AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 4, 1998.
REGISTRATION STATEMENT NO. 333-46177
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
PRE-EFFECTIVE AMENDMENT NO. 2 TO FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PT-1 COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 4813 11-3265685
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
30-50 WHITESTONE EXPRESSWAY JOHN J. KLUSARITZ, ESQ.
FLUSHING, NEW YORK 11354 EXECUTIVE VICE PRESIDENT AND GENERAL
(718) 939-9000 COUNSEL
(ADDRESS, INCLUDING ZIP CODE, AND PT-1 COMMUNICATIONS, INC.
TELEPHONE NUMBER, INCLUDING AREA 30-50 WHITESTONE EXPRESSWAY
CODE, OF REGISTRANT'S PRINCIPAL FLUSHING, NEW YORK 11354
EXECUTIVE OFFICES) (718) 939-9000
(NAME, ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
---------------
COPIES TO:
MORRIS F. DEFEO, JR., ESQ. ROBERT W. SMITH, JR., ESQ.
ANDREW M. RAY, ESQ. PIPER & MARBURY L.L.P.
SWIDLER & BERLIN, CHARTERED 36 SOUTH CHARLES STREET
3000 K STREET, N.W., SUITE 300 BALTIMORE MD 21201
WASHINGTON, D.C. 20007 (410) 539-2530
(202) 424-7500
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
---------------
CALCULATION OF REGISTRATION FEE
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- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1)(2) REGISTRATION FEE
- -----------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.01 par
value..................... $87,000,000 $25,665
</TABLE>
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- -----------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o).
(2) Includes shares of Common Stock which the Underwriters have the option to
purchase to cover over-allotments, if any.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The table below sets forth the expenses to be incurred by the Company in
connection with the issuance and distribution of the shares registered for
offer and sale hereby, other than underwriting discounts and commissions. All
amounts shown represent estimates except the Securities Act registration fee
and the NASD filing fee.
<TABLE>
<S> <C>
Registration fee under the Securities Act of 1933.............. $25,665
NASD filing fee...............................................
-------
Nasdaq National Market fee....................................
-------
Printing expenses............................................. *
Registrar and Transfer Agent's fees and expenses.............. *
Accountants' fees and expenses................................ *
Legal fees and expenses (not including Blue Sky).............. *
Miscellaneous................................................. *
-------
Total.................................................... $ *
=======
</TABLE>
---------------------
*To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 722 of the New York Business Corporation Law allows, in general, for
indemnification, in certain circumstances, by a corporation of any person
threatened with or made a party to any action, suit, or proceeding by reason
of the fact that he or she is, or was, a director, officer, employee, or agent
of such corporation. Indemnification is also authorized with respect to a
criminal action or proceeding where the person had no reasonable cause to
believe that his conduct was unlawful.
Under the Company's Restated Certificate of Incorporation, the Company has
agreed to indemnify and advance expenses to each person who is or was a
director or officer of the Corporation, to the fullest extent permitted by the
New York Business Corporation Law against actions that may arise against them
in such capacities. In addition, at the Company's option, it may indemnify any
other person (his testator or intestate) who is or was serving at the request
of the Company as a director or officer of any another corporation of any type
or kind, domestic or foreign, of any partnership, joint venture, trust,
employee benefit plan or other enterprise to the fullest extent permitted by
the New York Business Corporation Law against actions that may arise against
them in such capacities.
The Company intends to obtain directors' and officers' insurance which will
provide for indemnification of certain directors and officers of the Company.
In the Underwriting Agreement, the proposed form of which has been filed as
Exhibit 1.1, the Underwriters will agree to indemnify, under certain
conditions, the Company's officers, directors and controlling persons against
certain liabilities, including liabilities under the Securities Act of 1933.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following paragraphs of this Item 15 describe all offers and sales of
securities by the Company within the last three years which were not
registered under the Securities Act of 1933, other than securities issued in
connection with stock reclassifications, stock dividends or stock splits:
On April 21, 1995, the Company issued 30,450,000 shares of Common Stock to
each of Mr. Samer Tawfik and Mr. Thomas Hickey in connection with the
formation of the Company.
II-1
<PAGE>
<PAGE>
On April 6, 1996, the Company issued 6,500,000 and 2,600,000 shares of
Common Stock to Mr. Peter Vita and Mr. Douglas Barley, respectively, for
nominal consideration.
On March 26, 1997, the Company repurchased 25,052,632 shares of Common Stock
from Mr. Hickey for an aggregate purchase price of $15.0 million, of which
$5.0 million was payable in cash and $10.0 million was payable in the form of
a promissory note.
On May 9, 1997, in connection with Mr. Joseph Pannullo's employment
agreement, the Company granted an option to Mr. Pannullo to acquire 1,048,600
shares of Common Stock at a nominal exercise price. Mr. Pannullo exercised his
option on May 20, 1997.
On May 26, 1997, in connection with Mr. Klusaritz's employment agreement,
the Company granted Mr. Klusaritz an option to acquire 1,916,600 shares of
Common Stock at an aggregate exercise price of $3.6 million. Mr. Klusaritz
exercised his option on October 15, 1997.
On June 29, 1997, the Company granted warrants to employees of
InterExchange, Inc. to acquire shares of Common Stock with an aggregate "fair
market value" equal to (i) $1,000,000, at a nominal exercise price and (ii)
$2.0 million, at an aggregate exercise price equal to $1,000,000.
During October 1997, the Company has also granted options under the Stock
Incentive Plan to acquire 738,000 shares of the Company's Common Stock, at a
weighted average exercise price of $12.25 per share.
On November 7, 1997, the Company issued 483,980 shares of Common Stock to
Mr. Hickey in consideration for the extension of Mr. Hickey's non-competition
agreement with the Company and the settlement of certain claims.
Each issuance of securities described above was made in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act as
a transaction by an issuer not involving any public offering. The recipients
of securities in each such transaction represented their intention to acquire
the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed
to the share certificates issued in such transactions. All recipients had
adequate access, through their relationships with the Company, to information
about the Company.
II-2
<PAGE>
<PAGE>
ITEM 16(A). EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
<C> <S> <C>
*1.1 Form of Underwriting Agreement
**3.1 Amended and Restated Certificate of Incorporation of
the Company
**3.2 Amended and Restated Bylaws of the Company
*4.1 Form of Common Stock Certificate of the Company
4.2 Reference is made to Exhibits 3.1 and 3.2
**4.3 Warrants for the purchase of shares of Common Stock
of the Company, dated June 29, 1997, issued to David
L. Turock
**4.4 Warrants for the purchase of shares of Common Stock
of the Company, dated June 29, 1997, issued to Eric
L. Hecht
**4.5 Warrants for the purchase of shares of Common Stock
of the Company, dated June 29, 1997, issued to
Richard A. Robbins
**4.6 Warrants for the purchase of shares of Common Stock
of the Company, dated June 29, 1997, issued to
Bradley D. Turock
**4.7 Warrants for the purchase of shares of Common Stock
of the Company, dated June 29, 1997, held in escrow
**4.8 Escrow Agreement dated June 29, 1997 between John J.
Klusaritz as Escrow Agent, the Company
and InterExchange, Inc.
*5.1 Opinion of Swidler & Berlin, Chartered
**10.1 PT-1 Communications, Inc. 1997 Stock Incentive Plan
**10.2 Share Purchase Agreement, dated as of April 6, 1996,
by and among Thomas Hickey, Peter Vita and Douglas Barley
**10.3 Phonetime, Inc. Share Purchase Agreement, dated as of March 26,
1997, by and among Phonetime, Inc., Thomas Hickey, Samer Tawfik,
Peter Vita and Douglas Barley
**10.4 Agreement dated as of November 7, 1997, by and among the Company,
Thomas Hickey, Thomas Hickey Trust U/A dated September 9, 1997,
Samer Tawfik, Peter Vita, Douglas Barley, Joseph Pannullo and John
Klusaritz
**10.5 Option Agreement dated May 9, 1997, between the
Company and Joseph Pannullo
**10.6 Option Agreement dated May 26, 1997, as amended
between the Company and John J. Klusaritz
*10.7 Form of Registration Rights Agreement, dated ,
1997, between the Company and certain shareholders
**10.8 Employment Agreement, dated as of October 1, 1997,
between the Company and Samer Tawfik
**10.9 Employment Agreement, dated as of April 6, 1996,
between the Company and Peter M. Vita
</TABLE>
II-3<PAGE>
<PAGE>
ITEM 16(A). EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED
PAGE
<C> <S> <C>
**10.10 Employment Agreement, dated as of April 6, 1996,
between the Company and Douglas Barley
**10.11 Employment Agreement, dated as of May 9, 1997,
between the Company and Joseph Pannullo
**10.12 Employment Agreement, dated as of May 26, 1997,
between the Company and John J. Klusaritz
+10.13 Agreement, dated as of June 29, 1997, between Phonetime,
Inc. and InterExchange, Inc.
+10.14 Software License Agreement, dated as of May 9, 1997,
between GodotSoft, L.L.C. and Phonetime, Inc.
**10.15 Settlement Agreement dated as of April 3, 1996
between Samer Tawfik, Thomas J. Hickey, The
Interactive Telephone Company and Joseph Pannullo
**10.16 Agreement of Lease between Golden Union, LLC, as Landlord and
Phonetime, Inc., as Tenant dated April 8, 1997, as modified
+10.17 Network Products Purchase Agreement by and between Northern
Telecom, Inc. and Phonetime, Inc. with related Product Attachment
and Services Agreement (undated)
**10.18 General Loan and Collateral Agreement by and between the Company
and The Chase Manhattan Bank, dated October 8, 1997
**10.19 Security Agreements between the Company and The Chase Manhattan
Bank, dated October 8, 1997
**10.20 Promissory Note from the Company in favor of The Chase Manhattan
Bank, dated September 22, 1997
*11.1 Statement Regarding Computation of Per Share Earnings
**21.1 Subsidiaries of PT-1 Communications, Inc.
**23.1 Consent of KPMG Peat Marwick LLP
*23.2 Consent of Swidler & Berlin, Chartered (to be
included in Exhibit 5.1 to this Registration Statement)
**24.1 Power of Attorney (included on signature page)
*27.1 Financial Data Schedule
</TABLE>
- ---------------------
*To be filed by amendment.
**Previously filed.
+ Confidential Treatment is being requested for portions of this document.
The redacted material is being filed separately with the Commission.
ITEM 16(B). FINANCIAL STATEMENT SCHEDULES.
None.
II-4<PAGE>
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW
YORK, ON MARCH 4, 1998.
PT-1 COMMUNICATIONS, INC.
By: *
------------------------------
SAMER TAWFIK
CHIEF EXECUTIVE OFFICER
AND CHAIRMAN OF THE BOARD
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON MARCH 4, 1998.
SIGNATURE TITLE
* Chief Executive Officer and Chairman
- ------------------------------------- of the Board (Principal Executive
SAMER TAWFIK Officer)
* Chief Financial Officer, Secretary,
- ------------------------------------- Treasurer and Director (Principal
DOUGLAS BARLEY Financial Officer and Principal
Accounting Officer)
* Chief Operating Officer and Director
- -------------------------------------
JOSEPH PANNULLO
* President and Director
- -------------------------------------
PETER M. VITA
/s/ John J. Klusaritz Executive Vice President, General
- ------------------------------------- Counsel and Director
JOHN J. KLUSARITZ
* John J. Klusaritz, by signing his name hereto, signs this document on
behalf of each of the persons so indicated above pursuant to powers of
attorney duly executed by such person and filed with the Securities and
Exchange Commission.
II-6
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
<C> <S> <C>
*1.1 Form of Underwriting Agreement
**3.1 Amended and Restated Certificate of Incorporation of
the Company
**3.2 Amended and Restated Bylaws of the Company
*4.1 Form of Common Stock Certificate of the Company
4.2 Reference is made to Exhibits 3.1 and 3.2
**4.3 Warrants for the purchase of shares of Common Stock
of the Company, dated June 29, 1997, issued to David
L. Turock
**4.4 Warrants for the purchase of shares of Common Stock
of the Company, dated June 29, 1997, issued to Eric
L. Hecht
**4.5 Warrants for the purchase of shares of Common Stock
of the Company, dated June 29, 1997, issued to
Richard A. Robbins
**4.6 Warrants for the purchase of shares of Common Stock
of the Company, dated June 29, 1997, issued to
Bradley D. Turock
**4.7 Warrants for the purchase of shares of Common Stock
of the Company, dated June 29, 1997, held in escrow
**4.8 Escrow Agreement dated June 29, 1997 between John J.
Klusaritz as Escrow Agent, the Company
and InterExchange, Inc.
*5.1 Opinion of Swidler & Berlin, Chartered
**10.1 PT-1 Communications, Inc. 1997 Stock Incentive Plan
**10.2 Share Purchase Agreement, dated as of April 6, 1996,
by and among Thomas Hickey, Peter Vita and Douglas Barley
**10.3 Phonetime, Inc. Share Purchase Agreement, dated as of March 26,
1997, by and among Phonetime, Inc., Thomas Hickey, Samer Tawfik,
Peter Vita and Douglas Barley
**10.4 Agreement dated as of November 7, 1997, by and among the Company,
Thomas Hickey, Thomas Hickey Trust U/A dated September 9, 1997,
Samer Tawfik, Peter Vita, Douglas Barley, Joseph Pannullo and John
Klusaritz
**10.5 Option Agreement dated May 9, 1997, between the
Company and Joseph Pannullo
**10.6 Option Agreement dated May 26, 1997, as amended
between the Company and John J. Klusaritz
*10.7 Form of Registration Rights Agreement, dated ,
1997, between the Company and certain shareholders
**10.8 Employment Agreement, dated as of October 1, 1997,
between the Company and Samer Tawfik
**10.9 Employment Agreement, dated as of April 6, 1996,
between the Company and Peter M. Vita
</TABLE>
II-7<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED
PAGE
<C> <S> <C>
**10.10 Employment Agreement, dated as of April 6, 1996,
between the Company and Douglas Barley
**10.11 Employment Agreement, dated as of May 9, 1997,
between the Company and Joseph Pannullo
**10.12 Employment Agreement, dated as of May 26, 1997,
between the Company and John J. Klusaritz
+10.13 Agreement, dated as of June 29, 1997, between Phonetime,
Inc. and InterExchange, Inc.
+10.14 Software License Agreement, dated as of May 9, 1997,
between GodotSoft, L.L.C. and Phonetime, Inc.
**10.15 Settlement Agreement dated as of April 3, 1996
between Samer Tawfik, Thomas J. Hickey, The
Interactive Telephone Company and Joseph Pannullo
**10.16 Agreement of Lease between Golden Union, LLC, as Landlord and
Phonetime, Inc., as Tenant dated April 8, 1997, as modified
+10.17 Network Products Purchase Agreement by and between Northern
Telecom, Inc. and Phonetime, Inc. with related Product Attachment
and Services Agreement (undated)
**10.18 General Loan and Collateral Agreement by and between the Company
and The Chase Manhattan Bank, dated October 8, 1997
**10.19 Security Agreements between the Company and The Chase Manhattan
Bank, dated October 8, 1997
**10.20 Promissory Note from the Company in favor of The Chase Manhattan
Bank, dated September 22, 1997
*11.1 Statement Regarding Computation of Per Share Earnings
**21.1 Subsidiaries of PT-1 Communications, Inc.
**23.1 Consent of KPMG Peat Marwick LLP
*23.2 Consent of Swidler & Berlin, Chartered (to be
included in Exhibit 5.1 to this Registration Statement)
**24.1 Power of Attorney (included on signature page)
*27.1 Financial Data Schedule
</TABLE>
- ---------------------
*To be filed by amendment.
**Previously filed.
+ Confidential Treatment is being requested for portions of this document.
The redacted material is being filed separately with the Commission.
II-8
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of this 29th day of
June, 1997 (the "Effective Date"), by and between InterExchange, Inc. ("IX")
and PhoneTime, Inc. ("PTI").
RECITALS:
WHEREAS, IX is a provider of debit card services, and PTI is a
telecommunications carrier providing telecommunications products to its
customers by means of debit calling cards ("Debit Cards"), carrier resale
services ("Dedicated Resale Service") and other telecommunications services.
WHEREAS, IX and Tempus Worldwide Communications Ltd. ("TWC"), an
affiliate of PTI, have been parties to an agreement pursuant to which IX has
rendered certain debit card services to TWC.
WHEREAS, by letter agreement of even date, all agreements between IX and
TWC are being amended to substitute PTI as a party in place of TWC.
WHEREAS, PTI desires to retain IX to provide certain debit card services,
upon the terms and conditions hereinafter set forth.
WHEREAS, the parties desire to enter into this Agreement which is
intended to supersede, in its entirety, the prior agreement and amendments
thereto between IX and PTI and TWC (the "Prior Agreements").
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, IX and PTI hereby agree as follows:
1. Premises and Installation; Transition Plan.
(a) IX, at its sole cost, will migrate all of PTI's current
Piscataway debit T1s from IX's Excel switches to PTI's Piscataway DMS 250 (the
"Piscataway DMS"), provided sufficient capacity (as described in Exhibit 1(a))
exists on the Piscataway DMS, and assuming no major outages beyond IX's
control, IX will effect such migration at the rate of at least one Excel
switch every ten (10) days beginning with the Effective Date, in accordance
with Exhibit 1(a)(1).
(b) PTI will continue to expand the Piscataway DMS to a capacity
sufficient to handle all of PTI's Debit Cards and/or Dedicated Resale Service
traffic at Piscataway. Provided it has approved all costs in advance, PTI
will bear all out-of-pocket costs for DMS related hardware, software,
installation and configuration.
<PAGE>
<PAGE>
(c) Commencing upon the Effective Date, IX will provide to PTI
those Debit Card services (the "Services") set forth in Exhibit 1(c). In
addition, commencing upon the Effective Date, IX and PTI will work together to
develop and agree upon a plan (the "Transition Plan") to expand the system
that IX uses to service PTI's Debit Cards (the "System" as described in
Exhibit 1(c)(i)) (up to a maximum of * inbound T1s) and to migrate a portion
of the System to one other point-of-presence (a "POP") designated by PTI and
to be located in Manhattan, Queens or northern New Jersey (the "New POP").
(d) The Transition Plan shall set forth in reasonable detail the
installation, maintenance, administrative and other expenses of the System, as
well as the following elements:
(i) IX shall provide voice processor capacity at the
Piscataway DMS and the New POP which is sufficient to meet PTI's capacity
requirements up to * inbound T1s, in the aggregate, consistent with the level
of performance currently provided.
(ii) The physical distribution of voice processor capacity
between the Piscataway DMS and the New POP in terms of the number of inbound
debit T1s with at least * inbound debit T1s at the Piscataway DMS, and the
remaining inbound T1s allocated in PTI's discretion between the Piscataway
DMS and the New POP.
(iii) The migration of secondary databases to the New POP
in order to provide PIN database redundancy. These secondary databases will
be bridged by MAN to the primary databases in Piscataway and all voice
processors (in both locations) will be bridged by MAN to both the primary and
secondary databases so that, in the event of a major failure, IX can manually
switch all voice processors to communicate with the secondary database without
significant delay.
(iv) The arrangements pursuant to which PTI will provide IX
with collocation space in the new POP for IX's exclusive use to be used by IX
exclusively to provide services to PTI at no cost to IX, including power,
security, HVAC, battery and generator backups, it being understood that PTI
will pay for bandwith between Piscataway and the New POP for IX's database and
voice processing MAN and that IX is to have 24 hours seven days per week
access to such space. The issues to be agreed upon include the extent to
which the space will be segregated, whether the space will have a separate
entrance and whether IX's access to such space will be on an escorted basis.
(e) The timing of the Transition Plan shall be determined by
mutual agreement of the parties, taking into consideration:
(i) the completion by PTI of the buildout of the New POP
(including having adequate capacity, access to electric power, HVAC and
security),
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.
<PAGE>
<PAGE>
(ii) the establishment by PTI of connectivity between
Piscataway and the New POP for IX's MAN;
(iii) PTI obtaining inbound T1 facilities at the New POP,
and
(iv) PTI's outbound switching matrix in the New POP having
the capacity and the ability to process outbound calls from the System.
(f) In the event the Parties are unable to agree on the
Transition Plan, the remaining portions of this Agreement shall remain in full
force and effect, but neither party shall have any obligation to incur any
costs or take any action pursuant to any Transition Plan that it does not
approve.
2. IX Responsibilities.
(a) Subject to the Transition Plan, IX shall be responsible for
all aspects of expanding and maintaining the System (including bearing all
costs of expanding the System as set forth in Exhibit 2(a) but excluding
those costs for which PTI is responsible as expressly set forth in Section 3).
IX will be the owner of and have title to the hardware and software comprising
the System. IX will operate and maintain the System in Piscataway and the New
POP. IX covenants that during the Term of this Agreement, the hardware
portion of the System will be used solely for the business of PTI and IX will
not cause or permit any third party's telecommunications traffic to travel
through or otherwise use any portion of such hardware.
(b) IX, at its sole cost, will:
(i) provide the necessary staff to operate and maintain the
System 24 hours a day, 7 days a week;
(ii) provide adequate power, environmental controls,
security systems and space for the Piscataway portion of the System, all
reasonably satisfactory to PTI;
(iii) provide the Services set forth in Exhibit 1 (c);
(iv) maintain its current routing staff level (i.e., one
full-time and one part-time) for 90 days after the date of execution of this
Agreement; and
(v) provide assistance to PTI's Nortel/DMS 250 qualified
employees regarding the transition of DMS routing to PTI and, no later than
the actual date of such transition, provide documentation necessary for
operation of the switch, the NAMS system and remote access to the Piscataway
DMS.
(c) To the extent that IX has available segregated space in
Piscataway, IX will permit PTI to collocate equipment for a per rack charge
equal to the greater of (i) * per rack per month or (ii) * per rack per
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.
<PAGE>
<PAGE>
month plus allocable power costs. IX will permit PTI's representatives
escorted access thereto 24 hours a day 7 days a week.
(d) IX represents and warrants and covenants that, without the
prior written consent of PTI, which may be withheld in PTI sole discretion, IX
will not use any PTI interconnection or telecommunications facilities,
circuits, ports, debit cards, or DMS equipment for use by, resale to, or the
benefit of any customer other than PTI.
(e) Within 120 days after the receipt of written specifications
from PTI, in a format that will be acceptable to Atlantax (or a similar
service provider), IX will begin providing PTI with origination and
termination reports for intra-LATA and intra-State reporting required for PTI
tariff compliance and carrier resale obligations.
(f) Within 90 days after the Effective Date and provided PTI
provides IX with accurate data in a timely fashion, IX will implement a
reporting system which allows for the application of different rates within
billing periods and will use its best efforts to provide precise reports based
on the data provided by PTI and calls processed over the Piscataway DMS and
the System.
(g) IX will comply with the PTI "Master Dialing Plan" for debit
rate tables, report rate tables and routing tables, which Master Dialing Plan
tables will be mutually agreed to taking into consideration technical
limitations and the application it is being used for. Any changes thereto
shall be approved by PTI in advance.
(h) Within thirty days after the Effective Date, IX will begin
providing an E-Mail log of all trouble ticket resolutions and change request
completion of tasks set forth in Exhibit 2(j).
(i) IX and PTI will cooperate to formulate a mutually
satisfactory Disaster Recovery Plan as soon as practicable after the date of
this Agreement, but in any event within 45 days after the Effective Date which
shall insure PTI's access to the Customer Data (as defined herein) within the
time periods set forth in Exhibit 8(c) and deal with other agreed upon
contingencies.
(j) IX shall provide the Services in accordance with the
Performance and Service Level Standards set forth on Exhibit 2(j) and shall
comply with the response times set forth thereon, subject to delays due to
circumstances beyond IX's control, but IX shall take reasonable actions to
mitigate the cause of any delays.
(k) IX will maintain insurance on all IX's-owned equipment
collocated in Piscataway and PTI's New POP, including casualty and fire, in an
amount at least equal to the replacement cost of such property and will also
carry general liability (of not less than $2 million per occurrence), worker's
compensation and Employer's Liability (of not less than $500,000 per
occurrence), naming PTI as an additional insured under such policies. IX
will provide PTI 30 days prior written notice before terminating any of such
<PAGE>
<PAGE>
insurance and shall provide PTI with insurance certificates upon request. PTI
shall execute a bailment in a form satisfactory to IX and shall use best
efforts to obtain an acknowledgment from PTI's landlord in a form reasonably
satisfactory to IX that such landlord permits IX to locate its equipment in
such facility and that such landlord waives any claim to such equipment. IX
has the risk of loss on any IX owned equipment.
