<PAGE>
As filed with the Securities and Exchange Commission on May 24, 2000
Registration No. 333-34342
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
GENUITY INC.
(Exact Name of Registrant as Specified in its Charter)
----------------
Delaware 7370 74-2864824
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification No.)
Incorporation or
Organization)
----------------
3 Van de Graaff Drive
Burlington, Massachusetts 01803
(781) 262-4000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
----------------
PAUL R. GUDONIS
Chairman and Chief Executive Officer
3 Van de Graaff Drive
Burlington, Massachusetts 01803
Telephone: (781) 262-4000
Telecopy: (781) 262-3408
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Copies to:
KEITH F. HIGGINS, ESQ. IRA H. PARKER, ESQ. JOHN T. BOSTELMAN, ESQ.
PATRICK O'BRIEN, ESQ. General Counsel Sullivan & Cromwell
Ropes & Gray Genuity Inc. 125 Broad Street
One International Place 3 Van de Graaff Drive New York, New York 10004
Boston, Massachusetts Burlington, Massachusetts Telephone: (212) 558-4000
02110 01803 Telecopy: (212) 558-3588
Telephone: (617) 951-7000 Telephone: (781) 262-4000
Telecopy: (617) 951-7050 Telecopy: (781) 262-3408
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Proposed Maximum
Title of Each Class of Amount to be Maximum Offering Aggregate Amount of
Securities to be Registered Registered(1) Price Per Unit Offering Price Registration Fee(2)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A common stock,
par value $0.01 per
share................. 200,000,000 shares $15.00 $3,000,000,000 $792,000
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</TABLE>
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(1) Includes 26,087,000 shares that the underwriters have an option to purchase
from Genuity to cover over-allotments, if any.
(2) In accordance with Rule 457(a) under the Securities Act of 1933 we are only
paying an additional $787,000 as $5,000 was previously paid on April 6,
2000.
----------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and we are not soliciting offers to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion. Dated May 24, 2000.
PROSPECTUS
173,913,000 Shares
LOGO OF GENUITY
Class A Common Stock
------------
We are offering 173,913,000 shares of our Class A common stock. This is our
initial public offering and no public market currently exists for our shares.
We anticipate that the initial public offering price will be between $12 and
$15 per share.
------------
We intend to apply for quotation of our Class A common stock on the Nasdaq
National Market under the symbol "GENU".
------------
Investing in our Class A common stock involves risks. See "Risk Factors"
beginning on page 10.
------------
PRICE $ PER SHARE
------------
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public Discount Genuity
-------- ------------ -----------
<S> <C> <C> <C>
Per Share..................................... $ $ $
Total......................................... $ $ $
</TABLE>
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
We have granted the underwriters the right to purchase up to an additional
26,087,000 shares to cover over-allotments. Morgan Stanley & Co. Incorporated
and Salomon Smith Barney Inc. expect to deliver the shares to purchasers on
, 2000.
------------
Joint Book-Running Managers
Morgan Stanley Dean Witter Salomon Smith Barney
, 2000
<PAGE>
Inside Front Cover
Top Caption -- The "Genuity" logo appears across the top right.
Middle Left -- This is a picture of a blue globe on a black background.
Right Caption -- "Yesterday you knew us as GTE Internetworking and BBN, the firm
that brought you the Internet's first backbone. Today, Genuity brings
enterprises and service providers fully integrated solutions by capitalizing on
our:
. State-of-the-art IP network
. Tier 1 Internet backbone
. On-network users and content
. Comprehensive service offerings
. IP heritage and focus
Bottom Right -- There are four separate pictures of our network operations
center and our data center. The first top right picture is of a person looking
at a server. The second top left picture is of computer cables. The third
bottom right picture is of computers in our network operations center. The
fourth bottom left picture is of a person working on the back of an open server.
Bottom Caption -- "Enabling the Internet Revolution"
<PAGE>
Gatefold
Top Caption -- "Genuity's e-Business Network Infrastructure"
Center -- This is a picture of a map of the U.S. with our network. There are
orange lines that depict our current fiber cable network and aqua lines that
depict additions to our fiber cable network at year-end 2001. Orange diamonds
represent points of presence on our Internet backbone. Orange silo shapes
represent the current locations of our network operations centers and aqua silo
shapes represent additional locations of our network operations centers at the
end of 2001. Orange pyramids represent the current locations of our data
centers and aqua pyramids represent the additional locations of our data centers
at year-end 2001. White hexagons with the caption "private" represent the
private peering points on our Internet backbone.
Bottom -- There are three boxes with maps. The first box is titled "Japan" with
a map of Japan and a smaller map of Hawaii. The Japan map shows one current data
center in orange and an aqua line for projected fiber cable at year-end 2001.
The second box is titled "Latin America, Mexico, Puerto Rico." This map shows
one point of presence, one projected data center at year-end 2001 and our
projected fiber cable network at year-end 2001. The third box is titled
"Europe." This map shows seven current points of presence on our Internet
backbone, our current fiber cable network and our data center in the United
Kingdom.
In addition, there is a legend in a box which has the following: orange lines
represent current fiber cable, aqua lines represent projected 2001 fiber cable,
orange diamonds represent backbone POPs, orange silo shapes represent current
NOCs, aqua silo shapes represent projected 2001 NOCs, orange pyramids represent
current data centers, aqua pyramids represent projected 2001 data centers and
white hexagons entitled "Private" represent private peering points.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 10
Special Note Regarding Forward-Looking Statements........................ 22
Use of Proceeds.......................................................... 23
Dividend Policy.......................................................... 23
Capitalization........................................................... 24
Dilution................................................................. 25
Selected Combined Financial Data......................................... 27
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 29
Business................................................................. 39
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Management............................................................... 63
Related Party Transactions............................................... 73
Sole Stockholder......................................................... 79
Description of Capital Stock............................................. 80
Important United States Tax Consequences to Non-U.S. Holders of Class A
Common Stock............................................................ 87
Shares Eligible for Future Sale.......................................... 90
Underwriting............................................................. 91
Validity of Class A Common Stock......................................... 93
Experts.................................................................. 93
Where You Can Find More Information...................................... 94
Index To Combined Financial Statements................................... F-1
</TABLE>
----------------
Until , 2000, which is the 25th day after the date of this
prospectus, all dealers that buy, sell or trade our Class A common stock,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
You should rely only on the information contained in this prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with information that is different from that contained in this prospectus.
We are offering to sell and seeking offers to buy these securities only in
jurisdictions where offers and sales are permitted. The information contained
in this prospectus is accurate only as of the date on the front cover of this
prospectus, regardless of the time of delivery of the prospectus or of any sale
of the Class A common stock.
For investors outside the United States, neither we nor any of the
underwriters have done anything that would permit this offering or possession
or distribution of this prospectus in any jurisdiction where action for that
purpose is required, other than in the United States. You are required to
inform yourselves about and to observe any restrictions relating to this
offering and the distribution of this prospectus.
Genuity is our registered trademark in the United States and the Genuity
logo is subject to our pending application for registration as a trademark in
the United States. All other trademarks or trade names appearing elsewhere in
this prospectus are the property of their respective owners.
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information about Genuity and the Class A common stock being offered in this
offering and our combined financial statements and accompanying notes appearing
elsewhere in this prospectus. In this prospectus, "GTE" refers to GTE
Corporation and its subsidiaries other than Genuity, "Bell Atlantic" refers to
Bell Atlantic Corporation and its subsidiaries prior to the merger with GTE and
"Verizon" refers to Bell Atlantic doing business as Verizon Communications, the
name under which Bell Atlantic will operate after the merger with GTE, and its
subsidiaries, including GTE. "Genuity", "we", "us" and "our" each refers to
Genuity Inc. and its subsidiaries and not to the underwriters, GTE, Bell
Atlantic or Verizon. Except as otherwise indicated, all information in this
prospectus assumes no exercise of the underwriters' option to purchase
additional shares of Class A common stock to cover over-allotments and also
assumes that the merger between Bell Atlantic and GTE closes concurrently with,
or immediately following, the completion of this offering.
GENUITY
We are a leading e-business network provider delivering managed Internet
infrastructure services to enterprises and service providers. An e-business
network provider is a facilities-based Internet infrastructure supplier
offering a comprehensive set of managed Internet access, web hosting and value-
added e-business services. The combination of these services allows customers
to purchase integrated e-business solutions. Our comprehensive suite of managed
Internet infrastructure services includes:
.Internet access through dial-up, dedicated and digital subscriber lines;
.web hosting and content delivery; and
. value-added e-business services, such as virtual private networks for
secure data transmission and security services.
We operate a state-of-the-art global network that consists of:
. recently deployed broadband fiber optic cable in the United States;
. points of presence, which are locations where we provide Internet access
to end users;
. secure data centers with redundant fiber connections to our network and
backup power sources; and
. undersea and international fiber optic cable capacity.
Our large base of on-network users and content, combined with our extensive
network, positions us as one of the leading Internet backbone providers in the
world, a status commonly referred to as a Tier 1 Internet backbone provider. An
Internet backbone is an Internet Protocol-based network that connects users and
web content. We believe that service providers are increasingly connecting to
networks with substantial on-network content to improve the quality of their
customers' experience, which in turn drives demand by enterprises seeking to
connect to networks with large numbers of users. We believe that by taking
advantage of this demand cycle, which we call the "network effect", we will
continue to drive significant demand for our services from both enterprises and
service providers and differentiate ourselves from non-Tier 1 Internet backbone
providers. As of March 31, 2000, we provided services to approximately 5,000
enterprises, such as Carrier Corporation, Computer Sciences, CNN, Microsoft,
Sun Microsystems and ZDNet, and to approximately 400 service providers, such as
Akamai Technologies, America Online, Earthlink, NetZero and WebTV in the United
States and I.NET and Tiscali in Italy. Our revenues were approximately $706
million in 1999 and $248 million for the first quarter of 2000, and we incurred
net losses of approximately $647 million in 1999 and $210 million in the first
quarter of 2000.
1
<PAGE>
Unlike many recent entrants into the Internet industry, we have more than
three decades of experience in designing and implementing the architecture of
the Internet and with solving computer networking problems. In 1969, our
predecessor, BBN Corporation, designed and helped to implement ARPAnet, which
is widely recognized as the basis for the Internet today. Our network is
recognized as the first Internet backbone and, accordingly, was designated AS-
1. We also developed the first Internet router, delivered the world's first e-
mail message and pioneered the use of the "@" symbol as a universal addressing
standard for electronic mail. More recently, we were one of the first to offer
commercial installation, maintenance and support of web sites, which is
referred to as managed web hosting services, and managed security services
through outsourced firewall monitoring.
THE OPPORTUNITY
The Internet has experienced tremendous growth in the past decade and has
emerged as an important global medium for communications and commerce. As the
Internet and data traffic have grown, the cost and complexity for enterprises
and service providers to manage their own network infrastructure demands in-
house has increased. As a result, enterprises and service providers seek to
outsource their infrastructure needs to Internet infrastructure service
providers that can:
. speed their time-to-market;
. improve performance, security and the ability to rapidly increase the
capacity needed to deliver services, which is referred to as scalability;
. provide continuous operation of their web sites; and
. reduce the costs and risks associated with developing an in-house
solution.
As enterprises and service providers continue to outsource these
requirements, they demand that Internet infrastructure service providers
deliver a high quality Internet experience for their users. We believe leading
Internet infrastructure service providers must offer a comprehensive suite of
managed Internet infrastructure services, a large base of on-network users and
content, reliable and scalable network facilities, Tier 1 Internet connectivity
and the experience and expertise necessary to provide a complete Internet
infrastructure solution.
OUR SOLUTION
Our e-business network solution enables our customers to outsource their
Internet infrastructure requirements to a single provider and to scale their
Internet operations in a cost-effective and reliable manner. The key elements
of our solution include:
. Comprehensive Suite of Managed Internet Infrastructure Services. We offer
a broad range of managed Internet infrastructure services, including:
Internet access; web hosting and content delivery; and value-added e-
business services.
. Large Base of On-Network Users and Content. We carry a significant amount
of traffic over our Tier 1 Internet backbone, allowing enterprises and
service providers to directly route traffic to, or receive content from,
a significant number of other customers without the need to pass through
other Internet backbones.
. State-of-the-Art Network. We operate a state-of-the-art, high capacity
global fiber optic network that is highly reliable and scalable and has
been equipped with advanced optical electronic equipment. Our network
includes over 17,500 route miles of fiber optic cable in the United
States, undersea and international fiber optic cable capacity and 10 data
centers for web hosting services.
2
<PAGE>
. High Performance, Tier 1 Internet Connectivity. We provide high
performance connectivity to the Internet through our Tier 1 Internet
backbone and extensive high speed private connections with other major
Internet backbone providers.
. Significant Internet Protocol Engineering and Architectural Expertise.
Drawing upon the breadth and depth of our IP and networking experience
and expertise, including over 750 engineers and over 1,100 technicians,
we are able to quickly and cost-effectively identify the Internet
infrastructure requirements of our customers and design and implement
appropriate solutions.
OUR STRATEGY
Our objective is to be the leading e-business network provider by
architecting, building and operating the infrastructure for the Internet
economy. The principal elements of our strategy for pursuing this objective
include:
. leveraging the network effect;
. expanding our capacity and state-of-the-art network;
. continuing to build and own our network facilities;
. expanding our distribution capabilities;
. pursuing strategic transactions and alliances;
. using our extensive IP and networking expertise to develop new services;
and
. establishing Genuity as a leading brand for managed Internet
infrastructure services.
OUR CORPORATE INFORMATION
We have recently changed our name from GTE Internetworking Incorporated to
Genuity Inc. Our principal executive offices are located at 3 Van de Graaff
Drive, Burlington, Massachusetts 01803 and our telephone number is (781) 262-
4000.
3
<PAGE>
OUR RELATIONSHIP WITH VERIZON
We are currently a wholly owned subsidiary of GTE. In July 1998, Bell
Atlantic and GTE agreed to enter into a merger of equals transaction. We
anticipate that the merger between Bell Atlantic and GTE will close
concurrently with, or immediately following, the completion of this offering.
In April 2000, Bell Atlantic and GTE announced that following their merger they
will operate under the name Verizon Communications.
Under the Telecommunications Act of 1996, the Regional Bell Operating
Companies, including the Bell Atlantic local telephone operating companies and
their respective affiliates, are generally prohibited from providing long
distance services that originate in any state in which the Regional Bell
Operating Companies operate an incumbent local telephone company. These
restrictions, which are referred to in this prospectus as Section 271
restrictions, prohibit these companies from offering long distance services
originating in a particular state until the relevant local telephone operating
company operating in that state has satisfied a 14-point competitive checklist
under Section 271 of the Telecommunications Act and obtained authority from the
Federal Communications Commission to provide long distance services in those
states.
Bell Atlantic operates incumbent local telephone companies in 13 states,
from Maine to Virginia, and the District of Columbia. The total billable access
telephone lines owned by Bell Atlantic in these states in 1999 are referred to
in this prospectus as "Bell Atlantic in-region lines". Bell Atlantic has
obtained the necessary authorization to provide long distance service
originating in New York. Because we provide services in Bell Atlantic's region
that could be characterized as long distance services, Bell Atlantic and GTE
cannot complete their merger until they either:
. receive relief from the Section 271 restrictions for the remaining
states in which Bell Atlantic provides local telephone services; or
. implement a structure that complies with the requirements of the
Telecommunications Act.
To ensure compliance with the requirements of the Telecommunications Act and
to receive FCC approval of their merger, Bell Atlantic and GTE made a proposal
to the FCC under which GTE would exchange all of the outstanding shares of our
common stock for shares of our Class B common stock and we would make this
offering of our Class A common stock. As a result, immediately after completion
of this offering, the investors purchasing shares in this offering will own
shares of our Class A common stock possessing 90.5% of the total voting power
of our common stock and Verizon will own shares of our Class B common stock
possessing 9.5% of the total voting power of our common stock.
Our Class B common stock is convertible into Class A common stock or, if
held by Verizon and at its election, Class C common stock. Our Class A common
stock and our Class B common stock have one vote per share and our Class C
common stock has five votes per share. Under the proposal to the FCC, our Class
B common stock cannot be converted into more than 10% of our outstanding common
stock until Verizon has eliminated, as to at least 50% of Bell Atlantic in-
region lines, Section 271 restrictions applicable to its operation of our
business. At such time as Verizon has eliminated the applicable Section 271
restrictions as to at least 50% of Bell Atlantic in-region lines, our
outstanding shares of Class B common stock can be converted by a holder other
than Verizon into 800 million shares of our Class A common stock. This amount
represents approximately 82% of our common stock outstanding after this
offering, or approximately 80% if the underwriters fully exercise their over-
allotment option. At such time as Verizon has eliminated the applicable Section
271 restrictions as to 100% of Bell Atlantic in-region lines, it could convert
its Class B common stock into 800 million shares of Class C common stock,
which, in addition to representing approximately 82% of our common stock
outstanding after this offering, would also possess approximately 96% of the
total voting power of the common stock.
For more information about the conversion of the Class B common stock, you
should refer to the section in "Description of Capital Stock" entitled
"Conversion of Class B Common Stock".
4
<PAGE>
THE OFFERING
Class A Common Stock
Offered................... 173,913,000 shares
Common Stock to be
Outstanding After this
Offering................. We have authorized Class A common stock, Class B
common stock and Class C common stock. The number
of shares outstanding and the equity ownership and
voting percentages associated with these shares
immediately following the offering will be as
follows:
<TABLE>
<CAPTION>
Total Equity Total Voting
Shares Percentage Percentage
----------- ------------ ------------
<S> <C> <C> <C>
Class A common stock.... 173,913,000 90.5% 90.5%
Class B common stock.... 18,256,000 9.5% 9.5%
Class C common stock.... -- -- --
</TABLE>
If Verizon does not eliminate the applicable
Section 271 restrictions as to at least 50% of Bell
Atlantic in-region lines, the Class B common stock
is convertible into shares of Class A common stock
representing only 10% of our total common stock
outstanding.
If Verizon eliminates the applicable Section 271
restrictions as to at least 50% of Bell Atlantic
in-region lines, it would be able to transfer its
shares of Class B common stock to one or more third
parties that would be able to convert the Class B
common stock into an aggregate of 800 million
shares of Class A common stock, which immediately
after this offering would represent approximately
82% of our total equity and voting power.
If Verizon eliminates the applicable Section 271
restrictions as to 100% of Bell Atlantic in-region
lines, it would be able to convert the Class B
common stock into 800 million shares of Class C
common stock, which immediately after this offering
would represent approximately 82% of our total
equity and approximately 96% of our total voting
power. The following table reflects this
conversion:
<TABLE>
<CAPTION>
Total Equity Total Voting
Shares Percentage Percentage
----------- ------------ ------------
<S> <C> <C> <C>
Class A common stock.... 173,913,000 17.9% 4.2%
Class B common stock.... -- -- --
Class C common stock.... 800,000,000 82.1% 95.8%
</TABLE>
The information in the above tables is before
giving effect to options outstanding under our
long-term incentive plans and additional issuances
of shares of our common stock and assumes no
exercise of the underwriters' over-allotment
option.
Voting Rights........ Except as required by law or as described below,
the holders of our Class A common stock, Class B
common stock and Class C common stock vote together
as a single class on all matters submitted to a
vote of our stockholders.
5
<PAGE>
Each share of Class A common stock entitles the
holder to one vote per share. So long as 50% or
more of the shares of Class B common stock
outstanding at the completion of this offering
remain outstanding, no holder or group of holders
of Class A common stock may vote any of their
shares in excess of 20% of the aggregate number of
the then outstanding number of shares of Class A
common stock.
Each share of Class B common stock entitles the
holder to one vote per share. The holders of the
Class B common stock, voting separately as a class,
are entitled to elect one of our directors. We are
also required to obtain the consent of the holders
of Class B common stock before taking specific
actions, including making significant acquisitions
or dispositions, entering into major business
combinations and incurring indebtedness or issuing
additional equity securities in excess of specified
limits. You should refer to the section in "Related
Party Transactions" entitled "Recapitalization
Agreement" and the section in "Description of
Capital Stock" entitled "Common Stock" for a more
detailed description of these consent requirements,
including the circumstances under which these
consent requirements may be transferred and when
they terminate.
Each share of Class C common stock entitles the
holder to five votes per share.
Conversion of Class B
Common Stock........ Immediately after the completion of this offering,
Verizon will own all of the outstanding shares of
our Class B common stock. Although the ability of
Verizon to convert its shares of our Class B common
stock is limited by the proposal to the FCC, these
shares by their terms are convertible at any time
into either:
. shares of Class A common stock equal to 10% of
our total common stock immediately after the
conversion; or
. 800 million shares of Class A common stock or,
for Verizon or any of its affiliates and at
their election, Class C common stock, which
represent approximately 82%, or approximately
80% if the underwriters exercise in full the
over-allotment option, of our shares of common
stock outstanding immediately following this
offering.
Under the proposal to the FCC:
. if Verizon has not eliminated Section 271
restrictions applicable to its operation of our
business as to at least 50% of Bell Atlantic in-
region lines, Verizon can only convert its
outstanding shares of our Class B common stock
into shares of our Class A common stock that
after the conversion will represent 10% of our
total common stock then outstanding. If Verizon
transfers the Class B common stock before
meeting this 50% threshold, the transferee's
conversion rights would be similarly limited;
6
<PAGE>
. if Verizon has eliminated the applicable Section
271 restrictions as to at least 50% of Bell
Atlantic in-region lines, it could transfer its
shares of Class B common stock to one or more
third parties who would then be able to convert
them in the aggregate into 800 million shares of
Class A common stock; and
. if Verizon has eliminated the applicable Section
271 restrictions as to 100% of Bell Atlantic in-
region lines, Verizon or its affiliates could
convert the Class B common stock into 800
million shares of Class A common stock or Class
C common stock.
Under the proposal to the FCC, if Verizon has not
eliminated the applicable Section 271 restrictions
as to 100% of Bell Atlantic in-region lines on or
before , 2005, which date may be extended under
conditions that we describe in the section in
"Description of Capital Stock" entitled "Conversion
of Class B Common Stock", Verizon's ability to
convert the Class B common stock into 800 million
shares of Class A common stock or Class C common
stock will expire. Verizon will continue to retain
its right to convert its shares of our Class B
common stock into shares of Class A common stock
representing 10% of our total common stock then
outstanding. If Verizon has satisfied the
applicable Section 271 restrictions as to 100% of
Bell Atlantic in-region lines on or before that
date, its ability to convert the Class B common
stock into 800 million shares of Class A common
stock or Class C common stock will not expire. The
Class B common stock transferred by Verizon to a
third party will not be subject to the expiration
limitation.
Conversion of Class C
Common Stock....... Our Class C common stock is convertible into Class
A common stock at any time. Each share of Class C
common stock will automatically convert into one
share of Class A common stock if at any time the
aggregate number of outstanding shares of Class C
common stock, together with any shares of Class C
common stock issuable upon conversion of Class B
common stock, constitute less than 10% of our then
outstanding common stock.
Transfer of Class C
Common Stock....... Verizon can transfer shares of our Class C common
stock at any time. Any shares of our Class C common
stock so transferred will automatically convert
into shares of our Class A common stock on the
earlier to occur of (1) any subsequent transfer of
ownership of such shares or (2) the first
anniversary of the transfer of such shares by
Verizon. Accordingly, persons other than Verizon
could own shares of our Class C common stock.
7
<PAGE>
Verizon's Right to
Acquire Additional
Shares............. If Verizon holds shares of Class A common stock and
Class C common stock that in the aggregate exceed
70% of the total number of shares of our common
stock, Verizon may acquire from us a number of
shares of Class A common stock so that it will own
shares of common stock equal to 80% of the total
number of our shares of common stock.
Use of Proceeds...... For capital expenditures in connection with the
expansion of our network infrastructure and general
corporate purposes, including working capital and
possible acquisitions of and investments in other
businesses and technologies.
Proposed Nasdaq Stock
Symbol............. GENU
8
<PAGE>
SUMMARY COMBINED FINANCIAL DATA
The following tables present our summary combined financial data. The
financial data presented in these tables are from "Selected Combined Financial
Data" and our combined financial statements and accompanying notes included
elsewhere in this prospectus. You should read those sections for a further
explanation of the financial data summarized here.
Our combined financial statements have been carved out from the consolidated
financial statements of GTE using the historical results of operations and
historical bases of the assets and liabilities of Genuity. Accordingly, the
historical financial information we have included in this prospectus does not
necessarily reflect what our financial position, results of operations and cash
flows would have been had we been a separate, stand-alone entity during the
periods presented.
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, March 31,
-------------------- --------------------
1998 1999 1999 2000
--------- --------- --------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Results of Operations Data:
Revenues........................ $ 446,002 $ 706,466 $ 157,283 $ 247,852
Cost of goods sold.............. 492,794 767,498 160,540 283,928
Selling, general and
administrative................. 312,916 396,522 93,123 108,336
Operating loss.................. (464,152) (645,182) (137,472) (198,198)
Net loss........................ (468,559) (647,046) (138,580) (209,826)
Basic and diluted loss per
common share................... (25.67) (35.44) (7.59) (11.49)
Basic and diluted weighted-
average common shares
outstanding.................... 18,256 18,256 18,256 18,256
Pro forma as adjusted basic and
diluted net loss per common
share (unaudited).............. $ (3.37) $ (1.09)
Pro forma as adjusted basic and
diluted weighted-average common
shares outstanding............. 192,169 192,169
</TABLE>
The pro forma as adjusted column in the combined balance sheet data below
reflects the capital contribution of $178 million by GTE and the sale of shares
of Class A common stock in this offering at an assumed initial public offering
price of $13.50 per share, after deducting estimated underwriting discounts and
offering expenses payable by us.
<TABLE>
<CAPTION>
As of March 31, 2000
----------------------
Pro Forma
As
Actual Adjusted
---------- ----------
(in thousands)
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents............................ $ 17,118 $2,400,763
Working capital...................................... (180,484) 2,245,325
Property, plant and equipment, net................... 1,629,391 1,629,391
Total assets......................................... 2,461,854 4,843,663
Total long-term liabilities.......................... 70,584 68,584
Total liabilities.................................... 516,087 470,087
Stockholders' equity................................. 1,945,767 4,373,576
</TABLE>
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RISK FACTORS
Investing in our Class A common stock involves a high degree of risk. You
should carefully consider the following factors, as well as other information
contained in this prospectus, before deciding to invest in shares of our Class
A common stock. If any of the following risks actually occurs, our business,
financial condition and results of operations could suffer, in which case the
trading price of our Class A common stock could decline and you may lose all or
part of your investment.
Risks Related to Our Business
We have a history of significant operating losses and expect these losses to
continue for at least the next several years.
We have experienced operating losses in each quarterly and annual period
since 1996. Given the level of our planned operating and capital expenditures,
we expect to continue to incur significant operating losses for at least the
next several years. We incurred operating losses of approximately $464 million
in 1998, approximately $645 million in 1999 and $198 million in the first
quarter of 2000. As of March 31, 2000, we had an accumulated deficit of
approximately $1.5 billion.
We plan to continue to make significant investments to expand our capacity
and network infrastructure, develop brand recognition, broaden the range of our
service offerings and expand our sales, marketing, technical and customer
support personnel. Our capital expenditures program, as currently contemplated,
will require between $11 billion and $13 billion during the five-year period
ending December 31, 2004, the majority of which will be for the expansion of
our network infrastructure. A substantial portion of these expenditures will be
made long before any significant revenue related to these expenditures may be
realized.
In addition, our operating expenses are based largely on anticipated revenue
trends and a significant portion of our expenses, such as personnel, the leased
portion of our network and our real estate facilities and depreciation of our
network infrastructure, is fixed. If our revenues fall below our expectations,
we would probably not be able to reduce our fixed or variable expenses in
sufficient time to respond to the shortfall. If we fail to achieve significant
increases in our revenues as a result of our investments, the size of our
operating losses may be larger than expected. We may never achieve
profitability or generate positive cash flows from operations, and if we do
achieve profitability or positive cash flows from operations in any period, we
may not be able to sustain or increase profitability or positive cash flows on
a quarterly or annual basis.
If we do not maintain or increase our market share and therefore are no
longer considered a Tier 1 Internet backbone provider, we may lose customers
and our free peering relationships with other Tier 1 Internet backbone
providers. If this occurs, our revenues and operating results may decline
significantly.
We rely significantly on our status as a Tier 1 Internet backbone provider
to maintain and grow our market share and compete with other Tier 1 Internet
backbone providers, several of which have a larger market share than we do. Any
significant loss of market share for our services could cause the loss of our
status as a Tier 1 Internet backbone provider, which would make our services
significantly less attractive to existing and potential customers and would
likely result in a significant loss of revenues. In addition, the loss of
market share or our status as a Tier 1 Internet backbone provider would
adversely affect our ability to maintain our free private peering relationships
with other Tier 1 Internet backbone providers. Currently, these relationships
permit us to have direct, cost-free exchange of traffic with other Tier 1
Internet backbone providers and allow us to avoid the congestion of public
peering points when directing traffic to users connected to those other
Internet backbones. If we are unable to maintain these free peering
relationships, our operating costs will increase and our results of operations
will suffer.
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To increase or at least maintain our market share and maintain our status as
a Tier 1 Internet backbone provider, it is critical that a significant amount
of worldwide Internet traffic be carried on our Internet backbone. To generate
significant Internet traffic, we must:
. continue to increase the amount of content available on our network
infrastructure by successfully marketing our web hosting and high speed
dedicated Internet access services to enterprises, particularly
enterprises that operate high traffic web sites; and
. continue to increase the number of users that access the Internet
through our Internet backbone by successfully marketing our Internet
access services to service providers.
We may not be successful in marketing our services to enterprises and
service providers if we fail to expand our capacity and network infrastructure
to meet increasing demand or to competitively price or expand our services or
if we experience network performance and reliability problems.
If we were to lose a significant portion of our revenues from America
Online, we would not be able to replace those revenues in the short term and
our operating losses would increase significantly.
The termination of, or a significant adverse change in, our relationship
with America Online would have a material adverse effect on our revenues.
America Online accounted for approximately 53% of our revenues in 1998, 52% of
our revenues in 1999 and 46% of our revenues in the first quarter of 2000. We
expect that revenues from America Online will continue to represent a
significant portion of our revenues for the next several years. America Online
has the right to terminate its agreement with us on 30 days notice if we
materially breach the agreement, including our failure to meet specific
performance targets, and fail to cure the breach within that notice period.
America Online also has the right to terminate its agreement with us
immediately without notice if we commit repeated material breaches of the
agreement or if we violate the terms of a few specific material provisions
under the agreement. America Online also has the right to reduce its purchase
commitments if we, among other things, fail to meet specific delivery and
performance targets or fail to meet our obligation to provide most favored
customer pricing. In addition, upon a change in control of Genuity, America
Online has the right to terminate the agreement. A transfer of Verizon's
interest in Genuity to an unrelated party may constitute a change in control of
us. You should refer to the section in "Business" entitled "Our Relationship
With America Online" for additional information about our relationship with
America Online.
If we cannot obtain the additional capital we will require to fund our
operations and finance the expansion of our capacity and network
infrastructure, we will have to delay or abandon our development and expansion
plans.
We will need significant additional capital to fund our business plan and
achieve profitability. We currently intend to spend $11 billion to $13 billion
over the five-year period ending December 31, 2004, of which approximately $1.8
billion to $2.0 billion is expected to be spent during 2000, on the continued
expansion of our network infrastructure and other capital expenditures. During
the past three years, our capital needs have been satisfied with permanent
capital contributions from GTE or financing from its affiliates. However,
following this offering, Verizon is not obligated to provide funds to finance
our capital expenditures, working capital or other cash requirements. Under the
proposal to the FCC, Verizon is not permitted, before the conversion of its
shares of our Class B common stock, to provide more than 25% of the debt
financing that we are permitted to incur under the Recapitalization Agreement.
We may be unsuccessful in raising sufficient capital on terms that we consider
acceptable, when needed or at all. If this happens, we would have to delay or
abandon our development and expansion plans, which would adversely affect our
competitive position.
We currently intend to obtain additional capital through public offerings or
private placements of debt or equity securities or through borrowings under
future credit facilities. However, we are required to obtain the consent of the
holders of our Class B common stock before issuing any shares of our capital
stock in excess of specified amounts and our agreement with Verizon limits our
ability to incur debt in excess of specified
11
<PAGE>
amounts without its consent. You should refer to the risks described below
under "Risks Related to Our Relationship with Verizon", the section in "Related
Party Transactions" entitled "Recapitalization Agreement" and the section
entitled "Description of Capital Stock" for more detailed discussions of the
rights of our Class B common stock.
If we do not compete effectively, particularly against established
participants with greater financial and other resources than ours, we will lose
market share, which will make our services less attractive to our existing and
prospective customers.
The market for managed Internet infrastructure services is extremely
competitive and subject to rapid change. We expect to encounter increased
competition in the future as a result of increased consolidation and strategic
alliances in the industry. In addition, we will increasingly compete with
foreign service providers as we expand internationally and as these service
providers increasingly compete in the United States. If we are unable to
compete successfully, we would experience a loss in customers and the revenues
that accompany that business.
Our principal competitors in the managed Internet infrastructure services
market include:
. Internet infrastructure service providers such as UUNET Technologies, a
subsidiary of MCI WorldCom, AT&T, Sprint and Cable & Wireless, each of
which offers similar services and possesses the network scale and on-
network users and content to offer their customers connectivity to
virtually all addresses on the Internet, either directly through their
Internet backbone or through cost-free, high speed private peering
relationships;
. Internet service providers that have a significant regional, national or
international presence but do not offer as broad a range of services or
possess fewer users and less on-network content, such as Level 3
Communications, Qwest Communications, KPNQwest, Deutsche Telekom, PSINet
and Verio Communications; and
. companies that service generally only one or a few specific Internet
infrastructure needs of enterprise customers, including web hosting
companies such as Digex and Exodus Communications; broadband access
providers, such as Covad Communications and Rhythms NetConnections;
providers of security and virtual private networks, such as Pilot Network
Services; and transport service providers, such as Level 3
Communications, Qwest Communications and Williams Communications Group.
Numerous other companies from a variety of industries have also focused on
our target market. For example, many of the major cable companies have begun
offering, or are exploring the possibility of offering, Internet access by
engineering their current networks to include Internet access capabilities.
Direct broadcast satellite and wireless communications providers have also
entered the Internet access market with various wireless and satellite-based
service technologies. We have no patented technology that would preclude or
inhibit competitors from entering our market.
Many of these existing competitors have and potential competitors may have
greater financial and other resources, more customers, a larger installed
network infrastructure, greater market recognition and more established
relationships and alliances in the industry. As a result, these competitors may
be able to develop and expand their network infrastructure and service
offerings more quickly, adapt more swiftly to new or emerging technologies and
changes in customer demands, devote greater resources to the marketing and sale
of their offerings, pursue acquisitions and other opportunities more readily
and adopt more aggressive pricing policies. UUNET has substantially greater
market share and resources than we do. In addition, MCI WorldCom and Sprint
have announced a proposed merger. We believe this proposed merger would
substantially increase the market share and competitive position of UUNET, even
if it were required to divest itself of portions of its Internet backbone as a
condition of the merger. Some of our competitors are able to bundle their
Internet service offerings with other complementary services, such as local and
long distance voice, data transmission and video services, thereby reducing the
overall cost of their services compared with ours. We may not be able to offset
the effects of any of these actions.
12
<PAGE>
We expect that the rates we charge for our services will decline over time,
and we may not be successful in reducing our operating expenses or introducing
new services that will compensate for these lost revenues.
We expect to continue to experience decreasing prices for our services as we
and our competitors increase transmission capacity on existing and new
networks, as a result of our current agreements with customers, through
technological advances or otherwise, and as volume-based pricing becomes more
prevalent. For example, at specified times during the course of our agreement
with America Online, America Online has the right to seek a reduction in the
fees paid to us for access ports and digital subscriber line and other
broadband services. Accordingly, our historical revenues are not indicative of
future revenues based on comparable traffic volumes. If the prices for our
services decrease for whatever reason and we are unable to offer additional
services from which we can derive additional revenues or otherwise reduce our
operating expenses, our operating results will decline and our business and
financial results will suffer.
Our strategy contemplates future international expansion but there are
significant operational and financial risks associated with international
operations.
Although we have not derived significant revenues from our international
operations in the past, an important component of our strategy is to expand
significantly our presence in international markets. As we expand, we will
substantially increase our exposure to the risks inherent in international
operations, including, among others, the following:
. general economic, social and political conditions;
. unexpected changes in legal or regulatory requirements resulting in
unanticipated costs and delays;
. differences in technology standards;
. tariffs, export and exchange controls and other trade barriers;
. fluctuations in foreign currency exchange rates;
. difficulty of enforcing agreements and collecting accounts receivables;
. adverse tax consequences;
. changes in United States laws and regulations relating to foreign trade
and investment; and
. inability to offer some services in some countries due to regulatory and
other barriers.
You should refer to the section in "Business" entitled "Our International
Operations" for additional information about our existing and planned
operations in international markets.
Further, to expand our international operations, we may enter into joint
ventures or outsourcing agreements with third parties, acquire rights to high
bandwidth transmission capability, acquire complementary businesses or
operations or establish and maintain new operations outside the United States.
We may be heavily dependent on third parties to be successful in our
international operations. We may not be able to successfully sell our services
or adequately establish or maintain operations outside the United States.
If we are unable to manage our planned expansion effectively, we may incur
increased costs, experience capacity constraints and place too many demands
upon our management team.
We are currently experiencing a period of rapid expansion and, if our
business plan is successfully implemented, we expect our expansion to continue
for the foreseeable future. This expansion will increase our operating
complexity significantly and require significant time commitments from our
management team and severely restrict their ability to manage our existing
business. Our failure to manage our expansion effectively could increase our
costs, adversely affect our relations with customers and suppliers, result in
insufficient capacity over extended periods of time and adversely affect our
revenues and operating margins. Accordingly,
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<PAGE>
our success depends on our ability to effectively manage this expansion and the
demands it will impose on our management. In addition to training and managing
an increasing number of highly skilled employees, we will need to successfully
expand our capacity and network infrastructure and continually enhance our
information, management and operational and financial systems.
If we are not successful in achieving brand recognition for the Genuity
name, our competitive position will be weakened and we could lose market share.
We believe that establishing, maintaining and continually strengthening our
brand in domestic and international markets is a critical aspect of our efforts
to expand our customer base, solidify business relationships and successfully
implement our business strategy. The growing number of companies that offer
competing Internet infrastructure services increases the importance of
establishing and strengthening brand recognition. However, we only recently
changed our name to Genuity. Because our brand is new, it currently has very
limited recognition in the market. Our brand may not be viewed positively or be
accepted by the market. We intend to incur significant expenses to promote our
brand. The expenses we incur toward building our brand, however, may not result
in immediate returns and it may be a long time before enterprises, service
providers and business partners recognize and make positive connections with
our brand. In addition, our brand may be diluted if customers do not perceive
our services to be of high quality or if we fail to provide a satisfactory
customer service experience. We may not be successful in achieving these goals.
Our ability to develop, market and support our managed Internet
infrastructure services depends on retaining our management team and attracting
and retaining highly qualified individuals in the Internet industry.
Our future success depends to a significant extent on the continued services
of our management team. Our management team, which is described in the section
entitled "Management", has significant experience with data communications,
telecommunications and managed Internet infrastructure services, as well as
relationships with many of the enterprises, service providers and business
partners that we currently or may in the future rely on in implementing our
business plan. The loss of the services of our management team or any
significant portion of it could have a substantial detrimental effect on our
ability to execute our business strategy.
Our future success also depends on our continuing ability to identify, hire,
train, assimilate and retain large numbers of highly qualified technical,
sales, marketing and managerial personnel. The demand for qualified personnel
is high and competition for their services is intense. The competition for
qualified employees in the Internet industry is particularly intense in the
Boston, Massachusetts area where our principal operations are located. We have
from time to time experienced, and we expect to continue to experience in the
future, difficulty in hiring and retaining highly skilled employees with
appropriate qualifications. If we do not succeed in attracting new personnel or
retaining our current personnel, our business will suffer.
Our historical financial information may not be representative of our
results of operations as a separate entity.
The historical financial information we have included in this prospectus
does not necessarily reflect what our financial position, results of operations
and cash flows would have been had we been a separate, stand-alone entity
during the periods presented. GTE did not account for us, and we were not
operated, as a separate, stand-alone entity for the periods presented. Our
combined financial statements have been carved out from the consolidated
financial statements of GTE using the historical results of operations and
historical bases of the assets and liabilities of our business. Our costs and
expenses include allocations from GTE for centralized corporate services and
infrastructure costs, including legal, accounting, treasury, real estate,
information technology, distribution, customer service, sales, marketing and
engineering. These allocations have been determined on bases that we and GTE
considered to be reasonable reflections of the utilization of services provided
to or the benefit received by us. We have not made adjustments to our
historical financial information to reflect many significant changes that will
occur in our cost structure, funding and operations as a result of our
operating as a stand-alone company, including increased costs associated with
reduced economies of scale,
14
<PAGE>
increased marketing expenses related to building brand identity separate from
GTE and increased costs associated with being a publicly traded, stand-alone
company. Any increase in our costs related to these or similar factors could
adversely affect our operating results in future periods, which could cause the
market price of our Class A common stock to decline.
If we do not respond effectively and on a timely basis to rapid
technological changes, our services may become obsolete and we would probably
lose customers and be unable to attract new ones.
The managed Internet infrastructure services industry is characterized by
rapid technological developments and frequent new product and service
introductions and enhancements. The introduction of new products or
technologies could render our network or service offerings obsolete, thereby
requiring us to spend more than we currently anticipate in future periods in
order to remain competitive and retain our existing customers and attract new
ones. Similarly, technological developments could reduce the cost or increase
the supply of services similar to those that we provide or plan to provide,
which could result in lower than expected revenues in future periods. We may
not be able to:
. anticipate or adapt to these new products or technologies on a timely and
cost-effective basis;
. obtain the necessary funds to develop or acquire new technologies or
products needed to compete; or
. address the increasingly sophisticated and varied needs of our current
and prospective customers.
Our ability to compete could be jeopardized if our network and services do
not properly operate with the existing or future equipment of our customers.
We believe that our ability to compete successfully is dependent upon the
continued compatibility of our network and service offerings with products,
services and architectures offered by others, particularly our enterprise and
service provider customers. Although we often work with vendors in testing
newly developed products, these products may not be compatible with our
infrastructure. In addition, although we currently intend to support emerging
standards, there can be no assurance industry standards will be established or,
if they become established, that we will be able to conform to these new
standards in a timely fashion and maintain a competitive position in the
market. Our competitive position would be adversely affected if we fail to
conform to the prevailing standards, or if common standards fail to emerge.
We may lose customers if we experience system failures that significantly
disrupt the availability and quality of the services that we provide.
Our operations depend on our ability to avoid and mitigate any damages,
physical or otherwise, from natural disasters, power losses, capacity
limitations, physical or electronic breaches of security, software defects,
telecommunications failures and intentional acts of vandalism, including
computer viruses. The failure of any equipment or facility on our network could
result in interruptions in service or reduced capacity for our enterprise and
service provider customers until we make the necessary repairs or install
replacement equipment. In addition, our customers may experience interruptions
in service if carriers or other service providers fail to provide the
communications capacity that we have leased in order to provide service to our
customers or if our peering arrangements suffer significant disruption. For
example, in 1999 a third party provider from whom we lease capacity experienced
a significant disruption. Further, a majority of our traffic is transmitted
over capacity that we lease from third parties. The failure of any one of these
connections also could result in reduced performance.
These interruptions in service or performance problems could undermine
confidence in our services and cause us to lose customers or make it more
difficult to attract new ones. For example, America Online has the right to
reduce its purchase commitments and terminate its agreement with us if we fail
to meet agreed upon performance levels. In addition, because many of our
services are critical to the businesses of many of our customers, any
significant interruption in our service could result in lost profits or other
loss to our customers. Although we attempt to disclaim liability in our service
agreements, a court might not enforce a limitation on
15
<PAGE>
our liability, which could expose us to financial loss. In addition, we often
provide our customers with guaranteed service level commitments. If we do not
meet the required service levels as a result of service interruptions, we may
be obligated to provide credits, generally in the form of free service for a
short period of time, to our customers, which could significantly reduce our
revenues.
If we do not safeguard the security and privacy of our network
infrastructure, our reputation could be damaged and we could lose existing and
prospective customers and the potential revenues they represent.
The secure transmission of confidential information over networks, including
our network, is critical to the acceptance of the Internet. Internet usage
could decline if any well-publicized compromise of security occurs. Our
customers often maintain confidential information on our servers, such as
credit card and bank account numbers. We provide managed security services that
are intended to provide a high level of protection for our customers' networks.
Our managed security services include monitoring the network perimeters of our
enterprise customers and using firewall management, maintenance and proactive
response techniques to help ensure the security of access points into our
customers' computing infrastructure. We rely on encryption and authentication
technology to provide secure transmission of confidential information.
Despite our efforts, we may not be successful in maintaining information as
confidential or adequately safeguarding our customers' networks. Someone who is
able to circumvent our security measures could misappropriate proprietary
information or cause disruptions in our operations and those of our customers.
Any compromise of security in our network could damage our reputation and cause
us to lose existing and prospective customers. We may be required to expend
significant capital and other resources to protect against, or to alleviate
problems caused by, security breaches. In addition, a compromise of security
may result in claims against us, which could be successful. These claims,
regardless of their ultimate outcome, could result in costly litigation and
adversely affect our ability to attract and retain customers.
We rely on limited sources for supplying critical components of our network
infrastructure. If we are unable to obtain sufficient quantities of critical
equipment from these sources when needed, we may be forced to delay our
development and expansion plans, which would negatively affect our competitive
position.
We depend on vendors to supply the critical components of our network
infrastructure as we expand our network both domestically and internationally.
If we are unable to obtain these critical components on a timely basis, we may
have to abandon or delay our expansion plans, which would adversely affect our
competitive position. Some of our networking equipment is available only from
one or a small number of sources. For instance, we rely on Cisco Systems for
our network routers and Nortel Networks for our optical electronic equipment.
We typically purchase or lease all of our components under purchase orders
placed from time to time. We do not carry significant inventories of components
and have no guaranteed supply arrangements with vendors. Our vendors also sell
products to our competitors and we cannot assure you that they will not enter
into exclusive arrangements with our competitors.
We need to obtain additional capacity for our network from other providers
in order to serve our customers and keep our costs down.
We lease telecommunications capacity and obtain rights to unused fiber optic
strands from both long distance and local telecommunications carriers in order
to extend the range of our network. Our inability to obtain this additional
capacity on acceptable terms, or at all, could adversely affect our ability to
quickly expand our network, attract new customers and serve our existing
customers or could increase our costs of doing so.
We must obtain permits and rights-of-way to develop our network
infrastructure. If we do not obtain them in a timely fashion, we may have to
delay our expansion plans.
The expansion of our network infrastructure will require that we obtain
licenses, permits and other rights, including rights-of-way and encroachment
agreements and other permits to install conduit and related network
16
<PAGE>
equipment, from private landowners, utilities, railroads, local exchange
carriers, state highway authorities, local governments and transit authorities.
The process of obtaining these licenses, permits and rights can be time
consuming and burdensome. In addition, if we are unable to obtain these
licenses and permits on acceptable terms and on a timely basis, our ability to
expand and operate our network would be severely limited and our business will
not grow as we have planned.
Risks Related to Our Relationship With Verizon
Verizon's interests as a minority investor and potential future majority
stockholder of Genuity will be protected by the investor safeguards described
below. Under these safeguards, we need the consent of Verizon before taking the
actions described below. Verizon is not required to grant its consent and may
have interests that are different from ours.
We are contractually obligated to obtain the consent of Verizon before we
take any of the following actions:
. making any acquisition or series of related acquisitions with a purchase
price of more than 20% of our market capitalization at that time;
. making an acquisition in excess of $100 million or entering into a joint
venture in which our investment is more than $100 million, in each case
that is not closely related to our business;
. making any disposition or series of related dispositions for
consideration, including any indebtedness assumed, of more than 20% of
our market capitalization at the time;
. incurring indebtedness in any calendar year of more than $3.85 billion,
net of any repayments made during the year, or incurring any
indebtedness that would cause our aggregate indebtedness to exceed $11
billion;
. entering into any agreement with provisions that trigger a default or
require a material payment when Verizon converts its Class B common
stock or that purports to bind Verizon or any of its affiliates; and
. issuing any equity securities, although there are significant exceptions
for issuances in connection with acquisitions, employee benefit plans
and operating needs and capital expenditures.
You should refer to the section in "Related Party Transactions" entitled
"Recapitalization Agreement" for a more detailed description of these
contractual restrictions.
In addition, our certificate of incorporation requires us to obtain the
approval of the holders of a majority our Class B common stock before we:
. amend our certificate of incorporation, or amend our bylaws in a way
that affects the rights of the holders of the Class B common stock;
. agree to enter into a merger, consolidation or sale, lease or other
disposition of all or substantially all of our assets;
. file or declare bankruptcy or liquidation;
. authorize additional shares of our capital stock;
. materially change the nature or scope of our business; or
. take any action that would make it unlawful for a holder of Class B
common stock to exercise its conversion rights.
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<PAGE>
Verizon could prevent us from taking the actions described above. Verizon's
interests and objectives, which may diverge from ours, may influence whether
Verizon is willing to grant us any consents we may request. We may not be able
to resolve potential conflicts between Verizon and us to our satisfaction, and
if we cannot, our business may be harmed. The ability of Verizon to prevent us
from taking these actions will terminate under the circumstances described in
"Related Party Transactions" in the section entitled "Recapitalization
Agreement" and in "Description of Capital Stock" in the section entitled
"Common Stock".
Verizon has the right to transfer some or all of its shares of Class B
common stock to one or more persons. Verizon also may assign its contractual
rights to transferees of the Class B common stock. In that event, these persons
would be able to prevent us from taking the actions described above.
If Verizon is able to convert its shares of our Class B common stock into
shares of our Class C common stock, it will have the ability to exert
significant control over our business.
Although upon completion of this offering Verizon will hold shares of our
Class B common stock that represent 9.5% of our outstanding common stock at
that time, under the terms of the proposal to the FCC, if Verizon is permitted
to own more than 10% of our outstanding shares of common stock, it could
convert its shares into 800 million shares of Class C common stock. Based on
the shares of common stock outstanding immediately after this offering, these
shares would possess approximately 96% of the total voting power of our common
stock. After conversion of its shares of our Class B common stock, if Verizon
continues to beneficially own shares of capital stock representing more than
50% of the voting power of our outstanding capital stock, Verizon will be able
to exercise a controlling influence over us, including with respect to the
election of our directors and the outcome of any corporate transaction or other
matter submitted to our stockholders for approval. The voting power of Verizon
could have the effect of delaying or preventing a change in control. The
interests of Verizon may differ from the interests of our other stockholders.
Even if Verizon does not eliminate the applicable Section 271 restrictions
on all of Bell Atlantic in-region lines, it could still transfer a controlling
interest to someone who could exert significant control over our business.
Verizon may transfer some or all of its shares of Class B common stock
without our consent or the consent of the holders of our Class A common stock.
If Verizon transfers all of the Class B common stock after it has eliminated
the applicable Section 271 restrictions as to at least 50% of Bell Atlantic in-
region lines, the transferee would be able to convert those shares into 800
million shares of our Class A common stock and exercise significant control
over our business. Even if Verizon transfers fewer than all of its shares of
Class B common stock, the transferee might be able to exercise a controlling
influence over us after converting its shares of Class B common stock. In
addition, Verizon could convert its shares of our Class B common stock into
Class C common stock and transfer those shares to one or more persons who could
then exercise a controlling influence over us.
We have contracted with Verizon to provide us with a variety of transitional
services for a limited period of time. We may experience transitional problems
if we are unable to replace these services in a timely manner or on similar
terms.
We have not been operating as a stand-alone company. Affiliates of Verizon
are contractually obligated to provide us with office and operating facilities
and specified transitional services upon completion of this offering. If
Verizon does not perform its contractual obligations under these agreements, we
may not receive these services at the same level or obtain the same benefits as
when we were part of GTE. The agreements for those transitional services
generally terminate one year after this offering. After the termination of
these various arrangements, we may not be able to replace these transitional
services or enter into appropriate leases in a timely manner or on terms and
conditions, including cost, similar to those we will receive from Verizon or
are otherwise acceptable to us. You should refer to the section entitled
"Related Party Transactions" for more information about these arrangements.
18
<PAGE>
Risks Related to Legal Uncertainty
Our competitive position would be harmed if we are unable to protect our
intellectual property rights.
Despite the precautions we take to protect our intellectual property, it may
be possible for a third party to copy or otherwise misappropriate and use our
technology without authorization, particularly in foreign countries where the
laws may not protect our proprietary rights to the same extent as do the laws
of the United States, or for our competitors to develop substantially
equivalent or superior technology independently. If competitors are able to use
our proprietary technology or develop similar technology, our ability to
compete effectively would be seriously harmed. We may need to resort to
litigation in the future to enforce our intellectual property rights, to
protect our trade secrets or to determine the validity and scope of the
proprietary rights of others. This litigation could result in substantial costs
and diversion of resources.
We may be subject to infringement claims that could subject us to
significant liability or otherwise adversely affect our operating results.
We expect that participants in our markets will be increasingly subject to
infringement claims. Third parties may try to claim our services infringe their
intellectual property. Any claim, whether meritorious or not, could be time
consuming, result in costly litigation or require us to enter into royalty or
licensing agreements. These royalty or licensing agreements might not be
available on terms acceptable to us or at all, in which case we would have to
cease selling, incorporating or using those services that incorporate the
challenged intellectual property and expend substantial amounts of resources to
redesign our services. If we are forced to enter into unacceptable royalty or
licensing agreements or to redesign our services, our business and prospects
would suffer.
Some of the services we provide may in the future be regulated by the FCC,
states or foreign governments, which would significantly increase our operating
complexity and expenses and adversely affect our ability to compete.
Our existing and planned managed Internet infrastructure services are
currently classified as "information services" and, therefore, are exempt from
regulation by the FCC or any other government agency of the United States,
except to the extent that any regulations apply to businesses generally.
However, the regulatory characterization of Internet infrastructure services is
currently unsettled, and some private parties and regulators have raised
questions about the current regulatory status of Internet service offerings. As
a result, the FCC may choose to impose a new set of regulations on Internet
infrastructure services or reclassify them as either private carrier services
or telecommunications services. If existing telecommunications regulations are
extended to the Internet, or if new regulations are imposed, we may be
restricted in the way we offer our services, our cost of doing business could
increase and we could be required to exit some or all of our businesses. You
should refer to the section in "Business" entitled "Regulatory Matters" for a
more detailed description of the federal, state and international regulations
that could apply to our business if any of our services were reclassified as
either private carrier services or telecommunications services.
Although we believe that any regulation that applies to our business will
likewise apply to our competitors offering similar services, some of our
competitors are already regulated as telecommunications carriers due to their
other service offerings. As a result, these companies may be better able to
operate in a regulated environment than we are. Accordingly, regulatory changes
of the type described above could adversely affect our ability to compete
effectively against these competitors. There is no way to predict the future
regulatory framework of our industry.
The regulation of the Internet is unsettled and future regulations could
adversely affect our operating costs and business.
In addition to potential regulation of the Internet and related services by
the FCC and actual regulation of the operations of one of our subsidiaries, our
business may be adversely affected by the adoption of other laws
19
<PAGE>
and regulations in the United States or abroad that apply generally to
commerce and communication over the Internet, including laws or regulations
relating to intellectual property, telecommunications, privacy, consumer
protection, taxation and dissemination of unlawful or otherwise disfavored
content. The adoption or consideration of additional legislation or regulation
affecting the Internet could inhibit the continued growth of the Internet or
decrease its acceptance as a commercial medium, impose additional operating
and other costs on us, expose us to greater potential liability from
regulatory actions or private legal proceedings or otherwise adversely affect
our business operations or performance. We cannot predict the impact, if any,
that future laws and regulations relating to the Internet or legal or
regulatory changes may have on our business. You should refer to the section
in "Business" entitled "Regulatory Matters--Other Potential Regulation" for a
more detailed discussion of existing and potential laws and regulations that
could affect our business.
We may be subject to regulation, taxation, enforcement or other liabilities
in unexpected jurisdictions.
We provide our managed Internet infrastructure services to customers
located throughout the United States and internationally. As a result, we may
be required to qualify to do business, or be subject to tax or other laws and
regulations, in these jurisdictions even if we do not have a physical presence
or employees or property in these jurisdictions. The application of these
multiple sets of laws and regulations is uncertain, but we could become
subject to regulation, taxation, enforcement or other liability in unexpected
ways, which could materially adversely affect our business, financial
condition and results of operations.
If Verizon is unable to convert its Class B common stock to Class C common
stock, we will not be able to realize the benefits of being a majority-owned
subsidiary of Verizon.
If Verizon is unable to convert its Class B common stock into Class C
common stock, we may not realize the full benefits of our relationship with
Verizon. These benefits include the ability to:
. offer combined packages of Internet infrastructure services and telephony
services;
. obtain financing on more favorable terms than we otherwise could;
. integrate network infrastructure and reduce overhead costs; and
. take further advantage of the purchasing power of Verizon.
Risks Related to the Securities Markets and this Offering
The trading price of the Class A common stock will anticipate the dilution
that will result from future conversion of the Class B common stock.
We expect that upon completion of this offering, the trading price of the
Class A common stock will reflect the dilution that would result from the
future conversion of Class B common stock. This will likely result in the
shares of our Class A common stock trading at prices substantially lower than
they otherwise would without this future dilution. After this offering, the
Class A common stock will represent 90.5% of our outstanding common stock and
the Class B common stock will represent 9.5% of our outstanding common stock.
If Verizon is successful in satisfying the requirements of the proposal to the
FCC and is able to convert into 800 million shares of our Class A common stock
or Class C common stock, it or its transferees would be able to convert their
shares into shares of common stock representing up to 82% of our outstanding
common stock after this offering. Therefore, investors should recognize that
the Class B common stock may well be converted into approximately 82% of our
outstanding common stock, leaving the Class A common stock as representing
approximately 18% of our outstanding common stock.
The Class A common stock has limited voting rights in certain
circumstances.
Our charter provides that so long as 50% of the shares of Class B common
stock outstanding at the completion of this offering remains outstanding,
including additional shares of Class B common stock issued to Verizon in
connection with the exercise of the underwriters' over-allotment option, no
person or group of persons acting together may vote more than 20% of our
outstanding shares of Class A common stock.
20
<PAGE>
The market price of our Class A common stock may be materially adversely
affected by market volatility.
The price at which our Class A common stock will trade following this
offering is likely to be highly volatile and may fluctuate substantially. The
price of the Class A common stock that will prevail in the market after this
offering may be higher or lower than the price you pay, depending on many
factors, including:
. our actual or anticipated quarterly results of operations, which may
experience significant fluctuations;
. changes in financial estimates of our revenues and operating results by
securities analysts;
. increased capital expenditures or delays in the expansion of our capacity
and network infrastructure;
. actual or perceived difficulties in our ability to obtain sufficient
financing on acceptable terms to fund our capital expenditures;
. announcements by us or our competitors of new services, significant
acquisitions or strategic partnerships;
. a loss of or decrease in sales of services to major customers or a
failure to complete significant transactions;
. additions or departures of key personnel;
. future sales of our common stock, particularly by our directors and
officers; and
. commencement of, or involvement in, litigation.
In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have affected the market prices for the
securities of technology companies. As a result, investors in our Class A
common stock may experience a decrease in the value of their Class A common
stock regardless of our operating performance or prospects. The fluctuations in
the price of our Class A common stock may affect our visibility and credibility
in the Internet infrastructure services market and may affect our ability to
secure additional financing on acceptable terms, if at all.
You may suffer substantial dilution in the book value of your investment.
Assuming the Class B common stock outstanding on the date of this offering
converted into the maximum number of shares of common stock permitted under our
certificate of incorporation, the initial public offering price per share will
significantly exceed the net tangible book value per share. Accordingly,
investors purchasing shares in this offering may suffer substantial dilution of
$9.55 per share in their investment, assuming the conversion of Class B common
stock into Class A common stock and an initial public offering price of $13.50
per share. You should refer to the information in the section entitled
"Dilution" for more information.
21
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made statements under the captions "Prospectus Summary", "Risk
Factors", "Management's Discussion and Analysis of Financial Condition and
Results of Operations", "Business" and in other sections of this prospectus
that are forward-looking statements. In some cases, you can identify these
statements by forward-looking words such as "may", "might", "will", "should",
"expects", "plans", "anticipates", "believes", "estimates", "intends",
"future", "potential" or "continue", the negative of these terms and other
comparable terminology. These forward-looking statements, which are subject to
risks, uncertainties, and assumptions about us, may include, among other
things, projections of our future financial performance, our anticipated growth
strategies and anticipated trends in our business as well as projections
relating to our capital expenditure requirements, our network expansion plans,
locations of new data centers, network operations centers and points of
presence, expected deployment dates for capacity on trans-oceanic cable, our
plans for transitioning customer traffic from leased capacity to our network,
research and development initiatives and increases in sales and marketing
personnel. These statements are only predictions based on our current
expectations and projections about future events. Because these forward-looking
statements involve risks and uncertainties, there are important factors that
could cause our actual results, level of activity, performance or achievements
to differ materially from the results, level of activity, performance or
achievements expressed or implied by the forward-looking statements, including
those factors discussed under the caption entitled "Risk Factors". You should
specifically consider the numerous risks outlined under "Risk Factors".
