SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-25703
GTC TELECOM CORP.
(Exact Name of Registrant as Specified in its Charter)
NEVADA 88-0318246
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3151 AIRWAY AVE., SUITE P-3, COSTA MESA, CALIFORNIA 92626
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (714) 549-7700
N/A
(Former name, former address and former fiscal year, if changed
since last report)
---------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements
for the past 90 days.
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's
class of common stock, as of the latest practicable date:
Title of each class of Common Stock Outstanding at November 5, 1999
----------------------------------- -------------------------------
Common Stock, $0.001 par value 16,279,999
Transitional Small Business Disclosure Format
(Check one);
Yes [ ] No [ X ]
<PAGE>
INDEX
GTC TELECOM CORP.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at September 30, 1999 (Unaudited) and June
30, 1999
Statements of Operations (Unaudited) Three months ended
September 30, 1999 and 1998
Statements of Cash Flows (Unaudited) Three months ended
September 30, 1999 and 1998
Notes to Consolidated Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
GTC TELECOM CORP.
BALANCE SHEETS
September 30, June 30,
1999 1999
___________ __________
(Unaudited)
ASSETS
Current assets:
Cash $ 18,907 $ 500
Accounts receivable 70,969 16,889
Deposits 35,500 35,500
Prepaid expenses 23,313 23,319
__________ __________
Total current assets 148,689 76,208
__________ __________
Property and equipment, net of
accumulated depreciation of $66,140
and $32,186 at September 30, 1999 and
June 30, 1999, respectively 331,171 365,126
Deposits 330,110 150,000
Other assets 62,611 68,735
__________ __________
Total assets $ 872,581 $ 660,069
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses 889,418 688,178
Accrued payroll and related taxes 305,521 167,508
Current portion of obligation under
capital lease 63,022 61,198
Notes payable 123,500 25,000
Deferred income 15,990 12,482
__________ _________
Total current liabilities 1,397,451 954,366
Long-term liabilities:
Obligation under capital lease,
net of current portion 116,240 132,697
__________ __________
Total liabilities $1,513,691 $ 1,087,063
Contingencies
Stockholders' deficit:
Common stock, $0.001 par value;
50,000,000 shares authorized;
16,106,499 (unaudited) and
15,286,824 shares issued and
outstanding at September 30, 1999
and June 30, 1999, respectively 16,106 15,287
Additional paid-in-capital 4,426,917 3,452,282
Accumulated deficit (5,084,133) (3,894,563)
__________ __________
Total stockholders' deficit (641,110) (426,994)
__________ __________
Total liabilities and stockholders'
deficit $ 872,581 $ 660,069
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
GTC TELECOM CORP.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30,
____________________________
1999 1998
___________ ___________
(Unaudited) (Unaudited)
Revenues:
Telecommunications $ 138,865 $ -
Internet services 230
-
___________ ___________
Net revenues 139,095 -
___________ ___________
Cost of sales:
Telecommunications 166,602 -
Internet services 80,075 -
___________ ___________
Total cost of sales 246,677 -
___________ ___________
Gross profit/(loss) (107,582) -
Selling, general, and administrative
expenses 1,068,187 180,511
___________ ___________
Operating loss (1,175,769) (180,511)
Interest income/(expense) (9,890) -
___________ ___________
Loss before provision for income taxes (1,185,659) (180,511)
Provision for income taxes 3,911 200
___________ ___________
Net loss (1,189,570) (180,711)
=========== ===========
Basic and diluted net loss
per common share $ (0.08) $ (0.02)
=========== ===========
Basic and diluted weighted
average common shares outstanding 15,494,813 10,879,556
=========== ===========
The accompanying notes are an integral part of these financial statements.
<PAGE>
GTC TELECOM CORP.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
September 30,
__________________________
1999 1998
___________ __________
Cash Flows From Operating Activities:
Net loss $(1,189,570) $ (180,711)
Adjustments to reconcile net loss to net cash
used in operating activities:
Estimated fair market value of stock issued
for services 336,000 -
Estimated fair market value of
options granted to employees for compensation 12,624 -
Estimated fair market value of
warrants granted to a consultant
for services rendered - 70,072
Estimated fair market value of stock issued to
employees for compensation - 5,225
Depreciation and amortization 40,079 1,450
Changes in operating assets and liabilities:
Accounts receivable (54,074) -
Accounts payable and accrued expenses 201,240 41,153
Accrued payroll and related taxes 138,013 10,000
Deferred income 3,508 -
___________ __________
Net cash used in operating activities (512,180) (52,811)
___________ __________
Cash Flows From Investing Activities:
Deposits (180,110) -
___________ __________
Net cash used in investing activities (180,110) -
___________ __________
Cash Flows From Financing Activities:
Proceeds from sale of stock, net of offering
costs of $60,170 626,830 -
Borrowings on note payable to stockholder 48,500 -
Principal payments under capital lease (14,633) -
Borrowings on short term debt 50,000 40,000
Proceeds from exercise of stock options - 5,675
Collection of stock subscription receivable, net of
offering costs of $1,950 - 3,597
___________ ___________
Net cash provided by financing activities 710,697 49,272
___________ ___________
Net increase (decrease) in cash 18,407 (3,539)
Cash at beginning of period 500 3,892
___________ ___________
Cash at end of period $ 18,907 $ 353
=========== ===========
Supplemental Disclosures Of Cash Flow Information:
Cash paid during the quarter for:
Interest $ 1,487 $ -
Income taxes $ 3,711 $ -
The accompanying notes are an integral part of these financial statements.
<PAGE>
GTC TELECOM CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - MANAGEMENT'S REPRESENTATION:
The management of GTC Telecom Corp. (the "Company" or "GTC") without
audit has prepared the financial statements included herein.
Certain information and note disclosures normally included in the
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. In the opinion of the
management of the Company, all adjustments considered necessary for
fair presentation of the financial statements have been included and
were of a normal recurring nature, and the accompanying financial
statements present fairly the financial position as of September 30,
1999, and the results of operations and cash flows for the three
months ended September 30, 1999.
It is suggested that these financial statements be read in
conjunction with the audited financial statements and notes for the
year ended June 30, 1999, included in the Company's Form 10-KSB
filed with the Securities and Exchange Commission on October 13,
1999. The interim results are not necessarily indicative of the
results for a full year.
NOTE 2 - DESCRIPTION OF BUSINESS:
GTC is a single source provider of various telecommunication and
internet related services. GTC was organized as a Nevada
Corporation on May 17,1994 and is currently based in Costa Mesa
California.
NOTE 3 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
GOING CONCERN - The accompanying financial statements have been
prepared assuming the Company will continue as a going concern,
which contemplates, among other things, the realization of assets
and satisfaction of liabilities in the normal course of business.
The Company has negative working capital, reduced cash levels,
losses from operations through September 30, 1999 and a lack of
operational history, among other matters, raise substantial doubt
that its ability to continue as a going concern. The Company
intends to fund operations through debt and equity financing
arrangements which management believes may be insufficient to fund
its capital expenditures, working capital, and other cash
requirements for the fiscal year ending June 30, 2000. Therefore,
the Company will be required to seek additional funds to finance its
long term operations. The successful outcome of future activities
cannot be determined at this time and there is no assurances that if
achieved, the Company will have sufficient funds to execute its
intended business plan or generate positive operating results.
The financial statements do not include any adjustments related to
the recoverability and classification of assets carrying amounts or
the amount and classification of liabilities that might result
should the Company be unable to continue as a going concern.
REVENUE AND RELATED COST RECOGNITION - The Company recognizes
revenue during the month in which services or products are
delivered, as follows:
TELECOMMUNICATIONS RELATED SERVICES
The Company's long distance telecommunications service
revenues are generated when customers make long distance
telephone calls from their business or residential
telephones or by using any of the Company's telephone
calling cards. Proceeds from prepaid telephone calling
cards are recorded as deferred revenues when the cash is
received, and recognized as revenue as the telephone service
is utilized.
Telecommunication services cost of sales include the cost of
long distance service provided by MCI/WorldCom
("MCI/WorldCom") and other carriers, costs paid for customer
acquisition and third party verification costs.
<PAGE>
INTERNET RELATED SERVICES
Internet service revenues consist of monthly fees charged to
subscribers for Internet access and are recognized in the
period service access is provided.
Internet service cost of sales include the cost of providing
internet access.
EARNINGS PER SHARE - The Company has adopted Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share."
Under SFAS 128, basic earnings per share is computed by dividing
income available to common shareholders by the weighted-average
number of common shares assumed to be outstanding during the period
of computation. Diluted earnings per share is computed similar to
basic earnings per share except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if
the additional common shares were dilutive. Pro forma per share
data has been computed using the weighted average number of common
shares outstanding during the period assuming the Company was a C
corporation since inception. Because the Company has incurred net
losses, basic and diluted loss per share are the same as additional
potential common shares would be anti-dilutive.
INCOME TAXES - The Company accounts for income taxes under Statement
of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting
for Income Taxes." Under SFAS 109, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or
settled. A valuation allowance is provided for significant deferred
tax assets when it is more likely than not that such assets will not
be recovered.
NEW ACCOUNTING PRONOUNCEMENTS - In June 1998, the FASB issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities."
SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It
requires that an entity recognize all derivatives as either assets
or liabilities on the balance sheet at their fair value. This
statement, as amended SFAS 137, is effective for financial
statements for all fiscal quarters of all fiscal years beginning
after June 15, 2000. The Company does not expect the adoption of
this standard to have a material impact on its results of
operations, financial position or cash flows as it currently does
not engage in any derivative or hedging activities.
In April 1998, the American Institute of Certified Public
Accountants issued Statement of Position No. 98-5 ("SOP 98-5"),
"Reporting the Costs of Start-Up Activities." SOP 98-5 requires
that all non-governmental entities expense the costs of start-up
activities, including organization costs as those costs are
incurred. SOP 98-5 is effective for financial statements for fiscal
years beginning after December 15, 1998. The Company does not
expect the adoption of this standard to have a material effect on
its results of operations, financial position or cash flows.
NOTE 4 - OTHER ASSETS:
Other assets consist of PUC carrier certifications the Company must
obtain in order to provide interstate and intrastate telephone
service. Other assets are recorded at cost and are being amortized
using the straight-line method over the useful life of 3 years.
Amortization expense for the three months ended September 30, 1999
and 1998 is $6,124 and none, respectively.
NOTE 5 ACQUISITION:
Pursuant to an Agreement and Plan of Reorganization dated August 31,
1998, the Company completed a acquisition with and into Bobernco,
Inc. (the "Acquisition"). Under the terms of the tax-free
reorganization and acquisition, all of the Company's common stock
was converted to 8,986,950 shares of Bobernco common stock and, as a
result, the separate corporate existence of the Company ceased and
Bobernco continued as the surviving corporation. Thus, all
additional subsequent events are disclosed in Bobernco's separate
audited financial statements. The directors and officers of the
Company immediately prior to the acquisition became the directors
and officers of Bobernco, which subsequently changed its corporate
name to GTC Telecom Corp. ("GTC"). However, if the acquisition had
occurred at the beginning of the year, the pro forma financial
statements as of September 30, 1998 would be as follows:
<PAGE>
Net sales $ -
Cost of sales $ -
Net loss $ (180,711)
Basic and dilutive loss per share $ (0.02)
Basic and dilutive weighted average
common shares outstanding 10,879,556
NOTE 6 NOTES PAYABLE:
Notes payable represents:
Monies borrowed from a stockholder for working capital purposes.
The note payable accrues interest at 10% and is due within one year.
As of September 30, 1999 and June 30, 1999, the note payable to
stockholder was $73,500 and $25,000, respectively.
In addition, on July 6, 1999, the Company entered into a short term
note (the "Note") with an individual for $50,000 for working capital
purposes. Under the terms of the Note, the Company was required to
repay the principal amount of $50,000 within 30 days with 10%
interest. The Note is secured by the Company's receivables. The
Company is in the process of renegotiating the terms of the Note.
NOTE 7 COMMON STOCK ISSUANCES:
During the three months ended September 30, 1999, the Company sold
an aggregate of 687,000 shares to 13 "accredited" investors under an
ongoing Private Offering of 2,000,000 shares of the Company's Common
Stock at a price of $1.00 per share. The offering was conducted
without general solicitation or advertising and offered only to
"accredited" investors pursuant to Rule 506 of Regulation D of the
Securities Act of 1933. The sales resulted in net proceeds to the
Company of approximately $626,830, net of offering costs of $60,170.
In September 1999, the Company issued an aggregate of 67,675 shares
to consultants and attorney's in exchange for consultation and legal
services provided to the Company valued at approximately $271,000.
These shares were subsequently registered on Form S-8 filed with the
Securities and Exchange Commission on October 6, 1999.
In September 1999, the Company issued 50,000 shares of "restricted"
Common Stock valued at $50,000 to Dan Baer in consideration for
deferment of rent owed by the Company from April 1999 to September
1999 for its headquarters and customer service operations in Costa
Mesa, CA. The Company was required to pay a total of $42,360
deferred rent in nine payments beginning January 1, 2000 through
September 1, 2000 in addition to its regular rent due each month
under its lease. The issuance was an isolated transaction not
involving a public offering pursuant to section 4(2) of the
Securities Act of 1933.
In September 1999, the Company issued 15,000 shares of "restricted"
Common Stock valued at $15,000 to the Cutler Law Group, the
Company's securities counsel in exchange for legal services
rendered. The issuance was an isolated transaction not involving a
public offering pursuant to section 4(2) of the Securities Act of 1933.
On October 4, 1999, Paul Sandhu, the Company's President & CEO, and
Eric Clemons, the Company's Chief Operating Officer, canceled
581,480 and 145,370, respectively, shares of the Company's common
stock held by each of them. It was determined that these shares
were not cancelled in a timely matter. As a result, these
cancellations are reflected in the outstanding shares as of June 30,
1999 and September 30, 1999.
During the three months ended September 30, 1998, the Company issued
11,000 shares of restricted common stock, valued at $5,225
(estimated by the Company to be $0.475 per share) to employees in
lieu of salary.
NOTE 8 - OPTIONS AND WARRANTS:
On September 20, 1999, the Company's Board of Directors approved the
GTC Telecom Corp. 1999 Omnibus Stock Option Plan (the "Option
Plan"), effective October 1, 1999. An aggregate of 750,000 shares
of common stock are reserved for issuance under the Plan during the
year October 1, 1999 to September 30, 2000. For each subsequent
year beginning October 1, 2000, there shall be reserved for issuance
under the Plan that number of shares equal to 10% of the outstanding
shares of common stock on July 1 of that year. The exercise price
for each option shall be equal to 25% to 100% of the fair market
value of the common stock on the date of grant, as defined, and
shall vest over a five year period. The Company registered 750,000
shares underlying the options pursuant to its 1999 Stock Option Plan
on Form S-8 filed with the Securities and Exchange Commission on
October 6, 1999.
<PAGE>
Total consulting expense of $81,422 was recognized during the period
ended September 30, 1999 pursuant to a warrant agreement.
NOTE 10 CONTRACTS:
In connection with the Company's ongoing Private Offering, the
Company entered into a revised Investment Banking Agreement with
Transglobal Capital Corporation ("TCC"), a licensed NASD broker on
August 1, 1999. As part of this Agreement, TCC agreed to provide
the Company with consulting services and to assist the Company in
raising capital. In return, the Company agreed to compensate TCC
with a 13% commission on gross proceeds received in connection with
the July 20, 1999 private offering. In addition, the Company agreed
to issue TCC options to purchase up to 200,000 shares of the
Company's Common Stock at an exercise price of $1.10 per share based
upon 10% of the total proceeds raised by TCC. As of September 30,
1999, no options have been granted.
Beginning in August 1999, the Company entered into negotiations with
MCI/WorldCom ("MCI/WorldCom"), its major supplier of long distance
network transmission services, in an effort to lower its network
transmission costs. As a result of these negotiations, MCI/WorldCom
agreed to amend the existing contract between the Company and
MCI/WorldCom whereby MCI/WorldCom agreed to reduce the Company's
network transmission costs by approximately 40%. Additionally,
under the terms of the amendment, the minimum monthly purchase
requirement was increased to $12,000 per month and the total minimum
purchase requirement increased to $288,000. All remaining material
terms of the contract remain the same.
NOTE 11 SUBSEQUENT EVENTS:
On October 20, 1999, the Company granted options to purchase 526,000
shares of restricted Common Stock, at an exercise price of $1.00 per
share, to John M. Eger, a director of the Company. A total of
approximately $527,740 of compensation expense was recorded at the
date of grant in October 1999.
On October 18, 1999, the Company's Board of Directors granted,
pursuant to its Omnibus Stock Option Plan, an aggregate of 73,000
Incentive Stock Options, exercisable at $2.9375 per share (the fair
market value of the Company's Common Stock on the day of grant) to
certain employees of the Company and an aggregate of 360,000
Nonstatutory Stock Options, exercisable at $1.10 per share, to the
officers of the Company resulting in $661,500 of compensation expense
charged to the Company over a five year period.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CAUTIONARY STATEMENTS:
This Quarterly Report on Form 10-QSB contains certain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. The Company intends that such forward-looking
statements be subject to the safe harbors created by such statutes.
The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties.
Accordingly, to the extent that this Quarterly Report contains
forward-looking statements regarding the financial condition,
operating results, business prospects or any other aspect of the
Company, please be advised that the Company actual financial
condition, operating results and business performance may differ
materially from that projected or estimated by the Company in
forward-looking statements. The differences may be caused by a
variety of factors, including but not limited to adverse economic
conditions, intense competition, including intensification of price
competition and entry of new competitors and products, adverse
federal, state and local government regulation, inadequate capital,
unexpected costs and operating deficits, increases in general and
administrative costs, lower sales and revenues than forecast, loss
of customers, customer returns of products sold to them by the
Company, termination of contracts, loss of supplies, technological
obsolescence of the Company's products, technical problems with the
Company's products, price increases for supplies and components,
inability to raise prices, failure to obtain new customers,
litigation and administrative proceedings involving the Company, the
possible acquisition of new businesses that result in operating
losses or that do not perform as anticipated, resulting in
unanticipated losses, the possible fluctuation and volatility of the
Company's operating results, financial condition and stock price,
inability of the Company to continue as a going concern, losses
incurred in litigating and settling cases, adverse publicity and
news coverage, inability to carry out marketing and sales plans,
loss or retirement of key executives, changes in interest rates,
inflationary factors and other specific risks that may be alluded to
in this Quarterly Report or in other reports issued by the Company.