(l) If PTI does not maintain a minimum level of inbound traffic
of * minutes per inbound T-1 per month across all inbound debit T-1s for any
three consecutive month period, then IX shall have the option to reduce its
voice processing hardware to a capacity that would enable it to average *
minutes per inbound debit T-1 per month. PTI and IX will agree about the
trunk group reconfiguration.
3. PTI Responsibilities.
(a) PTI shall be responsible for all out-of-pocket costs of DMS
related hardware, materials, parts, software, installation and configuration
relating to expanding the Piscataway DMS sufficient to handle all of the debit
and/or resale traffic PTI sends to IX at its Piscataway POP. PTI shall not
have responsibility for any other costs relating to the expansion of the
Piscataway DMS if incurred without its prior written approval.
(b) PTI will assume responsibility for routing on the Piscataway
DMS from IX within 90 days of the date of execution of this Agreement. PTI
will be responsible for maintaining, operating and routing on the switch at
the New POP in accordance with industry standards. PTI will install, wire,
test and maintain all T1s inbound and outbound on the New POP switch..
(c) PTI will provide IX with accurate rates, billing methods and
routing information, and will provide IX new routing and rate tables and
changes thereto, new T1 installations, and new debit or resale programs.
(d) PTI will pay for programming of new systems (e.g. reporting)
or enhanced features on the current System as mutually agreed to per PTI
specifications at the rate of */man hour. Such features shall be owned by IX
and used in the operation of the System without further charge during the term
of this Agreement. Examples of such projects are listed on Exhibit 3(e).
(e) If PTI obtains casualty and fire insurance on PTI-owned
equipment collocated in IX's Piscataway facility and/or the New POP, PTI will
name IX as an additional insured under such policy. In addition, PTI agrees
to carry general liability (of not less than $2 million per occurrence),
worker's compensation and Employer's Liability (of not less than $500,000 per
occurrence) insurance naming IX as an additional insured under such policies.
PTI will provide IX 30 days prior written notice before terminating any of
its general liability, worker's compensation or Employer's Liability insurance
and shall provide IX with insurance certificates upon request. IX shall
execute a bailment in a form satisfactory to PTI and and use best efforts to
obtain an acknowledgment from IX's landlord in a form reasonably satisfactory
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.
<PAGE>
<PAGE>
to PTI that such landlord permits PTI to locate its equipment in such
facility and that such landlord waives any claim to such equipment. PTI has
the risk of loss on any PTI owned equipment.
4. Term and Termination. This Agreement shall commence on the
Effective Date and shall expire at 12:01 a.m. on January 1, 2000, unless
earlier terminated in accordance with Section 9(b) of this Agreement.
Notwithstanding the foregoing, provided PTI gives IX written notice at least
six (6) months in advance of the expiration of the term of this Agreement, PTI
may renew this Agreement for up to four (4) consecutive six (6) month periods
with a Minimum Monthly Service Fee as set forth in Section 5(a)(i)(A) below.
5. Fees and Payments.
(a) As consideration for the Services to be provided by IX to
PTI pursuant to this Agreement, IX shall be entitled to the following payments
(which shall be billed and paid in accordance with Section 6 of this
Agreement):
(i) PTI shall pay IX a minimum fee per month (the "Minimum
Monthly Service Fee") determined as follows:
(A) From July 1, 1997 through June 30, 1999, the
Minimum Monthly Service Fee shall be * per month.
(B) From July 1, 1999 through December 31, 1999, the
Minimum Monthly Service Fee shall be equal to the lesser of: (x) * or (y) *
less * percent of the total of all monthly service fees in excess of */month
paid for the period from July 1, 1997 through June 30, 1999 divided by six
(e.g. if PTI paid * per month for 24 months, then * (* percent of the excess
over *) times 24 months = * divided by 6 = * which would be the reduction of
the Minimum Monthly Service Fee; the new Minimum Monthly Service Fee would be
*).
(ii) PTI shall pay IX in arrears, a fee for each outbound
(but not inbound) call processed on behalf of PTI from and after June 1, 1997
as set forth below (the "Actual Service Fees"). The Actual Service Fees shall
be reduced by the Minimum Monthly Service Fee paid each month and only the
excess amount shall be payable.
(A) For Debit Card Service, the Actual Service Fees
through the end of the term of the Agreement shall be: (a) for the first *
million minutes processed each month - * per minute, and (b) for between *
million minutes and * million minutes per month * plus * per minute multiplied
by the number of minutes over * million.
(B) For Dedicated Resale Service beginning June 1,
1997, the Actual Service Fees shall be * per minute for 01plus minutes and *
per minute for 011plus minutes.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
(iii) Actual Service Fees shall be billed based on minutes
calculated in the "Outbound Usage Reports" (i.e., the same method used by each
carrier as provided in good faith by PTI) on a route specific basis.
(b) IX and PTI agree that: (i) for services rendered in June, l997,
* has already been paid by PTI and any additional amounts due for Actual
Service Fees as set forth in 5(a) above will be paid in accordance with
Section 6; (ii) no other amounts are due from PTI to IX or from IX to PTI
for any period prior to the Effective Date; and (iii) for services to be
rendered in July, l997 by IX to PTI, PTI will receive a credit of * (to be
applied in the August invoice for July services) which represents expenses
incurred by PTI on IX's behalf prior to the Effective Date.
6. Billing and Payments.
(a) Payments. * of the Minimum Monthly Service Fee (or, if
less than *, the Adjusted Minimum Monthly Service Fee for July 1, 1999 through
December 31, 1999) shall be paid in advance on or before the first day of each
month. The remainder of the Minimum Monthly Service Fee, plus the amount, if
any, by which the Actual Service Fees (based on actual traffic) for each such
month exceeds the Minimum Monthly Service Fee shall be paid following the end
of the month within seven (7) days but no sooner than three (3) days after
receipt of an invoice where there are no disputed amounts as set forth below.
If any amounts are disputed in good faith by PTI, PTI will nevertheless pay
the undisputed amounts within the time period set forth herein. Disputed
amounts shall not be due unless and until such dispute has been resolved. The
parties will use their best efforts to resolve any dispute in good faith
within 10 days or either party may pursue all remedies provided herein and/or
by law. The parties agree that, as to Actual Service Fees, the only dispute
that will justify a reduction in the amounts paid pursuant to this paragraph
shall be a good faith dispute as to the number of minutes of outbound
completed calls.
(b) Billings. Each month, IX will send to PTI a statement
setting forth in reasonable detail a description of the services rendered and
the amounts owed to IX for services rendered the prior month, including:
(i) Actual Service Fees since the date of the last
statement through the last day of the preceding month (the "Cutoff Date"),
(ii) any amounts unpaid from previous monthly statements,
and
(iii) payments made by PTI to IX through the Cutoff Date.
(c) IX will bill PTI separately for programming fees, rack
collocation fees and reimbursable expenses (provided such expenses are
approved by PTI) which bills will be due and payable within ten (10) days of
receipt.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
7. Regulatory Changes; Non-Competition.
(a) In the event that PTI suffers a material decrease in its
Debit Card traffic to a level below * million minutes per month for two or
more consecutive months as a result of a regulatory change in the law, or
substantial adverse change in PTI's business relating to Debit Cards, IX and
PTI will agree to renegotiate the Minimum Monthly Service Fee, the per minute
fees set forth in paragraph 5, the number of T1s and associated hardware.
(b) For so long as this Agreement is in effect, IX shall not
directly or indirectly, market, sell or issue debit calling cards in the
United States, or directly or indirectly have any ownership interest in any
entity (other than not more than a 5 percent interest in a public entity) that
markets, sells or issues debit calling cards. This clause shall not prevent
IX from providing services to an unrelated third party similar to the services
provided to PTI. Nothing contained herein will prevent IX from issuing
promotional debit calling cards, so long as IX does not issue more than
100,000 promotional debit calling cards for any one IX customer.
8. Segregation of PTI Systems; Access; Ownership.
(a) Where practical, IX will (at PTI's sole cost and expense
provided such expenses are approved in advance by PTI) physically segregate IX
equipment and systems that are used to provide services to PTI under this
Agreement.
(b) PTI shall have escorted access, 24 hours a day, 7 days a
week, to the facilities.
(c) IX and PTI acknowledge and agree that all data relating to
PTI customers either provided to IX by PTI (or the customer) or generated by
IX, including but not limited to, that set forth in Exhibit 8(c) (in the
aggregate referred to as "Customer Data"), shall be unconditionally owned by
and remain the property of PTI. Accordingly, at any time (whether in
connection with a termination of this Agreement, discontinuance of service
for any reason or for any other reason whatsoever), upon the request of PTI,
IX shall provide to PTI in the time frames set forth in Exhibit 8(c), on an
eight millimeter tape or other suitable medium, all such Customer Data. PTI
agrees that, except in the case of a request in connection with a termination
of this Agreement or a discontinuance of service, it will not otherwise
request IX to provide the Customer Data pursuant to this Section 8 (c) more
than once a month.
9. Events of Default.
(a) Each of the following events, separately, shall constitute
an "Event of Default" by either party:
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
(i) Such party shall fail to pay any amounts required to be
paid by such party pursuant to this Agreement within ten (10) days of written
notice of such failure to pay (notwithstanding the foregoing, even if PTI has
asserted that IX is in default hereunder, as long as PTI is receiving Services
(the Fees for which would exceed the Minimum Monthly Service Fee), it shall
continue to pay the Minimum Monthly Service Fee and other Actual Service Fees
that are due (except for amounts related to good faith disputes as to the
number of minutes of outbound completed calls as provided under Section 6); or
(ii) Any representation or warranty made by such party in
this Agreement shall prove to have been materially false or misleading as of
the time made or deemed made or furnished; or
(iii) such party shall fail to perform or observe the
covenants contained in this Agreement which failure continues for ten (10)
days (five (5) business days in the case of default by IX) after receipt of
written notice; or
(iv) IX fails on a recurring basis to: (A) perform its
material obligations within the time periods established hereunder, or (B) to
materially satisfy the performance and service level standards as required by
this Agreement; or
(v) If David Turock shall cease to be available to IX
(other than as a result of his death or disability) for purposes of providing
high-level guidance, crisis management and advice to IX's operations and
development personnel;
(vi) such party shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against such party seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, other similar official for
it or for any substantial part of its property; or such party shall take any
corporate action to authorize any of the actions set forth above in this
subsection (vi) unless such proceeding is dismissed or terminated within 90
days;
(b) Upon the occurrence of any Event of Default by either party,
in addition to all rights set forth below, the non-defaulting party shall have
the right to suspend services hereunder (if applicable) or terminate this
Agreement and any other agreements or instruments delivered by it in
connection with this Agreement. In addition to the right to terminate this
Agreement upon the occurrence of any Event of Default, the nondefaulting
party, if owed money by the defaulting party (for services rendered, expense
reimbursements, etc.), may pursue all legal remedies to collect such funds
<PAGE>
<PAGE>
(including offsetting any obligations the nondefaulting party owes to the
defaulting party). Nothing in this Agreement shall be construed to restrict
a party from pursing equitable remedies including that of specific performance
or injunctive relief.
10. Confidentiality. IX acknowledges that all Customer Data and
other information provided to IX regarding PTI's businesses or operations is
proprietary and confidential (the "PTI Confidential Information"). PTI
acknowledges that all information regarding software relating to the System to
the extent developed by IX and all design information relating to the System
to the extent developed by IX is confidential and proprietary (the "IX
Confidential Information"). IX agrees to treat the PTI Confidential
Information as confidential and not to disclose it to any third party without
the prior written consent of PTI. PTI agrees to treat the IX Confidential
Information as confidential and not to disclose it to any third party without
the prior written consent of IX. The foregoing limitations shall not apply
to any information that is required to be disclosed by any law or that is
generally available to the public or is otherwise in the public domain.
11. Representations and Warranties.
(a) PTI represents and warrants as follows:
(i) PTI is a corporation duly organized and validly
subsisting under the laws of the State of New York.
(ii) The execution, delivery and performance by PTI of this
Agreement is within PTI's corporate powers, have been duly authorized by all
necessary corporate action, do not contravene PTI's charter or by-laws or any
law or contractual restriction binding on or affecting PTI.
(iii) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by PTI of this
Agreement.
(iv) This Agreement is a legal, valid and binding
obligations of PTI enforceable against PTI in accordance with their respective
terms except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
and by general equitable principles relating to enforceability.
(v) There is no pending or, to the best of PTI's knowledge,
threatened in writing actions or proceedings affecting PTI or any of its
subsidiaries before any court, governmental agency or arbitrator, which would
reasonably be expected to materially adversely affect the financial condition
or operations of PTI or any subsidiary.
(b) IX represents and warrants as follows:
(i) IX is a corporation duly organized and validly
subsisting under the laws of its state of incorporation.
<PAGE>
<PAGE>
(ii) The execution, delivery and performance by IX of this
Agreement is within IX's corporate powers, have been duly authorized by all
necessary corporate action, do not contravene IX's charter or by-laws or any
law or contractual restriction binding on or affecting IX.
(iii) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by IX of this
Agreement.
(iv) This Agreement is a legal, valid and binding
obligation of IX enforceable against IX in accordance with its terms except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally and by
general equitable principles relating to enforceability.
(v) There is no pending or, to the best of IX's knowledge,
threatened in writing action or proceeding affecting IX or any of its
subsidiaries before any court, governmental agency or arbitrator, which would
reasonably be expected to materially adversely affect the financial condition
or operations of IX or any subsidiary.
12. Assignment. No party may assign any right under this Agreement,
without the prior written consent of the other party, and any purported
assignment will be null and void and a breach of this Agreement.
Notwithstanding the foregoing, PTI may assign its rights and/or obligations
hereunder: (i) to any subsidiary, parent company or affiliate; (ii) pursuant
to any sale or transfer of substantially all the business of PTI; or (iii)
pursuant to any consolidation, merger or reorganization of PTI; provided,
however, that the acquiring person must agree in writing to comply with PTI's
obligations under, and to be bound by, this Agreement.
13. Entire Agreement.
This Agreement and the Exhibits attached hereto constitute the entire
agreement between the parties concerning the subject matter thereof. No prior
or contemporaneous representations, inducements, promises, or agreements,
oral or otherwise, between the Parties with reference thereto will be of any
force or effect. The Prior Agreements have been terminated.
14. Independent Parties.
Except as may be expressly and unambiguously provided in this Agreement,
no partnership or joint venture is intended to be created by this Agreement,
nor any principal-agent or employer-employee relationship. Neither party has,
and neither Party shall attempt to assert, the authority to make commitments
for or to bind the other Party to any obligation.
<PAGE>
<PAGE>
15. Effect of Partial Invalidity.
If any one or more of the provisions of this Agreement should be ruled
wholly or partly invalid or unenforceable by a court or other government body
of competent jurisdiction, then: (a) the validity and enforceability of all
provisions of this Agreement not ruled to be invalid or unenforceable will be
unaffected; (b) the effect of the ruling will be limited to the jurisdiction
of the court or other government body making the ruling; (c) the provision(s)
held wholly or partly invalid or unenforceable will be deemed amended, and
the court or other government body is authorized to reform the provision(s),
to the minimum extent necessary to render them valid and enforceable in
conformity with the Parties' intent as manifested herein; and (d) if the
ruling, and/or the controlling principle of law or equity leading to the
ruling, is subsequently overruled, modified, or amended by legislative,
judicial, or administrative action, then the provision(s) in question as
originally set forth in this Agreement will be deemed valid and enforceable to
the maximum extent permitted by the new controlling principle of law or
equity.
16. Notices.
Any notice, request, instruction or other document to be given hereunder
by any party to any other party shall be in writing and shall be deemed to
have been given (i) by personal delivery (including nationally recognized
courier), (ii) if mailed with the United States Postal Service by prepaid,
first class, certified mail, return receipt requested, at the time of receipt
by the intended recipient, or (iii) if sent by facsimile transmission, when so
sent and receipt acknowledged by an appropriate facsimile receipt addressed as
follows:
If to IX, addressed to:
InterExchange, Inc.
225 Old New Brunswick Road
Suite 300
Piscataway, New Jersey 08854
Attn: Eric Hecht
President
` Telecopier: (908) 981-2801 and
(908) 981-2800
with a copy to Chief Operating Officer
With a copy to:
Podvey Sachs Meanor Catenacci Hildner & Coziello
1 Riverfront Plaza
Newark, NJ 07102
Telecopier: (201) 623-9131
Attention: Saul Zimmerman
<PAGE>
<PAGE>
With a copy to:
If to PTI:
PhoneTime, Inc.
30-60 Whitestone Expressway
Flushing, New York 11354
Attention: Sam Tawfik
w/copy to Chief Operating Officer
Telecopier: (718) 779-6571
With a copy to:
Swidler & Berlin Chartered
3000 K Street, N.W.
Washington, D.C. 20007-5516
Telecopier: (202) 424-7643
Attention: John J. Klusaritz, Esq.
or such other address as may be given from time to time under the terms of
this notice provision. Any notice changing the address for receipt of notice
shall be effective 5 days after receipt of such notice.
17. Remedies.
Except as expressly provided in Section 9(b) the parties agree that
neither party will be liable to the other in the event of any breach or
otherwise for any consequential, incidental, punitive or special damages and
that, except as provided in Section 9 (b), the sole remedies available to any
aggrieved party will be the right to demand performance or to terminate this
Agreement in the event of a default in accordance with the provisions of
Section 9. .
18. Choice of Law.
This Agreement will be interpreted and enforced in accordance with the
law of the State of New York, without reference to such state's choice of law
principles.
19. Attorneys' Fees.
If litigation or other action is commenced between the parties concerning
any dispute arising out of or relating to this Agreement, the prevailing party
in any contested ancillary proceeding relating to the action (e.g., motions to
transfer, to compel discovery, etc.) and the prevailing party in the action
itself will be entitled, in addition to any other award that may be made, to
recover all court costs or other official costs and all reasonable expenses
associated with the ancillary proceeding or action, including without
limitation reasonable attorney's fees and expenses actually incurred. Except
in the case where a party is seeking equitable relief (i.e., specific
performance, injunction, etc.), prior to filing any legal action hereunder, a
party will attempt to resolve the dispute through good faith discussions with
the other party for a period of 10 days. <PAGE>
<PAGE>
20. No Waiver.
The failure of either party at any time to require performance by the
other party of any provision of this Agreement shall in no way affect the
right of such party to require performance of that provision. Any waiver by
either party of any breach of any provision of this Agreement shall not be
construed as a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself or a waiver of any right under
this Agreement.
21. Binding on Successors.
This Agreement will be binding upon and inure to the benefit of the
parties and their successors and assigns permitted by this Agreement.
22. Section Headings.
The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
23. Counterparts.
This Agreement may be executed in multiple counterparts, each of which so
executed and delivered shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS.]<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
as of the Effective Date.
INTEREXCHANGE, INC.
By: /s/ Eric Hecht
---------------------
Name:
Its:
PHONETIME, INC.
By: /s/ Samer Tawfik
Name:
Its:
The undersigned hereby agrees to make himself available in accordance with the
provisions of Section 9(a)(v).
/s/ David Turock
- ---------------------
David Turock
<PAGE>
<PAGE>
List of Exhibits
Exhibit 1(a) Sufficient Capacity
Exhibit 1(a)(i) Statement of Work
Exhibit 1(c) Services
Exhibit 1(c)(i) System
Exhibit 2(a) Costs of expanding the System
Exhibit 2(b)(v) Data Backup
Exhibit 2(b)(vii) Reports
Exhibit 2(j) Performance and Service Levels
Exhibit 3(e) Project Examples
Exhibit 8 (c) Customer Data
SOFTWARE LICENSE AGREEMENT
This Software License Agreement ("Agreement") is made as of the 9th day
of May, 1997 (the "Effective Date") by and between Godot Soft, L.L.C., a New
Jersey limited liability company, with principal offices located at 378
Schuyler Avenue, Kearny, New Jersey 07032 ("Licensor"), PhoneTime, Inc, a New
York corporation, with principal offices located at 30-50 Whitestone
Expressway, Flushing, New York 11354 ("Licensee"), and Joseph Pannullo
("Pannullo").
RECITALS
Licensor and Pannullo have developed and Licensor has the right to
license the Licensed Software and Licensed Documentation (as defined herein)
and the Licensed Documentation (as defined herein) for the Licensed Software,
and Licensee desires to acquire a license to exercise certain license rights
with respect to the Licensed Software and Licensed Documentation under the
terms and conditions set forth herein.
In consideration of the mutual covenants herein contained and other good
and valuable consideration, receipt of which is acknowledged, and intending to
be legally bound hereby, the parties agree as follows:
AGREEMENTS
1. DEFINITIONS
The following terms, not defined elsewhere in this Agreement, shall have
the following meanings:
1.1 "Affiliate" as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of the Person, whether through the ownership of voting securities
or otherwise. Without limiting the generality of the foregoing, any Person
owning at least 51 percent of the outstanding voting securities of another
Person shall be deemed to control such Person.
1.2 "Claims" means any claims, counterclaims, cross claims, and the
like for monetary or injunctive relief in respect of any alleged or proven
injury (including bodily injury or death) in or before any court,
administrative agency, or other forum having the legal power to adjudicate
disputes, and any and all demands not yet matured into one or more of the
foregoing.
<PAGE>
<PAGE>
1.3 "Defending Party" means a Party who is under an obligation under
this Agreement to defend against a Claim.
1.4 "Derivative Work(s)" means: (i) for Licensed Products subject to
copyright or mask work right protection, any work which is based upon one or
more pre-existing Licensed Products, such as a revision, modification,
translation, abridgement, condensation, expansion, collection, compilation, or
any other form in which such pre-existing Licensed Products may be recast,
transformed or adapted; (ii) for patentable or patented Licensed Products, any
improvement patent which is based upon access to the Source Code of the pre-
existing Licensed Products; and (iii) for Licensed Products subject to trade
secret protection, any new material, information, or data derived from the
Licensed Products, including new material which may be protectable by
copyright, patent or other proprietary rights, and with respect to all of the
above, the preparation, use, and/or distribution of which, if prepared without
authorization of the owner of the copyright in such Licensed Products, would
constitute a copyright, patent, or trade secret infringement.
1.4 "Intellectual Property Rights" means all intellectual property
rights worldwide arising under statutory or common law, and whether or not
perfected, including, without limitation, all (i) patents, patent
applications, and patent rights; (ii) rights associated with works of
authorship including copyrights, copyright applications, copyright
registrations, mask work rights, mask work applications, mask work
registrations; (iii) rights relating to the protection of trade secrets and
confidential information; (iv) any right analogous to those set forth in this
section and any other proprietary rights relating to intangible property
(other than trademark, trade dress, or service mark rights); and (v)
divisions, continuations, renewals, reissues, and extensions of the foregoing
(as and to the extent applicable) now existing, hereafter filed, issued, or
acquired.
1.5 "Licensed Products" means collectively, the Licensed Software,
the Licensed Documentation and the Related Technology.
1.6 "Licensed Software" means the Source Code and Software Design
Specifications specified on Exhibit A, as amended from time to time, together
with all revisions and updates thereto, which is provided by Licensor to
Licensee to enable Licensee to implement and further develop the PhoneTime
Products.
1.7 "Licensed Documentation" means all textual and or graphic
material, perceivable directly by humans and/or with the aid of a device or
machine, relating to the Licensed Software.
1.8 "Licensee's Business" means the business conducted by the
Licensee or any Affiliate thereof.
1.9 "Licensee's Field of Use" means on-line rating and billing
systems for debit and credit calling cards, 10XXX and 101XXXX, 1+, 011+,
prepaid cellular and international callback telecommunications services and
for electric marketing and resale.
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1.10 "Licensor's Field of Use" means video and Internet transmission
on-line rating and billing services.
1.11 "Loss or Expense," in connection with an indemnity obligation,
encompasses any and all losses, damages, costs, and expenses, of every kind,
nature, and description, including costs of court and reasonable attorneys'
fees and disbursements (limited as set forth below), that is or are based
upon, arising out of, or otherwise in respect of a specified matter. If,
however, a Defending Party is defending an indemnitee against a Claim, then
the term "Loss or Expense" in respect of such Claim includes attorneys' fees
and disbursements incurred by separate counsel for the indemnitee if (and
only if) the respective interests of the indemnitee and Defending Party with
respect to the Claim are shown to be sufficiently disparate that the Defending
Party's counsel is or should be disqualified from representing the indemnitee
in connection with such defense.
1.12 "Material," with respect to a particular matter, means that the
matter is shown to affect adversely (a) the rights and benefits of the other
Party under this Agreement; or (b) the ability of the other Party to perform
its obligations hereunder, in either case to such a degree that a reasonable
person in the management of his or her own affairs would be more likely than
not to decline to enter into this Agreement in view of the matter in question.
