1.5 Mbps IOC 0-100 miles 1LNVX $ 433.33 $0.00
100+ miles $ 0.00 $4.33
(c) Office Functions
1. Network Protection Capability (NPC) - The following is
stabilized for the duration of the CT Term.
Monthly
USOC Charge
- per Protected APZNP 0.50 x the non-discounted
Channel Monthly AT&T ACCUNET T1.5 Service set
forth in Section 7.I.2.(a), preceding.
3. AT&T ACCUNET T45 Service
(a) Inter Office Channel
MONTHLY CHARGES
Mileage PER CHANNEL
Band USOC Fixed Per Mile
- per ACCUNET T45 IOC 0-100 miles 1LNVX $4,417.14 $00.00
100+ miles $ 0.00 $44.17
X 2nd Revised Page 25 was not incremented to 3rd Revised Page in the
material which was filed under Transmittal No. 7933 and became
effective on 8/31/00. This filing corrects that error.
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs Original Page 26
Bridgewater, NJ 08807
Issued: August 31, 2000 Effective: September 1, 2000
** All material on this page is new. **
7. Rates (continued)
H. AT&T Concert VNS
1. The following rate elements apply to calls from a station in the
designated foreign country/area with dedicated access. The Initial
Period (IP) is 6 seconds, or fraction thereof, and the Additional
Period (AP) is 1 second, or fraction thereof.
Schedule B - This schedule applies to on-net calls originating from
dedicated access locations in the designated foreign country/area to
the U.S. Mainland, Hawaii, Puerto Rico and the U.S. Virgin Islands.
The Peak and Off-Peak rate periods are as specified in AT&T Tariff
F.C.C. No. 1, as amended from time to time.
Initial Period Additional Period
Country Peak Off-Peak Peak Off-Peak
United Kingdom $0.0121 $0.0121 $0.0020 $0.0020
2. The following rate elements apply to calls from a station in the
designated foreign country/area with switched access. The Initial
Period (IP) is 18 seconds, or fraction thereof, and the Additional
Period (AP) is 1 second, or fraction thereof.
Schedule C - This schedule applies to on-net calls originating from
switched access locations in the designated foreign country/area to
the U.S. Mainland, Hawaii, Puerto Rico and the U.S. Virgin Islands.
The Peak and Off-Peak rate periods are as specified in AT&T Tariff
F.C.C. No. 1, as amended from time to time.
Initial Period Additional Period
Country Peak Off-Peak Peak Off-Peak
United Kingdom $0.0555 $0.0555 $0.0030 $0.0030
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs Original Page 27
Bridgewater, NJ 08807
Issued: August 31, 2000 Effective: September 1, 2000
** All material on this page is new. **
7. Rates (continued)
I. AT&T Conference Services
1. AT&T Audio-Teleconference Bridge Service - The following rates
are stabilized for the CT Term.
------------------------------------------------------------------------
Call Types Price/Min
------------------------------------------------------------------------
AT&T DIAL-OUT/OPERATOR
------------------------------------------------------------------------
ASSISTED CONFERENCE CALLS
------------------------------------------------------------------------
Bridge Port Usage Charge $.17
Conference Leg Usage Charge $.10
MEET ME/OPERATOR ASSISTED
BRIDGE ARRANGEMENT
OPTION 2/800
Bridge Port Usage Charge $.16
Conference Leg Usage Charge $.05
------------------------------------------------------------------------
Call Types Price/Min
------------------------------------------------------------------------
MEET ME/AUTOMATED ACCESS
BRIDGE ARRANGEMENT
OPTION 2/800
Bridge Port Usage Charge $.12
Conference Leg Usage Charge $.05
MEET ME/AUTOMATED ACCESS
BRIDGE ARRANGEMENT
OPTION 2/800- Reservationless
Bridge Port Usage Charge $.12
Conference Leg Usage Charge $.05
MEET ME/OPERATOR ASSISTED
BRIDGE ARRANGEMENT
OPTION 3/CALLER PAID
Bridge Port Usage Charge $.16
MEET ME/AUTOMATED ACCESS
BRIDGE ARRANGEMENT
OPTION 3/CALLER PAID
Bridge Port Usage Charge $.12
MEET ME/AUTOMATED ACCESS
BRIDGE ARRANGEMENT
OPTION 3/CALLER PAID-Reservationless
Bridge Port Usage Charge $.12
AT&T COMMUNICATIONS contract tariff NO. 10906
Adm. Rates and Tariffs 1st Revised Page 28
Bridgewater, NJ 08807 Cancels Original Page 28
Issued: October 30, 2000 Effective: October 31, 2000
7.I. AT&T Conference Services (continued)
2. AT&T Event TeleConference Service - The following rates are
stabilized for the CT Term.