In addition, the business and operations of the Company are subject
to substantial risks that increase the uncertainty inherent in the
forward-looking statements. The inclusion of forward looking
statements in this Quarterly Report should not be regarded as a
representation by the Company or any other person that the
objectives or plans of the Company will be achieved.
GENERAL OVERVIEW
The company's principal line of business is to provide long distance
and value-added services for small and medium-sized businesses and
residential customers throughout the United States. The Company's
strategy has been to build a subscriber base without committing
capital or management resources to construct its own network and
transmission facilities. This strategy has allowed the Company to
add customers without being limited by capacity, geographic
coverage, or configuration of any particular network that the
Company might have developed. The Company believes that in order
to stay competitive in the future, it will need to construct its own
network. Therefore, the Company has initiated plans to either
purchase or construct its own network. However, there can be no
assurances that the Company will be able to purchase or construct
its own network, or that is if it does purchase or construct its own
network, that it will remain competitive.
Recently, the Company has begun providing a number of Internet
related services such as the sale of electronic calling cards on its
ecallingcards.com web site; Internet access via Dial-Up, Wireless
T-1, and DSL; and Internet Web Page Hosting services. However, the
Company's Internet related services are intended to be a value-added
service to attract customers to the Company's Telecommunication
services as opposed to a revenue-generating service.
The Company's services are marketed nationwide, through broadcasting
and print media, telemarketing, independent sales agents and its own
sales force.
The Company's revenues consist of sales revenues from
telecommunications and Internet related services. These revenues are
generated when customers make long distance telephone calls from
their businesses or residential telephones or by using the Company's
telephone calling cards. Proceeds from prepaid telephone calling
cards are recorded as deferred revenues when the cash is received
and recognized as revenue as the telephone service is utilized. The
reserve for deferred revenues is carried on the balance sheet as an
accrued liability. Internet related services are typically billed
at a flat rate and are billed in advance. Revenues are recognized
in the period earned.
<PAGE>
Cost of sales include telecommunications service costs and costs
paid for customer acquisition and third party verification.
Telecommunications service costs paid by the Company are based on
the Company's customers' long distance usage. The Company pays its
carriers based on the type of call, time of call, duration of call,
the terminating telephone number, and terms of the Company's
contract in effect of the time of the call. General and
administrative expenses consist of the cost of customer service,
billing, cost of information systems and personnel required to
support the Company's operations and growth.
The Company, depending on the extent of its future growth, may
experience significant strain on its management, personnel, and
information systems. The Company will need to implement and improve
operational, financial, and management information systems. In
addition, the Company is implementing new information systems that
will provide better record keeping, customer service and billing.
However, there can be no assurance that the Company's management
resources or information systems will be sufficient to manage any
future growth in the Company's business, and the failure to do so
could have a material adverse effect on the Company's business,
results of operations and financial condition.
As previously discussed, the Company acquired all of the outstanding
common stock of GenTel on August 31, 1998. Following the
acquisition, the Company adopted the business plan of GenTel and
changed its name to GTC.
RESULTS OF OPERATIONS OF THE COMPANY
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1998
REVENUES - Revenues increased by $139,095 from $0 in the three
months ended September 30, 1998 to $139,095 in the three months
ended September 30, 1999. For the three months ended September 30,
1998, the Company had not yet began marketing its services.
Beginning in early 1999, the Company began to actively market its
services and began realizing revenues from the sale of such
services. As of September 30, 1999, the Company had 6,781
telecommunication customers, with usage of long distance services of
approximately 2,093,829 minutes for the three months ended September
30, 1999 as compared with 0 customers and 0 minutes as of September
30, 1998.
COST OF SALES - Cost of sales increased by $246,677 from $0 in the
three months ended September 30, 1998 to $246,677 in the three
months ended September 30, 1999. The increase was primarily due to
the increase in carrier costs associated with the cost of long
distance service of $124,954 and customer acquisition and third
party verification costs associated with the increase in the newly
acquired customers of $41,648 for the three months ended September
30, 1999. In addition, the Company incurred $80,075 of costs
associated with its Internet services for the three months ended
September 30, 1999. As a percentage of revenue, cost of sales was
177.3% and none resulting in a gross loss of 77.3% and no gross
margin for the three months ended September 30, 1999 and 1998,
respectively.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative ("S,G&A") expenses increased by $887,676 or 491.8%
from $180,511 in the three months ended September 30, 1998 to
$1,068,187 in the three months ended September 30, 1999. For the
three months ended September 30, 1999 compared to the three months
ended September 30, 1998, the Company began to realize sales from
its telecommunications customers, thereby resulting in significantly
increased S,G&A expenses. S,G&A expenses for the three months ended
September 30, 1999 were comprised primarily of shares valued at
approximately $50,000 issued to a vendor for deferment of rent;
options valued at approximately $12,624 issued to supplement
compensation to certain key employees; approximately $409,252 in
salaries and related taxes paid to employees; advertising expenses
of $170,618; Internet support costs of $104,639; depreciation
expense of $40,078;and $280,976 of other operating expenses,
primarily rent, legal, audit services, and investor relations.
S,G&A expenses for the three months ended September 30, 1998 were
comprised primarily of investor relations costs of $102,181;
salaries of $31,032; and $47,298 of other operating expenses,
primarily rent. Net loss was $1,189,570 and $180,711 for the three
months ended September 30,1999 and 1998, respectively.
ASSETS AND LIABILITIES - Assets increased by $212,512 from $660,069
as of June 30, 1999 to $872,581 as of September 30, 1999. The
increase was due primarily to increases in long-term deposits of
$180,110 and accounts receivables of $54,080. Liabilities increased
by $426,628 from $1,087,063 as of June 30, 1999 to $1,513,691 as of
September 30, 1999. The increase was due primarily to increases in
accounts payable and accrued expenses of $201,240, payroll and
payroll related liabilities of $138,013, and notes payable of
$98,500, offset primarily by the decrease in capitalized lease
obligations of $14,633.
<PAGE>
STOCKHOLDERS' DEFICIT - Stockholders' deficit increased by
$(214,116) from $(426,994) as of June 30, 1999 to $(641,110) as of
September 30, 1999. The increase was attributable to the net loss
of $1,189,570 in the three months ended September 30, 1999, offset
primarily by the fair market value of stock issued for services of
$336,000, the fair market value of options granted to employees for
compensation of $12,624, and amounts raised in the Company's recent
private offerings of its common stock of $626,830, net of offering
costs of $60,170 in the three months ended September 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL - Overall, the Company had positive cash flows of $18,407 in
the three months ended September 30, 1999 resulting from $710,697 of
cash provided by the Company's financing activities, offset by
$512,180 of cash used in operating activities and $180,110 of cash
used in investing activities.
CASH FLOWS FROM OPERATIONS - Net cash used in operating activities
of $512,180 in the three months ended September 30, 1999 was
primarily due to a net loss of $1,189,570, offset partially by
changes in operating assets and liabilities, principally accounts
payable and accrued expenses of $201,240, accrued payroll and
related taxes of $138,013 and deferred income of $3,508, offset
partially by accounts receivable of $54,074; the fair market value
of stock issued for services of $336,000; the fair market value of
options granted to employees for compensation of $12,624; and
depreciation expense of $40,079.
CASH FLOWS FROM INVESTING - Net cash used in investing activities of
$180,110 in the three months ended September 30, 1999 funded
deposits of $180,110.
CASH FLOWS FROM FINANCING - Net cash provided by financing
activities of $710,697 in the three months ended September 30, 1999
was primarily due to the proceeds from sales of the Company's common
stock of $626,830, net of offering costs of $60,170 and borrowings
of short term debt of $98,500, offset primarily by repayments on
capitalized lease obligations of $14,633.
SHORT-TERM FINANCING - As of June 30, 1999, the Company had raised
approximately $108,450, net of offering costs of $14,550, through the
sale of 123,000 shares of its common stock. During the three months
ended September 30, 1999, the Company has sold an aggregate of
687,000 shares of its "restricted" common stock at $1.00 per share
pursuant to an ongoing private placement offering ("Private
Offering") of 2,000,000 shares of the Company's common stock,
resulting in net proceeds to the Company of approximately $626,830,
net of offering costs of $60,170.
In connection with the Company's ongoing Private Offering, the
Company entered into a revised Investment Banking Agreement with
Transglobal Capital Corporation ("TCC"), a licensed NASD broker on
August 1, 1999. As part of this Agreement, TCC agreed to provide
the Company with consulting services and to assist the Company in
raising capital. In return, the Company agreed to compensate TCC
with a 13% commission on gross proceeds received in connection with
the July 20, 1999 private offering. In addition, the Company agreed
to issue TCC options to purchase up to 200,000 shares of the
Company's Common Stock at an exercise price of $1.10 per share based
upon 10% of the total proceeds raised by TCC. As of September 30,
1999, no options have been granted.
The Company has borrowed $73,500 from its President and CEO. These
borrowings ("Borrowings") were for use as working capital. The
Company does not expect to borrow any additional funds beyond the
total amount currently borrowed from the President and CEO. Under
the terms of the Borrowings, the Company will be required to repay
the principal of $73,500 within one year with 10% interest. The
Borrowings are not secured.
On July 6, 1999, the Company entered into a short term note (the
"Note") with an unrelated individual for the amount of $50,000 for
use as working capital. Under the terms of the note, the Company
will be required to repay the principal balance of $50,000 within 30
days plus interest at 10%. The Note is secured by the Company's
receivable. The Company is in the process of renegotiating the
repayment of the Note.
The funds from the sale of the Company's common stock as described
above will be used to fund the Company's ongoing operations. The Company
does not currently have sufficient capital to fund the acquisition of the
Company's VoIP network, and will need to raise such funds either
through the additional sale of its Common Stock or through debt
financing (Please refer to the General Overview, Long-Term
Financing, and Capital Expenditure - VoIP Network section of this
document for further information). No assurances can be given,
however, that the Company will be able to complete the Private
Offering or raise the capital necessary to complete the acquisition
of its VoIP network. The failure to complete the Private Offering
or to obtain the necessary capital for its VoIP network will have a
material adverse effect on the Company's results of operations.
<PAGE>
LONG-TERM FINANCING - On April 30, 1999, the Company entered into a
financing agreement (the "Financing Agreement") with Ascend
Communications, Inc. ("Ascend") for $26 million in equipment
financing, specifically for the purchase of the Company' s VoIP
network. Upon delivery of the equipment, which has yet to occur,
the terms of the financing will include thirty-three (33) monthly
payments of $942,760 and a five-year warrant for Ascend to purchase
315,151 shares of the Company's "restricted" Common Stock at an
exercise price of $8.25 per share. The warrants include provisions
for anti-dilution protection, net exercise and registration rights.
An additional amount of approximately $2.9 million, above and beyond
the Financing Agreement, will be needed to complete the purchase of
the VoIP network. Delivery of the Ascend equipment has been delayed
until completion of the Company's reevaluation of the VoIP network
as described below.
Beginning in August 1999, the Company entered into negotiations with
MCI/WorldCom ("MCI/WorldCom"), its major supplier of long distance
network transmission services, in an effort to lower its network
transmission costs. As a result of these negotiations, MCI/WorldCom
agreed to amend the existing contract between the Company and
MCI/WorldCom whereby MCI/WorldCom agreed to reduce the Company's
network transmission costs by approximately 40%. Additionally,
under the terms of the amendment, the minimum monthly purchase
requirement was increased to $12,000 per month and the total minimum
purchase requirement increased to $288,000. All remaining material
terms of the contract remain the same.
As a result of the Company's amended agreement with MCI/WorldCom,
the Company determined that it was necessary to reconfigure its VoIP
network as previously described. In August 1999, the Company began
negotiations with Williams Communications, a unit of Williams of
Tulsa, Oklahoma ("Williams") to reevaluate the configuration of the
VoIP network. This reevaluation may or may not result in a
reduction of the cost of the VoIP network. The Company anticipates
that the currently scheduled launch date of the VoIP network
(currently scheduled for January 2000) will be significantly delayed
as a result of such reevaluation. The Company anticipates that such
reevaluation will be completed in the first quarter of the year 2000.
Proceeds from the Private Offering will be used to meet the
Company's working capital and other cash requirements, and other
equipment purchases in connection with the expansion of its
business. The Company does not currently have sufficient capital to
fund the acquisition of the Company's VoIP network, and will need to
raise such funds either through the additional sale of its Common
Stock or through debt financing. No assurances can be given,
however, that the Company will be able to complete the Private
Offering or raise the capital necessary to complete the acquisition
of its VoIP network. The failure to complete the Private Offering
or to obtain the necessary capital for its VoIP network will have a
material adverse effect on the Company's results of operations.
The Company believes that its anticipated funds from operations and
funds from the sale of its recent and ongoing Private Offering will
be insufficient to fund its capital expenditures, working capital,
and other cash requirements for the through at least June 2000.
Therefore, the Company will be required to seek additional funds to
finance its long term operations ("Additional Funds"). Should the
Company fail to complete any of the Private Offering or raise the
Additional Funds, the Company will have insufficient funds for the
Company's intended operations and capital expenditures for the next
12 months and will have a material adverse effect on the Company's
long-term results of operations.
CAPITAL EXPENDITURES
VOIP NETWORK
On April 30, 1999, the Company entered into an agreement with
Williams, in which Williams will design, install and maintain the
Company's previously discussed high speed, nationwide VoIP network.
The total contract cost to the Company is approximately $100,000,000
over a five-year term. Under the terms of the agreement with
Williams (the "Williams Agreement"), the Company is obligated to pay
Williams $28.9 million upon delivery of the network to the Company.
The Company obtained equipment financing for $26.0 million of the
total contract price from Ascend Communications, Inc. The Company
is responsible for the remaining $2.9 million. Please refer to
Long-Term Financing, above for further details regarding the
Company's financing for the purchase of its VoIP Network. In
addition, the Company is obligated to pay Williams a monthly
maintenance fee of approximately $188,000 and an additional set-up
fee of $270,000 beginning on the first month following delivery of
the Network increasing to approximately $404,000 per month through
the twelfth (12th) month of the Williams Agreement. The monthly
maintenance fee increases to approximately $639,000 per month
<PAGE>
beginning with the thirteenth (13th) month and thereafter until the
end of the contract period. The remainder of the Williams Agreement
is for its carrier services in which the Company will pay
approximately $520,000 per month over the term of the contract. In
addition, the financing will include a five- year warrant to
purchase 315,151 shares of the Company 's common stock at an
exercise price of $8.25 per share. The warrant will include
provisions for anti-dilution protections, net exercise and
registration rights. The Williams Agreement can be terminated by
the Company with six month's written notice to Williams.
Beginning in August 1999, the Company entered into negotiations with
MCI/WorldCom ("MCI/WorldCom"), its major supplier of long distance
network transmission services, in an effort to lower its network
transmission costs. As a result of these negotiations, MCI/WorldCom
agreed to amend the existing contract between the Company and
MCI/WorldCom whereby MCI/WorldCom agreed to reduce the Company's
network transmission costs by approximately 40%. Additionally,
under the terms of the amendment, the minimum monthly purchase
requirement was increased to $12,000 per month and the total minimum
purchase requirement increased to $288,000. All remaining material
terms of the contract remain the same.
As a result of the Company's amended agreement with MCI/WorldCom,
the Company determined that it was necessary to reconfigure its VoIP
network as previously described. In August 1999, the Company began
negotiations with Williams to reevaluate the configuration of the
VoIP network. This reevaluation may or may not result in a
reduction of the cost of the VoIP network. The Company anticipates
that the currently scheduled launch date of the VoIP network
(currently scheduled for January 2000) will be significantly delayed
as a result of such reevaluation. The Company anticipates that such
reevaluation will be completed in the first quarter of the year 2000.
OTHER CAPITAL EXPENDITURES
The Company also expects to purchase approximately $200,000 of
additional equipment in connection with the expansion of its
business. Because the Company presently does not have the capital
for such expenditures, it will have to raise these funds. (See
Long-Term Financing in this section).
GOING CONCERN
The Company's independent certified public accountants have stated
in their report included in this Form 10-KSB, that the Company has
incurred operating losses in the last two years, has a working
capital deficit and a significant stockholders deficit. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern.
YEAR 2000 DISCLOSURE
The Company has completed a review of its computer systems and
non-information technology ("non-IT") systems to identify all
systems that could be affected by the inability of many existing
computer and microcontroller systems to process time-sensitive data
accurately beyond the year 1999, referred to as the Year 2000 or Y2K
issue. The Company is dependent on third-party computer systems and
applications, particularly with respect to such critical tasks as
accounting, billing and the underlying carrier (MCI/WorldCom) of its
long distance telephone service. The Company also relies on its own
computer and non-IT systems (which consists of personal computers,
internal telephone systems, internal network server, Internet server
and associated software and operating systems). In conducting the
Company's review of its internal systems, the Company performed
operational tests of its systems which revealed no Y2K problems. As
a result of its review, the Company has discovered no problems with
its systems relating to the Y2K issue and believes that such systems
are Y2K compliant. Additionally, the Company has obtained written
assurances from all of its major suppliers of third-party computer
systems and applications, indicating that they have completed a
review of their respective computer systems and that such systems
are Y2K compliant. Costs associated with the Company's review were
not material to its results of operations.
While the Company believes that its procedures have been designed to
be successful, because of the complexity of the Year 2000 issue and
the interdependence of organizations using computer systems, there
can be no assurances that the Company's efforts, or those of third
parties with whom the Company interacts, have fully resolved all
possible Year 2000 issues. Failure to satisfactorily address the
Year 2000 issue could have a material adverse effect on the Company.