1.13 "Party" means a party to this Agreement.
1.14 "Person" means a natural person, a corporation (for profit or
not-for- profit), an association, a partnership (general or limited), a joint
venture, a trust, a government or political department, subdivision, or
agency, or any other entity.
1.15 "PhoneTime Products" means all Derivative Works developed by or
on behalf of Licensee for any use whatsoever, including but not limited to use
in Licensee's Field of Use; provided, however, that PhoneTime Products may not
include any use or application of Derivative Works in connection with products
in the Licensor Field of Use.
1.16 "Protected Party" means a Party who is entitled to defense by a
Defending Party under this Agreement.
1.17 "Related Technology" means the trade secrets, know-how,
inventions, techniques and processes concerning the hardware designs,
simulation models, interactive voice response technology, system architecture
specifications, algorhythms, data structures and programming methods upon
which the Licensed Software is based and/or which are contained or embodied
therein, which are disclosed or provided to Licensee by Licensor for the
purpose of implementing the Licensed Software in which Licensee has
Intellectual Property Rights.
1.18 "Software Design Specifications" means specifications and other
written materials that relate to particular Source Code, including materials
useful for design (for example, logic manuals, flow charts, data structures,
and principles of operation), and machine-readable text or graphic files <PAGE>
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subject to display or print-out, all as referenced in Exhibit A of this
Agreement and as delivered hereunder.
1.19 "Source Code" means a complete copy of the source code for
the Licensed Software, in machine readable and human readable form, and all
related documentation, including, but not limited to, explanatory notes,
programmer comments, descriptive program materials such as program
descriptions, flow charts, design documents, functional and performance
specifications and other documentation used with such source code.
1.20 "Upgrade Version" means a version of the Licensed Software
that incorporates additional capability or functionality and that is
distributed to Licensee without charge. Any copy of an Upgrade Version
provided by Licensor will be deemed to be Licensed Software.
1.21 Terms generally. The definitions in this Agreement shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Sections and
Exhibits shall be deemed references to Sections and Exhibits to this
Agreement unless the context shall otherwise require. Any term defined
elsewhere in this Agreement shall have the meaning set forth in that
definition wherever the term is used herein, except as otherwise provided or
as the context shall otherwise require.
2. LICENSE GRANT
2.1 License Rights Granted.
Subject to the provisions of this Agreement, and in consideration of the
license to Derivative Works described in Section 17.3 and the remuneration to
be paid by Licensee to Licensor hereunder, Licensor hereby grants Licensee a
non-exclusive, license under Licensor's copyrights, trade secrets and know-how
embodied in the Licensed Products, to prepare and have prepared Derivative
Works thereof, and to reproduce, modify, perform and use the Licensed Products
on equipment that is owned, used, operated or controlled by Licensee or an
Affiliate on equipment located within the United States, Canada, Puerto Rico
or the US Virgin Islands (the "Territory") for the purpose of developing and
using the PhoneTime Products. Licensor understands and agrees that Licensee
will incorporate the Licensed Software into PhoneTime Products, and further,
the parties agree that Licensee shall retain full ownership and title to all
of the Derivative Works of the Licensed Software that are created by or on
behalf of Licensee pursuant to its license rights hereunder, subject to the
license granted to Licensor with respect to Derivative Works set forth in
Section 17.3.
2.2 Scope of License Grant.
2.2.1 During the four years immediately following the Effective
Date, the License granted by Licensee in Section 2.1 shall be exclusive to
Licensee with respect to Licensed Products for use on servers operating under
Windows NT in Licensee's Field of Use with respect to telephone equipment
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located within the Territory. Licensor acknowledges that Licensee may wish
to designate either an offshore site or sites for the equipment that is
outside the United States and Licensee agrees that its consent to such
designation shall not be unreasonably withheld or delayed.
2.2.2 (a) Licensor may license the Licensed Products outside the
United States.
(b) Licensee may not sublicense the Licensed Products and may
not use the Licensed Products or Derivative Works outside the Territory or in
the Licensor's Field of Use.
2.3 Title to Licensed Products. The License does not include a
grant to Licensee of any ownership right, title, or interest, nor any security
interest or other interest, in the Licensed Products. Licensee acknowledges
that Licensor owns all right, title and interest in and to all aspects of the
Source Code, including all trade secrets and copyrights pertaining thereto and
that this Agreement conveys to Licensee only a limited right of use that is
revocable in accordance with the provisions of this Agreement. Licensee
agrees that, except for the rights of use granted in this Agreement, it does
not have and shall not assert any right, title, or interest in or to Licensed
Products.
2.4. Term of License. The License shall be perpetual unless
terminated in accordance with Section 13.
2.5 As soon as practicable after the Effective Date, Pannullo shall
train at least one person designated by Licensee in the use and operation of
the Licensed Products.
3. LICENSE FEE
3.1 The fee for the License (the "License Fee") shall be ONE MILLION
DOLLARS ($1,000,000), to be paid as follows:
(a) $350,000.00 by wire transfer from Licensee to Licensor
of immediately available funds on the Effective Date; and
(b) the delivery of a non-interest bearing promissory note
in the form attached hereto as Exhibit B (the "Note") in the amount of
$650,000.00 payable in ten (10) equal monthly installments commencing ninety
(90) days after the Effective Date.
4. DELIVERY OF LICENSED PRODUCTS AND INSTALLATION
4.1 Licensor will deliver the Licensed Products to Licensee, at
Licensee's address set forth above, upon execution of this Agreement.
Licensor shall be solely responsible for the payment of all shipping and
handling charges associated with delivery of the Licensed Products. The
Licensed Products shall be delivered to Licensee f.o.b. Licensee's place of
business, and Licensor shall assume all risk of loss therefor prior to such
delivery to Licensee.
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4.2 All installation of the Licensed Software for use by Licensee
will be by, and at the sole expense of, Licensee.
5. [Intentionally omitted.]
6. REPRESENTATIONS AND WARRANTIES BY LICENSOR AND PANNULLO
6.1 Licensor and Pannullo jointly and severally represent and warrant
to Licensee as follows:
(a) The Licensor is duly organized and subsisting under the
laws of the jurisdiction of its formation;
(b) The Licensor has full power and authority to enter into this
Agreement and to grant the License granted by this Agreement to Licensee;
(c) The execution and or performance of this Agreement
does not and will not violate or interfere with any other agreement of the
Licensor or Pannullo, which violation or interference would have a Material
adverse effect on the Licensor;
(d) The Licensor or Pannullo will not enter into any
agreement the execution and/or performance of which would violate or interfere
with this Agreement and have a Material adverse effect on Licensee;
(e) The Licensor or Pannullo is not presently the subject
of a voluntary or involuntary petition in bankruptcy, does not presently
contemplate filing any such voluntary petition, and is not aware of any
intention on the part of any other Person to file such an involuntary petition
against it;
(f) The Licensor or Pannullo is not presently the subject
of, nor the proponent of, any Claim that would have a Material adverse effect
on the Licensee;
(g) The Person executing this Agreement on behalf of the
Licensor has actual authority to bind the Licensor to this Agreement;
(h) Neither the Licensed Products nor the grant of the licenses
granted under this Agreement infringe or violate any copyright or trade secret
rights of any third party. Licensee acknowledges that there may be one or
more existing patents whose holders claim that the use of the Licensed
Products infringes their patent rights.
7. REPRESENTATIONS AND WARRANTIES BY LICENSEE
7.1 Licensee represents and warrants to Licensor as follows:
(a) The Licensee, is duly organized and subsisting under the
laws of the jurisdiction of its incorporation;
(b) The Licensee has full power and authority to enter into
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(c) The execution and or performance of this Agreement does
not and will not violate or interfere with any other agreement of the
Licensee, which violation or interference would have a Material adverse effect
on the Licensee;
(d) The Licensee is not a party to any agreement calling for
the payment to, or receipt from, any third party by the Licensee of any
commission, gratuity, "kickback," or other similar thing or amount in
consideration of the Licensor's entry into this Agreement;
(e) The Licensee is not presently the subject of a voluntary
or involuntary petition in bankruptcy, does not presently contemplate filing
any such voluntary petition, and is not aware of any intention on the part of
any other Person to file such an involuntary petition against it;
(f) The Licensee is not presently the subject of, nor the
proponent of, any Claim that would have a Material adverse effect on the
Licensor;
(g) The Person executing this Agreement on behalf of the
Licensee has actual authority to bind the Licensee to this Agreement; and
(h) Concurrently with the execution of this Agreement,
Licensee has delivered to Licensor copies of the most recent regularly
prepared financial statements of Licensee, dated March 31, 1997, which fairly
present Licensee's financial condition at the date of the balance sheet
contained therein and the results of its operations for the period covered by
the profit and loss statement contained therein.
8. LICENSED PRODUCT WARRANTY
8.1 Licensor and Pannullo jointly and severally warrant to Licensee
as follows (the "Licensed Product Warranty"):
(a) Under normal use and service, the media on which the
Licensed Software is delivered shall be free from defects in material and
workmanship (the "Physical Media Warranty");
(b) The Licensed Products as delivered and installed by Licensor
are capable of operating in conformance with the current functional and
operation characteristics of the Licensed Products as described in the
Licensor's current published product description and documentation true and
complete copies of which will be delivered with ten (10) days of the Effective
Date.
(c) No copy of the Licensed Products provided to Licensee by
Licensor contains or will contain any Self-Help Code (as defined below) nor
any Unauthorized Code (as defined below) inserted or incorporated by Licensor,
Pannullo or any corporation Pannullo controls or, to Pannullo's knowledge, any
third party. This warranty is referred to in this Agreement as the "No
Surreptitious Code Warranty." As used in this Agreement, "Self-Help Code"
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means any back door, time bomb, drop dead device, or other software routine
designed to disable a computer program automatically with the passage of time
or under the positive control of a person other than a Licensee of the
program. As used in this Agreement, "Unauthorized Code" means any virus,
Trojan horse, worm, or other software routines of hardware equipments
designed to permit unauthorized access, to disable, erase, or otherwise use
or harm software, hardware, or data or to perform any other such actions. The
term Unauthorized Code does not include Self-Help Code.
8.2 Subject to the limitations set forth in this Agreement, Licensor
will defend Licensee against any Claim, and indemnify Licensee against any
Loss or Expense, arising out of any previously proved breach of the No
Surreptitious Code Warranty.
9. LICENSED PRODUCT WARRANTY LIMITATIONS
9.1 Except as may be expressly agreed in writing by Licensor, the
Licensed Product Warranty does not apply to: (a) any copy of the Licensed
Software that is modified by any Person other than Licensor, without the prior
authorization of Licensor; nor (b) use of the Licensed Software other than in
accordance with the most current operating instructions provided by Licensor;
nor (c) defects caused by negligence of Licensee or any other Person except
Licensor.
9.2 For a period of six (6) months from the date of this Agreement
(the "Acceptance Period"), Licensor, Pannullo and Licensee shall use their
commercially reasonable efforts to incorporate the Licensed Products into
Licensee's equipment and to test the Licensed Products to determine whether
the Licensed Products enable Licensee to process 2688 calls simultaneously and
account and report for such calls on a post processed basis (at least daily),
in accordance with customary industry standards for quality and reliability
(the "Acceptance Standard"). In the event that the Licensed Products fail to
meet the Acceptance Standard, as determined in good faith by Licensee, prior
to the end of the Acceptance Period, Licensee's obligation to make payments
under the Note shall be reduced in accordance with, and Licensee shall be
permitted to exercise certain rights set forth in that certain Option
Agreement of even date herewith between Licensee and Pannullo. In the event
that the Licensed Products are installed into Licensee's equipment and ready
for testing, but Licensee fails to perform the test prior to the date that is
four (4) months from the date of this Agreement, the Acceptance Period (and
Licensee's rights during the Acceptance Period) shall be extended through the
date that is sixty (60) days from the date of the first test. Provided that
the Licensed Products meet the Acceptance Standards prior to the end of the
Acceptance Period, the Licensed Product Warranty shall terminate at the end of
the Acceptance Period. Any improvements or enhancements to the Licensed
Products during the Acceptance Period shall be deemed incorporated into the
Licensed Products and shall not be deemed Derivative Works.
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9.3. Disclaimer of Other Warranties And Representations.
LICENSOR AND PANNULLO DISCLAIM ANY AND ALL OTHER WARRANTIES, CONDITIONS,
OR REPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR WRITTEN), WITH RESPECT TO THE
LICENSED SOFTWARE OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED
WARRANTIES OF MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR A PARTICULAR
PURPOSE.
10. DEFENSE OF INFRINGEMENT CLAIMS BY THIRD PARTIES.
10.1 Licensor, at its own expense and subject to the terms and
conditions of this Section 10, will defend any and all Claims brought against
Licensee by third parties that use by Licensee of the Licensed Products in
accordance with the terms of this Agreement constitutes infringement, misuse
or misappropriation of any Intellectual Property Right under the laws of the
United States or any of its states (excluding any Claims asserted by holders
of patents unrelated to Licensor or Pannullo that the use of the Licensed
Products by Licensee infringes their patent rights).
10.2 Conditions for Licensor Defense.
To be entitled to Defense by Licensor against a third-party Intellectual
Property Right Claim:
(a) Licensee shall promptly advise Licensor of the existence of
the Claim upon learning of the assertion of the Claim against Licensee
(whether or not litigation or other proceeding has been filed or served); and
(b) Licensee shall permit Licensor to have the sole right
to control the defense and or settlement of all such Claims, in litigation or
otherwise, so long as no such settlement adversely affects Licensee's ability
to exercise the rights granted to Licensee hereunder pursuant to the License
and Licensor demonstrates to Licensee's reasonable satisfaction Licensor's
financial capacity to defend such Claims.
10.3 Infringement Injunctions Obtained by Third Parties.
If a third-party Intellectual Property Right Claim, of which Licensor was
notified in accordance with this Section 10, is sustained in a final judgment
from which no further appeal is taken or possible, and such final judgment
includes an injunction prohibiting Licensee from continued use of the
Licensed Products or portions thereof, then Licensor shall, in its sole
election and at its expense: (a) procure for Licensee the right to continue to
use the Licensed Products pursuant to this Agreement; or (b) replace or
modify the Licensed Software to make it noninfringing while being capable of
performing the same function.
10.4 Licensor Responsibility for Infringement Monetary Awards.
If a third-party Intellectual Property Right Claim, of which Licensor was
notified in accordance with this Section 10, is sustained in a final judgment
from which no further appeal is taken or possible, then Licensor will pay or
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otherwise satisfy any monetary award entered against Licensee as part of such
final judgment to the extent that such award is adjudged in such final
judgment to arise from such infringement.
10.5 Licensee shall indemnify Licensor against any Loss or Expense
resulting from Claims asserted by holders of patents (unrelated to Licensor or
Pannullo) that Licensee's use of the Licensed Products infringed their patent
rights; provided, however, that Licensor shall not be entitled to
indemnification hereunder unless Licensor provides Licensee with prompt
written notice (in any event within thirty (30) days of receipt by Licensor or
Pannullo of written notice of the assertion of such a Claim) and an
opportunity to contest or defend such a Claim.
10.6 Pannullo shall be jointly and severally responsible for any
indemnification obligations of Licensor hereunder.
11. EXCLUSION OF INCIDENTAL AND CONSEQUENTIAL DAMAGES.
NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY (NOR TO ANY PERSON
CLAIMING RIGHTS DERIVED FROM THE OTHER PARTY'S RIGHTS) FOR INCIDENTAL,
CONSEQUENTIAL, SPECIAL, OR EXEMPLARY DAMAGES OF ANY KIND, INCLUDING, WITHOUT
LIMITATION, LOST PROFITS, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
PERFORMANCE OR BREACH THEREOF, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY THEREOF.
12. BREACH, TERMINATION
12.1. Notice of Breach, Cure Period.
In the event of a breach of any warranty, covenant, or other provision of
this Agreement or of the note, the following notice and cure procedures shall
apply:
12.1.1 The Party not in breach ("Nonbreaching Party") shall
give the Party in breach (the "Breaching Party") notice describing the breach
and stating the time, as provided below, within which the breach must be
cured.
12.1.2 If the breach is a non-monetary obligation of the
Breaching Party, then the Breaching Party shall have thirty (30) days to cure
the breach after written notice of such breach by the Nonbreaching Party.
12.1.3 If the breach is a monetary obligation of the
Breaching Party, then the Breaching Party shall have ten (10) days to cure the
breach after written notice of such breach by the Nonbreaching Party.
12.1.4 The Breaching Party will be deemed to have cured any
breach of a non-monetary obligation if within the cure period it takes steps
reasonably adequate to alleviate any damage to the Nonbreaching Party
resulting from the breach and to prevent a similar future breach.
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13. TERMINATION OF LICENSE RIGHTS
13.1 Termination by Mutual Consent.
The Parties may terminate the License by mutual consent upon such
terms as they may agree in writing.
13.2 Unilateral Termination by Licensee.
Licensee may unilaterally terminate the License at any time,
effective immediately upon notice to Licensor in accordance herewith, without
prejudice to any monetary obligations of Licensee under the Note or Licensor's
and Pannullo's or Licensee's indemnification obligations hereunder which
obligations shall continue until paid in full.
13.3. Termination for Breach.
If a breach has not been cured at the end of its cure period if
any, then the License shall terminate immediately upon expiration of that cure
period without the need for further action on the part of the Nonbreaching
Party.
13.4 Other Terminations.
The License shall terminate automatically, to the extent permitted
by applicable law in the jurisdiction or jurisdictions in question (e.g.,
bankruptcy law), upon the occurrence of any of the following events:
(a) If Licensee files a petition in bankruptcy (or is the
subject of an involuntary petition in bankruptcy that is not dismissed within
sixty days after the effective filing date thereof); or is or becomes
insolvent; or admits of a general inability to pay its debts as they become
due; then the License shall immediately terminate upon written notice to
Licensee to that effect.
(b) Either Party may terminate the License immediately upon
the discovery by that Party of any Material false statement or other Material
misrepresentation made or submitted to that Party by the other Party in this
Agreement.
14. POST-TERMINATION PROCEDURES
Upon termination or expiration for any reason of the License:
14.1 The Parties shall comply with their respective post-termination
obligations, if any, as set forth herein.
14.2 Except as may be expressly provided otherwise herein, within
ten business days after the effective date of termination or expiration of the
License, each Party shall pay the other Party any amounts that as of that
effective date were due and owing thereto pursuant to this Agreement.
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14.3 Licensee shall surrender to Licensor (or, at Licensee's option
with Licensor's consent, destroy and provide Licensor with a certificate
signed by an executive officer of Licensee attesting to the destruction of)
all copies of the Licensed Products remaining in the possession of Licensee
or any Person acquiring any such copy through Licensee.
15. INDEMNITY AND DEFENSE ADMINISTRATIVE PROVISIONS
15.1 Applicability of this Section.
The provisions of this Section 15 shall govern all defenses against
Claims, indemnities against Losses or Expenses, and claims to entitlement to
defense or indemnity.
15.2 Defense Procedure.
Each Protected Party seeking to be defended against a Claim under
this Agreement shall notify the Defending Party within thirty (30) days of
the assertion of any Claim(s) or discovery of any fact upon which the
Protected Party intends to base a claim for Defense and/or indemnification
under this Agreement. The Protected Party's failure to so notify a Defending
Party will relieve the Defending Party from any liability under this Agreement
to the Protected Party with respect to defense or indemnity with respect to
such Claim(s).
15.3 Participation in and Control of Defense.
If a Defending Party defends a Protected Party in a lawsuit,
arbitration, negotiation, or other proceeding ("dispute") concerning a Claim
pursuant to this Agreement, the Protected Party will have the right to engage
separate counsel, at the Defending Party's expense, to monitor and advise the
Protected Party about the status and progress of the defense.
15.3.1. With respect to any issue involved in such
dispute as to which the Defending Party has acknowledged the obligation to
indemnify the Protected Party, the Defending Party will have the sole right to
control the Defense of (and or to settle or otherwise dispose of) the dispute
on such terms as the Defending Party in its judgment deems appropriate.
15.3.2 To be entitled to sole control of the Defense, upon
request by the Protected Party the Defending Party shall demonstrate to the
reasonable satisfaction of the Protected Party the Defending Party's financial
ability to carry out its defense obligations (and its indemnity obligations
if any).
15.4 Offset of Indemnity Amounts.
In any event requiring indemnity of one Party by another hereunder,
the Indemnitee may offset, against any payments subsequently due to the
Indemnitor from the Indemnitee, any amount remaining unpaid under the
indemnity unless otherwise provided in this Agreement.
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15.5 No Defense or Indemnity for Own Negligence or Misconduct.
Except as may be expressly provided otherwise in this Agreement, no
Party will be required to defend or indemnify any other Party with respect to
Losses or Expenses finally adjudged to have been caused by the putative
Indemnitee's own negligence, gross negligence, or willful misconduct.
15.6 Advancement of Defense Expenses to Protected Party.
Reasonable expenses incurred by a Protected Party who is or is
threatened to be made a named defendant or respondent in a dispute may be
paid or reimbursed by the Defending Party, in advance of the final
disposition of the proceeding, after the Defending Party receives a written
undertaking by or on behalf of the Protected Party to repay the amount paid
or reimbursed, if and to the extent it is ultimately determined that the
Protected Party was not entitled to be defended hereunder.
16. LICENSOR AND LICENSEE CROSS-INDEMNITIES
16.1 Licensee will defend Licensor and Pannullo against any and
all Claims, and indemnify and hold Licensor harmless against any and all
Losses or Expenses, subject to the exclusion of consequential damages herein,
arising from or otherwise in respect of:
(a) any Material inaccuracy in any representation, and any
Material breach of any warranty or covenant, of Licensee contained in this
Agreement or in any certificate, document, or instrument delivered to Licensor
by Licensee pursuant to this Agreement; and
(b) any exercise of rights granted pursuant to the License
(other than as to matters for which Licensor is expressly made responsible
hereunder), and any other use of the Licensed Products, by Licensee or any
other Person authorized by Licensee.
16.2 Licensor and Pannullo will jointly and severally defend
Licensee against any and all Claims, and hold Licensee harmless against any
and all Losses or Expenses, subject to the limitations of warranties,
remedies, and liability herein, arising from or otherwise in respect of:
(a) any Material inaccuracy in any representation, and any
Material breach of any warranty or covenant, of Licensor contained in this
Agreement or in any certificate, document, or instrument delivered to
Licensee by Licensor pursuant to this Agreement; and
(b) the operation of Licensor's business relating to the
Licensed Products both before and after the date of this Agreement.
17. RIGHTS IN INVENTIONS AND WORKS
17.1 Definitions. As used in this Agreement:
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(a) "Conceived" and "Conception," as to an Invention, are
used in the same sense as in the patent laws of the United States, and
generally speaking refer to the formation of a complete mental picture of the
Invention, requiring only routine work by a hypothetical person of ordinary
skill in the art to which the Invention pertains to reduce the Invention to
practice.
(b) "Invention" means any invention, discovery, process, art,
method (including mathematical algorithms), machine, manufacture, composition
of matter, or improvement thereof, whether or not patentable, to the extent
that it is the subject of an Intellectual Property Right.
(c) "Work of Authorship" means:
(1) a work of authorship protectable under the
copyright laws of an applicable jurisdiction, or
(2) a mask work protectable under the semiconductor
chip protection laws of an applicable jurisdiction.
17.2 Ownership of Inventions and Works of Authorship.
The ownership of any Inventions or Works of Authorship relating to
the Licensed Products that may be made by Licensee personnel will be owned
entirely by Licensee.
17.3 License of Inventions and Works of Authorship by Licensee to
Licensor.
During the Term, Licensee shall disclose all Derivative Works
developed during the Term ("Term Works") to Licensor and, upon Licensor's
request, shall provide copies of Source Code for Term Works to Licensee.
Licensee hereby grants Licensor a perpetual world-wide royalty free license to
use and sublicense all Term Works, provided that during the four years
immediately following the Effective Date Licensor shall have no right to use
or sublicense the Term Works in Licensee's Field of Use and further provided
that the license granted shall be exclusive to Licensor in Licensor's Field of
Use.
18. [Intentionally omitted.]
19. GENERAL
19.1 Assignment
(a) No Party may assign any right under this Agreement, without
the prior written consent of the other Party, and any purported assignment
will be null and void and a breach of this Agreement. Notwithstanding the
foregoing, either Party may assign its rights and/or obligations hereunder:
(i) to any subsidiary, parent company or affiliate of that Party; (ii)
pursuant to any sale or transfer or substantially all the business of that
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Party; or (iii) pursuant to any consolidation, merger or reorganization of
that Party; provided, however, that the acquiring Person must agree in writing
to comply with the assigning Party's obligations under, and to be bound by,
this Agreement.