Call Type Price Per Port
Dial In/Dial Out Minute of use
Domestic $0.58
Call Type Price Per Port
Dial In/Dial Out Minute of use
International $0.50
Price Per Port
Call Type Minute of use
Meet-Me Option 3 $0.50
J. AT&T Local Channels
1. 56 kbps ACCUNET GDA Access Service
MONTHLY
Mileage USOC FIXED PER MILE
0-5 1LNR9 and $133.00 $0.00
1LNR2
6-10 1LNR9 and 1LNR2 $183.00 $0.00
11-15 1LNR9 and $200.00 $0.00
1LNR2
16-25 1LNR9 and 1LNR2 $317.00 $0.00
25+ 1LNR9 and 1LNR2 $350.00 $3.50
2. AT&T Terrestrial 1.544 Mbps Local Channel Services
MONTHLY
Mileage USOC FIXED PER MILE
0-5 1LNV9 and $323.00 $0.00
1LNVT
6-10 1LNV9 and $403.00 $0.00
1LNVT
11-15 1LNV9 and $444.00 $0.00
1LNVT
16-25 1LNV9 and $484.00 $0.00
1LNVT
25+ 1LNV9 and 484.00 $4.84
1LNVT
Exhibit XXXX
AT&T MA Reference No. ___________
8/8/00 AT&T AND CUSTOMER
CONFIDENTIAL PROPRIETARY INFORMATION
AMENDMENT TO MASTER AGREEMENT BETWEEN AT&T CORP. AND GALILEO
INTERNATIONAL, L.L.C.
The Addendum to the Master Agreement between AT&T Corp. ("AT&T") and
Galileo International, L.L.C. ("CUSTOMER"), and the General Terms and
Conditions of the Master Agreement, dated December 28, 1998,
(collectively, the "Agreement") are hereby amended as set forth below:
1. The words ", Amendment to Master Agreement, " are inserted at the end
of the first line in the first paragraph of the Master Agreement Cover
Sheet following the words "Addendum to Master Agreement". 2. The words
"and, in the case of AT&t..." to the end of Section 1.1 are deleted in their
entirety.
3. The following is inserted at the end of Section 1.3:
"Except to the extent prohibited by an Attachment, CUSTOMER may resell to
or share Services with Users at the rates and charges set forth in the
applicable Attachment(s). CUSTOMER shall be AT&T's customer of record
for Services provided to Users and shall be financially responsible for
any User's purchases of Services."
4. The words "except for amounts disputed in good faith" are inserted
in the first sentence of Section 2.1, after the words "under any other
Attachment." The word "reasonably" is inserted in the last sentence of
Section 2.1, before the words "determines that CUSTOMER". The following
is inserted at the end of Section 2.1: "AT&T shall use all reasonable
efforts to bill for Services promptly and accurately. If AT&T fails to
bill for Services promptly and accurately and in accordance with the
requirements agreed upon by the parties under Section 2.3 on a chronic
basis as such is documented by CUSTOMER, then CUSTOMER may escalate the
problem, and pursue the remedies available, pursuant to Section 7.1
(General)."
5. Section 2.2, is deleted in its entirety and replaced with the following:
"CUSTOMER shall pay all shipping charges, taxes and other similar
charges (and any related interest and penalties due other than as a
result of AT&T's failure to timely pay any taxes owed by it)
relating to the sale, transfer of ownership, installation, license,
use or provision of the Services, except to the extent a valid tax
exemption certificate is provided by CUSTOMER to AT&T prior to the
delivery of Services. Taxes include (a) Federal excise tax, (b) all
sales, use or similar taxes (however designated) in accordance with
the law of the taxing jurisdiction and (c) gross receipts taxes
identified in AT&T tariffs. Taxes do not include (a) any tax based
on AT&T's net income, (b) state or local privilege or excise taxes,
(c) capital values, license or franchise taxes (except to the extent
covered by (b) in the second sentence of this Section) imposed upon
AT&T for the privilege of doing business in any taxing jurisdiction.
If CUSTOMER disputes the taxability or desires to seek a refund of
any tax imposed as a result of the existence or operation of this
Agreement, CUSTOMER, at its own expense and in its own name, may
file a claim for refund or protest the imposition of the disputed
tax. In the event that such claim or protest must be made in the
name of AT&T, AT&T shall in good faith and with due diligence
contest the imposition of such tax at CUSTOMER's sole expense,
provided that AT&T will not be required to pursue such a protest if
the action will result in (i) a lien against AT&T for which CUSTOMER
has not adequately indemnified AT&T or (ii) a penalty being assessed
against AT&T for which CUSTOMER has not adequately indemnified AT&T.
If AT&T collects excess taxes from CUSTOMER as the result of a
mathematical error or for other reasons not attributable to CUSTOMER
or a taxing authority or reasonable error (or disagreement)
regarding interpretation of applicable law, AT&T shall promptly
refund the excess amount to CUSTOMER. If the taxing authority
allows or requires that any refund from the taxing authority be
sought by the vendor, AT&T shall remit to CUSTOMER such improper
charges and then seek the refund from the taxing authority at its
own expense. If the taxing authority does not allow the vendor to
seek the refund, AT&T shall promptly notify CUSTOMER and provide all
necessary cooperation so that CUSTOMER can collect the excess amount.
6. Section 2.3, is deleted in its entirety and replaced with the following:
"(i)AT&T will provide CUSTOMER with a level of invoice detail (content,
format, and medium) if agreed upon by the parties for each Service and
specified in an Attachment. CUSTOMER. Payment of undisputed charges is
due within thirty (30) days after the date of CUSTOMER's receipt of an
invoice that substantially conforms to such invoice detail and shall refer
to the invoice number. Restrictive endorsements or other statements on
checks accepted by AT&T will not apply. . AT&T may at its option bill,
and CUSTOMER shall pay, interest charges with respect to any undisputed
amounts that remain unpaid more than sixty (60) days following CUSTOMER's
receipt of a proper invoice therefor at the lower of 1.5% per month or the
maximum rate allowed by law. However, in the event of a bona fide dispute
over a charge specifically identified by CUSTOMER through written notice
to AT&T, payment of the identified charge may be withheld and will not be
considered past due and no interest will be charged for non-payment of
such disputed charges pending investigation by AT&T. Upon completion of
AT&T's investigation of such disputed charge, AT&T will consult with
CUSTOMER concerning the results of the investigation and will make such
adjustments as are deemed appropriate in AT&T's reasonable discretion,
acting in good faith, after such consultation. Payment of any disputed
charges that are determined to be correct as a result of such
investigation shall be considered past due if not paid in full within
thirty (30) days after completion of the investigation.