The most likely worst case Y2K scenario which management has
identified to date is that, due to unanticipated Y2K compliance
problems, the Company may be unable to bill its customers, in full
or in part, for services used. Should this occur, it would result
in a material loss of some or all gross revenue to the Company for
an indeterminable amount of time, which could cause the Company to
cease operations. Although the Company has received written
assurances from its major suppliers that they are, or will be, Year
2000 compliant, should any such supplier fail to adequately address
<PAGE>
the Year 2000 problem, the Company's only recourse for any damages
suffered as a result would be through litigation. The Company has
not yet developed a contingency plan to address this worst case Y2K
scenario, and does not intend to develop such a plan in the future.
INFLATION
Management believes that inflation has not had a material effect on
the Company's results of operations.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company may from time to time be involved in various claims,
lawsuits, disputes with third parties, actions involving allegations
of discrimination, or breach of contract actions incidental to the
operation of its business. The Company is not currently involved in
any such litigation which it believes could have a materially
adverse effect on its financial condition or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three months ended September 30, 1999, the Company sold
an aggregate of 687,000 shares to 13 "accredited" investors under an
ongoing Private Offering of 2,000,000 shares of the Company's Common
Stock at a price of $1.00 per share. The offering was conducted
without general solicitation or advertising and offered only to
"accredited" investors pursuant to Rule 506 of Regulation D of the
Securities Act of 1933. The sales resulted in net proceeds to the
Company of approximately $626,830, net of offering costs of $60,170.
In September 1999, the Company issued an aggregate of 67,675 shares
to seven consultants of the Company and the Cutler Law Group, the
Company's securities counsel, in exchange for consultation and legal
services provided to the Company valued at approximately $271,000.
The transactions were isolated transactions not involving a public
offering exempt under Section 4(2) of the Securities Act of 1933.
These shares were subsequently registered on Form S-8 filed with the
Securities and Exchange Commission on October 6, 1999.
In September 1999, the Company issued 50,000 shares of "restricted"
Common Stock valued at $50,000 to Dan Baer in consideration for
deferment of rent owed by the Company from April 1999 to September
1999 for its headquarters and customer service operations in Costa
Mesa, CA. The Company was required to pay a total of $42,360
deferred rent in nine payments beginning January 1, 2000 through
September 1, 2000 in addition to its regular rent due each month
under its lease. The issuance was an isolated transaction not
involving a public offering pursuant to section 4(2) of the
Securities Act of 1933.
In September 1999, the Company issued 15,000 shares of "restricted"
Common Stock valued at $15,000 to the Cutler Law Group, the
Company's securities counsel in exchange for legal services
rendered. The issuance was an isolated transaction not involving a
public offering pursuant to section 4(2) of the Securities Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the security holders for a vote
during the period covered by this report.
ITEM 5. OTHER INFORMATION
On October 20, 1999, John M. Eger was appointed to the Board of
Directors to fill an additional vacancy left over from the
acquisition of GenTel by the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
10.1 Investment Banking Agreement by and between
Transglobal Capital Corporation and GTC Telecom
Corp. dated August 1, 1999.
10.2 Amended MCI/WorldCom Telecommunication Resale
Contracts dated August 20, 1999
27 Financial Data Schedule
(B) REPORTS ON FROM 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934.
The registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GTC TELECOM CORP.
By /s/ S. Paul Sandhu
----------------------
S. Paul Sandhu
President & CEO
Dated: November 12, 1999
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10.1 Investment Banking Agreement by and between
Transglobal Capital Corporation and GTC Telecom
Corp. dated August 1, 1999.
10.2 Amended MCI/WorldCom Telecommunication Resale
Contracts dated August 20, 1999
27 Financial Data Schedule
<PAGE>
INVESTMENT BANKING AGREEMENT
Agreement made as of August 1, 1999, by and between TRANSGLOBAL
CAPITAL CORPORATION, ("TCC"), whose address is 21800 Oxnard Street,
Suite 220, Woodland Hills, CA 91367 and GTC Telecom ("Client"),
whose address is 3151 Airway Ave. Suite P-3, Costa Mesa, CA 92626.
WITNESSETH
WHEREAS, Client requires expertise in the area of
investment banking to support its business and growth; and
WHEREAS, TCC has substantial contacts among the members of the
investment community, investment banking expertise, and desires to
act as a consultant to provide investment banking and advisory
services.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants contained herein and subject specifically to
the conditions hereof, and intending to be legally bound thereby,
the parties agree as follows:
1. Certain Definitions. When used in this Agreement, the
following terms shall have the meanings set forth below:
1.1 Affiliate shall mean any persons or entities holding more
than a 51% interest in either party to this Agreement.
1.2 Client shall mean the Client's contractors, contacts or
associates.
1.3 Contact Person shall refer to the person who shall be
primarily responsible for carrying out the duties of the parties
hereunder. Client and TCC shall each appoint a Contact Person to be
responsible for their respective duties. In the event that one
party gives notice to the other party in writing that in their
reasonable opinion, the other party's Contact Person is not able to
fulfill their duties and responsibilities hereunder, both parties
shall mutually agree upon a replacement Contact Person within 10
days of said notice.
1.4 Extraordinary Expenses shall mean expenses that are
beyond those expenses that are usual, regular, or customary in the
conduct of Client's investment banking consulting activities in
fulfillment of the scope of this Agreement.
1.5 Equity shall mean cash, securities or liquid assets,
specifically excluding real property.
1.6 Payment or Payable in Kind shall refer to distribution of
the proceeds of a transaction in the same type and form as was given
as valuable consideration for the transaction.
<PAGE>
2. Contact Persons. The Contact Person for TCC is Wendell
Baker. The Contact Person for Client is Eric Clemons.
3. Services to be Rendered by TCC. Services to be rendered
by TCC are as follows:
3.1 Advice and Counsel. TCC will provide advice and counsel
regarding Client's strategic business and financial plans, strategy
and negotiations with potential lenders/investors, market timing
advice, merger/acquisition candidates, joint venturers, corporate
partners, primary or secondary market funding sources, and others
involving financial and financially related transactions.
3.2 Introduction to the Securities Brokerage Community. TCC
has a close association with numerous broker/dealers and investment
professionals across the country and will enable contact between
Client and/or Clients to facilitate business transactions among
them. TCC shall use its contacts in the brokerage community to
assist Client in establishing relationships with securities dealers
and to provide the most recent corporate information to interested
securities dealers on a regular and continuous basis. TCC
understands that this is in keeping with Client's business objective
to establish a nationwide network of securities dealers who have an
interest in Client and/or Clients.
3.3 Market-Timing Information. TCC will monitor and react to
sensitive market information on a timely basis and provide advice,
counsel and proprietary intelligence (including but not limited to,
information on price, volume and the identification of
market-makers, buyers and sellers) to Client in a timely fashion
with respect to securities of Client or in which Client has an
interest. Client understands that this information is available
from other sources but acknowledges that TCC can provide it in a
more timely fashion and with substantial value-added interpretation
of such information. The foregoing notwithstanding, no information
will be provided to Client with respect to the activities of any
other TCC customers or TCC customer accounts without such customer's
prior consent.
3.4 Client and/or ClientsTransaction Due Diligence. TCC will
undertake due diligence on all proposed financial transactions
affecting the Client, including investigation and advice on the
financial, dilutive, valuation and stock price implications thereof.
3.5 Additional Duties. Client and TCC shall mutually agree upon any
additional duties, which TCC may provide for compensation paid or
payable by Client under this Agreement. Such additional
agreement(s) may from time to time, although there is no requirement
to do so, be attached hereto and made a part hereof as Exhibits
beginning with Exhibit A.
3.6 Best Efforts. TCC shall devote such time and best efforts as may
be reasonable necessary to perform its services hereunder. TCC is
not responsible for the performance of any services, which may be
rendered hereunder without the Client providing the necessary
information prior thereto. TCC cannot guarantee results on behalf
of Client, but shall pursue all avenues available through its
network of financial contacts. At such time as an interest is
expressed in Client's needs, TCC shall notify Client and advise it
as to the source of such interest and any terms and conditions of
such interest. The acceptance and consummation of any transaction
is subject to acceptance of the terms and conditions by Client. It
is understood that a portion of the compensation to be paid
hereunder is being paid by Client to have TCC remain available to
assist it with transactions on an as needed basis.
<PAGE>
4. Compensation to TCC.
4.2 Completion of Financing. Upon receipt of the $2,000,000
or parts thereof, client agrees to pay TCC an investment
banking fee equal to 13% of the gross proceeds. In
addition, TCC shall also receive 200,000 FIVE YEAR
WARRANTS (EXERCISABLE AT $1.10) TO PURCHASE CLIENT'S
RESTRICTED COMMON STOCK. "GTC" will grant "TCC" options
(10%) based solely on the total amount of dollars raised.
4.2.1 TCC agrees not to short sell, pledge, or
hypothecate in any manner any of the GTC stock
it receives. However, In the event GTC or it's
officers decide to an additional holding (lock
up) period beyond the time frame listed in the
original Investment Banking agreement, TCC
shall have the sole discretion to accept or
deny such lock up.
4.3 Client hereby directs and authorizes such funding
source(s) or underwriter(s) to pay said investment banking fee
directly to, or to direct a third party escrow, if applicable, to
make payment directly to TCC.
4.4 TCC may, at its sole option, elect to receive all or a
portion of said investment banking fees as payment in kind, i.e.,
prorata in the same form and type of securities, equity, or
financing instruments issued to the funding source or underwriter by
Client. In the event the exercise of this option results in
additional expense over and above the expenses of the funding and/or
underwriting then the additional expenses shall be borne by TCC. In
addition, the exercise of this option by TCC shall not impede or
otherwise have a negative effect on the funding or underwriting.
4.5 Interest on Unpaid Investment Banking Fees. Client shall
pay interest on all payments in arrears due to TCC at the rate of
10% per annum.
4.6 Additional Fees. Client and TCC shall mutually agree
upon any additional fees, which Client may, pay in the future for
services rendered by TCC under this Agreement. Such additional
agreement(s) may, although there is no requirement to do so, be
attached hereto and made a part hereof as Exhibits beginning with
Exhibit A.
4.6 Optional Form of Payment. TCC may, at the time for each
payment and its' sole option, elect to receive all or a portion of
said fees in the form of securities equity, or financing instruments
issued by Client or Client's Clients to TCC on terms agreed upon by
Client in writing.
<PAGE>
4.7 Extraordinary Expenses. Extraordinary expenses of TCC,
including, but not limited to, air travel, lodging, meals, website
creation, printing expenses or car rental shall be submitted to
Client for approval prior to expenditure and shall be paid by
Client, within ten (10) business days of receipt of TCC's request
for payment.
5. Indemnification. Each party shall hold the other party
harmless from and against, and shall indemnify the other party, for
any liability, loss, and costs, expenses or damages howsoever caused
by reason of any injury (whether to body, property, personal or
business character or reputation) sustained by any person or to any
person or property by reason of any act, neglect, default or
omission of it or any of its agents, employees, or other
representatives arising out of or in relation to this Agreement.
Nothing herein is intended to nor shall it relieve either party from
liability for its own act, omission or negligence. All remedies
provided by law or in equity shall be cumulative and not in the
alternative.
6. Client Representations. Client hereby represents,
covenants and warrants to TCC as follows:
6.6 Authorization. Client and it's signatories herein have
full power and authority to enter into this Agreement and to carry
out the transactions contemplated hereby. Client shall provide TCC
with a certified copy of the resolutions of Client's Board of
Directors authorizing the entry into this Agreement and the payment
terms included herein.
6.7 No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will violate any provision of the charter or by-laws of
Client or, violate, or be in conflict with, or constitute a default
under, any agreement or commitment to which Client is a party, or
violate any status or law or any judgment, decree, order, regulation
or rule of any court or governmental authority.
6.8 Validity of Information. All business plans,
registration statements, contracts, agreements, plans, leases,
policies and licenses submitted to TCC as part of Client's due
diligence or to which Client is a party are valid and in full force
and effect.
6.9 Litigation. Except as set forth below, there is no
action, suit, inquiry, proceeding or investigation by or before any
court or governmental or other regulatory or administrative agency
or commission pending or, to the best knowledge of Client threatened
against or involving Contract, or which questions or challenges the
validity of this Agreement and its subject matter, and Client does
not know or have any reason to know of any valid basis for any such
action, proceeding or investigation.
6.10 Consents. No consent of any person, other than the
signatories hereto, is necessary to the consummation of the
transactions contemplated hereby, including, without limitation,
consents from parties to loans, contracts, leases or other
agreements and consents from government agencies, whether federal,
state, or local.
6.11 TCC Reliance. That TCC has and will rely upon the
documents, instruments and written information furnished to TCC by
the Client's officers, or designated employees; and:
<PAGE>
6.11.1 Client Material. That all representations and statements
provided about the Client are true and complete and accurate.
Client agrees to indemnify, hold harmless, and defend TCC, its
officers, directors, agents and employees, at Client's expense for
any proceeding or suit which may arise out of any inaccuracy or
incompleteness of any such material or written information supplied
to TCC; and,
6.11.2 Client and Other Material. That all representations and
statements provided, other than about the Client, are, to the best
of its knowledge, true and complete and accurate.
6.12 Services Not Expressed or Implied.
6.12.1 That TCC has not agreed with Client, in this Agreement or
any other agreement, verbal or written, to obtain market makers, or
to become a market-maker in any specific securities that Client or
Clients has an interest; and,
6.12.2 That any payments made herein to TCC are not, and shall
not be construed as, compensation to TCC for the purposes of making
a market, to cover TCC's out-of-pocket expenses for making a market,
or for the submission by TCC of an application to make a market in
any securities; and,
6.12.3 That no payments made herein to TCC are for the purposes
of affecting the price of any security or influencing any
market-making functions, including but not limited to, bid/ask
quotations, initiation and termination of quotations, retail
securities activities, or for the submission of any application to
make a market.
7. Confidentiality. TCC and Client each agree to provide
reasonable security measures to keep information confidential whose
release may be detrimental to the business. TCC and Client shall
each require their employees, agents, affiliates, subClients, other
licensees, and others who will properly have access to the
information through TCC and Client respectively, to first enter into
appropriate non-disclosure agreements requiring the confidentiality
contemplated by this Agreement in perpetuity.
8. Miscellaneous Provisions.
8.1 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented by written
agreement of TCC and Client or by their duly authorized respective
officers.
8.2 Waiver of Compliance. Any failure of TCC, on the one
hand, or Client, on the other, to comply with any obligation,
agreement or condition herein may be expressly waived in writing,
but such waiver of failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other
failure.
<PAGE>
8.3 Expenses; Transfer Taxes, Etc. Whether or not the
transaction contemplated by this Agreement shall be consummated, TCC
agrees that all fees and expenses incurred by TCC in connection with
this Agreement, shall be borne by TCC and Client agrees that all
fees and expenses incurred by Client in connection with this
Agreement shall be borne by Client, including, without limitation as
to TCC or Client, all fees of counsel and accountants.
8.4 Other Business Opportunities. Except as expressly
provided in this Agreement, each party hereto shall have the right
independently to engage in and receive full benefits from business
activities. In the case of business activities which would be
competitive with the other party, notice shall be given prior to
this Agreement or, if such activities are proposed, within 10 days
prior to engagement herein. The doctrines of "corporate
opportunity" or "business opportunity" shall not be applied to any
other activity, venture, or operation of either party.
8.5 Compliance with Regulatory Agencies. Each party
represents to the other party that all actions, direct or indirect,
taken by it and its respective agents, employees and affiliates in
connection with this Agreement and any financing or underwriting
hereunder shall conform to all applicable Federal and state
securities laws.
8.6 Notices. Any notices to be given hereunder by any part
to the other may be effected by personal delivery in writing or by
mail, registered or certified, postage prepaid with return receipt
requested. Mailed notices shall be addressed to the parties at the
addresses appearing on the introductory paragraph of this Agreement,
but any party may change his address by written notice in accordance
with this subsection. Notices delivered personally shall be deemed
communicated as of actual receipt, mailed notices shall be deemed
communicated as of three (3) days after mailing.
8.7 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto
without the prior written consent of the other party.
8.8 Delegation. Neither party shall delegate the performance
of its duties under this Agreement without the prior written consent
of the other party.
8.9 Publicity. Neither TCC nor Client shall make or issue,
or cause to be made or issued, any announcement or written statement
concerning this Agreement or the transactions contemplated hereby
for dissemination to the general public without the prior consent of
the other party. This provision shall not apply, however, to any
announcement or written statement required to be made by law or the
regulations of any federal or state governmental agency, except that
the party required to make such announcement shall, whenever
practicable, consult with the other party concerning the timing and
consent of such announcement before such announcement is made.
<PAGE>
8.10 Governing Law. This Agreement and the legal relations
among the parties hereto shall be governed by and construed in
accordance with the laws of the State of California, without regard
to its conflict of law doctrine. Client and TCC agree that if
action is instituted to enforce or interpret any provision of this
Agreement then jurisdiction and venue shall be Orange County,
California.
8.11 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but of which together shall constitute one and
the same instrument.
8.12 Headings. The headings of the Sections of this Agreement
are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this
Agreement.
8.13 Entire Agreement. This Agreement, including any Exhibits
hereto, and any other documents and certificates delivered pursuant
o the terms hereof, set forth the entire agreement and understanding
of the parties hereto in respect of the subject matter contained
herein, and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any
party hereto.
8.14 Third Parties. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended
or shall be construed to confer upon or give to any person or
corporation other than the parties hereto and their successors or
assigns, any rights or remedies
8.15 Attorneys' Fees and Costs. If any action is necessary to
enforce and collect upon the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees and costs, in
addition to any other relief to which that party may be entitled.
This provision shall be construed as applicable to the entire
agreement.
8.16 Survivability. If any part of this Agreement is found,
or deemed by a court of competent jurisdiction, to be invalid or
unenforceable, that part shall be severable from the remainder of
this Agreement.
8.17 Further Assurances. Each of the parties agrees that it
shall from time to time take such actions and execute such
additional instruments as may be reasonably necessary or convenient
to implement and carry out the intent and purpose of this Agreement.
8.18 Right to Data After Termination. After termination of
this Agreement each party shall be entitled to copies of all
information acquired hereunder as of the date of termination and not
previously furnished to it.