(b) In the event that Licensee: (i) transfers its rights and
obligation under this Agreement pursuant to any sale or transfer of
substantially all of Licensee's Business to a third Person (that is not an
Affiliate) or a merger between Licensee and a third Person (that is not an
Affiliate) in which the shareholders of such third Party immediately prior to
the merger own more than fifty percent (50 percent) of the merged company, and
(ii) Sam Tawfik and/or his affiliates and family members receive at least
$100,000,000 in cash or publicly held securities as a result of such
transaction, Licensee shall deliver a fee of $2,000,000.00 (the "Licensee
Transfer Fee") to Licensor upon the consummation of such transfer.
19.2 Entire Agreement.
This Agreement and the Exhibits attached hereto constitute the entire
agreement between the Parties concerning the subject matter thereof. No prior
or contemporaneous representations, inducements, promises, or agreements,
oral or otherwise, between the Parties with reference thereto will be of any
force or effect.
19.3 Survival of Representations and Warranties.
The representations and warranties made herein shall survive the
execution of this Agreement and the termination of the License except as may
be expressly indicated otherwise.
19.4 Independent Parties.
Except as may be expressly and unambiguously provided in this Agreement,
no partnership or joint venture is intended to be created by this Agreement,
nor any principal-agent or employer-employee relationship. Except to the
extent expressly provided in this Agreement, neither Party has, and neither
Party shall attempt to assert, the authority to make commitments for or to
bind the other Party to any obligation.
19.5 Effect of Partial Invalidity.
If any one or more of the provisions of this Agreement should be ruled
wholly or partly invalid or unenforceable by a court or other government body
of competent jurisdiction, then: (a) the validity and enforceability of all
provisions of this Agreement not ruled to be invalid or unenforceable will be
unaffected; (b) the effect of the ruling will be limited to the jurisdiction
of the court or other government body making the ruling; (c) the provision(s)
held wholly or partly invalid or unenforceable will be deemed amended, and
the court or other government body is authorized to reform the provision(s),
to the minimum extent necessary to render them valid and enforceable in
conformity with the Parties' intent as manifested herein; and (d) if the
<PAGE>
<PAGE>
ruling, and/or the controlling principle of law or equity leading to the
ruling, is subsequently overruled, modified, or amended by legislative,
judicial, or administrative action, then the provision(s) in question as
originally set forth in this Agreement will be deemed valid and enforceable to
the maximum extent permitted by the new controlling principle of law or
equity.
19.6 Notices.
Any notice, request, instruction or other document to be given hereunder
by any party to any other party shall be in writing and shall be deemed to
have been given (i) if mailed with the United States Postal Service by
prepaid, first class, certified mail, return receipt requested, at the time of
receipt by the intended recipient, or (ii) if sent by facsimile transmission,
when so sent and receipt acknowledged by an appropriate telephone or facsimile
receipt addressed as follows:
If to the Licensor, addressed to:
Godot Soft, L.L.C.
378 Schuyler Avenue
Kearny, New Jersey 07032
Attn: Joseph Pannullo
Telecopier: (201) 997-2009
With a copy to:
Lowenstein, Sandler, Kohl, Fisher & Boylan
85 Livingston Avenue
Roseland, NJ 07068-1791
Telecopier: (201) 992-5820
Attention: Richard Sandler, Esq.
If to the Licensee:
PhoneTime, Inc.
30-50 Whitestone Expressway
Flushing, New York 11354
Attention: Chief Executive Officer
w/copy to Chief Financial Officer
Telecopier: (718) 939-9998
With a copy to:
Swidler & Berlin Chartered
3000 K Street, N.W.
Washington, D.C. 20007-5516
Telecopier: (202) 424-7643
Attention: John J. Klusaritz, Esq.
or such other address as may be given from time to time under the terms of
this notice provision.
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<PAGE>
19.7 Remedies.
Except as otherwise provided herein or in this Agreement, the remedies
set forth herein or in this Agreement are not exclusive, and either Party
will be entitled alternatively or cumulatively to damages for breach of this
Agreement or to any other remedy available under applicable law
.
19.8 Choice of Law.
This Agreement will be interpreted and enforced in accordance with the
law of the State of New York, without reference to such state's choice of law
principles.
19.9 Attorneys' Fees.
If litigation or other action is commenced between the Parties
concerning any dispute arising out of or relating to this Agreement, the
prevailing Party in any contested ancillary proceeding relating to the action
(e.g., motions to transfer, to compel discovery, etc.) and the prevailing
Party in the action itself will be entitled, in addition to any other award
that may be made, to recover all court costs or other official costs and all
reasonable expenses associated with the ancillary proceeding or action,
including without limitation reasonable attorney's fees and expenses.
19.10 No Waiver.
The failure of either Party at any time to require performance by the
other Party of any provision of this Agreement shall in no way attest the
right of such Party to require performance of that provision. Any waiver by
either Party of any breach of any provision of this Agreement shall not be
construed as a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself or a waiver of any right under
this Agreement.
19.11 Binding on Successors.
This Agreement will be binding upon and inure to the benefit of the
Parties and their successors and assigns permitted by this Agreement.
19.12 Section Headings.
The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
19.13 Representation of Counsel; Mutual Negotiation.
Each Party has had the opportunity to be represented by counsel of its
choice in negotiating this Agreement. This Agreement shall therefore be
deemed to have been negotiated and prepared at the joint request, direction,
and construction of the Parties, at arms length, with the advice and
participation of counsel, and will be interpreted in accordance with its
terms without favor to any Party. <PAGE>
<PAGE>
19.14 Counterparts.
This Agreement may be executed in multiple counterparts, each of which so
executed and delivered shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
19.15 Confidentiality
Licensee acknowledges that the Licensed Products constitute commercially
valuable, proprietary, confidential assets of Licensor, the design and
development of which reflect a considerable effort on the part of skilled
development professionals and the investment of considerable time and money.
Licensee further acknowledges that the Licensed Products contain substantial
trade secrets of Licensor that are being entrusted to Licensee for use only as
expressly authorized under this Agreement.
Licensee shall devote its commercially reasonable efforts, consistent
with the practices and procedures under which it protects its own most
valuable proprietary information, to protect the Licensed Products against any
unauthorized or unlawful use, disclosure, dissemination or copying. Licensee
shall not at any time disclose or disseminate the Licensed Products (including
any extract, copy, adaptation or transcription thereof, or the trade secrets
embodied therein) in whole or in part, to any person who: (I) does not have a
need to know and obtain access thereto in order to give effect to the rights
granted to Licensee under this Agreement, and (ii) is not legally bound to
maintain the proprietary and confidential nature of such materials. Licensee
shall maintain a complete, current and accurate record of the number and
locations of all copies of the Licensed Products (including all extracts,
adaptations and transcriptions thereof)
Notwithstanding the foregoing, Licensee shall have no obligations with
respect to any information in or about the Licensed Products which: (I) is or
becomes publicly known through no wrongful act of Licensee; or (ii) is
independently developed or acquired by Licensee from another source having the
right to disclose, sell or acquire the information; or (iii) is required by
law to be disclosed.
19.16 Right of First Refusal
Licensee acknowledges that Licensor or an affiliate of Licensor has
entered into a contract to construct and deliver an online rating and billing
system in Russia. Licensee shall have a right of first refusal with respect
to the development and maintenance portion of the contract to provide the
system. Licensee shall have fifteen (15) days from the date of receipt of
written notice of the proposed terms and conditions of the proposed contract
to: (i) accept the terms; (ii) agree to negotiate in good faith with respect
to the terms; or (iii) decline to participate. If Licensee fails to notify
Licensor in writing of its election pursuant to clause (i) or (ii) of the
preceding sentence within thirty days of its receipt of written notice, it
shall be deemed to have declined to participate.
[SIGNATURE PAGE FOLLOWS.]<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the day and year first above written.
LICENSOR:
Godot Soft, LLC
By: /s/ Joseph Pannullo
-------------------------
Name: Joseph Pannullo
Its: President
PANNULLO:
/s/ Joseph Pannullo
-----------------------
Joseph Pannullo
LICENSEE:
PhoneTime, Inc.
By:/s/ Sam Tawfik
----------------------
Name: Sam Tawfik
Its: CEO and Chairman
NETWORK PRODUCTS PURCHASE AGREEMENT
Northern Telecom Inc., a Delaware corporation having offices at 2221 Lakeside
Blvd., Richardson, Texas 75082 ("Nortel") and Phonetime Inc., a New York
corporation, having its principal offices and place of business at 30-60
Whitestone Expressway Flushing, New York 11354 ("Buyer") agree as follows:
1. SCOPE
1.1 Certain terms used in this Agreement shall be defined as set
forth in Exhibit A.
1.2 The terms and conditions of this Agreement shall apply to the
purchase by Buyer and the sale by Nortel of Equipment and Services and the
licensing of Software furnished in connection with such Equipment. The terms
and conditions contained in a Product Attachment shall modify and/or
supplement the other terms and conditions of this Agreement, only with respect
to the Product Line and Services described in the Product Attachment.
1.3 All Products and Services obtained by Buyer pursuant to this
Agreement shall be obtained by Buyer solely for initial use by Buyer in its
internal business to provide services available through its networks, and not
as stock in trade or inventory which is intended for resale by Buyer to any
third party as new and unused material. All such Products shall be installed
in the United States.
2. TERM
2.1 This Agreement shall be in effect during the period that any
Product Attachment is in effect. Each Product Attachment shall be in effect
during its Product Attachment Term. This Agreement or any part thereof may be
terminated in accordance with the express provisions of this Agreement
concerning termination or by written agreement of the parties.
2.2 The termination of this Agreement or any part thereof shall not
affect the obligations of either party thereunder which have not been fully
performed with respect to any accepted Order, unless such Order is expressly
terminated in accordance with this Agreement or by written agreement of the
parties.
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3. ORDERING
All purchases pursuant to this Agreement shall be made by means of
Orders issued from time to time by Buyer and accepted by Nortel in writing
within fifteen (15) days. Otherwise, any such Order shall be deemed to be
void. All Orders shall reference this Agreement and the applicable Product
Attachment and shall be governed solely by the terms and conditions set forth
herein as modified and/or supplemented pursuant to Section 1.2 by the terms
and conditions of any applicable Product Attachments.
4. PRICES
4.1 The prices, charges, and fees applicable to Orders shall be set
forth in the appropriate Product Attachments and may be revised in accordance
with the provisions stated therein. Buyer shall pay transportation charges,
including insurance, in accordance with the applicable Product Attachment.
4.2 Until the total of all prices, charges and fees for Products
and related Services furnished hereunder shall have been paid to Nortel, Buyer
shall cooperate with Nortel in perfecting Nortel's purchase money security
interest in such Products and Buyer shall promptly execute all documents and
take all actions required by Nortel in connection therewith. Buyer shall not
sell, lease or otherwise transfer such Products or any portion thereof or
allow any liens or encumbrances to attach to such Products or any portion
thereof prior to payment in full to Nortel of the total of all such prices,
charges, and fees.
5. TERMS OF PAYMENT
5.1 The amounts payable for Products and/or Services may be
invoiced by Nortel to Buyer in accordance with the applicable Product
Attachments. All amounts payable and properly invoiced pursuant to this
Agreement shall be paid by Buyer to Nortel within thirty (30) days from the
date of Nortel's invoice in accordance with the payment instructions contained
in such invoice.
5.2 Overdue payments, excluding those which are the subject of a
good faith dispute, shall be subject to interest charges, calculated daily
commencing on the 31st day after the date of the invoice, at one and one half
percent (1-1/2 percent) per month or such lesser rate as may be the maximum
permissible rate under applicable law.
6. TAXES
Buyer shall at Nortel's direction promptly pay to Nortel or pay directly
to the applicable government or taxing authority, if requested by Nortel, all
taxes and charges, including, without limitation, penalties and interest,
which may be imposed by any federal, state, or local governmental or taxing
authority arising hereunder, such as, but not limited to all such taxes and
charges relating to the purchase, license, ownership, possession, use,
operation and/or relocation of any Equipment, Software, or Services furnished
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<PAGE>
by Seller pursuant to this Agreement, excluding, however, all taxes computed
upon the net income of Nortel. Buyer's obligations pursuant to this Section 6
shall survive any termination of this Agreement.
7. RISK OF LOSS, TITLE
7.1 Risk of loss or damage to Products shall pass to Buyer upon
delivery to the loading dock at the installation site or other delivery
location specified by Buyer in its Order, and Buyer shall keep such Products
fully insured for the total amount then due Nortel for such Products.
7.2 Good title to Equipment furnished hereunder which shall be free
and clear of all liens and encumbrances shall vest in Buyer upon full payment
by Buyer of the total prices, charges and fees payable by Buyer for such
Equipment and any related Software or Services furnished by Nortel in
connection with such Equipment.
7.3 Buyer shall receive a license to use Software subject to the
terms set forth in Exhibit B.
8. TESTING, TURNOVER AND ACCEPTANCE
8.1 If Nortel installs any Products furnished hereunder, the rights
and obligations of the parties with respect to testing, turnover and
acceptance of such Products shall be as set forth in the applicable Product
Attachment.
8.2 If Nortel does not install Products furnished hereunder, Nortel
shall prior to delivery of the Products perform such factory tests as Nortel
determines to be appropriate in order to confirm that such Products shall be
in accordance with the applicable Specifications. Buyer shall be deemed to
have accepted the Products upon completion of such tests.
8.3 In the event that Buyer places Products into revenue-generating
service, such Products shall be deemed to have been accepted by Buyer without
limitation or restriction.
9. DISCLAIMERS OF WARRANTIES AND REMEDIES
THE WARRANTIES AND REMEDIES SET FORTH IN EXHIBIT D AND IN ANY PRODUCT
ATTACHMENT CONSTITUTE THE ONLY WARRANTIES OF NORTEL WITH RESPECT TO THE
PRODUCTS AND SERVICES AND BUYER'S EXCLUSIVE REMEDIES IN THE EVENT SUCH
WARRANTIES ARE BREACHED. THEY ARE IN LIEU OF ALL OTHER WARRANTIES' WRITTEN OR
ORAL, STATUTORY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NORTEL SHALL
NOT BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY NATURE
WHATSOEVER, BEFORE OR AFTER THE PLACING OF ANY PRODUCT INTO SERVICE.
10. LIABILITY FOR BODILY INJURY, PROPERTY DAMAGE AND PATENT INFRINGEMENT
10.1 A party hereto shall defend the other party against any suit,
claim, or proceeding brought against the other party for direct damages due to
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<PAGE>
bodily injuries (including death) or damage to tangible property which
allegedly result from the negligence or willful misconduct of the defending
party in the performance of this Agreement. The defending party shall pay all
litigation costs, reasonable attorney's fees, settlement payments and such
direct damages awarded or resulting from any such suit, claim or proceeding.
10.2 Nortel shall defend Buyer against any suit, claim or
proceeding brought against Buyer alleging that any Products, excluding Vendor
Items, furnished hereunder infringe any United States patent. Nortel shall pay
all litigation costs, reasonable attorney's fees, settlement payments and any
damages awarded or resulting from any such suit, claim or proceeding. With
respect to Vendor Items, Nortel shall assign any rights with respect to
infringement of U.S. patents granted to Nortel by the supplier of such Vendor
Items to the extent of Nortel's right to do so.
10.3 The party entitled to defense pursuant to Section 10.1 or 10.2
shall promptly advise the party required to provide such defense of the
applicable suit, claim, or proceeding and shall cooperate with such party in
the defense or settlement thereof. The party required to provide such defense
shall have sole control of the defense of the applicable suit, claim, or
proceeding and of all negotiations for its settlement or compromise.
10.4 If an injunction is obtained against Buyer's use of any
Products as a result of any suit, claim, or proceeding described in Section
10.2, Nortel shall at Nortel's option use its reasonable efforts to either:
10.4.1 procure for Buyer the right to continue using the
portions of the Products enjoined from use; or
10.4.2 replace or modify the same with equivalent or better
Products so that Buyer's use is not subject to any such injunction.
10.5 If Nortel cannot perform under Section 10.4.1 or 10.4.2, Buyer
shall have the right to return the infringing Products to Nortel upon written
notice to Nortel, and in the event of such return, neither party shall have
any further liabilities or obligations under this Agreement on account of such
infringement or return, except Nortel shall refund the depreciated value of
such Products carried on Buyer's books at the time of such return, less any
outstanding monies due Nortel hereunder.
10.6 The obligations of Nortel hereunder with respect to any suit,
claim, or proceeding described in Section 10.2 shall not apply with respect to
Products which are (a) manufactured or supplied by Nortel in accordance with
any design or any special instruction furnished by Buyer, (b) used by Buyer in
a manner or for a purpose not contemplated by this Agreement, (c) located by
Buyer outside the United States, or (d) used by Buyer in combination with
other products not provided by Nortel, including, without limitation, any
software developed solely by Buyer through the permitted use of Products
furnished hereunder, provided the infringement arises from such combination or
the use thereof. Buyer shall indemnify and hold Nortel harmless against any
loss, cost, expense, damage, settlement or other liability, including, but not
limited to, attorneys' fees, which may be incurred by Nortel with respect to
any suit, claim, or proceeding described in this Section 10.6.<PAGE>
<PAGE>
10.7 Notwithstanding the above, Nortel shall have no obligation or
liability with regard to any patent infringement suit, claim, or proceeding
that may be made or brought against Buyer (i) alleging that method of use
claims in such patent are infringed by any service offering and/or by any use
by Buyer of Products furnished hereunder to make such service offering
available or (ii) resulting in a settlement payment, or award of damages, or
accounting of profits, where such settlement, award, or accounting is based on
the revenues or profits earned or other value obtained by Buyer from its use
of such Products and/or is based on the lost revenues or profits of third
parties arising from Buyer's use of such Products.
10.8 If Nortel determines that any Products are or may become the
subject of a suit, claim, or proceeding as described in Section 10.7, Nortel
may provide Buyer with notice to that effect. Nortel shall have no liability
to Buyer pursuant to Section 10.2, 10.4, or 10.5 with respect to Buyer's use
of such Products which occurs subsequent to such notice. In addition to its
obligations pursuant to Section 10.3, if Buyer becomes aware that any Products
may become the subject of any such suit, claim, or proceeding before receiving
any such notice from Nortel, Buyer shall provide Nortel with notice to that
effect.
10.9 After receipt of notice from Nortel pursuant to Section 10.8,
Buyer shall have the option to return to Nortel the applicable Products
identified in such notice and Nortel shall refund the depreciated value (as
carried on the books of Buyer) of the returned Products to Buyer as more fully
set forth in Section 10.5.
10.10 The provisions of Sections 10.2 through 10.9 state the entire
liability of Nortel and its suppliers and the exclusive remedy of Buyer with
respect to any suits, claims, or proceedings of the nature described in
Section 10.2.
10.11 Each party's respective obligations pursuant to this Section
shall survive any termination of this Agreement.
11. REMEDIES AND LIMITATION OF LIABILITY
11.1 Nortel shall have the right to suspend its performance by
written notice to Buyer and forthwith remove and take possession of all
Products that shall have been delivered to Buyer, if, prior to payment to
Nortel of any amounts due pursuant to this Agreement with respect to such
Products, Buyer shall (a) become insolvent or bankrupt or cease, be unable, or
admit in writing its inability, to pay all debts as they mature, or make a
general assignment for the benefit of, or enter into any arrangement with,
creditors, (b) authorize, apply for, or consent to the appointment of, a
receiver, trustee, or liquidator of all or a substantial part of its assets or
have proceedings seeking such appointment commenced against it which are not
terminated within ninety (90) days of such commencement, or (c) file a
voluntary petition under any bankruptcy or insolvency law or under the
reorganization or arrangement provisions of the United States Bankruptcy Code
or any similar law of any jurisdiction or have proceedings under any such law
instituted against it which are not terminated within ninety (90) days of such
commencement.<PAGE>
<PAGE>
11.2 In the event of any material breach of this Agreement which
shall continue for thirty (30) or more days after written notice of such
breach (including a reasonably detailed statement of the nature of such
breach) shall have been given to the breaching party by the aggrieved party,
the aggrieved party shall be entitled at its option to avail itself of any and
all remedies available at law or equity, except as otherwise provided in this
Agreement
11.3 Nothing contained in Section 11.2 or elsewhere in this
Agreement shall make Nortel liable for any incidental, indirect, consequential
or special damages of any nature whatsoever for any breach of this Agreement
whether the claims for such damages arise in tort, contract, or otherwise, or
shall increase the liability of Nortel under Section 9 or 10 or Exhibit D
beyond that prescribed therein.
11.4 Nortel shall not be liable for any additional costs, expenses,
losses or damages resulting from errors, acts or omissions of Buyer,
including, but not limited to, inaccuracy, incompleteness or untimeliness in
the provision of information by Buyer to Nortel or fulfillment by Buyer of any
of its obligations under this Agreement. Buyer shall pay Nortel the amount of
any such costs, expenses, losses or damage incurred by Nortel.
11.5 Any action for breach of this Agreement or to enforce any
right hereunder shall be commenced within two (2) years after the cause of
action accrues or it shall be deemed waived and barred, except any action for
nonpayment by Buyer of any prices, charges, or fees payable hereunder may be
brought by Nortel at any time permitted by applicable law.
11.6 The limitations on Nortel's liability and other obligations
set forth in Sections 9,10 and 11 shall survive any termination of this
Agreement.
12. FORCE MAJEURE
If the performance by a party of any of its obligations under this
Agreement shall be interfered with by reason of any circumstances beyond the
reasonable control of that party, including without limitation, unavailability
of supplies or sources of energy, power failure, breakdown of machinery, or
labor difficulties, including without limitation, strikes, slowdowns,
picketing or boycotts, then that party shall be excused from such performance
for a period equal to the delay resulting from the applicable circumstances
and such additional period as may be reasonably necessary to allow that party
to resume its performance. With respect to labor difficulties as described
above, a party shall not be obligated to accede to any demands being made by
employees or other personnel.
13. CONFIDENTIAL INFORMATION
13.1 Each party which receives the other party's Confidential
Information shall use reasonable care to hold such Confidential Information in
confidence and not disclose such Confidential Information to anyone other than
to its employees and employees of its affiliates with a need to know. A party
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<PAGE>
that receives the other party's Confidential Information shall not reproduce
such Confidential Information, except to the extent reasonably required for
the performance of its obligations pursuant to this Agreement and in
connection with any permitted use of such Confidential information.
13.2 Buyer shall take reasonable care to use Nortel's Confidential
Information only for study, operating, or maintenance purposes in connection
with Buyer's use of Products furnished by Nortel pursuant to this Agreement.
13.3 Nortel shall take reasonable care to use Buyer's Confidential
Information only to perform Nortel's obligations to provide Products and/or
Services to Buyer, provided Nortel may use any of Buyer's Confidential
Information for the development, manufacture, marketing and maintenance of new
products and/or services and/or changes or modifications to the existing
Products and/or Services, which Nortel may, in either case, provide to third
parties without restriction.
13.4 The obligations of either party pursuant to this Section 13
shall not extend to any Confidential Information which recipient can
demonstrate through written documentation was already known to the recipient
prior to its disclosure to the recipient, was known or generally available to
the public at the time of disclosure to the recipient, becomes known or
generally available to the public (other than by act of the recipient)
subsequent to its disclosure to the recipient, is disclosed or made available
in writing to the recipient by a third party having a bona fide right to do
so, or is required to be disclosed by process of law, provided that the
recipient shall notify the disclosing party promptly upon any request or
demand for such disclosure.
13.5 The parties' obligations pursuant to this Section 13 shall
survive any termination of this Agreement.
14. BUYER'S RESPONSIBILITIES
14.1 All sites at which the Products shall be delivered or
installed shall be prepared by Buyer in accordance with Nortel's standards,
including, without limitation, environmental requirements.
14.2 Buyer shall provide Nortel-designated personnel access to the
Products during the times deemed necessary by Nortel to install, maintain and
service the Products in accordance with Nortel's obligations. Nortel personnel
shall comply with Buyer's reasonable site and security regulations, provided
Nortel receives written notice of any such regulations reasonably in advance
of the arrival of Nortel's personnel at the site.
14.3 Buyer shall provide reasonable working space and facilities,
including heat, light, ventilation, telephones, electrical current, trash
removal and other necessary utilities for use by Nortel-designated maintenance
personnel, and adequate secure storage space, if required by Nortel, for
Products and materials. Buyer shall also provide adequate security for the
Products while on Buyer's site.
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14.4 Buyer shall obtain all necessary governmental permits
applicable to Buyer in connection with the installation, operation, and
maintenance of Products furnished hereunder, excluding any applicable permits
required in the normal course of Nortel's doing business.