(ii) Alternatively, if CUSTOMER submits a bona fide dispute to Dispute
Resolution (in accordance with Article 7), then CUSTOMER shall promptly
deposit the amount of the invoice in an interest-bearing escrow account in
the bank or depository specified by AT&T and shall furnish evidence of
such deposit to AT&T. The maximum amount the CUSTOMER may withhold and
pay into escrow pursuant to this subsection shall not in the aggregate
exceed three (3) months average charges. CUSTOMER shall pay any disputed
amounts that exceed the foregoing threshold to AT&T under protest, without
waiving any of the CUSTOMER's rights to recover such disputed amounts.
Upon resolution of the dispute, the parties shall allocate the money in
the escrow account and any fees relating to opening and maintaining the
escrow account, plus any interest earned on such money, consistent with
the resolution of the dispute."
7. Section 3.2 is deleted in its entirety and replaced with the following:
"CUSTOMER shall assure that its and Users' use of the Services and the
Content will at all times comply with all applicable laws, regulations and
written and electronic instructionsfor use provided or made available by
AT&T. AT&T reserves the right to terminate affected Attachments, suspend
affected Services and/or remove CUSTOMER or Users' Content from the
Services if AT&T, in its reasonable discretion, determines after
reasonable investigation that such use or Content does not conform with
the requirements set forth in this Agreement or determines after receipt
of notice from a reliable source and reasonable investigation that
CUSTOMER's or Users' use or Content may violate any laws or regulations or
interferes with AT&T's ability to provide the Services to CUSTOMER or
others. AT&T's actions or inaction under this Section shall not
constitute review or approval of CUSTOMER's or Users' use or Content.
AT&T shall notify CUSTOMER of any violation or threatened violation of
this Section 3.2 and give CUSTOMER thirty (30) days (after such provision
of notice) to cure such violation or threatened violation prior to
termination of any affected Services. Notwithstanding the foregoing, a
Service may be suspended without notice (a) in response to a court or
government demand, or (b) if AT&T reasonably determines that the integrity
or normal operation of its network and/or the Service is in imminent risk."
8. Section 3.3 of the Agreement has been relocated to a new Section 14.0
of the Agreement.
9. New sections 3.4-3.10 are inserted at the end of Section 3.0 as
follows:
3.4 AT&T shall on an annual basis and if specified in an Attachment,
review the mix and configuration of components of a Service based on
CUSTOMER's expected needs and consider CUSTOMER's need for modifications
to a thereto so as to optimize the efficiency and cost-effectiveness of
the Service supplied to CUSTOMER. Based on each such review, AT&T shall
make written recommendations to CUSTOMER that AT&T believes will improve
the efficiency and cost-effectiveness of the Service, including bringing
to CUSTOMER's attention any upgrades to the Service that AT&T believes
may be of value to CUSTOMER.
3.5 (a) AT&T shall ensure that an adequate number of appropriately
qualified and trained personnel are employed and available at all times to
provide and support CUSTOMER's use of the Services in accordance with the
terms of this Agreement.
(b) AT&T may augment the number of personnel assigned to CUSTOMER
from time to time as may reasonably be agreed upon between the parties to
carry out special projects. If AT&T Personnel (those personnel employed
by AT&T whose functions or job assignments relate substantially to the
provision of Service to CUSTOMER pursuant to this Agreement) are
reassigned during the execution of a special project, AT&T shall use its
best efforts to ensure a smooth transition, including cooperation between
the replaced and the newly-assigned personnel or, where appropriate, an
overlap in the assignment of such personnel to CUSTOMER.
3.6 AT&T shall promptly notify CUSTOMER of new features and
functions and revisions and potential enhancements and improvements to
existing Service features and functions that it believes CUSTOMER may wish
to consider asking AT&T to implement. If CUSTOMER learns (from AT&T or
otherwise) of a potential service enhancement or improvement, it may
request information from AT&T in order to determine whether it desires to
have such enhancement or improvement implemented by AT&T.
3.7 AT&T shall make Service Upgrades available to CUSTOMER. AT&T
shall notify CUSTOMER as far as reasonably possible in advance of any
proposed Service Upgrade. In the event that AT&T implements any proposed
Service Upgrade that would materially and adversely affect Customer's
ability to fully utilize the Services, Customer may terminate the
affected Service without payment of early termination charges. "Service
Upgrade" means any revision, improvement, enhancement, modification or
addition to a Service (including increases in the functionality or
improvements in performance) that is developed by or for AT&T and is
offered by AT&T to customers of the same service generally (or
implemented by AT&T in its networks) without charge.
3.8 Where such relate to the Services provided by AT&T, AT&T shall
cooperate with CUSTOMER in the development, testing and execution of
CUSTOMER's contingency and disaster recovery plans and in the testing of
equipment, services, and facilities to be used in the event of a disaster
within or directly affecting CUSTOMER's operations.