<PAGE>
8.19 Relationship of the Parties. Nothing contained in this
Agreement shall be deemed to constitute either party the partner of
the other, nor, except as otherwise herein expressly provided, to
constitute either party the agent or legal representative of the
other, nor to create any fiduciary relationship between them. It is
not the intention of the parties to create, nor shall this Agreement
be construed to create any commercial or other partnership. Neither
party shall have any authority to act for or to assume any
obligation or responsibility on behalf of the other party, except as
otherwise expressly provided herein. The rights, duties,
obligations and liabilities of the parties shall be several and not
joint or collective. Each party hereto shall be responsible only
for its obligations as herein set out and shall be liable only for
its share of the costs and expenses as provided herein. Each party
shall indemnify, defend and hold harmless the other party, its
directors, officers, and employees from and against any and all
losses, claims, damages and liabilities arising out of any act or
any assumption of liability by the indemnifying party, or any of its
directors, officers or employees, done or undertaken, or apparently
done or undertaken, on behalf of the other party, except pursuant to
the authority expressly granted herein or otherwise agreed in
writing between the parties. Each party shall be responsible for
the acts of its agent and affiliates.
9. Terms of Agreement and Termination. This Agreement shall
be effective upon execution, and shall continue for one year unless
terminated sooner, by either party, upon giving to the other party
30 days written notice, after which time this Agreement is
terminated. TCC shall be entitled to any investment banking fees for
fundings, mergers, or underwriting commitments entered into within
one year after the termination of this Agreement if said funding,
merger or underwriting was the result of TCC's consulting and
introduction efforts prior to the termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
Client: GTC TELECOM
By: /s/ Eric Clemons
Name: Eric Clemons
Title: Chief Operating Officer
TCC:
TRANSGLOBAL CAPITAL CORPORATION
a California corporation
By: /s/ Wendell Baker
Wendell Baker, Managing Director
WORLDCOM NETWORK SERVICES, INC.
TELECOMMUNICATIONS SERVICES AGREEMENT
(SWITCHED SERVICES)
This TELECOMMUNICATIONS SERVICES AGREEMENT (the "TSA") is entered into
as of the 20 day of August, 1999, by and between WORLDCOM NETWORK SERVICES,
INC., a Delaware corporation, with its principal office at 6929 North
Lakewood Avenue, Tulsa, Oklahoma 74117 ("MCI WORLDCOM") and GTC Telecom
Corp., a Nevada corporation, with its principal office at 3151 Airway Ave.,
Suite P-3, Costa Mesa, CA 92626 ("CUSTOMER").
In consideration of good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. SWITCHED SERVICES; OTHER DOCUMENTS; START OF SERVICE.
(A) Services MCI WorldCom agrees to provide and Customer agrees
to accept and pay for switched telecommunications services
and other associated services (collectively the "SWITCHED
SERVICES") as further described in the "ATTACHMENTS" attached
hereto and incorporated herein by reference, which describe
the particular services, rates, specific terms and other
information necessary or appropriate for MCI WorldCom to
provide the Switched Services to Customer. The Switched
Services provided by MCI WorldCom are subject to (i) the
terms and conditions contained in this TSA and the Program
Enrollment Terms (the "PET") which is attached hereto and
incorporated herein by reference, (ii) the rates and
discounts and other applicable terms set forth in
Attachment(s) attached hereto from time to time and
incorporated herein by reference, and (iii) each Service
Request (described below) which is accepted hereunder. The
PET, as subscribed to by the parties, shall set forth the
Effective Date, the Service Term, Customer's minimum monthly
commitment, if any, and other information necessary to
provide the Switched Services under this TSA. In the event
of a conflict between the terms of this TSA, the PET, the
Attachments and the Service Request(s), the following order
of precedence will prevail: (1) the PET, (2) the
Attachments, (3) this TSA, and (4) Service Request(s). This
TSA, the PET, and the applicable Attachments are sometimes
collectively referred to as the "AGREEMENT".
(B) Service Requests Customer's requests to initiate or cancel
Switched Services shall be described in an appropriate MCI
WorldCom Service Request ("SERVICE REQUEST"). A Service
Request may consist of machine readable tapes, facsimiles or
other means approved by MCI WorldCom. Further, Service
Requests shall specify all reasonable information, as
determined by MCI WorldCom, necessary or appropriate for MCI
WorldCom to provide the Switched Service(s) in question,
which shall include without limitation, the type, quantity
and end point(s) (when necessary) of circuits comprising a
Service Interconnection as described in the applicable
Service Schedules, or automatic number identification ("ANI")
information relevant to the Switched Service(s), the
"Requested Service Date", and charges, if any, relevant to
the Switched Services described in the Service Request.
<PAGE>
(C) Start of Service MCI WorldCom's obligation to provide and
Customer's obligation to accept and pay for non-usage sensitive
charges for Switched Services shall be binding to the extent
provided for in this Agreement upon the submission of an
acceptable Service Request to MCI WorldCom by Customer.
Customer's obligation to pay for usage sensitive charges for
Switched Services shall commence with respect to any Switched
Service as of the date the Switched Service in question is made
available to and used by Customer ("START OF SERVICE"), but in no
event later than the "REQUESTED SERVICE DATE" if such Switched
Service is available for Customer's use as of such Requested
Service Date. Start of Service for particular Services shall be
further described in the Attachment(s) relevant to the Switched
Services in question.
2. CANCELLATION.
(A) Cancellation Charge At any time after the Effective Date,
Customer may cancel this Agreement if Customer provides
written notification thereof to MCI WorldCom not less than
thirty (30) days prior to the effective date of cancellation.
In such case (or in the event MCI WorldCom terminates this
Agreement as provided in Section 7), Customer shall pay to
MCI WorldCom all charges for Services provided through the
effective date of such cancellation plus a cancellation
charge (the "CANCELLATION CHARGE") equal to one hundred
percent (100%) of Customer's commitment(s), if any, (as
described in the PET) that would have become due for the
unexpired portion of the Service Term.
(B) Liquidated Damages It is agreed that MCI WorldCom's damages
in the event Customer cancels this Agreement shall be
difficult or impossible to ascertain. The provision for a
Cancellation Charge in Subsection 2(A) above is intended,
therefore, to establish liquidated damages in the event of a
cancellation and is not intended as a penalty.
(C) Cancellation Without Charge Notwithstanding anything to the
contrary contained in Subsection 2(A) above, Customer may
cancel this Agreement, as provided below, without incurring
any cancellation charge (other than payment for Services
provided by MCI WorldCom up through the effective date of
cancellation) if (i) MCI WorldCom fails to provide a network
as warranted in Section 8 below; (ii) MCI WorldCom fails to
deliver call detail records promptly based on the frequency
selected by Customer (i.e., monthly, weekly or daily); or
(iii) MCI WorldCom fails to submit ANI(s) relevant to
Customer's Service Requests to the applicable local exchange
companies ("LECS") within the time period described in
applicable Attachment(s). Provided, however, Customer must
give MCI WorldCom written notice of any such default and an
opportunity to cure such default within five (5) days of the
notice. In the event MCI WorldCom fails to cure any such
default within the five-day period on more than three (3)
occasions within any six (6) month period, Customer may
cancel this Agreement without incurring any cancellation charge.
3. CUSTOMER'S END USERS.
(A) End Users Customer will obtain, and upon MCI WorldCom's request
provide MCI WorldCom (within two (2) business days of the date of
the request), a written Letter of Agency ("LOA") acceptable to MCI
WorldCom (or with any other means if approved by the Federal
Communications Commission ("FCC"), the applicable public utility
commission ("PUC") and the applicable LEC), for each ANI
indicating the consent of such end user of Customer ("END USER")
to be served by Customer and transferred (by way of change of such
End User's designated presubscribed interexchange carrier (PIC))
to the MCI WorldCom network prior to submitting a Service Request
to MCI WorldCom. Each LOA will provide, among other things, that
the End User has consented to the transfer being performed by
Customer or Customer's designee. When applicable, Customer will
be responsible for notifying its End Users, in writing (or by any
other means if approved by the FCC, the applicable PUC and the
<PAGE>
applicable LEC) that (i) a transfer charge will be reflected on
their LEC bill for effecting a change in their PIC, (ii) the
entity name under which their interstate, intrastate, local and/or
operator services will be billed (if different from Customer), and
(iii) the "primary" telephone number(s) to be used for maintenance
and questions concerning their telecommunications services and/or
billing. Customer agrees to send MCI WorldCom a copy of the
documentation Customer uses to satisfy the above requirements
promptly upon request of MCI WorldCom. MCI WorldCom may change
the foregoing requirements for Customer's confirming orders and/or
for notifying End Users regarding the transfer charge at any time
in order to conform with applicable FCC and state regulations.
Provided, however, Customer will be solely responsible for
ensuring that the transfer of End Users to the MCI WorldCom
network conforms with applicable FCC and state regulations,
including without limitation, the regulations established by the
FCC with respect to verification of orders for long distance
service generated by telemarketing as promulgated in 47 C.F.R.,
Part 64, Subpart K, Section64.1100 or any successor regulation(s).
(B) Transfer Charges/Disputed Transfers Customer agrees that it is
responsible for (i) all charges incurred by MCI WorldCom to change
the PIC of End Users to the MCI WorldCom network, (ii) all charges
incurred by MCI WorldCom to change End Users back to their
previous PIC arising from disputed transfers to the MCI WorldCom
network plus, at MCI WorldCom's option, an administrative charge
equal to twenty percent (20%) of such charges, and (iii) any other
damages or costs suffered by or awards against MCI WorldCom
resulting from disputed transfers.
(C) Excluded ANIs Customer agrees to provide all ANIs to be
carried on the MCI WorldCom network prior to the provisioning
of such ANIs with the LECs. MCI WorldCom has the right to
reject any ANI supplied by Customer for any of the following
reasons: (i) MCI WorldCom is not authorized to provide or
does not provide long distance services in the particular
jurisdiction in which the ANI is located, (ii) a particular
ANI submitted by Customer is not in proper form, (iii)
Customer is not certified to provide long distance services
in the jurisdiction in which the ANI is located, (iv)
Customer is in material default of this Agreement, (v)
Customer fails to cooperate with MCI WorldCom in implementing
reasonable verification processes determined by MCI WorldCom
to be necessary or appropriate in the conduct of business,
(vi) such ANI is rejected by a LEC (e.g., "PIC freezes"), or
(vii) any other circumstance reasonably determined by MCI
WorldCom which could adversely affect MCI WorldCom's
performance under this Agreement or MCI WorldCom's general
ability to transfer its other customers or other end users to
the MCI WorldCom network, including without limitation, MCI
WorldCom's ability to electronically effect PIC changes with
the LECs. In the event MCI WorldCom rejects an ANI, MCI
WorldCom will notify Customer of its decision specifically
describing the rejected ANI and the reason(s) for rejecting
that ANI, and will not incur any further liability under this
Agreement with regard to that ANI. Further, any ANI
previously requested by Customer for Switched Services may be
deactivated by MCI WorldCom if no Switched Services billings
relevant thereto are generated in any three (3) consecutive
calendar month/billing periods. MCI WorldCom will be under
no obligation to accept ANIs submitted by Customer within the
last full calendar month period preceding the scheduled
expiration of the Service Term.
(D) Records Customer will maintain documents and records
("RECORDS") supporting Customer's re-sale of Switched
Services, including, but not limited to, appropriate and
valid documentation of each subscribing End User's
authorization to Customer to act as the End User's PIC for a
<PAGE>
period of not less than twelve (12) months or such longer
period as may be required by applicable law, rule or
regulation. Customer shall indemnify MCI WorldCom for any
and all costs, charges or expenses incurred by MCI WorldCom
arising from disputed PIC selections involving Switched
Services to be provided to Customer.
(E) Customer Service Customer will be solely responsible for
billing its End Users and providing such End Users with
customer service. Customer agrees to notify MCI WorldCom as
soon as reasonably possible in the event an End User notifies
Customer of problems associated with the Switched Services,
including without limitation, excess noise, echo, or loss of
service.
4. CUSTOMER'S RESPONSIBILITIES.
(A) Expedite Charges In the event Customer requests expedited
services and/or changes to Service Requests and MCI WorldCom
agrees to such request, MCI WorldCom will pass through the charges
assessed by any supplying parties (e.g., local access providers)
for such expedited charges and/or changes to Service Requests
involved at the same rate to Customer. MCI WorldCom may further
condition its performance of such request upon Customer's payment
of such additional charges to MCI WorldCom.
(B) Fraudulent Calls Customer shall indemnify and hold MCI WorldCom
harmless from any and all costs, expenses, damages, claims or
actions arising from fraudulent calls of any nature which may
comprise a portion of the Switched Services to the extent that the
party claiming the call(s) in question to be fraudulent is (or had
been at the time of the call) an End User of such Switched
Services through Customer or an end user of the Switched Services
through Customer's distribution channels. Customer shall not be
excused from paying MCI WorldCom for Switched Services provided to
Customer or any portion thereof on the basis that fraudulent calls
comprised a corresponding portion of the Switched Services. In
the event MCI WorldCom discovers fraudulent calls being made (or
reasonably believes fraudulent calls are being made), nothing
contained herein shall prohibit MCI WorldCom from taking immediate
action (without notice to Customer) that is reasonably necessary
to prevent such fraudulent calls from taking place, including
without limitation, denying Switched Services to particular ANIs
or terminating Switched Services to or from specific locations.
Provided, however, nothing contained herein will impose any
obligation on MCI WorldCom to take any action with respect to
fraudulent calls.
5. CHARGES AND PAYMENT TERMS.
(A) Payment MCI WorldCom billings for Switched Services hereunder are
made on a monthly basis (or such other basis as may be mutually
agreed to by the parties) following Start of Service. Subject to
Subsection 5(C) below, Switched Services shall be billed at the
rates set forth in the applicable Attachment(s). Discounts, if
any, applicable to the rates for certain Services are set forth in
the applicable Attachment(s). Customer will pay all undisputed
charges relative to each MCI WorldCom invoice for Switched
Services within thirty (30) days of the invoice date set forth on
each MCI WorldCom invoice to Customer ("DUE DATE"). If payment is
not received by MCI WorldCom on or before the Due Date, Customer
shall also pay a late fee in the amount of the lesser of one and
one-half percent (11/2%) of the unpaid balance of the charges for
Switched Services rendered per month or partial month that such
payment is late, or the maximum lawful rate under applicable state
law.
(B) Taxes Customer acknowledges and understands that MCI WorldCom
computes all charges herein exclusive of any applicable federal,
state or local use, excise, gross receipts, sales and privilege
<PAGE>
taxes, duties, fees or similar liabilities (other than general
income or property taxes), whether charged to or against MCI
WorldCom or Customer because of the Switched Services furnished to
Customer ("ADDITIONAL CHARGES"). Customer shall pay such
Additional Charges in addition to all other charges provided for
herein. Customer will not be liable for certain Additional
Charges if Customer provides MCI WorldCom with an appropriate
exemption certificate.
(C) Modification of Charges MCI WorldCom reserves the right to
eliminate particular Switched Services and/or modify charges for
particular Switched Services (which charge modifications shall not
exceed then-current generally available MCI WorldCom charges for
comparable services), upon not less than sixty (60) days prior
notice to Customer, which notice will state the effective date for
the charge modification. In the event MCI WorldCom notifies
Customer of the elimination of a particular Switched Service
and/or an increase in the charges, Customer may terminate this
Agreement without incurring a cancellation charge (other than
payment for Services provided by MCI WorldCom up through the
effective date of cancellation) only with respect to the Switched
Service(s) affected by the increase in charges. In order to
cancel such Switched Service(s), Customer must notify MCI
WorldCom, in writing, at least thirty (30) days prior to the
effective date of the increase in charges. In the event Customer
cancels its subscription to a particular Switched Service as
described in this Subsection 5(C), MCI WorldCom and Customer agree
to negotiate in good faith concerning Customer's minimum monthly
commitment, if any, described in the PET.
(D) Billing Disputes Notwithstanding the foregoing, amounts
reasonably disputed by Customer (along with late fees
attributable to such amounts) shall apply but shall not be
due and payable for a period of sixty (60) days following the
Due Date therefor, provided Customer: (i) pays all undisputed
charges on or before the Due Date, (ii) presents a written
statement and supporting documentation of any billing
discrepancies to MCI WorldCom in reasonable detail on or
before the Due Date of the invoice in question, and (iii)
negotiates in good faith with MCI WorldCom for the purpose of
resolving such dispute within said sixty (60) day period. In
the event such dispute is mutually agreed upon and resolved
in favor of MCI WorldCom, Customer agrees to pay MCI WorldCom
the disputed amounts together with any applicable late fees
within ten (10) days of the resolution (the "ALTERNATE DUE
DATE"). In the event such dispute is mutually agreed upon
and resolved in favor of Customer, Customer will receive a
credit for the disputed charges in question and the
applicable late fees. In the event MCI WorldCom has
responded to Customer's dispute in writing and the parties
fail to mutually resolve or settle the dispute within such
sixty (60) day period (unless MCI WorldCom has agreed in
writing to extend such period) all disputed amounts together
with late fees shall become due and payable, and this
provision shall not be construed to prevent Customer from
pursuing any available legal remedies. MCI WorldCom shall
not be obligated to consider any Customer notice of billing
discrepancies which are received by MCI WorldCom more than
sixty (60) days following the Due Date of the invoice in
question.
6. CREDIT; CREDITWORTHINESS:
(A) Credit Customer's execution of this Agreement signifies
Customer's acceptance of MCI WorldCom's initial and
continuing credit approval procedures and policies. MCI
WorldCom reserves the right to withhold initiation or full
implementation of any or all Switched Services under this
Agreement pending MCI WorldCom's initial satisfactory credit
review and approval thereof which may be conditioned upon
terms specified by MCI WorldCom, including, but not limited
to, security for payments due hereunder in the form of a cash
deposit or other means. MCI WorldCom reserves the right to
modify its requirements, if any, with respect to any security
<PAGE>
or other assurance provided by Customer for payments due
hereunder in light of Customer's actual usage when compared
to projected usage levels upon which any security or
assurance requirement was based.