14.5 Any information which Nortel reasonably requests from Buyer
and which is necessary for Nortel to properly install or maintain the Products
shall be provided by Buyer to Nortel in a timely fashion and in a form
reasonably specified by Nortel.
15. HAZARDOUS MATERIALS
15.1 Prior to issuing any Order for Services to be performed at
Buyer's facilities, Buyer shall identify and notify Nortel in writing of the
existence of all Hazardous Materials which Nortel may encounter during the
performance of such Services, including, without limitation, any Hazardous
Materials contained within any equipment to be removed by Nortel.
15.2 If Buyer breaches its obligations pursuant to Section 15.1,
(a) Nortel may discontinue the performance of the appropriate Services until
all the applicable Hazardous Materials have been removed or abated to Nortel's
satisfaction by Buyer at Buyer's sole expense, and (b) Buyer shall defend,
indemnify and hold Nortel harmless from any and all damages, claims, losses,
liabilities and expenses, including, without limitation, attorneys' fees,
which arise out of Buyer's breach of such obligations. Buyer's obligations
pursuant to this Section 15.2 shall survive any termination of this Agreement.
16. SUBCONTRACTING
Nortel may subcontract any of its obligations under this Agreement, but
no such subcontract shall relieve Nortel of primary responsibility for
performance of its obligations.
17. REGULATORY COMPLIANCE
In the event of any change in the Specifications or Nortel's
manufacturing or delivery processes for any Products as a result of the
imposition of requirements by any government, Nortel may upon notice to Buyer,
increase its prices, charges and fees to cover the added costs and expenses
directly and indirectly incurred by Nortel as a result of such change.
18. GENERAL
18.1 If any of the provisions of this Agreement shall be invalid or
unenforceable under applicable law and a party deems such provisions to be
material, that party may terminate this Agreement upon notice to the other
party. Otherwise, such invalidity or unenforceability shall not invalidate or
render this Agreement unenforceable, but this Agreement shall be construed as
if not containing the particular invalid or unenforceable provision and the
rights and obligations of the parties shall be construed and enforced
accordingly.
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18.2 A party shall not release without the prior written approval
of the other party any advertising or other publicity relating to this
Agreement wherein such other party may reasonably be identified. In addition
each party shall take reasonable precautions to keep the existence and the
contents of this Agreement confidential so long as this Agreement remains in
effect and for a period of three (3) years thereafter, except as may be
reasonably required to enforce this Agreement or by law.
18.3 The construction, interpretation and performance of this
Agreement shall be governed by the laws of the State of North Carolina, except
for its rules with respect to the conflict of laws.
18.4 Neither party may assign or transfer this Agreement or any of
its rights hereunder without the prior written consent of the other party,
such consent not to be unreasonably withheld, except Buyer's consent shall not
be required for any assignment or transfer by Nortel (a) to any Affiliate of
all or any part of this Agreement or of Nortel's rights hereunder, or (b) to
any third party of Nortel's right to receive any monies which may become due
to Nortel pursuant to this Agreement.
18.5 Notices and other communications shall be transmitted in
writing by certified United States Mail, postage prepaid, return receipt
requested, by guaranteed overnight delivery, or by facsimile addressed to the
parties as follows:
To Buyer: Phonetime Inc.
30-60 Whitestone Expressway
Flushing, New York 11354
Attention: Mr. Sam Tawfik
To Nortel: Northern Telecom Inc.
2221 Lakeside Blvd.
Richardson, Texas 75082
Attention: Vice President, General Manager
Carrier Networks
In addition, notices submitted by Buyer to Nortel specific to any
Product Attachment shall be delivered to the address stated in the applicable
Product Attachment along with a copy submitted to Nortel at the address stated
above.
Any notice or communication sent under this Agreement shall be deemed
given upon receipt, as evidenced by the United States Postal Service return
receipt Mail if given by certified United States Mail, on the following
business day if sent by guaranteed overnight delivery, or on the transmission
date if given by facsimile during the receiving party's normal business hours.
The address information listed for a party in this Section or any
Product Attachment may be changed from time to time by that party by giving
notice to the other as provided above.
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18.6 In the event of a conflict between the provisions of this
Agreement which are not contained in a Product Attachment and the provisions
of a Product Attachment, the provisions of the Product Attachment shall
prevail with respect to the Product Line and Services described in that
Product Attachment.
18.7 All headings used herein are for index and reference purposes
only, and shall not be given any substantive effect. This Agreement has been
created jointly by the parties, and no rule of construction requiring
interpretation against the drafter of this Agreement shall apply in its
interpretation.
18.8 Buyer shall not export any technical data received from Nortel
pursuant to this Agreement, or release any such technical data with the
knowledge or intent that such technical data will be exported or transmitted
to any country or to foreign nationals of any country, except in accordance
with applicable U.S. law concerning the exporting of such technical data.
Buyer shall obtain all authorizations from the U.S. government in accordance
with applicable law prior to exporting or transmitting any such technical data
as described above.
18.9 Any changes to this Agreement may only be effected if agreed
upon in writing by duly authorized representatives of the parties hereto. No
agency, partnership, joint venture, or other similar business relationship
shall be or is created by this Agreement.
18.10 This Agreement, including all Product Attachments and
Exhibits constitutes the entire agreement of the parties with respect to the
subject matter hereof.
NORTHERN TELECOM INC. PHONETIME, INC.
By: /s/ Vickie Yohe By: /s/ Sam Tawfik
----------------------- -----------------------------
(Signature) (Signature)
Name: Vickie Yohe Name: Sam Tawfik
--------------------- ----------------------------
(Print) (Print)
Title: V.P. and General Mgr. Title: Pres.
Date: 9 Dec 96 Date: 12/3/96
<PAGE>
<PAGE>
EXHIBIT A
---------
DEFINITIONS
-----------
As used in the Agreement (as defined below), the following initially
capitalized terms shall have the following meanings:
"Affiliate" shall mean Nortel's parent corporation, Northern Telecom Limited
and any corporation controlled directly or indirectly by Northern Telecom
Limited through the ownership of control of shares or other securities in such
corporation.
"Agreement" shall mean the Agreement to which this Exhibit is attached, and
all Exhibits and Product Attachments.
"Confidential Information" shall mean all information, including, without
limitation, specifications, drawings, documentation, know-how and pricing
information, of every kind or description which may be disclosed by either
party or an Affiliate to the other party in connection with this Agreement,
provided the disclosing party shall clearly mark any such information which is
disclosed in writing as the confidential property of the disclosing party and
the disclosing party shall identify the confidential nature of any such
information which it orally discloses at the time of such disclosure and shall
provide a written summary of the orally disclosed information to the recipient
within fifteen (15) days of such disclosure.
"Equipment" shall mean the hardware listed or otherwise identified in, or
pursuant to, any Product Attachment.
"Exhibits" shall mean Exhibits A, B, C, and D attached hereto, and any
additional Exhibits which Nortel and Buyer subsequently agree in writing shall
be incorporated into, and made a part of the Agreement by reference.
"Hazardous Materials" shall mean any pollutants or dangerous, toxic or
hazardous substances (including, without limitation, asbestos) as defined in,
or pursuant to, the OSHA Hazard Communication Standard (29 CFR Part 1910,
Subpart Z), the Resource Conservation and Recovery Act of 1976 (42 USC Section
6901, et seq.), the Toxic Substances Control Act (15 USC Section 2601, et
seq.), the Comprehensive Environmental Response Compensation and Liability Act
(42 USC Section 9601, et seq.), and any other federal, state or local
environmental law, ordinance, rule or regulation.
"Order" shall mean a written purchase order issued by Buyer to Nortel. Each
Order shall specify on the face of the Order the types and quantities of
Products and/or Services to be furnished by Nortel pursuant to the Order, the
applicable prices, charges and/or fees with respect to such Products and/or
Services, Buyer's facility to which the Products are to be delivered, the
delivery and/or completion schedule, and any other information which may be
required to be included in an Order in accordance with the provisions of this
Agreement.
<PAGE>
<PAGE>
"Product Attachments" shall mean any Product Attachments which the parties
agree in writing shall be incorporated into, and made a part of, this
Agreement.
"Product Attachment Term" shall mean the period specified in a Product
Attachment during which that Product Attachment shall be in effect.
"Product Line" shall mean the Products described in and which may be furnished
pursuant to a specific Product Attachment.
"Products" shall mean any Equipment and/or Software which may be provided
under this Agreement.
"Services" shall mean all services listed or otherwise identified in, or
pursuant to, any Product Attachment which may be purchased from or provided by
Nortel and which are associated with the Product Line described in that
Product Attachment.
"Software" shall mean (a) programs in machine-readable code or firmware which
(i) are owned by, or licensed to, Nortel or any of its Affiliates, (ii) reside
in Equipment memories, tapes, disks or other media, and (iii) provide basic
logic operating instructions and user-related application instructions, and
(b) documentation associated with any such programs which may be furnished by
Nortel to Buyer from time to time.
"Specifications" shall mean, with respect to any Product Line, the
specifications identified in the applicable Product Attachment, provided
Nortel shall have the right at its sole discretion to modify, change or amend
such specifications at any time.
"Third Party Software Vendor" shall mean any supplier of programs contained in
the Software which is not an Affiliate.
"Vendor Items" shall mean, with respect to a Product Line, those portions of
the Product which are identified in the applicable Product Attachment as
Vendor Items.
"Warranty Period" shall mean, with respect to a Product Line, the Warranty
Period specified in the applicable Product Attachment.<PAGE>
<PAGE>
EXHIBIT B
---------
SOFTWARE LICENSE
----------------
1. Buyer acknowledges that the Software may contain programs which have
been supplied by, and are proprietary to, Third Party Software Vendors. In
addition to the terms and conditions herein, Buyer shall abide by any
additional terms and conditions provided by Nortel to Buyer with respect to
any Software provided by any Third Party Software Vendor.
2. Upon Buyer's payment to Nortel of the applicable fees with respect to
any Software furnished to Buyer pursuant to this Agreement, Buyer shall be
granted a personal, non-exclusive, paid-up license to use the version of the
Software furnished to Buyer only in conjunction with Buyer's use of the
Equipment with respect to which such Software was furnished for the life of
that Equipment as it may be repaired or modified. Buyer shall be granted no
title or ownership rights to the Software, which rights shall remain in Nortel
or its suppliers.
3. As a condition precedent to this license and to the supply of Software
by Nortel pursuant to the Agreement, Nortel requires Buyer to give proper
assurances to Nortel for the protection of the Software. Accordingly, all
Software supplied by Nortel under or in implementation of the Agreement shall
be treated by Buyer as the exclusive property, and as proprietary and a TRADE
SECRET, of Nortel and/or its suppliers, as appropriate, and Buyer shall: a)
hold the Software, including, without limitation, any methods or concepts
utilized therein in confidence for the benefit of Nortel and/or its suppliers,
as appropriate; b) not provide or make the Software available to any person
except to its employees on a need to know' basis; c) not reproduce, copy, or
modify the Software in whole or in part except as authorized by Nortel; d) not
attempt to decompile, reverse engineer, disassemble, reverse translate, or in
any other manner decode the Software; e) issue adequate instructions to all
persons, and take all actions reasonably necessary to satisfy Buyer's
obligations under this license; and f) forthwith return to Nortel, or with
Nortel's consent destroy, any magnetic tape, disc, semiconductor device or
other memory device or system and/or documentation or other material,
including, but not limited to all printed material furnished by Nortel to
Buyer which shall be replaced, modified or updated.
4. The obligations of Buyer hereunder shall not extend to any information
or data relating to the Software which is now available to the general public
or becomes available by reason of acts or failures to act not attributable to
Buyer.
5. Buyer shall not assign this license or sublicense any rights herein
granted to any other party without Nortel's prior written consent.
6 Buyer shall indemnify and hold Nortel and its suppliers, as
appropriate, harmless from any loss or damage resulting from a breach of this
Exhibit B. The obligations of Buyer under this Exhibit B shall survive the
termination of the Agreement and shall continue if the Software is removed
from service.<PAGE>
<PAGE>
EXHIBIT C
---------
STORAGE
-------
If Buyer notifies Nortel prior to the scheduled shipment date of Products that
Buyer does not wish to receive such Products on the date agreed by the
parties, or the installation site or other delivery location is not prepared
in sufficient time for Nortel to make delivery in accordance with such date,
or Buyer fails to take delivery of any portion of such Products, Nortel may
place the applicable Products in storage. In that event Buyer shall be liable
for all additional costs thereby incurred by Nortel. Delivery by Nortel of
any Products to a storage location as provided above shall be deemed to
constitute delivery of the Products to Buyer for purposes of this Agreement,
including, without limitation, provisions for payment, invoicing, passage of
risk of loss, and commencement of the Warranty Period.
<PAGE>
EXHIBIT D
----------
LIMITED WARRANTIES AND REMEDIES
------------------------------
1. Nortel warrants that the Equipment supplied hereunder will under
normal use and service be free from defective material and faulty workmanship
and will conform to the applicable Specifications for the Warranty Period
specified in the Product Attachment with respect to such Equipment. The
foregoing warranty shall not apply to items normally consumed in operation,
such as, but not limited to, lamps and fuses or to Vendor Items. Any
installation Services performed by Nortel with respect to such Equipment shall
be free from defects in workmanship for the Warranty Period set forth in the
applicable Product Attachment.
2. Nortel's sole obligation and Buyer's exclusive remedy under the
warranty set forth in Section 1 above shall be limited to the replacement or
repair, at Nortel's option and expense, of the defective Equipment, or
correction of the defective installation Services. Replacement Equipment may
be new or reconditioned at Nortel's option.
3. Nortel warrants that any Software licensed by Nortel to Buyer under
this Agreement shall function during the Warranty Period of the Equipment with
respect to which such Software is furnished without any material, service-
affecting nonconformance to the applicable Specifications, provided that Buyer
shall have paid all Software support fees specified in the applicable Product
Attachment. If the Software fails to so function, Buyer's sole remedy and
Nortel's sole obligation under this warranty is for Nortel to correct such
failure through, at Nortel's option, the replacement or modification of the
Software or such other actions as Nortel reasonably determines to be
appropriate.
4. Unless otherwise stated in a Product Attachment, (a) Nortel's
warranties in Section 3 above shall only apply to the portion of the Software
actually developed by Nortel or its Affiliates, (b) all other Software shall
be provided by Nortel "AS IS", (c) Nortel shall assign to Buyer on a
nonexclusive basis any warranty on such other Software provided to Nortel by
the developer of such other Software to the extent of Nortel's legal right to
do so.
5. The obligations and remedies set forth in Sections 1, 2, and 3 above
shall be conditional upon: the Equipment not having been altered or repaired,
the Software not having been modified, and the Products not having been
installed outside the United States; any defect or nonconformance not being
the result of mishandling, abuse, misuse, improper storage, improper
performance of installation, other services, maintenance or operation by other
than Nortel (including use in conjunction with any product which is
incompatible with the applicable Equipment or Software or of inferior
performance), and/or any error, act, or omission of Buyer described in Section
11.4; the Product not having been damaged by fire, explosion, power failure,
power surge, or other power irregularity, lightning, failure to comply with
<PAGE>
<PAGE>
all applicable environmental requirements for the Products specified by Nortel
or any other applicable supplier, such as but not limited to temperature or
humidity ranges, or any act of God, nature or public enemy; and written notice
of the defect having been given to Nortel within the applicable Warranty
Period.
6. The performance by Nortel of any of its obligations described in
Section 2 or 3 of this Exhibit D shall not extend the applicable Warranty
Period except to the extent specified in the applicable Product Attachment.
7. Upon expiration of the applicable Warranty Period for Equipment
furnished hereunder, repair and replacement Service for such Equipment shall
be available to Buyer from Nortel in accordance with Nortel's then-current
terms, conditions and prices. Such repair and replacement Service and notice
of any discontinuance of such repair and replacement Service shall be
available for a minimum period set forth in the Product Attachment applicable
to such Equipment. This provision shall survive the expiration of this
Agreement.
8. Unless Nortel elects to repair or replace defective Equipment at
Buyer's facility, all Equipment to be repaired or replaced, whether in or out
of warranty, shall be packed by Buyer in accordance with Nortel's instructions
stated in the applicable Product Attachment and shipped at Buyer's expense and
risk of loss to a location designated by Nortel. Replacement Equipment shall
be returned to Buyer at Nortel's expense and risk of loss. Buyer shall ship
the defective Equipment to Nortel within thirty (30) days of receipt of the
replacement Equipment. In the event Nortel fails to receive such defective
Equipment within such thirty (30) day period, Nortel shall invoice Buyer for
the replacement Equipment at the then-current price in effect therefor.
9. With respect to any Vendor Item furnished by Nortel to Buyer pursuant
to this Agreement, Nortel shall assign to Buyer on a nonexclusive basis any
warranty granted by the party that supplied such Vendor Item to Nortel to the
extent of Nortel's right to do so.
10. Neither Nortel nor Nortel's suppliers, as appropriate, shall have any
responsibility for warranties offered by Buyer to any of its customers. Buyer
shall indemnify Nortel and Nortel's suppliers, as appropriate, with respect
thereto.
<PAGE>
<PAGE>
PRODUCT ATTACHMENT
CARRIER NETWORKS PRODUCTS
Northern Telecom Inc. ("Nortel") and Phonetime, Inc. ("Buyer") agree as
follows:
1. INCORPORATION BY REFERENCE
This Product Attachment shall be incorporated into and made a part of
Network Products Purchase Agreement No. JRD1296PI between Nortel and Buyer.
2. DEFINITIONS
For purposes of this Product Attachment:
"Acceptance Criteria" shall mean, with respect to any Products installed
by Nortel hereunder, the standards and specifications contained in the Nortel
Installation Manuals which are applicable to such Products.
"Equipment" shall mean the equipment listed in Schedule A.
"Extension" shall mean Equipment and/or Software which Nortel engineers
and installs and which is added to an Initial System after the Turnover Date
of the Initial System.
"Initial System" shall mean the Equipment and Software which is included
in any configuration identified in Schedule A as an "Initial System."
"Installation Site" shall mean Buyer's facility identified in an Order to
which the applicable Products identified in such Order shall be delivered or
at which the applicable Services, if any, are to be performed, respectively.
"Merchandise" shall mean any Equipment which is not part of a System and
with respect to which no engineering or installation Services shall be
provided by Nortel.
"Product Attachment Term" shall mean the period which shall commence on
the date this Product Attachment is executed by the latter of the parties and
shall expire twenty four (24) months thereafter.
"Services" shall mean the services described in Schedule B.
"Software" shall mean the software listed in Schedule A.
"Specifications" shall mean with respect to any Products furnished
hereunder, the specifications published by Nortel which Nortel identifies as
<PAGE>
<PAGE>
its standard performance specifications for such Products as of the date of
Buyer's Order for such Products.
"System" shall mean any Initial System or Extension.
"Turnover Date" shall mean, with respect to any Products installed by
Nortel hereunder, the date on which Nortel provides the Turnover Notice to
Buyer pursuant to Section 8.a. of this Product Attachment.
"Warranty Period" shall mean, with respect to:
(a) Any System, the period which shall commence upon the Turnover
Date with respect to such System and shall expire twelve (12) months
thereafter,
(b) Merchandise, the period which shall commence upon the date of
shipment with respect to such Merchandise by Nortel to Buyer and shall expire
ninety (90) days thereafter,
(c) Installation Services involving any System, the period which
shall commence upon the Turnover Date with respect to such System and shall
expire twelve (12) months thereafter,
(d) Equipment which is repaired or replaced pursuant to Nortel's
obligations under Exhibit D to the Agreement, the period commencing five (5)
days after (i) shipment of the replacement Equipment to Buyer or
(ii) completion of the repair at the Installation Site of the applicable
Equipment and which shall expire on the later of thirty (30) days thereafter
or the last day of the original Warranty Period with respect to the Equipment
which was repaired or replaced, and
(e) Software which was corrected pursuant to Nortel's obligations
under Exhibit D to the Agreement, the period commencing upon delivery of the
corrected Software by Nortel to Buyer and expiring on the later of thirty (30)
days thereafter or the last day of the original Warranty Period with respect
to such Software.
3. SCOPE
(a) Buyer shall, during the Product Attachment Term, issue Orders for the
following DMS-250 Products in the amount of at least * ("Commitment"):
(1) DMS-250 SN Initial System(s), twenty eight thousand eight hundred
(28,800) Port Model ("DMS-250 28,800 Port Model"), including the Equipment,
Software and Power Plant Equipment as described and set forth in the attached
Schedule A, Part I, Section 1.1, and a maximum of One Hundred Thousand Dollars
($100,000.00) of Optional Software as selected by Buyer from the listing in
the Schedule A, Part VI, Section 1.0. With regard to the purchase price,
Buyer shall pay as follows:
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.
<PAGE>
<PAGE>
(i) If Buyer successfully completes the Commitment, Buyer shall
pay the purchase price of * for the DMS-250 28,800 Port Model as set forth in
the attached Schedule A, Part I, Section 1.2, and in accordance with Section 7
of this Product Attachment.
(ii) In the event that Buyer does not successfully complete the
Commitment and Buyer purchases less than * but at least *, the purchase price
is * as set forth in the attached Schedule A, Part I, Section 1.2, and for
which Nortel shall issue an invoice upon the termination of the Product
Attachment Term and Buyer shall pay in full thirty (30) days from the date of
invoice. Buyer shall receive a credit for any and all payments made towards
the purchase price prior to the termination of the Product Attachment Term.
(iii) In the event that Buyer does not successfully complete the
Commitment and Buyer purchases less than * but at least *, the purchase price
is * as set forth in the attached Schedule A, Part I, Section 1.2, and for
which Nortel shall issue an invoice upon the termination of the Product
Attachment Term and Buyer shall pay in full thirty (30) days from the date of
invoice. Buyer shall receive a credit for any and all payments made towards
the purchase price prior to the termination of the Product Attachment Term.
(iv) In the event that Buyer does not successfully complete the
Commitment and Buyer purchases less than *, the purchase price is *, as set
forth in the attached Schedule A, Part I, Section 1.2. and for which Nortel
shall issue an invoice upon the termination of the Product Attachment Term and
Buyer shall pay in full thirty (30) days from the date of invoice. Buyer
shall receive a credit for any and all payments made towards the purchase
price prior to the termination of the Product Attachment Term.
(2) DMS-250 SN Initial System(s), forty nine thousand nine hundred
twenty (49,920) Port Model ("DMS-250 49,920 Port Model"), including the
Equipment, Software and Power Plant Equipment as described and set forth in
the attached Schedule A, Part I, Section 2.1, and a maximum of One Hundred
Thousand Dollars ($100,000.00) of Optional Software as selected by Buyer from
the listing in the Schedule A, Part VI, Section 1.0. With regard to the
purchase price, Buyer shall pay as follows:
(i) If Buyer successfully completes its Commitment, Buyer shall
pay the purchase price of * for the DMS-250 49,920 Port Model as set forth in
the attached Schedule A, Part I, Section 2.2, and in accordance with Section 7
of this Product Attachment.
(ii) In the event that Buyer does not successfully complete the
Commitment and Buyer purchases less than * but at least * the purchase price
is * as set forth in the attached Schedule A, Part I, Section 2.2, and for
which Nortel shall issue an invoice upon the termination of the Product
Attachment Term and Buyer shall pay in full thirty (30) days from the date of
invoice. Buyer shall receive a credit for any and all payments made towards
the purchase price prior to the termination of the Product Attachment Term.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
(iii) In the event that Buyer does not successfully complete the
Commitment and Buyer purchases less than * but at least * the purchase price
is * as set forth in the attached Schedule A, Part I, Section 2.2, and for
which Nortel shall issue an invoice upon the termination of the Product
Attachment Term and Buyer shall pay in full thirty (30) days from the date of
invoice. Buyer shall receive a credit for any and all payments made towards
the purchase price prior to the termination of the Product Attachment Term.
(iv) In the event that Buyer does not successfully complete the
Commitment and Buyer purchases less than * the purchase price is * as set
forth in the attached Schedule A, Part I, Section 2.2, and for which Nortel
shall issue an invoice upon the termination of the Product Attachment Term and
Buyer shall pay in full thirty (30) days from the date of invoice. Buyer shall
receive a credit for any and all payments made towards the purchase price
prior to the termination of the Product Attachment Term.