22
<PAGE>
USE OF PROCEEDS
We estimate that the net proceeds from our sale of the 173,913,000 shares of
Class A common stock we are offering will be approximately $2.3 billion,
assuming an initial public offering price of $13.50 per share and after
deducting estimated underwriting discounts and offering expenses payable by us.
If the underwriters' over-allotment option is exercised in full, we estimate
that our net proceeds will be approximately $2.6 billion.
Of the net proceeds of this offering, we intend to use approximately $1.8
billion for capital expenditures in connection with the expansion of our
network infrastructure and the balance will be used for general corporate
purposes, including working capital. We may also use a portion of the net
proceeds to acquire or invest in businesses or products or to obtain the right
to use complementary technologies. We have no current commitments or agreements
with respect to any acquisition or investment. Pending these uses, we intend to
invest the net proceeds in short-term, investment-grade, interest-bearing
securities.
DIVIDEND POLICY
We have never declared or paid cash dividends on our capital stock. We
currently expect to retain earnings, if any, to finance the growth and
development of our business. Therefore, we do not anticipate declaring or
paying cash dividends on our common stock in the foreseeable future. The
decision to pay dividends will be made by our board of directors from time to
time in light of conditions then existing including, among other things, our
results of operations, financial condition and capital expenditure
requirements. We must also obtain the consent of Verizon to declare
extraordinary dividends or make other extraordinary distributions on our Class
A common stock. You should refer to the section in "Related Party Transactions"
entitled "Recapitalization Agreement" for more information on this limitation.
23
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 2000:
. on an actual basis giving effect to the recapitalization that will take
effect before this offering; and
. on a pro forma as adjusted basis to give effect to a $178 million capital
contribution by GTE and the sale of the shares of Class A common stock
offered by us in this offering at an assumed initial public offering
price of $13.50 per share, after deducting estimated underwriting
discounts and offering expenses payable by us.
This table should be read in conjunction with "Selected Combined Financial
Data", "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and our combined financial statements and accompanying notes
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
As of March 31, 2000
----------------------
Pro Forma
As
Actual Adjusted
---------- ----------
(in thousands except
share data)
<S> <C> <C>
Short-term obligations, including current maturities... $ 74,220 $ 74,220
---------- ----------
Long-term obligations.................................. 57,563 57,563
---------- ----------
Stockholders' equity:
Class A common stock, par value $.01 per share, 0
shares authorized, issued and outstanding, actual;
and 1,600,000,000 shares authorized and 173,913,000
shares issued and outstanding, pro forma as
adjusted............................................. -- 1,739
Class B common stock, par value $.01 per share,
21,000,000 shares authorized, 18,256,000 shares
issued and outstanding, actual and pro forma as
adjusted............................................. 183 183
Class C common stock, par value $.01 per share,
800,000,000 shares authorized, 0 shares issued and
outstanding, actual and pro forma as adjusted........ -- --
Additional paid-in-capital............................. 3,460,604 5,886,674
Other comprehensive income............................. 1,721 1,721
Accumulated deficit.................................... (1,516,741) (1,516,741)
---------- ----------
Total stockholders' equity............................ 1,945,767 4,373,576
---------- ----------
Total capitalization................................ $2,077,550 $4,505,359
========== ==========
</TABLE>
24
<PAGE>
DILUTION
After this offering, the Class A common stock will represent 90.5% of our
outstanding common stock and the Class B common stock will represent 9.5% of
our outstanding common stock. The Class B common stock is convertible at any
time into shares of our Class A common stock representing 10% of our total
common stock outstanding after the conversion. In circumstances that we
describe elsewhere in this prospectus, our Class B common stock can convert
into 800 million shares of Class A common stock or Class C common stock. We
have prepared the information below to show the effect of this offering on our
pro forma net tangible book value per share under either conversion.
Our pro forma net tangible book value as of March 31, 2000 was approximately
$1.6 billion. Pro forma net tangible book value per share represents our total
tangible assets, assuming a capital contribution of $178 million by GTE, less
our total liabilities. Assuming conversion of the Class B common stock into
shares of Class A common stock representing 10% of our total common stock
outstanding after the conversion, our pro forma net tangible book value per
share as of March 31, 2000 was approximately $82.75 per share. Assuming the
conversion of the Class B common stock into 800 million shares of Class A
common stock or Class C common stock, our pro forma net tangible book value per
share as of March 31, 2000 was approximately $2.00 per share. The accretion or
dilution in pro forma net tangible book value per share shown in the table
below represents the difference between the amount per share paid by purchasers
of shares of our Class A common stock in this offering and the net tangible
book value per share of our common stock immediately following this offering.
Without taking into account any changes in pro forma net tangible book value
after March 31, 2000, other than to give effect to the sale of the shares of
Class A common stock offered by us at an assumed initial public offering price
of $13.50 per share, after deducting estimated underwriting discounts and
offering expenses payable by us, our pro forma as adjusted net tangible book
value as of March 31, 2000 would have been approximately $3.8 billion, or
$19.92 per share of common stock assuming a 10% conversion, and $3.95 per share
of common stock assuming a conversion into 800 million shares. Such amounts
result in dilution of $62.83 per share to GTE, our sole stockholder, on the 10%
conversion basis and dilution of $9.55 per share to new investors purchasing
shares of Class A common stock on the 800 million share basis. If the initial
public offering price is higher or lower, the dilution to new investors will be
greater or less. The following table illustrates the accretion and dilution in
pro forma net tangible book value per share to new investors:
<TABLE>
<CAPTION>
800 Million
10% Conversion Share Conversion
--------------- ----------------
<S> <C> <C> <C> <C>
Initial public offering price per share..... $13.50 $ 13.50
Pro forma net tangible book value per share
as of March 31, 2000....................... $ 82.75 $ 2.00
(Decrease)/Increase per share attributable
to new investors........................... (62.83) 1.95
------- -------
Pro forma as adjusted net tangible book
value per share after this offering........ 19.92 3.95
------ --------
(Accretion)/Dilution per share to new
investors.................................. $(6.42) $ 9.55
====== ========
</TABLE>
25
<PAGE>
The following table summarizes on a pro forma basis after giving effect to
the recapitalization, the capital contribution discussed above, as of March 31,
2000, the number of shares of common stock purchased from us, the total
consideration paid to us and the average price per share paid by GTE as our
sole stockholder, both on a 10% conversion basis and an 800 million share
conversion basis. It also includes amounts to be paid by new investors
purchasing shares of Class A common stock in this offering at an assumed
initial public offering price of $13.50 per share, before deducting estimated
underwriting discounts and offering expenses payable by us.
<TABLE>
<CAPTION>
800 Million
Share
10% Conversion Conversion Total
Shares Shares Consideration
--------------- --------------- ------------------
Average
Price Per
Share in
Average Price 800
Per Share in Million
10% Share
Number Percent Number Percent Amount Percent Conversion Conversion
------- ------- ------- ------- ---------- ------- ------------- ----------
(in thousands, except per share data) ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GTE..................... 19,324 10% 800,000 82% $1,599,000 41% $82.75 $ 2.00
New investors........... 173,913 90 173,913 18 2,348,000 59 $13.50 $13.50
------- --- ------- --- ---------- ---
Total................. 193,237 100% 973,913 100% $3,947,000 100%
======= === ======= === ========== ===
</TABLE>
26
<PAGE>
SELECTED COMBINED FINANCIAL DATA
The selected combined financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the combined financial statements and
accompanying notes included elsewhere in this prospectus. The selected combined
balance sheet data as of December 31, 1998 and December 31, 1999 and the
selected combined results of operations for each of the years in the three-year
period ended December 31, 1999 have been derived from our combined financial
statements, which have been audited by Arthur Andersen LLP, independent public
accountants, and are included elsewhere in this prospectus. The selected
combined balance sheet data as of March 31, 2000 and results of operations for
each of the quarters ended March 31, 1999 and 2000 have been derived from our
unaudited financial statements included in this prospectus. The results of
operations of the predecessor to Genuity for the six months ended June 30,
1997, have also been derived from financial statements which have been audited
by Arthur Andersen LLP and are included elsewhere in this prospectus.
Our selected combined balance sheet data as of December 31, 1995, 1996 and
1997 and March 31, 1999 and the selected combined statement of operations data
for each of the years in the two year period ending December 31, 1996 were
derived from unaudited financial statements that are not included in this
prospectus. The selected combined balance sheet data of the predecessor to
Genuity as of December 31, 1995 and 1996 and June 30, 1997 and the selected
combined results of operations data of the predecessor for each of the years in
the two year period ended December 31, 1996 were derived from unaudited
financial statements that are not included in this prospectus. The unaudited
financial statements include all adjustments, consisting of normal recurring
accruals, which we consider necessary for a fair presentation of the results of
operations for these periods.
Our selected combined financial data set forth below, as of December 31,
1995, 1996, 1997, 1998 and 1999 and for each of the five years in the period
ended December 31, 1999 include the financial position and results of
operations of those operations that will constitute Genuity as of the
completion of this offering. The selected combined financial data as of
December 31, 1995 and 1996 and the results of operations for each of the years
in the two-year period ended December 31, 1996 do not include the financial
data of BBN Corporation. GTE acquired BBN Corporation effective June 30, 1997.
This acquisition was accounted for as a purchase business combination and,
consequently, the results of operations of BBN Corporation, excluding the
operations of BBN Technologies, which are being retained by GTE, are only
included in our results of operations for periods after June 30, 1997. The
results of operations of our predecessor represent the results of operations of
BBN Corporation, excluding the operations of BBN Technologies. The operations
of BBN Technologies are not included in the financial results of either the
predecessor or Genuity.
We have prepared the accompanying table to reflect our historical combined
financial information in a manner consistent with stand-alone operations by
reflecting transactions of GTE and balances attributable to us in our financial
statements for all periods presented. The historical financial information may
not be indicative of our future performance and does not necessarily reflect
what our financial position and results of operations would have been had we
operated as a separate, stand-alone entity during the periods covered.
27
<PAGE>
<TABLE>
<CAPTION>
Predecessor
-------------------------------
Year Ended Six Months
December 31, Ended
------------------- June 30,
1995 1996 1997
--------- -------- ----------
(in thousands,
except per share data)
<S> <C> <C> <C>
Results of
Operations Data:
Revenues
Access............ $ 24,323 $112,109 $ 94,126
Hosting........... 1,045 7,769 9,601
Transport......... -- -- --
Other............. 300 2,452 2,591
--------- -------- --------
Total revenues.. 25,668 122,330 106,318
Operating expenses
Cost of goods
sold............. 17,778 85,287 92,670
Selling,
general and
administrative... 28,341 68,602 38,801
Depreciation and
amortization..... 6,786 13,160 10,536
Operating income
(loss)............ (27,237) (44,719) (35,689)
Net income (loss).. $ (35,404) $(41,600) $(37,663)
Basic and diluted
income (loss) per
common share...... -- -- --
Basic and diluted
weighted-average
common shares
outstanding....... -- -- --
Pro forma as
adjusted basic and
diluted net loss
per common share.. -- -- --
Pro forma as
adjusted basic and
diluted weighted
average common
shares
outstanding....... -- -- --
<CAPTION>
Genuity
--------------------------------------------------------------------------
Year Ended December 31, Three Months Ended March 31,
-------------------------------------------------- -----------------------------------
1995 1996 1997 1998 1999 1999 2000
------- ------- ---------- ----------- ----------- ----------- -----------
(in thousands,
except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Results of
Operations Data:
Revenues
Access............ $ -- $ -- $ 128,838 $ 350,777 $ 555,603 $ 128,038 $ 183,285
Hosting........... -- -- 9,690 33,469 48,811 10,028 21,692
Transport......... 33,961 38,463 41,920 46,876 64,483 13,535 23,625
Other............. -- -- 3,035 14,880 37,569 5,682 19,250
------- ------- ---------- ----------- ----------- ----------- -----------
Total revenues.. 33,961 38,463 183,483 446,002 706,466 157,283 247,852
Operating expenses
Cost of goods
sold............. 14,812 15,606 166,040 492,794 767,498 160,540 283,928
Selling,
general and
administrative... 552 4,378 142,962 312,916 396,522 93,123 108,336
Depreciation and
amortization..... 6,062 6,731 49,444 104,444 187,628 41,092 53,786
Operating income
(loss)............ 12,535 10,656 (174,963) (464,152) (645,182) (137,472) (198,198)
Net income (loss).. $ 8,485 $ 7,309 $(174,928) $ (468,559) $ (647,046) $ (138,580) $ (209,826)
Basic and diluted
income (loss) per
common share...... $ 0.46 $ 0.40 $ (9.58) $ (25.67) $ (35.44) $ (7.59) $ (11.49)
Basic and diluted
weighted-average
common shares
outstanding....... 18,256 18,256 18,256 18,256 18,256 18,256 18,256
Pro forma as
adjusted basic and
diluted net loss
per common share.. -- -- -- -- $ (3.37) -- $ (1.09)
Pro forma as
adjusted basic and
diluted weighted
average common
shares
outstanding....... -- -- -- -- 192,169 -- 192,169
Other Data:
Cash flow provided
by (used in)
operating
activities........ $ (60,200) $(32,717) $ 2,496
Capital
expenditures...... 13,190 42,945 23,255
Other Data:
Cash flow provided
by (used in)
operating
activities........ $15,028 $ 8,349 $ (90,927) $ (512,928) $ (403,842) $ (133,479) $ (119,395)
Capital
expenditures...... 616 3,360 299,491 587,831 744,356 105,157 163,093
<CAPTION>
As of December 31, As of
------------------- June 30,
1995 1996 1997
--------- -------- ----------
(in thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents....... $ 36,082 $102,870 $ 78,773
Working capital.... 96,332 98,950 62,041
Property, plant and
equipment, net.... 25,671 56,865 72,179
Total assets....... 157,432 216,589 218,102
Total long-term
liabilities....... 82,840 80,495 83,334
Total liabilities.. 105,132 110,478 140,876
Stockholders'
equity............ 52,300 106,111 77,226
<CAPTION>
As of December 31, As of March 31
-------------------------------------------------- -----------------------------------
1995 1996 1997 1998 1999 1999 2000
------- ------- ---------- ----------- ----------- ----------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents....... $ 222 $ 304 $ 3,063 $ 13,883 $ 6,044 $ 541 $ 17,118
Working capital.... 14,712 698 370,765 43,060 (287,362) 114,361 (180,484)
Property, plant and
equipment, net.... 26,292 33,951 367,688 908,980 1,520,934 986,205 1,629,391
Total assets....... 60,123 58,735 1,094,576 1,685,969 2,343,132 1,785,867 2,461,854
Total long-term
liabilities....... 6,162 1,964 132,462 176,649 133,553 170,035 70,584
Total liabilities.. 23,156 25,818 609,208 351,242 675,026 311,510 516,087
Stockholders'
equity............ 36,967 32,917 485,368 1,334,727 1,668,106 1,474,357 1,945,767
</TABLE>
28
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with our combined
financial statements and the accompanying notes and other financial information
appearing elsewhere in this prospectus.
Components of Revenues
We derive our revenues from three operating segments: access, hosting and
transport. Our other revenues include international and value-added e-business
services.
Access. Our Internet access services include dial-up, dedicated and digital
subscriber lines. Our access revenues, which are derived from service providers
and enterprise customers, are the largest component of our total revenues.
Internet access customers typically sign one or two-year contracts providing
for monthly-recurring service fees that are either fixed or based on capacity
utilization. We also include in our access segment those revenues relating to
the development, operation and maintenance of a nationwide dial-up network for
America Online. We derived approximately 42% of our total revenues from America
Online in 1997, approximately 53% in 1998, 52% in 1999 and 46% in the first
quarter of 2000. Although we expect our revenues from America Online to
increase in absolute dollar amounts, we also expect these revenues to decline
as a percentage of our total revenues as we expand and broaden our revenue
base. In December 1999, we extended our strategic relationship with America
Online to provide it with additional dial-up as well as broadband backbone
Internet services. In December 1999, we agreed to operate the existing dial-up
network for AOL Japan, Inc., and we will be responsible for a significant
portion of the continued expansion of that network. Our expanded contractual
relationship with America Online extends through 2006. You should refer to the
section in "Business" entitled "Our Relationship With America Online".
We also include in access revenues those revenues derived from our provision
of dedicated Internet access to AT&T for resale to customers of its Business
Communications Services Division in the United States. We derived approximately
10% of our total revenues from AT&T in 1997. That percentage decreased to
approximately 7% in 1998 and approximately 2% in 1999 because our strategic
relationship with AT&T, under which BBN Corporation acted as the exclusive
provider for these services, was terminated in September 1997.
Hosting. Our web hosting services provide reliable hosting and a high speed
network infrastructure as well as flexible, fast and secure hosting platforms
and an experienced technical support staff. Our web hosting services include
managed hosting, collocation, content delivery and high availability services.
Our hosting revenues are based primarily on monthly fees for server management,
physical facilities and bandwidth utilization. Our web hosting services
contracts typically range from one to two years.
Transport. We provide a broad range of transport services. These services
are generally purchased by telecommunications carriers and Internet service
providers requiring additional capacity and do not include Internet access
services. Our transport revenues are typically based on available bandwidth.
Our transport services contracts typically range from one to two years.
Other. Other revenues include the results of our international business,
which consist primarily of Internet access, and domestic value-added e-business
services, such as managed security services, virtual private networks for
secure data transmission and the transport of voice communications that have
been converted to IP, commonly referred to as voice-over-IP. We charge for
international access and hosting revenues on a basis consistent with our
domestic services. We charge for our security and virtual private network
services on a fixed, monthly recurring fee basis and we charge for our voice-
over-IP services based on usage. The terms of our value-added e-business
service contracts typically range from one to two years.
29
<PAGE>
We believe that our hosting and other revenues will increase substantially
as a percentage of our total revenues. We also expect to continue to experience
declining prices in our access and transport services in the foreseeable
future.
Components of Operating Expenses
Cost of Goods Sold. Cost of goods sold consists primarily of the costs of
leasing telecommunications circuits and labor and expenses of operating our
network infrastructure. We also include in cost of goods sold the salaries and
benefits of our technical, operations and customer service personnel as well as
facilities administration, including rent, maintenance and utilities to support
our data centers.
We expect our network infrastructure requirements to grow in conjunction
with the growth of our overall business and, accordingly, expect our cost of
goods sold to increase significantly in the future. We believe our investments
in network infrastructure will cause our total data transmission costs to
increase substantially in the near term because of higher network operating and
maintenance expenses associated with this expansion. Although we expect our
total data transmission costs to increase significantly in absolute dollar
amounts as we expand, we also expect them to decline as a percentage of
revenues in the future as we add and utilize additional capacity and migrate
customers from our leased facilities to our own network.
Selling, General and Administrative. Selling, general and administrative
expenses consist primarily of salaries and benefits for our marketing, sales
and support personnel, advertising, trade shows, professional fees and legal
and accounting services and other miscellaneous expenses. We expect selling,
general and administrative expenses in the future to increase in absolute
dollar amounts as we hire additional personnel, expand our operations, invest
in new support systems and incur additional costs related to the growth of our
business. More specifically, we expect that advertising expenses will increase
substantially in the near term as we launch our advertising and branding
campaign and substantially increase our sales force. However, we expect
selling, general and administrative expenses to decline as a percentage of
revenues.
Depreciation and Amortization. Depreciation and amortization expenses
consist primarily of depreciation of our network infrastructure, including data
center equipment and related assets, and amortization of our goodwill and other
intangible assets. We expect these expenses to increase in the future as we
invest significant capital to expand our network infrastructure and data center
capacity.
In 1999, we completed the initial build-out of our high speed fiber network
infrastructure in the United States and have started adding additional layers
of capacity to meet existing and anticipated market demand. Our network
infrastructure has over 17,500 route miles of optical fiber connecting over 100
metropolitan areas in the United States. Through our recent investments in
undersea fiber optic cable capacity, we have expanded the reach of our network
into Europe and Asia.
Basis of Presentation
Our selected combined financial data as of December 31, 1995, 1996, 1997,
1998 and 1999 and March 31, 1999 and 2000 and for each of the five years in the
period ended December 31, 1999 and the three months ended March 31, 1999 and
2000 include the financial position and results of operations of those
operations that will constitute Genuity as of the completion of this offering.
Our combined financial data as of December 31, 1995 and December 31, 1996 and
our results of operations for each of the two years in the period ended
December 31, 1996 do not include the financial data of BBN Corporation. GTE
acquired BBN Corporation effective June 30, 1997. This acquisition was
accounted for as a purchase business combination and, consequently, the results
of operations of BBN Corporation, excluding the operations of BBN Technologies,
which are being retained by GTE, are only included in our results of operations
for periods after June 30, 1997. The results of operations of our predecessor
represent the results of operations of BBN Corporation, excluding the
operations of BBN Technologies.
30
<PAGE>
The following table sets forth our results of operations data derived from
our audited financial statements and unaudited financial statements for the
three months ended March 31, 1999 and 2000. For the purposes of the following
discussion and analysis, the pro forma results of operations for the year ended
December 31, 1997 combine the results of operations of our predecessor for the
six months ended June 30, 1997 with the results of operations of Genuity for
the year ended December 31, 1997, which includes the post-acquisition results
of our predecessor effective July 1, 1997. This presentation was included to
permit useful and complete year-to-year comparisons between the results of
operations for the years ended December 31, 1997, 1998 and 1999. However, this
pro forma restated information is not necessarily indicative of the operating
results we would have achieved if we had acquired our predecessor on January 1,
1997. The first six months of 1997 did not include some operating expenses,
amortization expense and allocations from GTE for centralized corporate
services and infrastructure costs, which were included in the second six months
of the year.
Results of Operations
<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended March 31,
-------------------------------- -------------------------
Pro Forma
1997 1998 1999 1999 2000
--------- --------- ---------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $ 289,801 $ 446,002 $ 706,466 $ 157,283 $ 247,852
Operating expenses:
Cost of goods sold.... 258,710 492,794 767,498 160,540 283,928
Selling, general and
administrative....... 181,763 312,916 396,522 93,123 108,336
Depreciation and
amortization......... 59,980 104,444 187,628 41,092 53,786
--------- --------- ---------- --------- ---------
Total operating
expenses........... 500,453 910,154 1,351,648 294,755 446,050
Operating loss.......... (210,652) (464,152) (645,182) (137,472) (198,198)
Other income (expense)
Interest expense,
net.................. (1,824) (20) (183) (434) (2,973)
Other, net............ 318 (2,924) (32) (341) (8,067)
--------- --------- ---------- --------- ---------
Loss before income
taxes.................. (212,158) (467,096) (645,397) (138,247) (209,238)
Income taxes............ 433 1,463 1,649 333 588
--------- --------- ---------- --------- ---------
Net loss................ $(212,591) $(468,559) $ (647,046) $(138,580) $(209,826)
========= ========= ========== ========= =========
</TABLE>
31
<PAGE>
The following table sets forth our results of operations data, including the
pro forma data for 1997, expressed as a percentage of total revenues, for the
periods indicated.
<TABLE>
<CAPTION>
Year Ended Three Months
December 31, Ended March 31,
------------------ ---------------
Pro
Forma
1997 1998 1999 1999 2000
----- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C>
Revenues............................... 100% 100% 100% 100% 100%
Operating expenses:
Cost of goods sold................... 89 110 109 102 115
Selling, general and administrative.. 63 70 56 59 44
Depreciation and amortization........ 21 23 27 26 22
--- ---- --- ------- -------
Total operating expenses........... 173 203 192 187 181
Operating loss......................... (73) (103) (92) (87) (81)
Other income (expense)
Interest expense, net................ (1) -- -- -- (1)
Other, net........................... -- (1) -- -- (3)
--- ---- --- ------- -------
Loss before income taxes............... (74) (104) (92) (87) (85)
Income taxes........................... -- -- -- -- --
--- ---- --- ------- -------
Net loss............................... (74)% (104)% (92)% (87)% (85)%
=== ==== === ======= =======
</TABLE>
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
Revenues
<TABLE>
<CAPTION>
Three Months Ended March
31,
--------------------------
1999 2000
------------ ------------
Amount % Amount %
-------- --- -------- ---
(dollars in thousands)
<S> <C> <C> <C> <C>
Access.............................................. $128,038 81% $183,285 74%
Hosting............................................. 10,028 6 21,692 9
Transport........................................... 13,535 9 23,625 9
Other............................................... 5,682 4 19,250 8
-------- --- -------- ---
Total............................................. $157,283 100% $247,852 100%
======== === ======== ===
</TABLE>
Our revenues in the first quarter of 2000 increased $91 million, or 58%,
over the first quarter of 1999. The first quarter of 1999 included
approximately $11 million of revenues associated with our strategic
relationship with AT&T. This contract has been terminated. If we exclude those
revenues from the first quarter of 1999, total revenues increased 70%.
Access. Our access revenues in the first quarter of 2000 increased $55
million, or 43%, over the first quarter of 1999. The increase in access
revenues reflects an 80% increase in dial-up access modems deployed and a 24%
increase in dedicated access customers. These increases were offset in part by
lower prices, including the pricing structure associated with our new contract
with America Online.
Hosting. Our hosting revenues in the first quarter of 2000 increased $12
million, or 116%, over the first quarter of 1999, due to an increase in the
number of our managed hosting customers.
Transport. Our transport revenues in the first quarter of 2000 increased $10
million, or 75%, over the first quarter of 1999 due primarily to the increased
sale of private line services.
32
<PAGE>
Other. Other revenues in the first quarter of 2000 increased $14 million, or
239%, over the first quarter of 1999 due to a $5 million increase in sales of
Internet access services in international markets and an $8 million increase in
value-added e-business services.
Operating Expenses
Costs of Goods Sold. Our cost of goods sold in the first quarter of 2000
increased $123 million, or 77%, over the first quarter of 1999. The increase
was the result of the continued build out of our network infrastructure to
provide access to a broader base of customers, support a growing customer base
and provide increased scope to service customers of our Internet access
services. Cost of goods sold, as a percentage of total revenues, was 115% in
the first quarter of 2000 compared to 102% in the first quarter of 1999. The
new pricing structure associated with the America Online contract contributed
to the increase.
Selling, General and Administrative Expenses. Our selling, general and
administrative expenses in the first quarter of 2000 increased $15 million, or
16%, over the first quarter of 1999. This increase is attributable to costs
associated with the expansion of our sales force and our marketing
organization.
Depreciation and Amortization. Our depreciation and amortization in the
first quarter of 2000 increased $13 million, or 31%, over the first quarter of
1999. The increase is the result of capital expenditures associated with the
continued build out of our network infrastructure.
Net Loss
Our net loss increased to $210 million in the first quarter of 2000 compared
to $139 million in the first quarter of 1999. We expect to continue to incur
significant net losses over the next several years, given our planned operating
and capital expenditures.
1999 Compared to 1998 and 1998 Compared to 1997
Revenues
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
Pro Forma
1997 1998 1999
------------ ------------ ------------
Amount % Amount % Amount %
-------- --- -------- --- -------- ---
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Access................................ $222,964 77% $350,777 79% $555,603 79%
Hosting............................... 19,291 7 33,469 8 48,811 7
Transport............................. 41,920 14 46,876 10 64,483 9
Other................................. 5,626 2 14,880 3 37,569 5
-------- --- -------- --- -------- ---
Total............................... $289,801 100% $446,002 100% $706,466 100%
======== === ======== === ======== ===
</TABLE>
Our revenues for 1999 increased $260 million, or 58%, over 1998. Our
revenues for 1998 increased $156 million, or 54%, over 1997.
Access. Our access revenues in 1999 increased $205 million, or 58%, over
1998. Our access revenues in 1998 increased $128 million, or 57%, over 1997.
These increases were due to an 87% increase in 1999 and a 76% increase in 1998
in the number of dial-up access modems deployed, primarily resulting from our
expanded relationship with America Online, and to a lesser extent, an increase
in the number of dedicated access customers. These increases were, in each
year, offset in part by lower prices.
Hosting. Our hosting revenues in 1999 increased $15 million, or 46%, over
1998, due to a 23% increase in the number of our managed hosting customers. Our
hosting revenues in 1998 increased $14 million, or 73%, over 1997 due in large
part to our acquisition of a web hosting company in December 1997.
33
<PAGE>
Transport. Our transport revenues in 1999 increased $18 million, or 38%,
over 1998, due to the sale of excess capacity on our network as we brought new
network segments on line. Our transport revenues in 1998 increased $5 million,
or 12%, due to increased sale of private line services.
Other. Other revenues in 1999 increased $23 million, or 152%, over 1998 due
to an $18 million increase in sales of Internet access services in
international markets and a $4 million increase in sales of voice-over-IP and
managed security services. Other revenues in 1998 increased $9 million, or
164%, over 1997, due to a $5 million increase in international revenues and a
$3 million increase in sales of managed security services.
Operating Expenses
Cost of Goods Sold. Our cost of goods sold in 1999 increased $275 million,
or 56%, over 1998, and our cost of goods sold in 1998 increased $234 million,
or 90%, over 1997. Our cost of goods sold, in each case, increased as a result
of the build-out of our network infrastructure to provide access to a broader
base of customers, support a growing customer base and provide increased scope
to service customers of our Internet access services. Our continued expansion
of the dial-up network operated for America Online also contributed to the
increase in cost of goods sold in 1999.
Our cost of goods sold, as a percentage of total revenues, was 89% in 1997,
110% in 1998 and 109% in 1999. To the extent we are able to increase our base
of customers and correspondingly increase our revenues, we expect cost of goods
sold to decrease as a percentage of our total revenues. Our telecommunications
circuit costs represent a substantial percentage of cost of goods sold. These
costs, which largely relate to long haul circuits, are expected to decrease as
a percentage of our revenues as we migrate customers from our leased facilities
to our own network.
Selling, General and Administrative Expenses. Our selling, general and
administrative expenses in 1999 increased $84 million, or 27%, over 1998. This
increase was due to a $67 million increase in selling expenses that were
directly attributable to an increase in the number of sales and sales-related
employees, both domestically and internationally. The growth in our sales force
resulted in higher training expenses and additional costs for expansion of
field offices. Also contributing to this increase was a $17 million increase in
general and administrative expense resulting from the hiring of additional
management staff and related operating expenses, increased facilities costs and
increased information technology expenses.
Our selling, general and administrative expenses in 1998 increased $131
million, or 72%, over 1997. Selling expenses increased $45 million due to
customer growth, higher new product development costs and investment in our
sales and marketing infrastructure, including expansion of sales channels,
advertising costs and other promotional activities related primarily to
Internet-based services for enterprise and service providers. General and
administrative expenses increased $86 million due to increases in management
staff and related operating expenses across the organization, as well as
increased cost of Year 2000 renovation and system testing.
Depreciation and Amortization. Our depreciation and amortization expenses in
1999 increased $83 million, or 80%, over 1998. This increase reflects our
continuing investment in our network infrastructure in order to support our
growth in customers and services. At December 31, 1999, over 17,500 miles of
our fiber optic network were operational and, therefore, being depreciated.
Our depreciation and amortization increased $44 million, or 74%, in 1998
over 1997. The increase reflects the continuing investment in our network
infrastructure, which had over 5,900 miles of fiber deployed and operational
and, therefore, being depreciated. In 1998 we also had a full year of
amortization of goodwill related to two acquisitions in 1997, compared to a
half year of amortization expense in 1997.
34
<PAGE>
Net Loss
Our net losses increased to $647 million in 1999 compared to $469 million in
1998 and $213 million in 1997. Our net losses increased to $210 million in the
first quarter 2000 compared to the first quarter 1999. Given our planned
operating and capital expenditures, we expect to continue to incur significant
net losses over the next several years.
Income Taxes
Our tax provision was computed on a stand-alone basis. Since July 1, 1997,
our federal income tax returns have been filed on a consolidated basis with
GTE. We generated taxable losses of $115 million in 1997, $527 million in 1998,
$638 million in 1999 and $179 million in the first quarter of 2000, which were
benefited by GTE in its consolidated income tax return. We received
reimbursements for these tax benefits of $40 million, $186 million and $224
million for the years ended December 31, 1997, 1998 and 1999 and $62.5 million
for the three-month period ended March 31, 2000. To reflect our income tax
provision on a basis that will be comparable to future periods, these
reimbursements have been accounted for as capital contributions. Our tax
provision represents amounts owed for state taxes. Our ability to use net
operating losses may be subject to annual limitations. We may also pay income
taxes in the future due to operating income in some states and foreign
countries. In the future, if we achieve operating profits and the net operating
losses have been exhausted or have expired, we may experience significant tax
expense.
Quarterly Results of Operations
The following table sets forth our unaudited quarterly results of operations
data for each of the nine quarters in the period ended March 31, 2000. This
data has been derived from our unaudited combined financial statements. We
believe that this information has been prepared on the same basis as our
audited combined financial statements and that all necessary adjustments,
consisting only of normal recurring adjustments, have been included to present
fairly the selected quarterly information when read in conjunction with our
audited combined financial statements and accompanying notes included elsewhere
in the prospectus. The operating results for any particular quarter are not
necessarily indicative of the operating results for any future period.
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------------------------------------------------------------------
Mar. 31, June 30, Sep. 30, Dec. 31, Mar. 31, June 30, Sep. 30, Dec. 31, Mar. 31,
1998 1998 1998 1998 1999 1999 1999 1999 2000
--------- --------- --------- --------- --------- --------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............. $ 96,863 $ 109,731 $ 115,018 $ 124,390 $ 157,283 $ 165,545 $ 181,548 $ 202,090 $ 247,852
Operating expenses:
Cost of goods sold.. 101,397 118,173 127,613 145,611 160,540 178,856 206,260 221,842 283,928
Selling,
general and
administrative..... 78,009 77,493 75,539 81,875 93,123 94,178 97,970 111,251 108,336
Depreciation and
amortization....... 21,071 23,272 28,071 32,030 41,092 44,148 49,831 52,557 53,786
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total operating
expenses.......... 200,477 218,938 231,223 259,516 294,755 317,182 354,061 385,650 446,050
Operating loss....... (103,614) (109,207) (116,205) (135,126) (137,472) (151,637) (172,513) (183,560) (198,198)
Other income
(expense):
Interest income
(expense), net..... (340) 200 2,115 (1,995) (434) 391 948 (1,088) (2,973)
Other, net.......... (152) (377) (219) (2,176) (341) (1,714) (336) 2,359 (8,067)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Loss before income
taxes............... (104,106) (109,384) (114,309) (139,297) (138,247) (152,960) (171,901) (182,289) (209,238)
Income taxes......... 326 343 358 436 333 369 463 484 588
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net loss............. $(104,432) $(109,727) $(114,667) $(139,733) $(138,580) $(153,329) $(172,364) $(182,773) $(209,826)
========= ========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
35
<PAGE>
Liquidity and Capital Resources
We have used cash in our operating and investing activities during all
periods. We have funded these cash requirements principally through permanent
contributions to capital from GTE and borrowings from its affiliates. Capital
contributions amounted to $611 million in 1997, $1.3 billion in 1998, $974
million in 1999 and $488 million in the first quarter of 2000. We expect to
continue to fund all of our cash requirements prior to this offering through
permanent contributions of capital from GTE.
Net cash used in operating activities was $91 million in 1997, $513 million
in 1998 and $404 million in 1999. Net cash used in operating activities was
$119 million in the first quarter of 2000. Net cash used in operating
activities for these years and the three-month period was primarily the result
of operating losses.
Net cash used in investing activities was $774 million in 1997, $505 million
in 1998 and $701 million in 1999. Net cash used in investing activities in each
of these years was primarily the result of capital expenditures for
construction of our network infrastructure, as well as leasehold improvements,
furniture, fixtures, computers and other equipment. Our capital expenditures
for the three-year period ended December 31, 1999 totaled over $1.4 billion.
Our net cash for investing activities in 1997 included the acquisitions of BBN
Corporation, our predecessor, and a web hosting company, which together totaled
$518 million. Net cash used in investing activities was $212 million for the
first quarter of 2000 due primarily to the result of capital expenditures for
the continued construction of our network infrastructure. Our capital
expenditures in the first quarter of 2000 were $211 million.
We currently intend to spend approximately $1.8 billion to $2.0 billion
during the year ended December 31, 2000 on capital expenditures, of which
approximately $1.2 billion is expected to be spent on the continued expansion
of our fiber optic network and approximately $250 million is expected to be
spent on the construction of additional data centers. As of March 31, 2000, we
had entered into $401 million in commitments for these projected expenditures.
Our capital expenditures program, as currently contemplated, will require
between $11 billion and $13 billion over the five-year period ending December
31, 2004, the majority of which will be for the expansion of our network
infrastructure. We expect capital expenditures to continue to increase
significantly beyond this period, depending on the pace at which we build and
expand our network infrastructure and increase our employee base to support our
operations and invest in our selling and marketing organization. In the near
term, we believe that the proceeds from this offering, along with the capital
contribution from GTE prior to this offering that will offset intercompany debt
as well as any outstanding external debt as of the closing of the offering,
should be sufficient to meet our cash needs through the first quarter of 2001.
Our future cash requirements, however, will depend on a number of factors,
including:
. the pace at which we expand our network infrastructure and the
associated costs;
. the rate at which customers purchase our services and the pricing of
those services;
. the level of marketing required to build our brand, to acquire and retain
customers and to maintain a competitive position in the marketplace;
. the rate at which we invest in support systems and engineering; and
. investment opportunities in complementary businesses or technologies.
We will be required to raise additional capital to fund our business plan as
currently contemplated. We cannot predict the timing and exact amount of
capital that we will be required to raise. We expect to raise this capital
principally through public offerings or private placements of debt or equity
securities, depending on market conditions. The issuance of additional equity
would be dilutive to the holders of our Class A common stock. We are required
to obtain the consent of Verizon or other future holders of our Class B common
stock
36
<PAGE>
prior to issuing shares of our capital stock in excess of specified limits and
our agreement with Verizon limits our ability to incur debt in excess of agreed
upon amounts. You should refer to "Description of Capital Stock" and the
section in "Related Party Transactions" entitled "Recapitalization Agreement"
for more information regarding limitations imposed on us by our charter and
contractual relationship with Verizon. If we are unable to obtain required
additional capital through the issuance of these securities or are required to
obtain it on terms less satisfactory than we desire, we may be required to
delay the expansion of our business.
As of March 31, 2000, our indebtedness included $49 million of 6%
convertible subordinated debentures. These debentures are due in 2012 and may
be converted at any time by the bondholders into cash at an exchange ratio of
$966.67 for each $1,000 in principal amount of debentures. The debentures are
unsecured obligations of Genuity and are subordinated in right of payment to
our senior indebtedness, if any. We are required to contribute to a sinking
fund annual payments equal to 5% of the aggregate principal amount issued. As
of December 31, 1999, we had purchased and retired debentures with an aggregate
principal of $37.3 million, which satisfies the annual sinking fund
requirements through 2006.
As of March 31, 2000, our indebtedness also included $83 million in capital
leases. The capital leases bear interest at 5.07% to 9.50% and have terms of 5
years from the date of purchase, with principal and interest payable quarterly
in advance.
In addition, in the future we may wish to selectively pursue possible
strategic investments in businesses, technologies or products complementary to
ours in order to expand our geographic presence and achieve operating
efficiencies. We may not have sufficient liquidity, or we may be unable to
obtain additional debt or equity financing on favorable terms or at all, to
finance these investments.
Year 2000
We do not believe that the Year 2000 rollover has had, or will have, any
material adverse impact on our operating results or liquidity. We have not
experienced any material contingencies with customers or major suppliers nor
have we experienced any significant Year 2000 events. The estimated total cost
of our Year 2000 compliance efforts is expected to total approximately $60
million, of which $54 million has been expended through March 31, 2000.
Inflation
We do not believe that inflation has had a material adverse impact on our
business or operating results during the periods presented.
Recently Issued Accounting Pronouncements
The Securities and Exchange Commission issued Staff Accounting Bulletin
(SAB) No. 101, Revenue Recognition in Financial Statements, on December 3,
1999. We are required to adopt this new accounting guidance, as amended by SAB
No. 101A, no later than the second quarter of 2000. We implemented this
accounting guidance in the first quarter of 2000.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. SFAS No. 133, as amended by SFAS No.
137, is effective for all fiscal quarters of fiscal years beginning after June
15, 2000. This new standard is not anticipated to have an impact on our
combined financial statements based on our current structure and operations.
37
<PAGE>
Quantitative and Qualitative Disclosure About Market Risk
While our long-term debt bears fixed interest rates, the fair value of our
fixed rate long-term debt is sensitive to changes in interest rates. There is a
risk that market rates will increase and the required payments will exceed
those based on the current market rates. The estimated fair value of long-term
debt based on a debt pricing model was lower than its recorded value by
approximately $1.2 million as of December 31, 1998, by approximately $6.6
million as of December 31, 1999 and by approximately $6.8 million as of March
31, 2000. Under our current risk management policies, we do not use interest
rate derivative instruments to manage our exposure to interest rate changes.
38
<PAGE>
BUSINESS
Overview
We are a leading e-business network provider of high quality, managed
Internet infrastructure services to enterprises and service providers. We offer
a comprehensive suite of managed Internet infrastructure services, including:
. Internet access through dial-up, dedicated and digital subscriber lines;
. web hosting and content delivery; and
. value-added e-business services, such as virtual private networks for
secure data transmissions and security services.
We operate a state-of-the-art global network that consists of:
. recently deployed broadband fiber optic cable in the United States;
. points of presence, which are locations where we provide Internet access
to end users;
. secure data centers with redundant fiber connections to our network and
backup power sources; and
. undersea and international fiber optic cable capacity.
Our large base of on-network users and content, combined with our extensive
network, positions us as one of the leading Internet backbone providers in the
world, a status commonly referred to as a Tier 1 Internet backbone provider.
Tier 1 Internet backbone providers have the network scale and on-network
traffic to offer their customers connectivity to virtually all addresses on the
Internet either directly through their Internet backbone or through cost-free,
high speed private connections to other Tier 1 Internet backbones. We believe
that service providers are increasingly connecting to networks with substantial
on-network content to improve the quality of their customers' experience, which
in turn drives demand by enterprises seeking to connect to networks with large
numbers of users. We believe that by taking advantage of this demand cycle,
which we call the "network effect", we will continue to drive significant
demand for our services from both enterprises and service providers and
differentiate ourselves from non-Tier 1 Internet backbone providers.
Industry Background
The Growing Importance of the Internet
The Internet has experienced tremendous growth in the past decade and has
emerged as an important global medium for communications and commerce. The
growth in data that is transmitted over the Internet is driven by a number of
factors, including the rapidly increasing number of network-enabled and
Internet-based applications, the growing number of personal computers linked to
the Internet, advances in network-enabled devices, servers and routers and the
increasing availability of broadband connections.
The explosive growth of the Internet and the increasing demand for data
services are expected to continue. According to International Data Corporation,
the number of Internet users worldwide will increase from 142 million at the
end of 1998 to approximately 502 million by the end of 2003. In addition,
according to International Data Corporation, the number of web pages is
expected to grow from 1.7 billion in 1999 to approximately 13.1 billion in
2003. This growth is expected to lead to a substantial increase in the demand
for bandwidth and other Internet infrastructure services.
The proliferation of the Internet within the business environment, in
particular, has been substantial. Once primarily used for e-mail and retrieving
information, the Internet is now being used as a communications platform for an
increasing number of mission-critical Internet-based applications, such as
those relating to
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e-commerce, internal networks or intranets, telephone and facsimile
capabilities, supply chain management, customer service and project
coordination via extranets. The Gartner Group estimates that worldwide
business-to-business e-commerce sales will grow from $145 billion in 1999 to
approximately $7.3 trillion in 2004.
To improve the effectiveness and scalability, of their critical Internet-
based applications, both enterprises and service providers are requiring
increasing levels of network performance, including capacity, reliability,
security and manageability, across the Internet.
The Growing Demand for Outsourced Internet Infrastructure Solutions
As the Internet and data traffic have grown, the cost and complexity for
enterprises and service providers to manage their own network infrastructure
demands in-house has increased. Traditionally, enterprises were required to
make substantial investments in developing the Internet expertise and
infrastructure necessary to ensure the quality, reliability, security and
availability of their Internet operations. The implementation and maintenance
of Internet infrastructure solutions also require significant technical
expertise and capital expenditures in a number of other areas, such as e-
commerce systems, security and privacy technologies, advanced user interface
and multimedia production. Moreover, the information technology departments
within enterprises are constantly challenged by the need to implement their
Internet business strategy, adopt new and rapidly changing technologies,
transition to new broadband content applications and continuously update
dynamically changing content. As a result, enterprises are seeking Internet
infrastructure service providers that can minimize their exposure to the
capital, human and technological risks associated with in-house solutions. To
increase their competitive edge, enterprises are now outsourcing their critical
Internet operations to increase performance and scalability, speed time-to-
market and reduce costs.
Similarly, service providers are challenged by the rapid growth and
increasing complexity of the Internet infrastructure, the dramatic increase in
data traffic and the growing need to meet the demands of broadband
applications. Service providers are increasingly required to devote substantial
capital and human resources to expanding the capacity and the technological
capabilities of their networks. As the demands of their customer base grow,
these service providers find it more difficult to quickly, cost-effectively and
efficiently deliver service through internal infrastructure expansion. As a
result, service providers are increasingly focusing their resources on sales
and marketing and outsourcing their Internet infrastructure requirements to
organizations focused on developing and enhancing a high capacity Internet
infrastructure that can be quickly expanded to meet their requirements.
The Development of the Internet Infrastructure Services Market
The growing demand from enterprises and service providers for outsourced
Internet infrastructure services has led to the development of an Internet
infrastructure service market comprised of companies focused on solving these
outsourcing requirements. Many of these companies have endeavored to build or
otherwise acquire network facilities in order to provide Internet access, while
others have addressed more specific solutions, such as web hosting or security
services. According to Forrester Research, the Internet access and web hosting
markets in the United States are expected to grow from an aggregate of $4
billion in 1998 to $57 billion by 2003, representing a compound annual growth
rate of approximately 70%.
Enterprises and service providers are increasingly demanding Internet
infrastructure service providers that can deliver a high quality Internet
experience for their users. The ability to deliver this high quality experience
has become more difficult, largely as a result of an increasing number of
Internet users and richer content, including graphics, photographs and
streaming video and audio. In addition, as the number of networks connected to
the Internet has grown, the delay and loss of data that is transmitted over the
Internet has increased. This is particularly true at the major public peering
points where multiple Internet service providers exchange data over shared
facilities. To increase performance, a number of Internet backbone providers
have established high-speed private connections with other networks to exchange
traffic over dedicated fiber circuits.
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These connections are referred to as private peering connections. The quality
of an experience on the Internet is therefore highly dependent on the quality,
capacity and reliability of the physical facilities over which Internet
services are provisioned and the Internet backbone through which Internet
access is provided and content is delivered.
The critical elements of delivering a high quality user experience are a
large base of on-network users, content, and high speed, well-managed private
peering relationships with other Tier 1 Internet backbones. Internet backbone
providers that have these competitive strengths are able to route traffic to
virtually all Internet addresses and avoid the need to route traffic across
multiple networks and congested public peering points. Consequently, their
users encounter fewer delays due to transmission bottlenecks across public
peering points, and enterprise and service providers using these Internet
infrastructure service providers are better able to manage the quality of
experience of their end users.
Accordingly, enterprises and service providers increasingly look to the
limited number of providers that offer a comprehensive suite of managed
Internet infrastructure services, a large base of on-network users and content,
and reliable and scalable network facilities. We believe that we are among only
a few companies in the world that offer the full complement of these attributes
as part of their e-business network solution.
Our Solution
Our e-business network solution enables our customers to outsource their
Internet infrastructure needs to a single provider and to scale their Internet
operations in a cost-effective and reliable manner. The key elements of our
solution include:
Comprehensive Suite of Managed Internet Infrastructure Services. We offer a
broad range of managed Internet infrastructure services, including: Internet
access; web hosting and content delivery; and value-added e-business services,
such as virtual private networks for secure data transmission, security
services and voice-over-IP. Our services are designed to enable customers to
purchase the level of service, features, access speed and functionality that
meet their existing requirements, while at the same time allowing them to
easily upgrade services over time. We believe there is significant opportunity
to offer integrated services to enterprise customers as their requirements
evolve from Internet connectivity to more critical Internet applications. As
part of our solution, we install, configure, maintain and monitor industry-
leading hardware and software, offer technical consulting and support, provide
high-volume backup and recovery systems and monitor our Internet backbone
operations 24 hours a day, seven days a week. Additionally, we provide flexible
service pricing that allows our customers to be billed according to their
bandwidth and capacity utilization.
Large Base of On-Network Users and Content. Because we provide Internet
access services to many of the leading Internet service providers, including
America Online, Earthlink, NetZero and Web TV, web hosting services for popular
web sites as Yahoo! and ZDNet, and high speed connections to enterprises that
host their own web sites, such as Microsoft, we carry a significant amount of
traffic over our Tier 1 Internet backbone. We believe enterprises and service
providers choose to connect to our Internet backbone because they can directly
route traffic to, or receive content from, a significant number of other
customers on our network. This capability results in higher transmission
speeds, lower instances of data loss and greater quality of service, thereby
improving the overall quality of experience for Internet users. We believe that
service providers are increasingly connecting to networks with substantial on-
network content to improve the quality of their customers' experience, which in
turn drives demand by enterprises seeking to connect to networks with large
numbers of users. We believe that by taking advantage of this demand cycle,
which we call the "network effect", we will continue to drive significant
demand for our services from both enterprises and service providers and
differentiate ourselves from non-Tier 1 Internet infrastructure service
providers.
State-of-the-Art Network. We operate a state-of-the-art, high capacity
global fiber optic network that is highly reliable and scalable. Over 85% of
our fiber has been deployed within the past two years, and a majority
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of our optical electronic equipment has been installed within the past year.
Our highly redundant fiber optic network architecture is designed to minimize
service interruptions in our network operations. We have significant additional
capacity on our fiber network, which already carries a substantial portion of
our traffic. This capacity allows us to scale quickly at favorable incremental
capital costs as we meet increased customer demands and continue our transition
from leased capacity. We also operate eight data centers in the United States,
one data center in the United Kingdom and one in Japan, through which we
provide managed and collocated web hosting services for enterprises with
critical Internet operations. Through our technologically advanced data
centers, we offer customers a secure environment to house critical Internet
operations and to obtain high bandwidth connectivity to the Internet.
High Performance, Tier 1 Internet Connectivity. We provide high performance
connectivity to the Internet through our Tier 1 Internet backbone and extensive
high speed private connections to other major Internet backbone providers and,
to a lesser extent, public peering points. Our extensive private peering
relationships permit us to have direct, cost-free exchange of traffic with a
significant number of telecommunications carriers and Internet infrastructure
service providers, thus avoiding the congestion of public peering points when
directing traffic to users connected to those Internet backbones. As a result,
we are able to offer our customers direct access to our on-network users and
content. In addition, over 80% of the traffic we deliver to the rest of the
Internet is delivered through private peering connections.
Significant Internet Protocol Engineering and Architectural Expertise.
Drawing upon the breadth and depth of our IP and networking experience and
expertise, including over 750 engineers and over 1,100 technicians, we are able
to quickly and cost-effectively identify the Internet infrastructure
requirements of our customers and design and implement appropriate solutions.
For service providers, this entails testing, certifying, deploying and scaling,
within our network, the latest fiber optic and IP routing, switching and web
hosting technology to provide cost-effective and highly reliable managed
Internet infrastructure services. For our enterprise customers, we provide high
quality IP solutions comprised of one or more of our services. For example, we
combine our Internet access, web hosting, virtual private networks and managed
security services to enable secure intranets and extranets for enterprises.
Our Strategy
Our objective is to be the leading e-business network provider by
architecting, building and operating the infrastructure for the Internet
economy. The principal elements of our strategy for pursuing this objective
include:
Leveraging the Network Effect. We intend to continue to target enterprises
and service providers with significant Internet infrastructure demands. The
addition of an increasing number of service providers enables us to cost-
effectively scale our network and attract enterprises that seek to connect to
networks with a large number of users. The additional users that these service
providers bring to our network attract enterprises that want to market their
products and services directly to a larger base of users. We believe that
attracting these customers will enhance our position as a leading provider of
managed Internet infrastructure services as a result of the consolidation of a
growing number of users and large volumes of content on our Tier 1 Internet
backbone. We also believe that over time the scale associated with an
increasing customer base will also allow us to pursue premium pricing with
enterprise customers and minimize operating expenses sometimes associated with
private peering connections to other Internet backbones.
Expanding Our Capacity and State-of-the-Art Network. We intend to continue
to expand our capacity and state-of-the-art network in advance of the capacity
demands of our customers. We plan to do this by accomplishing the following by
the end of 2001:
. extending our coverage by deploying up to an additional 4,500 route miles
of fiber optic cable serving approximately 120 metropolitan service areas
and 11 additional international markets;
. expanding our network capacity in the United States to the equivalent of
10 layers of 10 gigabit capacity each;
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. increasing our number of dedicated points of presence to nearly 300 and
deploying local fiber rings within selected metropolitan service areas to
increase our reach to end users;
. adding seven additional data centers in key locations worldwide to
address the growing demands for our web hosting and content delivery
services;
. expanding our network collocation facilities to enable our service
provider customers to reach new markets quickly and cost-effectively; and
. deploying state-of-the-art optical electronic equipment to maximize the
capacity of our fiber network.
Continuing to Build and Own Our Network Facilities. As we expand, both
domestically and internationally, we intend to build and own the majority of
our network facilities rather than leasing them from other facilities-based
providers. We believe that owning our network facilities:
. provides greater control over the performance, reliability and breadth of
our managed Internet infrastructure services;
. enables us to increase our capacity more quickly to meet increasing
bandwidth demands;
. generates higher gross margins than would be generated through leasing
circuits from other facilities-based providers; and
. improves service delivery to customers by reducing reliance on third-
party providers.
Expanding Our Distribution Capabilities. We intend to develop and expand our
direct sales force and our strategic alliances with other Internet-focused
companies in order to expand our distribution capabilities. Currently, we have
over 350 persons in our direct sales force, and we intend to substantially
increase this sales force by the end of 2001. During the same period, we plan
to substantially increase our Electronic Business Consultant organization,
which is a group of highly skilled sales consultants that aid our existing and
potential customers in designing e-business solutions based on our managed
Internet infrastructure services. In addition, through our eP@rtner Program, we
have formed alliances with leading web integrators, e-business consultants,
interactive agencies and other technology providers. We have formed similar
alliances with international Internet service providers through our
Net.Alliance program. This program enables these Internet service providers to
offer our portfolio of IP-based services to their customers and is designed to
allow us to provide our services to private and commercial customers in key
European, Pacific Rim and Latin American markets. Our current partners in these
programs include, among others, Agency.com, Cambridge Technology Partners,
Cisco Systems, Ernst & Young, Hewlett-Packard, IBM, Lante, Microsoft, Nortel
Networks and Sapient in the United States, Energis in the United Kingdom and
I.NET and Tiscali in Italy. These alliances serve as a valuable, cost-effective
channel for marketing our services. We also plan to expand our existing
reseller relationships to significantly enhance our distribution capabilities.
Pursuing Strategic Transactions and Alliances. We intend to pursue selective
acquisitions that will allow us to quickly and cost-effectively extend our
geographic presence and customer base, particularly in international markets.
Additionally, we intend to make strategic investments in or enter into joint
ventures or alliances with complementary businesses to broaden our market
presence or expand our strengths in key services. We believe that successfully
pursuing these strategic transactions or alliances will enable us to expand our
geographic and service reach and to broaden our Internet infrastructure
services for our customers.
Using Our Extensive Internet Protocol and Networking Expertise to Develop
New Services. We intend to use our long history of IP and networking expertise
to strengthen our reputation as a leader in the development and deployment of
innovative Internet infrastructure services. We were one of the first to offer
commercially managed web hosting services and managed security services. We
plan to continue to develop and introduce innovative services that address the
evolving requirements of our enterprise and service provider customers. We are
pursuing initiatives such as IP-based voice virtual private networks, enhanced
multi-media streaming and
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content distribution services and wireless and satellite access services. In
addition, we plan to partner with or make investments in innovative Internet
start-ups and other organizations to enhance both our access to and
incorporation of leading technologies.
Establishing Genuity as a Leading Brand for e-Business Network Services. We
intend to establish Genuity as a leading brand for e-business network services
worldwide. We plan to increase brand awareness by pursuing an aggressive
marketing strategy involving television, radio and print advertising as well as
extensive public relations efforts. We will pursue additional marketing
campaigns specifically targeted at enterprises and service providers. We also
intend to build brand recognition by continuing to work closely with our
eP@rtners and Net.Alliance partners to increase our exposure to a broader base
of customers.
Our Services
We provide a comprehensive suite of managed Internet infrastructure services
targeted to two primary customer groups, enterprises and service providers. Our
services fall into the following four categories:
. Internet access;
. web hosting;
. value-added e-business services; and
. transport services.
Our enterprise customers rely on our comprehensive suite of managed Internet
infrastructure services to create and implement their e-business strategies.
Our service provider customers rely primarily on our Internet access and web
hosting services, which enable them to focus on the retail aspects of their
business while we provide and manage the underlying scalable infrastructure
necessary to deliver services to their customers. We believe our focus on
developing and tailoring services to meet the needs of our target customers, as
well as the scale and diversity of our services, differentiates us from our
competitors.
Internet Access. We offer a variety of Internet access services to our
enterprise and service provider customers, including dial-up, dedicated and
digital subscriber lines. We also provide a range of customer premise equipment
that is necessary to connect to the Internet, including routers, channel
service units or data services units, modems, software and other products. Our
Internet access services, which accounted for over 77% of our total revenues in
1999, include:
. Dial-up Access. Our dial-up access service enables users to connect to
the Internet using a local telephone number. Our customers can connect to
our Internet backbone through more than 800 local access points in the
United States and, through our reseller relationship with iPass, a remote
access provider, through approximately 1,500 international local access
points in more than 150 countries. DiaLinxSM, which is our remote dial-up
access service for enterprises that enables them to provide their mobile
professionals, telecommuters, customers and business partners with
guaranteed, cost-effective local dial-up access to their intranets and
extranets, as well as the Internet, from around the world. Similarly, our
DiaLinx ISP service enables Internet service providers to expand their
existing dial-up access service without incurring substantial up-front
capital costs and ongoing operational expenses. For other Internet
service providers and organizations that want to quickly offer their
customers a private-label, Internet dial-up access service without
incurring up-front and ongoing investments in network infrastructure or
the burden of providing back office support, we offer a virtual Internet
service provider service, called DiaLinx VISP SM.
. Dedicated Access. Our Internet Advantage SM and ISP Direct SM services
connect enterprises and service providers directly to the Internet
through a dedicated high speed connection. These services are available
throughout the United States and in more than 60 other countries. We
offer a broad spectrum of dedicated connection types with flexible
pricing structures, as well as comprehensive service level guarantees. We
offer dedicated Internet access at speeds ranging from T1, including
fractional up to 1.5 megabits per second, to OC-12, which is capable of
transmitting data at 622 megabits per second.
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. Digital Subscriber Line Access. Our digital subscriber line access
service enables high speed digital transmission over telephone lines.
This service allows an end user to use the telephone while connected to
the Internet with only one connection. Unlike dial-up access services,
our digital subscriber line access service provides a full-time
connection that is "always on". We currently offer service in 24 major
metropolitan service areas throughout the United States, with expansion
planned to over 50 major metropolitan service areas, covering over 60% of
the United States population, by the end of 2000. Our digital subscriber
line access services are available in a wide range of dedicated access
speeds, from 144 kilobits per second to 1.5 megabits per second. Our
digital subscriber line access services for enterprises are designed to
meet the needs of telecommuters, branch offices and small businesses by
providing high quality Internet access at speeds faster than dial-up and
Integrated Services Digital Network and offered for a fixed monthly fee.
In addition, for our service provider customers, we coordinate all
activities necessary to provide digital subscriber line access service,
including service establishment, network connectivity, bulk billing and
second tier technical support.
Web Hosting. Our web hosting services, which accounted for 7% of our total
revenues in 1999, enable enterprises and application service providers to
outsource the storage and management of their web servers to our special
purpose web hosting facilities. Our Enterprise Advantage SM web hosting service
provides reliable web hosting and high speed network infrastructure, flexible,
fast, and secure web hosting platforms and experienced technical support staff.
We currently operate 10 data centers throughout the world, with eight in the
United States, one in Leeds, England and one in Tokyo, Japan. Each data center
is located in the same building as, or in close proximity to, our network
access points. Our data centers are technologically advanced facilities with
redundant, high speed connectivity to the Internet, uninterruptible power
supplies, back-up generators, fire suppression, raised computer floors,
separate cooling zones, seismically braced racks and high levels of security.
Our Enterprise Advantage services include:
. Managed Web Hosting. Our managed web hosting service provides fully
managed, secure and reliable web hosting capabilities for businesses
operating in Windows NT or UNIX environments that want to use our
expertise to implement and manage their web site infrastructure. We
manage the systems and platforms and also retain ownership of equipment
and software.
. Customer Managed Web Hosting. Our customer managed web hosting service is
designed for enterprises that require administrative control of their web
sites but prefer to partner with an experienced, reliable web hosting
provider. This service provides our customers with pre-configured server
hardware and software, Internet access and the benefit of secure and
continuously monitored data centers. Our customers retain full
responsibility for the content and administration of their web sites.