(B) Creditworthiness If at any time there is a material adverse
change in Customer's creditworthiness, then in addition to any
other remedies available to MCI WorldCom, MCI WorldCom may elect,
in its sole discretion, to exercise one or more of the following
remedies: (i) cause Start of Service for Switched Services
described in a previously executed Service Request to be withheld;
(ii) cease providing Switched Services pursuant to a Suspension
Notice in accordance with Section 7(A); (iii) decline to accept a
Service Request or other requests from Customer to provide
Switched Services which MCI WorldCom may otherwise be obligated to
accept; and/or (iv) condition its provision of Switched Services
or acceptance of a Service Request on Customer's assurance of
payment which shall be a deposit or such other means to establish
reasonable assurance of payment. An adverse material change in
Customer's creditworthiness shall include, but not be limited to:
(i) Customer's material default of its obligations to MCI WorldCom
under this or any other agreement with MCI WorldCom; (ii) failure
of Customer to make full payment of all undisputed charges due
hereunder on or before the Due Date (or disputed charges on or
before the Alternate Due Date) on three (3) or more occasions
during any period of twelve (12) or fewer months or Customer's
failure to make such payment on or before the Due Date (or the
Alternate Due Date, if applicable) in any two (2) consecutive
months; (iii) acquisition of Customer (whether in whole or by
majority or controlling interest) by an entity which is insolvent,
which is subject to bankruptcy or insolvency proceedings, which
owes past due amounts to MCI WorldCom or any entity affiliated
with MCI WorldCom or which is a materially greater credit risk
than Customer; or, (iv) Customer's being subject to or having
filed for bankruptcy or insolvency proceedings or the legal
insolvency of Customer.
7. REMEDIES FOR BREACH.
(A) Suspension of Service In the event all undisputed charges due
pursuant to MCI WorldCom's invoice are not paid in full by the Due
Date or disputed charges owed by Customer, if any, are not paid in
full by the Alternate Due Date, MCI WorldCom shall have the right,
after giving Customer at least five (5) days prior notice and
opportunity to pay such charges within such 5-day period, to
suspend all or any portion of the Switched Services to Customer
("SUSPENSION NOTICE") until such time (designated by MCI WorldCom
in its Suspension Notice) as Customer has paid in full all
undisputed charges then due to MCI WorldCom, including any late
fees. Following such payment, MCI WorldCom shall reinstitute
Switched Services to Customer only when Customer provides MCI
WorldCom with satisfactory assurance of Customer's ability to pay
for such Switched Services (i.e., a deposit, letter of credit or
other means acceptable to MCI WorldCom) and Customer's advance
payment of the cost of reinstituting such Switched Services. If
Customer fails to make the required payment by the date set forth
in the Suspension Notice, Customer will be deemed to have canceled
this Agreement as of the date set forth in the Suspension Notice
which cancellation shall not relieve Customer for payment of the
Cancellation Charge as described in Section 2.
(B) Disconnection of Service In the event Customer is in material
breach of this Agreement, including without limitation, failure to
pay all undisputed charges due hereunder by the date stated in the
Suspension Notice described in Subsection 7(A) above, MCI WorldCom
shall have the right, after giving Customer at least five (5) days
prior written notice and opportunity to cure (which notice may be
given instead of or in conjunction with the Suspension Notice
described in Subsection 7(A) above), and in addition to
foreclosing any security interest MCI WorldCom may have, to (i)
disconnect all or any portion the Switched Services being provided
hereunder and/or terminate this Agreement; (ii) withhold billing
information from Customer; and/or (iii) contact the End Users (for
whom calls are originated and terminated solely over facilities
comprising the MCI WorldCom network) directly and bill such End
Users directly until such time as MCI WorldCom has been paid in
full for the amount owed by Customer. If Customer fails to make
payment by the date stated in the Suspension Notice and MCI
<PAGE>
WorldCom, after giving Customer five (5) days prior written
notice, terminates this Agreement as provided in this Section 7,
such termination shall not relieve Customer for payment of the
Cancellation Charge as described in Section 2 above.
8. WARRANTY. MCI WorldCom will use reasonable efforts under the
circumstances to maintain its overall network quality. The quality of
Switched Services provided hereunder shall be consistent with
telecommunications common carrier industry standards, government regulations
and sound business practices. MCI WORLDCOM MAKES NO OTHER WARRANTIES ABOUT
THE SWITCHED SERVICES PROVIDED HEREUNDER, EXPRESS OR IMPLIED, INCLUDING BUT
NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE.
9. LIABILITY; GENERAL INDEMNITY; REIMBURSEMENT.
(A) Limited Liability IN NO EVENT WILL EITHER PARTY HERETO BE LIABLE
TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL LOSSES OR DAMAGES, INCLUDING WITHOUT LIMITATION,
LOSS OF REVENUE, LOSS OF CUSTOMERS OR CLIENTS, LOSS OF GOODWILL OR
LOSS OF PROFITS ARISING IN ANY MANNER FROM THIS AGREEMENT AND THE
PERFORMANCE OR NONPERFORMANCE OF OBLIGATIONS HEREUNDER.
(B) General Indemnity In the event parties other than Customer (e.g.,
Customer's End Users) shall have use of the Switched Services
through Customer, then Customer agrees to forever indemnify and
hold MCI WorldCom, its affiliated companies and any third-party
provider or operator of facilities employed in provision of the
Switched Services harmless from and against any and all claims,
demands, suits, actions, losses, damages, assessments or payments
which those parties may assert arising out of or relating to any
defect in the Switched Services or MCI WorldCom's provision or
nonprovision of Switched Services under this Agreement.
(C) Reimbursement Customer agrees to reimburse MCI WorldCom for all
reasonable costs and expenses incurred by MCI WorldCom due to MCI
WorldCom's direct participation (either as a party or witness) in
any administrative, regulatory or criminal proceeding concerning
Customer if MCI WorldCom's involvement in said proceeding is based
solely on MCI WorldCom's provision of Switched Services to Customer.
10. FORCE MAJEURE. If MCI WorldCom's performance of this Agreement or any
obligation hereunder is prevented, restricted or interfered with by causes
beyond its reasonable control including, but not limited to, acts of God,
fire, explosion, vandalism, cable cut, storm or other similar occurrence,
any law, order, regulation, direction, action or request of the United
States government, or state or local governments, or of any department,
agency, commission, court, bureau, corporation or other instrumentality of
any one or more such governments, or of any civil or military authority, or
by national emergency, insurrection, riot, war, strike, lockout or work
stoppage or other labor difficulties, or supplier failure, shortage, breach
or delay, then MCI WorldCom shall be excused from such performance on a
day-to-day basis to the extent of such restriction or interference. MCI
WorldCom shall use reasonable efforts under the circumstances to avoid or
remove such causes of nonperformance and shall proceed to perform with
reasonable dispatch whenever such causes are removed or cease.
11. STATE CERTIFICATION. Customer warrants that in all jurisdictions in
which it provides long distance services that require certification, it has
obtained the necessary certification from the appropriate governmental
authority and, if requested by MCI WorldCom, agrees to provide proof of such
<PAGE>
certification acceptable to MCI WorldCom. In the event Customer is
prohibited, either on a temporary or permanent basis, from continuing to
conduct its telecommunications operations in a given jurisdiction, Customer
shall (i) immediately notify MCI WorldCom by facsimile, (ii) send written
notice to MCI WorldCom within twenty-four (24) hours of such prohibition,
and (iii) take immediate steps to suspend or discontinue its use of Switched
Services in such jurisdiction.
12. INTERSTATE/INTRASTATE SERVICE. Except with respect to Switched
Services specifically designated as intrastate Services or international
Services, the rates provided to Customer in the applicable Attachments are
applicable only to Switched Services if such Switched Services are used for
carrying interstate telecommunications (i.e., Switched Services subject to
FCC jurisdiction). MCI WorldCom shall not be obligated to provide Switched
Services with end points within a single state or Switched Services which
originate/terminate at points both of which are situated within a single
state. In those states where MCI WorldCom is authorized to provide
intrastate service (i.e., telecommunications transmission services subject
to the jurisdiction of state regulatory authorities), MCI WorldCom will, at
its option, provide intrastate Switched Services pursuant to applicable
state laws, regulations and applicable tariff, if any, filed by MCI WorldCom
with state regulatory authorities as required by applicable law.
13. AUTHORIZED USE OF MCI WORLDCOM NAME; PRESS RELEASES. Without MCI
WorldCom's prior written consent, Customer shall not (i) refer to itself as
an authorized representative of MCI WorldCom whenever it refers to the
Switched Services in promotional, advertising or other materials, or (ii)
use MCI WorldCom's logos, trade marks, service marks, or any variations
thereof in any of its promotional, advertising or other materials.
Additionally, Customer shall provide to MCI WorldCom for its prior review
and written approval, all promotions, advertising or other materials or
activity using or displaying MCI WorldCom's name or the Services to be
provided by MCI WorldCom. In the event MCI WorldCom fails to provide its
approval such promotion, advertising or other materials shall be deemed not
approved. Customer agrees to change or correct, at Customer's expense, any
such material or activity which MCI WorldCom, in its sole judgment,
determines to be inaccurate, misleading or otherwise objectionable for any
reason. Customer is explicitly authorized to only use the following
statements in its sales literature or if in response to an inquiry by
Customer's End User: (i) "Customer utilizes the MCI WorldCom network", (ii)
"Customer utilizes MCI WorldCom's facilities", (iii) "MCI WorldCom provides
only the network facilities", and (iv) "MCI WorldCom is our network services
provider". Except as specifically provided in this Section 13, the parties
further agree that any press release, advertisement or publication generated
by a party regarding this Agreement, the Services provided hereunder or in
which a party desires to mention the name of the other party or the other
party's parent or affiliated company(ies), will be submitted to the
non-publishing party for its written approval prior to publication.
14. NOTICES. Notices under this Agreement shall be in writing and
delivered to the person identified below at the offices of the parties as
they appear below or as otherwise provided for by proper notice hereunder.
Customer shall notify MCI WorldCom in writing if Customer's billing address
is different than the address shown below. The effective date for any
notice under this Agreement shall be the date of actual receipt of such
notice by the appropriate party, notwithstanding the date of mailing or
transmittal via hand delivery or facsimile.
IF TO MCI WORLDCOM: WorldCom Network Services, Inc.
6929 North Lakewood Avenue
Tulsa, Oklahoma 74117
Attn: Wholesale Services
<PAGE>
IF TO CUSTOMER: GTC TELECOM CORP.
3151 Airway Ave. Bld. P-3
Costa Mesa, CA 92626
Attn: Paul Sandhu
Telephone No.: 714-549-7700
Fax No.: 714-549-7707
15. NO-WAIVER. No term or provision of this Agreement shall be deemed
waived and no breach or default shall be deemed excused unless such waiver
or consent shall be in writing and signed by the party claimed to have
waived or consented. A consent to waiver of or excuse for a breach or
default by either party, whether express or implied, shall not constitute a
consent to, waiver of, or excuse for any different or subsequent breach or
default.
16. PARTIAL INVALIDITY; GOVERNMENT ACTION.
(A) Partial Invalidity If any part of any provision of this Agreement
or any other agreement, document or writing given pursuant to or
in connection with this Agreement shall be invalid or
unenforceable under applicable law, rule or regulation, that part
shall be ineffective to the extent of such invalidity only,
without in any way affecting the remaining parts of that provision
or the remaining provisions of this Agreement. In such event,
Customer and MCI WorldCom will negotiate in good faith with
respect to any such invalid or unenforceable part to the extent
necessary to render such part valid and enforceable.
(B) Government Action Upon thirty (30) days prior notice, either
party shall have the right, without liability to the other, to
cancel an affected portion of the Switched Service if any material
rate or term contained in this Agreement and relevant to the
affected Switched Service is substantially changed (to the
detriment of the terminating party) or found to be unlawful or the
relationship between the parties hereunder is found to be unlawful
by order of the highest court of competent jurisdiction to which
the matter is appealed, the FCC, or other local, state or federal
government authority of competent jurisdiction. Provided, the
30-day notice required hereunder may be shortened as necessary if
such order goes into effect prior to thirty (30) days.
17. EXCLUSIVE REMEDIES. Except as otherwise specifically provided for
herein, the remedies set forth in this Agreement comprise the exclusive
remedies available to either party at law or in equity.
18. USE OF SERVICE. Upon MCI WorldCom's acceptance of a Service Request
hereunder, MCI WorldCom will provide the Switched Services specified therein
to Customer upon condition that such Switched Services shall not be used for
any unlawful purpose. The provision of Switched Services is not intended to
and will not create a partnership or joint venture between the parties or
result in a joint communications service offering to any third parties, and
MCI WorldCom and Customer agree that this Agreement, to the extent it is
subject to FCC regulation, is an inter-carrier agreement which is not
subject to the filing requirements of Section 211(a) of the Communications
Act of 1934 (47 U.S.C. Section 211(a)) as implemented in 47 C.F.R. Section
43.51.
19. CHOICE OF LAW; FORUM.
(A) Law This Agreement shall be construed under the laws of the State
of Oklahoma without regard to choice of law principles.
<PAGE>
(B) Forum Any legal action or proceeding with respect to this
Agreement may be brought in the Courts of the State of Oklahoma in
and for the County of Tulsa or the United States of America for
the Northern District of Oklahoma. By execution of this
Agreement, both Customer and MCI WorldCom hereby submit to such
jurisdiction, hereby expressly waiving whatever rights may
correspond to either of them by reason of their present or future
domicile. In furtherance of the foregoing, Customer and MCI
WorldCom hereby agree to service by U.S. Mail at the notice
addresses referenced in Section 14. Such service shall be deemed
effective upon the earlier of actual receipt or seven (7) days
following the date of posting.
20. PROPRIETARY INFORMATION.
(A) Confidential Information The parties understand and agree that
the terms and conditions of this Agreement (but not the existence
thereof), all documents referenced herein (including invoices to
Customer for Switched Services provided hereunder), communications
between the parties regarding this Agreement or the Switched
Services to be provided hereunder (including price quotes to
Customer for any services proposed to be provided or actually
provided hereunder), as well as such information relevant to any
other agreement between the parties (collectively "CONFIDENTIAL
INFORMATION"), are confidential as between Customer and MCI WorldCom.
(B) Limited Disclosure A party shall not disclose Confidential
Information (unless subject to discovery or disclosure pursuant to
legal process), to any other party other than the directors,
officers, and employees of a party or a party's agents including
their respective attorneys, consultants, brokers, lenders,
insurance carriers or bona fide prospective purchasers who have
specifically agreed in writing to nondisclosure of the terms and
conditions hereof. Any disclosure hereof required by legal
process shall only be made after providing the non-disclosing
party with notice thereof in order to permit the non-disclosing
party to seek an appropriate protective order or exemption.
Violation by a party or its agents of the foregoing provisions
shall entitle the non-disclosing party, at its option, to obtain
injunctive relief without a showing of irreparable harm or injury
and without bond.
(C) Survival of Confidentiality The provisions of this Section 20
will be effective as of the date of this Agreement and remain in
full force and effect for a period which will be the longer of (i)
one (1) year following the date of this Agreement, or (ii) one (1)
year from the termination or expiration of all Services hereunder.
21. SUCCESSORS AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
or assigns, provided, however, that Customer shall not assign or transfer
its rights or obligations under this Agreement without the prior written
consent of MCI WorldCom, which consent shall not be unreasonably withheld or
delayed, and further provided that any assignment or transfer without such
consent shall be void.
22. GENERAL.
(A) Survival of Terms The terms and provisions contained in this
Agreement that by their sense and context are intended to survive
the performance thereof by the parties hereto shall so survive the
completion of performance and termination of this Agreement,
including, without limitation, provisions for indemnification and
the making of any and all payments due hereunder.
<PAGE>
(B) Headings Descriptive headings in this Agreement are for
convenience only and shall not affect the construction of this
Agreement.
(C) Industry Terms Words having well-known technical or trade
meanings shall be so construed, and all listings of items shall
not be taken to be exclusive, but shall include other items,
whether similar or dissimilar to those listed, as the context
reasonably requires.
(D) Rule of Construction No rule of construction requiring
interpretation against the drafting party hereof shall apply in
the interpretation of this Agreement.
23. ENTIRE AGREEMENT. This Agreement consists of (i) all the terms and
conditions contained herein, and (ii) all documents incorporated herein
specifically by reference. This Agreement constitutes the complete and
exclusive statement of the understandings between the parties and supersedes
all prior and contemporaneous proposals and agreements (oral or written)
between the parties relating to the Switched Services provided hereunder.
No subsequent agreement between the parties concerning the Switched Services
(including further Attachments) shall be effective or binding unless it is
made in writing and signed by Customer and MCI WorldCom.
IN WITNESS WHEREOF, the parties have executed this Telecommunications
Services Agreement (Switched Services) as of the dates set forth below which
Agreement will be effective as described in the PET attached hereto.
WORLDCOM NETWORK SERVICES, INC. GTC TELECOM CORP.
By: /s/ Dennis P. Delaney By: /s/ Paul Sandhu
(Signature) (Signature)
Dennis P. Delaney Paul Sandhu
(Print Name) (Print Name)
Director President
(Title) (Title)
8-20-99 8/17/99
(Date) (Date)
<PAGE>
EFFECTIVE DATE: SEPT. 1, 1999
WORLDCOM NETWORK SERVICES, INC.
PROGRAM ENROLLMENT TERMS
(SWITCHED SERVICES)
These PROGRAM ENROLLMENT TERMS (the "PET") are made by and
between WorldCom Network Services, Inc. ("MCI WORLDCOM") and Genx,
LLC (d/b/a Preferred Discount Plan) ("CUSTOMER") and are a part of
their Telecommunications Services Agreement for Switched Services.
Capitalized terms not defined herein shall have the meaning ascribed
to them in the TSA, the applicable Attachment(s) or applicable
tariffs referenced in such Attachment(s). Neither Customer nor MCI
WorldCom shall be obligated with respect to the Switched Services
described in any Attachment, nor any other condition of such
Switched Services until Customer has submitted and MCI WorldCom has
accepted a Service Request with respect to the particular Switched
Service.