3.9 CUSTOMER is responsible for the compatibility of its
equipment with the Services. In recognition of this responsibility,
AT&T agrees:
(i) to consult with CUSTOMER, upon reasonable request,
concerning the compatibility of Services with CUSTOMER equipment
including, in the case of equipment that CUSTOMER proposes to acquire,
informing CUSTOMER of the effects (if any) of the use of such equipment
and associated software on the quality, operating characteristics and
efficiency of Services, and the effects (if any) of Services on the
operating characteristics and efficiency of such equipment and related
software to the extent such information is reasonably known to Key AT&T
Personnel (AT&T CBM), provided, however, that AT&T makes no warranty
with respect to such compatibility or effects.
(ii) to provide Service interface specifications reasonably
requested by CUSTOMER; and
(iii) not to condition use of any Service upon payment by CUSTOMER
of any fee or charge (whether styled as a patent or copyright royalty, a
license fee, an interconnection charge, or otherwise) other than as
indicated in the applicable Attachments.
3.10 (a) Subject to AT&T's reasonable security requirements, CUSTOMER
may, at its own expense, review AT&T's relevant billing records for the
purpose of assessing the accuracy of AT&T's invoices to CUSTOMER.
CUSTOMER may employ such assistance as it deems desirable to conduct
such reviews, but may not employ the assistance of any entity that
derives a substantial portion of its revenues from the provision of
services that are substantially similar to the Services provided
hereunder or employ the assistance of any person who has previously made
improper use of AT&T's Confidential Information. CUSTOMER shall cause
any person retained for this purpose to execute a non-disclosure
agreement in favor of AT&T under substantially the same obligations of
confidentiality as are set forth in Article 4.0 (Confidential
Information). Such reviews shall take place at a time and place agreed
upon by the parties. CUSTOMER's normal internal invoice reconciliation
procedures shall not be considered a review of AT&T's relevant billing
records for purposes of this Section.
(b) AT&T shall promptly correct any billing error that is revealed in
a billing review, including refunding any overpayment by CUSTOMER in the
form of a credit as soon as reasonably practicable under the
circumstances. Any dispute concerning the results of a billing review
shall be handled pursuant to the dispute resolution procedures in
Article 7.0 (Dispute Resolution).
(c) AT&T shall cooperate in any CUSTOMER billing review, providing
reasonable access to AT&T employees and all appropriate billing records
as reasonably necessary to verify the accuracy of AT&T's invoices. AT&T
may redact from the billing records provided to CUSTOMER any information
that reveals the identity or confidential information of other AT&T
customers or other AT&T Confidential Information (as defined in Section
4.1) that is not relevant to the purposes of the review.
(d) CUSTOMER may review AT&T's relevant billing records more than once
in any year if a previous review during that year found previously
uncorrected net variances or errors in invoices in AT&T's favor with an
aggregate value of at least three percent (3%) of the amounts payable by
CUSTOMER for Service provided during the period covered by the review.
10. The words "and CUSTOMER" are inserted in the last sentence of Section
4.1 after the words "deemed to be AT&T" and before the word "INFORMATION".
The following language is inserted at the end of Section 4.1:
"For purposes of confidentiality obligations hereunder, and without
purporting to allocate or assign ownership of such information, all
CUSTOMER Proprietary Network Information ("CPNI"), as that term is or may
hereafter be defined in Section 221(f) of the Communications Act of 1934,
as amended, shall be CUSTOMER Confidential Information, and shall not be
deemed AT&T Confidential Information; such CPNI shall be subject to the
requirements and restrictions on use contained in the Communications Act
of 1934 (the "Act"), but may be used and/or disclosed as permitted in the
Act."
11. Section 4.2 is deleted in its entirety and is replaced with the
following:
"Each party's INFORMATION shall, for a period of five (5) years following
its disclosure(except in the case of Software, for an indefinite period):
(i) be held in confidence; (ii) be used only for purposes of performing
this Agreement and using the Services; and (iii) not be disclosed except
to the receiving party's employees, agents, professional advisors, and
contractors having a need-to-know (provided that such agents, professional
advisors and contractors are not direct competitors of either party and
agree in writing to use and disclosure restrictions as restrictive as this
Article 4), or to the extent required by law (provided that prompt advance
notice is provided to the disclosing party to the extent practicable).
12. Section 4.4 is deleted in its entirety and is replaced with the
following:
"AT&T may monitor the Services in order to detect unauthorized use of the
Services. CUSTOMER also authorizes AT&T to monitor the Services as
necessary to verify transmission quality and operate, maintain and repair
the Services. Any monitoring authorized under this Subsection shall be
limited to that reasonably necessary to detect unauthorized use, verify
transmission quality, and maintain and repair the Services, and shall not
be for purposes of ascertaining or retaining message content of any voice
or data communication (except pursuant to valid law enforcement
requests). Subject to the provisions of Section 4.1, no information
obtained (inadvertently or otherwise) in the course of such monitoring for
fraud or quality shall be disseminated to any person without a "need to
know" within AT&T or disclosed outside AT&T without prior written consent
unless legally required. If AT&T has a legitimate need to monitor and/or
record any calls between itself and CUSTOMER concerning the Services, AT&T
shall comply with all federal and state laws applicable to such activity."