. Collocation Web Hosting. Our collocation web hosting service is designed
for enterprises that seek to own their own equipment and retain full
responsibility for management, content and administration of their web
sites, but need a secure and scalable hosting facility with high
performance connectivity.
. Content Delivery and High Availability Services. For customers with high
traffic web sites, we also offer optional, high availability services
that can increase web site capacity and performance. We currently offer
four high availability services:
. LoadBalancer. Our LoadBalancer SM service creates a single web
address that represents multiple web servers located in a single data
center. These web servers utilize advanced load balancing techniques,
based on the number of users seeking access to the web site, to
connect users to the web server that will produce the fastest
response to their request.
. Traffic Distributor. Our Traffic Distributor service is designed for
web sites requiring high reliability and involves hosting web servers
in multiple data centers. Enabled by our patent-pending Hopscotch(TM)
load distribution technology, this service enhances the experience of
an end user by directing their content requests to the web server
offering the fastest and most reliable service.
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. Site Replicator. Site Replicator enhances web site availability by
mirroring web site content between multiple servers. Site Replicator
copies new files, scripts and web images from the primary server to
the other servers within its defined group. Site Replicator is a
flexible web data replication tool, using efficient algorithms and
intelligent data transfer techniques to minimize overhead and ensure
that content on all web servers is synchronized.
. Site Accelerator. Site Accelerator replicates web site content on
servers throughout our Internet backbone and brings this content
geographically closer to our users, a process known as caching. This
process reduces web page load times. Because this service is
performed in our network, our customers receive the benefits of
caching without any capital investment. Site Accelerator splits the
task of serving content between the cache servers in our network and
the dedicated web site servers. When the content is moved to our
cache servers, the dedicated web site servers are freed up,
permitting more users and more transactions without sacrificing
performance from the perspective of the end user.
Value-added e-Business Services. As enterprises and service providers
continue to use the Internet as a business-critical tool, we believe they will
increasingly demand a wider range of e-business services to ensure security,
enhance productivity, reduce costs and improve service reliability and
scalability. Today, we offer a range of value-added e-business services,
including:
. Virtual Private Networks. With our virtual private network service, we
enable an enterprise and its employees, customers, suppliers and business
partners to securely send and receive information to and from each other
via encrypted dial-up, dedicated, digital subscriber line or cable-modem
Internet connections. Our VPN Advantage SM service is a managed virtual
private network service that makes it possible to communicate securely
over our Internet backbone and over the Internet from virtually anywhere
in the world. With VPN Advantage, our customers benefit from the
capabilities of a large, shared IP-based network infrastructure while
maintaining the look and feel of their own private corporate network.
. Managed Security Services. Our managed security services are scalable and
can be customized to our customers' needs and provide a high level of
protection for their corporate networks. Our managed security services
include monitoring the network perimeters of our enterprise customers, 24
hours a day, seven days a week, and use of firewall management,
maintenance and proactive response techniques to ensure the security of
access points into their computing infrastructure. Our Site Patrol SM for
FireWall-1(R) and our Security Advantage SM are Internet security
services that help to significantly reduce exposure to Internet security
threats and firewall breaches. In addition, we offer a vulnerability
assessment service, Site Scan SM, that helps enterprises strengthen their
network perimeter security by periodically testing for potential
weaknesses and generating recommendations for correcting them.
. Voice-over-Internet Protocol. Through our suite of voice-over-IP
services, including International VoIP Direct SM and ESP Direct SM, we
offer low-cost, high-quality voice-over-IP network transport to Internet
service providers, Internet telephony service providers, enhanced service
providers and telecommunications companies providing voice-over-IP
services to their customers. We seek to provide our customers with
accelerated time-to-market for their customers through innovative,
enhanced solutions enabling voice services such as personal computer-to-
phone and personal computer-to-personal computer.
Transport. Our transport services are generally purchased by
telecommunications carriers and Internet service providers requiring additional
capacity. In delivering these services, we provide a single point of contact
for planning, ordering, installing, billing, maintaining and managing the
transport services of our customers. Our transport services, which accounted
for 12% of our total revenues in 1999, include:
. ATM Service. Our asynchronous transfer mode, or ATM, transport service, a
form of high speed data transfer, is targeted primarily at carriers and
Internet service providers with high bandwidth voice, video and data
transmission requirements. We provide ATM connections between one or more
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locations. Our ATM transport services provide logical permanent virtual
connections, thereby supporting applications that send information at a
constant or variable bit rate. We offer a wide range of speeds at one
megabit per second increments and match the application needs to the
desired amount of bandwidth.
. Private Line Service. Our private line service provides dedicated point-
to-point transport services through non-switched, non-usage sensitive
dedicated facilities. Our private line service is supported over our
dedicated Synchronous Optical Network, or SONET, facilities, which
results in a highly reliable network. These services are comprised of
bandwidth delivered in units of: (1) DS-3, which is capable of
transmitting data at 44.736 megabits per second; (2) OC-3, which is
capable of transmitting data at 155.520 megabits per second; (3) OC-12,
which is capable of transmitting data at 622.080 megabits per second; and
(4) OC-48, which is capable of transmitting data at 2.488 gigabits per
second.
. Network Collocation Services. Our collocation services provide our
customers with a physical location to collocate communications equipment
at our points of presence. This service allows our service provider
customers to expand their market areas without extensive recurring real
estate charges, build-out fees and overhead costs.
Our Network
We operate a state-of-the-art, facilities-based global fiber optic network
designed specifically for IP technology. We own the core components of our
network infrastructure in the United States through indefeasible rights of use,
or IRUs, for the underlying fiber optic cable. Within the United States we also
lease capacity from third parties to provide service to our customers. We
estimate that a majority of our traffic is currently transmitted over this
leased capacity. We are in the process of transitioning traffic from leased
capacity to our network infrastructure and expect that over 80% of our traffic
will travel over our owned network by the end of 2001. We also own undersea
capacity through IRUs and lease capacity internationally. Our current network
infrastructure consists of:
. over 17,500 route miles of owned inter-city fiber cable in the United
States that passes through the largest 100 metropolitan service areas and
substantial additional leased capacity;
. undersea capacity to Europe via Atlantic Crossing-1 and to Asia via TPC-
5;
. over 70 dedicated points of presence in the United States through which
high speed dedicated Internet access is provisioned;
. over 800 local points of presence for dial-up access in the United States
and, through our reseller relationship with iPass, an additional 1,500
local access points of presence in more than 150 other countries;
. nine points of presence in international markets, including Amsterdam,
Dublin, Frankfurt, London (2), Milan, Paris, Sydney and Tokyo, with the
ability to provide service from over 300 additional points of presence in
over 60 countries though leased facilities; and
. eight data centers located in the United States and one each in the
United Kingdom and Japan.
We plan to substantially expand our network infrastructure, both
domestically and internationally. Through the end of 2001, we plan to:
. extend our coverage by deploying an additional 4,500 route miles of fiber
cable serving approximately 120 additional metropolitan service areas in
the United States and build local fiber rings in major metropolitan
service areas in the United States;
. utilize additional international undersea capacity to: (1) Europe via
TAT-14 and FLAG Atlantic; (2) Latin America via Americas II; (3) the
Caribbean via ARCOS-1; and (4) Asia via Japan-US cable network;
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. expand our network capacity in the United States to the equivalent of 10
layers of 10 gigabit capacity each;
. add more than 200 additional dedicated points of presence for access in
the United States;
. add an additional 11 points of presence in key international markets;
. add approximately 800,000 additional modems to our North American dial-up
infrastructure and expand our coverage to an additional 300 local markets
in North America;
. expand our broadband coverage to 80 metropolitan service areas and
surrounding cities in the United States; and
. build seven additional data centers in key locations worldwide, which
will increase our existing capacity by approximately 1.2 million square
feet.
As we expand our network infrastructure, both domestically and
internationally, we intend to primarily build and own our facilities rather
than lease them from other facilities-based providers. In addition, we have
taken the flexible approach of utilizing multiple fiber providers to ensure
higher reliability, quicker deployment of new technology and faster
provisioning for our customers. Our network infrastructure has the following
characteristics:
High Performance, Reliability and Quality. The geographic reach and state-
of-the-art nature of our network enhance our ability to provide a high quality
user experience. We have incorporated a variety of technologies in our network
to ensure high performance and reliable transmission. These technologies
include OC-192, which is capable of transmitting data at 10 gigabits per
second, and SONET transmission equipment employing self-healing protection
switching. These technologies, combined with our ring-based architecture,
increase network reliability and minimize the risk of service outages. In the
event of a failure in any segment of our network infrastructure, traffic is
automatically rerouted across different fiber strands with virtually no
interruption in service. Additionally, our network infrastructure makes
extensive use of railroad rights-of-way that typically offer greater protection
for the fiber than fiber deployed over other rights-of-way such as highways,
telephone poles or overhead power transmission.
Capacity on Demand. We currently have an indefeasible right to use over
17,500 route miles of fiber in the United States, with virtually all of these
fiber route miles having 24 separate strands. These fiber route miles, which
form the core of our network infrastructure in the United States, were
operational at the end of 1999. The majority of the fiber deployed in our
network infrastructure is state-of-the-art Lucent True Wave(R) fiber that
supports multiple wavelengths, each running at 10 gigabits per second, thus
allowing for more capacity on a single fiber strand. Our fiber network,
combined with our network design, enables us to take advantage of the most
recent advances in optical electronic transmission equipment. For example, we
generally are using only four of our existing 24 strands of fiber, each of
which supports up to eight wavelengths per fiber at 10 gigabits per second data
transmission using current generation optical electronic transmission
equipment. However, as optical electronic transmission equipment providing 16,
32, 50 or even higher numbers of wavelengths per fiber becomes commercially
available, we plan to deploy this equipment as needed on unused fiber strands
to expand the capacity of our network infrastructure. With the advanced nature
of our fiber network and the advances in optical electronic transmission
equipment, we believe we will have sufficient capacity on our existing fiber in
the United States for the foreseeable future. In addition to our owned
facilities, we supplement our existing route miles with leased capacity from
other providers.
Advanced Network Architectures. We believe that owning our network allows us
to implement new network architectures as they become technologically feasible.
For example, IP over dense wave division multiplexing, which is an optical
technology that increases the amount of data that can be transmitted over a
single fiber by dividing that fiber into multiple lightpaths or wavelengths,
will eliminate the need for the SONET network layer by relying on IP routers
and the dense wave division multiplexing equipment to perform the re-routing
that SONET currently performs. Furthermore, advanced optical networking
transmission
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equipment will enable traffic to be switched and routed without being converted
to an electrical signal first. We believe our engineering and architectural
expertise will enable us to quickly deploy these new architectures and
technologies, thereby reducing the complexity of data systems, increasing
flexibility and reducing costs.
Flexible Platform for Multiple Services. Our network has been specifically
designed for IP and can carry any form of packet data, including voice, video
and traditional data services. While many carriers and service providers use
multiple networks and platforms to deliver these distinct services, our IP-
optimized network provides a single platform that simplifies network
management, customer support and service delivery. In addition, ownership of
our facilities enables us to deploy new or enhanced services more quickly. For
example, we designed and deployed one of the first architectures to transmit
real-time voice and data packets with reliability and performance substantially
equivalent to the public switched telephone network. Moreover, our architecture
allows for rapid scalability of capacity, quick geographic expansion and cost-
efficient implementation of new services and features.
Our Data Centers
We currently operate 10 data centers that have been specifically designed
for managed web and application hosting services and high capacity connectivity
to our network. We have eight data centers in the United States, located in
Palo Alto, California; San Jose, California; Los Angeles, California; Phoenix,
Arizona; Chicago, Illinois; Cambridge, Massachusetts; Washington, D.C.; and New
York, New York. We also have one data center in each of Leeds, England, and
Tokyo, Japan.
Our data centers are strategically located in the same building, or in close
proximity to, network access points, and all are directly connected to our
Internet backbone. Our data centers are technologically advanced facilities
with:
. redundant, high speed connectivity to the Internet;
. uninterruptible power supplies;
. back-up generators;
. fire suppression;
. computer floors;
. separate cooling zones;
. seismically braced racks; and
. high levels of physical and network security.
Our highly trained staff monitors these systems 24 hours a day and seven
days a week. By the end of 2001, we plan to add seven data centers, adding
approximately 1.2 million square feet of additional capacity. Each of these new
data centers will be directly connected to our network and will be designed
specifically for mission-critical servers with complete redundancy of all
support systems. We expect these seven new data centers will be located in: Los
Angeles, California; Mountain View, California; Atlanta, Georgia; Cambridge,
Massachusetts; Carteret, New Jersey; Dallas, Texas; and Chantilly, Virginia.
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Our International Operations
We provide global coverage for our international customers. Today, we lease
our network facilities in international markets, including back haul services
from over 300 local points of presence in 60 countries and a SONET fiber ring
connecting London, Paris, Frankfurt and Amsterdam, which is capable of
transmitting data at 155.520 megabits per second. We are able to provide
dedicated access services in more than 60 countries and enable global dial-up
access service in more than 150 countries. We provide web hosting services out
of our data centers in the United Kingdom and Japan and we have the capability
to provide managed security and virtual private network services in over 39
countries. We have nine points of presence in international markets, including:
Amsterdam; Dublin; Frankfurt; London (2); Milan; Paris; Sydney; and Tokyo. All
of our international points of presence are capable of accepting voice-over-IP
traffic for delivery in the United States.
By the end of 2000, we plan to add 11 additional points of presence in the
following locations: Manchester; Madrid; Stockholm; Dusseldorf; Hamburg; Hong
Kong; Buenos Aires; Sao Paulo; Rio de Janeiro; San Juan; and Mexico City.
By the end of 2000, we also plan to deploy one of the first OC-48 fiber
rings in Europe employing IP over dense wave division multiplexing. We believe
this fiber ring network connecting London, Amsterdam, Frankfurt and Paris will
dramatically improve our ability to provide high-end data services and is
required to meet our rapidly growing traffic in Europe.
In terms of trans-oceanic capacity, over the past two years we have entered
into a number of agreements for indefeasible rights of use to cable systems
that are either deployed or in the process of deployment. The following table
details our current and planned international cable capacity. The expected
dates of deployment represent approximate time frames in which we believe our
capacity on this cable will become operational. These dates are, to a large
extent, beyond our control and deployment may occur significantly later than we
expect.
<TABLE>
<CAPTION>
Expected
Cable System Capacity Terms Deployment
------------- -------------------------------------- -------------- ----------
<S> <C> <C> <C>
Americas II U.S.-Brazil (One STM-1)(1) 25 Years (IRU) Q3 2000
U.S.-Venezuela (One STM-1)
U.S.-Puerto Rico (One DS-3)(2)
Atlantic U.S.-United Kingdom (Two STM-1s) 25 Years (IRU) In Service
Crossing-1 U.S.-Germany (One STM-1) Lease
United Kingdom-Netherlands (One STM-1) Lease
United Kingdom-Germany (One STM-1) Lease
Japan-U.S. U.S.-Japan (Six STM-1s) 25 Years (IRU) Q4 2000
Cable Network U.S.-Hawaii (One STM-1)
Upgrade Capability to 28.5 STM-1s
TAT-14 U.S.-France-Netherlands-Germany- 25 Years (IRU) Q1 2001
Denmark-U.S. (30 STM-1s)
FLAG U.S.-United Kingdom-France-U.S. 25 Years (IRU) Q2 2001
Atlantic-1 Portable Capacity
Seven STM-1s Initially
Upgrade Capability to over 50 STM-1s
ARCOS-1 U.S.-Caribbean Portable Capacity, 25 Years (IRU) Q1 2001
Two STM-1s Initially
Upgrade Capability to 21 STM-1s
TPC-5 U.S.-Japan (One DS-3) Lease In Service
</TABLE>
- --------
(1) STM-1 is capable of transmitting data at 155.520 megabits per second.
(2) DS-3 is capable of transmitting data at 44.736 megabits per second.
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Research and Development
We believe that the task of building an Internet infrastructure services
business is primarily one of integrating third-party systems, technologies,
communications equipment, software and services to provide reliable, highly
scalable and cost-effective Internet infrastructure services. Therefore, we
generally use commercially available equipment. Our 30 years of IP and
networking experience and expertise not only enables us to assess the
technology and quality of potential vendors and to assist them in making their
products more responsive to the needs of our customers.
We continually monitor research developments in the various industries
supporting our business. We work closely with the engineering groups of our
existing vendors, technology partners, innovative start-up companies and
complementary service providers to incorporate advanced technology, features
and services. For example, we have worked closely with Cisco Systems, one of
our primary suppliers, to develop new equipment and have been regular
participants in its Technical Advisory Group. Through this and other
cooperative programs, we strive to ensure that new hardware designs address the
evolving requirements of our business and those of our customers.
In addition, we plan to work with innovative start-up companies to assist
them in developing and implementing advanced technologies and converting these
technologies into market-ready products and services. A key component of our
strategy will be to develop strategic relationships with those start-ups that
have technology or services that can help us expedite the execution of our
business plan. The strategic nature of these relationships could take the form
of acquisitions, technology transfers, equity investments or joint product
development.
Our Customers
We primarily target enterprises and service providers. We have established a
large and diversified base of enterprise customers in a wide range of
industries, including financial services, manufacturing, media and publishing,
consulting services and high technology. As of March 31, 2000, we had
approximately 5,000 enterprise customers, the majority of which were located in
the United States. The following is a representative list of our enterprise
customers.
<TABLE>
<CAPTION>
High Technology Manufacturing
--------------- -------------
<S> <C> <C>
Cabletron Carrier Corporation
Compaq FMC Corporation
Microsoft Hasbro Interactive
Sun Microsystems Avid Technology
<CAPTION>
Media and Publishing Consulting Services
-------------------- -------------------
<S> <C> <C>
CNN Computer Sciences Corp.
DoubleClick ENTEX Information Systems
Yahoo! Hewitt Associates
ZDNet Sapient
Other Services
--------------
Block Financial
e-Speed
Stanford University
</TABLE>
Our customer base also includes many service providers, including
application service providers, Internet service providers and
telecommunications carriers. As of March 31, 2000, we had approximately 400
service provider customers, the majority of which were located in the United
States. The following is a representative list of our service provider
customers.
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<PAGE>
<TABLE>
<CAPTION>
Consumer Internet Service Providers Business Internet Service Providers
----------------------------------- -----------------------------------
<S> <C>
America Online I.NET S.p.A.
Earthlink Ipass
NetZero Planet Online
WebTV Shore.net
<CAPTION>
Telecommunications Carriers Internet-Centric Related Services
--------------------------- ---------------------------------
<S> <C>
Pacific Gateway Exchange Akamai Technologies
Tiscali S.p.A. Dialpad
TLD of Puerto Rico Digital Island
</TABLE>
Our Relationship With America Online
We have supplied managed, dial-up access services in the United States to
America Online since 1995. During the year ended December 31, 1999, America
Online accounted for approximately 52% of our total revenues. We entered into a
new agreement with America Online effective as of December 31, 1999, pursuant
to which America Online has agreed to purchase additional dial-up Internet
access services from us for a seven-year term through December 31, 2006. Under
the new agreement, America Online has also agreed to purchase managed digital
subscriber line and other broadband network access services from us for a five-
year term through December 31, 2004. The components and resources used to
provide dial-up access and broadband connections to our network backbone for
America Online are dedicated to them and may not be used by us to service other
customers. In addition, our Columbia, Maryland network operations center is
dedicated to servicing America Online.
Dial-Up Services. Under the new agreement, America Online has committed to
purchase from us agreed upon minimum quantities of dial-up network access
services as measured by the number of dial-up access ports, or modems,
available for America Online customers. America Online has agreed to increase
the number of dial-up access ports to be managed by us through June 2002,
subject to the terms and conditions of the agreement. America Online pays us a
fixed monthly fee for each activated dial-up access port managed by us for it.
Under the agreement, the monthly per access port fee to which we are entitled
will be reduced at specified intervals over the term of the agreement. In
addition, we have agreed, subject to limitations, that if we offer a third
party better pricing for comparable dial-up access services than that paid by
America Online, America Online may gain the benefit of this better pricing.
At specified times during the course of the new agreement, America Online
has the right to seek a reduction in the fees paid to us for access ports based
on the then prevailing market prices for comparable dial-up access services in
the manner described in the new agreement. If we do not agree to reduce the
fees we charge to America Online for the applicable dial-up access ports to the
market price, America Online may, subject to advance notice and other
limitations, terminate future dial-up service commitments to us and
decommission an equal number of its existing dial-up access ports with us.
Similarly, America Online may reduce its dial-up service commitments in the
event we fail to meet monthly or geographic delivery targets.
Beginning January 1, 2003, America Online may, subject to advance notice and
other limitations, decommission dial-up access ports managed by us in
proportion to their decommissioning of dial-up access ports provided by other
vendors. We are required to maintain a dedicated network operations center to
service the portions of our network dedicated to America Online.
Broadband Services. Under the agreement, we also provide broadband services
to America Online in connection with their digital subscriber line service
offerings. America Online also has agreed to purchase additional network
services from us in connection with its other broadband service offerings,
including cable modem, wireless and satellite, as they offer additional
broadband access options to their customers. America Online has committed to
purchase from us the network services necessary to serve specified percentages
of
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their digital subscriber line and other broadband customers. In connection with
providing digital subscriber line service to an America Online customer,
America Online is responsible for providing its customers with the local access
circuit and we are responsible for the interconnection of that circuit to our
backbone, transmission of the traffic to America Online and the monitoring,
management and control of the network.
We receive a specified monthly fee for each America Online digital
subscriber line and other broadband customer for whom we provide network
services. Under the agreement, America Online pays us monthly fees based on the
number of America Online broadband customers that are connected to our network,
which fees are subject to agreed upon reductions as the number of America
Online digital subscriber line and other broadband customers for whom we are
providing services increases. In addition, we have also agreed to extend
broadband network services. At specified times during the course of the new
agreement, America Online has the right to seek a reduction in the fee paid to
us for broadband backhaul services based on then prevailing market prices for
comparable broadband backhaul services. If we do not agree to reduce our fees
to America Online for broadband network services to the market price in the
manner described in the new agreement, America Online may, subject to advance
notice and other limitations, terminate future broadband service purchase
commitments to us and terminate existing broadband service. America Online may
also terminate future broadband service purchase commitments in the event we
fail to deliver services to a new local access and transport area within a
specified period.
General. In providing America Online services under the agreement, we are
obligated to comply with specified minimum service levels. Either party may
terminate the agreement in the event the other party commits a material breach
which is not cured within 30 days after notice of the breach. In addition,
America Online has the right to terminate the agreement in the event of:
. repeated material breaches by us even if cured;
. a violation of the most favored customer pricing provisions;
. a total or near total outage of any of the services provided by us that,
even if lasting fewer than 30 days, is widespread and prolonged;
. our inability to meet our service level commitments or to expand service
availability as required under the agreement; and
. a change in control of us other than changes in control resulting from or
arising out of the closing of the proposed merger of GTE and Bell
Atlantic.
We are also obligated to provide America Online assistance in the 12 months
following any termination of the agreement to ensure a smooth transition of
services. The agreement provides America Online with a right of first refusal
with respect to the sale of our dial-up network access business.
Under a separate agreement, we have agreed to provide dial-up network access
services to America Online in Japan. This agreement includes similar provisions
to those described above regarding minimum purchase requirements on the part of
America Online Japan, market pricing adjustments, service level requirements
and termination provisions.
Operations and Customer Support
We believe that a high level of operational and customer support is critical
to our success in attracting and retaining enterprise and service provider
customers. We provide superior customer support by understanding the evolving
and often complex technical requirements and business objectives of our
customers. We assist our customers by initially assembling design teams
comprised of product specialists from all relevant areas of our organization,
including Internet access, web hosting and security. These design teams work
closely with our customers from the very beginning of the relationship to
properly identify their Internet infrastructure requirements and design
appropriate solutions. We also assign a project manager to this team when a
customer is prepared to implement its solution. Our design teams can range from
a small group for single service
53
<PAGE>
solutions to a dedicated multi-discipline team for complex solutions. We also
assign an implementation engineer to coordinate all of our activities with a
customer. Our implementation engineers assist customers in developing
operational processes and databases for use within their internal support
environment after installation.
We provide toll-free phone access, as well as e-mail or facsimile access, to
our customer support centers. In addition, our web-enabled customer service
tools allow our customers to track order and service status and request
upgrades online. In addition, we have event management teams available 24 hours
a day, seven days a week, to work with the appropriate organizations in the
event of any major Internet-wide event that disrupts service. In these
circumstances, we also utilize our automated emergency broadcast capability to
quickly reach our customer by e-mail, telephone, facsimile or pager.
We provide operational support for all services 24 hours a day, seven days a
week. We also have network engineers and operational support agreements with
our vendors to provide us with support 24 hours a day, seven days a week.
Currently our primary Network Operations Center is located in our Burlington,
Massachusetts headquarters facility. This Network Operations Center is
supported by redundant power served from separate sources, extensive failover
battery backup and dual, on premises power generation stations. We plan to
relocate our primary Network Operations Center from Burlington, Massachusetts
to our new Woburn, Massachusetts campus that is currently under construction.
In addition, we have a Network Operations Center in Columbia, Maryland and are
finalizing plans for a new Network Operations Center in the Dallas, Texas area
to replace a facility we currently share with GTE. Our Columbia, Maryland
Network Operations Center is dedicated to servicing America Online. We also
have Operations Support Centers in Cambridge, Massachusetts and Chantilly,
Virginia. Our centers can perform disaster back-up for other centers. Our data
centers are designed with these same commitments to availability, and we
guarantee these capabilities with service level guarantees.
Sales and Marketing
Within the United States, we rely primarily on a direct sales force. This
direct sales force focuses on U.S.-based enterprises and service providers with
domestic and international service requirements. Our sales force within the
United States generally works with the managers of the marketing, sales or
finance departments, as well as with information technology officers within the
enterprise. In addition, through our eP@rtners program, we have formed
alliances with leading web integrators, e-business consultants, interactive
agencies and other technology providers, which increases our access to
potential service provider and enterprise customers. Our current partners in
this program include:
<TABLE>
<S> <C>
. Agency.com . IBM
. Cambridge Technology Partners . Lante
. Cisco Systems . Microsoft
. Ernst & Young . Nortel Networks
. Hewlett-Packard . Sapient
</TABLE>
These alliances enable us to provide comprehensive e-business solutions and
also serve as a valuable, cost-effective channel for marketing our services. We
also plan to expand our existing reseller relationships to significantly
enhance our distribution capabilities.
Internationally, we have both a direct sales force and a channel partner
program, which we call our Net.Alliance program. Our international direct sales
force focuses primarily on the international service provider segment, while
our Net.Alliance partners are our primary channel to multinational companies
based outside of the United States. Many of our Net.Alliance partners are both
customers and resellers of our services. This channel gives us distribution
capabilities in over 14 countries globally. Our current partners in this
program include Energis in the United Kingdom and Tiscali and I.NET in Italy.
54
<PAGE>
All of our sales representatives participate in extensive technical and
consultative sales training programs that we believe enable them to better
comprehend, respond to and resolve the complex networking problems of our
customers. As of March 31, 2000, we had a direct sales force of over 350
people.
We only recently changed our name to Genuity. To be successful, we must
establish and strengthen our brand recognition. We intend to incur significant
expenses to promote our brand. Our marketing organization is responsible for
developing the strength and awareness of the Genuity brand on a local, national
and international basis. We intend to build brand awareness through a variety
of methods, including radio, print advertising in trade journals and special-
interest publications and our web site. In addition, we also employ public
relations personnel in-house and work with an outside public relations agency
to provide broad coverage in the Internet and computer networking fields. To a
limited extent, we also directly market our services at seminars and trade
shows such as Internet World, ISPCon, COMnet, CeBit and various Gartner Group
information technology conferences.
Competition
The market for Internet infrastructure services is extremely competitive and
subject to rapid technological change. We expect to encounter increased
competition in the future as a result of increased consolidation and
development of strategic alliances in the industry. In addition, we will
compete with foreign service providers as we expand internationally and as
these service providers increasingly compete in the United States market. Our
principal competitors in the Internet infrastructure services market may be
divided into Internet infrastructure service providers and niche players
offering services competitive with one or more of our services.
Internet Infrastructure Service Providers. We were recently recognized by
Giga Information Group as one of a limited number of Tier 1 Internet backbone
providers that offer managed Internet infrastructure services. Accordingly, we
believe our primary competitors are those Internet infrastructure service
providers that offer a similar breadth of services and possess the on-network
users and content to offer their customers connectivity to virtually all
addresses on the Internet, either through their Internet backbone or through
high speed private peering relationships that permit them to have direct, cost-
free exchange of traffic with a significant number of carriers and other
Internet service providers. These competitors include UUNET Technologies, a
subsidiary of MCI WorldCom, AT&T, Cable & Wireless and Sprint. UUNET has
substantially greater market share than we do, and some of the others also have
greater market share than we do. UUNET is a competitor for America Online's
access requirements and is reported to provide a substantial portion of those
requirements. In addition, MCI WorldCom and Sprint have announced a proposed
merger. We believe this proposed merger would substantially increase the market
share and competitive position of UUNET, even if it were required to divest
itself of portions of its Internet backbone as a condition to the merger. Some
of these competitors also are able to bundle their Internet service offerings
with non-Internet data services, such as frame relay, and traditional voice
services, such as local and long distance, thereby reducing the price of their
services relative to ours. We may not be able to offset the effects of any
price reductions because we only offer IP-based services. We also compete with
an increasing number of Internet service providers that have a significant
regional, national or international presence but do not offer as broad a range
of services or possess fewer users and less on-network content than the
infrastructure service providers listed above. These competitors include, among
others, Level 3 Communications, Qwest Communications, KPNQwest, Deutsche
Telekom, PSINet, Verio Communications and Williams Communications Group. As a
result of the increase in the number of competitors and the vertical and
horizontal integration that is occurring in this industry, we currently
encounter and expect to continue to encounter significant competition, which
could force us to, among other things, reduce our rates and invest more heavily
in infrastructure.
We believe we compete with these competitors primarily on the basis of
quality and quantity of on-network users and content, breadth of service
offerings, geographic reach and quality of network infrastructure, capacity,
quality of service and price. While we believe that our network infrastructure,
comprehensive suite of services and expertise in designing, developing and
implementing managed Internet infrastructure solutions distinguish us
55
<PAGE>
from our competitors, many of our existing and potential competitors have
greater financial and other resources, more customers, a larger installed
network infrastructure, greater market recognition and more established
relationships and alliances in the industry. As a result, these competitors may
be able to develop and expand their network infrastructure and service
offerings more quickly, adapt more swiftly to new or emerging technologies and
changes in customer demands, devote greater resources to the marketing and sale
of their offerings, pursue acquisition and other opportunities more readily and
adopt more aggressive pricing policies.
Niche Players. There are numerous competitors that service generally one or
a small number of the specific Internet infrastructure requirements of
enterprise customers. These competitors include, among others:
. web-hosting companies, such as Digex and Exodus Communications;
. broadband Internet access providers such as Covad Communications and
Rhythms NetConnections, both of which focus on digital subscriber line
services;
. providers of security and virtual private networks, such as Pilot
Network Services; and
. transport service providers, such as Level 3 Communications, Qwest
Communications and Williams Communications Group.
We believe that there are relatively few barriers to entry in these markets.
We compete with these niche players on the basis of technical expertise,
quality of service, reliability and price.
There are numerous other companies from a variety of industries that have
also focused on our target market. For example, many of the major cable
companies have begun offering, or are exploring the possibility of offering,
Internet access through their current networks to include Internet access
capabilities. Direct broadcast satellite and wireless communications providers
have also entered the Internet access market with various wireless and
satellite-based service technologies. We believe that direct broadcast
satellite and wireless communications providers have also entered the Internet
access market.
As we continue to expand our operations in markets outside the United
States, we will also encounter new competitors and competitive environments.
Our foreign competitors may enjoy a government-sponsored monopoly on
telecommunications services essential to our business, and will generally have
a better understanding of their local industry and longer working relationships
with local infrastructure providers.
Employees
As of March 31, 2000, we had a total of 3,557 employees, of which 1,263 were
in customer service and support, 866 were in engineering, 761 were in sales and
marketing, 345 were in information technology and 322 were in finance and
administration. Our employees are not represented by any collective bargaining
agreement, and we believe that relations with our employees are good.
Real Estate Facilities
We currently occupy our headquarters and primary Network Operations Center
in Burlington, Massachusetts under a lease that expires in 2009. This lease
includes renewal options for two three-year periods. We are constructing a two-
building campus in Woburn, Massachusetts that is scheduled for completion in
the next 12 months. We plan to move our corporate headquarters operations,
including executive staff, finance, human resources and information technology
organizations, to our Woburn, Massachusetts campus. We anticipate that our
network operations organization, including our primary Network Operations
Center, also will relocate from Burlington, Massachusetts to Woburn,
Massachusetts. We intend to retain our Burlington, Massachusetts facility to
house our engineering, sales and marketing and service line organizations. We
lease space for our other Network Operating Center in Columbia, Maryland and
are finalizing plans for a new Network Operations Center in the Dallas, Texas
area to replace a facility we currently share with GTE.
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<PAGE>
Proprietary Rights
We rely on a combination of patent, copyright, trademark and trade secret
laws and contractual restrictions to establish and protect our technology. We
own, either exclusively or jointly, an interest in nearly 200 inventions that
are the subject of patents, patent applications or patent disclosures. These
legal protections provide only limited protection. Further, the market for
Internet infrastructure services is subject to rapid technological change.
Accordingly, while we intend to continue to protect our proprietary rights
where appropriate, we believe that our success in maintaining a technology
leadership position is more dependent on the technical expertise and innovative
abilities of our personnel than on these legal protections.
Despite our efforts to protect our proprietary technology, we cannot assure
you that the steps taken by us will be adequate to prevent misappropriation of
our technology or that our competitors will not independently develop
technologies that are substantially equivalent or superior to our technology.
The laws of many countries do not protect our proprietary technology to as
great an extent as do the laws of the United States. We may need to resort to
litigation in the future to enforce our intellectual property rights, to
protect our trade secrets, to determine the validity and scope of the
proprietary rights of others or to defend against claims of invalidity. We are
also subject to the risk of adverse claims and litigation alleging infringement
of the intellectual property rights of others. Any resulting litigation could
result in substantial costs and diversion of management and other resources and
could have a material adverse effect on our business and financial condition.
GTE has granted the exclusive right to our existing trademarks and
proprietary technology to TELUS Corporation for use solely in Canada for the
provision of telecommunications services, including Internet services. We rely
on TELUS to provide, in conjunction with us, some Internet services in Canada.
Regulatory Matters
The following summarizes regulatory developments and legislation that we
believe are currently material to us. It does not describe all present and
proposed federal, state, local and foreign regulation and legislation affecting
the telecommunications industry.
Our existing and planned Internet operations are not actively regulated by
the Federal Communications Commission or any other government agency of the
United States at the present time, other than regulations that apply to
businesses generally. However, one of our wholly owned subsidiaries is
classified as an "interexchange carrier" and provides primarily private-line
data services. As a result, this subsidiary is regulated as a
telecommunications carrier and is subject to the requirements described below
under "Telecommunications Services". Furthermore, the regulations governing the
telecommunications industry generally are often subject to regulatory,
judicial, or legislative modification and are in a state of flux at the present
time. Some private parties and regulators have called the current regulatory
status of various Internet service offerings into question.
We cannot predict the actions of the regulatory authorities that have
jurisdiction in this area or whether any of these authorities will attempt to
impose new regulations on Internet services or expand their interpretations of
existing regulations to make them apply directly to Internet services.
Accordingly, we do not know whether current or future regulations could have a
material adverse effect on us. If any regulatory authority imposes new
regulations or expands their interpretations of existing regulations to make
them applicable to Internet operations, some or all of the following rules may
be applied to those operations. However, if new regulations are imposed on our
industry, or existing regulations are expanded to cover our industry, these
regulations will almost certainly also apply to all similarly situated parties
offering comparable services, including our competitors.
Federal Telecommunications Regulation
Federal regulations have undergone major changes in the last four years as
the result of the enactment of the Telecommunications Act of 1996. The
Telecommunications Act is the most comprehensive reform of the
telecommunications law in the United States since the Communications Act was
enacted in 1934. For example,
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the Telecommunications Act imposes interconnection and access requirements on
telecommunications carriers and on all local exchange carriers, including
incumbent local exchange carriers and competitive local exchange carriers.
Under the current regulatory regime, communications related services are
generally classified into one of the following three definitional categories:
.information services;
.private carrier services; and
.telecommunications services or common carriage.
Because the boundaries between these categories are neither precise nor well-
fixed, and the industry is so dynamic, we cannot predict where particular
services will be classified, now or in the future. The regulations associated
with each type of classification are described below.
Information Services. Except for the provision of underlying basic
transmission capability, Internet services have generally been considered to be
"information services". Under current law, operators of information services
are exempt from regulation by the FCC, but operators of telecommunications
services are not similarly exempt. However, the FCC continues to review its
regulatory position on the usage of the basic network and communications
facilities used by Internet service providers. Whether it will assert
regulatory authority over the Internet, and the level of any asserted
authority, is a pending issue. While the FCC has determined in an April 1998
report to Congress that Internet access providers should not be treated as
telecommunications carriers and therefore should not be regulated, it is
expected that the status of various types of Internet service providers will
continue to be uncertain.
In the same report, the FCC also concluded that some of the services
currently offered over the Internet, such as phone-to-phone IP telephone
services, may be functionally indistinguishable from traditional
telecommunications service offerings, and that their non-regulated status may
have to be reexamined. The report also indicated that the FCC would determine
on a case-by-case basis whether to subject IP telephone service providers to
regulation, including whether to require them to contribute financially to
universal service support mechanisms, which could also subject these services
to other forms of regulation. The FCC has also stated that it may require
Internet service providers that use their own transmission facilities to
provide Internet access services to contribute to universal service mechanisms,
and has previously considered and rejected the possibility of regulating
Internet backbone peering arrangements, although that issue remains subject to
further review.
Private Carrier Services. The offering of private carrier services typically
entails the offering of telecommunications to a limited class of users on the
basis of individually negotiated terms and conditions. As a result, they do not
meet the definition of a telecommunications service under the
Telecommunications Act. These private carriers are generally unregulated by the
FCC, but are subject to regulation for intrastate offerings in some states and
incur universal service payment obligations, discussed below, based on their
gross revenues from end users. These private carriers may also be subject to
access charges if interconnected to local exchange facilities.
Telecommunications Services. A significant amount of regulation applies to
providers of telecommunications services. The Communications Act defines
telecommunications carriers as entities offering telecommunications services,
which are in turn defined as the offering of telecommunications for a fee,
directly to the public or to classes of users so as to be effectively available
directly to the public. The law does not distinguish on the basis of the
facilities used to provide these services. "Telecommunications" is defined as
the transmission, between or among points specified by the user, of information
of the user's choosing, without change in the form or content of the
information as sent and received. The FCC has found that the definition of
"telecommunications carrier" is essentially the same as the definition of
"common carrier". Telecommunications carriers are subject to regulatory
requirements that may impose substantial administrative and other burdens on
their operations.
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The FCC imposes regulations on some common carriers that have been found by
the FCC to have some degree of market power, otherwise known as dominant
carriers. The FCC imposes less regulation on other common carriers, which have
been found not to have market power, otherwise known as "non-dominant
carriers". A subsidiary of GTE is classified as a non-dominant carrier. These
non-dominant carriers do not need express prior authorization to provide
domestic services and can file tariffs on one day's notice. The FCC requires
common carriers to obtain a formal authorization to construct and operate
telecommunications facilities and to provide or resell telecommunications
services between the United States and international points. The FCC also
regulates carrier exits from markets.
General Obligations. All telecommunications carriers are subject to the
complaint process and rules and regulations of the FCC, as well as various
other requirements set out in Title II of the Communications Act of 1934, as
amended. In addition, telecommunications carriers have general obligations,
including the following:
. not to charge unreasonable rates or engage in unreasonable practices;
. to provide service on reasonable request;
. not to unreasonably discriminate in their service offerings;
. to comply with reporting requirements;
. to offer customer premises equipment for sale on an unbundled basis to
the extent that it is offered;
. to allow resale of their services in some circumstances; and
. to restrict their use of customer information.
In addition, telecommunications carriers are subject to further regulatory
requirements, some of which are discussed in greater detail below.
Telecommunications carriers must also pay regulatory fees associated with
filing license applications and other documents with the FCC.
Interconnection Obligations. All telecommunications carriers have the basic
duty to interconnect and interoperate, either directly or indirectly, with the
facilities of other telecommunications carriers.
Section 214 Authorizations. Common carriers are obligated to obtain, under
Section 214 of the Communications Act, authorization from the FCC to provide
services between the United States and other countries, and to disclose, among
other things, the extent to which they are owned or controlled by foreign
entities. The compliance with these regulatory requirements imposes
administrative and other burdens on these carriers.
Tariffs and Pricing Requirements. The FCC has eliminated the requirements
that non-dominant interstate interexchange carriers maintain tariffs on file
with the FCC for domestic interstate services. One of our wholly owned
subsidiaries is a non-dominant interstate interexchange carrier. Under the
rules of the FCC, after a transition period currently scheduled to expire on
January 31, 2001, relationships between interstate carriers and their customers
would be set by contract. At that point, the FCC would no longer permit the use
of tariffs for interstate, domestic interexchange services. Competitive local
exchange carriers do not have to file tariffs for their exchange access
services, but may if they choose to do so. The FCC is considering whether to
impose mandatory detariffing on them as well. There has been no proposal to
detariff international services.
Customer Proprietary Network Information. The use by a telecommunications
carrier of customer proprietary network information, which generally includes
any information regarding a subscriber's use of a telecommunications service
obtained by a carrier solely by virtue of the carrier-customer relationship, is
subject to statutory restrictions. This customer proprietary network
information does not include a subscriber's name, telephone number and address,
if that information is published or accepted for publication in any directory
format. A telecommunications carrier may use a customer's proprietary network
information only to market a service that is "necessary to, or used in" the
provision of a service that the carrier already provides to the
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customer, unless it receives the customer's prior oral or written consent to
use that information to market other services. The initial rules of the FCC
regarding customer proprietary network information have been struck down in the
courts and other rules adopted for reconsideration have not gone into effect,
leaving the current state of the customer proprietary network information
requirements uncertain. The FCC is expected to initiate further proceedings to
address this issue. These rules, either as adopted or as modified, may impede
the ability of a telecommunications carrier to effectively market integrated
packages of services and to expand existing customers' use of its services.
Universal Service. The FCC has recently expanded aid to schools and
libraries and extensively revamped the support structure for high cost-of-
service areas. These providers of interstate telecommunications services, as
well as some other entities, such as private carriers offering excess capacity
to end user customers, must contribute to a fund to pay for these programs. The
schools and libraries and rural health care support mechanisms are assessed
against interstate and international end-user revenues. The contribution level
and overall size of federal support may change. Several petitions for
administrative reconsideration of various FCC universal service orders are
pending, and there are a number of other proceedings relating to universal
service at the FCC and federal courts of appeals that are still ongoing. The
rules of the FCC also require that telecommunications carriers contribute to
the Number Portability Fund, the Telecommunications Relay Services Fund and the
North American Numbering Plan Administrator Fund.
Communications Assistance for Law Enforcement Act. Telecommunications
carriers may incur significant expenses to assure that their networks comply
with the requirements of the Communications Assistance for Law Enforcement Act.
Under this statute, telecommunications carriers are required to:
. provide law enforcement officials with call content and call identifying
information pursuant to a valid electronic surveillance warrant; and
. provide sufficient capacity for use by law enforcement officials in
executing authorized electronic surveillance.
While the telecommunications industry is attempting to negotiate legislative
and administrative provisions that would compensate carriers for some of the
costs associated with complying with this statute, as it stands today those
issues have not been definitively resolved.
Local Exchange Carriers
Telecommunications carriers that are classified as local exchange carriers
are subject to special regulatory provisions, in addition to those described
above. A local exchange carrier is defined as a provider of telephone exchange
service or exchange access. Telephone exchange service is defined as service
within a telephone exchange or connected system of exchanges operated to
provide inter-communicating service of the character ordinarily furnished by a
single exchange, covered by the local exchange charge, or comparable service
provided through a system of switches, transmission equipment or other
facilities, or combination thereof, by which a subscriber can originate and
terminate a telecommunications service. The universe of carriers that are
classified as local exchange carriers has never been fully defined by the FCC.
If an entity is found to be a local exchange carrier, it will have the
following obligations:
Reciprocal Compensation. This requires all local exchange carriers to
establish compensation arrangements with other carriers for the transport and
termination of telecommunications.
Resale. This requires all local exchange carriers to permit resale of their
telecommunications services without unreasonable restrictions or conditions.
Number Portability. This requires all local exchange carriers to permit
users of telecommunications services to retain existing telephone numbers
without impairment of quality, reliability or convenience when switching to
another service provider at the same location.
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Non-discriminatory Access and Dialing Parity. This requires all local
exchange carriers to provide nondiscriminatory access to telephone numbers,
operator services, directory assistance and directory listing with no
unreasonable dialing delays and to give customers access to their selected
carrier without having to dial extra digits.
Access to Rights-of-Way. This requires all local exchange carriers to permit
competing carriers access to poles, ducts, conduits and rights of way at
reasonable and nondiscriminatory rates, terms and conditions.
In addition, incumbent local exchange carriers also face additional pricing,
network unbundling, and other obligations.
State Telecommunications Regulation
States also regulate telecommunications services, including through
certification of providers of intrastate services, regulation of intrastate
rates and service offerings, and other regulations. The Telecommunications Act
prohibits state and local governments from enforcing any law, rule or legal
requirement that prohibits or has the effect of prohibiting any person from
providing any interstate or intrastate telecommunications service. In addition,
under current policies of the FCC, any dedicated transmission service or
facility that is used more than 10% of the time for the purpose of interstate
or foreign communication is subject to the jurisdiction of the FCC to the
exclusion of any state regulation. Under the Telecommunications Act, states
retain jurisdiction to adopt regulations necessary to preserve universal
service, protect public safety and welfare, ensure the continued quality of
communications services and safeguard the rights of consumers. Accordingly, the
degree of state involvement in local telecommunications services may be
substantial. Furthermore, states generally give municipal authorities
responsibility over the access to rights-of-way, franchises, zoning, and other
matters of local concern, which means that localities may also have involvement
in the regulation of the telecommunications industry.
Other Potential Regulation
The laws and regulations relating to the liability of Internet access
providers for information carried on or disseminated through their networks are
currently unsettled both in the United States and abroad. In the United States,
the Children's Online Protection Act of 1998 imposes criminal penalties and
civil liability on anyone engaged in the business of selling or transferring
material that is harmful to minors by means of the Internet without restricting
access to this type of material by underage persons. In addition, similar
legislation has been passed or is being considered in many states and foreign
jurisdictions. Several private lawsuits seeking to impose this type of
liability on online service companies and Internet access providers are
pending. The imposition of potential liability on us and other Internet access
providers for information carried on or disseminated through our systems could
require us to implement measures to reduce our exposure to this liability,
which may require the expenditure of substantial resources or the
discontinuance of various service offerings. While we carry professional
liability insurance, it may not cover this type of liability and otherwise may
not be adequate to compensate us for any damages or costs incurred in defending
against these claims. The costs of defending against any claims and potential
adverse outcomes of these claims could have a material adverse effect on our
business.
Due to the increase in Internet use and publicity, it is possible that other
laws and regulations that apply to commerce and communication over the Internet
will be adopted. The United States Congress has recently considered enacting
Internet laws regarding children's privacy, copyrights, the transmission of
sexually explicit material, the taxation of Internet services and transactions
and universal service contribution requirements for Internet accesss providers.
The European Union also recently enacted its own privacy regulations. The laws
governing the Internet, however, remain largely unsettled, even in areas where
there has been some legislative action. It may take years to determine whether
and how existing laws such as those governing intellectual property,
telecommunications, privacy, libel, taxation and other issues apply to the
Internet. In addition, the growth and development of the market for electronic
commerce may prompt calls for more stringent consumer protection laws, both in
the United States and abroad, which may impose additional burdens on companies
conducting business over the Internet.
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Other companies in our industry are not generally subject to direct
regulation by the FCC or any other governmental agency of the United States,
other than regulations that apply to all business organizations. However, in
connection with the merger between Bell Atlantic and GTE, the FCC has reviewed
our relationship with Verizon. In addition, the FCC continues to review its
regulatory position on the usage of the basic network and communications
facilities by Internet companies. To the extent that future regulatory licenses
or permissions are necessary or useful for us to provide IP-based services, we
will seek to obtain those licenses and permissions.
Recently, the FCC adopted rules that direct incumbent local exchange
carriers to share their telephone lines with providers of high speed Internet
access and other data services. This ruling enables competitive carriers to
provide digital subscriber line-based services over the same telephone lines
simultaneously used by incumbent local exchange carriers to provide basic
telephone service. These changes may increase competitive pressures on
incumbent local exchange carriers in the offering of advanced
telecommunications services, including digital subscriber line services.
International Regulatory Matters
The laws relating to the provision of Internet and telecommunications
services in other countries vary substantially from country to country and are
undergoing a rapid process of development and change. There are a variety of
regulations in different jurisdictions regarding authorizations to provide
services and the manner in which services are to be provided. In addition, some
countries impose liability for providing access to prohibited content and
restrict the transfer of personal information. As we continue to expand into
international markets, these laws will have an increasing impact on our
operations. We do not know whether new or existing laws or regulations could
have a material adverse effect on us or our ability to offer some or all of our
services in any country.
The ability for us to provide some or all of our Internet and other
services, including the ownership and operation of the necessary assets and
facilities in any particular country, will depend upon the extent to which
applicable laws and regulations permit us to provide our services. We believe
that the provision of some services, such as our voice-over-IP services, is
more likely to be subject to local country regulation than other Internet
services provided by us. Foreign countries treat voice-over IP differently.
Some countries impose no regulation on the service, while others allow voice-
over-IP but grant only a limited number of licenses to providers. In some
instances, the country requires licenses, but will grant an unlimited number of
licenses to providers. Finally, there are some countries that prohibit the
service altogether. Whether a carrier can provide voice-over-IP services in any
given country thus heavily depends on local regulations and the actions of
local governments.
We currently have the ability to provide Internet services in many countries
without obtaining regulatory authorizations, approvals, or licenses. In eight
countries where we currently have or are in the process of commencing
operations, we have either obtained or have applied for regulatory approvals,
authorizations, or licenses for at least some of these services. These eight
countries include Brazil, Germany, Ireland, Italy, Japan, Mexico, The
Netherlands and Spain. In addition, as we enter new markets, we anticipate
obtaining similar approvals, authorizations and licenses as required by
applicable local rules and regulations in order to acquire, own and operate the
necessary assets and facilities, and to provide services, in these countries.
We do not know if we will obtain the necessary local regulatory approvals to
own and operate the assets and facilities necessary to provide service, or to
provide the services themselves, in any country, or that local country laws or
regulations will not change. Any failure to obtain approvals, or loss of
authorization, to provide services in any country could have a material adverse
effect on us.
Legal Proceedings
We are not involved in any legal proceedings which we believe would, if
adversely determined, have a material adverse effect upon our business,
financial condition or results of operations.
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MANAGEMENT
The following table sets forth information concerning our executive officers
and directors.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Paul R. Gudonis......... 46 Chairman of the Board and Chief Executive Officer
Joseph C. Farina........ 50 President and Chief Operating Officer
Daniel P. O'Brien....... 45 Executive Vice President, Chief Financial Officer and Treasurer
Ira H. Parker........... 43 Senior Vice President, General Counsel and Secretary
Steven H. Blumenthal.... 46 Senior Vice President, Network Planning, Design and Engineering
Susan H. Bowman......... 46 Senior Vice President, Human Resources
James L. Freeze......... 39 Senior Vice President, Chief Strategy Officer and Director (1)
Charles J. Gibney....... 54 Senior Vice President, Enterprise Solutions and Director (1)
Michael J. Kalagher..... 54 Senior Vice President, Network Operations
Paul A. O'Brien......... 47 Senior Vice President, Sales and Marketing
Richard Stuntz.......... 46 Senior Vice President, Network Services
Philippe P. Dauman...... 46 Director Nominee (2)
Duncan M. Davidson...... 47 Director Nominee (2)
John W. Gerdelman....... 47 Director Nominee (2)
Debra L. Lee............ 45 Director Nominee (2)
Michael T. Masin........ 55 Director Nominee (2)(3)
</TABLE>
- --------
(1) These individuals will resign as directors immediately upon the completion
of this offering.
(2) These individuals will become directors immediately upon the completion of
this offering.
(3) This individual was elected by our Class B common stock.
Paul R. Gudonis has served as our Chairman and Chief Executive Officer since
April 2000. He has led the growth of Genuity since 1994, becoming President of
Genuity in 1998, one year after GTE acquired BBN. From 1990 to 1994, he served
as Vice President/General Manager-International of the Communications Industry
Group of EDS Corporation. Prior to 1990, Mr. Gudonis served as a senior
executive at several venture-backed start-up companies in the Boston,
Massachusetts area specializing in software and telecommunications services. He
started his career at AT&T, launching the first cellular phone operation in the
United States as Vice President-Marketing for Ameritech Mobile Communications.
Mr. Gudonis serves as a director of Boston Communications Group, Inc., a
provider of information technology services to the wireless industry. In
addition, he is Vice Chairman of the Massachusetts High Tech Council, a
director of the Massachusetts Software and Internet Council and a director of
the Massachusetts Telecommunications Council. He is a founding member of the
Global Internet Project, a group of Internet chief executive officers who
engage in public policy advocacy in support of Internet growth and expansion.
Mr. Gudonis holds a B.S. in Electrical Engineering from Northwestern University
and an M.B.A. from Harvard Business School.
Joseph C. Farina will serve as our President and Chief Operating Officer
upon the completion of this offering. From 1998 to 2000, he served as President
and Chief Executive Officer of Bell Atlantic's Data Solutions Group. He was
Executive Vice President-Operations Assurance for Bell Atlantic from 1995 to
1998. From 1993 to 1995, Mr. Farina served as both Vice President-Corporate
Business Development of NYNEX Corporation, a Regional Bell Operating Company
that is now part of Bell Atlantic, and President of the NYNEX Network Systems
Company, leading NYNEX's international expansion into Europe and Asia. Prior to
that time, he served as President of NYNEX Properties and Vice President-
Operations of NYNEX Mobile Communications, where he launched the inaugural
wireless service in New York City and Boston. Mr. Farina holds a B.S. from
Fordham University and an M.B.A. from St. John's University.
Daniel P. O'Brien will serve as our Executive Vice President and Chief
Financial Officer upon the completion of this offering. Since June 1998, Mr.
O'Brien served as the Executive Vice President--Finance and Chief Financial
Officer of GTE. From July 1997 to June 1998, he served as Vice President and
Treasurer of GTE, and from October 1995 to July 1997 he served as Assistant
Treasurer-Capital Markets of GTE Service Corporation. Prior to 1993, when he
joined the Treasury Department of GTE, Mr. O'Brien held several
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positions with the Electrical Products Group of GTE, including Vice President-
Controller of GTE European Lighting in Geneva, Switzerland from August 1991 to
January 1993. Mr. O'Brien holds a B.S. in Chemistry from Boston College and an
M.B.A. from University of Chicago.
Ira H. Parker will serve as our Senior Vice President, General Counsel and
Secretary upon completion of this offering. From November 1997 to the
completion of this offering, he served as Vice President and General Counsel
with Genuity. In 1999, in addition to his General Counsel position at Genuity,
Mr. Parker was appointed Vice President and Deputy General Counsel of GTE
Service Corporation. From July 1993 to November 1997, Mr. Parker was a partner
in the Washington, D.C. office of the law firm of Alston & Bird, where he
founded and headed the Electronic Commerce Practice Area. Prior to 1993, Mr.
Parker served in a number of positions with the United States Federal Deposit
Insurance Corporation, including Assistant General Counsel for Litigation and
Policy from August 1989 to May 1992 and Deputy General Counsel for Litigation
for the Resolution Trust Corporation from May 1992 to June 1993. In 1978, Mr.
Parker received his B.A. from Brooklyn College and he received his J.D. from
Emory University in 1981.
Steven H. Blumenthal will serve as our Senior Vice President, Network
Planning, Design and Engineering upon the completion of this offering. Since
1977, he has held several positions with Genuity, including Vice President for
Network Engineering and Technology. Mr. Blumenthal has been responsible for the
engineering of Genuity's network infrastructure and the development of Internet
services. He also led the design and construction of our network
infrastructure. Mr. Blumenthal holds a B.S.E.E. and M.S.E.E. from the
Massachusetts Institute of Technology.
Susan H. Bowman will serve as our Senior Vice President, Human Resources
upon the completion of this offering. From September 1997 to the completion of
this offering, Ms. Bowman served as Vice President, Human Resources for Genuity
and GTE Technology Service Corporation. Prior to that time, she held several
positions with GTE, including serving as the Strategic Human Resources Business
Partner for the Network Operations Group. Ms. Bowman holds a Ph.D. in
industrial/organizational psychology from the University of South Florida.
James L. Freeze has served as a Director since April 2000 and will serve as
our Senior Vice President and Chief Strategy Officer upon the completion of
this offering. Mr. Freeze will resign as a Director immediately upon the
completion of this offering. From August 1999 to the completion of this
offering, he served as Vice President of Business Development for Genuity. From
July 1998 to August 1999, he served as a senior telecommunications analyst at
Forrester Research, Inc., an Internet research firm. From June 1997 to June
1998, Mr. Freeze served as Vice President of Sales and Marketing of Genuity,
Inc., an Internet service provider and web hosting company that was acquired by
us in June 1998. In April 2000, we changed our name from GTE Internetworking
Incorporated to Genuity Inc. Prior to 1997, he held several positions with
CompuServe Inc., a worldwide provider of network access hosting and Internet
services to the business and consumer markets. Mr. Freeze holds a B.S. and M.A.
from Ohio State University and a J.D. from Capital University.
Charles J. Gibney has served as a Director since April 2000 and will serve
as our Senior Vice President, Enterprise Solutions upon the completion of this
offering. Mr. Gibney will resign as a Director immediately upon the completion
of this offering. From April 1998 to May 2000, he served as President and
General Manager of Enterprise Services of Genuity. From January 1988 to March
1998, he served as Senior Vice President of International and Corporate
Business of Cable & Wireless Inc., a global communications company. From 1962
to 1988, Mr. Gibney held various positions including the director of National
Sales for Sprint, a telecommunications company, and from 1962 to 1974, he held
several positions with Pacific Bell, a Regional Bell Operating Company.
Michael J. Kalagher will serve as our Senior Vice President, Network
Operations upon the completion of this offering. From January 2000 to the
completion of this offering, Mr. Kalagher served as Vice President of
Operations and Customer Service for Genuity. From July 1995 to December 1999,
Mr. Kalagher has held several positions, including Divisional VP of Operations
and Customer Service and Vice President of
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Operations for our DiaLinx remote access service. From 1969 to 1995, he held
several positions with Digital Equipment Corp., a supplier of networked
computer systems, software and services, including serving as Operations
Manager for Worldwide Marketing and Field Service Manager in the Central
European Region. Mr. Kalagher studied Electrical Engineering and Business at
the undergraduate level, and is a 1982 P.mD. graduate of the Harvard Business
School.
Paul A. O'Brien will serve as our Senior Vice President, Sales and Marketing
upon the completion of this offering. From October 1999 to the completion of
this offering, he served as our Vice President of Sales and Marketing. From
April 1998 to October 1999, he was Vice President and General Manager of our IP
Telecom Services business unit. From January 1995 to April 1998, Mr. O'Brien
served as Vice President of the Communications Industry Business unit of
National Cash Register, a provider of information technology business
solutions. From May 1990 to December 1994, he served as Vice President of
Marketing for Cincinnati Bell Telephone, a telecommunications company. Prior to
1990, Mr. O'Brien held several positions with AT&T and New England Telephone.
Mr. O'Brien holds a B.S. from Westfield College and an M.B.A from Suffolk
University.
Richard Stuntz will serve as our Senior Vice President, Network Services
upon the completion of this offering. From April 1998 to the completion of this
offering, he served as Vice President and General Manager of On-Line Services
for Genuity. He was previously the Vice President for Business Planning and
Management from March 1997 to April 1998. From 1992 to 1997, Mr. Stuntz was
first Director, and then Vice President of Contracts for Genuity. Prior to
joining Genuity in 1986, he held several positions with Westinghouse Electric
Corporation, a public utilities, manufacturing and defense contracting company.
Mr. Stuntz holds a B.A. from Duke University.
Philippe P. Dauman will serve as a Director upon the completion of this
offering. Mr. Dauman has served as Deputy Chairman and Executive Vice President
of Viacom, Inc., a diversified entertainment company, since January 1996. Prior
to January 1996, Mr. Dauman served as Executive Vice President, General Counsel
and Chief Administrative Officer of Viacom, Inc. In addition, he is a director
of Viacom, Inc., Blockbuster, Inc. and Lafarge Corporation. Mr. Dauman received
his B.A. from Yale University and received his J.D. from Columbia University
School of Law.
Duncan M. Davidson will serve as a Director upon the completion of this
offering. Mr. Davidson has served as Senior Vice President, business
development of InterTrust since July 1997. Before joining InterTrust, Mr.