1. SERVICE TERM:
(A) The Service Term shall commence as of the Effective Date (as
described below) and shall continue for a period of
twenty-four (24) months (the "SERVICE TERM"). Upon expiration
of the Service Term, the Switched Services in question will
continue to be provided pursuant to the same terms and
conditions as are then in effect (including without
limitation, the applicable rates, discounts and commitments,
if any), subject to termination by either party upon thirty
(30) days prior written notice to the other party. MCI
WorldCom will not be obligated to accept any Service Request
under this Agreement if Customer's initial Service Request is
(i) not submitted by Customer within thirty (30) days of the
Effective Date of this Agreement, and (ii) not subject to a
Requested Service Date within ninety (90) days of the
Effective Date.
(A) For purposes of this Agreement, the appropriate Effective Date
as determined under this Subsection (B) will be filled in the
area provided above by MCI WorldCom. If Customer has an
existing switched services agreement with MCI WorldCom or its
affiliates, the "EFFECTIVE DATE" will be the 1st day of the
month following the later of (i) twenty-one (21) days after
this Agreement has been fully executed by both parties, or
(ii) Customer has received a satisfactory credit review and
approval from MCI WorldCom's Credit Department pursuant to
Subsection 6(A) of the TSA, and all security documentation, if
any, required by MCI WorldCom has been properly executed and
delivered to MCI WorldCom (collectively, the "CREDIT REVIEW").
If Customer does not have an existing switched services
agreement with MCI WorldCom or its affiliates, the "EFFECTIVE
DATE" will be the date this Agreement has been fully executed
by both parties and the Credit Review has been completed.
<PAGE>
2. MONTHLY REVENUE: For purposes of this Agreement, Customer's
"MONTHLY REVENUE" will be comprised of (i) the aggregation of
all of Customer's Switched Services Revenue as such term is
described in each of the applicable Attachments, PLUS (ii)
Customer's Data Revenue (as defined herein) from MCI WorldCom.
For purposes of this Agreement, Customer's "DATA REVENUE"
will be comprised of Customer's monthly recurring private line
Interexchange Service charges (i.e., both Domestic and
International) PLUS Customer's Monthly Port Charges, Monthly
CIR Charges and Monthly NNI Charges, if any, as are
specifically described in an agreement for Frame Relay
Services between MCI WorldCom and Customer. Customer's
Monthly Revenue will not include any pro rata charges, access
charges, ancillary or special feature charges, such as,
Authorization codes or CDR Tapes, or any other charges other
than those identified by the relevant MCI WorldCom invoice as
charges specifically mentioned in this Section 2.
3. SERVICE INTERCONNECTIONS.
(A) In order to utilize (i) CLASSIC 2000 CARRIER TERMINATION
Service, CLASSIC 2000 CARRIER ORIGINATION Service, TRANSCENDJ
2000 CARRIER TERMINATION Service, TRANSCENDJ 2000 CARRIER
ORIGINATION Service, ACCESS BASED BILLING CARRIER TERMINATION
Service, ACCESS BASED BILLING CARRIER ORIGINATION Service, one
or more full time dedicated connections between Customer's
network and the MCI WorldCom network at one or more MCI
WorldCom designated locations ("MCI WORLDCOM POP") must be
established ("CARRIER SERVICE INTERCONNECTION(S)"), (ii)
CLASSIC 2000 END USER DEDICATED ACCESS Service (1+ or TOLL
FREE), TRANSCENDJ 2000 END USER DEDICATED ACCESS Service (1+
or TOLL FREE), or ACCESS BASED BILLING END USER DEDICATED
ACCESS Service (1+ or TOLL FREE), one or more full time
dedicated connections between an End User's private branch
exchange ("PBX") or other customer premise equipment and the
MCI WorldCom network at one or more MCI WorldCom POP(s) must
be established ("DEDICATED SERVICE INTERCONNECTION(S)"), and
(iii) PRISM I TERMINATION Service and ADVANCED TOLL FREE
Service, one or more full time dedicated connections between
Customer's network and the MCI WorldCom network at one or more
MCI WorldCom POP(s) must be established ("CARRIER PLUS SERVICE
INTERCONNECTION(S)"). Each Carrier Service Interconnection,
Carrier PLUS Service Interconnection and Dedicated Service
Interconnection shall be comprised of one or more dedicated
access circuits, as the case may be. Carrier Service
Interconnection(s), Carrier PLUS Service Interconnections and
Dedicated Service Interconnection(s) are collectively referred
to as "SERVICE INTERCONNECTIONS".
(B) The circuit(s) comprising each Service Interconnection to a
MCI WorldCom POP shall be requested by Customer on the
appropriate MCI WorldCom Service Request. Each Service
Request will describe (among other things) the MCI WorldCom
POP to which a Service Interconnection is to be established,
the Requested Service Date therefor, the type and quantity of
circuits comprising the Service Interconnection and any
charges and other information relevant thereto, such as,
Customer's originating or terminating switch location, as the
case may be. Such additional information may be obtained from
Customer or gathered by MCI WorldCom and recorded in Technical
Information Sheets provided by MCI WorldCom.
<PAGE>
(C) Once ordered, and unless otherwise provided for in this
Agreement, Service Interconnection(s) or the circuits
comprising each Service Interconnection may only be canceled
by Customer upon not less than thirty (30) days prior written
notice to MCI WorldCom.
(D) With respect to a Carrier Service Interconnection or a Carrier
PLUS Service Interconnection, Customer shall be solely
responsible for establishing and maintaining each Carrier
Service Interconnection or Carrier PLUS Service
Interconnection over facilities subject to MCI WorldCom's
approval. With respect to Dedicated Service Interconnections,
MCI WorldCom will provision and maintain local access
facilities between the End User location (i.e., PBX) and the
MCI WorldCom POP, subject to any LEC charges plus other
applicable terms and charges set forth in MCI WorldCom's
applicable tariffs (or the applicable tariffs of its
affiliates), however, Customer may elect to be responsible for
establishing each Dedicated Service Interconnection over
facilities subject to MCI WorldCom's approval. Service
Interconnections shall be only comprised of DS-1 facilities
unless otherwise provided for in the Service Request and
agreed to in writing by MCI WorldCom. If a Service
Interconnection is proposed to be made via a local exchange
carrier, MCI WorldCom will have the authority to direct
Customer to utilize MCI WorldCom's entrance facilities or
local serving arrangement ("LSA") with the relevant local
telephone operating company, and Customer will be subject to a
non-discriminatory charge therefor from MCI WorldCom. The
monthly recurring charge relevant to Customer's use of LSA
capacity shall be subject to upward adjustment by MCI WorldCom
from time to time which adjustment, if any, shall not exceed
the rate that otherwise would be charged for the equivalent
switched access capacity between the same points by the
relevant local telephone operating company pursuant to its
published charges for the type of service in question.
(E) If other private line interexchange facilities are necessary
to establish a Service Interconnection, and such facilities
are requested from MCI WorldCom, such facilities will be
provided on an individual case basis.
(F) Commencing with the second full calendar month following Start
of Service for each circuit comprising a Service
Interconnection (i.e., Carrier Service Interconnections,
Dedicated Service Interconnections and Carrier PLUS
Interconnections) and thereafter, Customer will maintain
Switched Services measured usage charges per DS-1 (or DS-1
equivalent circuit) of not less than an average of $1,500 per
calendar month/billing period ("MINIMUM MONTHLY USAGE"). In
the event Customer fails to obtain the required Minimum
Monthly Usage for the circuits comprising each Service
Interconnection, MCI WorldCom will charge and Customer will
pay the difference between the total combined number of DS-1s
times the Minimum Monthly Usage (i.e., $1,500) and Customer's
total combined Switched Services measured usage charges for
the circuit(s) comprising the Service Interconnection in
question ("MINIMUM USAGE CHARGE"). MCI WorldCom CLASSIC 2000
CARRIER TERMINATION Service, CLASSIC 2000 CARRIER ORIGINATION
Service and CLASSIC 2000 END USER DEDICATED Service (1+ and
TOLL FREE) minutes carried over the same Service
Interconnection, TRANSCENDJ 2000 TERMINATION Service,
TRANSCENDJ 2000 CARRIER ORIGINATION Service and TRANSCENDJ
<PAGE>
2000 END USER DEDICATED ACCESS Service (1+ and TOLL FREE)
minutes carried over the same Service Interconnection, ACCESS
BASED BILLING 2000 CARRIER TERMINATION Service, ACCESS BASED
CARRIER ORIGINATION Service and ACCESS BASED BILLING END USER
DEDICATED Service (1+ and TOLL FREE) carried over the same
Service Interconnection, or PRISM I TERMINATION Service and
ADVANCED TOLL FREE Service minutes carried over the same
Service Interconnection, shall be included in determining if
Customer has met the Minimum Monthly Usage requirement
described herein.
Example: Assume Customer's actual Switched Services
measured usage charges for 2 DS-1s comprising a Carrier
Service Interconnection at MCI WorldCom POP A is $3,500,
Customer's actual Switched Services measured usage charges for
2 DS-1s comprising a Carrier Service Interconnection at MCI
WorldCom POP B is $4,500, and Customer's End User's actual
Switched Services measured usage charges for 1 DS-1 comprising
a Dedicated Service Interconnection at MCI WorldCom POP C is
$600. Customer would not be subject to a Minimum Usage Charge
since Customer's actual Minimum Monthly Usage is $8,600 which
exceeds Customer's Minimum Monthly Usage of $7,500 [5 x $1,500].
(G) DS-1 circuits comprising all Service Interconnections will be
subject to a nonrecurring $400 per DS-1 switch port
installation charge (provided the maximum charge hereunder
will be $2,000 for up to 28 DS-1s ordered at the same time),
and DS-3 circuits comprising all Service Interconnections will
be subject to a nonrecurring per DS-3 switch port installation
charge as determined on an individual case basis.
4. APPLICATION OF DISCOUNTS:
(A) With respect to Classic 2000, and ACCESS BASED BILLING
products and services, after determining Customer's applicable
Discount under the appropriate Attachment(s), the applicable
Discount will only be applied to Customer's Interstate
Switched Services Revenue (including Alaska, Hawaii, the
United States Virgin Islands, Puerto Rico, Guam and the
Northern Marianas Islands unless otherwise noted in an
Attachment and including 1+ and Toll Free usage unless
otherwise noted in an Attachment). With respect to TRANSCENDJ
2000 products and services, after determining Customer's
applicable Discount under the appropriate Attachment(s), the
applicable Discount will only be applied to Customer's
Domestic Transport Charges and Customer's Extended Transport
Charges to/from Extended Locations unless otherwise noted in
an Attachment. With respect to PRISM I TERMINATION Service
and ADVANCED TOLL FREE Service, after determining Customer's
applicable Discount under the appropriate Attachment, the
applicable Discount will only be applied to Customer's
Interstate Switched Services Revenue unless otherwise noted in
the applicable Attachment.
<PAGE>
(B) During the Service Term, with respect to Classic 2000,
TRANSCENDJ 2000 and ACCESS BASED BILLING products and
services, accumulated credits derived from the applicable
Discounts will be applied in arrears commencing with the first
day of the month following the Effective Date, that is, the
Discount will be applied to Customer's measured usage charges
for the preceding month (the "DISCOUNT PERIOD"). The initial
Discount Period shall include any partial calendar month
following Start of Service, or such other time basis as may be
mutually determined by the parties. With respect to Classic
2000, TRANSCENDJ 2000 and ACCESS BASED BILLING products and
services, each Discount will result in the application of a
credit obtained during the Discount Period to the MCI WorldCom
invoice to Customer relevant to the billed measured Switched
Service for the calendar month next following the completion
of each Discount Period, provided Customer has paid undisputed
charges (including any late fees, if applicable) for that
month and has not otherwise been subject to a Suspension
Notice in accordance with the Agreement. Failure of Customer
to comply with the foregoing provision shall entitle MCI
WorldCom to withhold any credit due Customer for the Discount
Period in question until such charges (including late fees)
have been paid in full.
(C) With respect to all other products and services (not covered
by Subsection (B) above), each Discount, if applicable, will
result in the application of a credit obtained during the
Discount Period to the MCI WorldCom invoice to Customer
relevant to the billed measured Switched Service for the
calendar month immediately following the completion of each
Discount Period, provided Customer has paid undisputed charges
(including any late fees, if applicable) for that month and
has not otherwise been subject to a Suspension Notice in
accordance with the Agreement. Failure of Customer to comply
with the foregoing provision shall entitle MCI WorldCom to
withhold any credit due Customer for the Discount Period in
question until such charges (including late fees) have been
paid in full.
5. CUSTOMER'S MINIMUM REVENUE COMMITMENT: Commencing with the
first day of the first (1st) billing period following the
Effective Date (as determined under Section 1 above) and
continuing through the end of the Service Term (including any
extensions thereto) (the "COMMITMENT PERIOD"), Customer agrees
to maintain, on a take-or-pay basis, Monthly Revenue (as
defined in Section 2 above) of at least $12,000 ("CUSTOMER'S
MINIMUM REVENUE COMMITMENT").
6. DEFICIENCY CHARGE: In the event Customer does not maintain
Customer's Minimum Revenue Commitment in any month during the
Commitment Period (regardless of whether Customer has
commenced using any or all of the Switched Services described
herein), then for those month(s) only, Customer will pay MCI
WorldCom, in addition to charges due for Switched Services
<PAGE>
provided to Customer, the difference between Customer's
Minimum Revenue Commitment and Customer's actual Monthly
Revenue (as described in Section 2 above) (the "DEFICIENCY
CHARGE"). The Deficiency Charge will be due at the same time
payment is due for Switched Services provided to Customer for
the billing period in which the Deficiency Charge arises, or
immediately in an amount equal to Customer's Minimum Revenue
Commitment for the unexpired portion of the Service Term, if
MCI WorldCom terminates this Agreement based on Customer's
default or if Customer terminates this Agreement pursuant to
Section 2(A) of the TSA. It is agreed that MCI WorldCom's
damages in the event Customer fails to maintain Customer's
Minimum Revenue Commitment shall be difficult or impossible to
ascertain. The provision for a Deficiency Charge in this
Section 6 is intended, therefore, to establish liquidated
damages in the event Customer fails to maintain Customer's
Minimum Revenue Commitment and is not intended as a penalty.
7. SPECIAL INTERNATIONAL RATE:
(A) Notwithstanding anything to the contrary contained in the
applicable Attachment(s) attached hereto, commencing as of the
Effective Date (described in Section 1 above) and continuing
through the end of the Service Term, Customer will receive the
special International rate (the "SPECIAL INTERNATIONAL RATE")
shown below. All other rates will be as set forth in the
applicable Attachment(s). [NOTE: SPECIAL INTERNATIONAL RATE
IS FOR INTERNATIONAL TRANSPORT ONLY AND DOES NOT INCLUDE
DOMESTIC TRANSPORT.]
TRANSCEND 2000 SERVICE: Customer's International Transport
Charge per minute for calls terminating to India will be [NOT
SUBJECT TO DISCOUNT] $0.5100.
(B) Notwithstanding anything to the contrary contained in the TSA,
MCI WorldCom reserves the right to modify the Special
International Rate described in Subsection (A) above (which
charge modifications shall not exceed then-current generally
available MCI WorldCom charges for comparable services), upon
not less than fifteen (15) calendar days' prior notice to
Customer (facsimile being acceptable), which notice will state
the effective date for the charge modification.
8. PRIOR AGREEMENT: The parties acknowledge that they are
parties to that certain Switched Services Telecommunications
Services Agreement dated August 10, 1998, and more
particularly described as TSA#GNX-980820 (the "PRIOR CUSTOMER
AGREEMENT"). The parties agree that as of the Effective Date
described in Section 1 above, (i) the Prior Customer Agreement
will be canceled in its entirety and of no further force or
effect with the exception of certain accrued obligations
arising under the Prior Customer Agreement such as the payment
of money or the application of credits arising prior to the
Effective Date, and provisions intended to survive
termination, such as limitation of liability, indemnification
and confidentiality, and (ii) all Services currently being
<PAGE>
provided under the Prior Customer Agreement will be
provisioned and maintained by MCI WorldCom taking into account
the terms and conditions of this Agreement (including the
rates and discounts described herein).
9. SUSPENSION OF SERVICE. The parties agree to substitute
Subsection 7(A) of the TSA to read in its entirety as follows:
(A) Suspension of Service In the event all undisputed charges due
pursuant to MCI WorldCom's invoice are not paid in full by the
Due Date or disputed charges owed by Customer, if any, are not
paid in full by the Alternate Due Date, MCI WorldCom shall
have the right, after giving Customer at least ten (10) days
prior notice and opportunity to pay such charges within such
10-day period, to suspend all or any portion of the Switched
Services to Customer ("SUSPENSION NOTICE") until such time
(designated by MCI WorldCom in its Suspension Notice) as
Customer has paid in full all undisputed charges then due to
MCI WorldCom, including any late fees. Following such
payment, MCI WorldCom shall reinstitute Switched Services to
Customer only when Customer provides MCI WorldCom with
satisfactory assurance of Customer's ability to pay for such
Switched Services (i.e., a deposit, letter of credit or other
means acceptable to MCI WorldCom) and Customer's advance
payment of the cost of reinstituting such Switched Services.
If Customer fails to make the required payment by the date set
forth in the Suspension Notice, Customer will be deemed to
have canceled this Agreement as of the date set forth in the
Suspension Notice which cancellation shall not relieve
Customer for payment of the Cancellation Charge as described
in Section 2.