13. The first sentence in Section 6.1 is deleted in its entirety and
replaced with the following:
"AT&T grants CUSTOMER a personal, non-transferable, and non-exclusive
license (without the right to sublicense) to use, in object code form, all
software and data furnished pursuant to the Attachments (collectively, the
"Software"). AT&T shall provide CUSTOMER written and/or electronic
documentation associated with all such Software."
14. The first sentence in Section 6.2, is deleted in its entirety and
replaced with the following:
"CUSTOMER shall not copy or download the Software, except to create one
copy for back-up and/or archival purposes unless additional copiesare
expressly permitted in the applicable documentation for the Service or in
a writing signed by AT&T referencing an Attachment."
15. The following words shall be added to the end of Section 6.4:
", except that with respect to Billing Edge (or similar software), the
term of the license shall be extended beyond the expiration or termination
of this Agreement until both parties have agreed in writing that neither
party owes anything to the other in payments or credits."
16. Section 6.6 is deleted in its entirety and is replaced with the
following:
"AT&T warrants that all AT&T Software will perform substantially in
accordance with its applicable published specifications, beginning on the
date of delivery of the AT&T Software to CUSTOMER for a period of ninety
(90) days unless a different warranty period is specified in an
Attachment. If CUSTOMER returns any AT&T Software that does not comply
with this warranty during the warranty period, then AT&T, at its option,
will either repair or replace the portion of the AT&T Software that does
not comply or refund the amount paid by CUSTOMER for such failed or
defective AT&T Software.. This warranty will apply only if the AT&T
Software is used in accordance with the terms of this Agreement and is not
altered, modified, or tampered with by CUSTOMER or Users.
This Section sets forth CUSTOMER's sole and exclusive remedies for
failures and defects in Software, as provided in Section 9.2. If AT&T
Software is provided by AT&T as an integral and significant part of a
Service and its failure to perform as warranted hereunder would be
material and adverse to the provision of the Service, where such is
applicable as provided for in an Attachment, then any other applicable
remedies available to CUSTOMER under an Attachment may apply to the
Service.
17. The following is inserted in place of the existing Sections 7.1 and
7.2:
(a) Except as described in Section 7.2 (Exceptions), the following
procedures shall be adhered to in all disputes that arise under this
Agreement that the parties cannot resolve informally. The claimant must
notify the other party in writing of the nature of the dispute with as
much detail as possible about the deficient performance of that party.
The Project Managers shall meet in person or by telephone within seven
(7) days of the date of the written notification to reach agreement
about the nature of the deficiency and the corrective action to be
taken. The Project Managers shall memorialize the nature of the dispute
and their efforts to resolve it. If the Project Managers are unable to
agree on corrective action within fifteen (15) days after their meeting,
either party may require the escalation of the dispute to the next level
of management. If the dispute cannot be resolved by further escalation
to the second or third tier, as described in the escalation matrix in
Subsection (b) below, the aggrieved party may pursue available legal and
equitable remedies or, if the parties mutually agree, an independent
mediator or arbitrator.
(b) As of the Effective Date, the parties' representatives for Dispute
Resolution are as follows:
--------------------------------------
CUSTOMER AT&T Time
to
Resolve
--------------------------------------
--------------------------------------
Project Project 15
Manager Manager days
--------------------------------------
--------------------------------------
Vice Sales 15
Preside Vice days
President
--------------------------------------
--------------------------------------
Senior Vice Regional 15
President-NetworVice days
Operations President
--------------------------------------
(c) The parties agree that the fact that either party may take any
action that it believes is in its best interests to safeguard its
network(s) or business operations without resorting to dispute
resolution shall not, in and of itself, constitute a breach of this
Agreement.
Section 7.3 is renumbered as Section 7.2.
The following is inserted as a new Section 7.3:
7.3 Performance Pending Outcome of Disputes.
(a) Pending completion of the dispute resolution process in connection
with any dispute or controversy between the parties, both parties shall
continue to perform their obligations under this Agreement, and AT&T
shall not discontinue, disconnect, or in any other fashion cease to
provide all or any material portion of the Services to CUSTOMER unless
otherwise directed by CUSTOMER.
(b) The restrictions on AT&T in Subsection (a) above shall not apply
where (i) the dispute or controversy between parties relates to material
harm to the AT&T network(s) or other critical AT&T facilities or systems
allegedly caused by CUSTOMER, and CUSTOMER does not immediately cease
and desist from the activity giving rise to the dispute or controversy
upon receipt of notice from AT&T (ii) a government authority in the
affected jurisdiction has notified AT&T that CUSTOMER is making unlawful
use of the Services and CUSTOMER does not immediately cease and desist
such use; (iii) CUSTOMER does not continue to make payments as required
hereunder for Service for amounts not the subject of a bona fide
dispute, subject to the cure provisions set forth herein; (iv) CUSTOMER
is not compliant with Section 2.3 (ii); or (v) where permitted pursuant
to Section 3.2 or in the event of a violation of Articles 4, 5, 6 or 11.
18. The following is inserted at the end of Section 8.0:
"Performance times shall be extended for a period of time equivalent to
the time lost because of any delay or failure that is excusable under this
Article; provided that the party seeking to extend performance notifies
the other party of the occurrence of the cause of the delay or failure as
soon as reasonably possible. AT&T and CUSTOMER may also agree on other
measures to mitigate the consequences of circumstances beyond CUSTOMER's
or AT&T's control. Notwithstanding the foregoing, AT&T's delay or failure
to perform shall not be excused by the acts or omissions of its
subcontractors unless the subcontractor's delay or failure of performance
is the result of an event of force majeure set forth above.