Davidson was managing partner of Gemini McKenna, an alliance between Gemini
Consulting and Regis-McKenna, Inc., and The McKenna Group, from August 1995 to
July 1997. Mr. Davidson was also Vice President of Gemini Consulting, the
management consulting arm of Cap Gemini, a systems integrator and its
predecessor, The MAC Group, from April 1989 to August 1995. Mr. Davidson is a
founder of Covad Communications, a telecommunications company providing DSL
services, and serves on its board of advisors. Mr. Davidson received a Sc.B. in
Physics-Mathematics from Brown University and a J.D. from the University of
Michigan.
John W. Gerdelman will serve as a Director upon the completion of this
offering. Mr. Gerdelman has served as a managing member of Morton Group, LLC,
since September 1999. From April 1999 to September 1999, Mr. Gerdelman served
as Chief Executive Officer of USA.Net, an electronic messaging services company
and from September 1994 to April 1999, he served as President--Network Services
of MCI Communications Corporation, a telecommunications company. In addition,
he serves as a director of Sycamore Networks, Inc. Mr. Gerdelman received his
B.S. in Chemistry from the College of William and Mary.
Debra L. Lee will serve as a Director upon the completion of this offering.
Ms. Lee has served as President and Chief Operating Officer of BET Holdings,
Inc., a media company, since March 1996. From 1986 to 1996, Ms. Lee served as
Executive Vice President and General Counsel of BET Holdings, Inc. In addition,
she is a director of Eastman Kodak Company. Ms. Lee holds an A.B. from Brown
University, an M.P.P. from the John F. Kennedy School of Government and a J.D.
from Harvard Law School.
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Michael T. Masin will serve as a Director upon the completion of this
offering. Mr. Masin has served as Vice Chairman of GTE Corporation since
January 2000. Upon completion of the merger between GTE and Bell Atlantic, he
will serve as Vice Chairman and President of Verizon, with responsibility for
international wireline and wireless operations, international connectivity,
domestic and international directory and information services and
internetworking. Mr. Masin was previously employed by GTE Corporation as Vice
Chairman and President--International from June 1995 to January 2000, and as
Vice Chairman from October 1993 to June 1995. He is also a director of
Citigroup, Inc. and TELUS Corporation. Mr. Masin holds a B.A. from Dartmouth
College and a J.D. from the University of California at Los Angeles.
Composition of Board of Directors
Upon completion of this offering, our bylaws will provide that our board of
directors will consist of no less than three persons and no more than 21. Under
the terms of the proposal to the FCC and under our bylaws, upon the completion
of this offering our board of directors will consist of six persons, including
four persons that have not previously been employees or directors of GTE, Bell
Atlantic or any of their respective affiliates and one person that will be
appointed by the holder of the Class B common stock. Within 90 days of the
completion of this offering, our board of directors will be expanded to 13, and
the four unaffiliated directors will appoint the seven additional directors to
fill the vacancies caused by the increase in the size of the board of
directors.
Under the terms of the proposal to the FCC, the director appointed by the
holder of the Class B common stock will not exercise a vote until we have at
least 10 directors.
Under the terms of the proposal to the FCC, we have agreed to hold an
initial meeting of our stockholders not later than the date that is nine months
after the completion of this offering. At that meeting, our stockholders will
elect 13 directors as follows:
. four Class I directors, whose terms will expire at the annual meeting of
stockholders in 2001;
. four Class II directors, whose terms will expire at the annual meeting of
stockholders in 2002;
. four Class III directors, whose terms will expire at the annual meeting
of stockholders in 2003; and
. one director elected annually by the holder or holders of the Class B
common stock, voting separately as a class.
For our initial meeting of stockholders and each subsequent annual meeting
of stockholders, our board of directors will determine the nominees for
directors in the classes or class of directors to be elected at the meeting.
Committees of Board of Directors
We have an executive compensation committee comprised of and and
an audit committee comprised of and . The executive compensation
committee has the authority to approve salaries and bonuses and other
compensation matters for our officers and consultants, to approve employee
benefit plans and to administer our stock option plans. The audit committee,
which is comprised of independent directors, has the authority to recommend the
appointment of our independent auditors and to assist our board of directors in
its review of the results and scope of audits, internal accounting controls and
other accounting related matters.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serves as a member of the board of directors
or executive compensation committee of any entity which has one or more
executive officers serving as a member of our board of directors or
compensation committee.
Director Compensation
We intend to pay cash compensation to non-employee members of our board of
directors in the amount of $30,000 annually. We will reimburse each member of
the board of directors for reasonable expenses incurred in connection with
attending a meeting of the board of directors or any committee thereof. In
addition,
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pursuant to the Outside Directors' Compensation Plan, non-employee directors
who have agreed to serve on our board of directors at the time of this offering
will receive, effective upon the completion of this offering, options to
purchase 30,000 shares of Class A common stock at an exercise price equal to
the initial public offering price. In addition, non-employee directors who
agree after the initial public offering to serve on the board of directors will
receive, effective upon election to the board of directors, options to purchase
30,000 shares of Class A common stock at an exercise price equal to the fair
market value at the time of the grant. Options issued to the directors will
vest in three equal installments. The first installment will immediately vest
on the date of grant, but will not become exercisable until the day immediately
before the first annual meeting of the stockholders. The second installment
will vest and become immediately exercisable on the day immediately before the
second annual meeting of the stockholders. The third installment will vest and
become immediately exercisable on the day immediately before the third annual
meeting of the stockholders.
Executive Compensation
The following table shows the cash compensation paid or accrued for the
fiscal year ended December 31, 1999 to our chief executive officer and each of
our four most highly compensated executives other than the chief executive
officer. GTE will not compensate our officers going forward and therefore this
compensation is indicative only of the historical compensation paid by GTE to
these officers and is not indicative of the compensation that Genuity will pay
to these individuals in the future. The arrangements regarding the future
compensation and other incentives of our executive officers are currently under
study.
The options granted below represent options to acquire common stock of GTE.
Under the existing terms of the GTE Corporation 1997 Long-Term Incentive Plan,
the offering will not result in accelerated vesting of the remaining unvested
portion of these options. Instead, these options will continue to vest
according to their terms. These options were granted in recognition of past
service to GTE. These officers will not receive future grants of GTE or Verizon
options following the offering.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------ ---------------------------------------------
Shares of
Restricted GTE Common GTE
Stock Stock LTIP All Other
Name and Principal Other Annual Awards Underlying Payments Compensation
Position Salary ($) Bonus ($)(1) Compensation ($)(2)(3) Options (#) ($)(4) ($)(5)
------------------ ---------- ------------ ------------ ---------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul R. Gudonis......... 349,308 305,300 -- 80,642 43,400 1,027,500 5,000
Chairman and Chief
Executive Officer
Charles J. Gibney....... 289,808 126,200 -- 27,018 15,700 319,300 14,911
Senior Vice President,
Enterprise Solutions
Ira H. Parker........... 214,404 137,100 -- 21,535 20,900 216,400 7,200
Senior Vice President,
General Counsel and
Secretary
David B. Monaghan....... 221,708 109,700 -- 26,855 12,200 333,800 12,372
Vice President, Finance
Paul A. O'Brien......... 208,962 88,100 -- 5,506 35,700 -- 13,533
Senior Vice President,
Sales and Marketing
</TABLE>
- --------
(1) These amounts represent the annual bonus received by each executive under
the GTE Corporation 1997 Executive Incentive Plan for the year ended
December 31, 1999, of which a portion has been deferred into restricted
stock units payable at maturity, generally a minimum of three years from
the time of deferral, in common stock of GTE. GTE restricted stock units
will not be granted to these officers in the future.
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(2) The number of restricted stock units received was calculated by dividing
the sum of deferrals under (a) the annual bonus and (b) the LTIP payments
by the average closing price of the common stock of GTE on the New York
Stock Exchange Composite Transactions Tape for the 20 consecutive trading
days following the release to the public of the financial results of GTE
for the fiscal year in which the bonus and LTIP payments were earned.
Each executive received matching restricted stock units on the basis of
one additional restricted stock unit for every four restricted stock
units earned. The dollar value of the
matching restricted stock units is based on the average closing price of
the common stock of GTE on the date of grant for each related restricted
stock unit as described above. Additional restricted stock units were
received on each dividend payment date based upon the amount of the
dividend paid and the closing price of the common stock of GTE on the New
York Stock Exchange Composite Transactions Tape on the dividend declaration
date.
(3) The aggregate amount of the restricted stock units as of the end of the
year ended December 31, 1999 was 12,416, 1,981, 1,000 and 4,406 for
Messrs. Gudonis, Gibney, Parker and Monaghan. The aggregate value of these
restricted stock units was $876,104, $139,784, $70,562 and $310,898 for
Messrs. Gudonis, Gibney, Parker and Monaghan based solely upon the closing
price of the common stock of GTE on December 31, 1999.
(4) These amounts represent payments under the GTE Corporation 1997 Long-Term
Incentive Plan, of which a portion has been deferred into restricted stock
units payable at maturity, generally a minimum of three years from the
time of deferral, in common stock of GTE. These awards became immediately
non-forfeitable and payable when the GTE stockholders and Bell Atlantic
stockholders approved the merger. Each payment equaled the average of the
performance percentage for each individual for the three award cycles
completed prior to the date the merger was approved. We also included in
these amounts projected dividends through the end of the award cycle. GTE
restricted stock units will not be granted to these officers in the
future.
(5) These amounts consist of contributions under the BBN Corporation
Retirement Trust Agreement of $5,000 for Mr. Gudonis and under the GTE
Savings Plan of $7,200 for Messrs. Gibney, Parker, Monaghan, and O'Brien.
This column also includes contributions by GTE to the GTE Executive Salary
Deferral Plan of $7,711, $5,172 and $6,333 for Messrs. Gibney, Monaghan
and O'Brien. These executives will not be eligible to contribute to the
GTE Savings Plan or the GTE Executive Salary Deferral Plan following the
offering.
Option Grants in Last Fiscal Year
The following table describes grants of stock options to purchase GTE
common stock to those executive officers listed in the Summary Compensation
Table for the year ended December 31, 1999. These options vest as to one-third
of the aggregate number of shares each year, commencing one year after the
date of grant. These stock option grants included a replacement stock option
feature. This feature provides that, if an executive exercises a stock option
by delivering previously owned shares that are sufficient to pay the exercise
price plus applicable tax withholdings, the executive will receive an
additional one-time stock option grant. The number of shares represented by
that option will be equal to the number of previously owned shares surrendered
in this transaction. This replacement stock option will be granted with an
exercise price equal to the fair market value on the date of grant. No stock
appreciation rights were granted for the year ended December 31, 1999. These
options were granted in recognition of past service to GTE. These officers
will not receive future grants of GTE or Verizon options following the
offering.
The potential realizable value is calculated based on the term of the
option at its date of grant. It is calculated assuming that the fair market
value of the common stock of GTE on the date of grant appreciates at the
indicated annual rates compounded annually for the entire term of the option
and that the option is exercised and sold on the last day of its term for the
appreciated stock price. These numbers are calculated based on the
requirements of the Securities and Exchange Commission and do not reflect our
estimate of future stock price growth.
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<PAGE>
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
------------------------------------------ ---------------------
Shares of % of Total
GTE Common Options Exercise
Stock Granted to or Base
Underlying Employees Price
Options in Per Expiration
Name Granted Fiscal Year Share Date
---- ---------- ----------- -------- ----------
5% 10%
---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Paul R. Gudonis......... 43,400 * $65.0313 2/15/2009 $1,774,355 $4,498,105
Charles J. Gibney....... 15,700 * 65.0313 2/15/2009 642,092 1,627,194
Ira H. Parker........... 400 * 63.0313 1/10/2009 16,013 40,580
10,100 * 65.0313 2/15/2009 413,065 1,046,794
5,600 * 68.7500 9/1/2009 242,123 613,589
4,800 * 73.8400 11/03/2009 222,312 564,904
David B. Monaghan....... 12,200 * 65.0313 2/15/2009 498,950 1,264,444
Paul A. O'Brien......... 8,900 * 65.0313 2/15/2009 363,988 922,422
20,000 * 66.7500 4/29/2009 839,569 2,127,642
6,800 * 73.8400 11/03/2009 315,792 800,280
</TABLE>
- --------
* Less Than One Percent.
Fiscal Year End Option Values
The following table provides information for the executive officers listed
in the Summary Compensation Table regarding exercises of GTE options during the
year ended December 31, 1999 and GTE options held as of December 31, 1999. The
values in the table have been calculated on the basis of the fair market value
of the shares of common stock of GTE on December 31, 1999 less the applicable
exercise price. These options were granted in recognition of past service to
GTE. These officers will not receive further grants of GTE or Verizon options
following the offering.
<TABLE>
<CAPTION>
Shares of GTE Common
Stock Underlying Value of Unexercised
GTE Unexercised Options at In-the-Money Options
Common Stock Fiscal Year End (#) Fiscal Year End ($)
Acquired Value ------------------------- -------------------------
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul R. Gudonis......... 0 0 229,075 79,400 5,426,247 923,380
Charles J. Gibney....... 0 0 29,700 15,700 271,947 85,371
Ira H. Parker........... 6,000 189,750 9,700 20,900 156,111 67,271
David B. Monaghan....... 6,500 282,750 38,500 12,200 839,048 66,339
Paul A. O'Brien......... 0 0 15,000 35,700 167,815 122,775
</TABLE>
Awards Under Long Term Incentive Plans in Last Fiscal Year
The following table sets forth grants under the GTE Corporation 1997 Long-
Term Incentive Plan to those executive officers listed in the Summary
Compensation Table for the year ended December 31, 1999. These executives will
receive no further awards under the GTE Corporation 1997 Long-Term Incentive
Plan as of the date of the offering. In addition, any payouts to these
executives will be reduced on a pro-rata basis as of the date of the offering.
<TABLE>
<CAPTION>
Performance Estimated Future Payouts
or Other Under Non-Stock
Shares, Period Price-Based Plans
Units or Until -------------------------
Other Maturation Threshold Target Maximum
Name Rights (#) or Payout (Units) (Units) (Units)
---- ---------- ----------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Paul R. Gudonis................ 6,400 Three years 1,798 6,915
Charles J. Gibney.............. 1,800 Three years 506 1,945
Ira H. Parker.................. 2,070 Three years 575 2,211
David B. Monaghan.............. 1,200 Three years 337 1,297
Paul A. O'Brien................ 1,350 Three years 374 1,438
</TABLE>
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The estimated future payouts in the above table are calculated for
illustrative purposes only and are based upon the dividend rate and price of
the common stock of GTE at the close of business on December 31, 1999. The
target award is the dollar amount derived by multiplying the number of units
credited to the participant at the end of the award cycle by the average
closing price of the common stock of GTE as reported on the New York Stock
Exchange Composite Transactions Tape during the last 20 business days of the
award cycle.
The maximum amount of the award has intentionally been left blank because it
is not possible to determine the maximum number of units until the award cycle
has been completed. The maximum amount of the award is determined by the extent
to which the actual results of GTE for five key financial measures exceed the
target levels.
Pension Plan
The following table illustrates the estimated annual benefits payable under
the defined benefit pension plans of GTE. The information assumes normal
retirement at age 65 and is calculated on a single life annuity basis, based
upon final average earnings, integrated with social security as described
below, and years of service.
<TABLE>
<CAPTION>
Years of Service
--------------------------------------------
Final Average Earnings 15 20 25 30 35
---------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 300,000................... $ 63,765 $ 85,020 $106,275 $127,530 $148,785
400,000................... 85,515 114,020 142,525 171,030 199,535
500,000................... 107,265 143,020 178,775 214,530 250,285
600,000................... 129,015 172,020 215,025 258,030 301,035
700,000................... 150,765 201,020 251,275 301,530 351,785
800,000................... 172,515 230,020 287,525 345,030 402,535
900,000................... 194,265 259,020 323,775 388,530 453,285
1,000,000................... 216,015 288,020 360,025 432,030 504,035
</TABLE>
Messrs. Gibney, Parker, Monaghan and O'Brien participate in the GTE Service
Corporation Plan for Employees' Pensions. The GTE Service Corporation Plan is a
noncontributory pension plan for the benefit of all employees of GTE Service, a
wholly owned subsidiary of GTE, and participating affiliates who are not
covered by collective bargaining agreements. It provides a benefit based on a
participant's years of service and earnings. Pension benefits provided by GTE
Service and contributions to the GTE Service Corporation Plan are related to
basic salary and incentive payments, exclusive of overtime, differentials, some
types of incentive compensation and other similar types of payments. Under the
GTE Service Corporation Plan, pensions are computed on a two-rate formula basis
of 1.15% and 1.45% for each year of service, with the 1.15% service credit
being applied to that portion of the average annual salary for the five highest
consecutive years that does not exceed $33,000, which is the portion of salary
subject to the Federal Social Security Act, and the 1.45% service credit being
applied to that portion of the average annual salary for the five highest
consecutive years that exceeds this level up to the statutory limit on
compensation.
As of February 29, 2000, the credited years of service under the GTE Service
Corporation Plan were 11, 2, 31 and 1 for Messrs. Gibney, Parker, Monaghan and
O'Brien. Although these executives will no longer be employed by GTE Service
and will no longer accrue a pension under the GTE Service Pension Plan as of
the date of the offering, they along with other active employees of Genuity who
participate in the GTE Service Corporation Plan will continue to be credited
with additional years of age and service with Genuity for purposes of early
retirement eligibility under the GTE Service Corporation Plan. In addition,
they will have an assumed annual salary growth of 3.5% under the GTE Service
Corporation Plan. These special provisions will expire upon the earliest to
occur of the following:
. the date that is five years after the date of offering;
. an employee's termination of employment with Genuity; or
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. the date that Genuity becomes a majority-owned subsidiary of Verizon.
Service credit for GTE retiree welfare benefits will be provided in a
similar manner to the service recognition for pension purposes.
Under federal law, an employee's benefits under a qualified pension plan,
such as the GTE Service Corporation Plan, are limited to set maximum amounts.
GTE maintains the Excess Pension Plan, which supplements the benefits of any
participant in the GTE Service Corporation Plan in an amount by which any
participant's benefits under the GTE Service Corporation Plan are limited by
law. In addition, the GTE Supplemental Executive Retirement Plan provides
additional retirement benefits under management incentive plans or special
arrangements as determined by GTE Service or one of its affiliates. The
Supplemental Executive Retirement Plan and the Excess Pension Plan benefits are
payable in a lump sum or an annuity.
Long-Term Stock Incentive Plan
Our employees have historically been among those granted options to purchase
common stock of GTE. Our Long-Term Stock Incentive Plan has been adopted by our
board of directors and our sole stockholder. The Long-Term Stock Incentive Plan
provides for the following awards based on the Class A common stock: stock
options, stock appreciation rights, performance bonuses and other stock-based
awards. Awards may be granted to employees of Genuity or any entity in which it
owns at least a 10% interest. The Long-Term Stock Incentive Plan will be
administered by the executive compensation committee of our board of directors.
The administrator has the authority to determine eligibility, grant awards and
make all other determinations under the Long-Term Stock Incentive Plan. The
period or periods during which an award will be exercisable or remain
outstanding, including the manner of exercise and other details of awards will
be determined by the administrator consistent with the Long-Term Stock
Incentive Plan. Except in connection with promotions or significant increases
in responsibility or to ensure appropriate comparability with awards granted to
other participants, a person may receive only one award during the first four
years of the Long-Term Stock Incentive Plan. Our board of directors has the
power to amend or terminate the Long-Term Stock Incentive Plan. Unless
terminated earlier, the Long-Term Stock Incentive Plan will terminate on the
date of the annual meeting of stockholders in the year 2010.
Stock options granted under the Long-Term Stock Incentive Plan may have a
term of up to 10 years and may be either incentive stock options, as defined in
the Internal Revenue Code, or nonqualified stock options. Stock options granted
under the Long-Term Stock Incentive Plan may not be assigned other than by will
or by applicable laws of descent and distribution. The option exercise price of
each stock option granted under the Long-Term Stock Incentive Plan in
connection with the offering will be the offering price and in the case of
other stock options will not be less than the fair market value of the Class A
common stock as of the date of grant. In general, stock options and other
awards may not be repriced after grant.
The aggregate number of shares of Class A common stock available for awards
under the Long-Term Stock Incentive Plan will be 9% of the outstanding number
of shares of Class A common stock at the time of the offering. Of this amount,
5% will be available for awards to employees who were employed on or before
April 6, 2000; 1% will be available for awards to individuals who first became
or become employees after April 6, 2000 and on or before January 6, 2001; and
3% will be available for awards in connection with promotion and to individuals
who first become employed after January 6, 2001. Any shares attributable to the
expiration of the awards without exercise and similar events will be available
for awards to individuals regardless of their date of hire with the Company. In
no event will more than 50,000,000 shares be issued in satisfaction of
incentive stock options granted under the Long-Term Stock Incentive Plan. The
maximum number of shares for which stock options or stock appreciation rights
may be granted to any participant in any calendar year is 2,000,000. These
limits, as well as the exercise price of outstanding awards and other award
terms, are subject to appropriate adjustment to reflect stock splits, stock
dividends, and similar events.
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Outside Directors' Compensation Plan
We have an Outside Directors' Compensation Plan which, unless earlier
terminated, will terminate on the date of the annual meeting of stockholders in
the year 2010. Pursuant to the Outside Directors' Compensation Plan, non-
employee directors who have agreed to serve on our board of directors at the
time of this offering will receive, effective upon the completion of this
offering, a $30,000 annual cash fee and options to purchase 30,000 shares of
Class A common stock at an exercise price equal to the initial public offering
price. In addition, non-employee directors who agree after the initial public
offering to serve on the board of directors will receive, effective upon
election to the board of directors, a $30,000 annual cash fee and options to
purchase 30,000 shares of Class A common stock at an exercise price equal to
the fair market value at the time of the grant. Options issued to the directors
will vest in three equal installments. The first installment will immediately
vest on the date of grant, but will not become exercisable until the day
immediately before the first annual meeting of the stockholders. The second
installment will vest and become immediately exercisable on the day immediately
before the second annual meeting of the stockholders. The third installment
will vest and become immediately exercisable on the day immediately before the
third annual meeting of the stockholders. The number of shares subject to each
award, the exercise price and other terms of stock options under the Outside
Directors' Compensation Plan are subject to appropriate adjustment in the event
of a stock split, stock dividend or similar event. The vesting schedule
applicable to each stock option awarded under the Outside Directors'
Compensation Plan will be determined by the executive compensation committee of
our board of directors. If a director leaves our board of directors prior to
completing any three-year term as director, any then unvested stock option
would be forfeited. Any then vested and exercisable stock option would remain
exercisable for five years after the director leaves our board of directors
prior to the completion of a three-year term, subject to the maximum term of
the stock option and except as otherwise provided by the executive compensation
committee of our board of directors. Our board of directors has the power to
amend or terminate the Outside Directors' Compensation Plan.
Employment Agreements
Genuity intends to enter into multi-year employment agreements with Messrs.
Gudonis, Farina, D. O'Brien, and Parker. The agreements will describe the
compensation opportunities and severance arrangements for each of these
individuals in addition to any post-employment restrictions.
Indemnification of Directors and Executive Officers and Limitation on Liability
Our certificate of incorporation provides that our directors will not be
liable to us or our stockholders for monetary damages for any breach of
fiduciary duty, except to the extent otherwise required by the Delaware General
Corporation Law. This provision will not prevent our stockholders from
obtaining injunctive or other relief against our directors nor does it shield
our directors from liability under federal or state securities laws.
Our certificate of incorporation also requires us to indemnify our directors
and officers to the fullest extent permitted by the Delaware General
Corporation Law, subject to a few very limited exceptions where indemnification
is not permitted by applicable law. Our certificate of incorporation also
requires us to advance expenses, as incurred, to our directors and executive
officers in connection with any legal proceeding to the fullest extent
permitted by the Delaware General Corporation Law. These rights are not
exclusive.
Prior to the completion of this offering, we also intend to obtain
directors' and officers' insurance to provide coverage for our directors,
executive officers and some of our employees for specific liabilities,
including public securities matters. We believe that these indemnification
provisions and this insurance are necessary to attract and retain qualified
directors and officers.
The limitation of liability and indemnification provisions in our
certificate of incorporation may discourage stockholders from bringing a
lawsuit against our directors for breach of their fiduciary duty. They may also
reduce the likelihood of derivative litigation against directors and officers,
even though an action, if successful, might benefit us and other stockholders.
Furthermore, the value of the Class A common stock may be adversely affected to
the extent we pay the costs of settlement and damage awards against directors
and officers as required by these indemnification provisions.
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RELATED PARTY TRANSACTIONS
We have provided below a summary description of the significant agreements
that we expect to execute with GTE Service Corporation and other affiliates of
GTE. These agreements will become effective at the completion of this offering.
These descriptions, which summarize the material terms of the agreements, are
not complete. You should read the full text of these agreements, which have
been filed with the Securities and Exchange Commission as exhibits to the
registration statement of which this prospectus is a part. We believe that the
terms of these agreements are comparable to those that would have resulted from
arms-length negotiations with parties other than GTE and its affiliates. We
intend to negotiate any future agreements with Verizon on the same basis.
Transition Services Agreements
GTE and its affiliates currently provide a range of administrative and
support services to us. We will enter into an Agreement for Transition Services
and an Agreement for Information Technology Transition Services with GTE
Service.
Agreement for Transition Services. Under this agreement, GTE Service will
provide, to the extent we continue to require them on a transitional basis, the
following services currently provided to us by various GTE affiliates:
. accounting and cash processing services, including payroll, asset
accounting and accounts payable;
. billing and collection processing services;
. human resources services and benefits administration, including
relationships with employee benefits providers; and
. real estate support services, including project management and
environmental and safety services.
Agreement for Information Technology Transition Services. We and GTE Service
will enter into this agreement in order to provide or receive, to the extent
either party continues to require them on a transitional basis, the following
services:
. software support services to ensure that software continues to run
effectively after the offering; and
. hardware support services, including help desk support for personal
computers, systems support centers for critical servers and local area
network support.
In addition, we will provide wide area network support to GTE Service, and
GTE Service will provide us with wide area network support in areas outside of
Bell Atlantic's local service region. GTE Service also will provide us with
computer programming and technical services, including the development of
software interfaces and modifications and enhancements to existing systems.
Unless otherwise agreed, the ownership of any work product, including
intellectual property, created during the provision of services under either of
the transition service agreements will be determined under the terms and
conditions of the Software Development and Technical Services Agreement
described below. Similarly, any licenses relating to software will be granted
on the same terms and conditions as used in the Software License Agreement
described below.
The fees for these transition services are fixed under the agreements and
were negotiated based on historical costs and comparable market prices. Both
agreements have a term of one year, although some services will be used for
less than a year. We will be able to terminate each or any portion of the
agreements at any time upon 120 days notice to GTE Service. As an exception,
the billing and collection processing services require 180 days notice in order
to provide adequate transition time. GTE Service has the right to terminate the
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agreements on 120 days notice only with respect to the information technology
services that it receives from us. In connection with any termination or
expiration, GTE Service will be obligated to cooperate with us to transition
the work to another provider and to use commercially reasonable efforts to
secure our continued use of any necessary third party technology.
Purchase, Resale and Marketing Agreement
We will enter into a Purchase, Resale and Marketing Agreement under which
Verizon will purchase services from us that will include Internet access,
value-added e-business services and private line and asychronous transfer mode
transport services. Verizon will be permitted to use these services internally
or resell them on a stand-alone basis or as part of a bundled solution. Those
services resold by Verizon may be co-branded with us or may be branded without
use of our marks. To the extent we jointly market our services with Verizon, we
will do so in compliance with all applicable federal law. We will not jointly
market our services with Verizon in states in which Verizon would not have
legal authority under applicable federal law to operate our company. We have
granted Verizon most favored customer pricing and volume-based discounts. Under
the terms of the agreement, Verizon will purchase at least $500 million of our
services over a five-year period. In the event that Verizon has not purchased
$200 million in services by the end of the third year of the contract, it would
be required to pay to us at that time the difference between the amount of
services purchased to date and $200 million. Similarly, in the event Verizon
has not purchased $500 million in services by the end of the fifth year of the
contract, it would be required to pay to us at that time the difference between
the amount of services purchased to that date, including any shortfall payment
made at the end of the third year, and $500 million. The minimum purchase
commitment is reduced in the event we do not comply with various obligations as
to competitive pricing and other aspects of service, sale and delivery.
In order for us to properly plan for increasing demands for our services by
our customers, Verizon is required to provide us with 18-month forecasts of its
requirements on a quarterly basis. The agreement will remain in effect for five
years and is renewable for additional one-year periods by mutual consent of the
parties. Verizon may terminate the agreement on 90 days notice if a legislative
or regulatory order materially or adversely changes its rights, obligations or
risks in relation to the resale of our services. In this event, Verizon is
obligated to cooperate with us to ensure the orderly transition to us of all
outstanding reseller agreements, including the assignment of these agreements,
and to reimburse us for costs incurred by us relating to this transition.
Under the agreement, if Verizon were to cause us to adjust our business as
described below in this paragraph in order to convert its Class B common stock,
it must provide us with 180 days prior written notice of the date on which it
intends to convert its Class B common stock. This notice will also indicate if
there are any states in which Verizon does not expect to have legal authority
under applicable federal law to operate a long distance business at the time of
the conversion of the Class B common stock. Upon receipt of this notice, we
will adjust our operations in the states designated by Verizon in a manner
necessary to allow Verizon to be in compliance with applicable federal law in
these states after Verizon obtains a greater than 10% equity interest in our
capital stock. In no event will the states designated by Verizon account for
more than 3% of our total revenues during the preceding 12 months and in no
event shall the adjustment of our operations result in the loss of overall
revenue in excess of 3% of our total revenues during the preceding 12 months.
Verizon will agree to pay an amount necessary to make us financially whole as a
result of our modification of our business pursuant to this arrangement.
In conjunction with the Purchase, Resale and Marketing Agreement described
above, we also plan to provide to Verizon undersea cable capacity in the ARCOS-
1 Caribbean Ring System and have committed to negotiate with Verizon with
respect to operating capacity on the Americas III Cable Network currently under
construction.
Intellectual Property Agreements
We intend to enter into the following agreements with GTE Service in order
to allocate rights relating to existing and future patents, software, other
types of intellectual property and technical services.
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Intellectual Property Ownership and Cross License Agreement. This agreement
will apportion the ownership of existing patents, patent applications and other
types of intellectual property between GTE Service and us. Under the agreement,
existing patents and patent applications that relate exclusively to us will be
owned exclusively by us. Existing patents and patent applications that relate
to both us and GTE Service will be jointly owned by us and GTE Service. The
remaining existing patents and patent applications that relate to GTE Service
will be owned exclusively by GTE Service. Both we and GTE Service will grant
each other a perpetual, non-exclusive, royalty-free worldwide license to each
other's existing patents and patent applications. In addition, we will jointly
own any currently existing, non-statutory intellectual property. Those patents
and patent applications that either GTE Service or we develop in the future
will be owned pursuant to applicable laws or any controlling agreements.
Software License Agreement. We plan to enter into a Software License
Agreement with GTE Service under which it will grant us a non-exclusive, non-
transferable, worldwide license to use software programs owned by GTE Service
for our internal operations. In addition, GTE Service will provide us with
updates to the licensed software programs pursuant to the Agreement for
Information Technology Transition Services described above. In exchange for the
license, we will pay GTE Service an annual license fee for each licensed
software program. The term of each license will be one year and will be
automatically renewable for successive one-year periods upon the payment of
annual license fees. We may terminate or cancel any software license upon 30
days written notice to GTE Service. The licenses that GTE Service will grant us
pertain to the object code of the licensed software programs only. The source
code of the licensed software programs will be placed in an escrow account and
will be made available to us pursuant to the terms and conditions of a separate
escrow agreement.
Software Development and Technical Services Agreement. Under this agreement,
GTE Service will provide us with software development and other technical
services. For services related exclusively to our business, the newly created
deliverable, including any newly created software and accompanying
documentation, and all intellectual property rights in the deliverable, will be
transferred to us by GTE Service. In return, we will grant to GTE Service a
perpetual, royalty-free worldwide license to any deliverable owned by us for
the internal use of GTE Service only. For services not related exclusively to
us, GTE Service will retain ownership of any deliverable and will grant us a
non-exclusive, royalty-free, non-sublicensable, non-transferable license to use
the deliverable owned by GTE Service for our internal use only. The agreement
will have a term of one year and will be renewable for successive one-year
terms by mutual consent of the parties. We may terminate the agreement at any
time following written notice to GTE Service.
Network Monitoring Agreement
Under the terms of an existing agreement, we receive continuous monitoring
for some elements of our network infrastructure from GTE Network Services,
including monitoring of network-enabling devices and processes to detect
anomalies occurring in the network. The fees for monitoring services are fixed
under the agreement and were negotiated based on historical costs and
comparable market prices. The agreement may be terminated by us on 90 days
notice.
Real Estate Agreements
We plan to enter into several agreements with Verizon to allocate space in
various leased and owned properties between us and Verizon. None of the
properties involved are material to our operations or business. Provisions of
each agreement, including the lease and sublease payment of rent terms, vary
depending on the underlying lease at the specified property and the result of
negotiations pertaining to specific issues at a specified property.
In order to effect our transition to a stand-alone company, GTE also has
agreed to issue new guaranties and to continue existing guaranties in order to
support our real estate obligations. GTE has agreed to continue to issue new
guaranties until six months following this offering or the date on which both
Standard & Poor's and Moody's publish a credit rating for us, whichever occurs
first. We have agreed to pay GTE a commercially reasonable fee during the time
the guaranties are in force.
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Registration Rights Agreement
Immediately after the completion of this offering, under a Registration
Rights Agreement dated , 2000, Verizon and its transferees or assignees
will be entitled to cause us to register shares of Class A common stock that
are issued following the conversion of either our Class B common stock or our
Class C common stock. We may postpone the filing of any registration statement
up to two times for a total of 90 days in the event that the filing (1) would
require the disclosure of sensitive information that would be seriously
detrimental to us or (2) would occur at a time in which we are working on our
annual audited financial statements. If marketing reasons dictate, the
managing underwriter of any underwritten offering will have the right to limit
the number of shares of common stock that Verizon and its transferees or
assignees include in any registration statement. We will pay all expenses
incurred in connection with the filings described below, except for
underwriters' and brokers' discounts and commissions, which will be paid by
each of the selling stockholders.
Demand Registration Rights. At any time after six months following this
offering, Verizon and its transferees or assignees can request on sixteen
occasions that we register all or a portion of their shares of Class A common
stock on a registration statement so long as the total number of shares
requested to be registered is at least the greater of (1) the value of five
percent of the shares of Class A common stock issued and outstanding on the
date of this offering and (2) an aggregate value of $100,000,000. We are not
required to file more than one demand registration statement within 90 days of
the effectiveness of any registration statement, other than a shelf
registration statement as described below.
Piggyback Registration Rights. At any time after six months following this
offering, if we register any of our securities for public sale, either for our
own account or for the account of any holder of our securities, Verizon and
its transferees or assignees will have the right to include their shares of
common stock in such registration. This right, however, applies only to a
registration statement relating to an underwritten public offering for cash.
Shelf Registration Rights. At any time after six months following this
offering, in the event that Verizon or one of its affiliates issues any
securities that are convertible into or exchangeable for shares of Class A
common stock owned by Verizon, Verizon will have the right to request that we
file a registration statement relating to the conversion or exchange of the
securities issued by Verizon or its affiliates. However, we will not be
required to make such a filing unless the total number of shares requested to
be registered is at least the greater of (1) the value of five percent of the
shares of Class A common stock issued and outstanding on the date of this
offering and (2) an aggregate value of $100,000,000, in each case based on the
closing trading price of the Class A common stock on the date the demand to
file the shares is made.
Recapitalization Agreement
GTE will execute a recapitalization agreement in connection with its
receipt of the Class B common stock. Under this agreement, GTE will exchange
all of the shares of our common stock for such number of shares of Class B
common stock that will equal 9.5% of the total number of shares of our common
stock outstanding immediately after the completion of this offering. The
recapitalization agreement contains customary representations and warranties,
including with respect to the issuance of the Class B common stock. The
recapitalization agreement also includes provisions enabling Verizon to
purchase additional shares of Class B common stock under the circumstances
described in the section in "Description of Capital Stock" entitled "Right to
Purchase Additional Shares Upon Conversion." In addition, the recapitalization
agreement contains provisions requiring us to obtain the consent of Verizon
prior to taking the following actions:
. making any acquisition or series of related acquisitions with a purchase
price that exceeds 20% of our market capitalization at the time of such
acquisition. Market capitalization is determined by multiplying the
closing price of our Class A common stock on the date of determination by
the number of shares of common stock outstanding on that date, assuming
for purposes of this calculation that the Class B common stock has been
converted to the maximum extent permitted under our certificate of
incorporation;
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. making any acquisition with a purchase price in excess of $100 million or
entering into any joint venture which has a fair market value in excess
of $100 million immediately after formation, in each case that is not
closely related to our business;
. making any disposition or series of related dispositions for
consideration, including the assumption of indebtedness in excess of 20%
of our market capitalization at the time of such disposition or, if
earlier, of our entering into such disposition agreement;
. incurring indebtedness (including capital leases, guarantees of
indebtedness of others, letters of credit and indebtedness acquired in
connection with any acquisition, but excluding trade accounts payable)
(1) in any calendar year that exceeds $3.85 billion, net of any
indebtedness repaid during that same calendar year, or (2) at any time,
if immediately after the incurrence thereof, our indebtedness would
exceed $11.0 billion;
. entering into any agreement or arrangement that (1) binds or purports to
bind, or following conversion, would bind or purport to bind, Verizon or
any of its affiliates, or (2) contains provisions that trigger a default
or require a material payment when Verizon exercises its rights to
convert the Class B common stock;
. declaring extraordinary dividends or making other extraordinary
distributions to the holders of our capital stock;
. issuing any equity securities or securities convertible or exercisable
into equity securities except for:
(1) equity securities issued in connection with acquisitions, in an
aggregate amount not to exceed 30% of the shares of common stock
outstanding upon the completion of this offering, including shares
of common stock outstanding immediately after the exercise of the
underwriters' over-allotment option, if any;
(2) equity securities issued to fund operating needs, including capital
expenditures, in an aggregate amount not to exceed 5% of the shares
of common stock outstanding upon the completion of this offering,
including shares of common stock outstanding immediately after the
exercise of the underwriters' over-allotment option, if any;
(3) equity securities issued or granted to our employees, provided
that:
(a) the number of equity securities issued or granted to individuals
who were employees on April 6, 2000 does not exceed in the
aggregate 5% of the shares of common stock outstanding upon the
completion of this offering, including shares of common stock
outstanding immediately after the exercise of the underwriters'
over-allotment option, if any;
(b) the number of equity securities issued or granted to individuals
who first become our employees within nine months of April 6,
2000, other than individuals who become our employees as a result
of their former employer being acquired by us, does not exceed in
the aggregate 1.0% of the shares of common stock outstanding upon
the completion of this offering, including shares of common stock
outstanding immediately after the exercise of the underwriters'
over-allotment option, if any;
(c) the number of equity securities issued or granted to individuals
who become our employees beginning on or after January 6, 2001,
other than individuals who become our employees as a result of
their former employer being acquired by us, does not exceed in
the aggregate 3.0% of the shares of common stock outstanding upon
the completion of this offering, including shares of common stock
outstanding immediately after the exercise of the underwriters'
over-allotment option, if any;
(d) the number of equity securities issued to a trustee or other
fiduciary, or granted or reserved for issuance to our employees
described in the previous clauses (a), (b) and (c) in connection
with
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our 401(k) or any similar plan does not exceed 0.5% of the shares
outstanding upon completion of this offering, including shares of
common stock outstanding immediately after the exercise of the
underwriters over-allotment option, if any; and
(e) the number of shares issued or granted to individuals who become
our employees as a result of their former employer being acquired
by us, including equity securities issued, granted or reserved
for issuance to a trustee or other fiduciary or to our employees
described in clause (d) in connection with our 401(k) or any
similar plan, does not exceed 6.0% multiplied by the total of (i)
the number of shares of common stock outstanding upon the
completion of this offering plus (ii) the number of shares issued
in connection with acquisitions completed by us minus (iii) the
aggregate number of shares of common stock that may be issued
under clauses (a), (b), (c) and (d) above.
For the purpose of calculating the percentage of the shares of common stock
outstanding upon the completion of this offering, all shares of Class B common
stock shall be deemed to have been converted into shares of Class A common
stock to the maximum extent permitted under our certificate of incorporation.
If options expire or terminate after being granted under subsection (3) above,
those shares become available for any of the purposes stated in subsections (1)
through (3).
We will not be required to obtain the consent of Verizon to take the above
actions if at any time:
. Verizon and its affiliates do not have the right to vote more than 50% of
the then outstanding shares of Class B common stock; or
. Verizon and its affiliates do not own shares of common stock constituting
more than 10% of our then outstanding common stock; or
. Any third party and its affiliates own more than 50% of the then
outstanding shares of Class B common stock.
Verizon may assign these consent rights to a third party who may exercise
them so long as the third party directly or indirectly:
. owns and has the right to vote more than 50% of the then outstanding
shares of Class B common stock; and
. owns or has the right to acquire more than 50% of our then outstanding
common stock.
For purposes of calculating the ownership of our common stock in the two
preceding paragraphs, shares of Class B common stock that can never be
converted into more than their proportionate share of 10% of our total common
stock outstanding shall be considered to have been converted on that basis. All
other shares of Class B common stock shall be considered to have been converted
to the maximum extent permitted under our certificate of incorporation.
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SOLE STOCKHOLDER
Prior to this offering, all of the outstanding shares of our common stock
will be owned by GTE. The mailing address of GTE Corporation is 1255 Corporate
Drive, Irving, Texas 75038. Upon completion of this offering, Verizon will
beneficially hold all of the outstanding shares of our Class B common stock,
which will represent 9.5% of the voting power of our outstanding capital stock
at that time, before giving effect to any outstanding options to purchase
shares of our Class A common stock under our long-term incentive plans. Except
for Verizon, we are not aware of any person or group that will beneficially own
more than five percent of our Class A common stock or Class B common stock upon
completion of this offering. There will not be any shares of our Class C common
stock outstanding immediately after this offering.
None of our directors and executive officers beneficially owns any shares of
our common stock. We intend to grant to our officers and directors options to
purchase an aggregate of 6,075,000 shares of our Class A common stock with an
exercise price equal to the public offering price set forth on the cover page
of this prospectus. Assuming the exercise of these options, these officers and
directors would beneficially own 3% of our Class A common stock.
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DESCRIPTION OF CAPITAL STOCK
Immediately following the completion of this offering, our authorized
capital stock will consist of 1,600,000,000 shares of Class A common stock, par
value $0.01 per share, 21,000,000 shares of Class B common stock, par value
$0.01 per share, 800,000,000 shares of Class C common stock, par value $0.01
per share, and 50,000,000 shares of preferred stock, par value $0.01 per share.
Immediately following the completion of this offering, there will be
outstanding:
. 173,913,000 shares of Class A common stock, all of which will be owned
by the investors purchasing shares in this offering;
. options to purchase approximately 50,000,000 shares of Class A common
stock;
. 18,256,000 shares of Class B common stock, all of which will be owned by
Verizon;
. no shares of Class C common stock; and
. no shares of preferred stock.
In the event that the underwriters exercise any portion of the over-
allotment option, we will subdivide our shares of Class B common stock so that
Verizon will beneficially own 9.5% of the total number of shares of common
stock then outstanding, before giving effect to any issuance of shares of Class
A common stock upon the exercise of outstanding options of Genuity.
Common Stock
The shares of our Class A common stock, Class B common stock and Class C
common stock are identical in all respects except for voting rights, conversion
rights and as otherwise described below. The rights, preferences and privileges
of holders of our Class A common stock, Class B common stock and Class C common
stock are subject to the rights of the holders of shares of any other class of
common stock that we may authorize and issue and any series of preferred stock
that we may designate and issue in the future.
Voting Rights. Each share of Class A common stock and Class B common stock
entitles the holder to one vote on each matter submitted to a vote of our
stockholders. Each share of Class C common stock entitles the holder to five
votes on each matter. Except as required by applicable law or as discussed
below, the holders of the Class A common stock, Class B common stock and Class
C common stock vote together as a single class on all matters submitted to a
vote of our stockholders.
So long as 50% of the shares of Class B common stock outstanding immediately
following the completion of this offering, including additional shares of Class
B common stock issued to Verizon in connection with the exercise of the over-
allotment option, remain outstanding, no person or group of persons acting
together, as determined pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, will be permitted to vote any of the shares of Class A common
stock beneficially owned by that person or group of persons in excess of 20% of
the aggregate number of then outstanding shares of Class A common stock, except
as set forth below. To the extent any person or group of persons beneficially
owns more than 20% of the shares of Class A common stock, the vote of any
excess shares will be apportioned among the other holders of Class A common
stock in accordance with their respective percentage ownership. In order to
enforce this limitation, our certificate of incorporation permits us to require
stockholders or groups that have filed or, in the reasonable judgment of our
board of directors after consultation with legal counsel, were required by law
to have filed, a Schedule 13D or Schedule 13G, or any successor schedules or
forms, under the Securities Exchange Act, to certify to us in writing the
number of shares of Class A common stock beneficially owned by them as of the
applicable record date. This prohibition on voting excess shares of Class A
common stock does not apply to Verizon or its affiliates or to any person or
group of persons that acquired Class A common stock by converting Class B
common stock.
So long as any shares of Class B common stock remain outstanding, the
holders of Class B common stock, voting separately as a class, will have the
right to elect one member of our board of directors.
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The holders of Class B common stock are also entitled to vote with the holders
of the Class A common stock and Class C common stock in the election of the
other directors. You should refer to the section in "Management" entitled
"Composition of Board of Directors" for a more detailed description of our
board of directors.
In addition, the affirmative vote of the holders of a majority of the
outstanding shares of Class B common stock, voting separately as a class, is
required before we:
. amend our certificate of incorporation, or amend our bylaws in a way
that affects the rights of the holders of the Class B common stock;
. agree to enter into a merger, consolidation or sale, lease or other
disposition of all or substantially all of our assets;
. file or declare bankruptcy or liquidation;
. authorize additional shares of our capital stock;
. materially change the nature or scope of our business from the
description of the business and business plan in this prospectus; or
. take any action that would make it unlawful for a holder of Class B
common stock to exercise its conversion rights.
Except as described in the next paragraph, this class vote will not be
required if at any time:
. Verizon and its affiliates do not have the right to vote more than 50%
of the then outstanding shares of Class B common stock;
. Verizon and its affiliates do not own shares of common stock
constituting more than 10% of our then outstanding common stock; or
. Any third party and its affiliates own more than 50% of the then
outstanding shares of Class B common stock.
The class vote of the holders of Class B common stock will still be required
if:
. Verizon has transferred shares of Class B common stock to a third party
that directly or indirectly owns and has the right to vote more than 50%
of the then outstanding shares of Class B common stock; and
. the Class B common stock at the time constitutes more than 50% of our
then outstanding common stock.
For purposes of calculating the ownership of our common stock in the two
preceding paragraphs, shares of Class B common stock that can never be
converted into more than their proportionate share of 10% of our total common
stock outstanding shall be considered to have been converted on that basis. All
other shares of Class B common stock shall be considered to have been converted
to the maximum extent permitted under our certificate of incorporation.
We have also entered into an agreement that requires us to obtain the
consent of Verizon or its assignees prior to taking other actions. You should
refer to the section in "Related Party Transactions" entitled "Recapitalization
Agreement."
Dividends, Distributions and Stock Splits. Subject to preferences that may
apply to any outstanding series of preferred stock, the holders of each of our
three classes of common stock are entitled to receive dividends at the same
rate if, as and when dividends are declared by the board of directors out of
assets legally available therefor. In the case of dividends or distributions
payable in common stock, only shares of Class A common stock will be
distributed on Class A common stock, only shares of Class B common stock will
be distributed on Class B common stock and only shares of Class C common stock
will be distributed on Class C common stock. Except as described above, in no
event may any of the shares of Class A common stock, Class B common stock or
Class C common stock be subdivided or combined in any manner unless each other
class is subdivided or combined in the same proportion.
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Conversion of Class A Common Stock. The Class A common stock has no conver-
sion rights.
Conversion of Class B Common Stock. Immediately after the completion of this
offering, Verizon will own all of our outstanding shares of Class B common
stock. Although the ability of Verizon to convert its Class B common stock is
limited by the proposal to the FCC, these shares by their terms are convertible
at any time into either:
. shares of Class A common stock equal to 10% of our total common stock
immediately after the conversion; or
. 800 million shares of Class A common stock or, for Verizon or any of its
affiliates and at their election, Class C common stock, which represents
approximately 82%, or 80% if the underwriters exercise in full the over-
allotment option, of our shares of common stock outstanding immediately
following this offering.
Under the proposal to the FCC:
. if Verizon has not eliminated Section 271 restrictions applicable to its
operation of our business as to at least 50% of Bell Atlantic in-region
lines, the outstanding shares of our Class B common stock can only be
converted into shares of our Class A common stock that after the
conversion will represent 10% of our total common stock then
outstanding. If Verizon transfers the Class B common stock before
meeting this 50% threshold, the transferee's conversion rights would be
similarly limited;
. if Verizon has eliminated applicable Section 271 restrictions as to at
least 50% of Bell Atlantic in-region lines, it could transfer its shares
of Class B common stock to one or more third parties who would then be
able to convert them in the aggregate into 800 million shares of Class A
common stock;
. if Verizon has eliminated applicable Section 271 restrictions as to 100%
of Bell Atlantic in-region lines, Verizon or its affiliates could
convert the Class B common stock into 800 million shares of Class A
common stock or Class C common stock; and
. if Verizon has eliminated applicable Section 271 restrictions as to 95%
of Bell Atlantic in-region lines, Verizon may require us to reconfigure
our operations in one or more Bell Atlantic in-region states where
Verizon has not eliminated those restrictions in order to bring those
operations into compliance with Section 271 and therefore be able to
convert the Class B common stock into 800 million shares of Class A
common stock or Class C common stock. To require us to reconfigure our
operations, Verizon must give the FCC at least 90 days advance notice of
its intent to exercise its conversion rights and submit to the FCC a
plan for the reconfiguration of our operations in the relevant state or
states. The reconfiguration of our operations must not result in the
loss to us of more than 3% of our annual revenue and Verizon must
reimburse us for the cost of such reconfiguration.
If Verizon were to cause us to reconfigure our business in the manner
described in the preceding paragraph, it must also comply with the provisions
of the Purchase, Resale and Marketing Agreement, including providing us with
180 days prior written notice of the date on which it intends to convert its
Class B common stock and paying us an amount necessary to make us financially
whole as a result of these modifications to our business. You should refer to
the section in "Related Party Transactions" entitled "Purchase, Resale and
Marketing Agreement" for more information.
Notwithstanding the above provisions, if before Verizon has eliminated
applicable Section 271 restrictions as to at least 50% of Bell Atlantic in-
region lines, a court or governmental agency of competent jurisdiction rules
that Verizon's interest in us violates Section 271 of the Telecommunications
Act, then under the proposal to the FCC:
. Verizon can at that time convert its shares of our Class B common stock
into 800 million shares of our Class A common stock or Class C common
stock for the purpose of disposing of all such shares above 10%; or
. Verizon can sell some or all of its Class B common stock to a third
party who shall have the right to convert such shares into 800 million
shares of our Class A common stock or Class C common stock.
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Under the proposal to the FCC, if Verizon has not eliminated the applicable
Section 271 restrictions as to 100% of Bell Atlantic in-region lines on or
before , 2005, which date may be extended under conditions that we describe
below, Verizon's ability to convert the Class B common stock into 800 million
shares of Class A common stock or Class C common stock will expire. Verizon
will continue to retain its right to convert its shares into shares of Class A
common stock representing 10% of our total common stock then outstanding. If
Verizon has satisfied the applicable Section 271 restrictions as to 100% of
Bell Atlantic in-region lines on or before that date, its ability to convert
the Class B common stock does not expire. Class B common stock transferred by
Verizon to a third party will not be subject to this expiration limitation.
Under the proposal to the FCC, Verizon may file a petition to extend the
date by which Verizon must eliminate the applicable Section 271 restrictions,
and in the event of that filing, the date will be extended to , 2006 or
later at the discretion of the FCC, if by , 2005 Verizon has eliminated the
applicable Section 271 restrictions on:
(1) all but 10% of Bell Atlantic in-region lines; or
(2) all of Bell Atlantic in-region lines except for:
. lines in any one state, regardless of the number of Bell Atlantic in-
region lines accounted for by that state; and
. lines in additional states accounting for, in the aggregate, up to 5%
of Bell Atlantic in-region lines.
If on the original or extended date referred to above Verizon has entered
into an agreement to sell the Class B common stock to a third party, then
Verizon shall be given a reasonable period of time to allow for the completion
of the sale under an agreement and the purchaser's immediate conversion of the
Class B common stock thereafter.
Conversion of Class C Common Stock. The Class C common stock is convertible
into Class A common stock, in whole or in part, at any time and from time to
time at the option of the holder, on the basis of one share of Class A common
stock for each share of Class C common stock. Each share of Class C common
stock will automatically convert into one share of Class A common stock if at
any time the aggregate number of outstanding shares of Class C common stock,
together with any shares of Class C common stock issuable upon conversion of
Class B common stock, constitute less than 10% of our then outstanding
common stock.
Transfer of Class C Common Stock. If any party other than Verizon or its
affiliates converts shares of our Class B common stock, such party can only
receive shares of our Class A common stock. Verizon can receive shares of our
Class C common stock upon conversion of its Class B common stock, either after
eliminating applicable Section 271 restrictions as to 100% of Bell Atlantic in-
region lines or, in connection with a disposition of Verizon's shares of our
common stock, after eliminating applicable Section 271 restrictions as to at
least 50% of Bell Atlantic in-region lines. In either event, Verizon can
transfer shares of our Class C common stock to one or more persons, provided
that any shares of our Class C common stock so transferred will automatically
convert into shares of our Class A common stock on the earlier to occur of
(1) any subsequent transfer of ownership of such shares or (2) the first
anniversary of the transfer of such shares by Verizon. As a result of the
foregoing, one or more third parties could own shares of our Class C common
stock.
Limitation on Receipt of Sale Proceeds. Under the proposal to the FCC, if
Verizon sells its shares of our Class B common stock, or the shares of our
common stock received by it on conversion of its shares of our Class B common
stock, after eliminating Section 271 restrictions applicable to its operation
of our business as to at least 50% but less than 95% of Bell Atlantic in-region
lines, Verizon will be required to pay to the U.S. Treasury the portion of its
after tax proceeds that exceeds the proceeds it would have received for the
shares it is not permitted to hold from a comparable investment in the Standard
& Poors 500 Index. This payment may be reduced in the discretion of the FCC.
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Right to Purchase Additional Shares Upon Conversion. If at any time during
the one year following the conversion by Verizon or its affiliates of any
shares of Class B common stock Verizon and its affiliates control shares of
Class A common stock and Class C common stock that together equal or exceed 70%
of the total number of shares of common stock then outstanding, Verizon will
have the right to acquire from us a number of shares of Class A common stock so
that, immediately after the acquisition, Verizon and its affiliates' combined
ownership of Class A and Class C common stock will be equal to 80% of the total
number of shares of common stock then outstanding. This right to purchase
additional shares may be exercised only one time. The price payable per share
in this purchase would consist of cash or other property with a fair market
value equal to the average of the closing prices for the Class A common stock
for the 30 trading days immediately preceding the date of the purchase. In the
event Verizon elects to pay the purchase price in property, the fair market
value of such property will be established by an appraisal conducted by a
nationally recognized appraiser chosen by our independent directors. Verizon
shall not be permitted to pay the purchase price in property if our independent
directors determine that:
. our ownership of such property will violate the law including without
limitation any federal or state regulations applicable to us; or
. the property is not reasonably useful to us in light of our then
existing business plan.
Liquidation. In the event of any dissolution, liquidation, or winding up of
our affairs, whether voluntary or involuntary, the holders of the Class A
common stock, the Class B common stock and the Class C common stock will be
entitled to share ratably, in proportion to the number of shares they represent
of our outstanding common stock, in the assets legally available for
distribution to stockholders, in each case after payment of all of our
liabilities and subject to preferences that may apply to any series of
preferred stock then outstanding. We may not dissolve, liquidate or wind up our
affairs without obtaining the consent of the holders of the outstanding shares
of our Class B common stock.
Mergers and Other Business Combinations. If we enter into a merger,
consolidation or other similar transaction in which shares of our common stock
are exchanged for or converted into securities, cash or any other property, the
holders of each class of our common stock will be entitled to receive an equal
per share amount of the securities, cash, or other property, as the case may
be, for which or into which each share of any other class of common stock is
exchanged or converted; provided that in any such merger, consolidation or
other similar transaction, the holders of the shares of Class B common stock
shall be entitled to receive, at their election, either (1) the merger
consideration such holders would have received had they converted their shares
of Class B common stock immediately prior to the consummation of such
transaction or (2) a new security that is convertible into the merger
consideration and has substantially identical voting and other rights as the
Class B common stock. In any transaction in which shares of capital stock are
distributed, the shares that are exchanged for or converted into the capital
stock may differ as to voting rights and conversion rights only to the extent
that the voting rights and conversion rights of Class A common stock, Class B
common stock and Class C common stock differ at that time. As described above,
the holders of the Class B common stock, voting separately as a class, must
consent to any merger, consolidation or other similar transaction.
Other Provisions. The holders of our Class A common stock, Class B common
stock and Class C common stock are not entitled to preemptive rights. There are
no redemption provisions or sinking fund provisions that apply to the Class A
common stock, the Class B common stock or the Class C common stock.
Preferred Stock
Our board of directors has the authority, without further action by the
holders of our Class A common stock or Class C common stock, to issue from time
to time, shares of our preferred stock in one or more series. The issuance of
shares of preferred stock is, however, subject to the approval of holders of
the Class B common stock. Once the approval of the holders of the Class B
common stock has been obtained, our board of directors may fix the number of
shares, designations, preferences, powers and other special rights of the
preferred stock. The preferences, powers, rights and restrictions of different
series of preferred stock may differ.
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The issuance of preferred stock could decrease the amount of earnings and
assets available for distribution to holders of common stock or affect
adversely the rights and powers, including voting rights, of the holders of
common stock. The issuance of preferred stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, may also
have the effect of discouraging, delaying or preventing a change in control of
our company, regardless of whether the transaction may be beneficial to
stockholders. After the closing of this offering, there will be no shares of
preferred stock outstanding and we have no current plans to issue any shares of
preferred stock.
Anti-takeover Effects of Delaware Law and our Certificate of Incorporation and
Bylaws
In addition to the special approval and conversion rights of the Class B
common stock and the provision referred to above relating to the voting of
beneficial ownership above 20% of our outstanding shares of Class A common
stock, there are provisions of the Delaware General Corporation Law and other
provisions of our certificate of incorporation and bylaws that may be deemed to
have an anti-takeover effect and may discourage, delay or prevent a tender
offer or takeover attempt that a stockholder might consider in its best
interest, including those attempts that might result in a premium over the
market price for the shares held by our stockholders. Under our bylaws, the
provisions summarized below regarding our classified board, action by written
consent and stockholder meetings can be amended by the vote of either:
. both 80% of the voting power of all of our voting stock and 50% of the
voting power of our Class B common stock; or
. 80% of the voting power of the Class B common stock, provided that such
vote occurs in connection with the delivery of a conversion notice
pursuant to which the Class B common stock is converted into greater
than 10% of our common stock.
Classified Board of Directors. Other than the director elected by the
holders of our Class B common stock, our board of directors will be divided at
our initial meeting of stockholders into three classes of directors, as nearly
equal in size as possible, serving staggered three-year terms. Upon expiration
of the term of a class of directors, the directors in that class will be
elected for three-year terms at the annual meeting of stockholders in the year
in which the term for that class of directors expires. In addition, our bylaws
provide that directors, other than the director elected by the holders of the
Class B common stock, may be removed only for cause by the affirmative vote of
the holders of a majority of the shares of capital stock entitled to vote in
the election of directors. Under our bylaws, a vacancy on the board of
directors, other than a vacancy with respect to the director elected by the
holders of the Class B common stock but including a vacancy resulting from an
enlargement of the board of directors, may only be filled by vote of a majority
of the directors then in office. The classification of the board of directors
and the limitations on removing directors and filling vacancies could have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, control of us.
Stockholder Action; Special Meeting of Stockholders. Our certificate of
incorporation eliminates the ability of our Class A common stock to act by
written consent. Our bylaws further provide that special meetings of our
stockholders may be called only by the chairman of the board of directors or a
majority of the board of directors. These provisions could have the effect of
delaying until the next annual meeting of stockholders those actions that are
favored by the holders of a majority of our outstanding voting securities.
These provisions may also discourage another person from making a tender offer
for our common stock, because that person, even if it acquired a majority of
our outstanding voting securities, would be able to take action as a
stockholder, such as electing new directors or approving a merger, only at a
duly called meeting of stockholders and not by written consent.
Advance Notice Requirements for Stockholder Proposals and Directors
Nominations. Our bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for
election as directors at an annual meeting of stockholders, must provide timely
notice thereof in writing.
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To be timely, a stockholder's notice must be received at our principal
executive offices not less than 90 days nor more than 120 days prior to the
anniversary date of the immediately preceding annual meeting of stockholders.