(3) An Upgrade for Buyer's existing DMS-250 Switching System
("DMS-250") located in Piscataway, New Jersey, as described in the attached
Schedule A, Part IV, Section 1.1 ("Upgrade"). Nortel may use any of the
Buyer's existing DMS-250 system equipment prior to its de-installation to
perform the installation of the Upgrade. Buyer will incur no additional
charges for the de-installation. Buyer shall, upon the date of installation of
the Upgrade, convey to Nortel good and marketable title to the DMS-250 free
and clear of all liens and encumbrances and return to Nortel all copies of the
Software which were used in conjunction with the existing DMS-250, including
all documentation pertaining thereto, and shall thereupon discontinue any
further use thereof and forever abandon any rights which it may have to use or
to do any other thing with respect to such software. With regard to the
purchase price, Buyer shall pay as follows:
(i) If Buyer successfully completes its Commitment, Buyer shall
receive the Upgrade free of charge during the Product Attachment Term.
(ii) In the event that Buyer does not successfully complete the
Commitment, Buyer shall pay the purchase price of * for which Nortel shall
issue an invoice upon the termination of the Product Attachment Term and Buyer
shall pay in full thirty (30) days from the date of invoice.
(b) Buyer shall receive one (1) additional year of Warranty per each DMS-250
28,800 Port Model and/or DMS-250 49,920 Port Model ordered during the
Product Attachment Term free of charge if Buyer successfully completes the
Commitment. In the event that Buyer does not successfully complete the
Commitment, Buyer shall pay the purchase price of * for which Nortel shall
issue an invoice upon the termination of the Product Attachment Term and Buyer
shall pay in full thirty (30) days from the date of invoice.
(c) Buyer may, during the Product Attachment Term, issue Orders for
additional Extensions described in the attached Schedule A, Part II and Part
III, for delivery and installation in a DMS-250 28,800 Port Model and/or DMS-250
49,920 Port Model ordered under this Agreement. Buyer shall pay the
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
prices, fees and charges set forth in the attached Schedule A, Part II and
Part III, respectively, in accordance with Section 7 of this Product
Attachment.
(d) Buyer may issue Orders for the DMS-250 Optional Software described in
the attached Schedule A, Part VI, Section 1.0, in excess of the One Hundred
Thousand Dollars ($100,000.00) of Optional Software that Buyer will receive
with each DMS-250 28,800 Port Model and/or DMS-250 49,920 Port Model ordered
("Included Optional Software"), during the Product Attachment Term. Buyer
shall receive a * percent discount on the prices, fees and charges set forth
in the attached Schedule A, Part VI, Section 1.0, on any DMS-250 Optional
Software Orders included with the Buyer's Order for any DMS-250 28,800 Port
Model and/or DMS-250 49,920 Port Model except for the Included Optional
Software. Buyer shall receive a * percent discount on the prices, fees and
charges set forth in the attached Schedule A, Part VI, Section 1.0, on any
DMS-500 Optional Software orders issued at any other time during the Product
Attachment Term, except for the Included Optional Software.
4. SCHEDULES
The following Schedules which are attached hereto are an integral part of
the Product Attachment and are incorporated herein by reference:
Schedule A - Products, Prices, and Fees
Schedule B - Services and Charges
Schedule C - Delivery
Schedule D - Documentation
Schedule E - Forecast
5. ORDERING
With respect to Section 3, ORDERING of the Agreement the following
additional terms shall apply:
a. Buyer shall identify in each Order for Products whether the Products
constitute an Initial System, Extension, or Merchandise. All Orders for
Extensions, Merchandise, or any Services other than engineering and
installation Services provided by Nortel in connection with an Order for an
Initial System shall be subject to written agreement of Buyer and Nortel on
the applicable prices, charges and fees with respect thereto as required
pursuant to Section 6, PRICING, of this Product Attachment.
b. Notwithstanding Exhibit C to the Agreement, Buyer may by written notice
to Nortel cancel without charge any Order for Products and/or Services prior
to the delivery date of the applicable Products set forth in such Order or the
agreed date for the commencement by Nortel of the applicable Services
("Service Commencement Date"), except that if Buyer cancels such Order within
six (6) weeks or less of any such date, a cancellation fee of fifteen percent
(15 percent) of the aggregate price of all Products and/or Services included
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
in such canceled Order shall be payable by Buyer. Nortel may invoice such
amount upon receipt of Buyer's notice of cancellation of the Order.
c. Notwithstanding Exhibit C to the Agreement, Buyer may by written notice
to Nortel not less than six (6) weeks prior to the delivery date of any
Products set forth in an Order and/or the Service Commencement Date of the
applicable Services, delay the delivery date of such Products and/or the
Service Commencement Date of such Services for a period which shall not exceed
ninety (90) days from the date such Products were originally scheduled to be
delivered or ninety (90) days from the Service Commencement Date, subject to
the availability from Nortel of the applicable Products and/or Services after
such period of delay.
d. Except as set forth in Sections 5.b. and 5.c. of this Product
Attachment, any change to an Order after Nortel's acceptance of such Order
shall require written agreement of Nortel and Buyer upon a written change to
the Order ("Change Order") which shall reference the original Order and be
executed by the parties. No such changes shall be implemented until the
applicable Change Order has been executed by the parties.
e. With respect to each Order for Products which is accepted by Nortel,
Buyer may make a written request at least ninety (90) days prior to the
scheduled shipment date of such Products for a change ("Change") consisting of
certain addition(s) or deletion(s) to such Products. After receipt of such
request, Nortel shall submit a Job Change Order ("JCO") to Buyer for Buyer's
approval with respect to the requested Change, except that Nortel shall be
under no obligation to submit such JCO to Buyer if Nortel determines that the
Price applicable to such Order would be reduced by more than ten percent (10
percent) as a result of the implementation of the Change. Each JCO shall
state whether the requested Change shall increase or decrease the Price and/or
time required by Nortel for any aspect of its performance under the Agreement
with respect to such Order. Buyer shall accept or reject the JCO in writing
within ten (10) days of receipt thereof. Failure of the Buyer to accept or
reject the JCO in writing as described above shall be deemed a rejection of
the JCO by Buyer. In the event an accepted JCO involves the return to Nortel
of any Equipment which shall have been previously delivered to Buyer, Nortel
may invoice and Buyer shall pay the transportation costs and Nortel's then-
current restocking charge for the returned Equipment.
f. Any increase or decrease in the Price with respect to an Order
hereunder which is occasioned by an accepted JCO shall be added to or
subtracted from, as applicable, the amount of the last payment due pursuant to
Section 6 with respect to such Order.
g. If Buyer rejects a proposed JCO, then the rights and obligations of the
parties with respect to the applicable Order shall not be subject to Buyer's
requested Changes, provided that Buyer shall promptly pay to Nortel all of
Nortel's additional costs and expenses incurred hereunder in accordance with
Buyer's requested Changes and Nortel's additional costs and expenses
subsequently incurred in order that Nortel may be able to perform Nortel's
obligations without modification by the requested Changes, and Nortel shall be
entitled to an extension of the dates for performance of its obligations with
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<PAGE>
respect to the applicable Order as a result of any delays in such performance
which result from the foregoing.
6. PRICING
With respect to Section 4, PRICES, of the Agreement, the following
additional terms shall apply:
a. The prices set forth in Schedule A with respect to any Initial System
shall be in effect for a period which shall commence upon the effective date
of this Product Attachment and shall expire after six (6) months. Nortel may
in its sole discretion, thereafter, increase any prices set forth in Schedule
A upon sixty (60) days prior written notice to Buyer. The prices listed in
Schedule A shall apply to any Order for an Initial System listed in Schedule A
which shall be received by Nortel prior to the effective date of any change in
such prices as permitted by this Section, provided that delivery date for such
Initial System as set forth in the applicable Order shall be not more than
one-hundred twenty (120) days after Nortel's acceptance of such Orders.
b. The prices for Equipment and the fees for the right to use the Software
included in any Extension, prices for any Merchandise, and charges for any
Services, other than engineering and installation Services provided with any
Initial System shall be as subsequently agreed in writing by Nortel and Buyer.
c. All transportation charges associated with the shipment of the Products
to Buyer for delivery are included in the prices, fees and charges set forth
in the attached Schedule A.
7. TERMS OF PAYMENT
With respect to Section 5, TERMS OF PAYMENT, the following additional
terms shall apply:
a. With respect to each Initial System furnished hereunder by Nortel to
Buyer the price listed in Schedule A shall be invoiced by Nortel in accordance
with the following schedule:
(i) * percent (* percent) of such price may be invoiced upon Nortel's
acceptance of the Order for such Initial System,
(ii) * percent (* percent) of such price may be invoiced on the date
of shipment by Nortel to Buyer of the switch component of such Initial System,
(iii) * percent (* percent) of such price may be invoiced on the
Turnover Date of such Initial System, and
(iv) * percent (* percent) of such price may be invoiced on the date
of Acceptance of such Initial System.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
b. With respect to each Extension furnished hereunder by Nortel to Buyer,
the applicable price determined in accordance with Section 6.b. of this
Product Attachment shall be invoiced by Nortel in accordance with the
following schedule:
(i) * percent (* percent) of such price may be invoiced upon Nortel's
acceptance of the Order for such Extension,
(ii) * percent (* percent) of such price may be invoiced on the date
of shipment by Nortel to Buyer of the Equipment included in such Extension,
(iii) * percent (* percent) of such price may be invoiced on the
Turnover Date with respect to such Extension, and
(iv) * percent (* percent) of such price may be invoiced on the date
of Acceptance of such Extension.
c. Except as may be otherwise agreed in writing by the parties, Nortel's
prices for Merchandise and charges for any Services determined in accordance
with Section 6.b. above may be respectively invoiced upon delivery of such
Merchandise and upon performance of such Services by Nortel.
8. TESTING, TURNOVER, AND ACCEPTANCE
Pursuant to Section 8.1 of the Agreement, the rights and obligations of the
parties with respect to testing, turnover and acceptance of any Products
furnished hereunder and installed by Nortel shall be as follows:
a. Nortel shall provide Buyer with five (5) days written notice prior to
commencing final commissioning and testing of any Products installed by
Nortel. Buyer shall cause an authorized representative of Buyer to be present
at the applicable Installation Site to witness such final commissioning and
testing, provided that in the event such representative fails to be present
for any reason, Nortel shall not be required to delay performance of such
final commissioning and testing. In connection with the final commissioning
and testing of such Products, Nortel shall test the Products for conformity
with the applicable Acceptance Criteria. When such tests have been
successfully completed, Nortel shall provide Buyer with written notice
("Turnover Notice") that the applicable Products meet such Acceptance Criteria
and are ready for Buyer's testing for compliance with such Acceptance
Criteria. Buyer shall promptly complete and return to Nortel Buyer's
acknowledgment of receipt of such Turnover Notice.
b. Following the Turnover Date, Buyer may test the applicable Products for
compliance with the Acceptance Criteria using the tests and test procedures
contained in Nortel's Installation Manuals with respect to such Products.
Within fifteen (15) days following the Turnover Date of the applicable
Products, Buyer shall notify Nortel either that Buyer has accepted such
Products in writing using Nortel's standard Acceptance Notice form or that
Buyer has not accepted such Products in which case Buyer shall also provide
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
Nortel with a written notice ("Notice of Deficiency") which shall provide in
reasonable detail the manner in which Buyer asserts that the Products failed
to meet the Acceptance Criteria. With respect to any such details with which
Nortel agrees, Nortel shall promptly proceed to take appropriate corrective
action and following correction, Buyer may retest the Products in accordance
with this Section. Buyer shall accept the Products in writing without delay
when the tests pursuant to this Section indicate that the Products comply with
the Acceptance Criteria.
c. With respect to any points of disagreement between Nortel and Buyer
concerning any Notice of Deficiency which are not resolved by Nortel and Buyer
within ten (10) days after the effective date of the Notice of Deficiency,
Buyer, at its option, may waive any rights it may have on account of any such
points of disagreement, or require that the disputed points be resolved by
arbitration.
d. Buyer shall notify Nortel in writing of its election pursuant to
Section 8.c. not later than ten (10) days after the effective date of the
Notice of Deficiency, if any, given to Nortel by Buyer. Upon expiration of
such ten (10) day period unless Buyer has notified Nortel to the contrary,
Buyer shall be deemed to have elected to waive its right with respect to any
points of disagreement then existing between it and Nortel with respect to
such Notice of Deficiency.
e. If Buyer makes timely election to require arbitration of such disputed
points, the arbitrator shall be chosen by mutual agreement. If the parties
cannot agree upon an arbitrator within three (3) days of Buyer's election to
arbitrate, each party shall within three (3) days thereafter select an
independent and an unaffiliated person to be an arbitrator. These two (2)
persons selected shall select a third person, independent and unaffiliated
with either party, as a third arbitrator. The arbitration shall be conducted
in accordance with the Rules of the American Arbitration Association,
provided, however that the Arbitrator(s) shall be empowered to reduce the
Prices of Products only to the extent that the Arbitrator(s) find that the
benefit of Buyer's bargain has been reduced. The Arbitrator(s) shall not have
any authority to grant partial or total rescission unless the Arbitrator(s)
determine that (i) Buyer has not substantially received the benefit of its
bargain; and (ii) money damages will not provide an adequate remedy. Judgment
upon the award rendered by the Arbitrator(s) may be entered in any Court of
competent jurisdiction.
f. For purposes of this Product Attachment, "Acceptance" of the applicable
Products shall occur upon the earliest of the following and Buyer shall upon
request sign Nortel's Acceptance Notice confirming such Acceptance without any
conditions, restrictions, or limitations of any nature whatsoever:
(i) The date on which Buyer accepts such Products pursuant to Section
8.b. of this Product Attachment;
(ii) The failure of Buyer to provide Nortel with any notice required
by Section 8.b. of this Product Attachment, with respect to such Products;
<PAGE>
<PAGE>
(iii) Use by Buyer of such Products or any portion thereof in
revenue-producing service at any time; or
(iv) Waiver by Buyer of its rights pursuant to Section 8.c. or 8.d.
g. Acceptance by Buyer of such Products pursuant to Section 8.f. of this
Product Attachment above shall not be withheld or postponed due to:
(i) Deficiencies of such Products resulting from causes not
attributable to Nortel, such as, but not limited to (A) inaccuracy of
information provided by Buyer, (B) inadequacy or deficiencies of any
materials, facilities or services provided directly or indirectly by Buyer and
tested in conjunction with the applicable Products, (C) other conditions
external to the Products which are beyond the limits specified by Nortel in
the Specifications for the Products and which are used by Nortel in
performance calculations with respect to the Acceptance Criteria, or (D)
spurious outputs from adjacent material; or
(ii) Minor deficiencies or shortages with respect to such Products
which are attributable to Nortel, but of a nature that do not prevent full and
efficient operation of the Products.
h. With respect to any deficiencies of the type described in Section
8.g.(i), Nortel shall at Buyer's request and expense assist Buyer in the
elimination or minimization of any such deficiencies. With respect to any
deficiencies or shortages as described in the Section 8.g.(ii), Nortel shall,
at Nortel's expense, take prompt and effective action to correct any such
deficiencies or shortages.
i. In the event Buyer's Acceptance of any Products is withheld or
postponed due to any deficiencies of the type described in Section 8.g.(i),
Nortel shall invoice and Buyer shall pay Nortel's charges and reasonable
expenses incurred by Nortel associated with Nortel's investigation of the
reasons for Buyer's withholding or postponement of such Acceptance.
9. WARRANTIES AND REMEDIES
With respect to Exhibit D, LIMITED WARRANTIES AND REMEDIES, the following
additional terms shall apply:
a. Except as set forth in Section 9.b. below, Nortel shall in performance
of its obligations under Section 2 of Exhibit D to the Agreement, (i) ship
replacement Equipment or complete the repair within thirty (30) days of
Nortel's receipt of the Equipment to be replaced or repaired, and
(ii) commence the correction of the applicable installation Services within
thirty (30) days of receipt of notice from Buyer pursuant to Section 5 of
Exhibit D to the Agreement.
b. For emergency warranty service situations involving the Equipment,
Nortel shall during the applicable Warranty Period use all reasonable efforts
to ship replacement Equipment within twenty-four (24) hours of notification of
the applicable warranty defect by Buyer pursuant to Section 5 of Exhibit D to
<PAGE>
<PAGE>
the Agreement, provided that Buyer shall have requested such emergency
service. Nortel may invoice Buyer and Buyer shall pay Nortel's surcharge for
emergency warranty services. If Nortel determines that due to the particular
circumstances, onsite technical assistance is necessary, Nortel shall use all
reasonable efforts to dispatch emergency service personnel to the applicable
Installation Site within twenty-four (24) hours of receipt of notice from
Buyer as described above.
c. All Products to be repaired or replaced, both within and outside of the
applicable Warranty Period, shall be packed by Buyer in accordance with
Nortel's then-current instructions.
d. No later than ninety (90) days prior to the expiration of the Warranty
Period with respect to any Initial System, Nortel shall offer to Buyer post-
warranty support by means of an extended service plan or other terms, provided
that neither party shall have any obligation with respect thereto except as
may be agreed upon in writing by the parties.
10. NOTICES
Pursuant to Section 18.5 of the Agreement, any notices by Buyer to Nortel
which are specific to this Product Attachment shall be delivered to the
following address:
Northern Telecom Inc.
2350 Lakeside Blvd.
Richardson, Texas 75082-4399
Attn: General Manager and Vice President,
Carrier Networks
11. ADDITIONAL TERMS
The following additional terms shall apply to the Agreement:
(a) With respect to Section 14, BUYER'S RESPONSIBILITIES, the following
additional terms shall apply:
(i) Buyer shall be responsible for ordering and coordinating with
each applicable local telephone company the installation of all central office
trunks and test trunks and Buyer shall be responsible for all utility charges
associated with the installation, testing, operation and maintenance of
Products furnished hereunder, including, but not limited to, all applicable
charges for such central office trunks, test trunks and any tie lines.
(b) Nortel shall provide documentation with respect to the Products in
accordance with Schedule D to this Product Attachment.
<PAGE>
<PAGE>
NORTHERN TELECOM INC. PHONETIME, INC.
By:/s/ Vickie Johe By: /s/ Douglas Barley
----------------------- ----------------------------
(Signature) (Signature)
Name: V.P. and General Manager Name: Douglas Barley
-------------------------- -------------------------
(Print) (Print)
Title: Title: CFO and Secretary
------------------------- --------------------------
Date: 14 July 97 Date: 7-3-97
-------------------------- --------------------------<PAGE>
<PAGE>
SCHEDULE A
I. INITIAL SYSTEM DMS-250
(DMS-250 SWITCHING SYSTEM)
NORTEL SHALL ENGINEER THE DMS-250 INITIAL SYSTEM PROVIDED HEREUNDER IN
ACCORDANCE WITH NORTEL'S STANDARD ENGINEERING PRACTICES AND PROCEDURES. AFTER
NORTEL HAS ENGINEERED EACH DMS-250 INITIAL SYSTEM ORDERED BY BUYER HEREUNDER,
NORTEL SHALL PROVIDE BUYER WITH A DETAILED LIST OF THE COMPONENTS OF SUCH DMS-
250 INITIAL SYSTEM.
1.0 DMS-250 Initial System (28,800 Port Model)
1.1 DMS-250 Initial System Includes:
A DMS-250 Initial System (28,800 Port Model) shall consist of the
following configuration of Equipment and Software:
a) SuperNode front end, Enhanced Network (dual cabinet) and
other common Equipment as follows:
- One (1) SuperNode equipped with BRISC70 processor, four
(4) 96 megabyte memory circuit packs ("96 MB Memory
Packs") per plane and SLM III.
- One Link Peripheral Processor equipped with eight (8) LIU7
links and two (2) Ethernet Interface Units and wired for
thirty six (36) Interface Units (IUs).
- One Dual Frame Enhanced Network to support 28,800 equipped
and wired ports.
- Thirty (30) DTEI frames equipped and wired with 28,800
bunking ports. All 28,800 bunking ports are engineered to
provide SS7 functionality. There are no ports engineered
for PRI. Twenty eight thousand eight hundred (28,800)
ports are equipped with Continuity Tone Detectors for SS7
and STRs providing for reorigination.
- Two (2) Integrated Services Module (ISME) frames equipped
with DMS-250 service and test circuits providing DMS-250
functionality, as well as two (2) Enhanced Digital
Recorded Announcement Machine circuit packs each providing
a maximum of four minutes of recordable announcement time.
- Two (2) Input Output Equipment (JOE) frames equipped with:
- One (1) Mag Tape Device
- Two (2) SCSI Disk Drive Units
- Two (2) IOC Shelves
- Four (4) I/O Controllers providing sixteen (16) switch
interface ports
- Four(4) EMPC circuit packs
- Two (2) MIS frames equipped with required invertors and
terminal block assemblies.
- One (1) Meridian Cabinet Spare Storage (MCSS) cabinet to
house switch spares.
- Three (3) Power Distribution Center (PDC) frames equipped
with "A" and "B" feed fuse panels & fuses as required.
<PAGE>
<PAGE>
SCHEDULE A
I. INITIAL SYSTEM DMS-250
(DMS-250 SWITCHING SYSTEM)
1.1 DMS-250 INITIAL SYSTEM INCLUDES (CONT.)
- Miscellaneous Switch Room Equipment as follows:
- One (1) Maintenance Administration Position & one (1)
set MAP Furniture
- Two (2) UDS 2440 Modems
- Two (2) RTIF Terminals
- One (1) MAP Printer
- One (1) Helmsman Workstation and CD-ROM documentation
disk
- One (1) Helmsman LaserJet Printer
- One (1) Norstar Key System
- DSX and Relay Rack equipment to support a 28,800 port DMS-
50 Initial System as described above.
b) DMS-250 Standard Features as set forth in Section V of this
Schedule A.
c) Nortel's standard compliment of DMS-250 switch spares.
d) Power Plant Equipment as follows:
- Power plant sized for an ultimate capacity of 2200A and
an initial load of 1000A.
- Six MPR200 Rectifiers are provided (n+1).
- GNB Absolyte IIP Batteries providing a two (2) hour
battery backup.
- Main Control and Distribution Bay.
- Required fuse panels to support an initial load of 1000A.
- Cable rack and grounding required to support power plant.
1.2 DMS-250 Initial System (28,800 Port Model) Pricing
The price for the above DMS-250 Initial System (28,800 Port Model),
based on Buyer purchasing * in switching Product over a twenty four month
period, shall be *.
In the event Buyer purchases DMS-250 Product, as described in this
Schedule A, for a price less than * but at least *, the price for the above
DMS-250 Initial System (28,800 Port Model) shall be *.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.
<PAGE>
<PAGE>
In the event Buyer purchases DMS-250 Product, as described in this
Schedule A, for a price less than * but at least *, the price for the above
DMS-250 Initial System (28,800 Port Model) shall be *.
In the event Buyer purchases DMS-250 Product, as described in this
Schedule A, for a price less than *, the price for the above DMS-250 Initial
System (28,800 Port Model) shall be *.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.
<PAGE>
<PAGE>
2.0 DMS-250 Initial System (49,920 Port Model)
2.1 DMS-250 Initial System Includes:
A DMS-250 Initial System (49,920 Port Model) shall consist of the
following configuration of Equipment and Software:
a) SuperNode front end, Enhanced Network (dual cabinet) and
other common Equipment as follows:
- One (1) SuperNode equipped with BRISC70 processor, four (4)
96 megabyte memory circuit packs ("96 MB Memory Packs") per
plane and SLM III.
- One Link Peripheral Processor equipped with eight (8) LIU7
links and two (2) Ethernet Interface Units and wired for
thirty six (36) Interface Units (IUs).
- One Dual Frame Enhanced Network to support 49,920 equipped
and wired ports.
- Fifty two (52) DTEI frames equipped and wired with 49,920
bunking ports. All 49,920 bunking ports are engineered to
provide SS7 functionality. There are no ports engineered
for PRI. Forty Nine Thousand Nine Hundred Twenty (49,920)
ports are equipped with Continuity Tone Detectors for SS7
and STRs providing for reorigination.
- Two (2) Integrated Services Module (ISME) frames equipped
with DMS-250 service and test circuits providing DMS-250
functionality, as well as two (2) Enhanced Digital Recorded
Announcement Machine circuit packs each providing a maximum
of four minutes of recordable announcement time.
- Two (2) Input Output Equipment (JOE) frames equipped with:
- One (1) Mag Tape Device
- Two (2) SCSI Disk Drive Units
- Two (2) IOC Shelves
- Four (4) I/O Controllers providing sixteen (16) switch
interface ports
- Four (4) EMPC circuit packs
- Two (2) MIS frames equipped with required invertors and
terminal block assemblies.
- One (1) Meridian Cabinet Spare Storage (MCSS) cabinet to
house switch spares.
- Four (4) Power Distribution Center (PDC) frames equipped
with "A" and "B" feed fuse panels & fuses as required.