AT&T shall not charge CUSTOMER for any Service or component thereof
that is not provided as a result of a delay or interruption excused
under this Section during the period of such delay or interruption.
CUSTOMER shall be excused from any failure to satisfy any minimum
purchase requirement to the extent that any such failure or
ineligibility is the result of any delay or interruption by AT&T that
is excused under this Section 8.0.
19. Sections 9.2 and 9.3 are deleted in their entirety and are rewritten
as follows:
"9.2 EITHER PARTY'S ENTIRE LIABILITY AND THE OTHER PARTY'S EXCLUSIVE
REMEDIES, FOR ANY DAMAGES CAUSED BY ANY SERVICE DEFECT OR FAILURE, OR FOR
OTHER CLAIMS ARISING IN CONNECTION WITH ANY SERVICE OR PERFORMANCE OR
NON-PERFORMANCE OF OBLIGATIONS UNDER THIS AGREEMENT SHALL BE:
(i) FOR BODILY INJURY OR DEATH TO ANY PERSON, OR REAL OR TANGIBLE PROPERTY
DAMAGE, NEGLIGENTLY CAUSED BY A PARTY, OR DAMAGES ARISING FROM THE WILLFUL
MISCONDUCT OF A PARTY OR A BREACH OF THE PROVISIONS OF ARTICLES 4 OR 5,
THE OTHER, PARTY'S RIGHT TO PROVEN DIRECT DAMAGES;
(ii) FOR DEFECTS OR FAILURES OF SOFTWARE, THE REMEDIES SET FORTH IN
SECTION 6.6;
(iii) FOR INDEMNITY, THE REMEDIES SET FORTH IN SECTION 14;
(iv) FOR DAMAGES OTHER THAN THOSE SET FORTH ABOVE AND NOT EXCLUDED UNDER
THIS AGREEMENT OR ANY ATTACHMENT, EACH PARTY'S LIABILITY SHALL BE LIMITED
TO PROVEN DIRECT DAMAGES NOT TO EXCEED PER CLAIM (OR IN THE AGGREGATE
DURING ANY TWELVE (12) -MONTH PERIOD) AN AMOUNT EQUAL TO THE TOTAL NET
PAYMENTS PAYABLE BY CUSTOMER FOR THE APPLICABLE SERVICE UNDER THE
APPLICABLE ATTACHMENT DURING THE THREE (3) MONTHS PRECEDING THE MONTH IN
WHICH THE DAMAGE OCCURRED. THIS SECTION 9.2(iv) SHALL NOT LIMIT
CUSTOMER'S RESPONSIBILITY FOR THE PAYMENT OF ANY AND ALL PROPERLY DUE
CHARGES UNDER THIS AGREEMENT.
9.3 EXCEPT FOR THE PARTIES' OBLIGATIONS UNDER SECTION 14, NEITHER PARTY
SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE, RELIANCE OR SPECIAL DAMAGES, INCLUDING WITHOUT
LIMITATION, DAMAGES FOR LOST PROFITS, ADVANTAGE, SAVINGS OR REVENUES OF
ANY KIND OR INCREASED COST OF OPERATIONS, WHETHER OR NOT SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES."
20. The words "EXCEPT FOR AT&T SUBCONTRACTORS" are inserted in Section
9.4, after the words "OR THIRD PARTIES".
21. The words "except for amounts disputed in good faith" are inserted in
the second sentence of Section 10.1, after the words "after written notice
by AT&T".
22. Section 11.3 is deleted in its entirety and replaced with the
following:
"If any portion of this Agreement is found to be invalid or unenforceable,
the remaining provisions shall remain in effect and the parties shall
promptly negotiate in good faith to replace invalid or unenforceable
portions that are essential parts of this Agreement with provisions that
are consistent, to the greatest possible extent, with the parties original
intent."
23. New section 11.9 is added at the end of Section 11.0 as follows:
"11.9 AT&T shall include in its Tariffs any necessary terms and conditions
of this Agreement that under applicable law must be included therein to be
fully enforceable and shall draft such tariff to accurately reflect the
terms and conditions of this Agreement. The terms and conditions in this
Agreement that are not incorporated into such Tariff shall be fully
enforceable whether or not they are included in the Tariff. Absent a
contrary holding by a court, the FCC or another governmental authority of
competent jurisdiction by final order, neither CUSTOMER nor AT&T shall not
urge a court, the Federal Communications Commission or other governmental
authority of competent jurisdiction to hold that any non-tariffed terms
are invalid or unenforceable because they are not included in an AT&T
Tariff or because of inconsistency with an AT&T Tariffs. In the event
that a provision of this Agreement is held to be unenforceable because the
provision is not included in (or is inconsistent with) an AT&T Tariff,
AT&T shall amend the Tariff to incorporate such provisions or to remove
the inconsistency, subject to all applicable legal and regulatory
requirements."
24. The following new Section 12 is added at the end of the Agreement:
"AT&T will provide a written report quarterly and review with CUSTOMER the
status of CUSTOMER's revenue, volume and monitoring condition commitments
and requirements , taken as a whole, for periods that have previously been
billed by AT&T for the Attachment Term year in which the review occurs. In
the course of such quarterly reviews, AT&T and CUSTOMER may further
discuss other matters of mutual interest, including, but not limited to,
the performance of the Services, the adequacy of AT&T resources in the
provisioning and support of CUSTOMER's use of the Services, new or
improved AT&T services and features, and CUSTOMER's anticipated future
requirements.