In the event that the annual meeting is called for a date that is not within 30
days before or after the anniversary date, in order to be timely, notice from
the stockholder must be received no later than the tenth day following the date
on which notice of the annual meeting was mailed to stockholders or made
public, whichever occurred earlier. Our bylaws also specify requirements as to
the form and content of a stockholder's notice. These provisions may preclude
stockholders from bringing matters before an annual meeting of stockholders or
from making nominations for directors at an annual meeting of stockholders.
Authorized but Unissued Shares. The authorized but unissued shares of common
stock and preferred stock are available for future issuance without approval of
the holders of Class A or Class C common stock. As described above, the vote of
the holders of the Class B common stock, voting separately as a class, is
required to issue equity securities in excess of specified limits. These
additional shares may be utilized for a variety of corporate purposes,
including future public offerings to raise additional capital, corporate
acquisitions and employee benefit plans. The existence of authorized but
unissued shares of common stock and preferred stock could render more difficult
or discourage an attempt to obtain control of us by means of a proxy contest,
tender offer, merger or otherwise.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is EquiServe.
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IMPORTANT UNITED STATES TAX CONSEQUENCES
TO NON-U.S. HOLDERS OF CLASS A COMMON STOCK
This section is a general discussion of important United States federal
income and estate tax consequences of the ownership and disposition of our
Class A common stock by a non-U.S. holder. You are a non-U.S. holder if you
are, for United States federal income tax purposes:
. a non-resident alien individual;
. a foreign corporation;
. a foreign partnership; or
. an estate or trust that in either case is not subject to United States
federal income tax on a net income basis on income or gain from Class A
common stock.
We do not, however, discuss all aspects of United States federal taxation
that may be important to a particular non-U.S. holder in light of specific
facts and circumstances relevant to that non-U.S. holder. For example this
section does not describe special tax rules that could apply to a non-U.S.
holder who was previously a U.S. resident or citizen. This section also does
not address the treatment of a non-U.S. holder under the laws of any state,
local or foreign taxing jurisdiction. This section is based on the tax laws of
the United States, including the Internal Revenue Code of 1986, as amended,
existing and proposed regulations, and administrative and judicial
interpretations, all as currently in effect. These laws are subject to change,
possibly on a retroactive basis.
You should consult a tax advisor regarding the United States federal tax
consequences of acquiring, holding and disposing of Class A common stock in
your particular circumstances, as well as any tax consequences that may arise
under the laws of any state, local or foreign taxing jurisdiction
Dividends
Except as described below, if you are a non-U.S. holder of Class A common
stock, dividends paid to you are subject to withholding of United States
federal income tax at a 30% rate or at a lower rate if you are eligible for the
benefits of an income tax treaty that provides for a lower rate. Under
currently effective United States Treasury regulations, for purposes of
determining if dividends are subject to the 30% withholding tax, dividends paid
to an address in a foreign country are presumed to be paid to a resident of
that country, unless the person making the payment has knowledge to the
contrary. Under current interpretations of United States Treasury regulations,
this presumption also applies for purposes of determining whether a lower
withholding rate applies under an income tax treaty.
Under United States Treasury regulations that will generally apply to
dividends paid after December 31, 2000, you must satisfy certification
requirements in order to claim the benefit of a lower treaty rate.
Additionally, if you are a partner in a foreign partnership, you, in addition
to the foreign partnership, must satisfy the certification requirements and the
partnership must provide information as well. The Internal Revenue Service will
apply a look-through rule in the case of tiered partnerships.
If you are eligible for a reduced rate of United States withholding tax
under a tax treaty, you may obtain a refund of any amounts withheld in excess
of that rate by filing a refund claim with the United States Internal Revenue
Service.
If the dividends are "effectively connected" with your conduct of a trade or
business within the United States, and, if required by a tax treaty, the
dividends are attributable to a permanent establishment that you maintain in
the United States, then the dividends generally are not subject to withholding
tax. Instead, "effectively connected" dividends are taxed at rates applicable
to United States citizens, resident aliens and domestic United States
corporations.
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If you are a corporate non-U.S. holder, "effectively connected" dividends
that you receive may be subject to an additional "branch profits tax" at a 30%
rate or at a lower rate if you are eligible for the benefits of an income tax
treaty that provides for a lower rate.
Gain on Disposition of Class A Common Stock
If you are a non-U.S. holder, you generally will not be subject to United
States federal income tax on gain that you recognize on a disposition of Class
A common stock unless:
. the gain is "effectively connected" with your conduct of a trade or
business in the United States, and the gain is attributable to a
permanent establishment that you maintain in the United States, if that
is required by an applicable income tax treaty as a condition for
subjecting you to United States taxation on a net income basis;
. you are an individual, you hold the Class A common stock as a capital
asset, you are present in the United States for 183 or more days in the
taxable year of the sale and other specific requirements are met; or
. we are or have been a United States real property holding corporation for
federal income tax purposes and you held, directly or indirectly, at any
time during the five-year period ending on the date of disposition, more
than 5% of the Class A common stock and you are not eligible for any
treaty exemption.
If you are a corporate non-U.S. holder, "effectively connected" gains that
you recognize may also, in some circumstances, be subject to an additional
"branch profits tax" at a 30% rate or at a lower rate if you are eligible for
the benefits of an income tax treaty that provides for a lower rate.
We have not been, are not and do not anticipate becoming a United States
real property holding corporation for United States federal income tax
purposes.
Federal Estate Taxes
Class A common stock held by an individual who is a non-U.S. holder at the
time of death will be included in the holder's gross estate for United States
federal estate tax purposes, unless an applicable estate tax treaty provides
otherwise.
Information Reporting and Backup Withholding
Under currently applicable law, if you are a non-U.S. holder, dividends paid
to you at an address outside the United States generally will not be subject to
United States information reporting requirements or backup withholding tax.
Beginning with payments made after December 31, 2000, a non-U.S. holder will be
entitled to such exemption only if the non-U.S. holder provides a Form W-8BEN
or otherwise meets documentary evidence requirements for establishing that it
is a non-U.S. holder, or otherwise establishes an exemption.
The gross proceeds from the disposition of Class A common stock may be
subject to information reporting and backup withholding tax at a rate of 31%.
If you sell your Class A common stock outside of the United States through a
non-U.S. office of a non-U.S. broker, and the sales proceeds are paid to you
outside the United States, then United States backup withholding and
information reporting requirements generally will not apply to that payment.
However, United States information reporting, but not backup withholding, will
apply to a payment of sales proceeds, even if that payment is made outside the
United States, if you sell your Class A common stock through a non-U.S. office
of a broker that:
. is a United States person;
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. derives 50% or more of its gross income in specific periods from the
conduct of a trade or business in the United States;
. is a "controlled foreign corporation" as to the United States; or
. with respect to payments made after December 31, 2000, is a foreign
partnership, if at any time during its tax year:
- one or more of its partners are U.S. persons, as defined in United
States Treasury regulations, who in the aggregate hold more than 50%
of the income or capital interests in the partnership;
- at any time during its tax year, the foreign partnership is engaged in
a United States trade or business,
unless the broker has documentary evidence in its files that you are a non-U.S.
person or you otherwise establish an exemption.
If you receive payments of the proceeds of a sale of Class A common stock to
or through a United States office of a broker, the payment is subject to both
United States backup withholding and information reporting unless you certify,
under penalties of perjury, that you are a non-U.S. person or you otherwise
establish an exemption.
You generally may obtain a refund of any amounts withheld under the backup
withholding rules that exceed your income tax liability by filing a refund
claim with the United States Internal Revenue Service.
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SHARES ELIGIBLE FOR FUTURE SALE
The sale of a substantial amount of our Class A common stock, including
shares issued upon exercise of outstanding options to purchase Class A common
stock, in the public market after this offering could adversely affect the
prevailing market price of our Class A common stock. Furthermore, because no
shares of Class A common stock will be available for sale shortly after this
offering due to the contractual restrictions on resale described in the section
entitled "Underwriting" and the legal restrictions on resale described below,
the sale of a substantial amount of common stock in the public market after
these restrictions lapse could adversely affect the prevailing market price of
our Class A common stock and our ability to raise equity capital in the future.
Upon completion of this offering, we will have outstanding an aggregate of
173,913,000 shares of our Class A common stock and 18,256,000 shares of Class B
common stock. The Class B common stock is convertible into 800 million shares
of Class A common stock or Class C common stock as described elsewhere in this
prospectus. The Class C common stock is convertible into shares of Class A
common stock. All of the 173,913,000 shares of our Class A common stock sold in
this offering will be freely tradable without restriction or further
registration under the Securities Act, unless the shares are purchased by
"affiliates" as that term is defined in Rule 144 under the Securities Act. Any
shares purchased by an affiliate may not be resold except pursuant to an
effective registration statement or an applicable exemption from registration,
including an exemption under Rule 144 of the Securities Act. The shares of
Class A common stock issuable upon conversion of the Class A common stock or
Class C common stock will be "restricted securities" as that term is defined in
Rule 144 under the Securities Act. These restricted securities may be sold in
the public market only if they are registered or if they qualify for an
exemption from registration under Rule 144 or Rule 701 under the Securities
Act. All of the shares of Class B common stock are subject to lock-up
agreements as described more fully in the section entitled "Underwriting".
Stock Options
Immediately after the completion of this offering, there will be options to
purchase approximately 50 million shares of our Class A common stock
outstanding under our long-term incentive plans. Shortly after the completion
date of this offering, we expect to file a registration statement under the
Securities Act covering the 90 million shares of Class A common stock reserved
for issuance under our long-term incentive plans. The shares of our Class A
common stock registered under this registration statement would be immediately
available for sale in the open market, subject to vesting restrictions for
these options and the lock-up agreements.
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UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus, the underwriters named below, for
whom Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc. are acting
as representatives, have agreed to purchase, and we have agreed to sell to
them, the number of shares indicated below:
<TABLE>
<CAPTION>
Number of
Underwriters Shares
------------ -----------
<S> <C>
Morgan Stanley & Co. Incorporated................................
Salomon Smith Barney Inc. .......................................
-----------
Total........................................................ 173,913,000
===========
</TABLE>
The underwriters are offering the shares of Class A common stock subject to
their acceptance of the shares from us and subject to prior sale. The
underwriting agreement provides that the obligations of the underwriters to pay
for and accept delivery of the shares of Class A common stock offered by this
prospectus are subject to various conditions. The underwriters must take and
pay for all of the shares of Class A common stock offered by this prospectus if
any of these shares are taken. However, the underwriters are not required to
take or pay for the shares covered by the underwriters' over-allotment option
described below.
The underwriters initially propose to offer part of the shares of Class A
common stock directly to the public at the public offering price listed on the
cover page of this prospectus and part to dealers at a price that represents a
concession not in excess of $ a share under the public offering price. Any
underwriter may allow, and dealers may reallow, a concession not in excess of
$ a share to other underwriters or to dealers. After the initial offering of
the shares of Class A common stock, the offering price and other selling terms
may from time to time be varied by the representatives of the underwriters.
We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus, to purchase up to an aggregate of 26,087,000
additional shares of Class A common stock at the public offering price listed
on the cover page of this prospectus, less underwriting discounts and
commissions. The underwriters may exercise this option solely for the purpose
of covering overallotments, if any, made in connection with the offering of the
shares of Class A common stock offered by this prospectus. To the extent the
option is exercised, each underwriter will become obligated, subject to
conditions, to purchase about the same percentage of the additional shares of
Class A common stock as the number listed next to the underwriter's name in the
preceding table bears to the total number of shares of Class A common stock
listed next to the names of all underwriters in the preceding table. If the
underwriters exercise the option in full, the total price to the public would
be $ , the total underwriters' discounts and commissions would be $ and
total proceeds to us would be $ .
The underwriters have informed us that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
Class A common stock offered by them.
We have applied to have our Class A common stock listed on the Nasdaq
National Market under the symbol "GENU".
Each of Genuity, the directors and executive officers of Genuity, the
persons purchasing shares of our Class A common stock in the directed share
program and GTE has agreed that, without the prior written consent of Morgan
Stanley & Co. Incorporated and Salomon Smith Barney Inc. on behalf of the
underwriters, it will not, during the period ending 180 days after the date of
this prospectus:
. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of
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directly or indirectly, any shares of Class A common stock or any
securities convertible into or exercisable or exchangeable for Class A
common stock; or
. enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
Class A common stock;
whether any transaction described above is to be settled by delivery of Class A
common stock or such other securities, in cash or otherwise. The restrictions
described in this paragraph do not apply to:
. the sale of shares to the underwriters;
. our issuance of shares of Class A common stock upon the exercise of an
option or a warrant or the conversion of a security outstanding on the
date of this prospectus of which the underwriters have been advised in
writing; or
. transactions by any person other than us relating to shares of Class A
common stock or other securities acquired in open market transactions
after the completion of the offering of the shares.
The representatives of the underwriters may also waive the restrictions
described above in their discretion.
In order to facilitate the offering of the Class A common stock, the
underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Class A common stock. Specifically, the underwriters
may over-allot in connection with the offering, creating a short position in
the Class A common stock for their own account. In addition, to cover over-
allotments or to stabilize the price of the Class A common stock, the
underwriters may bid for, and purchase, shares of Class A common stock in the
open market. Finally, the underwriting syndicate may reclaim selling
concessions allowed to an underwriter or a dealer for distributing the common
stock in the offering, if the syndicate repurchases previously distributed
common stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the common stock above independent market
levels. The underwriters are not required to engage in these activities, and
may end any of these activities at any time.
We and the underwriters have agreed to indemnify each other against
liabilities, including liabilities under the Securities Act.
Directed Share Program
At our request, the underwriters have reserved for sale, at the initial
offering price, up to 8,695,650 shares of our Class A common stock offered by
this prospectus. The number of shares of Class A common stock available for
sale to the general public will be reduced to the extent such persons purchase
such reserved shares. Any reserved shares that are not so purchased will be
offered by the underwriters to the general public on the same basis as the
other shares offered hereby.
Pricing of the Offering
Prior to this offering, there has been no public market for the Class A
common stock. The initial public offering price will be determined by
negotiations between us and the representatives of the underwriters. The
factors to be considered in determining the initial public offering price will
include the future prospects of our company and its industry in general, sales,
earnings and other financial operating information of our company in recent
periods, and the price-earnings ratios, price-sales ratios, market prices of
securities and some financial and operating information of companies engaged in
activities similar to those of our company. The estimated initial public
offering price range indicated on the cover page of this preliminary prospectus
is subject to change as a result of market conditions and other factors.
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VALIDITY OF CLASS A COMMON STOCK
The validity of the Class A common stock offered by this prospectus will be
passed upon by Ropes & Gray, Boston, Massachusetts, for Genuity, and by
Sullivan & Cromwell, New York, New York, for the underwriters.
EXPERTS
The financial statements and schedule included in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a Registration
Statement on Form S-1, including exhibits and schedules, under the Securities
Act with respect to the Class A common stock to be sold in this offering. This
prospectus, which constitutes a part of the registration statement, does not
contain all of the information set forth in the registration statement or the
exhibits and schedules that are part of the registration statement. The
statements contained in this prospectus as to the contents of any contract or
other document filed as an exhibit to the registration statement are not
necessarily complete. If a contract or document has been filed as an exhibit to
the registration statement, we refer you to the copy of the contract or
document that has been filed. You may read and copy all or any portion of the
registration statement or any reports, statements or other information in the
files at the following public reference facilities of the Securities and
Exchange Commission:
<TABLE>
<S> <C> <C>
Washington, D.C. New York, New York Chicago, Illinois
Room 1024, Judiciary Plaza Seven World Trade Center 500 West Madison Street
450 Fifth Street, N.W. Suite 1300 Suite 1400
Washington, D.C., 20549 New York, New York 10048 Chicago, Illinois 60661
</TABLE>
You can request copies of these documents upon payment of a duplicating fee
by writing to the Commission. You may call the Commission at 1-800-SEC-0330 for
further information on the operation of its public reference rooms. Our
filings, including the registration statement, will also be available to you on
the Internet web site maintained by the Commission at http://www.sec.gov.
We intend to furnish our stockholders with annual reports containing
financial statements audited by our independent auditors.
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GENUITY INC.
INDEX TO COMBINED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants................................. F-2
Combined Statements of Operations for the six months ended June 30, 1997
related to the Predecessor, for the years ended December 31, 1997, 1998
and 1999, and the three months ended March 31, 1999 and 2000 (unaudited)
and Pro Forma As Adjusted March 31, 2000 (unaudited) related to
Genuity................................................................. F-3
Combined Balance Sheets as of December 31, 1998 and 1999, as of March 31,
2000 (unaudited) and Pro Forma As Adjusted March 31, 2000 (unaudited)... F-4
Combined Statements of Cash Flows for the six months ended June 30, 1997
related to the Predecessor and for the years ended December 31, 1997,
1998 and 1999, and the three months ended March 31, 1999 and 2000
(unaudited) related to Genuity.......................................... F-5
Combined Statements of Changes in Stockholder's Equity for the six months
ended June 30, 1997 related to the Predecessor, for the years ended
December 31, 1997, 1998 and 1999, and the three months ended March 31,
2000 (unaudited) and Pro Forma As Adjusted March 31, 2000 (unaudited)
related to Genuity...................................................... F-6
Combined Statements of Comprehensive Loss for the six months ended June
30, 1997 related to the Predecessor, for the years ended December 31,
1997, 1998 and 1999, and the three months ended March 31, 1999 and 2000
(unaudited) related to Genuity.......................................... F-7
Notes to Combined Financial Statements................................... F-8
</TABLE>
F-1
<PAGE>
After the recapitalization, issuance of Class B common stock and finalization
of agreements discussed in Notes 6, 13 and 14 to Genuity Inc.'s combined
financial statements are effected, we expect to be in a position to render the
following audit report.
ARTHUR ANDERSEN LLP
May 20, 2000
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholder of Genuity Inc.:
We have audited the accompanying combined balance sheets of Genuity Inc.
(comprised of certain operations of Genuity Inc. and wholly-owned by GTE
Corporation (GTE)) (the Company) as of December 31, 1998 and 1999, and the
related combined statements of operations, changes in stockholder's equity,
cash flows and comprehensive loss for each of the three years in the period
ended December 31, 1999. We have also audited the statements of operations,
changes in shareholder's equity, cash flows and comprehensive loss of the
Company's predecessor for the six months ended June 30, 1997, the period prior
to the acquisition by the Company. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 1998 and 1999, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1999 and the results
of operations and cash flows of the Predecessor for the six months ended June
30, 1997 in conformity with accounting principles generally accepted in the
United States.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.
Boston, Massachusetts
, 2000
F-2
<PAGE>
GENUITY INC.
COMBINED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Predecessor Genuity
------------- -----------------------------------------------------
Three Months
Six Months Year Ended December 31, Ended March 31,
Ended ------------------------------- --------------------
June 30, 1997 1997 1998 1999 1999 2000
------------- --------- --------- --------- --------- ---------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Access................ $ 94,126 $ 128,838 $ 350,777 $ 555,603 $ 128,038 $ 183,285
Hosting............... 9,601 9,690 33,469 48,811 10,028 21,692
Transport............. -- 41,920 46,876 64,483 13,535 23,625
Other................. 2,591 3,035 14,880 37,569 5,682 19,250
-------- --------- --------- --------- --------- ---------
Total revenues...... 106,318 183,483 446,002 706,466 157,283 247,852
Operating Expenses
Cost of goods sold.... 92,670 166,040 492,794 767,498 160,540 283,928
Selling, general and
administrative....... 38,801 142,962 312,916 396,522 93,123 108,336
Depreciation and
amortization......... 10,536 49,444 104,444 187,628 41,092 53,786
-------- --------- --------- --------- --------- ---------
Total operating
expenses........... 142,007 358,446 910,154 1,351,648 294,755 446,050
-------- --------- --------- --------- --------- ---------
Operating Loss.......... (35,689) (174,963) (464,152) (645,182) (137,472) (198,198)
Other Income (Expense)
Interest expense,
net.................. (478) (1,346) (20) (183) (434) (2,973)
Other, net............ (1,496) 1,814 (2,924) (32) (341) (8,067)
-------- --------- --------- --------- --------- ---------
Loss Before Income
Taxes.................. (37,663) (174,495) (467,096) (645,397) (138,247) (209,238)
Income Taxes............ -- 433 1,463 1,649 333 588
-------- --------- --------- --------- --------- ---------
Net Loss................ $(37,663) $(174,928) $(468,559) $(647,046) $(138,580) $(209,826)
======== ========= ========= ========= ========= =========
Basic and Diluted Loss
Per Common Share....... $ -- $ (9.58) $ (25.67) $ (35.44) $ (7.59) $ (11.49)
======== ========= ========= ========= ========= =========
Basic and Diluted
Weighted-Average Common
Shares Outstanding..... -- 18,256 18,256 18,256 18,256 18,256
======== ========= ========= ========= ========= =========
Pro Forma As Adjusted
Basic and Diluted Loss
Per Common Share (Note
15) (unaudited)........ $ -- $ -- $ -- $ (3.37) $ -- $ (1.09)
======== ========= ========= ========= ========= =========
Pro Forma As Adjusted
Basic and Diluted
Weighted-Average Common
Shares Outstanding
(unaudited)............ -- -- -- 192,169 -- 192,169
======== ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-3
<PAGE>
GENUITY INC.
COMBINED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
March 31, 2000
December 31, -----------------------
----------------------- (unaudited)
Pro Forma
As
1998 1999 Actual Adjusted
---------- ----------- ----------- ----------
(Note 15)
Assets
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents.. $ 13,883 $ 6,044 $ 17,118 $2,400,763
Receivables, less
allowances of $3,651,
$5,550 and $4,476
(unaudited)............... 148,355 193,978 185,107 185,107
Receivables--affiliates.... 18,077 40,462 29,497 29,497
Note receivable--GTE....... 18,239 -- 1,836 --
Other current assets....... 19,099 13,627 31,461 31,461
---------- ----------- ----------- ----------
Total current assets..... 217,653 254,111 265,019 2,646,828
Property, Plant and
Equipment, Net.............. 908,980 1,520,934 1,629,391 1,629,391
Goodwill and Other
Intangibles, Net............ 555,612 537,989 524,536 524,536
Other Assets................. 3,724 30,098 42,908 42,908
---------- ----------- ----------- ----------
Total assets............. $1,685,969 $ 2,343,132 $2,461,854 $4,843,663
========== =========== =========== ==========
Liabilities and Stockholder's
Equity
Current Liabilities:
Short-term obligations,
including current
maturities................ $ 20,499 $ 25,921 $ 74,220 $ 74,220
Note payable--GTE.......... -- 136,484 -- --
Accounts payable........... 73,711 142,752 135,705 135,705
Accounts payable--
affiliates................ 13,440 29,647 25,287 25,287
Accrued compensation and
related liabilities....... 15,763 49,637 64,553 20,553
Accrued circuits........... -- 51,775 74,843 74,843
Accrued liabilities........ 41,008 78,937 52,555 52,555
Advanced billings.......... 10,172 26,320 18,340 18,340
---------- ----------- ----------- ----------
Total current
liabilities............. 174,593 541,473 445,503 401,503
Long-Term Obligations........ 126,855 112,717 57,563 57,563
Employee Benefit Plan
Obligations and Deferred
Compensation................ 46,388 20,466 12,604 10,604
Other Liabilities............ 3,406 370 417 417
---------- ----------- ----------- ----------
Total long-term
liabilities............. 176,649 133,553 70,584 68,584
---------- ----------- ----------- ----------
Stockholder's Equity:
Class A common stock--$0.01
par value; authorized
1,600,000,000 shares;
173,913,000 shares issued
and outstanding, pro forma
as adjusted............... -- -- -- 1,739
Class B common stock--$0.01
par value; 21,000,000
shares authorized;
18,256,000 shares
authorized, issued
and outstanding........... 183 183 183 183
Class C common stock--$0.01
par value; 800,000,000
shares authorized;
no shares issued
and outstanding........... -- -- -- --
Additional paid-in
capital................... 1,990,485 2,972,142 3,460,604 5,886,674
Other comprehensive
income.................... 3,928 2,696 1,721 1,721
Accumulated deficit........ (659,869) (1,306,915) (1,516,741) (1,516,741)
---------- ----------- ----------- ----------
Total stockholder's
equity.................. 1,334,727 $ 1,668,106 1,945,767 4,373,576
---------- ----------- ----------- ----------
Total liabilities and
stockholder's equity.... $1,685,969 $ 2,343,132 $ 2,461,854 $4,843,663
========== =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-4
<PAGE>
GENUITY INC.
COMBINED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Predecessor Genuity
----------- ---------------------------------
Three Months
Six Months Year Ended December 31, Ended March 31,
Ended June --------------------------------- ----------------------
30, 1997 1997 1998 1999 1999 2000
----------- --------- ---------- ---------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss........................................... $(37,663) $(174,928) $ (468,559) $ (647,046) $ (138,580) $ (209,826)
Adjustments to reconcile net loss to net cash
provided by (used in) operations:
Depreciation and amortization..................... 10,536 49,444 104,444 187,628 41,094 53,786
Changes in current assets and current liabilities:
Receivables--net................................. (15,602) (19,934) (75,883) (68,008) (24,903) 19,836
Other current assets............................. 726 (9,341) (6,730) 5,472 (6,142) (17,834)
Other current liabilities........................ 46,265 96,667 (92,914) 170,338 5,596 40,017
Other, net........................................ (1,766) (32,835) 26,714 (52,226) (10,544) (5,374)
-------- --------- ---------- ---------- ---------- ----------
Net cash provided by (used in) operating
activities......................................... 2,496 (90,927) (512,928) (403,842) (133,479) (119,395)
-------- --------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Capital expenditures.............................. (2,830) (255,903) (505,303) (666,398) (132,733) (210,895)
Purchase of businesses, net of cash acquired...... -- (517,788) -- -- -- --
Capitalized software.............................. -- -- -- (34,580) -- (1,408)
-------- --------- ---------- ---------- ---------- ----------
Net cash used in investing activities............... (2,830) (773,691) (505,303) (700,978) (132,733) (212,303)
-------- --------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Repayment of long-term debt....................... (34,012) (834) (29,547) (37,512) (8,742) (55,154)
Change in short-term obligations.................. 10,249 346 9,904 5,422 3,068 48,299
Change in note payable/receivable--GTE............ -- 257,178 (264,860) 154,723 (20,480) (138,320)
Issuance of Class B common stock.................. -- 183 -- -- -- --
Contributions from GTE............................ -- 610,505 1,313,554 974,348 279,024 487,947
-------- --------- ---------- ---------- ---------- ----------
Net cash provided by (used in) financing
activities......................................... (23,763) 867,378 1,029,051 1,096,981 252,870 342,772
-------- --------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and cash
equivalents........................................ (24,097) 2,760 10,820 (7,839) (13,342) 11,074
Cash and cash equivalents, beginning of period...... 102,870 303 3,063 13,883 13,883 6,044
-------- --------- ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period............ $ 78,773 $ 3,063 $ 13,883 $ 6,044 $ 541 $ 17,118
======== ========= ========== ========== ========== ==========
Supplemental Cash Flows Disclosure
Cash paid during the year for:
Interest.......................................... $ 671 $ 2,142 $ 16,401 $ 4,403 $ 1,184 $ 802
======== ========= ========== ========== ========== ==========
State income taxes................................ $ -- $ 433 $ 1,463 $ 1,649 $ 333 $ 588
======== ========= ========== ========== ========== ==========
Noncash Investing and Financing Activities:
Capital lease obligation incurred for equipment
purchase......................................... $ 20,425 $ 21,469 $ 54,958 $ 23,374 $ 14,206 $ --
======== ========= ========== ========== ========== ==========
Accounts payable--work in process................. $ -- $ 22,119 $ 27,570 $ 54,584 $ (41,782) $ (47,802)
- --------------------------------------------------
======== ========= ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-5
<PAGE>
GENUITY INC.
COMBINED STATEMENTS OF
CHANGES IN STOCKHOLDER'S EQUITY
(dollars and shares in thousands)
<TABLE>
<CAPTION>
Other
Class Class Class Compre-
Class A A B B Additional hensive Accum-
Common Common Common Common Common Paid-In Income ulated Treasury
Stock Shares Stock Shares Stock Capital (Loss) Deficit Shares Total
------- ------- ------ ------ ------ ---------- ------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR
Balance, December 31,
1996.................... $25,041 -- $ -- -- $ -- $ 115,456 $ -- $ (5,967) $(28,419) $ 106,111
Stock option
exercises.............. 88 -- -- -- -- 1,912 -- -- -- 2,000
Conversion of
debentures............. 249 -- -- -- -- 7,562 -- -- -- 7,811
Net loss............... -- -- -- -- -- -- -- (37,663) -- (37,663)
Other.................. -- -- -- -- -- -- (1,033) -- -- (1,033)
------- ------- ------ ------ ---- ---------- ------- ----------- -------- ----------
Balance, June 30, 1997.. $25,378 -- $ -- -- $ -- $ 124,930 $(1,033) $ (43,630) $(28,419) $ 77,226
======= ======= ====== ====== ==== ========== ======= =========== ======== ==========
- -------------------------------------------------------------------------------
GENUITY
Balance, December 31,
1996.................... $ -- -- $ -- -- $ -- $ 47,758 $ -- $ (16,382) $ -- $ 31,376
Conversion of
Predecessor equity
instruments............ -- -- -- -- -- 16,186 -- -- -- 16,186
Issuance of Class B
common stock........... -- -- -- 18,256 183 -- -- -- -- 183
Capital contributions--
GTE.................... -- -- -- -- -- 610,505 -- -- -- 610,505
Net loss............... -- -- -- -- -- -- -- (174,928) -- (174,928)
Other.................. -- -- -- -- -- -- 2,046 -- -- 2,046
------- ------- ------ ------ ---- ---------- ------- ----------- -------- ----------
Balance, December 31,
1997.................... -- -- -- 18,256 183 674,449 2,046 (191,310) -- 485,368
Tax benefit on exercise
of stock options--GTE.. -- -- -- -- -- 2,482 -- -- -- 2,482
Capital contributions--
GTE.................... -- -- -- -- -- 1,313,554 -- -- -- 1,313,554
Net loss............... -- -- -- -- -- -- -- (468,559) -- (468,559)
Other.................. -- -- -- -- -- -- 1,882 -- -- 1,882
------- ------- ------ ------ ---- ---------- ------- ----------- -------- ----------
Balance, December 31,
1998.................... -- -- -- 18,256 183 1,990,485 3,928 (659,869) -- 1,334,727
Tax benefit on exercise
of stock options--GTE.. -- -- -- -- -- 7,309 -- -- -- 7,309
Capital contributions--
GTE.................... -- -- -- -- -- 974,348 -- -- -- 974,348
Net loss............... -- -- -- -- -- -- -- (647,046) -- (647,046)
Other.................. -- -- -- -- -- -- (1,232) -- -- (1,232)
------- ------- ------ ------ ---- ---------- ------- ----------- -------- ----------
Balance, December 31,
1999.................... -- -- -- 18,256 183 2,972,142 2,696 (1,306,915) -- 1,668,106
------- ------- ------ ------ ---- ---------- ------- ----------- -------- ----------
Tax benefit on exercise
of stock options--GTE.. -- -- -- -- -- 515 -- -- -- 515
Capital contributions--
GTE.................... -- -- -- -- -- 487,947 -- -- -- 487,947
Net loss............... -- -- -- -- -- -- -- (209,826) -- (209,826)
Other.................. -- -- -- -- -- -- (975) -- -- (975)
------- ------- ------ ------ ---- ---------- ------- ----------- -------- ----------
Balance, March 31, 2000
(unaudited)............. -- -- -- 18,256 183 3,460,604 1,721 (1,516,741) -- 1,945,767
------- ------- ------ ------ ---- ---------- ------- ----------- -------- ----------
Capital contribution--
GTE.................... -- -- -- -- -- 177,783 -- -- -- 177,783
Issuance of Class A
Common Stock........... -- 173,913 1,739 -- -- 2,248,287 -- -- -- 2,250,026
------- ------- ------ ------ ---- ---------- ------- ----------- -------- ----------
Pro Forma As Adjusted
Balance, March 31, 2000
(Note 15)(unaudited).... $ -- 173,913 $1,739 18,256 $183 $5,886,674 $ 1,721 $(1,516,741) $ -- $4,373,576
======= ======= ====== ====== ==== ========== ======= =========== ======== ==========
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
F-6
<PAGE>
GENUITY INC.
COMBINED STATEMENTS OF COMPREHENSIVE LOSS
(dollars in thousands)
<TABLE>
<CAPTION>
Predecessor Genuity
-------------- -----------------------------------------------------
Three Months Ended
Six Months Year Ended December 31, March 31,
Ended June 30, ------------------------------- --------------------
1997 1997 1998 1999 1999 2000
-------------- --------- --------- --------- --------- ---------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Loss............................................. $(37,663) $(174,928) $(468,559) $(647,046) $(138,580) $(209,826)
Other Comprehensive Income (Loss):
Foreign currency translation adjustments............ (113) (37) 32 118 768 550
Unrealized gain (loss) on securities................ (920) 2,083 1,850 (1,350) (1,062) (1,525)
-------- --------- --------- --------- --------- ---------
(1,033) 2,046 1,882 (1,232) (294) (975)
-------- --------- --------- --------- --------- ---------
Comprehensive Loss................................... $(38,696) $(172,882) $(466,677) $(648,278) $(138,874) $(210,801)
- --------------------------------------------------
======== ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-7
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(Including Data Applicable to Unaudited Periods)
1.Description of Business and Summary of Significant Accounting Policies:
Description of Business and Organization
Genuity Inc. (Genuity or the Company), a Delaware corporation, is a wholly-
owned subsidiary of GTE Corporation (GTE). Genuity is a leading facilities-
based provider of managed Internet infrastructure services. By leveraging a
technologically advanced, high-bandwidth global fiber-optic network, data
center facilities, and a rapidly growing base of business and consumer users
and content directly attached to its Internet backbone, Genuity engineers and
delivers a comprehensive suite of managed Internet infrastructure services.
These services include Internet access through dial-up, dedicated and digital
subscriber lines; web hosting and content delivery; and value added e-business
services, such as virtual private networks for secure data transmission,
security services and voice-over-IP. Genuity's services are provided to both
enterprises and service providers including Internet service providers,
application service providers and carriers.
Genuity's predecessor incurred net losses of $37.7 million for the six
months ended June 30, 1997. Genuity incurred net losses of $174.9 million,
$468.6 million and $647.0 million for the years ended December 31, 1997, 1998
and 1999, respectively, and $138.6 million and $209.8 million for the three
months ended March 31, 1999 and 2000 (unaudited), respectively. Through March
31, 2000, Genuity has incurred cumulative operating losses of $1,516.7 million
(unaudited). Given the level of planned operating and capital expenditures,
Genuity expects to continue to incur significant operating losses for the next
several years.
The markets in which Genuity operates can be characterized as rapidly
changing due to technological developments, evolving industry standards and
customer demands and frequent new product and service introductions and
enhancements. Genuity expects to continue to make significant investments to
expand its capacity and facilities infrastructure, develop brand recognition,
broaden the range of service offerings and expand its sales, marketing,
technical and customer support personnel. These efforts will require
significant expenditures, a substantial portion of which will be made before
any significant corresponding revenue may be realized.
Genuity is also dependent on a limited source of suppliers for a number of
components and parts necessary for its network buildout and operations. Genuity
does not carry significant inventories of components and has no guaranteed
supply arrangements with vendors. Shortages from these suppliers could cause
significant delays in or abandonment of the expansion of the network and could
have an adverse affect on Genuity's operating results.
Basis of Presentation
The accompanying combined financial statements of Genuity include the
financial position and results of operations of those operations that will
constitute Genuity as of the completion of the proposed initial public
offering. Certain of the operations and assets included in these combined
financial statements were transferred to Genuity on , 2000. The
accompanying financial statements have been restated to combine the assets,
liabilities, equity and results of operations of these transferred operations
as if the transfer had occurred as of January 1, 1997. GTE acquired BBN
Corporation effective June 30, 1997. This acquisition was accounted for as a
purchase business combination and, consequently, the results of operations of
BBN Corporation, excluding the operations of BBN Technologies (BBNT), which are
being retained by GTE, are included in the Genuity financial statements for the
periods after June 30, 1997. The results of operations of our predecessor
represent the results of BBN Corporation, excluding the operations of BBNT.
Genuity prepares its combined financial statements in accordance with
generally accepted accounting principles, which require that management make
estimates and assumptions that affect reported amounts. Actual results could
differ from these estimates.
F-8
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
The combined financial statements of Genuity include the accounts of all
majority-owned subsidiaries. All significant intercompany amounts have been
eliminated.
Genuity purchases payroll, purchasing, electronic data processing services
and other general and administrative services from GTE and affiliates whose
business is the provision of these services. In management's view, the cost of
services provided to Genuity by GTE and affiliates reasonably approximates the
costs that Genuity would have incurred if it had performed the services. See
Note 13 for further discussion.
Interim Financial Statements
The accompanying combined financial statements as of March 31, 2000, and for
the three-month periods ended March 31, 1999 and 2000, are unaudited, but in
the opinion of management, include all adjustments consisting of normal
recurring adjustments necessary for a fair presentation of results for the
interim periods. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted with respect to the quarters, although
the Company believes that the disclosures included are adequate to make the
information presented not misleading. Results for the three months ended March
31, 2000 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2000.
Revenue Recognition
Revenue is generally recognized when services are rendered or products are
delivered to customers. The majority of Genuity's contracts consist of separate
agreements to provide Internet access, web-hosting, value added e-business or
transport services to customers.
Access
Internet access services include dial-up, dedicated and digital subscriber
lines. Internet access customers typically sign one or two-year contracts
providing for monthly recurring service fees that are earned and recognized
based on either fixed fees or capacity utilization. Access also includes
revenue associated with the development, operation and maintenance of a
nationwide dial-up network for America Online, based on a fee per modem per
month basis. The contract with America Online extends through 2006.
Web-Hosting
Web-hosting services include managed hosting, collocation, content delivery
and high availability services. Web-hosting customers typically sign one or
two-year contracts. Revenues are earned and recognized based on monthly fees
for server management, physical facilities and bandwidth utilization.
Transport
Transport services include services such as asynchronous transfer mode, or
ATM, and private line services. ATM transfer service, a form of high speed data
transfer, is targeted primarily at carriers and Internet service providers with
high bandwidth voice, video and data transmission requirements. Private line
service provides dedicated point-to-point transport services through non-
switched, non-usage sensitive dedicated facilities. Transport revenues are
earned and recognized based on customer usage of circuit mileage and capacity.
Transport customers typically sign one or two-year contracts.
Other
Other includes the results of the international business, which consists
primarily of Internet access, and domestic value-added e-business services,
such as managed security services, virtual private networks for
F-9
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
secure data transmission and voice-over-IP. Revenues for international access
and hosting are recognized on a basis consistent with domestic services.
Revenues for security and virtual private network services are earned and
recorded based on fixed, monthly recurring fees and revenues for voice-over-IP
services are based on usage. Value-added e-business service contracts typically
range from one to two years.
Billings made or payments received in advance of providing services are
deferred until the period these services are provided.
Certain of Genuity's contracts, primarily related to web hosting and value
added e-business services, include up-front charges for installation services.
It has been the Company's practice to recognize installation revenue only to
the extent of incurred costs. In the first quarter of 2000, the Company adopted
Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." In accordance with SAB No. 101, as amended, this revenue and the
corresponding costs are deferred and recognized over the contract terms, which
approximate 1 year.
Genuity has contracts with some customers that provide service level
commitments. If Genuity does not meet the required service levels, it may be
obligated to provide credits, usually in the form of free service for a short
period of time. These amounts are accounted for in cost of sales. To date,
credits issued under these arrangements for Genuity's failure to meet service
level commitments have not been material. During 1999, one of Genuity's vendors
experienced failures on its network, which resulted in a disruption to
Genuity's customers. Genuity's vendor provided credits to Genuity for the
service failure, which Genuity passed on to its customers.
Advertising Costs
Genuity expenses the cost of advertising as incurred. The Predecessor's
advertising expense was $5.1 million for the six months ended June 30, 1997.
Genuity's advertising expense was $4.6 million, $16.5 million and $21.5 million
for the years ended December 31, 1997, 1998 and 1999, respectively, and $2.8
million and $6.6 million for the three-month periods ended March 31, 1999 and
2000 (unaudited), respectively. Advertising expense is included as a component
of selling, general and administrative expenses in the accompanying combined
statements of operations.
Income Taxes
Genuity has historically filed its federal income tax return on a
consolidated basis with GTE. Upon completion of the proposed initial public
offering, Genuity will be deconsolidated from GTE for income tax return
purposes. Income tax payments and refunds will be determined based on the
stand-alone filings of Genuity. The accompanying combined financial statements
are presented as if Genuity was a stand-alone company for all periods
presented. The Predecessor was part of a stand-alone entity, and its taxes were
recorded on that basis.
Genuity and the Predecessor computed their current and deferred income tax
expense on a stand-alone basis in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes," which
requires recognition of deferred tax liabilities and assets based upon the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between the
financial statement and tax basis of assets and liabilities using tax rates in
effect for the year in which the differences are expected to reverse. A
valuation allowance has been established to reflect the likelihood of
realization of deferred tax assets.
F-10
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
Genuity has approximately $39 million of net operating loss carryforwards
and $10 million of research credit carryforwards, which are limited in use due
to the fact that they were generated by the Predecessor.
Loss Per Common Share
Loss per common share is calculated based on the provisions of SFAS No. 128,
"Earnings per Share." The basic loss per share of Genuity was computed based on
the number of common shares that were issued in connection with the
recapitalization of Genuity, which occurred on , 2000. Genuity has no
potentially dilutive common shares.
Cash and Cash Equivalents
Cash and cash equivalents include investments in short-term, highly liquid
securities, which have maturities when purchased of three months or less.
Deferred Commissions
Genuity defers certain customer acquisition costs in order to recognize
those direct costs in the same accounting period as the associated revenues,
provided the revenues are contractual. These deferred costs were included in
other current assets in the accompanying combined balance sheets.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation is computed over the assets'
estimated useful lives using the straight-line method. Useful lives used in
computing depreciation are as follows: buildings and fixtures--10 to 30 years,
communications network--fiber-optic cable--20 to 25 years, communications
network--data processing equipment and machinery which include labor and other
direct costs--3 to 10 years and furniture--5 to 7 years. Leasehold improvements
are amortized over the shorter of the lease period or their estimated useful
lives using the straight-line method. Maintenance and repairs are charged to
expense as incurred; improvements are capitalized.
When property is sold or retired, the cost of the property and the related
accumulated depreciation are removed from the combined balance sheet and any
gain or loss on the transaction is included in the accompanying combined
statement of operations.
Work in progress represents costs incurred for the build-out and expansion
of the network infrastructure and includes engineering costs and capitalized
interest. When these assets are placed in service, the costs are recorded in
the appropriate property, plant and equipment accounts and depreciation begins.
Genuity leases data communications equipment under a capital lease
agreement. The assets and liabilities under the capital lease are recorded at
the present value of minimum lease payments. Assets under the capital lease are
depreciated over the term of the lease, which is generally 5 years.
Communications network--fiber optic cable primarily includes an indefeasible
right of use agreement with Qwest Communications International Inc. at December
31, 1999 and March 31, 2000 (unaudited).
Goodwill and Other Intangibles
Goodwill and other intangible assets pertain to the acquisitions of the
Predecessor and the assets of a web hosting business acquired in 1997, and
internal use software. Goodwill is being amortized on a straight-line basis
over the lesser of 20 years or the period benefited. Other intangible assets
include customer bases,
F-11
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
trademarks, developed technology and in-place work forces in connection with
the acquisitions, and internal use software. Customer bases and in-place work
forces are amortized in a manner consistent with historical attrition patterns
over 3 to 10 years. Trademarks, developed technology and internal use software
are amortized on a straight-line basis over 3 to 10 years.
Software
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." Under the provisions of this
SOP, effective January 1, 1999, Genuity was required to capitalize and amortize
the cost of all internal-use software. Prior to the adoption of SOP 98-1,
primarily all software was expensed as incurred. Software expensed in 1997 and
1998 was approximately $17.3 million and $1.4 million, respectively.
Capitalized software is amortized over a useful life ranging from 3 to 5 years.
Software maintenance costs are expensed as incurred.
Employee Benefit Plans
For periods prior to the initial public offering, Genuity participated in
GTE's pension and postretirement health care and life insurance benefit plans.
The plans' cost and liability recorded by Genuity are based on Genuity's
participation in GTE's plans.
Valuation of Assets
The impairment of tangible and intangible assets is assessed when changes in
circumstances indicate that their carrying value may not be recoverable. Under
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of," a determination of impairment, if any, is made
based on estimated future cash flows, salvage value or expected net sales
proceeds depending on the circumstances. In instances where goodwill has been
recorded in connection with impaired assets, the carrying amount of the
goodwill is first eliminated before any reduction to the carrying value of
tangible or identifiable intangible assets. Genuity's policy is to record asset
impairment losses as well as net gains or losses on sales of assets as a
component of other income. Under Accounting Principles Board Opinion No. 17,
"Intangible Assets," the Company also annually evaluates the future period over
which the benefit of goodwill will be received, based on future cash flows, and
changes the amortization life accordingly.
Concentrations of Credit Risk and Significant Customers
Genuity's accounts receivable are subject to credit risk. Genuity performs
regular credit evaluations of its customers' financial condition and maintains
allowances for potential credit losses. Genuity's risk of loss is limited due
to advance billings to some of its customers for services and the ability to
terminate service on delinquent accounts. The credit risk is also mitigated by
the large number of customers comprising the customer base, with the exception
of one large customer, America Online. Revenues from America Online in relation
to Genuity's and Predecessor's total revenues were significant. However, the
credit risk associated with America Online is mitigated by utilization of
advance billings and a history of timely collections. The average accounts
receivable balance of America Online represented 34%, 44% and 37% of Genuity's
receivable balance during the years ended 1998 and 1999, and the three-months
ended March 31, 2000 (unaudited),
F-12
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
respectively, while revenues from America Online represented 53% and 52% of
Genuity's total revenues for the years ended December 31, 1998 and 1999,
respectively, and 53% and 46% for the three-month periods ended March 31, 1999
and 2000 (unaudited), respectively.
Genuity has been a supplier of network access services in the United States
to America Online since 1995. Genuity entered into a new agreement with America
Online effective as of December 31, 1999, pursuant to which America Online has
agreed to purchase additional dial-up access services from Genuity for a seven-
year term through December 31, 2006. Under the new agreement, America Online
has also agreed to purchase managed digital subscriber line and other broadband
network access services from Genuity for a five-year term through December 31,
2004. This agreement includes provisions for minimum purchase requirements at
fixed monthly fees, subject to market pricing adjustments, service level
requirements and termination provisions.
In providing America Online services under the agreement, Genuity is
obligated to comply with specified minimum service levels. Either party may
terminate the agreement in the event the other party commits a material breach
which is not cured within the specified period. In addition, America Online has
the right to terminate the agreement in the event of: (1) repeated material
breaches by Genuity; (2) a violation of the most favored customer pricing
provisions; (3) a total or near total outage of any of the services provided by
Genuity that, while lasting fewer than thirty days, is widespread and
prolonged; (4) Genuity's inability to meet the service level commitments or to
expand service availability as required under the agreement; and (5) a change
in control other than through an initial public offering. Genuity is also
obligated to provide America Online assistance in the twelve months following
any termination of the agreement to ensure a smooth transition of services. The
agreement provides America Online with a right of first refusal with respect to
the sale of the dial-up network access business.
Under a separate agreement with America Online Japan and Genuity's Japanese
branch, Genuity has agreed to provide dial-up network access services to
America Online in Japan. This agreement also includes minimum purchase
requirements on the part of America Online Japan, market pricing adjustments,
service level requirements, and termination provisions.
Financial Instruments
Financial instruments include cash and cash equivalents, accounts
receivable, equity securities, accounts payable, notes payable and debt. The
fair values of financial instruments included in the combined balance sheets,
other than long-term debt, closely approximate their recorded values. The
recorded values of equity securities equal their fair values based on quoted
market prices, and are classified as available-for-sale securities. The
securities are included in other current assets in the accompanying combined
balance sheets and have a cost of $11.8 million and $3.5 million at December
31, 1998 and 1999, respectively, and $3.5 million at March 31, 2000
(unaudited). The estimated fair value of long-term debt based on a debt pricing
model was lower than its recorded value as of December 31, 1998 and 1999 by
approximately $1.2 million and $6.6 million, respectively, and as of March 31,
2000, by approximately $6.8 million (unaudited).
Comprehensive Loss
Comprehensive loss is the change in equity from transactions and other
events and circumstances that are not from owners. Included in other
comprehensive income (loss) are foreign currency translation gains and losses
and unrealized gains and losses on available-for-sale securities.
F-13
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable in Unaudited Periods)
Foreign Currency Translation
Assets and liabilities of units operating in foreign countries are
translated into U.S. dollars using the exchange rates in effect on the balance
sheet date. Results of operations are translated using the average exchange
rates prevailing throughout the period. Foreign assets, liabilities and results
of operations are not material in all periods presented.
Recent Accounting Pronouncements
On December 3, 1999, the Securities and Exchange Commission issued SAB No.
101. Genuity is required to adopt this accounting guidance, as amended by SAB
No. 101A, no later than the second quarter of 2000. Genuity adopted this
accounting in the first quarter of 2000. There was no impact to the Company's
combined statement of operations for the adoption of SAB No. 101, as it had
been the Company's practice to recognize installation revenue on its web
hosting contracts only to the extent of incurred costs. The Company, at March
31, 2000, has recorded deferred revenue of approximately $1.9 million and
deferred costs of approximately $1.9 million associated with the adoption of
SAB No. 101.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities. SFAS No.
133, as amended by SFAS No. 137, is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. This new standard is not anticipated to
have an impact on the Company's combined financial statements based on the
current structure and operations.
2.GTE's Proposed Merger with Bell Atlantic Corporation
Genuity is currently a wholly owned subsidiary of GTE. In July 1998, GTE and
Bell Atlantic agreed to enter into a merger of equals transaction. The new
combined company is Verizon Communications (Verizon). Under the terms of the
agreement, which was unanimously approved by the boards of directors of both
companies and a majority of the shareholders, GTE's shareholders will receive
1.22 shares of Verizon stock for each share of GTE's stock that they own. The
merger is subject to regulatory approvals.
Under the Telecommunications Act of 1996 (Telecommunications Act), the
Regional Bell Operating Companies, including the Bell Atlantic local telephone
operating companies, and their respective affiliates, are generally prohibited
from providing long distance services that originate in any state in which the
Regional Bell Operating Companies operate an incumbent local telephone company.
These restrictions, which are referred to as Section 271 restrictions, prohibit
these companies from offering long distance services originating in a
particular state until the relevant local telephone operating company operating
in that state has satisfied a 14-point competitive checklist under Section 271
of the Telecommunications Act and obtained authority from the Federal
Communications Commission (FCC) to provide long distance services in those
states.
Bell Atlantic operates an incumbent local telephone companies in 13 states,
from Maine to Virginia, and the District of Columbia. The total billable access
telephone lines owned by Bell Atlantic in these states in 1999 are referred to
as "Bell Atlantic in-region lines." Bell Atlantic has obtained the necessary
authorization to provide long distance service originating in New York. Because
Genuity provides services in Bell Atlantic's region that could be characterized
as long distance services, Bell Atlantic and GTE cannot complete their merger
until they
F-14
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
either (1) receive relief from the Section 271 restrictions for the remaining
states in which Bell Atlantic provides local telephone services or (2)
implement a structure that complies with the requirements of the
Telecommunications Act.
To ensure compliance with the requirements of the Telecommunications Act and
to receive FCC approval of their merger, Bell Atlantic and GTE made a proposal
to the FCC under which (1) GTE would exchange all of the outstanding shares of
Genuity common stock for shares of Genuity Class B common stock and (2) Genuity
would complete an initial public offering of Class A common stock. As a result,
immediately after completion of Genuity's proposed initial public offering, the
investors purchasing shares in the initial public offering will own shares of
Genuity's Class A common stock possessing 90.5% of the total voting power of
Genuity's common stock and Verizon will own shares of Genuity's Class B common
stock possessing 9.5% of the total voting power of Genuity's common stock.
Genuity's Class B common stock is convertible into Class A common stock or,
if held by Verizon and at Verizon's election, Class C common stock. Genuity's
Class A common stock and Class B common stock have one vote per share and
Genuity's Class C common stock has five votes per share. Under the proposal to
the FCC, Genuity's Class B common stock cannot be converted into more than 10%
of the outstanding common stock until Verizon has eliminated, as to at least
50% of the Bell Atlantic in-region lines, Section 271 restrictions applicable
to its operation of Genuity's business. At such time as Verizon has eliminated
the applicable Section 271 restrictions as to at least 50% of Bell Atlantic in-
region lines, Genuity's outstanding shares of Class B common stock can be
converted by a holder other than Verizon into 800 million shares of Genuity's
Class A common stock. This amount represents approximately 82% of Genuity's
common stock outstanding after the proposed initial public offering or 80% if
the underwriters fully exercise their over-allotment option. At such time as
Verizon has eliminated the applicable Section 271 restrictions as to 100% of
the Bell Atlantic in-region lines, it could convert its Class B common stock
into 800 million shares of Class C common stock, which, in addition to
representing approximately 82% of Genuity's common stock outstanding after the
proposed initial public offering, would also possess approximately 96% of the
total voting power of the common stock.
3.Property, Plant and Equipment, Net
Property, plant and equipment, net was comprised of the following (in
thousands):
<TABLE>
<CAPTION>
December 31,
---------------------- March 31,
1998 1999 2000
---------- ---------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Land............................... $ 4,644 $ 4,705 $ 4,705
Buildings and fixtures............. 5,210 13,327 7,194
Communications network--fiber-optic
cable............................. 300,035 481,573 537,113
Communications network--data
processing
equipment and machinery........... 484,502 727,046 773,416
Furniture.......................... 11,083 18,653 20,338
Leasehold improvements............. 95,418 164,542 151,157
Work in progress................... 177,607 402,740 465,621
---------- ---------- ----------
Subtotal......................... 1,078,499 1,812,586 1,959,544
Accumulated depreciation........... (169,519) (291,652) (330,153)
---------- ---------- ----------
Total............................ $ 908,980 $1,520,934 $1,629,391
========== ========== ==========
</TABLE>
F-15
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
During 1999, Genuity completed its initial buildout of its communications
network in the United States. Costs directly related to the network have been
capitalized, including amounts associated with the indefeasible rights of use.
Genuity commenced depreciation as individual segments were placed in service.
The Predecessor's depreciation expense was $10.5 million for the six months
ended June 30, 1997. Genuity's depreciation expense was $18.7 million, $56.2
million and $135.4 million for the years ended December 31, 1997, 1998 and
1999, respectively, and $28.6 million and $38.9 million for the three-month
periods ended March 31, 1999 and 2000 (unaudited), respectively.
Interest and network engineering costs capitalized as part of property,
plant and equipment were as follows (in thousands):
<TABLE>
<CAPTION>
Predecessor Genuity
-------------- ----------------------------------------
Three Months
Six Months Ended March
Ended June 30, Year Ended December 31, 31,
-------------- ------------------------- --------------
1997 1997 1998 1999 1999 2000
-------------- ------- -------- -------- ------- ------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Network engineering
costs.................. $422 $ 1,422 $ 10,263 $ 23,148 $ 9,461 $9,511
Capitalized interest.... -- -- 17,700 6,408 1,818 298
---- ------- -------- -------- ------- ------
Total................. $422 $ 1,422 $ 27,963 $ 29,556 $11,279 $9,809
==== ======= ======== ======== ======= ======
</TABLE>
4.Goodwill and Other Intangibles, Net
Goodwill and other intangibles, net was comprised of the following (in
thousands):
<TABLE>
<CAPTION>
December 31,
------------------ March 31,
1998 1999 2000
-------- -------- -----------
(unaudited)
<S> <C> <C> <C>
Goodwill.................................... $495,348 $495,348 $495,348
Customer bases.............................. 77,000 77,000 77,000
Trademarks.................................. 34,000 34,000 34,000
Developed technology........................ 19,000 19,000 19,000
In-place work forces........................ 9,190 9,190 9,190
Internal use software....................... -- 34,580 35,988
-------- -------- --------
Subtotal.................................. 634,538 669,118 670,526
Accumulated amortization.................... (78,926) (131,129) (145,990)
-------- -------- --------
Total..................................... $555,612 $537,989 $524,536
======== ======== ========
</TABLE>
Genuity's amortization expense was $30.7 million, $48.2 million and $52.2
million for the years ended December 31, 1997, 1998 and 1999, respectively, and
$12.5 million and $14.9 million for the three month periods ended March 31,
1999 and 2000 (unaudited), respectively.
F-16
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
5.Debt
Long-term obligations and short-term obligations were as follows (in
thousands):
<TABLE>
<CAPTION>
December 31,
----------------- March 31,
1998 1999 2000
-------- -------- -----------
(unaudited)
<S> <C> <C> <C>
6% convertible subordinated debentures........ $ 55,903 $ 48,948 $ --
Capital leases................................ 70,952 63,769 57,563
-------- -------- -------
Total long-term obligations................. $126,855 $112,717 $57,563
======== ======== =======
Note payable--GTE............................. $ -- $136,484 $ --
6% convertible subordinated debentures........ -- -- 48,812
Current portion of capital leases............. 20,499 25,921 25,408
-------- -------- -------
Total short-term obligations................ $ 20,499 $162,405 $74,220
======== ======== =======
</TABLE>
On April 1, 1987, Predecessor issued $84.7 million of 6% convertible
subordinated debentures. The 6% convertible subordinated debentures due 2012
may be converted by the bondholders into cash at an exchange ratio of $966.67
for each $1,000 in principal amount of debentures. The debentures are unsecured
obligations of Genuity and are subordinated in right of payment to Genuity's
senior indebtedness, if any. Debt issuance costs are being amortized over the
term of the debentures. The unamortized balance at December 31, 1999, and March
31, 2000 of $0.6 million and $0.5 million (unaudited), respectively, is
included in other assets in the accompanying combined balance sheets.
Genuity is required to contribute to a sinking fund annual payments equal to
5% of the aggregate principal amount issued. The sinking fund was calculated to
retire 70% of the original debentures prior to maturity. As of December 31,
1999 Genuity had purchased and retired debentures with a face value of $37.3
million which has been used to satisfy the annual sinking fund requirements
through 2006.
The interest rate on the note payable to/receivable from GTE is based on an
intercompany borrowing interest rate established by GTE, which fluctuated
between 4.85% and 6.58% in 1997, 5.41% and 6.24% in 1998, 6.04% and 6.75% in
1999, 5.00% and 5.68% in the first quarter of 1999 (unaudited) and 6.00% and
6.24% in the first quarter of 2000 (unaudited).
Genuity has entered into leasing agreements to finance some equipment
acquisitions. The underlying assets serve to collateralize the debt. The
borrowings bear interest at effective rates of 5.07% to 9.50% and have terms of
5 years from the date of purchase, with principal and interest payable
quarterly in advance. The leases include purchase and renewal options at fair
market values. The leases are classified as capital leases in accordance with
the provisions of SFAS No. 13, "Accounting for Leases."
Assets under capital leases were as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
----------------- March 31,
1998 1999 2000
------- -------- -----------
(unaudited)
<S> <C> <C> <C>
Data processing equipment..................... $91,682 $115,056 $115,407
Accumulated depreciation...................... (25,936) (51,792) (57,409)
------- -------- --------
Total....................................... $65,746 $ 63,264 $ 57,998
======= ======== ========
</TABLE>
F-17
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
6.Stockholder's Equity
Common Stock
The authorized and issued common stock of Genuity is based on the number of
common shares that will be issued in connection with the recapitalization of
Genuity, which occurred on , 2000. In connection with the
recapitalization, the 1,000 shares of common stock issued and outstanding were
converted to 18,256,000 shares of Class B common stock.
Additional Paid-In Capital
Genuity received contributions from GTE of $610.5 million, $1,313.6 million
and $974.3 million, for the years ended December 31, 1997, 1998 and 1999,
respectively, and $487.9 million for the three-month period ended March 31,
2000 (unaudited).
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) includes cumulative foreign
currency translation adjustments and the cumulative unrealized loss on
investments in securities. The Predecessor's cumulative foreign currency
translation adjustment was a loss of $0.1 million as of June 30, 1997.
Genuity's cumulative foreign currency translation adjustment was a gain of $0.1
million as of December 31, 1999, and $0.8 million and $0.7 million as of March
31, 1999 and 2000 (unaudited), respectively. The Predecessor's cumulative
unrealized loss on investments in securities was $0.9 million as of June 30,
1997 and Genuity's cumulative unrealized gain on investments in securities was
$2.1 million, $3.9 million and $2.6 million as of December 31, 1997, 1998 and
1999, respectively, and $2.9 million and $1.1 million as of March 31, 1999 and
2000 (unaudited), respectively.
7.Stock-Based Compensation
GTE maintains broad-based stock option plans that have historically covered
substantially all Genuity employees. Genuity employees will not participate in
these plans after the initial public offering. Prior to 1997, options were
granted separately or in conjunction with stock appreciation rights (SARs).
Beginning in 1997, the granting of SARs was discontinued. In 1997, GTE's
shareholders approved the GTE Corporation 1997 Long-Term Incentive Plan (the
LTIP). Each option granted under the LTIP conveys the right to purchase, at
fair market value on the date of the grant, shares of GTE common stock.