- Miscellaneous Switch Room Equipment as follows:
- One (1) Maintenance Administration Position & One
set MAP Furniture
- Two (2) UDS 2440 Modems
- Two (2) RTIF Terminals
- One (1) MAP Printer
- One (1) Helmsman Workstation and CD-ROM documenta-
tion disk
- One (1) Helmsman LaserJet Printer
- One (1) Norstar Key System
<PAGE>
<PAGE>
- DSX and Relay Rack equipment to support a 49,920
port DMS-250 Initial System as described above.
b) DMS-250 Standard features as set forth in Section V of this
Schedule A.
c) Nortel's standard compliment of DMS-250 switch spares.
d) Power Plant Equipment as follows.
- Power plant sized for an ultimate capacity of 2200A and
an initial load of 1000A.
- Six MPR200 Rectifiers are provided (n+1).
- GNB Absolyte IIP Batteries providing a two (2) hour
battery backup.
- Main Control and Distribution Bay.
- Required fuse panels to support an initial load of
1000A.
- Cable rack and grounding required to support power plant.
2.2 DMS-250 Initial System (49,920 Port Model) Pricing
The price for the above DMS-250 Initial System (49,920 Port Model),
based on Buyer purchasing * in switching Product over a twenty four month
period, shall be *.
In the event Buyer purchases DMS-250 Product, as described in this
Schedule A, for a price less than * but at least *, the price for the above
DMS-250 Initial System (49,920 Port Model) shall be *.
In the event Buyer purchases DMS-250 Product, as described in this
Schedule A, for a price less than * but at least *, the price for the above
DMS-250 Initial System (49,920 Port Model) shall be *.
In the event Buyer purchases DMS-250 Product, as described in this
Schedule A, for a price less than *, the price for the above DMS-250 Initial
System (49,920 Port Model) shall be *.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
SCHEDULE A
II. LINK PERIPHERAL PROCESSOR EXTENSION
(DMS-250 SWITCHING SYSTEM)
1.0 Link Peripheral Processor (LPP)
Link Peripheral Processor Extensions to a DMS-250 Initial System shall
include the following and shall be priced as set forth below:
1.1 Link Peripheral Processor Extensions
The price for a Link Peripheral Processor (LPP) hardware extension
to an existing DMS-250 Initial System (either equipped with LPP hardware or
not equipped with LPP hardware) is * for the first thirty-six (36) wired and
four (4) equipped links ordered.
The LPP Extension price for the above defined configuration includes
the following:
a) Link Peripheral Processor hardware including LIU7s and/or EIU
circuit packs;
b) Any required MS expansions;
c) V.35 or DS-0A interface equipment to support wired
configurations; and
d) Sparing of unique circuit packs, if any, per standard Nortel
engineering sparing guidelines.
1.2 Link Interface Unit (LIU) "Add-On" Price
In the event Buyer desires to order additional Link Interface Units
("Add-on LIUs") to the DMS-250 Initial System, at the time of the placement of
Buyer's Initial Order, such Add-on LIUs shall be purchased by Buyer in minimum
increments of one (1) LIU per DMS-250 initial System at a price of * per LIU.
The "Add-on" LIU price includes engineering, installation and Equipment
defined in Section 1.1 above.
1.3 Link Interface Unit (LIU) Extension Price
In the event Buyer desires to order additional Link Interface Units
("Extension LIUs") to the DMS-250 Initial System, after the initial Order,
such extension LIUs shall be purchased by Buyer in minimum increments of one
(1) LIU per DMS-250 Initial System at a price of * per LIU. The Extension LIU
price includes engineering and Equipment defined in Section 1.1 above.
1.4 Ethernet Interface Unit (EIU) "Add-On" Price
In the event Buyer desires to order additional Ethernet Interface
Units ("Add-on EIU") to the DMS-250 Initial System, at the time of the
placement of Buyer's Initial Order, such Add-on EIUs shall be purchased by
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
Buyer in minimum increments of one (1) EIU per DMS250 Initial System at a
price of * per EIU. The "Add-on" EIU price includes engineering, installation
and Equipment defined in Section 1.1 above.
1.5 Ethernet Interface Unit (EIU) Extension Price
In the event Buyer desires to order additional Ethernet Interface
Units ("Extension EIUs") to the DMS-250 Initial System, after the initial
Order, such extension EIUs shall be purchased by Buyer in minimum increments
of one (1) EIU per DMS-250 Initial System at a price of * per EIU. The
Extension EIU price includes engineering and Equipment defined in Section 1.1
above.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
SCHEDULE A
III. EXTENSION AND "ADD-ON" PORTS
(DMS-250 SWITCHING SYSTEM)
1.0 DTEI PORT EXTENSIONS
1.1 Equipping of Wired Only Ports
As used in this Product Attachment, equipping of wired only ports
in minimum increments of nine hundred sixty ports (960) and applies only to
the unequipped ports that are part of the wired configuration of the DMS-250
Initial System ordered by Buyer, as defined in Part I, Sections 1.1 and 2.1 of
this Schedule A and each nine hundred sixty (960) port increment includes the
following:
a) Twenty (20) DS1 NT6X50AB circuit packs which Nortel
determines to be required in accordance with Nortel's engineering rules for
the DTEI Port Extension, based on Buyer's Order;
1.2 Equipping Wired Only Port Extension Pricing
The price to equip each of the nine hundred sixty (960) wired only
port increments, shall be * or * per port. This pricing applies only to
unequipped wired only ports that are part of a DMS-250 Initial System as
described in Part I, Section 1.1 and 2.1 of this Schedule A, and must not
contain less than 28,800 equipped and wired DTEI ports.
2.0 Fully Wired and Fully Equipped DTEI Port Extensions
2.1 DTEI Port Extension Fully Wired and Fully Equipped
All prices for DTEI Port Extensions include the following, and are
sold in minimum increments of nine hundred, sixty (960) ports, configured for
SS7/PTS or ISDN signaling at Buyer's request:
a) DTEI hardware and XPM+;
b) Either UTR, STR, CTD for DTCs configured for SS7 or PTS
capability, or UTR and ISDN pre-processor circuit packs configured for ISDN
PRI capability;
c) Any required ENET extension;
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
d) Any required service/test circuits;
e) Any required Power Distribution Center (PDC) Equipment;
f) Optional DTEI Equipment as outlined in Section 2.2 below at
defined pricing levels; and
g) Spare circuit packs, if required, based on Nortel's standard
engineering sparing guidelines.
2.2 DTEI Optional Equipment
2.2.1 Dialable Wideband
Nortel shall provide two (2) NTAX78AA circuit packs per DTC instead
of the standard time switch circuit packs on new DTEI Port Extensions for an
incremental price of * per DTC or * per DTEI frame.
2.2.2 Echo Cancellation
The incremental price to upgrade to the NT6X50EC circuit pack on new
NT6X50AB circuit packs shall be * per port sold in forty eight (48) port
increments or * each in addition to the price for the NT6X50AB circuit pack as
defined in Section 2.3 below.
2.3 DTEI Port Extension Prices
Trunk Type Extension Price
---------- --------------
SS7 Trunking Port */port
PRI Local/Long Distance Trunking Port */port
2.4 Add-On Port Prices
In the event Buyer desires to order additional ports ("Add-on
Ports") to the DMS-250 Initial System, at the time of the placement of Buyer's
Initial Order, such Add-on Ports shall be purchased by Buyer in minimum
increments of nine hundred sixty (960) "Add-on Ports" per DMS-250 Initial
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
System. The below listed "Add-on" port price includes engineering,
installation and Equipment defined in Section 2.1 above. In the event Buyer
purchases "Add-on Ports" in increments of less than 960 Add-on Ports per DMS-
250 Initial System, pricing for such Add-on Ports shall be at Nortel's then
current prices:
Trunk Type "Add-On" Price
----------- -------------
SS7 Trunking Port */port
PRI Local/Long Distance Trunking Port */port
2.5 Extension of Add-On Port Prices
In the event Buyer desires to order additional ports ("Add-on
Ports") to an DMS-250 Initial System, in minimum increments of ten thousand
five hundred sixty (10,560) "Add-on Ports" per DMS-250 Initial System, during
the first twelve months after execution of this Product Attachment, Nortel
shall extend to Buyer the "Add-On" Port Pricing set forth in 2.4 above. The
"Add-on" port price includes engineering and installation and the equipment
defined in 2.1 above. In the event Buyer purchases "Add-on Ports" in
increments of less than 10,560 Add-on Ports per DMS-250 Initial System, or
such ports are purchased after the twelve month period has elapsed, pricing
for such ports shall be as set forth in Section 2.3 "DTEI Port Extension
Prices" above.
2.6 Wired Only Add-On Port Prices
As used in this Product Attachment, wired only ports in minimum
increments of four hundred eighty (480) equipped ports and four hundred eighty
wired only ports (480), and shall be defined as the addition of the equipment
listed below to an Initial System of no less than twenty eight thousand eight
hundred (28,800) equipped and wired ports as set forth in Part I, Sections 1.1
and 2.1 of this Schedule A. Wired Only Add On Ports shall be purchased by
Buyer in not less than a total of nine hundred sixty (960) equipped/wired port
increments, and a minimum of fifty percent (50 percent) of the total wired
capacity ordered by Buyer must be equipped with NT6X50AB (DS1 Circuit Packs).
Such Wired Only "Add-On" Port Extension includes the following:
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
a) DTEI hardware and XPM+;
b) The number of DS1 NT6X50AB circuit packs which Nortel
determines to be required such that fifty percent (50 percent) of the total
wired capacity is equipped;
c) Either UTR, STR, CTD for DTCs configured for SS7 or PTS
capability, or UTR and ISDN pre-processor circuit packs configured for ISDN
PRI capability;
d) Any required ENET extension;
e) Any required service/test circuits;
f ) Any required Power Distribution Center (PDC) Equipment;
g) Optional DTEI Equipment as outlined in Section 2.2 below at
defined pricing levels; and
h) Spare circuit packs, if required, based on Nortel's standard
engineering sparing guidelines.
The price for a "Wired Only Add-On" port, shall be * per port, and
shall conform to the minimum increment requirements set forth in Section 2.6
above.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
SCHEDULE A
IV. EXISTING DMS-250 UPGRADES
(DMS-250 SWITCHING SYSTEM)
1.0 DMS-250 System Upgrades
1.1 DMS-250 System Upgrades
As used in this Product Attachment, System Upgrades shall
consist of the equipment described below, and shall be provided by Nortel at
no additional charge to Buyer for their existing DMS-250 System located in
Piscataway, New Jersey, based on Buyer's Commitment to purchase and take
delivery of * of DMS-250 Product as set forth in this Schedule A. In the
event Buyer does not purchase and take delivery of * of DMS-250 Product during
the term of this Product and Pricing Attachment, Nortel shall invoice Buyer
for the system upgrade Equipment listed below at a mutually agreed to price.
a) DTEI DS-512 Link Control Circuit Packs for twelve (12) DTCs
(NT6X40FA and NT6X40GA);
b) Twenty-two (22) DTEI XPM+ Upgrade Circuit Packs as required
for the existing DMS250 switching system to be engineered per Nortel standard
engineering guidelines;
c) Enhanced Network Single Frame cabinet equipped to support the
existing five thousand seven hundred sixty (5760) port DMS250 switching
system;
d) Any required MS equipment required per Nortel standard
engineering guidelines required to support the DMS-250 system upgrades set
forth in this Section 1.1;
e) Eight (8) 96mb Memory circuit packs and one spare;
f) Two (2) BRISC60 CPU circuit packs and one spare;
g) Two (2) Ethernet Interface units;
h) Seven (7) NTEX22BB IPF Integrated Processor & FBUS circuit
packs;
i) Two (2) NT1X55FA SCSI Disk Drive Controller circuit packs;
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
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j) UCS05 Base and Optional Software as set forth in Section V of
this Schedule A; and
k) Spare circuit packs, if required, based on Nortel's standard
engineering sparing guidelines.<PAGE>
<PAGE>
SCHEDULE A
V. DMS-250 STANDARD SOFTWARE
(DMS-250 SWITCHING SYSTEM)
1.0 DMS-250 STANDARD FEATURES
1.1 DMS-250 BASE AND OPTIONAL SOFTWARE INCLUDED IN THE INITIAL
SYSTEM
The following represents the DMS-250 UCS05 base and optional Software
packages that are included in the price of the DMS-250 Initial Systems ("DMS-
250 Standard Features") as described in Part I, Sections 1.1 and 2.1 of this
Schedule A. The following is a list of Software only included in the Schedule
A-DMS-250 Initial System. This list does not include any/all required
Equipment to provide feature functionality.
1.1.1 Nortel may deliver Software ordered hereunder in a single
Software load which may include Software which Buyer has not yet licensed
("Non-licensed Software"). Except as set forth in Section 1.1.2 below, Buyer
shall not be entitled to use such Non-licensed Software, until such time as
the applicable right to use fees are paid by Buyer pursuant to Section 1.1.5.
1.1.2 For the purpose of gathering market trial information and
prior to payment of any applicable right-to-use fees, certain Non-licensed
Software may be placed in service by Buyer on a limited, non-revenue-generating,
trial basis only ("Feature Trial"). Buyer may request the right
to evaluate such Non-licensed Software for a maximum period of six (6) months
commencing as of the date of Nortel's written consent to such Feature Trial.
Nortel shall respond to Buyer's request as described above in writing. Within
ten (10) business days following expiration of the agreed to Feature Trial
period, Buyer shall notify Nortel in writing of its plans for activation or
deactivation of such Non-licensed Software, and the corresponding number of
units activated, if applicable.
1.1.3 Upon Buyer's placement of any Non-licensed Software in-
service, Buyer shall pay the applicable right-to-use fees for such Non-licensed
Software pursuant to this Agreement, except as described in Section
1.1.2. Buyer shall also have the option to pay the applicable right-to-use
fees for any Non-licensed Software upon installation of a Software load
containing such Non-licensed Software. For any Non-licensed Software that is
installed and added pursuant to a product computing module load ("PCL") and or
non-computing module load ("NCL"), if any, the right-to-use fees shall be the
list price for such feature in effect as of the date of activation.
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1.1.4 To ensure Buyer's proper activation and/or usage of the
appropriate Software, Buyer shall properly notify Nortel at the address
specified in the Agreement to the attention of Account Executive, prior to the
activation and/or usage by Buyer of any Software. Buyer shall identify all
Software being activated and/or used (including the number of units activated,
if applicable) in each Initial System .
1.1.5 Nortel shall promptly review notification from Buyer
provided pursuant to Section 1.4 above and identify any applicable
prerequisite Equipment or Software required by Buyer prior to activation
and/or usage of the applicable Software. Nortel shall respond to Buyer's
written notice by means of a price quotation. Such price quotation shall
include Nortel's consent to activate and/or use such Software or notification
that such Software requires engineering to determine whether the current
switch configuration will require additional Equipment prior to activation
and/or usage. Upon Buyer's written acceptance of Nortel's price quotation,
Nortel shall grant its consent to Buyer to activate and/or use such Software
prior to payment of the applicable right-to-use fees. However, under no
circumstances shall such Software be activated and/or used by Buyer prior to
Buyer's acceptance of Nortel's price quotation. Nortel shall invoice Buyer
for all applicable right to use fees and associated feature activation
engineering charges. One hundred percent (100 percent) of such invoiced right
to use fees and engineering charges shall be due and payable within thirty
(30) days of the date of Nortel's invoice therefor.
1.1.6 Nortel reserves the right, every six (6) months to submit
a written report for each site containing a Software load. The written report
shall identify all Software activated and/or used (including the number of
incremental units activated, if applicable) by Buyer during the applicable
reporting period. Buyer shall audit the report against Purchase Order(s) which
have been submitted by Buyer and accepted by Nortel during the applicable
period to determine the existence of any discrepancies. Buyer shall submit
such audited written report to Nortel at the address specified in Section 9 of
this Product Attachment to the attention of Director, Sales Engineering,
within thirty (30) days from receipt of such request.
1.1.7 Nortel also reserves the right to access by remote polling
or to conduct an on-site inspection of any site in which a Software load is
installed and/or to perform an onsite review of Buyer's books and records
related to such site to verify activation and/or usage of Software.
1.1.8 Nortel shall issue invoices, for any applicable prices,
charges or fees, in addition to those amounts previously invoiced, as a result
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of Buyer's activation and/or usage of any Software that does not appear on
Nortel's written report or that appear as a result of Nortel's remote polling
of an Initial Systems.
1.1.9 Upon payment of the applicable right to use fees for
Software activated and/or used by Buyer, Buyer shall receive a non-exclusive
paid-up license to use such Software in accordance with the provisions of this
Agreement. Nortel may immediately terminate the applicable license granted
hereunder for Buyer's failure to pay the applicable right to use fees for such
Software which has been activated and/or used.
1.1.10 The obligations of Buyer under this Section 1 shall
without limitation survive the termination of this Agreement and shall
continue if the Software is removed from service. Buyer agrees to indemnify
Nortel or Third Party Software Vendors as appropriate for any loss or damage
resulting from a breach of this Section 1.
Feature/
Master Pkg S/W Package Description
- ----------- ------------- ------------------------
UCS00005 UCS Tandem Services Base PCL
Enhanced Security-without Password Encryption
DMS-250 Universal Master Package (WCS)
Bilge
Common Basic
Synchronization
Automatic Trunk Testing
Maintenance Assistance Package
Trunk Test Position (TTP)
TTP Digit Verification
TTP Transmission Measurement
Enhanced Administration
Network Management
Network Management - Enhanced
International Direct Distance Dialing (IDDD)
Disk Data Storage Storage System
Traffic Separation Peg Count
Traffic Separation Usage
Traffic Separation Report
Operational Measurements Enhancements I
OM Call Attempts Summary
Automatic Transmission Measuring System
DMS-250 Operational Measurements on Tape<PAGE>
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1.1 DMS-250 BASE AND OPTIONAL SOFTWARE (CONT.)
Feature/
Master Pkg S/W Package Description
- ----------- ------------- ------------------------
UCS00005 UCS Tandem Services Base PCL
DMS-250 104 Testlines
DMS-250 Base Package (Type II)
DMS-250 Call Detail Recording (Type II) Billing
DMS-250 Call Processing (Type II)
DMS-250 Time Of Day Routing
DMS-250 DCM Channel Unit Cross Reference
DMS-250 Speed Numbers (Public/Private)
DMS-250 Incoming Exclusion
DMS-250 Authcodes (Type II)
DMS-250 Restricted Usage By Date and Time
DMS-250 Alternate Trunk Group Treatments
DMS-250 Translation Verification
Enhanced Sequential Trunk Hunting
UCS Tandem Services Base PCL
Universal Tone Receivers
New Peripheral Maintenance Package
Enhanced Real Time Indicator
DMS-250 Universal Master Package (WCS)
DMS-250 Generic Offnet Access Trunks (FG-B)
DMS-250 Equal Access Base Package (FG-D)
DMS-250 Equal Access (Type II) - ANI Scrn
DMS Base Data Communication Software
DMS-250 Automatic Trunk Routining
Operational Measurement Selective Output
Switch Performance Monitoring System (SPMS)
Toll Features I
New Peripherals Performance Measurements
Transmission Measurements
Patch Administration & Downloading via X.25
DMS-250 UCS Outgoing FG-D Enhancements
DMS-250 Integrated Echo Canceller
Maintenance Managers Report
DMS-250 UCS Dialing Plan Enhancements
DMS-250 Roaming PINs
DMS-250 XPM+ for DTC7/DTC1
XPM Plus Basic
Firmware Downloading
DMS-250 Safe Store TAP (X.25 Applications)<PAGE>
<PAGE>
1.1 DMS-250 BASE AND OPTIONAL SOFTWARE (CONT.)
Feature/
Master Pkg S/W Package Description
- ----------- ------------- ------------------------
UCS00005 UCS Tandem Services Base PCL
UCS Tandem Services Base
Service Analysis
DS-1 64 KBPS Clear
DS-1 ESF
CCS7 Trunk Signaling
DMS-250 ATB by NPA Using Operational Meas.
DMS-250 ATB by NPA Using Logs
DMS-250 Off Hook Queuing
DMS-250 Nailed Up Connections
DMS-250 Adaptive Routing
DMS-250 Intra Lata Intra State Screening
DMS-250 CCS7 IMTS
DMS-250 Multiple Authcode Sets
Random Conditional Routing
CCS7 Transaction Service Support
LPP V.35 Subrate Links
LPP Enhanced Maintenance and Bert
LIU7 Gateway Message Screening
Bit Error Ratio Indicator for Toll Switches
Inter Office Trunk Bit Error Rate
Switch Pat Diagnostics MS Base Link Maintenance
UCS Tandem Services Base Cont.
Enhanced Network Basic (ENET)
CCS7 Preventative Cyclical Retransmission
MPC X.25 Interface
High Speed MPC
Ethernet Interface Unit
TCP/IP Protocols
LMS on LPP
SuperNode Enhanced Messaging
DMS-250 CNS CCITT 1984 X.25 Datacom
DMS Base Data Access Interface Session
DMS-250 Safe Store Tap
DMS-250 SS7 FG-D
DMS-250 Enhanced COS Screening
DMS-250 Trunk Group and CLLI name analysis
DMS-250 Paystation Pretranslator
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1.1 DMS-250 BASE AND OPTIONAL SOFTWARE (CONT.)
FEATURE/
MASTER PKG S/W PACKAGE DESCRIPTION
- ----------- ------------- ------------------------
UCS00005 UCS TANDEM SERVICES BASE PCL
DMS-250 SS7 IMT Terminations to DTU
DMS-250 Direct Termination Service
DMS-250 UCS SS7 UCP (Base ISUP)
LIU7 Gateway Verification Tools
CCS7 Test Tools
SLM File System
Mandatory Parallel AMA
DMS-250 UCS Account Code Screening Enh.
DMS-250 UCS to USP ISUP Interworking
DMS-250 UCS SS7 Intra/Inter Networking
DMS-250 UCS X.25 Transport
DMS-250 UCS PRA
DMS-250 UCS to MCI ISUP Interworking
DMS-250 UCS to FGD ISUP Interworking
DMS-250 UCS International Partitioning
DMS-250 Lower Layer Compatibility
Enhanced Dram
FBUS LIU Base
LIU7 for LPP Based CCS7 Applications
XPM Broadcast Patching
LIS Common
Network Module Software
Enet Switch Path Diagnostics
Dirp Parallel Storage Size Increase
MS SR512 Lis Controller
CM Base for OPC
CCS7 MTP/SCCP for LPP
File Transfer Protocol
Extended XPM Diagnostics
UCS Tandem Services Base Cont.
DMS-250 UCS X.25 Data Transport
Enhancements
UCS Enhanced Dialing Plan Phase II
Enhanced PANI on UCS
Disallow Reorigination on KANT FG-D Trunks
SuperNode Series 70 Processor
ENET 16K Channels
Long Call Duration/No Answer Disconnect<PAGE>
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DMS-250 BASE
BAS00003 Base Generic
BAS00001 Base COOK
BAS00002 Base ANI
BAS00004 Base OA&M
BAS00007 Base Logs
BASE0001 Base 0001
BASE0009 Base SN Series 70 Processor
TEL00001 Telecom Layer
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SCHEDULE A
VI. DMS-250 OPTIONAL SOFTWARE
(DMS-250 SWITCHING SYSTEM)
1.0 DMS-250 OPTIONAL SOFTWARE
The following represents the DMS-250 UCS05 optional Software packages
that are not included in the price of the DMS-250 Initial System as defined in
Part I, Sections 1.1 and 2.1. of this Schedule A ("DMS-250 Optional
Features"). The following Software represents those master/feature packages
that may be ordered by Buyer at an additional price for a DMS-250 Initial
System or with a DMS-250 Software Upgrade.
DMS-250 UCS05 Optional Software
(DMS-250)
Feature/
Master Pkg S/W Package Description List Price
- ---------- ----------- ----------- ----------
NOOR00001 NOO ROUTING *
N00 Routing
Info Digit 24 Functionality
NOOR00002 0NOO/NXX TCAP Services *
TCAP Based NOO Routing
TCAP Based NXX Dialing Plan
Auto Code Gapping
NOO TCAP Route Advance
NSER0001 Network Services
ANI Deliver on DALTIE
STS/Netinfo Mapping *
NPRI0001 Network Interfaces PRI
PRI D-Channel Backup
Access Transport *
UDWS0001 UCS DWS
DWS FG-D ISUP
DWS IMP ISUP
DWS PRI *
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
Feature/
Master Pkg S/W Package Description List Price
- ---------- ----------- ----------- ----------
CRDS0001 Card Services *
Calling Card
Enhanced Calling Card
TCN Log Enhancements
MCCS Dedicated
CRDS0002 TCAP Based Card Services *
CI Command TESTSS
TCAP Based TCN
CRDS0003 MCCS MVP Card Services *
MCCS Mechanized Voice Prompts
UTRS0001 Routing *
Carrier ID Code Routing
NSER0002 TCAP Based Authcode and
Account Code Validation *
TCAP Based Account Code and
Private Speed Validation
TCAP Based Authorization Code
Validation
NSER0003 Inter/Intra IMT Support *
Inter/Intra IMT Support
CAIN0200 Carrier AIN Extension Parameters *
Carrier AIN Extension Parms.