The parties acknowledge that federal and state regulatory and legislative
actions may introduce new competitive alternatives into the
telecommunications marketplace, which may affect the continued
competitiveness of Services provided under this Agreement. Accordingly,
if authorized in and pursuant to the procedures specified in an
Attachment, AT&T acknowledges CUSTOMER's interest in state-of-the-art
technologies that offer improved performance and more efficient and
cost-effective ways to meet CUSTOMER's communications and related
requirements. The parties shall meet on an annual basis to discuss such
evaluate the competitiveness of Services provided under this Agreement in
light of competitive service alternatives and other regulatory,
technological, or marketplace developments. AT&T shall present an annual
optimization study and make recommendations regarding potential changes
that it believes CUSTOMER may wish to consider to achieve CUSTOMER's
objectives. AT&T and CUSTOMER will cooperate in efforts to develop a
mutually agreeable proposal that will satisfy the concerns of both parties
and comply with all applicable legal and regulatory requirements. By way
of example and not limitation, alternative proposals may include changes
in rates, nonrecurring charges, revenue and/or volume commitments,
discounts, the term of the Attachment and other provisions. If the
parties reach mutual agreement on an alternative, AT&T will prepare and
file any necessary tariff revisions and/or the parties will sign a
contractual amendment to implement any mutually agreeable alternative
proposal, subject to all applicable legal and regulatory requirements.
This provision does not constitute a waiver of any charges, including
shortfall charges, or any terms and conditions applicable to CUSTOMER,
prior to the time the parties mutually agree to amend or replace the
affected Attachment."
25. The Business Downturn clause set forth in Section 8 of the Addendum
is deleted in its entirety and replaced with the following, which shall be
a new Section 13.0 and added to the end of the Agreement:
"13.0 In the event of: (i) a business downturn, a corporate
divestiture, merger, acquisition or significant restructuring or
reorganization (including, without limitation, a CUSTOMER decision
to exit a foreign country); or (ii) changes in CUSTOMER's network
configuration, design, or use of technology, including without
limitation changes resulting from the implementation of new services
or service upgrades, the optimization of CUSTOMER's network or the
substitution of one kind of AT&T service for another AT&T service;
any of which is reasonably likely to affect CUSTOMER's requirements
for Services in a manner than prevents or would prevent CUSTOMER
from incurring charges sufficient to satisfy the minimum revenue or
volume commitments under any Attachment (notwithstanding all
commercially reasonable efforts by CUSTOMER to avoid a shortfall),
the parties shall cooperate in efforts to develop a mutually
agreeable alternatgive proposal that will satify the concerns of
both parties . . By way of example and not limitation, such
alternative proposals may include changes in rates, nonrecurring
charges, revenue and/or volume commitments, discounts, the Service
term and other provisions. Any mutually agreed upon adjustments
shall be accomplished so as to reflect reduced traffic volumes in a
fair manner, and may take account of the reduced commitment, the
cause of the reduction in traffic, the effect of the reduction on
AT&T's costs, the benefits enjoyed by both parties prior to the
reduction, and the prices that would otherwise be available from
AT&T for the affected Services at the revised commitment levels. If
the parties reach mutual agreement on an alternative, the affected
Attachment(s) shall be modified to incorporate the agreed-upon
adjustments, and AT&T shall file any tariff revisions necessary to
effectuate them within thirty (30) days after the parties agree to
such revisions, subject to all applicable legal and regulatory
requirements. This provision shall not apply to a change resulting
from a decision by CUSTOMER to transfer portions of its traffic or
projected growth to carriers other than AT&T. CUSTOMER must give
AT&T written notice of the conditions it believes will require
application of this provision. This provision does not constitute a
waiver of any charges, including shortfall charges, incurred by
CUSTOMER prior to the time the parties agree to revise or replace an
Attachment."
26. A new Section 14.0 of the Agreement is inserted as follows:
14.1 AT&T agrees to defend or settle, at its own expense, any third party
claim or suit against CUSTOMER alleging that a Service furnished under
this Agreement infringes any United States patent, trademark, copyright or
trade secret, except where the claim or suit arises out of or results
from: CUSTOMER's or User's Content in connection with the Service;
modifications to the Service made by or combinations of the Service with
services or products provided by CUSTOMER or others; AT&T's adherence to
CUSTOMER's written requirements; or, use of the Service in violation of
this Agreement. CUSTOMER agrees to defend or settle, at its own expense
and without prejudice to AT&T or AT&T's continued provisioning of the
Service to CUSTOMER or others, all claims or suits against AT&T covered by
the exceptions in the preceding sentence and shall immediately cease any
activity which gives rise to the alleged infringement. The indemnifying
party will also pay all Damages and costs (including reasonable attorneys'
fees) that by final judgment may be assessed against the indemnified party
due to infringement by the indemnifying party.
14.2 In the event of a claim of infringement for which AT&T is the
indemnifying party under Section 14.1, AT&T may at its option either
procure the right to continue using, or replace or modify, the alleged
infringing Service so that the Service becomes noninfringing and
substantially compliant with the requirements in the applicable
Attachment. Upon inability to reasonably perform either of the foregoing
options, AT&T may terminate the affected Attachment, without liability
other than as stated in Section 14.1.