Generally, options have a term of 10 years and become vested over a period not
to exceed three years. At December 31, 1999 and March 31, 2000, 1,595,984 and
1,961,045 (unaudited) options granted to Genuity employees, respectively, were
exercisable in shares of GTE common stock. Options granted under the
Predecessor's stock incentive plan were converted into GTE options or plan
participants received cash.
In 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." As permitted by SFAS No. 123, GTE continues to apply the
recognition and measurement provisions of Accounting Principles Board Opinion
(APB) No. 25, "Accounting for Stock Issued to Employees." In accordance with
APB No. 25, compensation expense is not recognized for stock options on the
date of grant since it is GTE's practice to grant options with an exercise
price equal to the fair market value of its common stock on the date of grant.
Under SFAS No. 123, compensation cost is measured at the grant date based on
the value of the award and is recognized over the service or vesting period.
Had compensation cost for GTE's stock options been determined under SFAS No.
123, based on the fair market value at the grant dates, pro forma net loss and
basic loss per share of Genuity would have been as follows (in thousands except
per share amounts):
F-18
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
<TABLE>
<CAPTION>
Genuity
-------------------------------
Year Ended
December 31,
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Net loss
As reported.............................. $(174,928) $(468,559) $(647,046)
Pro forma................................ (175,943) (474,364) (668,558)
Basic and diluted loss per share
As reported.............................. $ (9.58) $ (25.67) $ (35.44)
Pro forma................................ (9.64) (25.98) (36.62)
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions for GTE options granted during the years ended December 31, 1997,
1998 and 1999: expected volatility of 18%-19.5%, expected maturities of seven
years, risk-free interest rates equal to the yield on seven-year U.S. Treasury
notes on the grant date and expected dividend yield of approximately 3%.
8.Employee Benefit Plans
Genuity does not intend to offer a pension or other postretirement plan to
employees once its employees are no longer employees of GTE. Genuity does
intend to offer a defined contribution (401(k)) plan.
GTE sponsors several qualified and nonqualified pension plans and other
postretirement benefit plans for its employees, which prior to the initial
public offering, include Genuity's employees. The Predecessor did not sponsor
either a pension plan or an other postretirement benefit plan. Approximately
600 of Genuity's employees are covered under defined benefit pension plans and
postretirement health care and life insurance plans. Pension plans are
generally noncontributory by plan participants. Postretirement health care
plans are generally contributory and include a limit on the portion of the cost
of benefits for recent and future retirees paid by Genuity.
The cost and liability for the pension and other postretirement benefit
plans recorded by Genuity are based on Genuity's participation in GTE's plans,
representing an allocation of GTE's plans' assets and liabilities. Genuity's
pension expense was $0.5 million, $0.9 million and $2.6 million for the years
ended December 31, 1997, 1998 and 1999, respectively, and $0.2 million and $0.1
million for the three-month periods ended March 31, 1999 and 2000 (unaudited),
respectively. Genuity's other postretirement benefit expense was $0.2 million,
$0.4 million and $0.3 million for the years ended December 31, 1997, 1998 and
1999, respectively, and $0.1 million for the three-month period ended March 31,
1999 (unaudited). Genuity's pension liability was $2.5 million and $5.1 million
as of December 31, 1998 and 1999, respectively, and $2.0 million as of March
31, 2000 (unaudited). Genuity's other postretirement benefit liability was
$2.0 million and $2.2 million as of December 31, 1998 and 1999, respectively,
and $1.9 million as of March 31, 2000 (unaudited).
BBN Corporation maintained the BBN Corporation Retirement Trust Agreement
(the BBN 401(k) plan), which is a 401(k) plan that includes matching and profit
sharing features. The plan covers most employees of Genuity who are not covered
by the GTE Savings Plan. It is anticipated that the plan will be sponsored and
maintained by Genuity or one of its affiliates after the proposed initial
public offering. GTE sponsors employee savings and stock ownership plans (the
GTE 401(k) plans) under section 401(k) of the Internal Revenue Code. Through
the date of the proposed initial public offering the plans cover substantially
all full-time employees of Genuity. Under the plans, Genuity provides matching
contributions in either cash or GTE
F-19
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
common stock based on qualified employee contributions. The Predecessor's
matching contribution charged to income related to the BBN 401(k) plan was
$0.6 million for the six months ended June 30, 1997. Genuity's matching
contributions charged to income related to the GTE 401(k) plans and the BBN
401(k) plan were $1.0 million, $3.1 million, and $4.8 million for the years
ended December 31, 1997, 1998 and 1999, respectively, and $0.9 million and $2.2
million for the three-month periods ended March 31, 1999 and 2000 (unaudited),
respectively.
9.Interest Expense, Net
The combined statements of operations reflect total interest expense, less
interest capitalized during construction and interest income as follows (in
thousands):
<TABLE>
<CAPTION>
Predecessor Genuity
-------------- --------------------------------------------
Six Months Three Months
Ended June 30, Year Ended December 31, Ended March 31,
-------------- -------------------------- ----------------
1997 1997 1998 1999 1999 2000
-------------- ------- -------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Interest expense........ $(2,951) $(1,346) $(17,720) $(9,952) $(2,439) $(3,271)
Interest capitalized.... -- -- 17,700 6,408 1,818 298
Interest income......... 2,473 -- -- 3,361 187 --
------- ------- -------- ------- ------- -------
Interest Expense,
Net.................. $ (478) $(1,346) $ (20) $ (183) $ (434) $(2,973)
======= ======= ======== ======= ======= =======
</TABLE>
10.Income Taxes
The income tax accounts included in the accompanying combined balance sheets
and statements of operations are presented as if Genuity were a stand-alone
company for all periods presented. The Predecessor was part of a stand-alone
entity, and its income taxes were recorded on that basis. Taxable losses of
Genuity aggregating $114.8 million, $526.7 million and $638.2 million for the
years ended December 31, 1997, 1998 and 1999, respectively, and $179.1 million
for the three-month period ended March 31, 2000 (unaudited), have benefited GTE
in its consolidated tax return. Genuity received reimbursements aggregating
$40.4 million, $185.7 million and $223.5 million for the years ended
December 31, 1997, 1998 and 1999, respectively, and $62.5 million for the
three-month period ended March 31, 2000 (unaudited). To present Genuity's tax
provisions on a basis consistent with future periods these reimbursements have
been accounted for as capital contributions. The tax provision included in the
accompanying combined statements of operations represents the amounts owed for
state taxes.
F-20
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
The significant components of Genuity's deferred tax assets and
liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
December 31, March
------------------ 31,
1998 1999 2000
-------- -------- -------- ---
<S> <C> <C> <C> <C>
Deferred tax assets:
Employee benefit obligations............. $ 21,183 $ 22,200 $ 23,039
NOL carryforward......................... 24,480 24,014 24,014
Predecessor goodwill..................... 10,241 11,830 12,228
Capitalized software..................... 3,548 5,256 5,256
Other.................................... 14,238 13,233 15,044
-------- -------- --------
Total deferred tax assets.............. 73,690 76,533 79,581
-------- -------- --------
Deferred tax liabilities:
Depreciation and amortization............ (7,100) (32,688) (37,428)
Other intangibles........................ (35,775) (29,247) (27,615)
Operating leases......................... (4,201) (4,201) (4,201)
Other.................................... (5,308) (2,090) (2,090)
-------- -------- --------
Net deferred tax asset................. 21,306 8,307 8,247
-------- -------- --------
Deferred tax asset--current............ 7,604 7,785 7,443
Deferred tax asset--noncurrent......... 13,702 522 804
Valuation allowance.................... (21,306) (8,307) (8,247)
-------- -------- --------
$ -- $ -- $ --
======== ======== ========
</TABLE>
The net operating losses included above relate to Predecessor and are
limited in their utilization under Internal Revenue Code Section 382. A full
valuation allowance has been recorded in the accompanying combined financial
statements to offset the net deferred tax asset because its future
realizability is uncertain.
The difference between the income tax rate computed by applying the
statutory federal income tax rate of 35% to income before income taxes and the
actual effective income tax rate is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------
Three-Months
Ended
March 31,
1997 1998 1999 2000
------- ------- ------- ------------
<S> <C> <C> <C> <C>
Statutory rate...................... (35.0%) (35.0%) (35.0%) (35.0%)
Increase (decrease) resulting from--
State taxes, net of federal
benefit.......................... 0.2 0.2 0.2 0.2
Goodwill.......................... 4.1 2.7 2.0 1.5
Meals and entertainment........... 0.1 0.1 0.1 0.1
Change in valuation allowance..... 6.3 (3.1) (2.1) --
Tax losses benefited to GTE....... 25.2 35.3 35.0 33.4
Other............................. (0.6) 0.1 0.1 0.1
------- ------- ------- -----
0.3% 0.3% 0.3% 0.3%
======= ======= ======= =====
</TABLE>
F-21
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
11.Segment Reporting
Effective December 31, 1998, Genuity adopted SFAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information." SFAS No. 131 establishes
standards for reporting financial information about operating segments in
annual and interim financial statements and requires restatement of prior year
information. Operating segments are defined as units of a business for which
financial information is available that is evaluated by the primary decision-
makers in determining the manner in which resources are allocated and in
assessing performance of the business.
Genuity's operations are reported in three segments, Access, Hosting and
Transport.
Access--Internet access pertains to a variety of global Internet access
services, including dial-up, dedicated, DSL and other broadband, by providing
and managing the underlying scaleable infrastructure. Genuity also provides a
range of customer premise equipment necessary to connect to the Internet,
including routers, channel service units/data services units, modems, software
and other products. Customers receive 24 hours per day, 7 days per week network
monitoring and technical support from Genuity's Network Operations Centers
(NOC).
Hosting--Hosting pertains to services that allow customers to successfully
implement their e-business strategies through scaleable, reliable and secure
Web sites, which serve as their e-business storefronts. Thee-business model
enables companies to decrease sales costs; accelerate time to market; access
new sales channels; increase revenues, productivity and customer satisfaction;
and gain competitive advantage. Genuity currently operates ten global data
centers, eight in the US, one in Leeds, England and one in Tokyo, Japan.
Through the web hosting operation center, Genuity monitors these systems 24
hours a day and 7 days a week.
Transport--Genuity provides a broad range of transport services to customers
through a single point of contact for planning, ordering, installing, billing,
maintaining and managing our customers transport services. Genuity provides
seamless operation of local loops, central office connections and interexchange
carrier transport. Through Genuity's NOC, network faults, intrusion or
environmental alarms are observed, diagnostics are performed, and referrals or
dispatches are initiated as needed.
Other--Includes revenue from international operations, sale of international
services and revenue generated from value-added Internet services of security,
virtual private networks and voice-over IP.
Network costs within GNI which are incurred to support the Access, Hosting
and Transport segments are not allocated to these segments for management
reporting or segment reporting purposes. Similarly, selling, general and
administrative expenses are not allocated to the segments for management or
segment reporting purposes.
Revenues for America Online in relation to the Predecessor's total revenues
represented 54% for the six months ended June 30, 1997. Revenues for America
Online in relation to Genuity's total revenues were 42%, 53% and 52% for the
years ended December 31, 1997, 1998 and 1999, respectively, and 53% and 46% for
the three-month periods ended March 31, 1999 and 2000 (unaudited),
respectively.
Management utilizes several measurements to evaluate its operations and
allocate resources. However, the principal measurements are consistent with
Genuity's financial statements. The accounting policies of the segments are the
same as those described in Note 1.
F-22
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
Financial information for Genuity's segments is as follows (in thousands):
<TABLE>
<CAPTION>
Predecessor Genuity
-------------- ---------------------------------
Three Months
Six Months Year Ended December 31, Ended March 31,
Ended June 30, --------------------------------- ---------------------
1997 1997 1998 1999 1999 2000
-------------- --------- --------- ----------- --------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Access................ $ 94,126 $ 128,838 $ 350,777 $ 555,603 $ 128,038 $ 183,285
Hosting............... 9,601 9,690 33,469 48,811 10,028 21,692
Transport............. -- 41,920 46,876 64,483 13,535 23,625
Other................. 2,591 3,035 14,880 37,569 5,682 19,250
-------- --------- --------- ----------- --------- ----------
Total revenues....... 106,318 183,483 446,002 706,466 157,283 247,852
Operating Expenses
Cost of goods sold.... 92,670 166,040 492,794 767,498 160,540 283,928
Selling, general and
administrative....... 38,801 142,962 312,916 396,522 93,123 108,336
Depreciation and
amortization......... 10,536 49,444 104,444 187,628 41,092 53,786
-------- --------- --------- ----------- --------- ----------
Total operating
expenses............ 142,007 358,446 910,154 1,351,648 294,755 446,050
-------- --------- --------- ----------- --------- ----------
Operating Loss.......... (35,689) (174,963) (464,152) (645,182) (137,472) (198,198)
Other Income (Expense)
Interest expense,
net.................. (478) (1,346) (20) (183) (434) (2,973)
Other, net............ (1,496) 1,814 (2,924) (32) (341) (8,067)
-------- --------- --------- ----------- --------- ----------
Loss Before Income
Taxes.................. $(37,663) $(174,495) $(467,096) $ (645,397) $(138,247) $ (209,238)
======== ========= ========= =========== ========= ==========
Property, Plant and
Equipment, Net
Access................ $ 44,212 $ 50,849 $ 100,884 $ 180,777 $ 109,663 $ 190,494
Hosting............... 7,957 23,023 29,310 52,998 30,421 66,686
Transport............. -- 27,313 26,752 26,974 26,263 26,342
GNI................... -- 263,467 705,892 1,162,287 764,194 1,243,404
Other................. 20,010 3,036 46,142 97,898 61,264 102,465
-------- --------- --------- ----------- --------- ----------
Total................ $ 72,179 $ 367,688 $ 908,980 $ 1,520,934 $ 991,805 $1,629,391
======== ========= ========= =========== ========= ==========
Capital Expenditures/1/
Access................ $ 21,741 $ 21,002 $ 57,344 $ 112,872 $ 15,376 $ 22,894
Hosting............... 402 6,422 14,801 34,258 4,111 17,352
Transport............. -- 215 7,485 5,377 1,454 547
GNI................... -- 263,610 458,038 531,719 74,214 103,238
Other................. 1,112 8,242 50,163 60,130 10,002 19,062
-------- --------- --------- ----------- --------- ----------
Total................ $ 23,255 $ 299,491 $ 587,831 $ 744,356 $ 105,157 $ 163,093
======== ========= ========= =========== ========= ==========
Depreciation and
Amortization
Access................ $ 6,375 $ 6,341 $ 12,649 $ 32,543 $ 6,597 $ 10,138
Hosting............... 138 2,534 8,514 12,585 3,000 3,664
Transport............. -- 6,852 8,012 7,180 1,943 1,782
GNI................... -- 143 19,119 72,475 14,971 20,654
Other................. 4,023 33,574 56,150 62,845 14,581 17,548
-------- --------- --------- ----------- --------- ----------
Total................ $ 10,536 $ 49,444 $ 104,444 $ 187,628 $ 41,092 $ 53,786
======== ========= ========= =========== ========= ==========
International
Revenues.............. $ 279 $ 710 $ 5,622 $ 22,816 $ 3,812 $ 8,682
Long-lived assets..... -- -- -- 1,855 427 4,654
</TABLE>
- --------
/1/ Includes accruals and capital leases.
F-23
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
12.Commitments and Contingencies
Leases
Genuity leases office space and network equipment under long-term capital
and operating leases. These leases have options for renewal with provisions for
increased rent upon renewal. The Predecessor's rent expense was $2.1 million
for the six months ended June 30, 1997, and Genuity's rent expense was $5.1
million, $12.9 million and $19.9 million for the years ended December 31, 1997,
1998 and 1999, respectively, and $3.7 million and $6.6 million for the three-
month periods ended March 31, 1999 and 2000 (unaudited), respectively. Rent
expense is included in cost of goods sold and selling, general and
administrative expenses in the accompanying combined statements of operations.
As of December 31, 1999, future minimum lease payments under noncancelable
capital and operating leases with initial or remaining periods in excess of one
year were as follows (in thousands):
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
-------- ---------
<S> <C> <C>
2000..................................................... $ 33,475 $ 66,419
2001..................................................... 28,701 60,143
2002..................................................... 25,176 32,293
2003..................................................... 11,643 26,142
2004..................................................... 823 20,230
Subsequent years......................................... -- 56,502
-------- --------
Total minimum lease payments........................... 99,818 $261,729
========
Amount representing interest............................. (10,128)
--------
Present value of minimum lease payments................ $ 89,690
========
</TABLE>
GTE guarantees Genuity's existing real estate leases.
Contract Commitments
Genuity has entered into several agreements for indefeasible rights of use
(IRU) for its network infrastructure in the United States. The initial terms of
the IRUs are for 20-25 years, with options to extend the term. As of December
31, 1999 and March 31, 2000, the outstanding commitments under the agreements
is approximately $17.4 million and $16.6 million, respectively. Genuity is also
obligated to pay operating and maintenance costs under the contract terms.
Genuity has entered into a number of agreements for IRU to trans-oceanic
cable systems that are either deployed or in the process of being deployed. The
initial terms of the IRU is for 25 years. As of December 31, 1999 and March 31,
2000, outstanding commitments under these agreements total approximately $54.4
million and $52.5 million (unaudited), respectively.
F-24
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Appliable to Unaudited Periods)
Genuity has a noncancelable long-term purchase commitment with a circuit
provider. The purchase agreement contains provisions that require Genuity to
purchase a minimum amount of services annually through 2003. If Genuity does
not purchase the minimum services, it is required to pay the amount of the
shortfall between the minimum commitments and actual purchases. As of December
31, 1999, future minimum circuit payments under this noncancelable purchase
commitment were as follows (in thousands):
<TABLE>
<S> <C>
2000............................................................... $ 38,000
2001............................................................... 28,000
2002............................................................... 24,000
2003............................................................... 24,000
--------
Total minimum circuit purchases.................................. $114,000
========
</TABLE>
Contingencies
Some claims arising in the ordinary course of business are pending against
the Company. In the opinion of management, these claims are without merit and
are not expected to have a material effect on operations.
13.Related Party Transactions
Genuity recorded revenues for transport services that it provided to
affiliates in the amount of $13.6 million, $17.5 million and $24.1 million for
the years ended December 31, 1997, 1998 and 1999, respectively, and $5.5
million and $11.7 million for the three-month periods ended March 31, 1999 and
2000 (unaudited), respectively. The transport services provided are similar to
services provided to unaffiliated customers and are priced at comparable rates.
Genuity purchases payroll, purchasing, electronic data processing services
and other general and administrative services from GTE and affiliates whose
business is the provision of these services. The cost of these services to
Genuity was $39.6 million, $92.3 million and $84.1 million for the years ended
December 31, 1997, 1998 and 1999, respectively, and $25.2 million and $21.2
million for the three-month periods ended March 31, 1999 and 2000 (unaudited),
respectively, and were based on the cost of providing these services as
determined by cost and time studies performed periodically.
In management's view, the cost of services provided to Genuity by GTE and
affiliates reasonably approximates the costs that Genuity would have incurred
if it had performed the services.
Note payable to, and receivable from GTE include GTE funding of net cash
flows to and from Genuity. Accounts receivable from, and accounts payable to
affiliates represent balances from transactions in the ordinary course of
business between Genuity and affiliates.
Transition Services Agreements
GTE and its affiliates currently provide a range of administrative and
support services to Genuity. In connection with the proposed initial public
offering of Genuity's shares of Class A common stock, Genuity will enter into
(1) an Agreement for Transition Services under which GTE Service will continue
to provide Genuity with services such as accounting and cash processing,
billing and collection processing, human resource services, benefits
administration and real estate support services and (2) an Agreement for
Information Technology Transition Services under which Genuity and GTE Service
will provide each other with software and hardware support services.
F-25
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Appliable to Unaudited Periods)
In addition, GTE Service and Genuity will provide each other with wide area
network support and computer programming and technical services, including the
development of software interfaces and modifications and enhancements to
existing systems.
Purchase, Resale and Marketing Agreement
Genuity plans to enter into a Purchase, Resale and Marketing Agreement under
which Verizon will purchase services from Genuity, that will include Internet
access, value-added e-business services and private line and asynchronous
transfer mode transport services. Verizon will be permitted to use these
services internally or resell the services on a stand-alone basis or as part of
a bundled solution. Those services resold by Verizon may be co-branded with
Genuity or may be branded without use of Genuity's marks. To the extent Genuity
jointly markets services with Verizon, Genuity will do so in compliance with
all applicable federal law. Genuity will not jointly market its services with
Verizon in states in which Verizon would not have legal authority under
applicable federal law to operate Genuity. Genuity has granted Verizon most
favored customer pricing and volume-based discounts. Under the terms of the
agreement, Verizon will purchase at least $500 million of Genuity's services
over a five year period. In the event that Verizon has not purchased $200
million in services by the end of the third year of the contract, it would be
required to pay to Genuity at that time the difference between the amount of
services purchased to date and $200 million. Similarly, in the event Verizon
has not purchased $500 million in services by the end of the fifth year of the
contract, it would be required to pay to Genuity at that time the difference
between the amount of services purchased to that date, including any shortfall
payment made at the end of the third year, and $500 million. The minimum
purchase commitment is reduced in the event Genuity does not comply with
various obligations as to competitive pricing and other aspects of service,
sale and delivery.
In conjunction with the Purchase, Resale and Marketing Agreement, Genuity
also plans to provide to Verizon undersea cable capacity in the ARCOS-1
Caribbean Ring System and has committed to negotiate with Verizon with respect
to obtaining capacity on the Americas III Cable Network currently under
construction.
Intellectual Property Agreements
Genuity intends to enter into agreements with GTE Service in order to
allocate rights relating to existing and future patents, software, other types
of intellectual property and technical services.
Network Monitoring Agreement
Under the terms of an existing agreement, Genuity receives continual
monitoring for some elements of Genuity's network infrastructure from GTE
Network Services, including monitoring of network-enabling devices and
processes to detect anomalies occurring in the network. The fees for monitoring
services are fixed under the agreement and were negotiated based on historical
costs and comparable market prices. The agreement may be terminated by Genuity
on 90 days notice.
Real Estate Agreements
Genuity plans to enter into several agreements with Verizon to allocate
space in various leased and owned properties between Genuity and Verizon. None
of the properties involved are material to Genuity's operations or business.
Provisions of each agreement, including the lease and sublease payment of rent
terms, vary depending on the underlying lease at the specified property and the
result of negotiations pertaining to specific issues at a specified property.
F-26
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
In order to effect a transition to a stand-alone company, GTE also has
agreed to issue new guaranties and to continue existing guaranties in order to
support Genuity's real estate obligations. GTE has agreed to continue to issue
new guaranties until six months following the proposed initial public offering
or the date on which both Standard & Poor's and Moody's publish a credit rating
for Genuity, whichever occurs first. Genuity has agreed to pay GTE a
commercially reasonable fee during the time the guaranties are in force.
Registration Rights Agreement
Immediately after the completion of Genuity's proposed initial public
offering, under a Registration Rights Agreement dated , 2000, Verizon and
its transferees or assignees will be entitled to cause Genuity to register
shares of Class A common stock that are issued following conversion of either
Genuity's Class B common stock or Genuity's Class C common stock. In addition,
this agreement will provide Verizon with certain demand, piggyback and shelf
registration rights after six months following the proposed initial public
offering.
14.Subsequent Events
Recapitalization
On , 2000, Genuity completed a recapitalization. As part of the
recapitalization, Genuity converted 1,000 shares of common stock issued and
outstanding to 18,256,000 shares of Class B common stock.
In connection with the recapitalization, GTE will execute a recapitalization
agreement in connection with its receipt of the Class B common stock. Under
this agreement, GTE will exchange all of the shares of its Genuity common stock
for such number of shares of Class B common stock that will equal 9.5% of the
total number of shares of the common stock outstanding immediately after the
completion of this initial public offering. The recapitalization agreement also
includes provisions enabling Verizon to purchase additional shares
of Class B common stock under certain circumstances. In addition, the
recapitalization agreement contains provisions requiring us to obtain the
consent of Verizon prior to taking actions such as making acquisitions with a
purchase price exceeding 20% of Genuity's market capitalization, making any
acquisitions with a purchase price in excess of $100 million or entering any
joint venture which has a fair market value in excess of $100 million that is
not closely related to Genuity's business, making any disposition, including
the assumption of indebtedness in excess of 20% of Genuity's market
capitalization, and certain restrictions on incurring indebtedness and other
protective rights.
Common Stock
The shares of Genuity's Class A common stock, Class B common stock and Class
C common stock are identical in all respects except for voting rights,
conversion rights and as otherwise described below. The rights, preferences and
privileges of holders of our Class A common stock, Class B common stock and
Class C common stock are subject to the rights of the holders of shares of any
other class of common stock that Genuity may authorize and issue and any series
of preferred stock that Genuity may designate and issue in the future.
Voting Rights. Each share of Class A common stock and Class B common stock
entitles the holder to one vote on each matter submitted to a vote of the
stockholders. Each share of Class C common stock entitles the holder to five
votes on each matter. Except as required by applicable law or as discussed
below, the holders of the Class A common stock, Class B common stock and Class
C common stock vote together as a single class on all matters submitted to a
vote of Genuity's stockholders. So long as any shares of Class B common stock
remain outstanding, the holders of Class B common stock, voting separately as a
class, will have the right to elect one member of Genuity's board of directors.
F-27
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
Genuity is also required to obtain the consent of the holders of Class B
common stock before taking specific actions, including making significant
acquisitions or dispositions, entering into major business combinations, and
incurring indebtedness or issuing additional equity securities in excess of
specified limits.
Conversion. Immediately after the completion of the proposed initial public
offering, Verizon will own all of the outstanding shares of Genuity's Class B
common stock.
Although the ability of Verizon to convert its Class B common stock is
limited by the proposal to the FCC, these shares by their terms are convertible
at any time into either:
. a number of shares of Class A common stock equal to 10% of Genuity's
total common stock immediately after the conversion; or
. 800 million shares of Class A common stock or, for Verizon or any of its
affiliates and at their election, Class C common stock, which represents
approximately 82% (or approximately 80% if the underwriters exercise in
full the over-allotment option) of Genuity's shares of common stock
outstanding immediately following the proposed initial public offering.
Under the proposal to the FCC:
. if Verizon has not eliminated Section 271 restrictions applicable to its
operation of Genuity's business as to at least 50% of the Bell Atlantic
in-region lines, Verizon can only convert its outstanding shares of
Genuity's Class B common stock into shares of Genuity's Class A common
stock that after the conversion will represent 10% of Genuity's total
common stock then outstanding. If Verizon transfers the Class B common
stock before meeting this 50% threshold, the transferee's conversion
rights would be similarly limited;
. if Verizon has eliminated the applicable Section 271 restrictions as to
at least 50% of Bell Atlantic in-region lines, it could transfer its
shares of Class B common stock to one or more third parties who would
then be able to convert them in the aggregate into 800 million shares of
Class A common stock; and
. if Verizon has eliminated the applicable Section 271 restrictions as to
100% of Bell Atlantic in-region lines, subject to limited exceptions,
Verizon or its affiliates could convert the Class B common stock into
800 million shares of Class A common stock or Class C common stock.
Under the proposal to the FCC, if Verizon has not eliminated the applicable
Section 271 restrictions as to 100% of Bell Atlantic in-region lines on or
before , 2005, which date may be extended under certain conditions,
Verizon's ability to convert the Class B common stock into 800 million shares
of Class A or Class C common stock will expire. Verizon will continue to retain
its right to convert its shares of Class B common stock into shares of Class A
common stock representing 10% of Genuity's total common stock then outstanding.
If Verizon has satisfied the applicable Section 271 restrictions as to 100% of
Bell Atlantic in-region lines on or before that date, its ability to convert
the Class B common stock into 800 million shares of Class A common stock or
Class C common stock does not expire. The Class B common stock transferred by
Verizon to a third party will not be subject to this expiration limitation.
The Class C common stock is convertible into Class A common stock at any
time. Each share of Class C common stock will automatically convert into one
share of Class A common stock if at any time the aggregate number of
outstanding shares of Class C common stock, together with any shares of Class C
common stock issuable upon conversion of Class B common stock, held by Verizon
and its affiliates constitute less than 10% of Genuity's then outstanding
common stock.
F-28
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
Verizon's Right to Acquire Additional Shares. If Verizon holds shares of
Class A common stock and Class C common stock that in the aggregate exceed 70%
of the total number of Genuity common stock, Verizon may acquire from Genuity a
number of shares of Class A common stock so that Verizon will own shares of
common stock equal to 80% of the total number of Genuity shares of common
stock.
Liquidation. In the event of any dissolution, liquidation, or winding up of
Genuity's affairs, whether voluntary or involuntary, the holders of the Class A
common stock, the Class B common stock and the Class C common stock will be
entitled to share ratably, in proportion to the number of shares they represent
of Genuity's outstanding common stock, in the assets legally available for
distribution to stockholders, in each case after payment of all of Genuity's
liabilities and subject to preferences that may apply to any series of
preferred stock then outstanding. Genuity may not dissolve, liquidate or wind
up its affairs without obtaining the consent of the holders of the outstanding
shares of its Class B common stock.
Mergers and Other Business Combinations. If Genuity enters into a merger,
consolidation or other similar transaction in which shares of its common stock
are exchanged for or converted into securities, cash or any other property, the
holders of each class of Genuity's common stock will be entitled to receive an
equal per share amount of the securities, cash, or other property, as the case
may be, for which or into which each share of any other class of common stock
is exchanged or converted; provided that in any such merger, consolidation or
other similar transaction, the holders of the shares of Class B common stock
shall be entitled to receive, at their election, either (1) the merger
consideration such holders would have received had they converted their shares
of Class B common stock immediately prior to the consummation of such
transaction or (2) a new security that is convertible into the merger
consideration and has substantially identical voting and other rights as the
Class B common stock. In any transaction in which shares of capital stock are
distributed, the shares that are exchanged for or converted into the capital
stock may differ as to voting rights and conversion rights only to the extent
that the voting rights and conversion rights of Class A common stock, Class B
common stock and Class C common stock differ at that time. As described above,
the holders of the Class B common stock, voting separately as a class, must
consent to any merger, consolidation or other similar transaction.
Other Provisions. The holders of Class A common stock, Class B common stock
and Class C common stock are not entitled to preemptive rights. There are no
redemption provisions or sinking fund provisions that apply to the Class A
common stock, the Class B common stock or the Class C common stock.
Immediately following the closing of the proposed initial public offering,
Genuity's authorized capital stock will consist of 1,600,000,000 shares of
Class A common stock, par value $0.01 per share, 21,000,000 shares of Class B
common stock, par value $0.01 per share, 800,000,000 shares of Class C common
stock, par value $0.01 per share, and 0 shares of preferred stock, par value
$0.01 per share. Immediately following the closing of the initial public
offering, there will be outstanding: (1) 173,913,000 shares of Class A common
stock; (2) options to purchase approximately 50,000,000 shares of Class A
common stock; (3) 18,256,000 shares of Class B common stock, all of which will
be held of record by Verizon as of that date; (4) no shares of Class C common
stock; and (5) no shares of preferred stock.
Long-Term Stock Incentive Plan
Genuity's employees have historically been among those granted options to
purchase common stock of GTE. The Long-Term Stock Incentive Plan was adopted by
the board of directors. The Long-Term Stock Incentive Plan provides for the
following awards based on the Class A common stock: stock options, stock
appreciation rights, performance bonuses and other stock-based awards. Awards
may be granted to employees
F-29
<PAGE>
GENUITY INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--Continued
(Including Data Applicable to Unaudited Periods)
of Genuity or any entity in which it owns at least a 10% interest. The Long-
Term Stock Incentive Plan will be administered by the executive compensation
committee of the Genuity board of directors. The administrator has the
authority to determine eligibility, grant awards and make all other
determinations under the plan.
Stock options granted under the Long-Term Stock Incentive Plan may have a
term of up to 10 years and may be either incentive stock options, as defined in
the Internal Revenue Code, or nonqualified stock options. Stock options granted
may not be assigned other than by will or by applicable laws descent and
distribution. The period or periods during which an award will be exercisable
or remain outstanding, including any periods following termination of service,
the manner of exercise and other details of awards will be determined by the
administrator consistent with the Long-Term Stock Incentive Plan.
Genuity has reserved shares of Class A common stock for issuance under
the 2000 Long-Term Stock Incentive Plan, subject to adjustment for stock splits
and similar events. Concurrently with the initial public offering, the Company
expects to issue options to purchase shares of Genuity's Class A common
stock at an exercise price equal to the initial public offering price. The 2000
Long-Term Stock Incentive Plan will terminate at the annual shareholders'
meeting in 2010, unless sooner terminated in accordance with the terms of the
plan.
Outside Directors' Compensation Plan
Pursuant to the Outside Directors' Compensation Plan, non-employee directors
who have agreed to serve on Genuity's board of directors at the time of the
proposed initial public offering will receive, effective upon the completion of
this offering, a $30,000 annual cash fee and options to purchase 30,000 shares
of Class A common stock at an exercise price equal to the initial public
offering price. In addition, non-employee directors who agree after the initial
public offering to serve on the board of directors will receive, effective upon
election to the board of directors, a $30,000 annual cash fee and options to
purchase 30,000 shares of Class A common stock at an exercise price equal to
the fair market value at the time of the grant. Options issued to the directors
will vest in three equal installments. The first installment will immediately
vest on the date of grant, but will not become exercisable until the day
immediately before the first annual meeting of the stockholders. The second
installment will vest and become immediately exercisable on the day immediately
before the second annual meeting of the stockholders. The third installment
will vest and become immediately exercisable on the day immediately before the
third annual meeting of the stockholders. If a director is not elected to the
board of directors at an annual meeting of the stockholders all unvested
options will expire.
15. Pro Forma (unaudited)
On , 2000 GTE made a capital contribution of $ to Genuity.
The pro forma effect of GTE's capital contribution, estimated to be $178
million as of March 31, 2000 and the sale of Class A common stock, assuming the
sale of 173,913,000 shares at an assumed initial public offering price of
$13.50 per share, after deducting the underwriters fees and estimated offering
expenses payable by Genuity, has been presented separately in Genuity's
accompanying combined balance sheets and combined statements of changes in
stockholder's equity.
F-30
<PAGE>
GENUITY INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1997, 1998 and 1999 and the
Three Months Ended March 31, 2000 (Unaudited) for Genuity
and the Six Months Ended June 30, 1997 for the Predecessor
(in thousands)
(Including Data Applicable to Unaudited Periods)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- ---------- ------------------------- ------------ --------------
Balance at Charged to Charged to
beginning costs and other accts.-- Deductions-- Balance at end
Description of period expenses describe describe of period
----------- ---------- ---------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
PREDECESSOR
1997
Allowance for doubtful
accounts............... $ 948 $1,840 $ 1(a) $ (35)(c) $2,754
- --------------------------------------------------------------------------------
GENUITY
1997
Allowance for doubtful
accounts............... $ 520 $1,898 $2,754(b) $ (850)(c) $4,322
1998
Allowance for doubtful
accounts............... $4,322 $2,256 $ 131(a) $(3,058)(c) $3,651
1999
Allowance for doubtful
accounts............... $3,651 $4,799 $ 201(a) $(3,101)(c) $5,550
March 31, 2000
(unaudited)
Allowance for doubtful
accounts............... $5,550 $1,553 $ 52(a) $(2,679)(c) $4,476
</TABLE>
- --------
(a) Represent bad debt recoveries
(b) Represents the impact of acquiring the Predecessor
(c) Represent write-offs of uncollectible receivable balances
<PAGE>
Inside Back Cover
Top Caption -- The "Genuity" logo is centered across the top.
Middle Diagram -- In the center of the page is a picture of a globe with the
caption "The Network Effect" in white letters. There are two
arrows surrounding the globe. The blue arrow points down and
has the caption "On-Network Users" in white. The purple arrow
points up with the caption "On-network Content" in white.
Bottom Caption -- "We believe that service providers are increasingly connecting
to networks with substantial on-network content to improve
their customers' experience. In turn, this drives demand by
enterprises seeking to connect to networks with large numbers
of users. At Genuity, we capitalize on our large base of on-
network users and content to create a cycle of demand that we
call the "network effect."
<PAGE>
- --------------------------------------------------------------------------------
173,913,000 Shares
Class A Common Stock
LOGO OF GENUITY
$ PER SHARE
Morgan Stanley Dean Witter Salomon Smith Barney
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than the
underwriting discounts and commissions. All amounts shown are estimates, except
the Securities and Exchange Commission Registration Fee and the National
Association of Securities Dealers, Inc. Filing Fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee........... $ 792,000
National Association of Securities Dealers Filing Fee......... 30,500
Nasdaq National Market Listing Fee............................ 95,000
Blue Sky Fees and Expenses.................................... 20,000
Transfer Agent and Registrar Fees............................. 100,000
Accounting Fees and Expenses.................................. 1,850,000
Directors and Officers Liability Insurance.................... 870,000
Legal Fees and Expenses....................................... 1,300,000
Printing Expenses............................................. 500,000
Miscellaneous................................................. 449,044
==========
Total....................................................... $6,006,544
</TABLE>
ITEM 14. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or the board of directors of a corporation to grant, indemnity to
directors and officers in terms sufficiently broad to permit indemnification
under some circumstances for liabilities, including reimbursement for expenses
incurred, arising under the Securities Act of 1933.
As permitted by the Delaware General Corporation Law, the certificate of
incorporation of the Registrant provides that its directors shall not be liable
to the Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent that the exculpation from
liabilities is not permitted under the Delaware General Corporation Law as in
effect at the time the liability is determined. As permitted by the Delaware
General Corporation Law, the certificate of incorporation of the Registrant
also provides that the Registrant shall indemnify its directors to the full
extent permitted by the laws of the State of Delaware.
The Registrant is in the process of obtaining policies of insurance under
which coverage will be provided (a) to its directors and officers against loss
arising from claims made by reason of breach of fiduciary duty or other
wrongful acts, including claims relating to public securities matters and (b)
to the Registrant with respect to payments which may be made by the Registrant
to these officers and directors pursuant to the above indemnification provision
or otherwise as a matter of law.
The Underwriting Agreement provides for the indemnification of officers and
directors of the Registrant by the Underwriters against some types of
liability.
ITEM 15. Recent Sales of Unregistered Securities.
In the three fiscal years prior to the effective date of this Registration
Statement, we have issued and sold the following unregistered securities:
On September 12, 1997, Genuity issued and sold 500 shares of its common
stock, par value $1.00 per share, to GTE Corporation for an aggregate price of
$500.
On , 2000, Genuity issued 18,256,000 shares of its Class B common
stock, par value $0.01 per share to GTE Corporation in exchange for 500 shares
of its common stock, par value $1.00 per share, held by GTE Corporation.
II-1
<PAGE>
The sales and issuances of securities listed above, other the sales and
issuances in Item , were deemed to be exempt from registration under Section
4(2) of the Securities Act or Regulation D thereunder as transactions not
involving a public offering. The sales and issuances of securities listed above
in Item were deemed to be exempt from registration under the Securities Act
by virtue of Rule 701 promulgated under Section 3(b) of the Securities Act of
1933 as transactions pursuant to compensation benefit plans and contracts
relating to compensation. All of the foregoing securities are deemed restricted
securities for purposes of the Securities Act.
ITEM 16. Exhibits and Financial Statement Schedules.
(a) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
------- -------------
<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Certificate of Incorporation*
3.2 Amended and Restated Certificate of Incorporation (To Be Filed Prior
To Closing Of Offering)*
3.3 Amended and Restated By-laws*
4.1 Specimen Class A Common Stock Certificate
5.1 Opinion of Ropes & Gray*
10.1 2000 Long-Term Stock Incentive Plan
10.2 Outside Directors' Compensation Plan
10.3 IRU Agreement dated as of May 2, 1997 by and between Qwest
Communications Corporation and GTE Intelligent Network Services
Incorporated(1)
10.4 First Amendment to IRU Agreement dated as of August 13, 1997(1)
10.5 Second Amendment IRU Agreement dated as of May 29, 1998(1)
10.6 Third Amendment to IRU Agreement dated as of November 16, 1998(1)
10.7 Fourth Amendment to IRU Agreement dated as of February 5, 1999(1)
10.8 Network Services Agreement by and between America Online, Inc. and BBN
Corporation effective as of December 31, 1999(1)
10.9 Form of Agreement for Transition Services between GTE Service
Corporation and Genuity Inc.(2)
10.10 Form of Agreement for IT Transition Services between GTE Service
Corporation and Genuity Inc.(2)
10.11 Form of Purchase, Resale and Marketing Agreement between Bell Atlantic
Corporation and Genuity Inc.(1)(2)
10.12 Form of Software License Agreement between GTE Service Corporation and
Genuity Inc.(2)
10.13 Form of Software Development and Technical Services Agreement between
GTE Service Corporation and Genuity Inc.(2)
10.14 Form of Intellectual Property Ownership and Cross License Agreement
between GTE Service Corporation and Genuity Inc.(2)
10.15 Form of Facility Lease Agreement(2)
10.16 Form of Sublease Agreement(2)
10.17 Form of Assignment and Assumption of Lease(2)
10.18 Form of Financial Support Agreement Regarding Guaranty of Obligation
between GTE Corporation and Genuity Inc.(2)
10.19 Form of Request by Genuity Inc. for Continuation of Financial Support
after Separation between GTE Corporation and Genuity Inc.(2)
10.20 Master Services Agreement dated as of September 14, 1999 between GTE
Network Services and GTE Global Network Incorporated
10.21 Form of First Amendment to Master Services Agreement between GTE
Network Services and GTE Incorporated(2)
10.22 Form of Second Amendment to Master Services Agreement between GTE
Network Services and GTE Incorporated(2)
10.23 Executive Deferral Plan
10.24 2000 Executive Incentive Plan
10.25 Executive Employment Agreement between Genuity Inc. and Paul R.
Gudonis*
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
------- -------------
<C> <S>
10.26 Executive Employment Agreement between Genuity Inc. and Joseph C.
Farina*
10.27 Executive Employment Agreement between Genuity Inc. and Daniel P.
O'Brien*
10.28 Executive Employment Agreement between Genuity Inc. and Ira H. Parker*
10.29 Consent of Philippe P. Dauman*
10.30 Consent of Duncan M. Davidson*
10.31 Consent of John W. Gerdelman*
10.32 Consent of Debra L. Lee*
10.33 Consent of Michael T. Masin*
21.1 Subsidiaries*
23.1 Consent of Ropes & Gray (Exhibit 5.1)*
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (Signature Page)+
27. Financial Data Schedule
</TABLE>
- --------
*To Be Filed By Amendment.
+Previously Filed.
(1) There are portions of these agreements that have been omitted pursuant to
a request for confidential treatment filed separately with the Securities
and Exchange Commission.
(2) These agreements are being filed in the form in which they will be
executed immediately upon the closing of the merger of Bell Atlantic
Corporation and GTE Corporation.
Other financial statement schedules are omitted because the information
called for is not required or is shown either in the financial statements or
the notes thereto.
ITEM 17. Undertakings.
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under "Item 14--Indemnification
of Directors and Officers" above, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission this
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against these liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by the
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether the indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of the issue.
(b) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this Registration Statement as of the time it was declared
effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of these securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) The undersigned Registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement,
certificates in the denominations and registered in the names required by the
underwriters to permit prompt delivery to each purchaser.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 2 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Burlington, State of Massachusetts, on the 24th day of May, 2000.
GENUITY INC.
/s/ Paul R. Gudonis
By __________________________________
Paul R. Gudonis
Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 2 to the Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Paul R. Gudonis Chief Executive Officer and May 24, 2000
____________________________________ Director (Principal
Paul R. Gudonis Executive Officer)
* Director May 24, 2000
____________________________________
Charles J. Gibney
* Director May 24, 2000
____________________________________
James L. Freeze
* Vice President, Finance May 24, 2000
____________________________________ (Principal Financial Officer
David B. Monaghan and Principal Accounting
Officer)
/s/ Paul R. Gudonis
____________________________________
*Paul R. Gudonis, Attorney-in-Fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
------- -------------
<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Certificate of Incorporation*
3.2 Amended and Restated Certificate of Incorporation (To Be Filed Prior
To Closing Of Offering)*
3.3 Amended and Restated By-laws*
4.1 Specimen Class A Common Stock Certificate
5.1 Opinion of Ropes & Gray*
10.1 2000 Long-Term Stock Incentive Plan
10.2 Outside Directors' Compensation Plan
10.3 IRU Agreement dated as of May 2, 1997 by and between Qwest
Communications Corporation and GTE Intelligent Network Services
Incorporated(1)
10.4 First Amendment to IRU Agreement dated as of August 13, 1997(1)
10.5 Second Amendment IRU Agreement dated as of May 29, 1998(1)
10.6 Third Amendment to IRU Agreement dated as of November 16, 1998(1)
10.7 Fourth Amendment to IRU Agreement dated as of February 5, 1999(1)
10.8 Network Services Agreement by and between America Online, Inc. and BBN
Corporation effective as of December 31, 1999(1)
10.9 Form of Agreement for Transition Services between GTE Service
Corporation and Genuity Inc.(2)
10.10 Form of Agreement for IT Transition Services between GTE Service
Corporation and Genuity Inc.(2)
10.11 Form of Purchase, Resale and Marketing Agreement between Bell Atlantic
Corporation and Genuity Inc.(1)(2)
10.12 Form of Software License Agreement between GTE Service Corporation and
Genuity Inc.(2)
10.13 Form of Software Development and Technical Services Agreement between
GTE Service Corporation and Genuity Inc.(2)
10.14 Form of Intellectual Property Ownership and Cross License Agreement
between GTE Service Corporation and Genuity Inc.(2)
10.15 Form of Facility Lease Agreement(2)
10.16 Form of Sublease Agreement(2)
10.17 Form of Assignment and Assumption of Lease(2)
10.18 Form of Financial Support Agreement Regarding Guaranty of Obligation
between GTE Corporation and Genuity Inc.(2)
10.19 Form of Request by Genuity Inc. for Continuation of Financial Support
after Separation between GTE Corporation and Genuity Inc.(2)
10.20 Master Services Agreement dated as of September 14, 1999 between GTE
Network Services and GTE Global Network Incorporated
10.21 Form of First Amendment to Master Services Agreement between GTE
Network Services and GTE Incorporated(2)
10.22 Form of Second Amendment to Master Services Agreement between GTE
Network Services and GTE Incorporated(2)
10.23 Executive Deferral Plan
10.24 2000 Executive Incentive Plan
10.25 Executive Employment Agreement between Genuity Inc. and Paul R.
Gudonis*
10.26 Executive Employment Agreement between Genuity Inc. and Joseph C.
Farina*
10.27 Executive Employment Agreement between Genuity Inc. and Daniel P.
O'Brien*
10.28 Executive Employment Agreement between Genuity Inc. and Ira H. Parker*
10.29 Consent of Philippe P. Dauman*
10.30 Consent of Duncan M. Davidson*
10.31 Consent of John W. Gerdelman*
10.32 Consent of Debra L. Lee*
10.33 Consent of Michael T. Masin*
21.1 Subsidiaries*
23.1 Consent of Ropes & Gray (Exhibit 5.1)*
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (Signature Page)+
27. Financial Data Schedule
</TABLE>
- --------
*To Be Filed By Amendment.
+Previously Filed.
(1) There are portions of this agreement that have been omitted pursuant to a
request for confidential treatment filed separately with the Securities
and Exchange Commission.
(2) These agreements are being filed in the form in which they will be
executed immediately upon the closing of the merger of Bell Atlantic
Corporation and GTE Corporation.
<PAGE>
GENU
THIS CERTIFICATE IS TRANSFERABLE
IN BOSTON, MA OR NEW YORK, NY
[GENUITY LOGO APPEARS HERE]
GENUITY INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CLASS A COMMON STOCK
CUSIP
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF CLASS A COMMON STOCK OF THE PAR VALUE OF
ONE CENT ($.01) EACH OF
GENUITY INC.
transferable upon the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this certificate properly endorsed
or assigned. This certificate and the shares represented hereby are issued and
shall be subject to the laws of the State of Delaware and to the provisions of
the Amended and Restated Certificate of Incorporation and By-Laws of the
Corporation as from time to time amended. This certificate is not valid unless
countersigned by the Transfer Agent and registered by the Registrar.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by the facsimile signatures of its duly authorized officers and its
facsimile corporate seal to be hereunto affixed.
Dated:
/s/ D.P. O'Brien
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND TREASURER
GENUITY INC. CORPORATE SEAL DELAWARE 1997.
/s/ Paul R. Gudonis
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED:
EquiServe Trust Company, N.A.
TRANSFER AGENT
AND REGISTRAR
BY
/s/ Charles V. Romin
AUTHORIZED SIGNATURE
<PAGE>
GENUITY INC.
The Corporation is authorized to issue more than one class of stock. A
statement of the powers, designations, preferences, and the relative
participating, optional or other rights of each class and series of stock and
the qualifications, limitations or restrictions thereon will be provided without
charge to each stockholder upon request to the Corporation.
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-
TEN ENT - as tenants by the entireties ----------
JT TEN - as joint tenants with right (Cust)
of survivorship and not as
tenants in common Custodian
-------------
(Minor)
under Uniform Gifts to Minors
Act
------------
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
For value received, hereby sell, assign, and transfer unto
---------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
INDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- ------------------------------------------------------------------------- Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
- ----------------------------------------------------------------------- Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated,
--------------------------- ----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the Certificate, in
every particular, without alteration or
enlargement, or any change whatever.
SIGNATURE(S) GUARANTEED:
--------------------------------------------------------
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
Exhibit 10.1
================================================================================
GENUITY INC.
2000 LONG-TERM STOCK INCENTIVE PLAN
___________
Effective May 22, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
1. PURPOSE........................................................... 1
2. EFFECTIVE DATE AND TERM OF THE PLAN............................... 1
3. DEFINITIONS....................................................... 1
4. PARTICIPATION..................................................... 2
5. ADMINISTRATION.................................................... 2
6. TYPES OF AWARDS................................................... 3
7. LIMITATIONS ON AWARDS............................................. 5
8. AWARD AGREEMENTS.................................................. 6
9. PAYMENT OF AWARDS................................................. 6
10. REVOCATION OR AMENDMENT OF AWARDS................................. 6
11. LIMITATION ON NUMBER OF SHARES.................................... 7
12. AMENDMENT OR TERMINATION OF THE PLAN.............................. 7
13. ADJUSTMENT PROVISIONS............................................. 8
14. NO REQUIRED SEGREGATION OF ASSETS................................. 9
15. COSTS............................................................. 9
16. RIGHT OF DISCHARGE RESERVED....................................... 9
17. NATURE OF PAYMENTS................................................ 9
18. SEVERABILITY...................................................... 9
19. GOVERNING LAW..................................................... 9
</TABLE>
- --------------------------------------------------------------------------------
Genuity Inc. 2000 Long-Term Stock Incentive Plan Table of Contents
<PAGE>
1. PURPOSE
The primary purpose of the Plan is to enable the Company to achieve
superior financial performance as reflected in the performance of the
Common Stock and/or other key financial or operating indicators by offering
Participants incentives to effect such results.
2. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan became effective on May 22, 2000. Unless the Plan is terminated
earlier in accordance with Section 12 hereof, the Plan shall remain in full
force and effect until the close of business on the date of the Company's
annual meeting of shareholders in the year 2010, at which time the right to
grant Awards under the Plan shall terminate automatically unless the
shareholders of the Company approve an extension or renewal of the Plan.
3. DEFINITIONS
Except where otherwise indicated, the following terms shall have the
definitions set forth below for purposes of the Plan:
"AWARD" means any award described in Section 6 hereof.
"AWARD AGREEMENT" means an agreement entered into between the Company and a
Participant, in a form determined by the Committee in its sole discretion,
setting forth the terms and conditions applicable to the Award granted to
the Participant.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.
"COMMITTEE" means the Executive Compensation Committee of the Board.
"COMMON STOCK" means the Class A common stock of the Company, including
both treasury shares and authorized but unissued shares, or any security of
the Company issued in substitution or exchange therefor or in lieu thereof.
"COMPANY" means Genuity Inc.
"EMPLOYEE" means an individual who is employed by the Company or a Related
Entity.
- --------------------------------------------------------------------------------
Genuity Inc. 2000 Long-Term Stock Incentive Plan Page 1
<PAGE>
"FAIR MARKET VALUE" means the average of the high and low sales prices of
the Shares on Nasdaq (or any other reporting system or market selected by
the Committee) on the relevant date, or if no sale of Shares is reported
for that date, on the date or dates that the Committee determines, in its
sole discretion, to be appropriate for purposes of the valuation.
"GRANT PRICE" means the price per Share at which Shares may be purchased
under a stock option and the price per Share used as the base price for
measuring the appreciation, if any, under a stock appreciation right.
Except as provided in Section 6(a), below, the Grant Price shall not be
less than the Fair Market Value of the Shares covered by the stock option
or stock appreciation right on the date as of which the option or right is
granted.
"MARKET PRICE" means the price of a Share on Nasdaq (or any other reporting
system or market selected by the Committee) at the time a stock
appreciation right is exercised.
"PARTICIPANT" means an Employee who has been granted an Award pursuant to
the Plan.
"PERFORMANCE BONUS" means an Award described in Section 6(c) hereof.
"PERFORMANCE CYCLE" means a period of three consecutive fiscal years of the
Company or such other period as the Committee may specify.
"PLAN" means the Genuity Inc. 2000 Long-Term Stock Incentive Plan, on the
date of adoption hereof and as it may be amended from time to time.
"RELATED ENTITY" means a corporation, partnership, joint venture or other
entity in which the Company has an ownership or other proprietary interest
of at least ten percent.
"SHARES" means shares of Common Stock.
4. PARTICIPATION
Only those Employees designated from time to time by the Committee shall
participate in the Plan and receive Awards hereunder.
5. ADMINISTRATION
(a) The Plan and all Awards granted pursuant thereto shall be administered by
the Committee. The Committee shall periodically determine, in its sole
discretion, the Employees who shall participate in the Plan and the terms
of the Awards to be granted to Participants. All questions of
interpretation
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Genuity Inc. 2000 Long-Term Stock Incentive Plan Page 2
<PAGE>
and administration with respect to the Plan, Awards, and Award Agreements
shall be determined by the Committee in its sole and absolute discretion,
and its determinations shall be final and binding upon all parties.
(b) The Committee may delegate its authority under subsection (a), above, to
persons other than its members to the extent it deems such action
advisable. Any person to whom the Committee has delegated authority under
subsection (a), above, may receive Awards only if the Awards are granted
directly by the Committee without delegation.
(c) The Committee may, in its sole discretion, promulgate general regulations
and guidelines governing the administration of the Plan and the Awards
granted hereunder. The Committee also may establish regulations governing
the deferred payment of Awards and may determine that deferred payments
shall accrue interest at a rate or rates determined by the Committee and/or
that deferred payments shall be deemed to be invested in Share equivalents
or other hypothetical investments.
(d) The Committee may not at any time adjust the purchase price, Grant Price,
or Market Price specified by Section 3 hereof (except for adjustments
pursuant to Section 13 hereof).
6. TYPES OF AWARDS
The types of Awards described in subsections (a) through (d), below, may be
granted or payable under the Plan, singly or in combination or in tandem
with other Awards (or with awards under other plans of the Company or a
Related Entity), as the Committee may determine. All Awards shall be in a
form determined by the Committee. No Award shall be inconsistent with the
terms of the Plan or fail to satisfy the requirements of applicable law.
The Committee may, from time to time, grant dividend equivalents in respect
of Awards.
(a) Stock Options
-------------
A stock option represents the right to purchase a specified number of
Shares, at a fixed Grant Price, during a specified term as the Committee
may determine. The term of a stock option shall not exceed ten years from
the date as of which the Grant Price is determined.
The Grant Price shall be payable, at the discretion of the Committee, by
the payment of cash, the delivery of Shares, and/or any other means that
- --------------------------------------------------------------------------------
Genuity Inc. 2000 Long-Term Stock Incentive Plan Page 3
<PAGE>
the Committee determines to be consistent with the Plan's purposes and
applicable law.
The stock options that may be granted under the Plan include (but are not
limited to) incentive stock options that comply with the requirements of
Section 422(b) of the Code. Incentive stock options may not be granted
under the Plan after February 1, 2010. Incentive stock options may be
granted only to Employees who are employed by the Company or by a
subsidiary corporation (within the meaning of Section 424(f) of the Code),
including a subsidiary corporation that becomes such after the adoption of
the Plan.
The Committee also may grant a right to purchase additional Shares to a
Participant contingent upon the surrender of Shares owned by the
Participant in payment of the Grant Price of a stock option granted under
the Plan or upon the surrender of Shares by the Participant in payment of
withholding tax liability with respect to such a stock option.
The Grant Price of the initial stock options granted to Participants who
were employees of the Company on or before the effective date of the
Company's initial public offering, shall be the initial public offering
price per Share. All other stock options granted under the Plan shall be
exercisable at the Grant Price.
(b) Stock Appreciation Rights
-------------------------
A stock appreciation right represents the right, denominated in Shares, to
receive, upon surrender of the right (or of both the right and a related
option in the case of a tandem right), in whole or in part, but without
payment, an amount (payable in accordance with Section 9 hereof) that does
not exceed the excess of the Market Price over the Grant Price for the
number of Shares for which the stock appreciation right is exercised. The
term of a stock appreciation right shall not exceed ten years from the date
as of which the Grant Price is determined.
(c) Performance Bonuses
-------------------
The Committee may, from time to time, grant Performance Bonuses to
Participants in accordance with such terms and conditions that the
Committee in its sole discretion may establish. Any such Performance
Bonuses shall be payable in the form of Shares only (except for cash in
lieu of fractional shares).
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Genuity Inc. 2000 Long-Term Stock Incentive Plan Page 4
<PAGE>
(d) Other Stock-Based Awards
------------------------
The Committee may, from time to time, grant Awards (other than the Awards
described above) under the Plan that consist of or are denominated in or
payable in, valued in whole or in part by reference to, or otherwise based
on or related to, Shares. These Awards may include Shares and/or
hypothetical Shares.
The Committee may subject these Awards to restrictions on transfer and/or
other restrictions on incidents of ownership as the Committee may
determine.
The Committee may grant Awards under this Section 6(d) that do not require
the payment of additional consideration by the Participant (other than
services previously rendered or, as may be permitted by applicable law,
services to be rendered), either on the date of grant or the date any
restriction(s) thereon are removed.
The term of an Award that grants a Participant the right to purchase Shares
shall not exceed ten years from the date as of which the purchase price is
determined.
7. LIMITATIONS ON AWARDS
(a) No Participant shall be granted options to purchase more than two
million Shares in one calendar year.
(b) Except as provided in subsection (c), below, a Participant shall
receive only one Award grant during the period beginning on the
effective date of the Plan and ending four years after the effective
date of the Plan.
(c) A Participant may receive a grant of an Award under the Plan at any
time to the extent that such grant is consistent with a promotion or
other significant increase in responsibility or, in the discretion of
the Committee, necessary to ensure that the Awards granted to such
Participant are appropriate in comparison to the Awards granted to
other Participants.
(d) No Award shall be assignable or transferable other than by will or by
the laws of descent and distribution. During the Participant's
lifetime, an Award may be exercised only by the Participant or by the
Participant's guardian or legal representative.
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Genuity Inc. 2000 Long-Term Stock Incentive Plan Page 5
<PAGE>
8. AWARD AGREEMENTS
An Award may be evidenced by an Award Agreement, the terms of which have
been approved by the Committee, setting forth the terms and conditions
applicable to the Award, including
(a) terms and conditions governing the extent (if any) to which the Award
may vest, become exercised, be exercised or paid, or be canceled or
forfeited,
(b) terms and conditions governing the disposition of the Award in the
event of disability, death, or other termination of a Participant's
employment,
(c) a provision that a Participant shall have no rights as a shareholder
with respect to any Shares covered by an Award until the date on which
the Participant or his nominee becomes the holder of record of such
Shares, and
(d) terms and conditions governing tax withholding.
9. PAYMENT OF AWARDS
(a) All payments of Awards shall be made on a date prescribed by the
Committee, unless the Participant has elected to defer payment in
accordance with the rules and regulations established by the
Committee.
(b) At the discretion of the Committee, a Participant may be offered an
election to substitute an Award for another Award or Awards of the
same or different type.
(c) No fractional Shares shall be issued in connection with Awards under
the Plan. The Committee shall determine whether cash, other
securities, or other property shall be paid or transferred in lieu of
fractional Shares, or whether fractional Shares or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(d) Except as provided in subsection (c), above, payments of Awards shall
be wholly in Shares. The Committee, in its sole discretion, shall
determine whether the Shares shall be subject to restrictions on
transfer and/or provisions regarding forfeiture of said Shares.
10. REVOCATION OR AMENDMENT OF AWARDS
(a) Subject to any early termination restrictions imposed by the Committee
in an Award Agreement and except as provided in subsection (b), below,
the Committee may not, without the written consent of the Participant,
revoke
- --------------------------------------------------------------------------------
Genuity Inc. 2000 Long-Term Stock Incentive Plan Page 6
<PAGE>
an Award Agreement, and may not without such written consent make or
change any determination or change any term, condition, or provision
affecting an Award if the determination or change would adversely
affect the Award or a Participant's rights thereto.
(b) The Committee may at any time and in any manner modify the terms of an
Award that relate to the early termination of the option or Award
period after the Participant's termination of employment; provided
that such modification shall not apply to an Award to the extent that
it has been previously exercised.