10. ATTACHMENTS: This Agreement consists of the TSA, the PET and
the following Attachment(s) [check all that apply] and will
include any additional Attachments agreed to by the parties
after the Effective Date of this Agreement:
G CLASSIC 2000 CARRIER TERMINATION Service CLASSIC 2000
CARRIER ORIGINATION Service (Schedules CL-A, (2000), CL-B
(2000), CL-C (2000)) (Schedules CL-A (2000), CL-B
(2000))
G CLASSIC 2000 SWITCHLESS/END USER DEDICATED Service
(Schedule CL-A (2000), CL-B (2000), CL-C (2000), CL-D
(2000))
G TRANSCENDJ 2000 Services
(Schedules TR-A (2000))
G TRANCENDJ UNIVERSAL INTERNATIONAL FREE PHONE NUMBER Service
(UIFN)
G TRANCENDJ INTERNATIONAL TOLL FREE SERVICES (ITFS)
G PRISM 1J CARRIER TERMINATION Service G ADVANCED TOLL FREE
Service
(Schedules PR-A, PR-B, PR-C and PR-D) (Schedules
PR-A, PR-B, PR-C
and PR-D)
G ACCESS BASED BILLING CARRI ER TERMINATION Service
(Schedules ABB-A, ABB-B, ABB-C)
G ACCESS BASED BILLING CARRIER ORIGINATION Service
(Schedules ABB-D, ABB-E)
G ACCESS BASED BILLING SWITCHLESS/END USER DEDICATED Service
(Schedules ABB-A, ABB-B, ABB-C, ABB-D, ABB-E,
ABB-F, ABB-G, ABB-H, ABB-I, ABB-J)
G OPERATOR SERVICES G DEBIT CARD Service
G CALLING CARDJ Service G NETWORK CONFERENCING Service
G UNIVERSAL INTERNATIONAL FREE G INTERNATIONAL TOLL FREE
SERVICES
(ITFS)
PHONE NUMBER Service (UIFN)
G LOCAL SERVICE G CIC TRANSLATION Service
IN WITNESS WHEREOF, the parties have executed these Switched
Services Program Enrollment Terms.
WORLDCOM NETWORK SERVICES, INC. GTC TELECOM CORP.
By: /S/ Dennis P. Delaney By: /s/ Paul Sandhu
(Signature) (Signature)
Dennis P. Delaney Paul Sandhu
(Print Name) (Print Name)
Director President
(Title (Title)
8-20-99 8/17/99
(Date) (Date)
<PAGE>
WORLDCOM NETWORK SERVICES, INC.
ATTACHMENT FOR TRANSCEND(TM) 2000 SERVICES
This ATTACHMENT FOR TRANSCEND(TM) 2000 SERVICES is made by and
between GTC TELECOM CORP. ("CUSTOMER") and WorldCom Network Services,
Inc. ("MCI WORLDCOM") and is a part of their Telecommunications
Services Agreement for Switched Services. Capitalized terms
not defined herein shall have the meaning ascribed to them in the
TSA, the PET or the applicable Attachment(s). NOTE: ANY MODIFICATIONS,
ADDITIONS OR DELETIONS FROM THIS ATTACHMENT WILL NOT BE EFFECTIVE UNLESS
SPECIFICALLY SET FORTH IN THE PET.
During the Service Term of the Agreement, MCI WorldCom will provide
"TRANSCEND(TM) 2000 SERVICES" which include the following services:
(a) TRANSCEND(TM) 2000 CARRIER TERMINATION Service which is the
termination of calls received from Customer's Service Interconnection(s),
(i) to and from the locations below, and (ii) for the charges and
applicable discounts set forth herein.
(b) TRANSCEND(TM) 2000 CARRIER ORIGINATION Service which is the
origination of Toll Free calls by MCI WorldCom and the termination of such
calls to Customer's Service Interconnection(s), (i) to and from the
locations below, and (ii) for the charges and applicable discounts set
forth herein.
(c) TRANSCEND(TM) 2000 SWITCHLESS 1+ Service which is the origination
(via individual telephone access lines) and termination of calls solely
over facilities comprising the MCI WorldCom network, (i) to and from the
locations below, and (ii) for the charges and applicable discounts set
forth herein.
(d) TRANSCEND(TM) 2000 SWITCHLESS TOLL FREE Service which is the
origination (via individual telephone lines) and termination of Toll Free
calls solely over facilities comprising the MCI WorldCom network, (i) to
and from the locations below, and (ii) for the charges and applicable
discounts set forth herein.
(e) TRANSCEND(TM) 2000 END USER DEDICATED 1+ Service which is the
termination of calls solely over facilities comprising the MCI WorldCom
network which origination is via dedicated access lines, (i) to and from
the locations below, and (ii) for the charges and applicable discounts set
forth herein.
(f) TRANSCEND(TM) 2000 END USER DEDICATED TOLL FREE Service which is the
origination of Toll Free calls by MCI WorldCom solely over facilities
comprising the MCI WorldCom network which termination is via dedicated
access lines, (i) to and from the locations below, and (ii) for the
charges and applicable discounts set forth herein.
<PAGE>
I. TERMS AND CONDITIONS.
(A) FORECASTS: Before Customer's initial order for TRANSCEND(TM)
2000 Services, Customer shall provide MCI WorldCom with a forecast
regarding the number of minutes expected to be terminated or
originated in various LATAs and/or Tandems, so as to enable MCI
WorldCom to configure optimum network arrangements. IN THE EVENT
CUSTOMER'S TRAFFIC VOLUMES RESULT IN A LOWER THAN INDUSTRY STANDARD
COMPLETION RATE OR OTHERWISE ADVERSELY AFFECT THE MCI WORLDCOM
NETWORK, MCI WORLDCOM RESERVES THE RIGHT TO BLOCK THE SOURCE OF SUCH
ADVERSE TRAFFIC AT ANY TIME. Customer will provide MCI WorldCom
with additional forecasts from time to time upon MCI WorldCom's
request which shall not be more frequent than once every three (3)
months.
(B) START OF SERVICE: Start of Service for (i) TRANSCEND(TM) 2000
CARRIER TERMINATION Service will be concurrent with the activation
of each circuit comprising a Carrier Service Interconnection (as
defined in the PET) relevant to TRANSCEND(TM) 2000 CARRIER
TERMINATION Service, (ii) TRANSCEND(TM) 2000 CARRIER ORIGINATION
Service will be concurrent with the activation of each circuit
comprising a Carrier Service Interconnection (as defined in the PET)
relevant to TRANSCEND(TM) 2000 CARRIER ORIGINATION Service, (iii)
TRANSCEND(TM) 2000 SWITCHLESS 1+ Service will be on an ANI by ANI
basis concurrently with the activation of each ANI to be served,
(iv) TRANSCEND(TM) 2000 SWITCHLESS TOLL FREE Service will be on a
Toll Free Number by Toll Free Number basis concurrently with the
activation of each Toll Free Number to be served, and (v)
TRANSCEND(TM) 2000 END USER DEDICATED 1+ Service and TRANSCEND(TM)
2000 END USER DEDICATED TOLL FREE Service will be concurrently with
the activation of each circuit comprising a Dedicated Service
Interconnection (as defined in the PET) relevant to such Service.
(C) SUBMISSION OF ANIS: After MCI WorldCom's receipt and
verification of a valid Service Request for TRANSCEND(TM) 2000
SWITCHLESS 1+ Service or TRANSCEND(TM) 2000 SWITCHLESS TOLL FREE
Service requiring a change in the primary interexchange carrier
("PIC"), MCI WorldCom agrees to (i) submit the ANI(s) relevant to
such Service Requests to the following local exchange carriers
("LECS") (with which MCI WorldCom currently has electronic interface
capabilities) within ten (10) days: Ameritech, Bell Atlantic,
BellSouth, Nynex, Pacific Bell, Southwestern Bell, US West, GTE and
United, and (ii) submit the ANI(s) relevant to such Service Requests
to those LECs with which MCI WorldCom does not have electronic
interface capabilities within a reasonable time.
(D) LIMITATION OF ORIGINATION AND TERMINATION LOCATIONS:
(i) TRANSCEND(TM) 2000 CARRIER TERMINATION Service may be
originated from any MCI WorldCom POP and terminated to any direct
dialable location worldwide.
(ii) TRANSCEND(TM) 2000 CARRIER ORIGINATION Service may be
originated from locations in the 48 contiguous United States,
Hawaii, Alaska, the US Virgin Islands, Puerto Rico, Guam, the
Northern Marianas Islands and Canada and terminated to any
Customer-designated Carrier Service Interconnection in the 48
contiguous United States.
<PAGE>
(iii) TRANSCEND(TM) 2000 SWITCHLESS 1+ Service may be originated
from all equal access exchanges in the 48 contiguous United States
(except in LATA 921 Fishers Island, New York) and Hawaii and
terminated to any direct dialable location worldwide.
(iv) TRANSCEND(TM) 2000 SWITCHLESS TOLL FREE Service may be
originated from locations in the 48 contiguous United States,
Hawaii, Alaska, the US Virgin Islands, Puerto Rico, Guam, the
Northern Marianas Islands and Canada and terminated to locations in
the 48 contiguous United States and Canada.
(v) TRANSCEND(TM) 2000 END USER DEDICATED 1+ Service may be
originated from any Customer-designated Dedicated Service
Interconnection and terminated to any direct dialable location
worldwide.
(vi) TRANSCEND(TM) 2000 END USER DEDICATED TOLL FREE Service may be
originated from locations in the 48 contiguous United States,
Hawaii, Alaska, the US Virgin Islands, Puerto Rico, Guam, the
Northern Marianas Islands and Canada and terminated to any
Customer-designated Dedicated Service Interconnection in the 48
contiguous United States.
(E) BILLING INCREMENTS: Domestic Transport and Extended Location
Transport (excluding California IntraLATA and California intrastate
calls and calls to/from International Locations, Canada and Mexico)
will be billed in six (6) second increments and subject to a six (6)
second minimum charge. International Transport and Canada and Mexico
Transport will be billed in six (6) second increments and subject to
a thirty (30) second minimum charge. All calls will be billed
utilizing Hardware Answer Supervision where available commencing
with Customer's switch wink or answer back. If Customer is found to
be non-compliant in passing back appropriate answer supervision,
i.e., answer back, MCI WorldCom reserves the right to suspend
TRANSCEND(TM) 2000 CARRIER ORIGINATION Service, TRANSCEND(TM) 2000
SWITCHLESS TOLL FREE Service and/or TRANSCEND(TM) 2000 END USER
DEDICATED TOLL FREE Service or deny requests by Customer for
additional Service until appropriate compliance is established. LEC
Access Charges for all calls will be billed in one (1) second
increments and subject to a one (1) second minimum charge. LEC
Egress Charges for all calls will be billed in one (1) second
increments and subject to a one (1) second minimum charge.
(F) PRESUBSCRIBED INTEREXCHANGE CARRIER CHARGE (PICC): MCI
WorldCom will charge Customer for any LEC-assessed presubscribed
interexchange carrier charge ("PICC CHARGE") which PICC Charge will
be reasonably determined by MCI WorldCom as of a date certain each
month (the "PICC CHARGE DETERMINATION DATE"). Customer's PICC
Charge will be determined as of the PICC Charge Determination Date
and will be based on the same criteria for which MCI WorldCom is
assessed such charge by the LEC (e.g., number and type of Customer's
End Users (i.e., residential or business) as well as the type of
<PAGE>
line associated with each such End User (i.e., single line,
secondary line or multi-line). This Subparagraph (F) will be deemed
to include any other similar additional charges assessed by a LEC
during the Service Term of this Agreement. (i.e., charges for which
MCI WorldCom is not currently being assessed).
(G) TOLL FREE NUMBERS:
(1) TOLL FREE numbers will be issued to Customer (i.e.,
issuance equates to activation or reservation, whichever
occurs first) on a random basis. Customer requests for
specific numbers will be considered by MCI WorldCom, and if
provided, will be subject to additional charges as set forth
below and MCI WorldCom's then current reservation policy which
shall also apply to any randomly selected and reserved TOLL
FREE number. At any time preceding three (3) months from the
scheduled expiration of the Service Term, Customer may only
reserve TOLL FREE numbers in an amount equal to the greater of
(i) 50, or (ii) fifteen percent (15%) of the total number of
TOLL FREE numbers activated by MCI WorldCom for Customer.
Customer requests for TOLL FREE numbers inconsistent with the
above stated conditions may be considered by MCI WorldCom on
an individual case basis. TOLL FREE numbers reserved for
Customer will be activated upon Customer's request, however,
MCI WorldCom may charge Customer an SMS Storage fee for each
TOLL FREE number.
(2) Customer Request for Specific Numbers - $25 per
individual TOLL FREE number reserved or assigned.
(3) Customer specifically agrees that regardless of the
method in which a TOLL FREE number is reserved for or
otherwise assigned to Customer, that Customer will not seek
any remedy from MCI WorldCom including, but not limited to,
any remedy based on a theory of detrimental reliance or
otherwise that such TOLL FREE number(s) are found not to be
available for Customer's use until such TOLL FREE number is
put in service for the benefit of Customer, and that such TOLL
FREE number(s) shall not be sold, bartered, brokered or
otherwise released by Customer for a fee ("TOLL FREE NUMBER
TRAFFICKING"). Any attempt by Customer to engage in TOLL FREE
Number Trafficking shall be grounds for reclamation by MCI
WorldCom for reassignment of the TOLL FREE number(s) reserved
for or assigned to Customer.
(H) ENHANCED TOLL FREE SERVICES AND ROUTING OPTIONS: The
following Toll Free identification services and routing options
(collectively, "ENHANCED TOLL FREE SERVICES") are available from MCI
WorldCom:
<PAGE>
IDENTIFICATION SERVICES:
i. Dialed Number Identification Service (DNIS) -
identification of specific TOLL FREE number dialed.
ii. Real-Time ANI - receipt of telephone number of calling
party.
TOLL FREE ROUTING OPTIONS:
i. Message Referral - recording (up to six (6) months) that
informs callers that the TOLL FREE number has been
disconnected or refers callers to new number.
ii. Call Area Selection - selection or blockage of locations
from which TOLL FREE numbers can be received (i.e., State,
NPA, LATA or NXX level).
iii. Call Distributor Routing - distribution of TOLL FREE
traffic evenly over dedicated access lines in a trunk group
(e.g., ascending, descending, most idle, least idle).
iv. Route Completion (Overflow) - overflow of TOLL FREE
dedicated access traffic only to up to five (5) pre-defined
alternate routing groups (e.g., dedicated access, WATs access
lines or switched access lines).
v. Geographic Routing - termination of calls to a single
TOLL FREE number from two or more originating routing groups
to different locations.
vi. Time-of-Day Routing - routing of calls to single TOLL
FREE number based on time of day (up to forty-eight (48) time
slots of 15-minute increments in a 24-hour period).
vii. Day-of-Week Routing - routing of calls to single TOLL
FREE number based on each day of the week.
viii. Day-of-Year Routing - routing of calls to single TOLL
FREE number based on up to fifteen (15) customer-specified
holidays.
ix. Percent Allocation Routing - routing of calls for each
originating routing group to two (2) or more terminating
locations based on customer-specified percentage.
Customer will receive the Identification Services described above at
no charge. The minutes of use rates for Toll Free Routing Options
described above (in addition to the Toll Free Routing Option Feature
Charges described below) will be the same rates for TRANSCEND(TM)
2000 CARRIER ORIGINATION Service, TRANSCEND(TM) 2000 SWITCHLESS TOLL
FREE Service or TRANSCEND(TM) 2000 END USER DEDICATED TOLL FREE
Service described herein excluding Route Completion (Overflow). The
Toll Free Routing Option Feature Charges are as follows:
<PAGE>
Installation Charge: $50.00 per feature; maximum of $250.00 per
TOLL FREE number.
Change Order Charge: $50.00 per feature; maximum of $250.00 per
TOLL FREE number.
Monthly Recurring Charge: $25.00 per feature; maximum of $150.00
per TOLL FREE number.
Expedite Charge: $500.00 (i.e., outside normal interval time of
four (4) business days).
Note: More than ten (10) points of termination for a single feature
will be treated as two (2) features. Further, every additional ten
(10) points of termination will be treated as a separate feature.
(I) RESPORG SERVICES: Responsible Organization Services (relevant
to TOLL FREE Numbers) if provided by MCI WorldCom will be provided
by MCI WorldCom pursuant to MCI WorldCom's applicable tariffs (or
the applicable tariffs of its affiliates).
(J) PAYPHONE SURCHARGE: In the event MCI WorldCom is required to
compensate payphone service providers (PSPs) for toll-free or access
code calls which originate from payphones (including without
limitation, any Order adopted by the FCC) ("PAYPHONE SURCHARGE"),
MCI WorldCom will charge and Customer agrees to pay MCI WorldCom the
amount of the Payphone Surcharge which is required to be paid by MCI
WorldCom.
(K) PIU CERTIFICATION: With respect to a Carrier Service
Interconnection as defined in the PET, absent the automatic number
identification ("ANI") of the calling party, Customer shall provide
MCI WorldCom with a written certification (the "CERTIFICATION") of
the percentage of interstate (including international) and
intrastate minutes of use relevant to the minutes of traffic to be
terminated in the same state in which the MCI WorldCom POP is
located to which the Carrier Service Interconnection is made. This
Certification shall be provided by Customer prior to Start of
Service for any Carrier Service Interconnection and may be modified
from time to time by Customer and subject to recertification upon
the request of MCI WorldCom which requests shall not be made
unilaterally by MCI WorldCom more than once each calendar quarter.
Any such modification(s) or Certification(s) shall be effective as
of the first day of any calendar month and following at least
forty-five (45) days notice from Customer. In the event Customer
<PAGE>
fails to make such Certification, the relevant minutes of use will
be deemed to be subject to the Intrastate Rates described herein.
In the event MCI WorldCom or any other third party requires an audit
of MCI WorldCom's interstate/intrastate minutes of traffic, Customer
agrees to cooperate in such audit at its expense and make its call
detail records, billing systems and other necessary information
reasonably available to MCI WorldCom or any third party solely for
the purpose of verifying Customer's interstate/intrastate minutes of
traffic. Customer agrees to indemnify MCI WorldCom for any
liability MCI WorldCom incurs in the event Customer's Certification
is different than that determined by the audit.
II. TRANSCEND(TM) 2000 SERVICE CHARGES.
Charges for TRANSCEND(TM) 2000 Services hereunder will be generally
comprised of the following charges, if applicable: (i) local exchange
company ("LEC") charges (including without limitation, access charges,
egress charges, etc.), (ii) Domestic Transport Charges (i.e., transport
within the continental United States), (iii) Extended Location Transport
Charges, (iv) International Transport Charges, (v) Canada and Mexico
Transport Charges, and (vi) surcharges (e.g., directory assistance) as
such charges are further defined herein. For purposes of this Attachment,
Customer's "SWITCHED SERVICES REVENUE" will be comprised of (a) Customer's
gross (i.e., prior to the application of discounts) Transport Charges
(i.e., Domestic, Extended Location, Canada and Mexico and International
Transport Charges), (b) LEC Charges plus the applicable Administrative Fee
described in Subsection (E)(i) below, (c) the Directory Assistance
Surcharge described in Subsection (G) below, and (d) the PICC Charge, if
applicable, as described in Subsection I.(F) above.