CAIN0300 Carrier AIN SCP Simulator *
Carrier AIN SCP Simulator
CAIN0400 Carrier AIN Test Query *
Carrier AIN Test Query
CAIN0500 Carrier AIN Customized *
Dialing Plan Trigger
Carrier AIN Customized
Dialing Plan Trigger
CAIN0501 Carrier AIN Specific Digit Trigger *
Carrier AIN Specific Digit Trigger
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
SCHEDULE B
SERVICES AND CHARGES
ENGINEERING
1. Nortel shall engineer each System furnished hereunder in accordance
with Nortel's engineering practices applicable to such Initial System at the
time such engineering is performed.
2. Nortel's charges for engineering each Initial System are included in
the prices and fees for the Initial System set forth in Schedule A.
3. The provision of any other engineering by Nortel and the charges
associated therewith shall be as subsequently agreed in writing by Nortel and
Buyer.
INSTALLATION
1. Nortel shall install each Initial System furnished hereunder at the
applicable Installation Site in accordance with Nortel's installation
practices applicable to such Initial System at the time such installation is
performed.
2. Nortel's charges for performance of such installation are included in
the prices and fees for the Initial System set forth in Schedule A.
3. The provision of any other installation by Nortel and the charges
associated therewith shall be as subsequently agreed in writing by Nortel and
Buyer.
TRAINING
1. With each Initial System furnished hereunder, Nortel shall provide to
Buyer at no additional charge one hundred (100) days of training at Nortel's
Training Center currently located in Raleigh, North Carolina. Such training
shall be in any of the courses scheduled to be provided at that Training
Center as set forth in NTI's applicable Technical Training Course catalog with
respect to the Products described in Schedule A to this Product Attachment.
2. Buyer shall be responsible for the payment of all travel and living
expenses of its employees whom Buyer sends to receive such training.
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3. Additional Training in such courses shall be provided by Nortel to
Buyer subject to availability and scheduling of such courses. NTI may change
the schedule of such courses at any time. Such additional training shall be
provided at NTI's then-current charges.
4. All training provided by NTI shall consist of such materials and cover
such subject as NTI in its sole discretion determines to be appropriate.
Nortel makes no representation concerning the ability of anyone to
satisfactorily complete any training.
5. Nortel may add to, or delete from, the subject matter and or medium of
any of the training courses which NTI provides. In addition, NTI may
reschedule such courses as NTI determines to be appropriate.
6. The availability of any training to Buyer as set forth above shall be
subject to any prerequisites identified by NTI in its training catalog or
other documentation with respect to such training.
CUTOVER SUPPORT
1. Nortel shall provide to Buyer, at the applicable Installation Sites, a
Cutover Specialist whom shall provide a total of two hundred forty (240) hours
of cutover support and hands-on DMS-250 switch support in accordance with
Nortel's cutover practices applicable to such Initial Systems at the time such
cutover support is performed.
2. The cutover support shall include, but not be limited to, hands-on
operation of the DMS-250 Initial System and an explanation by the Cutover
Specialist to Buyer's operations staff of the DMS-250 Initial System setup.
3. Buyer shall receive the cutover support free of charge if Buyer
completes the Commitment. In the event that Buyer does not successfully
complete the Commitment, Nortel shall invoice and Buyer shall pay the purchase
price of * in full, thirty (30) days from the date of invoice.
4. The provision of any other cutover support by Nortel and the charges
associated therewith shall be as subsequently agreed in writing by Nortel and
Buyer.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.
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ADDITIONAL SERVICES
1. All other services to be furnished hereunder shall be subject to
written agreement of the parties which shall set forth the terms and
conditions applicable to the provision of such services and a description of
such services and the charges for such services.
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SCHEDULE C
DELIVERY
INTENTIONALLY LEFT BLANK
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SCHEDULE D
DOCUMENTATION
Certain documentation with respect to the Products may be made available to
Buyer on CD-ROM pursuant to the terms and conditions set forth below.
In addition, Nortel may furnish to Buyer such other documentation with respect
to the Products as Nortel deems appropriate.
HELMSMAN TERMS AND CONDITIONS
1. DEFINITIONS
"CD-ROM" shall mean a compact disk with read-only memory.
"CD-ROM Software" shall mean the computer programs which provide basic logic,
operating instructions or user-related application instructions with respect
to the retrieval of CD-ROM Documentation, along with the documentation used to
describe, maintain and use such computer programs.
"CD-ROM Documentation" shall mean the documentation that Nortel makes
available to its customers on CD-ROM with respect to DMS-250, DMS-300, and/or
DMS-STP Systems.
2. SCOPE
With the delivery of each Initial System ordered by Buyer, Nortel shall
deliver a CD-ROM on which the appropriate CD-ROM Documentation is contained
and a user manual which shall set forth the procedures by which Buyer may use
the CD-ROM Software to access to the CD-ROM Documentation.
Buyer shall be solely responsible for obtaining, at its cost and expense, any
computer or other equipment and software required to use the CD-ROM, CD-ROM
Software and/or CD-ROM Documentation.
Buyer may order additional CD-ROMs from Nortel at Nortel's then current fees
therefor, and any such additional CD-ROMs shall be subject to these terms and
conditions.
3. LICENSE
Upon delivery of the CD-ROM, Nortel shall grant to Buyer a non-exclusive, non-
transferable and non-assignable license, subject to these terms and
conditions:
(a) to use CD-ROM Software solely to access to the CD-ROM Documentation;
and<PAGE>
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(b) to use the CD-ROM Documentation solely to operate and maintain the
Initial System with which it was delivered.
Buyer acknowledges that, as between Nortel and Buyer, Nortel retains title to
and all other rights and interest in the CD-ROM Software and CD-ROM
Documentation. Buyer shall not modify, translate or copy the CD-ROM Software
or CD-ROM Documentation without Nortel's prior written consent. Buyer shall
hold secret and not disclose to any person, except Buyer's employees with a
need to know, any of the CD-ROM Software or CD-ROM Documentation.
Buyer shall not sell, license, reproduce or otherwise convey or directly or
indirectly allow access to the CD-ROM Software or CD-ROM Documentation to any
other person, firm, corporation or other entity.
Except to the extent expressly set forth in this Schedule D, Nortel shall have
no obligations of any nature whatsoever with respect to the CD-ROM Software or
the CD-ROM Documentation.
4. DISCLAIMER OF WARRANTY AND LIABILITY
NORTEL MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY NATURE WHATSOEVER WITH
RESPECT TO THE CD-ROM, CD-ROM SOFTWARE, CD-ROM DOCUMENTATION OR ANY
INFORMATION CONTAINED ON ANY OF THE FOREGOING OR ANY RESULTS OR CONCLUSIONS
REACHED BY BUYER AS A RESULT OF ACCESS TO OR USE THEREOF, OR WITH RESPECT TO
ANY OTHER MATTER OR SERVICE PROVIDED BY NORTEL, WHETHER STATUTORY, EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR AGAINST INFRINGEMENT. NORTEL SHALL NOT BE
LIABLE FOR ANY DIRECT, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES
OF ANY NATURE WHATSOEVER INCLUDING ANY SUCH DAMAGES WHICH MAY ARISE OUT OF THE
USE OF OR INABILITY TO USE OR ACCESS THE CD-ROM, THE CD-ROM SOFTWARE, THE CD-ROM
DOCUMENTATION, AND FURTHER INCLUDING LOSS OF USE, REVENUE, PROFITS OR
ANTICIPATED SAVINGS REGARDLESS OF HOW SUCH DAMAGES MAY HAVE BEEN CAUSED.
5. GENERAL
Nothing contained in this Schedule D shall limit, in any manner, Nortel's
right to change the CD-ROM Software or CD-ROM Documentation or the design or
characteristics of Nortel's Products at any time without notice and without
liability.
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SCHEDULE E
FORECAST
Buyer has made a Commitment to Order for delivery and installation, during the
Product Attachment Term, certain DMS-250 Initial Systems as described in
Schedule A, Part I, Sections 1.0 and 2.0. The forecasted cities for
Installation and the respective delivery dates of such DMS-250 Initial Systems
are as follows:
Site Approximate Date Initial System, port
Flushing, NY 2Q97 28,800
Jersey City, NJ 3Q97 49,920
Miami 4Q97 28,800
TBD 1Q98 28,800
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SERVICES AGREEMENT
Services Agreement ("Agreement")
by and between:
Northern Telecom Inc. ("Nortel")
2221 Lakeside Boulevard
Richardson, Texas 75092
and
Phonetime, Inc. ("Buyer")
30-60 Whitestone Expressway
Flushing, New York 11354
1. Services. Subject to the terms and conditions of this Agreement,
Nortel shall perform the services described in Exhibit A ("Services") at the
"Service Site" identified in Exhibit A.
2. Fees and Expenses. Buyer shall pay to Nortel the fees and expenses set
forth in the attached Exhibit A for the Services. Nortel shall invoice Buyer
for payment in accordance with the payment terms set forth in Exhibit A.
In addition to the fees for Services, Buyer shall reimburse Nortel for
reasonable travel and lodging expenses incurred in accordance with the payment
terms set forth in the attached Exhibit A.
Buyer also shall pay to Nortel the amount of any applicable sales, use or
service taxes which Nortel may be required to pay because of its performance
of this Agreement, except for any franchise tax or any tax imposed on Nortel's
net income. Nortel shall identify any such tax as a separate line item on
each invoice it submits to Buyer for the payment of fees.
3. Term. The term of this Agreement shall commence upon the latter date
of execution set forth hereinbelow and terminate upon July 14, 1999 ("Term").
The Services referenced in the attached Exhibit A shall commence and terminate
upon the dates set forth in the attached Exhibit A.
4. Warranties on Services. Nortel warrants that the Services shall be
performed in a good and workmanlike manner and to standards not less than
those generally accepted in the industry. Nortel shall promptly correct any
failure of the Services to conform to the above warranties provided it is
notified of such non-conformance within thirty (30) days following the
completion date of that the portion of the Services which are non-conforming.
5. REMEDIES AND DISCLAIMERS OF WARRANTIES. NORTEL MAKES NO WARRANTIES,
OTHER THAN THE WARRANTIES EXPRESSED IN SECTION 4, WITH RESPECT TO THE SERVICES
OR ANY OTHER MATTER COVERED BY THIS AGREEMENT, AND NO OTHER WARRANTIES,
STATUTORY, EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING, WITHOUT LIMITATION,
THE IMPLIED WARRANTY OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
SHALL APPLY TO THE SERVICES OR ANY OTHER MATTER COVERED BY THIS AGREEMENT. IN
NO EVENT SHALL NORTEL BE LIABLE FOR ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT OR
SPECIAL DAMAGES OF ANY NATURE WHATSOEVER FOR ANY BREACH OF WARRANTY OR ANY
OTHER MATTER ARISING OUT OF THIS AGREEMENT.<PAGE>
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6. Force Majeure. If any circumstance beyond Nortel's reasonable control
interferes with Nortel's performance of the Services, including, without
limitation, fire, explosion, power failure, acts of God, war, revolution,
civil commotion or acts of public enemies, any law, order, regulation,
ordinance or requirement of any government or legal body or representative of
any government or legal body, labor unrest, including, without limitation,
strikes, slowdowns, picketing or boycotts, then Nortel shall be excused from
its obligation to perform the Service on a day-for-day basis to the extent of
such interference.
7. Independent Contractor. Nortel shall perform the Services as an
independent contractor, and nothing contained in this Agreement shall be
construed to create or imply a joint venture, partnership, principal-agent or
employment relationship between the parties. Neither party shall take any
action or permit any action to be taken on its behalf which purports to be
done in the name of or on behalf of the other party.
Neither party, nor any of its respective employees or agents, shall, in
any sense, be considered employees or agents of the other, nor shall either
party, or its respective employees or agents, be eligible or entitled to any
benefits, perquisites or privileges given to or extended by the other to its
employees.
8. Indemnities. Each party shall indemnify and hold the other harmless
from any and all claims, suits, damages, liabilities and costs (including,
without limitation, reasonable attorneys' fees) which arise from the bodily
injury or death to persons or loss of or injury to tangible property resulting
from a negligent act or omission of the indemnifying party in connection with
the Services. A party seeking indemnity hereunder shall promptly notify the
other of any such claim or suit and shall cooperate with the other in the
defense thereof.
9. Subcontracts. Nortel may assign or subcontract any portion of its
obligations or the performance of the Services under this Agreement.
10. Publicity. Neither party shall promote or advertise in any manner the
fact that it has entered into this Agreement with the other, unless the other
grants written permission to do so.
11. Compliance with Rules. Nortel, when in or upon Buyer's premises,
shall obey all reasonable rules and regulations established by Buyer regarding
the conduct of contractors working on its premises, provided Buyer advises
Nortel in advance of such rules and regulations, and such rules and
regulations do not increase Nortel's costs or schedule for performing the
Services.
12. Hazardous Materials. Buyer shall identify and notify Nortel in
writing of the existence of all Hazardous Materials which Nortel may encounter
during the performance of the Services, including, without limitation, any
Hazardous Materials contained within any equipment to be removed by Nortel.
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Nortel may discontinue the performance of any Services which may be
affected by Hazardous Materials until such Hazardous Materials have been
removed or abated to Nortel's satisfaction by Buyer at Buyer's sole expense.
Buyer shall defend, indemnify and hold Nortel harmless from any and all
damages, claims, losses, liabilities and expenses, including, without
limitation, attorneys' fees, which arise out of Buyer's breach of such
obligations. Buyer's obligations shall survive the expiration or any
termination of this Agreement.
"Hazardous Materials" shall mean any pollutants or dangerous, toxic or
hazardous substances (including, without limitation, asbestos) as defined in,
or pursuant to, the OSHA Hazard Communication Standard (29 CFR Part 1910,
Subpart Z), the Resource Conservation and Recovery Act of 1976 (42 USC Section
6910, et seq.), the Toxic Substances Control Act (15 USC Section 2601, et
seq.), the Comprehensive Environmental Response Compensation and Liability Act
(42 USC Section 9601, et seq.), and any other federal, state or local
environmental law, ordinance, rule or regulation.
13. Default. If either party shall be in default of this Agreement and
such default shall continue for more than twenty (20) days after notice
thereof is given to the party in default, the party not in default shall be
entitled to terminate this Agreement. The failure to object to an act of
default shall not be deemed a waiver thereof. In no event shall Nortel be
liable for any incidental, consequential, indirect, or special damages of any
nature whatsoever for any breach of this Agreement, and in no event shall
Nortel's ability exceed the fees paid by Buyer for the Services.
14. Notices. All notices shall be sent to the addresses set forth above
or such other address as may be established by notice hereunder, and, shall be
effective upon receipt, as evidenced by a postal or courier receipt or
facsimile transmission confirmation. Such notices shall be directed to:
Buyer: Phonetime, Inc.
Attention: Mr. Douglas Barley, CFO
(718) 779-6571
Nortel: Northern Telecom, Inc.
Attention: Group Vice President, Carrier Networks
(972) 685-3284
15. Governing Law. This Agreement shall be governed by the laws of the
State of Texas, notwithstanding its rules regarding the conflict of laws.
16. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties with respect to the subject matter hereof and supersedes
all prior communications, written or oral, with respect hereto. This
AGREEMENT may only be amended or modified by a writing duly executed by both
parties which expressly references and amends this Agreement.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed
by its duly authorized representative.
Northern Telecom Inc. Phonetime, Inc.
("Nortel") ("Buyer")
By: By: /s/ Joseph Pannullo
Title: Title: COO
Date: Date: October 28, 1997
<PAGE>
<PAGE>
EXHIBIT A - SERVICES
The following Field (On-Site) Switch Maintenance and Support Services, Remote
Hybrid Maintenance Services, Data Base Management and/or Translation Support
Services and On-Site Project Management Services (collectively referred to
herein as "Services") will be performed by Nortel at Buyer's facilities
located at Flushing, New York (the "Service Site"). Buyer may order any
and/or all of the Services during the Term of this Agreement.
1.0 Field (On-Site) Maintenance Support Services
Nortel will provide Buyer with one (1) field technician ("Technician") who
will perform Field (On-Site) Maintenance Support ("Field Support Services")
during normal business hours of Monday through Friday, 8 a.m. until 5 p.m.,
with a one (1) hour lunch break and excluding standard Nortel holidays
("Normal Business Hours"). The Field Support Services will include
preventative maintenance, routine functions, emergency procedures and
administrative functions, subject to the Buyer's instructions and as directed
by the Nortel's Remote Surveillance Center ("RSC") and Buyer's Network
Operating Center("NOC"), including, but not limited to, the following:
A. Clear switch, trunk and transport troubles as received by the RSC
and NOC;
B. Perform routine switch and transport tasks and procedures as
scheduled and assigned by the RSC and/or NOC;
C. Prepare back-up office image to tape as required;
D. Replenish printer paper as required
E. Maintain a marked, proven set of maintenance spare cards;
F. Maintain the AMA/CDR Tape Log, the Circuit Pack Repair/Replacement
Log, the Site Trouble Ticket Log and the Site Customer Trouble
Ticket Log;
G. Perform Circuit Pack Replacement including acceptance, testing and
replacement of in-service spare cards received from repair and
return, as directed by RSC and/or NOC;
H. Operate manual answer of dial-up port data sets as required and
restore when dial-up is complete;
I. Request technical assistance from RSC and/or NOC as required;
J. Supervise hardware change controls;
K. Provide support for service orders including providing assistance
in moves, adds and changes;
L. Provide MDF assignments and connections;
M. Participate in requested major failure and outage investigation
meetings;
N. Assist with data modification for routing and translation changes
in the trunk network and for the Buyer's groups;
O. Perform preventative maintenance as required by NOC;
P. Assist the control/help desk with tracking and resolution of user
trouble reports;
Q. Provide trunk problem resolution and coordination assistance with
other switches;
R. Process AMA/SMDR tapes and billing tapes; and
S. Provide BCS application support.
<PAGE>
<PAGE>
Each field technician will have Nortel standard issued tool kits and volt-
ohmmeters. Additional test and measuring equipment, computer terminals and
on-line documentation must be supplied by Buyer. Extraordinary expenses for
items such as computer printer paper and test equipment calibration will be
the responsibility of Buyer.
Field Support Services may be provided after Normal Business Hours and on
holidays ("Non-Business Hours") and on an emergency basis ("Emergency Call-Out")
by the TECHNICIAN at an additional hourly rate. Buyer's NOC is
responsible for notifying the Technician of an Emergency Call-Out. The
Technician will respond to an Emergency Call-Out and resolve of the problem
within a reasonable amount of time.
1.1 Period of Performance
Buyer may issue a purchase order for the Field Support Services during the
Term of the Agreement. The Field Support Services shall commence at least six
(6) weeks after the date Nortel receives Buyer's purchase order and shall be
provided for a twelve (12) month period of time.
1.2 Fees and Payment Terms
Buyer shall pay to Nortel the amount of * for the twelve (12) months of Field
Support Services provided by one (1) Technician during the Term of the
Agreement. Such price does not include any travel and living expenses
incurred by Nortel as a result of the customer requesting that the Technician
travel outside of the Service Site. Nortel shall issue monthly invoices to
Buyer for the Field Support Services and the payment of the invoiced amount
shall be due and payable thirty (30) days from the date of the invoice.
Nortel shall issue separate monthly invoices to Buyer for customer requested
travel and living expenses and the payment of the invoiced amount shall be due
and payable thirty (30) days from the date of the invoice.
Field Support provided during Non-Business Hours and Emergency Call-Out
situations shall be billed at * per hour, during the Term of the Agreement.
Nortel shall issue separate monthly invoices to Buyer and the payment of the
invoiced amount shall be due and payable thirty (30) days from the date of the
invoice.
2.0 Remote Hybrid Maintenance Services
Nortel's Remote Hybrid Maintenance Service ("RHMS") includes Nortel's RM
Services as set forth in Section 1.0 hereinabove, which are performed during
Non-Business Hours when Nortel's Field Support and/or Buyer's NOC is not on
duty. In order for Nortel to perform RHMS, Nortel and/or Buyer must have a
technician on-site during Normal business Hours.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
2.1 Period of Performance
Buyer may issue a purchase order for the RHMS Services during the Term of the
Agreement. The RHMS Service shall commence within two (2) weeks after the
date Nortel receives Buyer's purchase order and shall be provided for a twelve
(12) month period of time.
2.2 Fees and Payment Terms
Buyer shall pay to Nortel the amount of * for the twelve (12) months of RHMS
Services provided during the Term of the Agreement. Nortel shall issue
monthly invoices to Buyer and payment of the invoiced amount shall be due and
payable thirty (30) days from the date of the invoice.
3.0 Data Base Management and/or Translations Support
Nortel's Database Management and/or Translations Services ("DM/TS") shall
designate one (1) prime DM/TS representative ("Prime") to provide three
hundred (300) hours of off-site translations assistance to Buyer during Normal
Business Hours. Nortel's DM/TS assistance includes, but is not limited to,
the following:
A. Datafill design, including, but not limited to, Network Routing
Translation Datafill, Trunk Translation Datafill, and Feature
Translation Datafill;
B. Standardization of translations across Buyer's network;
C. Prompt support and turnaround;
D. Monthly statements that provide an explanation for hours used and
list the hours remaining; and
E. Simplified ordering process.
In the event that Buyer requires on-site DM/TS assistance, Nortel shall
provide a Prime at the Buyer's designated Switch Site within a reasonable
period of time and at an additional hourly rate, plus travel and living
expenses ("On-Site DM/TS").
3.1 Period of Performance
Buyer may issue purchase orders for the three hundred (300) hours of DM/TS
Services during the Term of the Agreement. The DM/TS Services shall commence
within one (1) week after the date Nortel receives Buyer's purchase orders and
shall terminate upon the earlier of Buyer using all three hundred (300) hours
or the expiration of the Term of the AGREEMENT.
3.2 Fees and Payment Terms
Buyer shall pay to Nortel the amount of * for the DM/TS Services provided
during the Term of the Agreement. Nortel shall issue monthly invoices to
Buyer for the DM/TS Services and the payment of the invoiced amount shall be
due and payable thirty (30) days from the date of the invoice.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.<PAGE>
<PAGE>
Buyer shall pay to Nortel the amount of * per hour, for each hour of On-Site
DM/TS Services and travel time. Such price does not include any travel and
living expenses incurred by Nortel. Nortel shall issue a separate, monthly
invoice to Buyer for the On-Site DM/TS and payment in full shall be due and
payable thirty (30) days from the date of the invoice. Any and all reasonable
travel and living expenses shall be invoiced separately on a monthly basis and
payment thereof shall be due and payable thirty (30) days from the date of
invoice.
4.0 On-Site Project Management
Nortel's On-Site Project Management Services ("OSPM") will provide Buyer with
one (1) representative to manage the Buyer's General Contractor responsible
for building and completing the switch room and to provide the following
services:
A. Track all switch room construction activities;
B. Ensure all sub-contractor scheduled milestones are met;
C. Track construction permits;
D. Assist with the scheduling of third party vendors with the General
Contractor;
E. Ensure technical specifications are met with regards to air
conditioning systems, fire protection, heat, power requirements,
flooring and lighting;
F. Monitor third party subcontractor performance and service levels;
and
G. Provide weekly documentation and management reports.
4.1 Period of Performance
Buyer may issue a purchase order for the OSPM Services during the Term of the
Agreement. The OSPM Services shall commence upon the date Nortel receives
Buyer's purchase orders and shall be provided for a three (3) month period of
time.
4.2 Fees and Payment Terms
Buyer shall pay to Nortel the amount of * for the three (3) months of OSPM
Services provided during the Term. Such price does not include any and all
reasonable travel and living expenses incurred by Nortel as a result of the
customer requesting travel outside of the Service Site. Nortel shall issue a
monthly invoice to Buyer for the OSPM Services and payment in full shall be
due and payable thirty (30) days from the date of the invoice. Any and all
reasonable travel and living expenses incurred by Nortel shall be invoiced
separately to Buyer on a monthly basis and payment in full shall be due and
payable thirty (30) days from the date of the invoice.
*Confidential Treatment Requested. The redacted material has been separately
filed with the Commission.