11. LIMITATION ON NUMBER OF SHARES
(a) The aggregate number of Shares that may be subject to all Awards shall
not exceed:
(1) Five percent of the outstanding Shares at the time of the initial
public offering of the Shares for all individuals who were
Employees on or before April 6, 2000, in the aggregate (except
for Awards granted pursuant to Section 7(c) hereof;
(2) One percent of the outstanding Shares at the time of the initial
public offering of the Shares for all individuals who first
become Employees after April 6, 2000, and on or before January 6,
2001, in the aggregate (except for Awards granted pursuant to
Section 7(c) hereof); and
(3) Three percent of the outstanding Shares at the time of the
initial public offering of the Shares plus any Shares that are
forfeited by a Participant or that are part of an Award that
expires unexercised for Awards granted pursuant to Section 7(c)
hereof and for all individuals who first become Employees after
January 6, 2001, in the aggregate.
(b) Subject to the limits imposed by subsection (a), above, no more than
50,000,000 Shares shall be available to be issued pursuant to
incentive stock options (within the meaning of Section 422(b) of the
Code or any successor thereto).
12. AMENDMENT OR TERMINATION OF THE PLAN
The Board may, from time to time, alter, amend, suspend or terminate the
Plan as it shall deem advisable, subject to any requirement for shareholder
approval imposed by applicable law. The termination of the Plan shall not
cause any previously granted Awards to terminate. After the termination of
the Plan, any
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Genuity Inc. 2000 Long-Term Stock Incentive Plan Page 7
<PAGE>
previously granted Awards shall remain in effect and shall continue to be
governed by the terms of the Plan, the Awards, and any applicable Award
Agreements. This Section applies regardless of whether the termination of
the Plan occurs pursuant to Section 2 hereof or pursuant to this Section
12.
13. ADJUSTMENT PROVISIONS
If the Committee determines that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property),
extraordinary cash dividend, recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities, the
issuance of warrants or other rights to purchase Shares or other
securities, or other similar corporate transaction or event affects the
Shares with respect to which Awards have been or may be issued under the
Plan and that an adjustment is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall, in a manner that the
Committee deems appropriate to prevent such dilution or enlargement, adjust
any or all of
(a) the number and type of securities that thereafter may be issued under
the Plan,
(b) the number and type of securities subject to outstanding Awards, and
(c) the Grant Price, purchase price, or Market Price with respect to any
Award, or, if deemed appropriate, make provision for a cash payment to
the holder of an outstanding Award.
However, no adjustment shall be authorized with respect to incentive stock
options to the extent that the adjustment would cause the options to
violate Section 422(b) of the Code or any successor provision. In
addition, the number of securities subject to any Award denominated in
Shares shall always be a whole number.
In the event of an acquisition by the Company by means of a merger,
consolidation, acquisition of property or stock, reorganization or
otherwise, the Committee shall be authorized to cause the Company to issue
or to assume stock options or stock appreciation rights, whether or not in
a transaction to which Section 424(a) of the Code applies, by means of
substitution of new options or rights for previously issued options or
rights or an assumption of previously issued options or rights, but only if
and to the extent that the substitution or assumption is consistent with
the other provisions of the Plan and with any applicable law.
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Genuity Inc. 2000 Long-Term Stock Incentive Plan Page 8
<PAGE>
Subject to any required action by the Company's shareholders, if the
Company is a party to any merger or consolidation, a Participant holding an
outstanding Award valued directly or indirectly by Shares shall be entitled
to receive, upon the exercise of the Award, the same per Share
consideration on the same terms that a holder of the same number of Shares
that are subject to the Award would be entitled to receive pursuant to the
merger or consolidation.
14. NO REQUIRED SEGREGATION OF ASSETS
Neither the Company nor any Related Entity shall be required to segregate
any assets that may at any time be represented by Awards pursuant to the
Plan.
15. COSTS
The Committee may require a Participant or beneficiary to bear all or part
of the cost of exercising an Award or issuing Shares under the Plan.
16. RIGHT OF DISCHARGE RESERVED
Neither the Plan nor any Award or Award Agreement shall guarantee any
Employee continued employment with the Company or a Related Entity or
guarantee the grant of future Awards. Either the Company or the Employee
may terminate the employment relationship at any time and for any reason.
17. NATURE OF PAYMENTS
All Awards made pursuant to the Plan are in consideration of services for
the Company or the Related Entities. Any gain realized pursuant to Awards
under the Plan constitutes a special incentive payment to the Participant
and shall not be taken into account as compensation for purposes of any of
the employee benefit plans of the Company or any Related Entity except as
may be determined by the Board or by the board of directors of the
applicable Related Entity.
18. SEVERABILITY
If any provision of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part, the unlawfulness, invalidity, or
unenforceability shall not affect any other provision of the Plan or part
thereof, each of which shall remain in full force and effect.
19. GOVERNING LAW
To the extent not preempted by federal law, the provisions of the Plan will
be construed and enforced in accordance with the laws of the Commonwealth
of Massachusetts, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of this
provision to the substantive law of another jurisdiction, except that
issues regarding the rights attendant to stock ownership shall be governed
by the laws of the State of Delaware (excluding its conflicts or choice of
law rules or principles) and construed accordingly.
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Genuity Inc. 2000 Long-Term Stock Incentive Plan Page 9
<PAGE>
EXHIBIT 10.2
================================================================================
GENUITY INC.
OUTSIDE DIRECTORS' COMPENSATION PLAN
___________
Effective May 22, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
1. PURPOSE................................................................ 1
2. EFFECTIVE DATE AND TERM OF THE PLAN.................................... 1
3. DEFINITIONS............................................................ 1
4. PARTICIPATION.......................................................... 2
5. ADMINISTRATION......................................................... 2
6. OPTIONS................................................................ 3
7. LIMITATIONS ON OPTIONS................................................. 3
8. OPTION AGREEMENTS...................................................... 4
9. REVOCATION OR AMENDMENT OF OPTIONS..................................... 4
10. FORFEITURE OF OPTIONS.................................................. 4
11. AMENDMENT OR TERMINATION OF THE PLAN................................... 5
12. ADJUSTMENT PROVISIONS.................................................. 5
13. NO REQUIRED SEGREGATION OF ASSETS...................................... 6
14. COSTS.................................................................. 6
15. SEVERABILITY........................................................... 6
16. GOVERNING LAW.......................................................... 6
</TABLE>
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Genuity Inc. Outside Directors' Compensation Plan Table of Contents
<PAGE>
1. PURPOSE
The purpose of the Plan is to benefit the shareholders of Genuity Inc. by
increasing the proprietary interests of non-employee directors of Genuity
Inc. or any Related Entity in the growth and success of Genuity Inc.
2. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan became effective on May 22, 2000. Unless the Plan is terminated
earlier in accordance with Section 11 hereof, the Plan shall remain in full
force and effect until the close of business on the date of the Company's
annual meeting of shareholders in the year 2010, at which time the right to
grant Options under the Plan shall terminate automatically unless the
shareholders of the Company approve an extension or renewal of the Plan.
3. DEFINITIONS
Except where otherwise indicated, the following terms shall have the
definitions set forth below for purposes of the Plan:
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.
"Committee" means the Executive Compensation Committee of the Board.
"Common Stock" means the Class A common stock of the Company, including
both treasury shares and authorized but unissued shares, or any security of
the Company issued in substitution or exchange therefor or in lieu thereof.
"Company" means Genuity Inc.
"Director" means a member of the Board.
"Fair Market Value" means the average of the high and low sales prices of a
Share on Nasdaq (or any other reporting system or market selected by the
Committee) on the relevant date, or if no sale of Shares is reported for
that date, on the date or dates that the Committee determines, in its sole
discretion, to be appropriate for purposes of the valuation.
"Grant Price" means the price per Share at which Shares may be purchased
under an Option. Except as provided in Section 6(d), below, the Grant
Price shall not be less than the Fair Market Value of the Shares covered by
the Option on the date the Option is granted.
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Genuity Inc. Outside Directors' Compensation Plan Page 1
<PAGE>
"Option" means the right to purchase a specified number of Shares, at a
fixed Grant Price, during a specified term (not to exceed ten years from
the date as of which the Grant Price is determined) as the Committee may
determine.
"Option Agreement" means an agreement entered into between the Company and
a Participant, in a form determined by the Committee in its sole
discretion, setting forth the terms and conditions applicable to the
Options granted to the Participant.
"Participant" means a Director who has been granted an Option under the
Plan.
"Plan" means the Genuity Inc. Outside Directors' Stock Option Plan, as set
forth herein.
"Related Entity" means a corporation, partnership, joint venture or other
entity in which the Company has an ownership or other proprietary interest
of at least ten percent.
"Share" means a share of Common Stock.
4. PARTICIPATION
Only those individuals who are Directors and who are not employees of the
Company shall participate in the Plan and receive Options hereunder.
5. ADMINISTRATION
(a) The Plan and all Options granted pursuant thereto shall be
administered by the Committee. All questions of interpretation and
administration with respect to the Plan, Options, and Option
Agreements shall be determined by the Committee in its sole and
absolute discretion, and its determinations shall be final and binding
upon all parties.
(b) The Committee may delegate its authority under subsection (a), above,
to persons other than its members to the extent it deems such action
advisable. Any person to whom the Committee has delegated authority
under subsection (a), above, may receive Options only if the Options
are granted directly by the Committee without delegation.
(c) The Committee may, in its sole discretion, promulgate general
regulations and guidelines governing the administration of the Plan
and the Options granted hereunder.
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Genuity Inc. Outside Directors' Stock Option Plan Page 2
<PAGE>
6. OPTIONS
(a) At the beginning of each Participant's initial term as a Director,
the Participant shall receive an option to purchase 30,000 Shares. At
the beginning of any subsequent three-year term to which each
Participant may be elected and begin to serve as a Director, the
Participant shall receive an additional option to purchase 30,000
Shares; provided, that a participant whose initial term was less than
three years shall not receive an additional 30,000 options upon his or
her first election to a full three-year term. The Committee shall have
discretion to award a pro rated option to any Director who begins to
serve a term as a Director that is expected to be less than three
years in duration.
(b) The Grant Price shall be payable, at the discretion of the Committee,
by the payment of cash, the delivery of Shares, and/or any other means
that the Committee determines to be consistent with the Plan's
purposes and applicable law.
(c) The Committee also may grant an Option to purchase additional Shares
to a Participant contingent upon the surrender of Shares owned by the
Participant in payment of the Grant Price under an Option or upon the
surrender of Shares by the Participant in payment of withholding tax
liability with respect to an Option.
(d) The initial Option granted to the eligible members of the Company's
initial Board shall be exercisable at the initial public offering
price per Share. Any other Option granted under the Plan shall be
exercisable at the Grant Price.
7. LIMITATIONS ON OPTIONS
(a) The only Options that may be granted under the Plan are those set
forth in Section 6 hereof.
(b) No Option awarded under the Plan shall be assignable or transferable
other than by will or by the laws of descent and distribution. During
the Participant's lifetime, an Option may be exercised only by the
Participant or by the Participant's guardian or legal representative.
(c) No fractional Shares shall be issued in connection with Options under
the Plan. The Committee shall determine whether cash, other
securities, or other property shall be paid or transferred in lieu of
fractional Shares, or whether fractional Shares or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(d) Except as provided in subsection (c), above, and Section 10 hereof,
payments of Options shall be wholly in Shares. The Committee, in its
sole
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Genuity Inc. Outside Directors' Compensation Plan Page 3
<PAGE>
discretion, shall determine whether the Shares shall be subject to
restrictions on transfer and/or forfeiture provisions.
8. OPTION AGREEMENTS
An Option may be evidenced by an Option Agreement, the terms of which have
been approved by the Committee, setting forth the terms and conditions
applicable to the Option, including
(a) terms and conditions governing the extent (if any) to which the Option
may become vested or exercisable or be exercised or paid,
(b) terms and conditions governing the disposition of the Option in the
event of disability, death or other termination of a Participant's
status as a Director, and
(c) a provision that a Participant shall have no rights as a shareholder
with respect to any Shares covered by an Option until the date on
which the Participant or his nominee becomes the holder of record of
such Shares.
9. REVOCATION OR AMENDMENT OF OPTIONS
(a) Except as provided in subsection (b) and Section 10, below, the
Committee may not, without the written consent of the Participant,
revoke an Option Agreement, and may not without such written consent
make or change any determination or change any term, condition, or
provision affecting an Option if the determination or change would
adversely affect the Option or a Participant's rights thereto.
(b) The Committee may at any time and in any manner modify the terms of an
Option that relate to the early termination of the Option after the
Participant's separation from the Board; provided that such
modification shall not apply to an Option to the extent that it has
been previously exercised.
10. FORFEITURE OF OPTIONS
(a) A Participant who does not complete the three-year term as a Director
for which an Option was granted shall, upon removal or withdrawal from
the Board, forfeit any then-unvested portion of the Option.
(b) Except to the extent a shorter time period is dictated by another
provision of the Plan or by an Award Agreement, any portion of an
Option that is not exercised within five years of the Participant's
separation or withdrawal from the Board shall be forfeited.
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Genuity Inc. Outside Directors' Compensation Plan Page 4
<PAGE>
11. AMENDMENT OR TERMINATION OF THE PLAN
The Board may, from time to time, alter, amend, suspend, or terminate the
Plan as it shall deem advisable, subject to any requirement for shareholder
approval imposed by applicable law. The termination of the Plan shall not
cause any previously granted Options to terminate. After the termination
of the Plan, any previously granted Options shall remain in effect and
shall continue to be governed by the terms of the Plan, the Options, and
any applicable Option Agreements. This Section applies regardless of
whether the termination of the Plan occurs pursuant to Section 2 hereof or
pursuant to this Section 11.
12. ADJUSTMENT PROVISIONS
If the Committee determines that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property),
extraordinary cash dividend, recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities, the
issuance of warrants or other rights to purchase Shares or other
securities, or other similar corporate transaction or event affects the
Shares with respect to which Options have been or may be issued under the
Plan and that an adjustment is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall, in a manner that the
Committee deems appropriate to prevent such dilution or enlargement, adjust
any or all of
(a) the number and type of securities that thereafter may be issued under
the Plan,
(b) the number and type of securities subject to outstanding Options, and
(c) the Grant Price with respect to any outstanding Option, or, if deemed
appropriate, make provision for a cash payment to the holder of an
outstanding Option.
The number of Shares subject to any Option shall always be a whole number.
Subject to any required action by the Company's shareholders, if the
Company is a party to any merger or consolidation, a Participant holding an
outstanding Option shall be entitled to receive, upon the exercise of the
Option, the same per Share consideration on the same terms that a holder of
the same number of Shares that are subject to the Option would be entitled
to receive pursuant to the merger or consolidation.
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Genuity Inc. Outside Directors' Compensation Plan Page 5
<PAGE>
13. NO REQUIRED SEGREGATION OF ASSETS
The Company shall be required to segregate any assets that may at any time
be represented by Options pursuant to the Plan.
14. COSTS
The Committee may require a Participant or beneficiary to bear all or part
of the cost of exercising an Option or issuing Shares under the Plan.
15. SEVERABILITY
If any provision of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part, the unlawfulness, invalidity, or
unenforceability shall not affect any other provision of the Plan or part
thereof, each of which shall remain in full force and effect.
16. GOVERNING LAW
To the extent not preempted by federal law, the provisions of the Plan will
be construed and enforced in accordance with the laws of the State of
Delaware, excluding any conflicts or choice of law rule or principle that
might otherwise refer construction or interpretation of this provision to
the substantive law of another jurisdiction.
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Genuity Inc. Outside Directors' Stock Option Plan Page 6
<PAGE>
CONFIDENTIAL TREATMENT EXHIBIT 10.3
CONFIDENTIAL AND PROPRIETARY
IRU AGREEMENT
DATED AS OF MAY 2, 1997
BY AND BETWEEN
QWEST COMMUNICATIONS CORPORATION ("QWEST")
AND
GTE INTELLIGENT NETWORK SERVICES INCORPORATED ("GTE")
TABLE OF CONTENTS
Page
RECITALS
ARTICLE I. GRANT OF IRU IN QWEST SYSTEM. . . . . . . . . . . . . . . . . .
ARTICLE II. CONSIDERATION FOR GRANT. . . . . . . . . . . . . . . . . . . .
ARTICLE III. CONSTRUCTION OF THE QWEST SYSTEM. . . . . . . . . . . . . . .
ARTICLE IV. ACCEPTANCE AND TESTING OF GTE FIBERS . . . . . . . . . . . . .
ARTICLE V. DOCUMENTATION . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VI. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VII. NETWORK ACCESS; REGENERATION FACILITIES . . . . . . . . . . .
ARTICLE VIII. OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE IX. MAINTENANCE AND REPAIR OF THE QWEST SYSTEM . . . . . . . . . .
ARTICLE X. PERMITS; UNDERLYING RIGHTS; RELOCATION. . . . . . . . . . . . .
ARTICLE XI. USE OF QWEST SYSTEM. . . . . . . . . . . . . . . . . . . . . .
ARTICLE XII. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XIII. LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . .
ARTICLE XIV. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XV. TAXES, FEES AND OTHER GOVERNMENTAL IMPOSITIONS . . . . . . . .
ARTICLE XVI. NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XVII. CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XVIII. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XIX. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XX. FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXI. DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXII. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXIII.GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXIV. RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . .
ARTICLE XXV. ASSIGNMENT AND TRANSFER RESTRICTIONS. . . . . . . . . . . . .
ARTICLE XXVI. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS. . . . . . .
ARTICLE XXVII. ENTIRE AGREEMENT; AMENDMENT . . . . . . . . . . . . . . . .
ARTICLE XXVIII. NO PERSONAL LIABILITY. . . . . . . . . . . . . . . . . . .
ARTICLE XXIX. RELATIONSHIP OF THE PARTIES. . . . . . . . . . . . . . . . .
ARTICLE XXX. LATE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXXI. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXXII. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXXIII. CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . .
EXHIBITS
Exhibit A: QWEST System Description
Exhibit A-1: QWEST System Description and Delivery Dates
Exhibit A-2: General Route Map
Exhibit A-3: Detailed Route Maps
Exhibit A-4: Designated Endpoint and Intermediate Point Cities
Exhibit B: IRU Fee Payment Schedule
Exhibit C: Construction Specifications
Exhibit D: Fiber Cable Splicing, Testing, and Acceptance Procedures
Exhibit E: Fiber Specifications
Exhibit E-1: Fiber Deployment Diagram
Exhibit F: Specifications for Regeneration Facilities
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Exhibit G: Regeneration Facility Sites
Exhibit H: QWEST System Maintenance Specifications and Procedures
Exhibit I: Underlying Rights and Underlying Rights Requirements
IRU AGREEMENT
THIS IRU AGREEMENT (this "Agreement") is made and entered into as of May 2,
1997, by and between QWEST COMMUNICATIONS CORPORATION, a Delaware corporation
("QWEST"), and GTE INTELLIGENT NETWORK SERVICES INCORPORATED, a Delaware
corporation ("GTE").
RECITALS
A. QWEST is planning to construct a continuous fiberoptic communication system,
contiguous from end to end, as described in Exhibit A hereto, and between each
of the city pairs identified in Exhibit A-1 hereto (the fiberoptic communication
system between each such city pair being referred to as a "Segment"), being
referred to herein collectively as the "QWEST System". The route that the QWEST
System shall follow as described in this paragraph is referred to herein as the
"System Route."
B. GTE desires to be granted the right to use certain optical fibers in the
QWEST System.
C. QWEST desires to grant GTE an exclusive, indefeasible right to use certain
fibers and associated property in the QWEST System, all upon the terms and
conditions set forth below. Accordingly, in consideration of the mutual promises
set forth below, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I.
GRANT OF IRU IN QWEST SYSTEM
1.1 (a) Effective as of the effective date described in Section 6.1 below,
for each particular Segment delivered by QWEST to GTE hereunder and with respect
to which an Acceptance Date (as defined in Section 4.2 below) has occurred,
QWEST hereby grants to GTE, and GTE hereby purchases from QWEST, (i) an
exclusive, Indefeasible Right of Use (as defined in Section 33.1(f), for the
purposes described herein, in twenty-four (24) "Dark Fibers" (as defined in
Section 33.1(c)), to be specifically identified, in the QWEST System in the
Segments and more specifically described in the maps included in Exhibit A-3
hereto and (ii) an associated and non-exclusive Indefeasible Right of Use, for
the purposes described herein, in the tangible and intangible property needed
for the use of such Dark Fibers as Dark Fibers, including, but not limited to,
the associated conduit, QWEST's rights in all "Underlying Rights" (as defined in
Section 10.1), but in any event excluding any electronic or optronic equipment
(collectively, the "Associated Property"), for the Term (as defined in Section
6.1) respecting such Segment, and all on the terms and subject to the covenants
and conditions set forth herein (collectively, the "IRUs"). The Dark Fibers
subject to the IRUs are referred to collectively as the "GTE Fibers."
(b) The parties acknowledge and agree that the specific route of any Segment
that has not been finally designed or engineered, or with respect to which a
right-of-way agreement has not been obtained as of the date hereof is subject to
final determination by QWEST, based on specific engineering, right-of-way,
permitting, authorization and other requirements; provided, however, that (i)
any such Segment route, as finally determined, must include all of the endpoint
and intermediate point cities identified in Exhibit A-4 and all of the junction
points identified in the System Route maps included in Exhibit A; (ii) no
deviation in the route of any Segment as set forth in the maps included in
Exhibit A-3 shall result in a Material Deviation (as defined below) in the
System Route as set forth in Exhibit A, and (iii) once the final route of any
Segment has been so determined, QWEST shall deliver to GTE corresponding
revisions to the relevant maps included in Exhibit A hereto. As used herein, the
term "Material Deviation" shall mean a deviation in the general route
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CONFIDENTIAL TREATMENT
of a Segment (A) that modifies the System Route architecture in a manner that
breaks a ring, creates a spur or breaks the contiguous nature of Segments; (B)
that modifies the route of the System Route through any city, identified in
Exhibit A-3 as being the location of a GTE POP site, from the detailed route map
shown in Exhibit A-3 for such city in a manner that materially changes the
proximity of such POP site to the System Route right-of-way (provided that, if
any such detailed city map shows that the POP site is in direct proximity to the
System Route right-of-way, any route modification which does not provide such
direct proximity shall be considered a material change in proximity); (C) that
modifies the route of the System Route through any city, as set forth in the
detailed route map for such city set forth in Exhibit A-3, such that the
location of the route at any point would be moved more than 1,200 feet in any
direction, without the prior written approval of GTE (such approval not to be
unreasonably withheld or delayed); or (D) that modifies any parallel route shown
within any city that is the subject of a detailed map included in Exhibit A-3
such that the distance between such parallel routes is less than 1,200 feet
outside metropolitan areas and less than two city blocks within metropolitan
areas.
(c) If any deviation(s) in the routes of Segments comprising the System
Route cause(s) the aggregate route miles as reflected in Exhibit A estimated for
the System Route to increase by more than ##MATERIAL OMITTED AND SEPARATELY
FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## %) of such estimate such
mileage shall be solely at QWEST's cost and expense and any route mileage in
excess of the applicable ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## %) increase as aforesaid shall not be
included in the route mileage for purposes of determining the IRU Fee as defined
and described in Section 2.1 below.
ARTICLE II.
CONSIDERATION FOR GRANT
2.1 In consideration of the grant of the IRUs hereunder by QWEST to GTE, GTE
agrees to pay to QWEST an IRU fee determined based on the QWEST mileage (and
allocated among the Segments based on Segment Rate mileage as set forth in
Exhibit B. (the "IRU Fee").
The IRU Fee shall be payable with respect to each Segment according to the
payment schedule set forth in Exhibit B.
2.2 QWEST will fax or send by overnight delivery each invoice for payments
to be made by GTE hereunder. GTE shall pay such invoiced amounts, less any
reasonably disputed amounts, for receipt by QWEST within thirty (30) days after
receipt of such invoice by GTE with respect to payments of the IRU Fee and
within thirty (30) days after receipt of such invoice by GTE for any other
amounts owed to QWEST hereunder; provided that GTE shall provide written notice
describing in detail the basis for any disputed amounts; and provided further
that any disputed amounts that are resolved in favor of QWEST shall be due for
payment based on the original invoice date. All payments to be made by GTE
hereunder of the IRU Fee and of any other amounts in excess of $100,000 shall be
made by wire transfer of immediately available funds to the account or accounts
as QWEST shall notify GTE in writing from time to time. Payments of all other
amounts by GTE hereunder may be made by check payable to QWEST. QWEST agrees to
provide GTE from time to time, upon request, with QWEST's estimate of the next
invoice date for a portion of the IRU Fee and the estimated amount of such IRU
Fee payment; provided that failure to provide any such notice shall not in any
way alter or impair GTE's payment obligations hereunder.
2.3 QWEST and GTE acknowledge and agree that with respect to Segment 23,
notwithstanding the fact that Segment 23 has already been constructed and
installed, delivery of Segment 23 shall occur in two installments of twelve (12)
Dark Fibers each as indicated in Exhibit A, and payment of the IRU Fee
established pursuant to Section 2.1 therefor (other than the initial
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
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CONFIDENTIAL TREATMENT
CONFIDENTIAL TREATMENT## % due upon execution of this Agreement), shall be
deferred until each such deferred installment delivery date as set forth in
Exhibit B.
ARTICLE III.
CONSTRUCTION OF THE QWEST SYSTEM
3.1 QWEST shall, at QWEST's sole cost and expense, be responsible for and
shall effect the design, engineering, installation, and construction of those
portions of the QWEST System not already constructed as of the date hereof in
accordance with the System Route (as it may be modified pursuant to Section 1.1)
and in conformity with (i) the construction specifications set forth in Exhibit
C, (ii) industry standards and practices, and (iii) applicable Underlying Rights
Requirements (as defined in Section 11.1). Such responsibilities shall include,
without limitation, preparation of construction drawings, bills of materials,
materials specifications and materials requisitions. Except for the existing
fibers on Segments 11A, 11B, 12A, 12B, 12C and 12D (which are Corning SMF-DS)
and any alternative fibers approved pursuant to the following sentence, all
fiber included in the GTE Fibers shall be Corning SMF-LS non-zero dispersion-
shifted or Lucent Technologies True Wave and shall meet or exceed the applicable
fiber specifications set forth in Exhibit E. QWEST may use alternative types of
fiber equivalent to either of the aforementioned fibers; provided that (i) prior
to any such use, QWEST meets with GTE (and GTE hereby agrees to so meet) to,
cooperatively and in good faith, jointly evaluate the use of any such fiber and
(ii) thereafter, GTE approves the use of such fiber, which approval shall not be
unreasonably withheld or delayed. QWEST agrees that, to the extent possible in
light of the fiber already incorporated in Segments that have been constructed,
in whole or in part, prior to the date hereof and the availability and cost of
the fiber of a particular type and manufacture hereafter, fiber utilized with
respect to the loops, rings and regions of the QWEST System shall be of the same
type and manufacture, as depicted in the fiber deployment diagram set forth in
Exhibit E-1 hereto, indicating the type of fiber QWEST currently plans to use in
each such Segment. Any deviation from the planned fiber use set forth in the
diagram must be approved by GTE, which approval shall not be unreasonably
withheld or delayed.
3.2 Subject to extension for delays described in Article XX, QWEST shall
complete at QWEST's sole cost and expense, all construction, installation, and
satisfactory Fiber Acceptance Testing (as defined in Section 4.1) of each of the
Segments, including the provision of such Regeneration Facilities on such
Segment as may be provided pursuant to Section 7.2(a), by the applicable
"Estimated Delivery Date" (as defined in Section 33.1(d)) respecting such
Segment.
3.3 Except as may be provided herein, QWEST shall, at QWEST's sole cost and
expense, procure all materials to be incorporated in and to become a permanent
part of the QWEST System, including, without limitation, the Regeneration
Facilities provided pursuant to Section 7.2(a).
3.4 QWEST shall, at QWEST's sole cost and expense, obtain all Underlying
Rights and other rights, licenses, permits and authorizations as required
pursuant to Article X hereof.
3.5 QWEST shall perform, at QWEST's sole cost and expense, substantially in
accordance with industry standards and practices and as deemed necessary or
appropriate in QWEST's reasonable business judgment, all supervisory and
inspection services relating to the construction of the QWEST System, including,
without limitation, performing construction inspections to assure that all
construction shall be in material compliance with the specifications, drawings,
Underlying Rights, provisions of this Agreement, and applicable governmental
codes. During the course of construction of each Segment, QWEST shall prepare
and provide to GTE construction schedule and progress reports every two weeks.
GTE shall have the right, but not the obligation, to inspect the construction of
each Segment,
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CONFIDENTIAL TREATMENT
including the installation, splicing and testing of the GTE Fiber incorporated
therein, during the course and at the time of the relevant design, construction
and installation period. No inspection or failure to inspect by GTE shall impair
or invalidate any rights and remedies of GTE under this Agreement or modify,
amend or otherwise affect any of the representations, warranties, covenants or
agreements of QWEST under this Agreement.
3.6 Upon GTE's written request, QWEST shall make available for inspection by
GTE, at QWEST's offices, copies of all information, documents, agreements,
reports, permits, drawings and specifications generated, obtained or acquired by
QWEST in performing its duties pursuant to this Article III that are material to
grant of the IRUs to GTE, including, without limitation, the Underlying Rights,
subject only to the conditions that (i) the terms of each such document or the
legal restrictions applicable to such information or document permits
disclosure; provided that QWEST will use its best efforts (without requiring the
expenditure of money) to obtain a waiver of any existing confidentiality and/or
non-disclosure restrictions, and to exempt GTE from subsequent confidentiality
and/or non-disclosure restrictions, that would restrict QWEST's ability to make
such documents and/or information available to GTE for inspection; (ii)
notwithstanding the existence or non-existence of such restrictions and/or
waivers, QWEST may, in its sole discretion, redact portions of such documents it
deems proprietary business terms prior to GTE's inspection. No inspection or
failure to inspect by GTE shall impair or invalidate any rights and remedies of
GTE under this Agreement or modify, amend or otherwise affect any of the
representations, warranties, covenants or agreements of QWEST under this
Agreement.
ARTICLE IV.
ACCEPTANCE AND TESTING OF GTE FIBERS
4.1 QWEST shall test all GTE Fibers in accordance with the procedures
specified in Exhibit D ("Fiber Acceptance Testing") to verify that the GTE
Fibers are installed and operating in accordance with the specifications
described in Exhibit D. Fiber Acceptance Testing shall progress span by span
along each Segment as cable splicing progresses, so that test results may be
reviewed in a timely manner. QWEST shall provide GTE at least five (5) days
advance notice of the date and time of each Fiber Acceptance Testing such that
GTE shall have the right, but not the obligation, to have a person or persons
present to observe QWEST's Fiber Acceptance Testing. When QWEST has determined
that the results of the Fiber Acceptance Testing with respect to a particular
span show that the GTE Fibers so tested are installed and operating in
conformity with the applicable specifications set forth in Exhibit D, QWEST
shall promptly provide GTE with a copy of such test results.
4.2 When QWEST reasonably determines in good faith that the GTE Fibers with
respect to an entire Segment are installed and operating in conformity with the
applicable specifications set forth in Exhibit D, QWEST shall promptly provide
written notice of same to GTE (a "Completion Notice"). GTE shall, within thirty
(30) days of receipt of the Completion Notice, either reject the Completion
Notice specifying, in good faith, the defect or failure in such Fiber Acceptance
Testing or give QWEST written notice of acceptance of such Fiber Acceptance
Testing (the period from the date of GTE's receipt of the Completion Notice to
the date of QWEST's receipt of GTE's notice of rejection or acceptance being
referred to herein as the "GTE Review Period"). In the event GTE rejects the
Completion Notice, QWEST shall promptly, and not later than seven days, and at
no cost to GTE, commence to remedy the defect or failure. Thereafter QWEST shall
again give GTE a Completion Notice with respect to such GTE Fibers. The
foregoing procedure shall apply again and successively thereafter for a total of
two attempts to remedy the defect or failure. If QWEST fails to adequately
remedy or complete the defect or failure after two attempts, GTE shall have the
right to proceed promptly and in an economically efficient manner to cure such
defects or failures at QWEST's cost and expense, which shall be paid by QWEST to
GTE upon demand, or at the election of GTE, offset from any IRU Fee payable by
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CONFIDENTIAL TREATMENT
GTE to QWEST with respect to such Segment or any other Segment. No acceptance
of, or failure by GTE to reject, the Completion Notice shall be deemed to be a
waiver of any rights or remedies of GTE under this Agreement; provided that, any
failure by GTE to timely reject as set forth above shall operate as a
constructive acceptance for purposes of this Agreement. The date when GTE
accepts or is deemed to have accepted a Completion Notice or cures such defects
at QWEST's cost and expense as provided above with respect to a Segment is
herein defined as the "Acceptance Date".
ARTICLE V.
DOCUMENTATION
5.1 Notwithstanding the conditions and limitations set forth in Section 3.6,
QWEST shall provide GTE with a copy of all Underlying Right Requirements (as
defined in Section 11.1) applicable to each Segment promptly following the grant
to QWEST of the Underlying Right pursuant to which such Underlying Right
Requirements are imposed and, in any event, on or before the date of completion
of conduit installation in such Segment (as defined in Exhibit B, paragraph
3(ii)).
5.2 Not later than ninety (90) days after the Acceptance Date for each
Segment, QWEST shall provide GTE with the following documentation:
(a) As-built drawings for such Segment in accordance with the requirements
described in Exhibit C ("As-Builts").
(b) Technical specifications of the optical fiber cable and associated
splices and other equipment placed in that Segment.
5.3 As a condition to, and effective upon receipt of, each IRU Fee payment
installment that is due upon QWEST's achievement of a construction,
installation, testing or acceptance milestone as set forth in Exhibit B, QWEST
shall deliver to GTE a lien waiver with respect to liens in favor of QWEST
arising out of QWEST's services in accomplishing such milestone. Promptly
following QWEST's receipt of each such payment, QWEST shall use reasonable
efforts to obtain (and in any event on or before the Acceptance Date with
respect to the relevant Segment shall obtain) from each subcontractor that
provided services in accomplishing such milestone a lien waiver with respect to
liens arising out of such services and, upon receipt, deliver a copy of each
such lien waiver to GTE.
ARTICLE VI.
TERM
6.1 The grant of the IRUs hereunder with respect to each Segment shall
become effective on the first day when both (i) the Acceptance Date with respect
to that Segment has occurred and (ii) QWEST has received payment in full of the
IRU Fee with respect to such Segment in accordance with Exhibit B, and, subject
to the provisions of Article X, such grant shall terminate at the end of the
economically useful life of the GTE Fibers, as reasonably determined by GTE
pursuant to Section 6.2 below. The period of each such grant respecting each
such Segment and IRU is herein defined as the "Term".
6.2 In the event that GTE, at any time, reasonably determines that the GTE
Fibers comprising any Segment have reached the end of their economically useful
life and desires to not retain the IRU in such Segment, GTE shall have the right
to abandon the IRU with respect to such Segment by written notice to QWEST. If,
at any time during or after the last year of the Minimum Period (as defined in
Section 10.2(ii) below), with respect to any Segment, GTE fails to use any of
the GTE Fibers comprising such Segment for any period of thirty (30) consecutive
days (except to the extent that such non-use is as a result of any of the events
described in Article XX or as a result of QWEST System maintenance, restoration,
relocation, or reconfiguration or as a result of the failure of QWEST to observe
and perform the terms of this Agreement), QWEST shall have the right to request
GTE to acknowledge that the GTE Fibers comprising such Segment have reached the
end of their economic life and, accordingly, has abandoned the GTE Fibers
comprising such Segment (which acknowledgment shall not be unreasonably withheld
or delayed). Upon any such notice of
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CONFIDENTIAL TREATMENT
abandonment or acknowledgment, the Term shall expire with respect to such
Segment and all rights to the use of such Segment shall revert to QWEST without
reimbursement of any fees or other payments previously made with respect
thereto, and from and after such time GTE shall have no further rights or
obligations hereunder with respect to such Segment (subject to the provisions of
Article XIX).
6.3 It is understood and agreed as between the parties that the grant of the
IRUs hereunder shall be treated for accounting and federal and all applicable
state and local tax purposes as the sale and purchase of the GTE Fibers and a
corresponding interest in QWEST's rights in the Associated Property subject
thereto, and that on and after the Acceptance Date with respect to each Segment,
GTE shall be treated as the owner of the GTE Fibers and an interest in QWEST's
rights in the Associated Property comprising such Segment for such purposes. The
parties agree to file their respective financial reports, income tax returns,
property tax returns, and other returns and reports for their respective
Impositions (as such term is defined in Section 33.1(e)) on such basis and,
except as otherwise required by law, not to take any positions inconsistent
therewith. QWEST shall retain legal title to the entire QWEST System, including
the GTE Fibers and Associated Property subject to the IRUs hereunder. In the
event the grant is not treated as a sale and purchase for tax purposes, the
parties shall pay any taxes arising by reason of such tax treatment on the same
basis as if it had been treated as a sale and purchase. Each party agrees to
indemnify the other with respect to any late filing penalties, interest or fees
incurred as a result of such party's failure to provide the other with such
information solely in such party's possession or control that may be necessary
in order to timely make any such filing.
6.4 This Agreement shall become effective on the date hereof and shall
terminate on the date when, after completion and delivery of all Segments
required to be delivered hereunder, all the Terms of all such Segments shall
have expired; provided that, those provisions of this Agreement which, by their
express terms, are intended to survive such termination, shall survive.
ARTICLE VII.
NETWORK ACCESS; REGENERATION FACILITIES
7.1 (a) QWEST shall provide GTE with access to, and GTE shall have the right
to connect, at GTE's sole cost and expense, its telecommunications system with,
the GTE Fibers at various network access points on the QWEST System right-of-way
in each of the endpoint cities and intermediate point cities along the route of
each Segment and at such additional locations along the QWEST System right-of-
way as may be requested by GTE (each such access point being referred to as a
"Connecting Point"). The specific locations of each such Connecting Point shall
be as mutually reasonably agreed upon by the parties in good faith, subject to
the Underlying Rights Requirements and QWEST obtaining other required permits,
authorizations and approvals (which QWEST agrees to use its best efforts to
obtain). Any such connection will be performed by QWEST, at GTE's sole cost and
expense, in accordance with QWEST's applicable specifications and operating
procedures. GTE shall pay QWEST's Costs for each such connection within thirty
(30) days of the date of GTE's receipt of QWEST's invoice therefor. In order to
schedule a connection of this type, GTE shall request and coordinate such work
not less than ninety (90) days in advance of the date the connection is
requested to be completed. Such work will be restricted to a Planned System Work
Period ("PSWP"), as defined in Section 33.1(i), unless otherwise agreed to in
writing for specific projects. Subject to all applicable Underlying Rights
Requirements, GTE shall also be provided reasonable access by QWEST to any
Connecting Point at all times. GTE shall have no limitations on the types of
electronics or technologies employed to utilize the GTE Fibers, subject to
mutually agreeable safety procedures and so long as such electronics or
technologies do not interfere with the use of or present a risk of damage to any
portion of the QWEST System.
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(b) QWEST may route the GTE Fibers through QWEST's separate terminal,
endlink, POP or Regeneration Facilities at its sole discretion so long as such
routing does not have a material adverse effect on the security, the safety or
GTE's use of the GTE Fibers or Associated Property hereunder and QWEST is
responsible for all costs and expenses associated therewith.
7.2 (a) QWEST will provide GTE with regeneration site facilities as
identified on Exhibit F or as mutually agreed by the parties to be located at
approximately sixty (60) mile intervals along the QWEST System right-of-way, in
each case consisting of and providing space of approximately ##MATERIAL OMITTED
AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## square
feet and amenities (except for the operating costs associated therewith
expressly required to be paid by GTE pursuant to Section 8.2), as described in
Exhibit F ("Regeneration Facilities") at the rates set forth below. The parties
acknowledge that (i) the locations of such Regeneration Facilities shall be
coincident with the locations of QWEST's own Regeneration Facilities. In
addition, QWEST shall provide to GTE at GTE's Prorated Cost (as defined below in
this paragraph (a)) POP or terminal facilities of approximately ##MATERIAL
OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##
square feet along the QWEST System right-of-way at such locations as may be
mutually determined by GTE and QWEST, subject to space and power availability
and Underlying Rights Requirements. GTE's Occupancy of and access to all such
Regeneration Facility Sites (or POP or terminal facilities) shall include
separate, secured, 24-hour-per-day building access. Any Regeneration Facilities
(or POP or terminal facilities) provided by QWEST to GTE shall be at GTE's
Prorated Cost. For purposes of the foregoing two sentences, GTE's Prorated Cost
for Regeneration facilities means $ ##MATERIAL OMITTED AND SEPARATELY FILED
UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per facility and for POP or
terminal facilities means $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## per facility.
(b) Except as provided in Section 8.2 or as otherwise agreed upon, in
writing, by the parties, all amounts payable under this Section 7.2 shall be due
upon the date that the subject facility is available for occupancy by GTE and
shall be paid in the manner specified in Section 2.2.
7.3 Notwithstanding any qualifications or limitations on QWEST's obligations
under this Article or elsewhere in this Agreement, including but not limited to
the qualification that any obligation of QWEST is subject to the Underlying
Rights Requirements, QWEST is obligated to use its best efforts to obtain and
provide any requisite consents, approvals, permits, authorizations and rights as
may be necessary in order for GTE to be able to install necessary equipment
and/or facilities, to have access to and to maintain its equipment and
facilities, to fully utilize the GTE Fibers, Associated Property, and the IRU
granted or to be granted to GTE under the Agreement, and to provide maintenance
on the Qwest System should QWEST not provide the maintenance services set out in
Exhibit H. QWEST agrees that in the event GTE's ability to utilize and maintain
the GTE Fibers as herein described is impeded in a material way as a result of
the Underlying Rights Requirements, QWEST agrees to use all commercially
reasonable efforts to amend the Underlying Rights or secure additional rights in
order to provide GTE with full access to the GTE Fibers.
ARTICLE VIII.
OPERATIONS
8.1 Each party shall have full and complete control and responsibility for
determining any network and service configuration or designs, routing
configurations, regrooming, rearrangement or consolidation of channels or
circuits and all related functions with regard to the use of that party's Dark
Fiber.
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8.2 GTE shall reimburse QWEST for GTE's proportionate share of all
reasonable and necessary operating costs incurred by QWEST in connection with
the Regeneration Facilities (or alternatively requested POP or terminal
facilities) provided pursuant to Section 7.2(a), including its proportionate
share of any monthly lease costs for any such facilities and/or underlying
property that QWEST leases (including, to the extent included in such lease
costs, base rent, maintenance, insurance, security and taxes), maintenance of
such facilities, and all power and utility fees and charges, excluding any lease
costs for underlying rights on the right-of-way. GTE's proportionate share of
such operating costs, including a proportionate share of common area costs,
shall be the ratio that the floor space provided to GTE in any such facility
(including a proportionate share of the common area) bears to (i) in the case of
lease costs, the total space in such facility, and (ii) in the case of all other
costs (including common area costs), the total utilized space in such facility.
QWEST shall submit invoices to GTE on an annual basis for GTE's pro rata share
of such operating costs during the preceding twelve months. GTE's reimbursement
obligations for insurance and taxes pursuant to this Section 8.2 shall in no
event be duplicative of GTE's payment obligations for insurance or taxes,
respectively, as provided in Article XIV and XV hereof, and in no event shall
relieve QWEST of its payment obligations for insurance costs or taxes,
respectively, as provided in Article XIV and XV hereof.
8.3 GTE acknowledges and agrees that, except to the extent expressly
provided pursuant to Section 7.2, QWEST is not supplying nor is QWEST obligated
to supply to GTE any optronics or electronics or optical or electrical equipment
or other facilities, including without limitation, generators, batteries, air
conditioners, fire protection and monitoring and testing equipment, all of which
are the sole responsibility of GTE, nor is QWEST responsible for performing any
work other than as specified in this Agreement.
8.4 Upon not less than one hundred twenty (120) days' written notice from
QWEST to GTE, QWEST may, subject to GTE's prior written approval (which approval
shall not be unreasonably delayed or withheld) substitute for the GTE Fibers on
the QWEST System, or any Segment or Segments comprising a portion of said QWEST
System, an equal number of alternative fibers along the same or an alternative
route; provided that in any such event, such substitution (i) shall be in
accordance with GTE's applicable specifications and operating procedures, (ii)
shall be effected at the sole cost of QWEST, including, without limitation, all
disconnect and reconnect costs, fees and expenses, (iii) shall be constructed
and tested in accordance with the specifications and drawings set forth in
Exhibits C and D and Section 4.2, and incorporate fiber meeting the
specifications set forth in Exhibit E, and (iv) shall not interrupt or adversely
affect the use, operation or performance of GTE's network or business, or change
any Connecting Points or endpoints of any Segment or change the location of any
Regeneration Facilities (or POPs or terminal facilities) used by GTE hereunder
or any other GTE POP, node or switch facilities, all as determined by GTE, in
its sole discretion.
ARTICLE IX.
MAINTENANCE AND REPAIR OF THE QWEST SYSTEM
9.1 From and after the Acceptance Date with respect to each Segment, the
maintenance of the QWEST System comprising such Segment shall be provided in
accordance with the maintenance requirements and procedures set forth in Exhibit
H hereto.
ARTICLE X.
PERMITS; UNDERLYING RIGHTS; RELOCATION
10.1 QWEST covenants and agrees that it shall obtain, during the course of
construction of, and in any event on or before the completion of conduit
installation with respect to, each Segment of conduit to be delivered hereunder
all Underlying Rights (as defined below) and such other rights, licenses,
permits, authorizations, consents and approvals (including, without limitation,
any necessary local, state, federal or tribal authorizations and environmental
permits) that are necessary in order to permit QWEST to construct,
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install and maintain the conduit and the GTE Fibers to be encompassed in such
Segment in accordance with the terms and conditions hereof. QWEST further
covenants and agrees that it shall obtain, during the course of construction of
and in any event on or before the Acceptance Date with respect to each Segment
to be delivered hereunder, any and all rights-of way, easements, licenses and
other agreements relating to the grant of rights and interests in and/or access
to the real property underlying the QWEST System (collectively, the "Underlying
Rights") and such other rights, licenses, permits, authorizations, consents and
approvals (including without limitation, any necessary local, state, federal or
tribal authorizations and environmental permits) that are necessary in order to
permit QWEST to grant the IRUs, and otherwise to perform its obligations
hereunder, in accordance with the terms and conditions hereof, and to (and all
of which Underlying Rights shall) permit GTE to use the GTE Fibers and
Associated Property as provided and permitted hereunder and in accordance with
the terms and conditions hereof. QWEST shall use its best efforts to cause the
terms of each such Underlying Right to provide GTE with notice of any default on
the part of QWEST and to permit GTE to cure, on behalf of QWEST, any such
default by QWEST and, thereafter, to continue the use of such Underlying Right
in accordance with QWEST's rights and interests thereunder and, if GTE at any
time cures such default by QWEST, QWEST shall reimburse GTE for any and all
amounts reasonably paid by GTE promptly upon demand.
10.2 QWEST further covenants and agrees that, with respect to each Underlying
Right that is necessary in order to continue and maintain the IRUs granted
hereunder, and to permit GTE to exercise its rights to use the GTE Fibers and
Associated Property, in each case in accordance with the terms and conditions
hereof:
(i) QWEST shall, for a period of
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
years from the date hereof (or until the earlier to occur of
(A) the expiration of the economically useful life of the GTE Fibers,
as determined pursuant to Section 6.2, or (B) the expiration or
termination of the term of a particular Underlying Right, so long as
any such termination is not effected as a result of any failure of
QWEST (not caused as a result of GTE's failure to observe and perform
its obligations hereunder) to observe and perform its duties,
obligations and responsibilities under such Underlying Right or under
this Agreement, including under this Article X), observe and perform
each and every of its obligations under each document, agreement or
instrument granting or conveying to QWEST such an Underlying Right if
the failure to observe and perform any such obligation or obligations
would permit the grantor of such Underlying Right to terminate such
Underlying Right prior to its stated expiration date, or would
otherwise materially, adversely impair or affect GTE's ability to use
the GTE Fibers and Associated Property, or exercise its rights with
respect thereto, as provided and permitted hereunder; and
(ii) QWEST shall either require that the initial stated
term of each such Underlying Right be for a period that does not
expire, in accordance with its ordinary terms, prior to the last day
of the Minimum Period (as hereinafter defined with respect to each
Segment) or, if the initial stated term of any such Underlying Right
expires, in accordance with its ordinary terms, on a date earlier than
the last day of the Minimum Period, QWEST shall at its cost exercise
any renewal rights thereunder, or otherwise acquire such extensions,
additions and/or replacements as may be necessary, in order to cause
the stated term thereof to be continued until a date that is not
earlier than the last day of the Minimum Period. The "Minimum Period"
shall be, with respect to each Segment, the period from the date on
which construction of such Segment commences until the twenty-fifth
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anniversary of such date; and
(iii) From and after the last day of the Minimum Period, QWEST at its sole cost
shall use its best efforts (without being required to expend commercially
unreasonably amounts therefor) to obtain such extensions and/or renewals as may
be necessary in order to cause the stated term of each such Underlying Right to
be continued for an additional period or periods of, in the aggregate,
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
years following the Minimum Period or until the earlier expiration of the
economically useful life of the GTE Fibers, as determined pursuant to Section
6.2; provided that QWEST shall not be required to expend, as consideration for
any such renewal or extension, more than the fair market rate payable at such
time for similar rights and terms except to the extent that GTE agrees at its
option to pay directly or reimburse QWEST for any amounts required to be paid in
excess of such fair market rate to renew or extend such an Underlying Right; and
(iv) Throughout the term of each such Underlying Right, QWEST shall at its
reasonable cost and expense defend and protect QWEST's rights in and interests
under the Underlying Rights and GTE's right to use the GTE Fibers and Associated
Property as provided and permitted hereunder against interfering or infringing
rights, interests or claims of third parties.
10.3 Upon the expiration or termination of any Underlying Right that is
necessary in order to grant, continue or maintain an IRU granted hereunder in
accordance with the terms and conditions hereof, so long as QWEST shall have
fully observed and performed its obligations under this Article X with respect
thereto, the Term of the IRUs hereunder with respect to any Segment or Segments
affected thereby shall automatically expire upon such expiration or termination.
10.4 If, after the Acceptance Date with respect to a Segment, QWEST is required
by a third party with legal authority to so require (including, without
limitation, the grantor of an Underlying Right, but only to the extent that such
relocation is not required as a result of a failure by QWEST to observe and
perform its obligations under such Underlying Right or this Agreement), or if
GTE agrees, to relocate any portion of such Segment including any of the
facilities used or required in providing the IRUs in such Segment hereunder,
QWEST shall proceed with such relocation, including, but not limited to, the
right, in good faith, to reasonably determine the extent of, the timing of, and
methods to be used for such relocation; provided that (i) the route of any such
relocation shall be subject to the good faith agreement of the parties with a
bona fide interest therein, (ii) GTE shall be kept fully informed of all other
determinations made by QWEST in connection with such relocation, and (iii) any
such relocation shall be constructed and tested in accordance with the
specifications and drawings set forth in Exhibits C and D, and incorporate fiber
meeting the specifications set forth in Exhibit E. GTE shall reimburse QWEST for
its proportionate share of the Costs of such relocation of the portion of the
Segment so relocated, reduced by such amount, if any, of the portion of such
Costs as are reimbursed to QWEST by the party requiring such relocation, as
follows: (i) if the affected portion of the Segment includes any conduit other
than the conduit housing the GTE Fibers for which QWEST is responsible for
relocation costs, the total Costs of relocation of the conduits (i.e.,
relocation of the conduits only without regard to whether the conduits contain
fibers) shall be allocated based on the overall number of conduits relocated;
(ii) such Costs allocated to the conduit carrying the GTE Fibers plus the Costs
specifically associated with the
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relocation of the fiber (i.e., relocation of the fiber only without regard to
relocation of conduit) shall be further allocated to GTE based on GTE's
proportionate share of (A) all Costs of fiber acquisitions, splicing and
testing, prorated based on the total fiber count in the affected Cable, as so
relocated, and (B) all other Costs associated with the relocation of the conduit
housing the affected Cable, prorated based on the total number of owners
(including QWEST) and holders of IRUs or equivalent interests (including long-
term lessees) (each, an "Interest Holder") in the affected Cable, as so
relocated. GTE shall have the right to review and audit all Costs incurred in
connection with such relocation. QWEST shall deliver to GTE updated As-Builts
with respect to the relocated Segment not later than sixty (60) days following
the completion of such relocation. Any condemnation or taking under the power of
eminent domain of all or any portion of a Segment shall be deemed a relocation
required by a third party with legal authority to so require, and such affected
Segment, or portion thereof, shall be relocated in accordance with this Section
10.4 and any condemnation proceeds received by QWEST shall be applied to such
relocation as provided above.
ARTICLE XI.
USE OF QWEST SYSTEM
11.1 The requirements, restrictions, and/or limitations upon GTE's right to use
the GTE Fibers and Associated Property as provided and permitted under this
Agreement imposed under, and associated safety, operational and other rules and
regulations imposed in connection with, the Underlying Rights are referred to
collectively as the "Underlying Rights Requirements." QWEST represents and
warrants that, it has made available to GTE for its review and inspection a copy
of certain documents, agreements, or instruments pursuant to which QWEST has
been granted an Underlying Right as of the date hereof (the "Existing Underlying
Rights"), and certain associated safety, operational and other rules and
regulations imposed in connection with the exercise of its rights thereunder
(all of which are identified on Exhibit I hereto). GTE hereby accepts the
Existing Underlying Rights and the Underlying Rights Requirements associated
therewith. QWEST represents that it is not in default under any of the Existing
Underlying Rights that would permit the grantor of such Underlying Right to
terminate such Underlying Right prior to its stated expiration date, or would
otherwise materially, adversely impair or affect GTE's ability to use the GTE
Fibers and Associated Property, or exercise its rights with respect thereto, as
provided and permitted hereunder, and, to the best of its knowledge, none of the
grantors are in default under the Existing Underlying Rights. With respect to
each Underlying Right (other than the Existing Underlying Rights) obtained after
the date hereof by QWEST (or an Underlying Right existing on the date hereof
under any document, agreement or instrument delivered after the date hereof) in
carrying out its obligations hereunder from the same type of grantor as a
grantor of any Existing Underlying Right, QWEST represents and warrants that the
terms and conditions thereof, and rules and regulations imposed in connection
therewith, shall not impose materially more onerous limitations and restrictions
on the rights of GTE to use the GTE Fibers and Associated Property as permitted
and provided hereunder than those imposed by such type of grantor under and in
connection with the Existing Underlying Rights and Underlying Rights
Requirements associated therewith. To the extent that any such Underlying Right
documents, agreements or instruments were or hereafter are provided in a
redacted format to protect confidential and proprietary business terms, QWEST
represents and warrants that no language or information so redacted constitutes
an Underlying Rights Requirement nor otherwise imposes material requirements,
restrictions and/or limitations upon GTE's right to use the GTE Fibers and
Associated Property as provided and permitted hereunder. QWEST represents to GTE
that the map heretofore provided to GTE delineating the general location of
rights of way, easements and other rights held by QWEST under the principal
agreements evidencing the Existing Underlying Rights is a true and complete
depiction, in all material respects, with respect to the general
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CONFIDENTIAL TREATMENT
location of such Existing Underlying Rights that relate to the GTE Fibers to be
installed along the QWEST System as contemplated by this Agreement.
11.2 GTE represents, warrants and covenants that it will use the GTE Fibers and
Associated Property in compliance with (i) all applicable government codes,
ordinances, laws, rules, regulations and/or restrictions, and (ii) subject to
QWEST's obligations under Section 11.1, the Underlying Rights Requirements.
11.3 In addition to the other rights provided hereunder, but subject to the
provisions of Article VII, the IRUs granted hereunder shall include the right at
GTE's cost to install additional equipment, or replace existing equipment, in
the facility space provided to GTE pursuant to Article VII, subject to the
Underlying Rights Requirements.
11.4 QWEST agrees and acknowledges that it has no right to use the GTE Fibers
during the Term hereof, and that, from and after the effective date of the grant
of each IRU hereunder, QWEST shall keep the GTE Fibers, the Associated Property
and the IRUs granted hereunder free from (i) any liens of any third party
attributable to QWEST, and (ii) any rights or claims of any third party
attributable to QWEST, as and to the extent required pursuant to Article X
hereof. In addition, QWEST agrees that, from and after the execution of this
Agreement and until the effective date of the grant of each IRU hereunder with
respect to any Segment, it shall obtain from any entity in favor of which QWEST
in its discretion shall have granted a security interest or lien on all or part
of such Segment a written nondisturbance agreement substantially to the effect
that such lienholder acknowledges GTE's rights and interests in and to the GTE
Fibers, the Associated Property and the IRU's hereunder and agrees that the same
shall not be diminished, disturbed, impaired or interfered with by such
lienholder.
11.5 Subject to the provisions of Article XXV and this Article XI, GTE may use
the GTE Fibers, the Associated Property and the IRUs for any lawful
telecommunications purpose. For purposes of this Section 11.5
"telecommunications" shall have the meaning as used and interpreted in 47 U.S.C.
Sec.153(2)(43). GTE agrees and acknowledges that it has no right to use any of
the fibers, other than the GTE Fibers, included in the Cable or otherwise
incorporated in the QWEST System, and that GTE shall keep any and all of the
QWEST System, other than the IRU in the GTE Fibers or in the Associated
Property, free from any liens, rights or claims of any third party attributable
to GTE.
11.6 GTE and QWEST shall promptly notify each other of any matters pertaining
to, or the occurrence (or impending occurrence) of, any event which could give
rise to any damage or impending damage to or loss of the QWEST System that are
known to such party. Without limiting the generality of the foregoing, QWEST
shall promptly forward to GTE a copy of any notice of default received by QWEST
with respect to its obligations under any Underlying Right if such default is
not promptly cured by QWEST.
11.7 GTE shall not use the GTE Fibers or any related facilities or equipment in
a way which physically interferes in any way with or adversely affects the use
of the fibers or cable of any other person using the QWEST System, it being
expressly acknowledged that the QWEST System includes or will include other
participants, including QWEST and other owners and holders of Dark Fiber IRUs
and telecommunication system operations. QWEST shall not use any other fibers in
the QWEST System in a way which physically interferes with or adversely affects
the use of the GTE Fibers, and shall obtain a similar agreement from any person
that acquires the right to use fibers in the QWEST System after the date hereof.
11.8 GTE and QWEST each agree to cooperate with and support the other in
complying with any requirements applicable to their respective rights and
obligations hereunder by any governmental or regulatory agency or authority.
11.9 QWEST agrees, so long as any such action would not violate the terms of any
Underlying Right, upon request of GTE, to execute,
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file and/or record such documents or instruments as GTE shall deem reasonably
necessary or appropriate to evidence or safeguard the IRUs granted to GTE
hereunder. GTE agrees to reimburse QWEST for all reasonable costs and out-of-
pocket expenses (including, without limitation, reasonable fees and expenses of
legal counsel) incurred by QWEST in fulfilling its obligations under this
Section 11.9.
ARTICLE XII.
INDEMNIFICATION
12.1 Subject to the provisions of Articles XIII and XVIII, QWEST hereby releases
and agrees to indemnify, defend, protect and hold harmless GTE and its
employees, officers and directors, from and against, and assumes liability for:
(a) Any injury, loss or damage to any person (including GTE), tangible property
or facilities of any person or entity (including reasonable attorneys' fees and
costs) to the extent arising out of or resulting from the acts or omissions,
negligent or otherwise, of QWEST, its officers, employees, servants, affiliates,
agents, contractors, licensees, invitees or vendors arising out of or in
connection with a default (other than a default caused by a failure of GTE to
perform or comply with its obligations hereunder) by QWEST in the performance of
its obligations or breach of its representations under this Agreement
(including, without limitation, any default by QWEST in the performance of its
obligations under Article X with respect to the Underlying Rights and under
Article XI with respect to its use of the QWEST System); and
(b) Any claims, liabilities or damages, including reasonable attorneys' fees and
costs, arising out of any violation by QWEST of any regulation, rule, statute or
court order of any local, state or federal governmental agency, court or body in
connection with the performance of its obligations under this Agreement.
12.2 Subject to the provisions of Articles XIII and XVIII, GTE hereby releases
and agrees to indemnify, defend, protect and hold harmless QWEST, and its
employees, officers and directors, from and against, and assumes liability for:
(a) Any injury, loss or damage to any person (including QWEST), tangible
property or facilities of any person or entity (including reasonable attorneys'
fees and costs) to the extent arising out of or resulting from the acts or
omissions, negligent or otherwise, of GTE, its officers, employees, servants,
affiliates, agents, contractors, licensees, invitees or vendors arising out of
or in connection with a default (other than a default caused by a failure of
QWEST to perform or comply with its obligations hereunder) by GTE in the
performance of its obligations or breach of its representations under this
Agreement (including, without limitation, any default by GTE in the performance
of its obligations under Article XI with respect to its use of the QWEST
System); and
(b) Any claims, liabilities or damages, including reasonable attorneys' fees and
costs, arising out of any violation by GTE of any regulation, rule, statute or
court order of any local, state or federal governmental agency, court or body in
connection with its use of the IRUs and/or the GTE Fibers and Associated
Property hereunder.