(A) DOMESTIC TRANSPORT CHARGES.
(i) Customer's "DOMESTIC TRANSPORT CHARGE" for TRANSCEND(TM)
2000 CARRIER TERMINATION Service, TRANSCEND(TM) 2000 CARRIER
ORIGINATION Service, TRANSCEND(TM) SWITCHLESS (1+ and TOLL
FREE) Service and TRANSCEND(TM) END USER DEDICATED (1+ and
TOLL FREE) Service (regardless of jurisdiction or time of day)
for calls within the continental United States or from the
continental United States to an Extended Location or an
International Location will be $0.0190. The Domestic
Transport Charge will be based upon the number of originating
seconds, and will be assessed on (i) all completed or answered
calls, and (ii) all incomplete transport billable calls. A
completed call is a call that has received answer supervision.
Incomplete transport billable calls are calls in which
disconnect time minus origination time is greater than 150
seconds and less than 10,800 seconds.
(ii) With respect to TRANSCEND(TM) 2000 CARRIER TERMINATION
Service calls within the continental United States (including
calls terminating to an Extended Location, an International
location, Canada or Mexico) and TRANSCEND(TM) 2000 CARRIER
ORIGINATION Service calls within the continental United States
(including calls originating from an Extended Location or
Canada), the Domestic Transport Charge will be comprised of a
terminating Transport Charge or an originating Transport
Charge, whichever is applicable. With respect to
TRANSCEND(TM) 2000 SWITCHLESS (1+ and TOLL FREE) Service calls
and TRANSCEND(TM) 2000 END USER DEDICATED (1+ and TOLL FREE)
Service calls within the continental United States (including
1+ calls to an Extended Location, an International location,
Canada or Mexico, 1+ calls from Hawaii, and Toll Free calls
<PAGE>
originating from an Extended Location or Canada), the Domestic
Transport Charge will be comprised of an originating Transport
Charge and a terminating Transport Charge.
(iii) With respect to Directory Assistance calls from the
continental United States to Canada, the Domestic Transport
Charge will be comprised of an originating Transport Charge
and a terminating Transport Charge.
(B) EXTENDED LOCATION TRANSPORT CHARGES.
(i) With respect to calls terminating to an Extended
Location, the following "EXTENDED LOCATION TRANSPORT CHARGES"
will apply in addition to the Domestic Transport Charge
described in Subsection II.(A) above. [Note: Egress Charges
associated with calls to an Extended Location are included in
the Extended Location Transport Charges].
Extended Location Extended Location Transport Charge
Alaska $0.0825
Guam $0.1085
Hawaii $0.0690
Northern Marianas Islands $0.2885
Puerto Rico $0.0825
US Virgin Islands $0.0825
(ii) With respect to calls (and 1+ calls from Hawaii only)
originating from an Extended Location, the following Extended
Location Transport Charges will apply in addition to the
Domestic Transport Charge described in Subsection II.(A)
above. [Note: Access Charges associated with calls from an
Extended Location are included in the Extended Location
Transport Charges.]
Extended Location Extended Location Transport Charge
Alaska $0.1000
Guam $0.2080
Hawaii $0.0700
Northern Marianas Islands $0.3485
Puerto Rico $0.1000
US Virgin Islands $0.1000
(C) CANADA AND MEXICO TRANSPORT CHARGES [NOT SUBJECT TO DISCOUNT].
(i) With respect to calls terminating to Canada and Mexico
(including directory assistance calls to Canada), the
following "CANADA AND MEXICO TRANSPORT CHARGES" will apply in
addition to the Domestic Transport Charge described in
Subsection II.(A) above. [Note: Egress Charges associated
with calls to Canada and Mexico are included in the Canada and
Mexico Transport Charge.]
<PAGE>
Canada and Mexico
Location Transport Charge
Canada (Region 1) $0.0500
Canada (Region 2) $0.0700
Canada (Region 3) $0.0725
Mexico (All Bands) $0.1750
(ii) With respect to calls originating from Canada, the
following Canada Transport Charges will apply in addition to
any applicable Domestic Transport Charge as described in
Subsection II.(A) above. [Note: Access Charges associated
with calls from Canada are included in the Canada Transport
Charge.]
Canada
Location Transport Charge
Canada (All Regions) $0.0850
(iii) With respect to Toll Free calls terminating to Canada,
the following Canada Transport Charge will apply in addition
to the Domestic Transport Charge described in Subsection
II.(A) above. [Note: Egress Charges associated with calls to
Canada are included in the Canada Transport Charge.]
Canada
Location Transport Charge
Canada $0.0900
(D) INTERNATIONAL TRANSPORT CHARGES [NOT SUBJECT TO DISCOUNT].
Commencing with the Effective Date described in Section 1 of
the PET, with respect to calls terminating to an International
location, the "INTERNATIONAL TRANSPORT CHARGES" will be the
rates shown on Schedule TR-A (2000) attached hereto and
incorporated herein by reference. [Note: Egress charges
associated with calls to International Locations are included
in the International Transport Charges.]
(E) LEC CHARGES.
(i) "LEC CHARGES" include Access Charges (as defined
herein), Egress Charges (as defined herein), SMS Toll Free
queries, and presubscribed interexchange carrier charges
("PICC CHARGE") assessed by a LEC or the SMS Toll Free
database administrator relating to Customer's traffic.
"ACCESS CHARGES" and "EGRESS CHARGES" are per minute costs
determined by MCI WorldCom between the applicable MCI WorldCom
point of presence and the terminating or originating point,
and rated at the applicable end office (NPA-NXX) level using
<PAGE>
switched tandem access or direct end office trunking rates and
charges. MCI WorldCom may also charge Customer for other
charges it is assessed by any LEC (e.g., National Exchange
Carrier Association (NECA) charges, etc.). Directory
Assistance calls will only be assessed the applicable Access
Charge. Customer will also pay MCI WorldCom a five percent
(5%) administrative charge (the "ADMINISTRATIVE FEE") which is
assessed on the total of Customer's monthly LEC Charges
(excluding the PICC Charge described in Subsection I.(F)
above). The NPA-NXX is generally identified by the end user's
automated number identification ("ANI"); provided, however, in
the event there is not an identified originating ANI, the
NPA-NXX will be assigned based on MCI WorldCom's originating
trunk group. The terminating NPA-NXX will be identified by
the dialed number; provided, however, in the event there is
not an identified dialed number, the NPA-NXX will be assigned
based on MCI WorldCom's terminating trunk group.
(ii) The per minute rates utilized by MCI WorldCom in
determining the applicable Access Charges and Egress Charges
are described in the LEC's applicable tariffs, are based on
MCI WorldCom's determination of end user ownership and type,
and are exclusive of any discounts based on minute or term
commitments. The Access Charges and Egress Charges as
determined by MCI WorldCom are set forth in the "LEC TARIFF
DATABASE". The LEC Tariff Database will be updated
periodically to take into account any tariff changes by the
various LECs ("TARIFF CHANGES"). Tariff Changes received by
MCI WorldCom on or before the fifteenth (15th) day of a month
and effective as of the first day of the following month or
thereafter, will be incorporated into the LEC Tariff Database
by the first day of the month following MCI WorldCom's receipt
thereof or the date such Tariff Changes are effective,
whichever is later.
(iii) The Access Charges and Egress Charges may include,
without limitation, the components and elements described
below; provided, however, the terminology with respect to
these components and elements may vary among LECs. The Access
Charges and Egress Charges will be calculated taking into
effect whether the call is interstate, intrastate or
intraLATA, the direction of the call (i.e., whether
originating or terminating), whether the call is premium or
nonpremium (if applicable), the mileage, the meet point (if
applicable) and the call type (i.e., 1+ or 800). MCI WorldCom
may also apply any other rating elements which are assessed by
the LECs or third parties (e.g., regulatory fee assessments,
standard or non-standard LEC access components) whether such
charges are based per access line, per business line, per
market share, per call, etc. (e.g., the Arkansas Carrier
Common Line charge which is assessed by a regulatory body and
allocated to the LECs). With respect to those LECs utilizing
a "time of day" differential (i.e., Day/Nonday,
Day/Evening/Night, etc.), MCI WorldCom will only use the "Day"
rate provided by the LECs.
<PAGE>
Component Elements
Carrier Common Line Carrier Common Line
Common Line Termination
Common Line Surcharge
Marketing
End Office Local Switching
Equal Access Recovery
Information Surcharge
Common Trunk Port
Local Transport Termination
Tandem Switching
Facility
Interconnection
Common Multiplexing
Entrance Facility DS-3 (month-to-month electrical)
Multiplexer (3/1 month-to-month)
Direct Transport to the Direct Trunk Transport (fixed)
Access Tandem Direct Trunk Transport (per mile)
Dedicated Tandem Trunk Port
Direct End Office Trunks Direct Trunk Transport (fixed)
Direct Trunk Transport (per mile)
Dedicated Trunk Port
(iv) The Access Charges and Egress Charges are generally
applied on a per minute basis except for (a) the Local
Transport Facility charge which is based on minutes and
mileage, (b) the Entrance Facility rate and Multiplexer rate
which are flat monthly rates which are converted by MCI
WorldCom to a cost per minute basis by dividing the applicable
DS-3 flat rate or the multiplexer rate as found in the
applicable LEC tariff by 6,160,000, (c) Direct Trunk at the
Tandem charge which is based on minutes and mileage, and (d)
Dedicated Tandem Trunk Port charge and Dedicated Trunk Port
charge which are converted by MCI WorldCom to a cost per
minute basis by dividing the applicable rate found in the
applicable LEC tariff by a nationwide throughput average.
There will be a two (2) month "lag" in implementing a given
nationwide throughput average into the LEC Tariff Database.
MCI WorldCom reserves the right to convert any other flat
rates assessed by the LECs into per minute charges.
<PAGE>
Example: Assume the applicable LEC tariffed rate (i) for
entrance facility charges is $2,350 per DS-3, and (ii) for
muxing is $500 per 3/1 mux. The Entrance Facility rate will
be $.00038149 [$2,350/6,160,000] and the Multiplexer rate will
be $.00008117 [$500/6,160,000].
(v) Access Charges will commence when the call is originated
and will end when the call is disconnected. Customer will be
assessed Access Charges even if a call is not completed.
Egress Charges will commence when the call is answered and
will end when the call is disconnected. Access Charges and
Egress Charges will not apply with respect to dedicated access
originations or terminations, respectively.
(F) TRANSCEND(TM) MANAGER.
MCI WorldCom agrees to provide Customer, at no cost to
Customer, a windows-based software program entitled
"TRANSCEND(TM) MANAGER" which will allow the Customer to
"query" the LEC Tariff Database described in Subpart (E)(ii)
above.
(G) DIRECTORY ASSISTANCE SURCHARGE:
Directory assistance calls in the continental United States
will be assessed a surcharge of $0.4300 in addition to the
Domestic Transport Charge described in Subsection II.(A)
above. Directory assistance calls to Canada will be assessed
a surcharge of $0.6000 in addition to the Domestic Transport
Charge described in Subsection II.(A) above and the Canada
Transport Charge described in Subsection II.(C) above.
III. DISCOUNTS.
Commencing with the Effective Date and continuing through the end of
the Service Term (including any applicable extensions thereto),
Customer's discount percentage for TRANSCEND(TM) 2000 Services (the
"DISCOUNT") will be determined under the Discount Schedule shown
below based on Customer's actual Monthly Revenue for such month.
Throughout the Service Term, Customer will automatically receive the
next higher (or lower) Discount when Customer's eligible Monthly
Revenue (as defined in the PET) reaches the next level (or falls
below a level).
Monthly Revenue Discount
$ 0 - $249,999 0.00%
$250,000 - $499,999 5.00%
$500,000 - $749,999 10.00%
$750,000 - $999,999 15.00%
$1,000,000+ 20.00%
<PAGE>
IV. CDR MEDIA.
MCI WorldCom will provide Call Detail Records (CDRs) for MCI WorldCom's
Switched Services in machine readable form in one of several magnetic tape
formats (selected by Customer on Customer's Service Request) ("CDR
MEDIA"). CDR Media provided hereunder (i) monthly is provided at no
charge, (ii) weekly is subject to a recurring monthly charge of $150, and
(iii) daily is subject to the applicable non-recurring Installation Charge
as described below (plus all leased-line and equipment costs necessary to
implement Daily CDR Media which will be determined on an individual case
basis depending on Customer's specific configuration).
TYPE TOTAL CONTRACT VALUE NON-RECURRING INSTALLATION CHARGE
Daily CDR Media-Customer
provided hardware and software <$1,000,000 $1,000
$1,000,000+ $1,000
Daily CDR Media-PC Solution <$1,000,000 $5,000
$1,000,000+ $2,500
Sub-Daily CDR Media-Customer
provided hardware and software <$1,000,000 $1,000
$1,000,000+ $1,000
Sub-Daily CDR Media-PC
Solution <$1,000,000 $5,000
$1,000,000+ $2,500
V. OTHER AGREEMENTS. Customer acknowledges and agrees that without the
prior written consent of MCI WorldCom, the Switched Services described in
this Attachment may not be combined with any other switched services
products or services offered by MCI WorldCom, MCI WorldCom's parent
company or MCI WorldCom's affiliates. Additionally, Customer acknowledges
and agrees that:
(i) As of the date of this Attachment, (a) all switched
telecommunications services ("CURRENT SERVICES") offered by MCI
WorldCom or any of MCI WorldCom's affiliates (excluding MCI
Telecommunications Corporation unless specifically agreed to in
writing by MCI WorldCom) (hereinafter referred to as the "MCI
WORLDCOM GROUP"), which are currently being provided Customer (which
will include Customer's parent company, Customer's subsidiaries and
any other entities under common control with Customer; hereinafter
referred to as the "CUSTOMER GROUP") pursuant to existing service
agreements ("EXISTING AGREEMENTS") will be canceled and no longer in
force or effect except for charges or credits due for Current
Services rendered as of the Effective Date of this Agreement and
provisions intended to survive termination, such as limitation of
liability, indemnification and confidentiality, and (b) all Current
Services provided a member of the Customer Group by a member of the
MCI WorldCom Group will be provisioned under the terms and
conditions of this Attachment, other TRANSCEND(TM) Attachments (if
<PAGE>
applicable), and other Attachments specifically agreed to in writing
by MCI WorldCom (collectively, the "APPROVED ATTACHMENTS").
Simultaneous with the execution of this Attachment, Customer shall
cause all members of the Customer Group to agree to the cancellation
of such Existing Agreements and the provision of Current Services
under the terms and conditions of this Attachment and Customer
agrees to provide MCI WorldCom with reasonable documentation
evidencing such agreement.
(ii) If Customer acquires or merges or combines with a third party
after the Effective Date of this Agreement, and such third party has
existing agreement(s) with a member of the MCI WorldCom Group
(collectively referred to as the "THIRD PARTY AGREEMENTS") for the
provision of switched telecommunications services ("THIRD PARTY
EXISTING SERVICES"), then ninety (90) days following the date of
such acquisition, merger or combination (or such earlier date
contained in a written notice from Customer to MCI WorldCom) (the
"TRANSFER DATE"), if requested by MCI WorldCom, Customer agrees to
select one agreement (either the Approved Attachments or a Third
Party Agreement) (the "SURVIVING AGREEMENT") pursuant to which all
switched services will be provided to Customer and all members of
the Customer Group and all other agreements (the "CANCELED
AGREEMENTS") will be canceled and no longer in force or effect
except for commitments, if any, contained in the Canceled Agreements
and charges and credits due for Services provided prior to the
effective date of cancellation of such Canceled Agreements.
Further, as of the effective date of cancellation, Third Party
Existing Services or, if applicable, the Services provided under the
Approved Attachments will be provisioned under the Surviving
Agreement, and the aggregate commitment(s) (e.g., revenue, volume,
minute, etc.) remaining under the Canceled Agreements shall be added
on a pro rata basis to the commitment(s), if any, existing under the
Surviving Agreement. Simultaneous with the closing of such
acquisition, combination or merger, Customer will cause such third
party and all of its affiliates who are parties to such Third Party
Agreements, to agree to such cancellation(s) as appropriate and the
provision of such Services, as appropriate under the terms and
conditions of the Surviving Agreement and Customer agrees to provide
MCI WorldCom with reasonable documentation evidencing such agreement.
IN WITNESS WHEREOF, authorized parties on behalf of their respective
entities have initialed this Attachment for TRANSCEND(TM) 2000 Services as
of the date shown below.
GTC TELECOM CORP. WORLDCOM NETWORK SERVICES, INC.
Customer's Initials /s/ PS MCI WorldCom's Initials /s/ DAL
Date: 8/27/99 Date: 11/8/99
ATTACHMENTS:
Schedule TR-A (2000) = International Transport Charges
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001081919
<NAME> GTC TELECOM CORP.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 18,907
<SECURITIES> 0
<RECEIVABLES> 70,969
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 148,689
<PP&E> 397,311
<DEPRECIATION> 66,140
<TOTAL-ASSETS> 872,581
<CURRENT-LIABILITIES> 1,397,451
<BONDS> 116,240
0
0
<COMMON> 16,106
<OTHER-SE> (657,216)
<TOTAL-LIABILITY-AND-EQUITY> 872,581
<SALES> 139,095
<TOTAL-REVENUES> 139,095
<CGS> 246,677
<TOTAL-COSTS> 246,677
<OTHER-EXPENSES> 1,068,187
<LOSS-PROVISION> (1,175,769)
<INTEREST-EXPENSE> 9,890
<INCOME-PRETAX> (1,185,659)
<INCOME-TAX> 3,911
<INCOME-CONTINUING> (1,189,570)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,189,570)
<EPS-BASIC> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