14.3AT&T grants to CUSTOMER the right to permit Users to access and
use the Services, provided that CUSTOMER shall remain solely
responsible for the access and use by any User of the Services. Any
use or access by Users shall be deemed to be use or access by
CUSTOMER. AT&T shall be solely responsible to CUSTOMER, and not
Users, for the Services."
14.4 With respect to the indemnification obligations in this Article 14:
(i) the indemnified party will notify the indemnifying party in writing
promptly upon learning of any claim or suit for which indemnification may
be sought, provided that failure to do so shall not affect the indemnity
except to the extent the indemnifying party is prejudiced thereby; (ii)
the indemnifying party shall have control of the defense or settlement,
provided that the indemnified party shall have the right to participate in
such defense or settlement with counsel of its own selection and at its
sole expense; and (iii) the indemnified party shall reasonably cooperate
with the defense, at the indemnifying party's expense.
27. A new Section 15.0 is inserted at the end of the Agreement as follows:
Mechanics' Liens.
(a) AT&T will pay all subcontractors, materialmen or other laborers
with which it enters into agreements to perform work related to the
Service. In no event shall CUSTOMER be obligated to pay such
subcontractors, materialmen or other laborers for claims that arise out
of work under their agreements with AT&T related to the Service.
(b) If any subcontractor, materialman, or laborer shall file in a
county clerk's office a notice of intention, lien claim or stop notice
with respect to a mechanics' lien (collectively "Lien Claim") against
CUSTOMER, based upon AT&T's failure to pay any of its subcontractors,
AT&T shall secure and furnish to CUSTOMER a waiver or release from such
claimant, releasing CUSTOMER from all claims for work performed or
materials furnished. AT&T shall have the option in lieu of discharging
or removing any resulting lien, of furnishing CUSTOMER with a bond in
form and amount satisfactory to CUSTOMER indemnifying CUSTOMER against
such lien.
(c) Subject to the limitations of liability hereunder, if AT&T fails
to honor its obligations under Section (a) or (b) above, it shall be
liable for any cost, expense, or damage incurred by CUSTOMER (including
any Affiliate) or any director, agent, or employee of CUSTOMER, acting
in their corporate capacity, as a result of the filing or asserting of
any Lien Claim or other charge by AT&T or any subcontractor,
materialman, or supplier furnishing labor or material pursuant to this
Agreement. CUSTOMER shall promptly notify AT&T of the filing of any
Lien Claim or other charge upon CUSTOMER's discovery of same, but shall
not itself undertake any action with respect thereto unless AT&T fails
or refuses to perform AT&T's obligations with respect to same.
28. A new Section 16.0 is inserted at the end of the Agreement as
follows:
Access and Security
(a) Subject to Subsections (b) and (c) below, AT&T Personnel shall
have such access at all times to Installation Sites as reasonably
necessary to provide the Services in accordance with the terms of this
Agreement.
(b) All AT&T Personnel shall be informed of, and shall comply with,
CUSTOMER's security requirements at Installation Sites for which access
is necessary to provide the Services. When deemed appropriate by
CUSTOMER, AT&T Personnel will be issued passes or visitor identification
cards which must be presented upon request to CUSTOMER's personnel and
surrendered promptly upon CUSTOMER's demand or upon termination of this
Agreement. Such passes or other identification shall be issued only to
persons meeting any reasonable security criteria established by CUSTOMER
for such purpose.
(c) Notwithstanding any other provision of this Agreement, CUSTOMER
may refuse to issue passes or identification cards or immediately
terminate the right of access to its premises of any AT&T Personnel,
should CUSTOMER determine in its sole discretion for any lawful reason
that such termination is in CUSTOMER's best interest. CUSTOMER shall
promptly notify AT&T of any such refusal or termination of access, and
AT&T shall have a reasonable opportunity to demonstrate to CUSTOMER that
access should be granted or reinstated. Any refusal or termination of
access shall remain in effect (without relieving AT&T of any of its
obligations to perform hereunder) pending such demonstration and
CUSTOMER's final determination as to the advisability of such
reinstatement. Unless AT&T had prior notice or reasonable cause to
believe that particular AT&T Personnel would be barred from CUSTOMER's
premises, the time allowed under this Agreement for any installation,
repair, maintenance, or similar action that such barred personnel were
to perform shall be tolled for the period reasonably required by AT&T to
deploy substitute personnel.
(d) For purposes of this Section, the term "AT&T Personnel" shall
include all employees and agents of AT&T and its subcontractors.
29. A new Section 17.0 is inserted at the end of the Agreement as
follows:
The parties represent that they are now in compliance with, and warrant
that they shall for the duration of this Agreement comply with, all
foreign and domestic laws, statutes, ordinances, rules, regulations and
orders applicable and material to, in the case of AT&T, the provision of
Services to CUSTOMER and, in the case of CUSTOMER, the use of the
Services.
Each party, by signing below, acknowledges that it has read, understands
and agrees to the provisions of this Amendment. Each individual signing
below represents that such individual is duly authorized to sign this
Amendment on behalf of the party for whom such individual is signing.
IN WITNESS WHEREOF, the parties have entered into this Amendment as of the
date fully executed below.
GALILEO INTERNATIONAL, L.L.C. AT&T CORP.
By:______________________________ By:______________________________
(Authorized Signature) (Authorized Signature)
_________________________________ __________________________________
(Typed or Printed Name) (Typed or Printed Name)
_________________________________ ____________________________________
(Title) (Title)
_________________________________ ____________________________________
(Date) (Date)