12.3 The parties agree to promptly provide each other with notice of any
lawsuit, judicial, administrative or other dispute resolution action or
proceeding, or claim of which it becomes aware and which it believes may result
in an indemnification obligation hereunder (each, an "Action"); provided that
the failure to provide any such notice shall not affect the indemnifying party's
indemnification obligation unless the indemnifying party is actually prejudiced
by the failure to receive such notice. After receipt of any such notice, if the
indemnifying party shall acknowledge in writing to the indemnified party that
the indemnifying party shall be obligated under the terms of this indemnity
hereunder in connection with such Action, then the indemnifying party shall be
entitled, if it so elects (i) to take control of the defense and investigation
of such Action, (ii) to employ and engage attorneys of its own choice to handle
and defend the same, at the indemnifying party's cost, risk and expense unless
the named parties to such action or proceeding include
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both the indemnifying party and the indemnified party and the indemnified party
has been advised in writing by counsel that there may be one or more legal
defenses available to such indemnified party that are different from or
additional to those available to the indemnifying party, in which case the
indemnified party shall also have the right to employ its own counsel in any
such case with the reasonable fees and expenses of such counsel being borne by
the indemnifying party, and (iii) to compromise or settle such Action, which
compromise or settlement shall be made only with the written consent of the
indemnified party, such consent not to be unreasonably withheld. Notwithstanding
anything in this Section 12.3 to the contrary, (i) if there is a reasonable
probability that an indemnifiable claim may materially adversely affect the
indemnified party, other than as a result of money damages or other money
payments, the indemnified party shall have the right to participate in such
defense, compromise or settlement and the indemnifying party shall not, without
the indemnified party's written consent (which consent shall not be unreasonably
withheld), settle or compromise any indemnifiable claim or consent to entry of
any judgment in respect thereof unless such settlement, compromise or consent
includes as an unconditional term thereof the giving by the claimant or the
plaintiff to the indemnified party a release from all liability in respect of
such indemnifiable claim.
12.4 The parties hereby expressly recognize and agree that each party's said
obligation to indemnify, defend, protect and save the other harmless is not a
material obligation to the continuing performance of the parties' other
obligations, if any, hereunder. In the event that a party shall fail for any
reason to so indemnify, defend, protect and save the other harmless, the injured
party hereby expressly recognizes that its sole remedy in such event shall be
the right to bring legal proceedings against the other party for its damages as
a result of the other party's said failure to indemnify, defend, protect and
save harmless. The obligations of the parties under this Article XII shall
survive the expiration or termination of this Agreement.
12.5 Nothing contained herein shall operate as a limitation on the right of
either party hereto to bring an action for damages against any third party,
including indirect, special or consequential damages, based on any acts or
omissions of such third party as such acts or omissions may affect the
construction, operation or use of the GTE Fibers or the QWEST System; provided,
however, that each party hereto shall assign such rights or claims, execute such
documents and do whatever else may be reasonably necessary to enable the other
party to pursue any such action against such third party.
ARTICLE XIII.
LIMITATION OF LIABILITY
13.1 Notwithstanding any provision of this Agreement to the contrary, except to
the extent caused by its own willful misconduct, neither party shall be liable
to the other party for any special, incidental, indirect, punitive or
consequential damages, whether foreseeable or not, arising out of, or in
connection with such party's failure to perform its respective obligations or
breach of its respective representations hereunder, including, but not limited
to, loss of profits or revenue (whether arising out of transmission
interruptions or problems, any interruption or degradation of service or
otherwise), cost of capital, or claims of customers, in each case whether
occasioned by any construction, reconstruction, relocation, repair or
maintenance performed by, or failed to be performed by, the other party or any
other cause whatsoever, including breach of contract, breach of warranty,
negligence, or strict liability, all claims with respect to which such special,
incidental, indirect, punitive or consequential damages are hereby specifically
waived. Nothing contained herein shall be construed to prohibit or reduce the
payment by QWEST of the amounts described in Section 18.2 and which the parties
acknowledge are the sole rights and remedies of GTE to the extent provided in
Section 18.2(e).
ARTICLE XIV.
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INSURANCE
14.1 During the construction period with respect to any Segment, and until the
Acceptance Date with respect thereto, QWEST shall procure and maintain in force
the following insurance coverage from companies lawfully approved to do business
in the state where the construction will be performed:
(a) not less than $5,000,000 combined single-limit liability insurance, on an
occurrence basis, for personal injury and property damage, including, without
limitation, injury or damage arising from the operation of vehicles or equipment
and liability for completed operations;
(b) workers' compensation insurance in amounts required by applicable law and
employers' liability insurance with a limit of at least $1,000,000 per
occurrence;
(c) automobile liability insurance covering death or injury to any person or
persons, or damage to property arising from the operation of vehicles or
equipment, with limits of not less than $2,000,000 per occurrence; and
(d) any other insurance coverages required pursuant to QWEST's right-of-way
agreements with railroads or other third parties. QWEST shall require its
subcontractors who are engaged in connection with the construction of the QWEST
System to maintain insurance in the types and amounts as would be obtained by a
prudent person to provide adequate protection against loss. In all
circumstances, QWEST shall require its subcontractors to carry a minimum of
$1,000,000 in commercial general liability; and
(e) GTE shall be listed as an additional insured on all policies set forth
above, except workers' compensation. QWEST shall provide to GTE a certificate of
insurance evidencing such insurance coverage. Evidence of insurance furnished
shall contain a clause stating GTE "shall be notified in writing at least thirty
(30) days prior to any cancellation of, or any material change or new exclusions
in the policy."
14.2 Following the Acceptance Date with respect to each Segment, and throughout
the remaining term of the IRU with respect to such Segment, each party shall
procure and maintain in force, at its own expense:
(a) not less than $5,000,000 combined single limit liability insurance, on an
occurrence basis, for personal injury and property damage, including, without
limitation, injury or damage arising from the operation of vehicles or equipment
and liability for completed operations;
(b) workers' compensation insurance in amounts required by applicable law and
employers' liability insurance with a limit of at least $1,000,000 per
occurrence;
(c) automobile liability insurance covering death or injury to any person or
persons, or damage to property arising from the operation of vehicles or
equipment, with limits of not less than $2,000,000 per occurrence; and
(d) any other insurance coverages specifically required of such party pursuant
to QWEST's right-of-way agreements with railroads or other third parties.
14.3 Both parties expressly acknowledge that a party shall be deemed to be in
compliance with the provisions of this Article if it maintains an approved self
insurance program providing for a retention of up to $1,000,000. If either party
provides any of the foregoing coverages on a claims-made basis, such policy or
policies shall be for at least a three-year extended reporting or discovery
period. Unless otherwise agreed, GTE's and QWEST's insurance policies shall be
obtained and maintained with companies rated "A" or better by Best's Key Rating
Guide and each party shall provide the other with an insurance certificate
confirming compliance with this requirement for each policy providing such
required coverage.
14.4 In the event either party fails to obtain the required insurance or to
obtain the required certificates from any contractor and a claim is made or
suffered, such party shall indemnify and hold harmless the other party from any
and all claims for which the
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required insurance would have provided coverage. Further, in the event of any
such failure which continues after seven (7) days' written notice thereof by the
other party, such other party may, but shall not be obligated to, obtain such
insurance and will have the right to be reimbursed for the cost of such
insurance by the party failing to obtain such insurance.
14.5 In the event coverage is denied or reimbursement of a properly presented
claim is disputed by the carrier for insurance provided above, the party
carrying such coverage shall make good-faith efforts to pursue such claim with
its carrier.
14.6 GTE and QWEST shall each obtain from the insurance companies providing the
coverages required by this Agreement the permission of such insurers to allow
such party to waive all rights of subrogation and such party does hereby waive
all rights of said insurance companies to subrogation against the other party,
its parent corporation, affiliates, subsidiaries, assignees, officers,
directors, and employees or any other party entitled to indemnity under this
Agreement.
ARTICLE XV.
TAXES, FEES AND OTHER GOVERNMENTAL IMPOSITIONS
15.1 The parties acknowledge and agree that it is their mutual objective and
intent to (i) minimize, to the extent feasible, the aggregate Impositions (as
defined in Section 33.1(e)) payable with respect to the QWEST System and (ii)
share such Impositions according to their respective interests in the QWEST
System , and that they will cooperate with each other and coordinate their
mutual efforts to achieve such objectives in accordance with the provisions of
this Article XV.
15.2 (a) QWEST shall be responsible for and shall timely pay any and all
Impositions with respect to the construction or operation of the QWEST System
which Impositions are (i) imposed or assessed prior to the Acceptance Date, (ii)
imposed or assessed with respect to events which occurred or property rights or
obligations of QWEST which existed prior to the acceptance date; or (iii)
imposed or assessed (regardless of the time) with respect to the QWEST System in
exchange for the approval of construction in the original agreement which
resulted in the granting of an Underlying Right. Notwithstanding the foregoing
obligations, QWEST shall have the right to challenge any such Impositions so
long as the challenge of such Impositions does not materially, adversely affect
the title, rights or property to be delivered to GTE pursuant hereto.
(b) Real and/or personal property or ad valorem taxes shall be prorated
between QWEST and GTE based on the period the Property was owned by each
respective party during the fiscal period for which such taxes were imposed by
the taxing jurisdiction (as such fiscal period is reflected on the bill rendered
by such taxing jurisdiction). If the fiscal period is not identified on the tax
bill, proration between QWEST and GTE shall be calculated based on the privilege
period of the taxing jurisdiction. QWEST and GTE shall pay or be reimbursed for
real and/or personal property taxes (including instances in which such property
taxes have been paid before the Acceptance Date) prorated on this basis.
15.3 Except as to Impositions described in paragraphs (ii) and (iii) of Section
15.2, which are clearly for QWEST's account following the Acceptance Date, QWEST
shall timely pay any and all Impositions imposed upon or with respect to the
QWEST System to the extent such Impositions may not feasibly be separately
assessed or imposed upon or against the respective ownership interests of QWEST
and GTE in the QWEST System; provided that, upon receipt of a notice of any such
Imposition, QWEST shall promptly notify GTE of such Imposition and following
payment of such Imposition by QWEST, GTE shall promptly reimburse QWEST for its
proportionate share of such Imposition, which share shall be determined (i) to
the extent possible, based upon the manner and methodology used by the
particular authority imposing such Impositions (e.g., on the cost of the
relative property interests, historic or projected revenue derived therefrom, or
any combination thereof) and, if based upon projected revenue or gross receipts,
then
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based on the relative number of GTE Fibers in the affected portion of the QWEST
System compared to the total number of fibers in the affected portion of the
QWEST System during the relevant tax period which are subject to an indefeasible
right of use or are otherwise in use; or (ii) if the same cannot be so
determined, then based upon GTE's proportionate share of the total fiber count
in the affected portion of the QWEST System. If QWEST's assessed value, for
property tax purposes, is based on its entire operation in any state (i.e.,
central assessment), QWEST and GTE shall work together in good faith to allocate
a proper portion n of said assessment to the QWEST System and GTE's ownership
interest in the QWEST System. If GTE's assessed value, for property tax
purposes, is based on a duplicate assessment of the same property as QWEST,
QWEST and GTE shall work together in good faith to allocate a portion of this
duplicate assessment to each party. QWEST and GTE shall work together in good
faith to aggressively defend against such duplicate assessment in any state
which attempts to impose a duplicate assessment. QWEST shall provide GTE with
reasonable supporting documentation for Impositions for which QWEST seeks
reimbursement. Any reimbursement made under this Section 15.3 shall be in an
amount that, after deductions of all Impositions required to be paid by QWEST in
respect of the receipt or accrual of such reimbursement and after consideration
of any deduction to which QWEST may be entitled with respect to the payment or
accrual of the Impositions which have been reimbursed shall be equal to the
amount otherwise required to be paid by QWEST hereunder. Hereafter, such
additional amount or amounts shall be referred to as the "Gross-up Amount."
QWEST shall, upon request, provide GTE with documentation in support of any
Gross-up Amount so as to ensure that both parties are made whole in a manner
that is consistent with the mutual objectives set forth in section 15.1 of the
Agreement. If such Gross-up Amount exceeds $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
, GTE may elect to engage the services of an independent consultant, at GTE's
sole cost and expense, to review QWEST's computation of such Gross-up Amount.
Any independent consultant selected by GTE shall be subject to approval by
QWEST, which such approval shall not be unreasonably withheld, and such
independent consultant shall be subject to confidentiality restrictions as may
be determined in QWEST's sole discretion. Further, if, after review of such
documentation or otherwise, in the event the parties are unable to agree upon
the amount of the Gross-up Amount, such dispute shall be resolved pursuant to
Article XXI of the Agreement.
15.4 Upon notice of the assertion or proposed assertion of any Imposition
described in Section 15.3 (including Impositions that trigger a Gross-up Amount)
QWEST shall promptly and in good faith consult with GTE concerning the
underlying facts and whether to contest or continue to contest such assertion or
proposed assertion. Notwithstanding any provision herein to the contrary, QWEST
shall have the right to contest any Imposition described in Section 15.3, above,
(including Impositions which trigger a Gross-up Amount), provided that such
contest does not materially adversely affect GTE. Such contest may be pursued by
any lawful means including by non-payment of such Imposition provided such non-
payment contest does not materially, adversely affect the title, rights or
property to be delivered to GTE pursuant hereto. The out-of-pocket costs and
expenses (including reasonable attorneys' fees) incurred by QWEST in any such
contest shall be shared by QWEST and GTE in the same proportion as to which the
parties shared in any such Imposition, as it was originally assessed. Any
refunds or credits resulting from a contest brought pursuant to this Section
15.4 shall be divided between QWEST and GTE in the same proportion as to which
such refunded or credited Impositions were borne by QWEST and GTE. In any such
event, QWEST shall provide timely notice of such challenge to GTE. If QWEST
chooses to proceed with such challenge after receipt of a written objection to
the challenge from GTE, QWEST shall conduct such challenge at its own costs and
expense, provided that GTE shall not
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receive the benefit of any refund or credit, if any, obtained as a result of a
successful challenge. Further, where QWEST does not contest an Imposition, GTE
shall have the right, after notice to QWEST, to contest such Imposition as long
as such contest does not materially, adversely affect the title property or
rights of QWEST. The out-of-pocket costs and expenses (including reasonable
attorneys' fees) incurred by GTE in any such contest shall be shared by GTE and
QWEST in the same proportion as to which the parties shared in such Imposition,
as it was originally assessed. Any refunds or credits resulting from a contest
shall be divided between GTE and QWEST in the same proportion as to which such
refunded or credited Imposition was borne by GTE and QWEST. If GTE chooses to
proceed with such contest after receipt of written objection to the challenge
from QWEST, GTE shall conduct such challenge at its own costs and expense,
provided that QWEST shall not receive the benefit of any refund or credit, if
any, obtained as a result of a successful challenge. Provided, however, that
notwithstanding anything to the contrary in this Article XV, QWEST shall have
complete authority over and discretion to control (including the authority to
dismiss or not pursue) any contests relating to Impositions based upon the
computation of QWEST's taxable income under the Federal Internal Revenue Code or
state income or franchise tax laws (hereinafter "Net Income Based Impositions").
GTE shall, however, be consulted on the conduct and status of such contest.
QWEST shall have no obligation to disclose to GTE its income or franchise tax
returns and records except as to the discrete portion of such return or record
that directly relates to the computation and payment of such Net Income Based
Impositions. Provided further, however, that in the event QWEST shall determine
in its own discretion not to pursue a contest of any Net Income Based Imposition
as to which GTE has requested a contest pursuant to the provisions described
above in this Section 15.4, then GTE shall have no obligation to provide any
reimbursement for such amount if GTE shall have obtained and provided to QWEST
an opinion of nationally recognized legal counsel confirming that a meritorious
defense exists to such Net Income Based Imposition.
15.5 Except as to Impositions described in paragraph (iii) of Section 15.2,
following the Acceptance Date QWEST and GTE, respectively, shall be separately
responsible for any and all Impositions (i) expressly or implicitly imposed
upon, based upon, or otherwise measured by the gross receipts, gross income, net
receipts or net income received by or accrued to such party due to its
respective ownership or use of the QWEST System and/or the GTE Fibers, or (ii)
which have been separately assessed or imposed upon the respective ownership
interest of such party in the QWEST System and/or the GTE Fibers. If the GTE
Fibers are the only fibers located in the Cable from the point where the Cable
leaves the QWEST System right-of-way to a GTE POP, GTE shall be solely
responsible for any and all Impositions imposed on or with respect to such
portion of the QWEST System.
15.6 Notwithstanding any provision herein to the contrary, GTE shall have the
right to protest by appropriate proceedings any Imposition described in Section
15.5, above. In such event, GTE shall indemnify and hold QWEST harmless from any
expense, legal action or cost, including reasonable attorneys' fees, resulting
from GTE's exercise of its rights hereunder. In the event of any refund, rebate,
reduction or abatement to GTE of any such Imposition imposed upon and/or paid by
GTE, GTE shall be entitled to receive the entire benefit of such refund, rebate,
reduction or abatement attributable to GTE's use of the QWEST System. In the
event GTE has exhausted all its rights of appeal in protesting any Imposition
and has failed to obtain the relief sought in such proceedings or appeals
("Finally Determined Taxes and Fees"), GTE and QWEST may jointly agree (with the
consent and participation of the other Interest Holders in the affected portion
of the QWEST System) to relocate a portion of the QWEST System so as to bypass
the jurisdiction which had imposed or assessed such Finally Determined Taxes and
Fees with the total Costs thereof to be shared proportionately as follows: (i)
if the affected portion of the QWEST System includes any conduit other than the
conduit in which the
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GTE Fibers are located, the total Costs of relocation of the conduits (i.e.,
relocation of the conduits only without regard to whether the conduits contain
fibers) shall be allocated based on the overall number of conduits in the QWEST
System which are relocated; and (ii) such Costs allocated to the conduit
carrying the GTE Fibers plus the Costs specifically associated with the
relocation of the fiber (i.e., relocation of the fiber only without regard to
relocation of conduit) to be further allocated to GTE based upon GTE's
proportionate share of (A) all Costs of fiber acquisitions, splicing and
testing, prorated based on the total fiber count in the Cable, as so relocated;
and (B) all other Costs associated with the relocation of the conduit housing
the affected Cable, prorated based upon the total number of Interest Holders in
the affected Cable, as so relocated. QWEST shall deliver to GTE updated As-
Builts with respect to the relocated QWEST System not later than sixty (60) days
following the completion of such relocation. If GTE and QWEST do not determine
to relocate the affected portion of the QWEST System, GTE shall have the right
to terminate its use of the GTE Fibers in the affected portion of the QWEST
System. Such termination shall be effective on the date specified by GTE in a
notice of termination, which date shall be at least ninety (90) days after the
notice. Upon such termination, the IRU in the affected portion of the QWEST
System shall immediately terminate, and the GTE Fibers in the affected portion
of the QWEST System shall thereupon revert to QWEST without reimbursement of any
of the IRU Fee or other payments previously made with respect thereto.
15.7 Notwithstanding the provisions of Section 15.6, with respect to any
Impositions relating to the QWEST System which are imposed upon both QWEST and
GTE (or both of their respective interests therein), QWEST, at its option and at
its own expense, shall have the right to direct and manage in good faith any
such contest; subject, however, to reasonable and appropriate consultation with
GTE which hereby agrees to reasonably cooperate with QWEST in any such contest.
The right of QWEST to contest any Imposition pursuant to this Section 15.7 shall
be contingent upon reasonable and appropriate assurances that any such contest
will not adversely affect the title, property or rights of GTE hereunder.
15.8 QWEST and GTE agree to cooperate fully in the preparation of any returns or
reports relating to the Impositions. QWEST and GTE further acknowledge and agree
that the provisions of this Article XV are intended to allocate the Impositions
expected to be assessed against or imposed upon the parties with respect to the
QWEST System based upon the procedures and methods of computation by which
Impositions generally have been assessed and imposed to date, and that material
changes in the procedures and methods of computation by which such assessments
are assessed and imposed could significantly alter the fundamental economic
assumptions underlying the transactions hereunder to the parties. Accordingly,
the parties agree that, if in the future the procedures or methods of
computation by which Impositions are assessed or imposed against the parties
change materially from the procedures or methods of computation by which they
are imposed as of the date hereof, the parties will negotiate in good faith an
amendment to the provisions of this Article XV in order to preserve, to the
extent reasonably possible, the economic intent and effect of this Article XV as
of the date hereof.
ARTICLE XVI.
NOTICE
16.1 Unless otherwise provided herein, all notices and communications concerning
this Agreement shall be addressed to the other party as follows:
If to QWEST: QWEST Communications Corporation
ATTENTION: President
555 Seventeenth Street
Denver, Colorado 80202
Telephone No.: (303) 291-1400
Facsimile No.: (303) 291-1724
with a copy to: QWEST Communications Corporation
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ATTENTION: General Counsel
555 Seventeenth Street
Denver, Colorado 80202
Telephone No.: (303) 291-1400
Facsimile No.: (303) 291-1724
If to GTE: GTE Intelligent Network Services Incorporated
ATTENTION: President
600 Hidden Ridge
P.O. Box 152092
Irving, Texas 75038
Telephone No.:
Facsimile No:
with a copy to:
or at such other address as either party may designated from time to time in
writing to the other party.
16.2 Unless otherwise provided herein, notices shall be hand delivered, sent
by registered or certified U.S. mail, postage prepaid, or by commercial
overnight delivery service, or transmitted by facsimile, and shall be deemed
served or delivered to the addressee or its office when received at the address
for notice specified above when hand delivered, upon confirmation of sending
when sent by fax, on the day after being sent when sent by overnight delivery
service, or three (3) days after deposit in the mail when sent by U.S. mail.
16.3 All invoices concerning payment obligations due to QWEST pursuant to
this Agreement shall be addressed to GTE as follows:
GTE Intelligent Network Services Incorporated
600 Hidden Ridge
P.O. Box 152092
Irving, Texas 75038
ATTENTION: Accounts Payable
with a copy to:
ARTICLE XVII.
CONFIDENTIALITY
17.1 QWEST and GTE hereby agree that if either party provides (or, prior to
the execution hereof, has provided) confidential or proprietary information to
the other party ("Proprietary Information"), such Proprietary Information shall
be held in confidence, and the receiving party shall afford such Proprietary
Information the same care and protection as it affords generally to its own
confidential and proprietary information (which in any case shall be not less
than reasonable care) in order to avoid disclosure to or unauthorized use by any
third party. The parties acknowledge and agree that this Agreement, including
all of the terms, conditions and provisions hereof, and all drafts hereof,
constitutes Proprietary Information. In addition, all information disclosed by
either party to the other in connection with or pursuant to this Agreement,
including prior to the date hereof, shall be deemed to be Proprietary
Information. All Proprietary Information, unless otherwise specified in writing,
shall remain the property of the disclosing party, shall be used by the
receiving party only for the intended purpose, and such written Proprietary
Information, including all copies thereof, shall be returned to the disclosing
party or destroyed after the receiving party's need for it has expired or upon
the request of the disclosing party. Proprietary Information shall
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not be reproduced except to the extent necessary to accomplish the purpose and
intent of this Agreement, or as otherwise may be permitted in writing by the
disclosing party.
17.2 The foregoing provisions of Section 17.1 shall not apply to any
Proprietary Information which (i) becomes publicly available other than through
the recipient; (ii) is required to be disclosed by a governmental or judicial
law, order, rule or regulation; (iii) is independently developed by the
disclosing party; (iv) becomes available to the disclosing party without
restriction from a third party; or (v) becomes relevant to the settlement of any
dispute or enforcement of either party's rights under this Agreement in
accordance with the provisions of this Agreement, in which case appropriate
protective measures shall be taken to preserve the confidentiality of such
Proprietary Information as fully as possible within the confines of such
settlement or enforcement process. If any Proprietary Information is required to
be disclosed pursuant to the foregoing clause (ii), the party required to make
such disclosure shall promptly inform the other party of the requirements of
such disclosure.
17.3 Notwithstanding Sections 17.1 and 17.2 of this Article, either party may
disclose Proprietary Information to its employees, agents, and legal, financial,
and accounting advisors and providers (including its lenders and other
financiers) to the extent necessary or appropriate in connection with the
negotiation and/or performance of this Agreement or its obtaining of financing,
provided that each such party is notified of the confidential and proprietary
nature of such Proprietary Information and is subject to or agrees to be bound
by similar restrictions on its use and disclosure.
17.4 Notwithstanding the foregoing sections of this Article 17, the parties
may provide public statements concerning their participation in this Agreement
that do not disclose Proprietary Information of the other party. Any news
release, public announcement, advertising or any form of publicity pertaining to
this Agreement, provision of services pursuant to it, or association of the
parties with respect to the subject of this Agreement shall be subject to prior
written approval of both parties which approval shall not be unreasonably
withheld.
17.5 The provisions of this Article XVII shall survive expiration or
termination of this Agreement.
ARTICLE XVIII.
DEFAULT
18.1 With respect to all payments required to be made by GTE hereunder,
including, without limitation, payment of the IRU Fee and all other amounts
payable by GTE hereunder, in the event GTE shall fail to make a payment by the
date due and payable hereunder, from and after such date, (i) such unpaid amount
shall bear interest until paid at a rate equal to the rate set forth in Article
XXX and (ii) if such payment is due with respect to a Segment on or prior to the
Acceptance Date of such Segment, the Estimated Delivery Date for such Segment
shall be extended by a number of days equal to the number of days that elapse
from the date such payment is due until paid. In the event any amount or amounts
due and payable hereunder remain unpaid for a period of eighty (80) days after
written notice from QWEST to GTE, and the amount thereof is not in bona fide
dispute, then QWEST may, in its sole and absolute discretion and in addition to
its other rights and remedies hereunder, after ten (10) days prior written
notice to GTE and the failure of GTE to pay such amount within such ten-day
period, terminate any and all of its obligations hereunder with respect to any
Segment or Segments as to which the Acceptance Date has not yet occurred or the
grant of the IRU with respect to which has not yet become effective, and to
apply any and all amounts previously paid by GTE hereunder with respect to such
Segment or Segments toward the payment of any other amounts then or thereafter
payable by GTE hereunder. With respect to all of its other obligations
hereunder, in the event GTE shall fail to perform a non-payment obligation and
such failure shall continue for a period of thirty (30) days after QWEST shall
have given GTE written notice of such failure, GTE shall be in
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default hereunder unless GTE shall have cured such failure or such failure is
otherwise waived in writing by QWEST within such thirty (30) days; provided,
however, that where such failure cannot reasonably be cured within such 30-day
period, if GTE shall proceed promptly to cure the same and prosecute such cure
with due diligence, the time for curing such failure shall be extended for such
period of time as may be necessary to complete such cure; and provided further
that if GTE certifies in good faith to QWEST in writing that a non-payment
failure has been cured, such failure shall be deemed to be cured unless QWEST
otherwise notifies GTE in writing within fifteen (15) days of receipt of such
notice from GTE. GTE shall be in default hereunder (i) automatically upon the
making by GTE of a general assignment for the benefit of its creditors, the
filing by GTE of a voluntary petition in bankruptcy or the filing by GTE of any
petition or answer seeking, consenting to, or acquiescing in reorganization,
arrangement, adjustment, composition, liquidation, dissolution, or similar
relief; (ii) one hundred twenty (120) days after the filing of an involuntary
petition in bankruptcy or other insolvency protection against GTE which is not
dismissed within such one hundred twenty (120) days, or (iii) upon any default
by GTE under the Guaranty, which default is not cured within the relevant cure
period, if any, provided with respect thereto under the Guaranty. Except as
otherwise provided in this Section 18.1, upon any default by GTE, after written
notice thereof from QWEST, QWEST may (i) take such action as it determines, in
its sole discretion, to be necessary to correct the default and, subject to
Section 13.1, recover from GTE its reasonable costs incurred in correcting such
default, and (ii) pursue any legal remedies it may have under applicable law or
principles of equity relating to such default, including specific performance.
Notwithstanding any other provision of this Agreement, QWEST acknowledges and
agrees that QWEST shall have no right to terminate the IRU or any of the rights
and interests of GTE hereunder with respect to any Segment for which the IRU Fee
relating thereto has been fully paid.
18.2 (a) With respect to its obligation to complete the construction,
installation, and satisfactory Fiber Acceptance Testing of the GTE Fibers
comprising a particular Segment by the Estimated Delivery Date with respect to
such Segment pursuant to Section 3.2, the parties acknowledge and agree that it
is in their mutual best interest to work together in a cooperative effort to
determine whether and to what extent any event or occurrence that is reasonably
likely to cause a delay in the delivery of a Segment hereunder, as a result of
any force majeure event or other occurrence described in Article XX or
otherwise, can be terminated, resolved or avoided, and to cause the
construction, installation and delivery of the Segment to be completed in the
most expeditious and practical manner feasible under the circumstances.
Accordingly, within three (3) months following its discovery of an event or
occurrence that QWEST reasonably believes is likely to cause (i) an extension of
the Estimated Delivery Date of one hundred twenty (120) days or more pursuant to
Article XX or (ii) a Delivery Default (as defined pursuant to Section 18.2(d)
below), QWEST shall give written notice to GTE of such event or occurrence.
Thereupon, each of QWEST and GTE (i) will designate a senior executive officer
with decision-making authority and familiarity with this Agreement and the
relevant issue hereunder, and (ii) may designate one technical representative
and one financial representative, to participate in the following resolution
efforts. Each of such designees shall participate in such meetings, promptly
scheduled at mutually agreed upon times and places, as may be necessary or
appropriate to discuss in good faith the status of construction of the affected
Segment, the reason or reasons for the anticipated Estimated Delivery Date
extension or Delivery Default, various possible and practical means by which the
event(s) or occurrence(s) causing such anticipated Estimated Delivery Date
extension or Delivery Default might be terminated, avoided or resolved,
including, without limitation, possible modifications to the route, selection of
right-of-way, or manner of construction of the affected Segment, and
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(iii) use their best efforts to settle upon and implement a procedure by which
such event(s) or occurrence(s) may be terminated, avoided or resolved and the
construction, installation and delivery of the affected Segment completed in an
expeditious and economically practical and feasible manner under the
circumstances. The parties acknowledge and agree that, because the QWEST System
includes or will include other participants, including owners and holders of
Dark Fiber IRUs and telecommunication system operations, such meetings may, and
likely will, involve designees and representatives of such other participants,
and the resolution of any matters so acted upon will require the cooperative
efforts of, and have to be structured, to the extent feasible, in an effort to
meet the needs of all such participants. The parties hereto further acknowledge
and agree that no failure of the parties hereto to resolve, or to agree upon a
manner in which they might resolve, any issue addressed hereunder shall impair,
adversely affect or invalidate any of their respective rights, claims or
remedies under this Agreement.
(b) If, notwithstanding the efforts of the parties pursuant to Section
18.2(a): (i) (A) a force majeure event or occurrence described in Article XX
causing an anticipated Estimated Delivery Date extension has not been
terminated, avoided or resolved by the date that is twelve (12) months following
QWEST's discovery of such event or occurrence, and
(B) there is no "Reasonably Apparent Probability" (either as mutually
determined by QWEST and GTE or, if QWEST and GTE are unable to make such a
mutual determination, as determined by an independent third party mutually
selected by QWEST and GTE and familiar with large-scale fiberoptic system
constructions projects or, if QWEST and GTE are unable to make such a mutual
selection, each of QWEST and GTE shall designate such an independent third
party, the two of which shall designate such an independent third party to make
such determination) that the Acceptance Date with respect to any such affected
Segment will occur within (1) twelve (12) months following the Estimated
Delivery Date (without extension for any delay pursuant to Article XX) with
respect to any Segment designated as a "priority" Segment on Exhibit A-1, or (2)
eighteen (18) months following the Estimated Delivery Date (without extension
for any delay pursuant to Article XX) with respect to any other Segment (such
date with respect to each Segment being referred to as the "Outside Force
Majeure Date"); or
(ii) notwithstanding a determination pursuant to the foregoing clause (i) that
there was a Reasonably Apparent Probability that the Acceptance Date with
respect to the affected Segment would occur by the applicable Outside Force
Majeure Date, nonetheless the event or occurrence described in Article XX
causing such delay is continuing on such applicable Outside Force Majeure Date;
or
(iii) notwithstanding such a determination that there was a Reasonably Apparent
Probability that the Acceptance Date with respect to the affected Segment would
occur by the applicable Outside Force Majeure Date, nonetheless, on the
applicable Outside Force Majeure Date, although the event or occurrence
described in Article XX has been terminated, avoided or resolved and QWEST has
resumed its construction, installation, splicing, and/or testing efforts, QWEST
is unable to demonstrate to GTE's reasonable satisfaction that the Acceptance
Date for such Segment will occur, in all reasonable probability, by the date
that is six (6) months following such Outside Force Majeure Date, then, in any
such event described in foregoing clauses (i), (ii), and (iii), GTE may elect,
in its sole discretion, by written notice to QWEST, to delete such Segment from
the System Route otherwise to be delivered pursuant to this Agreement, and
recover from QWEST (1) the amount of the IRU Fee previously paid by GTE
hereunder with respect to such Segment, plus (2) interest at the prime rate
interest published by The Wall Street Journal as the base rate on corporate
loans posted by a substantial percentage of the nation's largest banks on such
date, plus (3) an amount equal to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER
AN APPLICATION FOR
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CONFIDENTIAL TREATMENT##
of the IRU Fee for such Segment, as determined pursuant to Section 2.1 (with
such aggregate amount payable to GTE promptly following QWEST's receipt of such
election notice or, at the election of GTE, offset against the unpaid amount of
the IRU Fee payable hereunder with respect to any other Segment or Segments).
Upon any such election and payment (or offset), neither party shall have any
further rights or obligations with respect to such Segment hereunder. (c) If,
notwithstanding the efforts of the parties pursuant to Section 18.2(a):
(i) (A) an event or occurrence causing an anticipated Delivery Default (as
defined in Section 18.2(d) below) has not been terminated, avoided, resolved or
waived by the date that is twelve (12) months following QWEST's discovery of
such event or occurrence; and
(B) there is no Reasonably Apparent Probability that the Acceptance Date
with respect to any such affected Segment will occur within (x) twelve (12)
months following the Estimated Delivery Date with respect to each Segment
designated as a "Priority" Segment on Exhibit A-1, or (y) eighteen (18) months
following the Estimated Delivery Date with respect to any other Segment (such
dates being referred to collectively as the "Outside Delivery Default Date"); or
(ii) notwithstanding a determination pursuant to the foregoing clause (i)
that there was a Reasonably Apparent Probability that the Acceptance Date with
respect to the affected Segment would occur by the applicable Outside Delivery
Default Date, nonetheless, on the applicable Outside Delivery Default Date, the
Acceptance Date for such Segment has not occurred; then, in any such event
described in the foregoing clauses (i) and (ii), GTE may elect, in its sole
discretion, by written notice to QWEST, to delete such Segment from the System
Route otherwise to be delivered pursuant to this Agreement, and recover from
QWEST (1) the amount of the IRU Fee previously paid by GTE hereunder with
respect to such Segment, plus (2) interest thereon at the rate of interest
applicable to late payments set forth in Article XXX, plus (3) an amount equal
to
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT##
of the IRU Fee for such Segment, as determined pursuant to Section 2.1, but
without reduction of such IRU fee under Section 18.2(d) (with such aggregate
amount payable to GTE promptly following QWEST's receipt of such election notice
or, at the election of GTE, offset against the unpaid amount of the IRU Fee
payable hereunder with respect to any other Segment or Segments). Upon any such
election and payment (or offset), neither party shall have any further rights or
obligations with respect to such Segment hereunder. (d) In addition to the
specific rights and remedies provided pursuant to the foregoing paragraphs (b)
and (c) in connection with delays and anticipated delays in the delivery of
Segments hereunder, QWEST shall be in default under this Agreement if the
Acceptance Date with respect to any Segment has not occurred within one hundred
twenty (120) days after the Estimated Delivery Date (a "Delivery Default"). From
the date of any such Delivery Default, and until the Acceptance Date with
respect to such Segment occurs, the IRU Fee with respect to such Segment, as
determined or redetermined pursuant to Section 2.1 hereof, shall be reduced by
an amount equal to
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% of such IRU Fee for each thirty (30) days (or a pro rata percentage of
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% for any period of less than thirty (30) days) that elapse between such date of
Delivery Default and the Acceptance Date. (e) The rights and remedies set forth
in the foregoing Sections 18.2(c) and 18.2(d) shall be the sole remedies
available to GTE with respect to any failure by QWEST to construct, install, and
conduct satisfactory Fiber Acceptance Testing with respect to the GTE
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Fibers comprising any Segment by the relevant Estimated Delivery Date (it being
expressly acknowledged and agreed that the rights provided to GTE pursuant to
Section 18.2(b) are provided only as an accommodation in the event of lengthy
force majeure delays pursuant to Article XX, and that the events described in
Section 18.2(b) do not constitute defaults hereunder). With respect to all of
QWEST's other obligations hereunder, in the event that QWEST shall fail to
perform an obligation and such failure shall continue for a period of thirty
(30) days after GTE shall have given QWEST written notice of such failure, QWEST
shall be in default hereunder unless QWEST shall have cured such failure or such
failure is otherwise waived in writing by GTE within such thirty (30) days;
provided however, that where such failure cannot reasonably be cured within such
30-day period, if QWEST shall proceed promptly to cure the same and prosecute
such cure with due diligence, the time for curing such failure shall be extended
for such period of time as may be necessary to complete such cure; and provided
further, that if QWEST certifies in good faith to GTE in writing that failure
has been cured, such failure shall be deemed to be cured unless GTE otherwise
notifies QWEST in writing within fifteen (15) days of receipt of such notice
from QWEST. QWEST shall be in default hereunder automatically upon the making by
QWEST of a general assignment for the benefit of its creditors, the filing by
QWEST of a voluntary petition in bankruptcy or the filing by QWEST of any
petition or answer seeking, consenting to, or acquiescing in reorganization,
arrangement, adjustment, composition, liquidation, dissolution, or similar
relief, or (ii) one hundred twenty (120) days after the involuntary filing of a
petition in bankruptcy or other insolvency protection against QWEST which is not
dismissed within such 120-day period. Except as otherwise provided in this
Section 18.2, upon any default by QWEST, after notice thereof from GTE, GTE may
(i) take such action as it determines, in its sole discretion, to be necessary
to correct the default, and, subject to Section 13.1, recover from QWEST its
reasonable costs in correcting such default, and (ii) pursue any legal remedies
it may have under applicable law or principles of equity relating to such
default including specific performance.
ARTICLE XIX.
TERMINATION
19.1 This Agreement automatically shall terminate with respect to a Segment
upon the expiration or termination of the Term of the IRU respecting such
Segment pursuant to Article VI or Section 18.2 hereof.
19.2 Upon the expiration or termination of this Agreement with respect to a
Segment, the IRU in such Segment shall immediately terminate and all rights of
GTE to use the QWEST System, the GTE Fibers, the Associated Property or any part
thereof relating to such Segment, shall cease and QWEST shall owe GTE no
additional duties or consideration with respect to such Segment. Promptly
thereupon, GTE shall remove all of GTE's electronics, equipment, separate
Regeneration Facilities (as provided pursuant to Section 7.2) and other
associated GTE property from such Segment and any related QWEST facilities at
its sole cost under QWEST's supervision (which supervision shall be without cost
to GTE).
19.3 Notwithstanding the foregoing, no termination or expiration of this
Agreement shall affect the rights or obligations of any party hereto (i) with
respect to any then existing defaults or the obligation to make any payment
hereunder for services rendered prior to the date of termination or expiration
or (ii) pursuant to Article XII, Article XIII, Article XV or Article XVII
herein, which shall survive the expiration or termination hereof.
ARTICLE XX.
FORCE MAJEURE
20.1 Neither party shall be in default under this Agreement if and to the
extent that any failure or delay in such party's performance of one or more of
its obligations hereunder is caused by any of the following conditions, and such
party's performance of such obligation or obligations shall be excused and
extended for and during the period of any such delay: act of God; fire; flood;
fiber, Cable,
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or other material failures, shortages or unavailability or other delay in
delivery not resulting from the responsible party's failure to timely place
orders therefor (it being expressly acknowledged that the Cable that is being
acquired for and installed in the QWEST System and that will include the GTE
Fibers must include higher fiber counts than that necessary solely for the GTE
Fibers in order to permit completion of the entire QWEST System); lack of or
delay in transportation; government codes, ordinances, laws, rules, regulations
or restrictions (collectively, "Regulations"); war or civil disorder; strikes or
other labor disputes; failure of a third party to grant or recognize an
Underlying Right, or any other cause beyond the reasonable control of such
party; provided that any delay caused by the failure of a third party to grant
an Underlying Right shall constitute a force majeure delay hereunder only to the
extent that such delay does not extend beyond a period of six months (such that
the Estimated Delivery Date with respect to any Segment affected by such delay
shall be extended only up to a period of six months of any such delay, and shall
not be further extended if such delay extends beyond a period of six months).
The party claiming relief under this Article shall notify the other in writing
of the existence of the event relied on and the cessation or termination of said
event.
ARTICLE XXI
DISPUTE RESOLUTION
21.1 Except as provided in Sections 18.1 and 18.2, if the parties are unable
to resolve any disagreement or dispute arising under or related to this
Agreement, including without limitation, the failure to agree upon any item
requiring a mutual agreement of the parties hereunder, they shall resolve the
disagreement or dispute as follows:
(a) Officers. Either party may refer the matter to the Chief Executive
Officers or the Chief Operating Officers (the "Officers") of the parties by
giving the other party written notice (a "Notice"). Within fifteen (15) days
after delivery of a Notice, the Officers of both parties shall meet at a
mutually acceptable time and place to exchange relevant information and to
attempt to resolve the dispute.
(b) Negotiation. If the matter has not been resolved within thirty (30) days
after delivery of such Notice, or if the Officers fail to meet within fifteen
(15) days after delivery of such Notice, either party may initiate mediation
and, if applicable, arbitration in accordance with the procedure set forth in
subsections (c) and (d) below. All negotiations conducted by the Officers
pursuant to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence and State
Rules of Evidence.
(c) Mediation. In the event a dispute exists between the parties and the
respective Officers are unable to resolve the dispute, the parties agree to
participate in a non-binding mediation procedure as follows:
(i) A mediator will be selected by having counsel for each party agree on a
single person to act as mediator. The parties' counsel as well as the
Officers of each party and not more than two other participants from each
party will appear before the mediator at a time and place determined by the
mediator, but not more than sixty (60) days after delivery of a Notice. The
fees of the mediator and other costs of mediation will be shared equally by
the parties. (ii) Each party's counsel will have forty-five (45) minutes to
present a review of the issue and argument before the mediator. After each
counsel's presentation, the other counsel may present specific counter-
arguments not to exceed ten (10) minutes. The 45-minute and 10-minute periods
will be exclusive of the time required to answer questions from the mediator
or attendees. (iii) After both presentations, the Officers may ask questions
of the other side. At the conclusion of both presentations and the question
periods, the Officers and their
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counsels will meet together to attempt to resolve the dispute. The length of
the meeting will be as agreed between the parties. Either party may abandon
the procedure at the end of the presentations and question periods if they
feel it is not productive to go further. The mediation procedure is not
binding on either party.
(iv) The duties of the mediator are to be sure that the above set-out
time periods are adhered to and to ask questions so as to clarify the issues
and understandings of the parties. The mediator may also offer possible
resolutions of the issues but has no duty to do so.
(d) Arbitration. If the matter is not resolved after applying the mediation
procedures set forth above, or if either party refuses to take part in the
mediation process, the parties hereby agree to submit all controversies, claims
and matters of difference that are unresolved to arbitration in Denver,
Colorado, according to the commercial rules and practices of the American
Arbitration Association ("AAA") from time to time in force, and in accordance
with the following provisions of this subsection (d), and unless otherwise
agreed by the parties and subject to the rights of the parties as provided in
Section 18.1 and Section 18.2 hereof (including the right not to continue to
perform under this Agreement), they shall continue to perform under this
Agreement during arbitration.
(i) Arbitration discovery shall be conducted in accordance with the
Federal Rules of Civil Procedure, with any disputes over the scope of
discovery to be determined by the arbitrators, it being intended that the
arbitrators shall allow limited, reasonable discovery prior to any hearing on
the merits.
(ii) Arbitration hereunder shall be by three independent and impartial
arbitrators. Each of the parties shall appoint one arbitrator within thirty
(30) days after initiation of arbitration and the two arbitrators so
appointed shall select a third arbitrator within forty-five (45) days after
initiation of arbitration. In the event that the parties or the arbitrators
fail to select arbitrators as required above, the AAA shall select such
arbitrators.
(iii) The AAA shall have the authority to disqualify any arbitrator who it
determines not to be independent and impartial. The arbitrators shall be
entitled to a fee commensurate with their fees for professional services
requiring similar time and effort.
(iv) The arbitrators shall conduct a hearing no later than sixty (60)
days after initiation of the matter to arbitration, and a decision shall be
rendered by the arbitrators within thirty (30) days of the hearing. At the
hearing, the parties shall present such evidence and witnesses as they may
choose, with or without counsel. Adherence to formal rules of evidence shall
not be required but the arbitration panel shall consider any evidence and
testimony that it determines to be relevant, in accordance with procedures
that it determines to be appropriate. The arbitration determination shall be
in writing and shall specify the factual and legal bases for the
determination. The arbitrators may award legal or equitable relief, including
but not limited to specific performance. (v) The parties agree that this
submission and agreement to arbitrate shall be governed by and specifically
enforceable in accordance with the laws of the State of Colorado. Arbitration
may proceed in the absence of any party if prior written notice of the
proceedings has been given to such party. The parties agree to abide by all
decisions and determinations rendered in such proceedings. Such decisions and
determinations shall be final and binding on all parties. All decisions and
determinations may be filed with the clerk of one or more courts, state,
federal or foreign having jurisdiction over the party against whom it is
rendered or its property, as a basis of judgment.
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(vi) The arbitrators' fees and other costs of the arbitration shall be
borne by the party against whom the award is rendered, except as the
arbitration panel may otherwise provide in its written opinion.
ARTICLE XXII.
WAIVER
22.1 The failure of either party hereto to enforce any of the provisions of
this Agreement, or the waiver thereof in any instance, shall not be construed as
a general waiver or relinquishment on its part of any such provision, but the
same shall nevertheless be and remain in full force and effect.
ARTICLE XXIII.
GOVERNING LAW
23.1 This Agreement shall be governed by and construed in accordance with the
domestic laws of the State of Colorado, without reference to its choice of law
principles. Any litigation based hereon, or arising out of or in connection with
a default by either party in the performance of its obligations hereunder, shall
be brought and maintained exclusively in the courts of the State of Colorado or
in the United States District Court for the District of Colorado, and each party
hereby irrevocable submits to the jurisdiction of such courts for the purpose of
any such litigation and irrevocably agrees to be bound by any judgment rendered
thereby in connection with such litigation.
ARTICLE XXIV.
RULES OF CONSTRUCTION
24.1 The captions or headings in this Agreement are strictly for convenience
and shall not be considered in interpreting this Agreement or as amplifying or
limiting any of its content. Words in this Agreement which import the singular
connotation shall be interpreted as plural, and words which import the plural
connotation shall be interpreted as singular, as the identity of the parties or
objects referred to may require.
24.2 Unless expressly defined herein, words having well known technical or
trade meanings shall be so construed. All listing 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.
24.3 Except as set forth to the contrary herein, any right or remedy of GTE
or QWEST shall be cumulative and without prejudice to any other right or remedy,
whether contained herein or not.
24.4 Except as expressly provided in Section
28.1, nothing in this Agreement is intended to provide any legal rights to
anyone not an executing party of this Agreement.
24.5 This Agreement has been fully negotiated between and jointly drafted by
the parties.
24.6 All actions, activities, consents, approvals and other undertakings of
the parties in this Agreement shall be performed in a reasonable and timely
manner, it being expressly acknowledged and understood that time is of the
essence in the performance of obligations required to be performed by a date
expressly specified herein. Except as specifically set forth herein, for the
purpose of this Agreement the standards and practices of performance within the
telecommunications industry in the relevant market shall be the measure of a
party's performance.
ARTICLE XXV.
ASSIGNMENT AND TRANSFER RESTRICTIONS
25.1 Except as provided below, QWEST shall not assign, encumber or otherwise
transfer this Agreement or all or any portion of its rights or obligations
hereunder to any other party without the prior written consent of GTE, which
consent will not be unreasonably withheld or delayed. Notwithstanding the
foregoing, QWEST shall have the right, without GTE's consent, to (i) subcontract
any of its construction or maintenance obligations hereunder, or (ii) assign or
otherwise transfer this Agreement in whole or in part (A) as collateral to any
institutional lender to QWEST (or institutional lender to any permitted
transferee or assignee of QWEST) subject to
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the prior rights and obligations of the parties hereunder, (B) to any parent,
subsidiary or affiliate of QWEST, (C) to any person, firm or corporation which
shall control, be under the control of or be under common control with QWEST, or
(D) any corporation or other entity into which QWEST may be merged or
consolidated or which purchases all or substantially all of the stock or assets
of QWEST, or (E) any partnership, joint venture or other business entity of
which QWEST or any wholly owned subsidiary of QWEST HOLDING CORPORATION owns at
least 50 percent of the equity interests thereof and which cannot make major
decisions without the consent of QWEST (or subsidiary of QWEST HOLDING
CORPORATION); provided that the assignee or transferee in any such circumstance
shall continue to be subject to all of the provisions of this Agreement,
including without limitation, this Section 25.1 (except that any lender referred
to in clause (A) above shall not incur any obligations under this Agreement nor
shall it be restricted from exercising any right of enforcement or foreclosure
with respect to any related security interest or lien, so long as the purchaser
in foreclosure is subject to the provisions of this Agreement, including,
without limitation, this Section 25.1); and provided further that promptly
following any such assignment or transfer, QWEST shall give GTE written notice
identifying the assignee or transferee. In the event of any permitted partial
assignment of any rights hereunder, QWEST shall remain the sole point of contact
with GTE. No permitted partial or complete assignment shall release or discharge
QWEST from its duties and obligations hereunder.
25.2 Except as provided in this Section 25.2 and the following Section 25.3,
GTE shall not assign, encumber or otherwise transfer this Agreement or all or
any of portion of its rights or obligations hereunder to any other party without
the prior written consent of QWEST, which consent will not be unreasonably
withheld or delayed. Subject to the provisions of Section 25.3 (which provision
shall be binding upon any permitted assignee or transferee hereunder), GTE shall
have the right, without QWEST's consent, to assign or otherwise transfer this
Agreement in whole or in part (i) as collateral to any institutional lender to
GTE (or institutional lender to any permitted transferee or assignee of GTE)
subject to the prior rights and obligations of the parties hereunder, (ii) to
any parent, subsidiary or affiliate of GTE, (iii) to any person, firm or
corporation which shall control, be under the control of or be under common
control with GTE, or (iv) any other entity into which GTE may be merged or
consolidated or which purchases all or substantially all of the stock or assets
of GTE or (v) any partnership, joint venture or other business entity of which
GTE or any wholly owned subsidiary of GTE owns at least 50 percent of the equity
interests thereof and which cannot make major decisions without the consent of
GTE (or subsidiary of GTE); provided that no assignment or other transfer under
this clause (v) shall be permitted hereunder if its purpose or effect would
constitute, directly or indirectly, a Restricted Transaction (as defined in
Section 25.3) or otherwise violate the provisions of Section 25.3; provided that
the assignee or transferee in any such circumstance shall continue to be subject
to all of the provisions of this Agreement, including without limitation this
Section 25.2 and the following Section 25.3 (except that any lender referred to
in clause (i) above shall not incur any obligations under this Agreement, nor
shall it be restricted from exercising any right of enforcement or foreclosure
with respect to any related security interest or lien, so long as the purchaser
in foreclosure is subject to the provisions of this Agreement, including,
without limitation, this Section 25.2 and the following Section 25.3); and
provided further that in any of circumstances described in clauses (ii), (iii)
or (iv) all of the payment obligations of GTE hereunder for the remainder of the
Term shall be fully guaranteed by GTE or shall be paid in full as a condition to
such transfer or assignment; and provided further that promptly following any
such assignment or transfer, GTE shall give QWEST written notice identifying the
assignee or transferee. In the event of any permitted partial assignment of any
rights hereunder, GTE shall remain the sole party and point of contact with
QWEST hereunder.
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No permitted partial or complete assignment shall release or discharge GTE from
its duties and obligations hereunder.
25.3 Notwithstanding the provisions of Article XI, except as expressly permitted
in Section 25.2(i)-(v), inclusive, without the prior written consent of QWEST,
which consent may be withheld in QWEST's sole discretion, for a period of
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following the date that the last Segment of the QWEST System is accepted by GTE:
(a) GTE shall not sell, assign, lease, grant an IRU with respect to, exchange,
encumber, or otherwise in any manner transfer or make available in any manner to
any third party the ownership, right to use, use of, or access in any manner to,
any of GTE's rights in the whole or discrete GTE Fibers which at the time of
such transaction are Dark Fibers, or engage in substantive discussions or
negotiations with respect thereto, or otherwise engage in a similar transaction
with respect to any GTE Fibers in a manner designed or intended to circumvent
the foregoing limitations.
(b) GTE shall not sell, assign, lease, grant an IRU with respect to, exchange,
encumber, or otherwise in any manner transfer or make available in any manner to
a Capacity Reseller (as defined below) any of GTE's rights in the whole or
discrete GTE Fibers at a capacity in excess of OC-12, or engage in substantive
discussions or negotiations with respect thereto, or otherwise engage in a
similar transaction with respect to any GTE Fibers in a manner designed or
intended to circumvent the foregoing limitations. As used in this subparagraph,
a Capacity Reseller is any person or entity which, in whole or in part, seeks to
obtain such capacity for the purpose of reselling or otherwise providing access
thereto to third parties for profit, whether or not such person or entity
actually realizes a profit as a result of such transaction.
(c) Each transaction prohibited in subparagraphs (a) or (b) of this Section
25.3 shall constitute a "Restricted Transaction." Except as provided in
subparagraph (b) of this Section 25.3, nothing contained herein shall restrict
or prohibit GTE from creating telecommunications capacity along or through the
GTE Fibers by the addition of GTE's electronic and optronic equipment and
selling or otherwise permitting third parties to use such telecommunications
capacity.
25.4 QWEST and GTE recognize that QWEST may desire to obtain tax-deferred
exchange treatment pursuant to Section 1031 of the Internal Revenue Code, as
amended, with respect to certain of the Dark Fibers and Associated Property in
which the IRUs are to be granted hereunder and which are used or held for use by
QWEST in its business as of the date hereof (the "Existing Properties"), and GTE
agrees to reasonably cooperate as provided herein in obtaining such treatment
(at no cost or expense to GTE). Accordingly, notwithstanding any provision
contained in this Agreement to the contrary, QWEST may, at its sole option, on
or prior to the Acceptance Date for any relevant Segment, appoint a third party
(the "Intermediary") as agent for QWEST with respect to the transfer of the
Existing Properties to GTE, and assign its rights under this Agreement (insofar
as they relate to the Existing Properties) to such Intermediary. If QWEST so
elects to appoint an Intermediary, QWEST shall notify GTE, in writing, on or
prior to the Acceptance Date with respect to the relevant Segment, and shall
provide GTE with copies of all agreements between QWEST and the Intermediary. If
QWEST appoints an Intermediary, QWEST shall transfer the Existing Properties or
such portion thereof as designated by QWEST to the Intermediary, and GTE shall
pay the IRU Fee with respect to the
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Existing Properties (as designated by QWEST) to the Intermediary; provided that
QWEST agrees that such transfer shall be expressly subject to this Agreement,
and that QWEST shall remain liable for performance under this Agreement to the
same extent as if it had not appointed an Intermediary; provided that in such
event QWEST shall indemnify and hold harmless GTE from and against any and all
loss, damage, cost or expense suffered, sustained or incurred by GTE in
connection with any such cooperation and/or payment of such IRU Fee to such
Intermediary.
25.5 This Agreement and each of the parties' respective rights and
obligations under this Agreement, shall be binding upon and shall inure to the
benefit of the parties hereto and each of their respective permitted successors
and assigns.
ARTICLE XXVI.
REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS
26.1 Each party represents and warrants that:
(a) it has the full right and authority to enter into, execute, deliver and
perform its obligations under this Agreement;
(b) this Agreement constitutes a legal, valid and binding obligation
enforceable against such party in accordance with its terms, subject to
bankruptcy, insolvency, creditors' rights and general equitable principles; and
(c) its execution of and performance under this Agreement shall not violate
any applicable existing regulations, rules, statutes or court orders of any
local, state or federal government agency, court or body.
26.2 QWEST represents and warrants that the Segments of the QWEST System that
it has heretofore constructed or will construct pursuant hereto have been or
shall be designed, engineered, installed, and constructed in compliance with the
terms and provisions of this Agreement and in material compliance with any and
all applicable building, construction and safety codes for such construction and
installation, as well as any and all other applicable governmental laws, codes,
ordinances, statutes and regulations.
26.3 With respect to each of the Segments that has been constructed prior to
the date hereof, QWEST represents and warrants that such Segment, when
constructed, generally was constructed substantially in accordance with the
specifications set forth in Exhibit C hereto, and QWEST has no actual knowledge
on the date hereof of any material deviation in the construction of such Segment
from such specifications. If, within twelve (12) months from the respective
Acceptance Date for each of the Segments referred to in this Section 26.3 ,
there is an event or occurrence that is caused by a material deviation in the
construction or installation of any of such Segments from such specifications,
and which has a material adverse affect on the operation or performance of the
GTE Fibers in such Segment, then, promptly following receipt of written notice
thereof from GTE, QWEST, at its sole cost and expense, shall undertake to repair
the affected portion of such Segment to the relevant specifications.
26.4 QWEST represents and warrants that the Segments of the QWEST System that
it constructs pursuant hereto shall be constructed in all material respects in
accordance with the specifications set forth in Exhibit C hereto; provided that
GTE's sole rights and remedies with respect to any failure to so construct shall
be (i) to inspect the construction, installation and splicing, and participate
in the acceptance testing, of the GTE Fibers incorporated in each such Segment,
during the course and at the time of the relevant construction, installation and
testing periods for each Segment, as provided in Articles III and IV, (ii) if,
during the course of such construction, installation and testing any material
deviation from the specifications set forth in Exhibit C is discovered, the
construction or installation of the affected portion of the Segment shall be
repaired to such specification by QWEST at QWEST's sole cost and expense, and
(iii) if, at any time prior to the date that is twelve (12) months after the
Acceptance Date, GTE shall notify QWEST in writing of its discovery of a
material deviation from the
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specifications set forth in Exhibit C with respect to any such Segment (which
notice shall be given within thirty (30) days of such discovery) the
construction or installation of the affected portion of such Segment shall be
repaired to such specification by QWEST at QWEST's sole cost and expense. For
purposes hereof, "material deviation" means a deviation which is reasonably
likely to have a material adverse affect on the operation or performance of the
GTE Fibers affected thereby.
26.5 EXCEPT AS SET FORTH IN THE FOREGOING PARAGRAPHS 26.2, 26.3 AND 26.4, AND
EXCEPT AS MAY BE SET FORTH SPECIFICALLY AND EXPRESSLY ELSEWHERE IN THIS
AGREEMENT, QWEST MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE GTE
FIBERS OR THE SEGMENTS DELIVERABLE HEREUNDER, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE, AND ALL SUCH WARRANTIES ARE
HEREBY EXPRESSLY DISCLAIMED.
26.7 The parties acknowledge and agree that on and after the relevant
Acceptance Date GTE's sole rights and remedies with respect to any defect in or
failure of the GTE Fibers to perform in accordance with the applicable vendor's
or manufacturer's specifications with respect to the GTE Fibers shall be limited
to the particular vendor's or manufacturer's warranty with respect thereto,
which warranty, to the extent permitted by the terms thereof, shall be assigned
to GTE upon its request. In the event any maintenance or repairs to the QWEST
System are required as a result of a breach of any warranty made by any
manufacturers, contractors or vendors, unless GTE shall elect to pursue such
remedies itself, QWEST shall pursue all remedies against such manufacturers,
contractors or vendors on behalf of GTE, and QWEST shall reimburse GTE's costs
for any maintenance GTE has incurred as a result of any such breach of warranty
to the extent the manufacturer, contractor or vendor has paid such costs.
26.8 QWEST and GTE acknowledge and agree:
(a) that each grant of the IRU in the GTE Fibers and Associated Property for
a Segment hereunder (each herein called a "Grant") will be treated by each of
them, vis-a-vis the other, as of and after the relevant effective date thereof
as described in Section 6.1, an executed grant to GTE of an interest in real
property with respect to such Segment; and
(b) that, from and after the effective date of a Grant with respect to a
Segment, no material obligation of either QWEST or GTE will remain to be
performed with respect to such Grant or Segment; and
(c) that, with respect to each such Grant, this Agreement is not intended as
an executory contract or unexpired lease subject to assumption, rejection, or
assignment by the trustee in bankruptcy of any party to this Agreement,
including, without limitation, assumption, rejection, or assignment under
Bankruptcy Code Section 365.
ARTICLE XXVII.
ENTIRE AGREEMENT; AMENDMENT
27.1 This Agreement, together with any Confidentiality Agreement entered into
in connection herewith constitutes the entire and final agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements relating to the subject matter hereof, which are
of no further force or effect. The Exhibits referred to herein are integral
parts hereof and are hereby made a part of this Agreement. To the extent that
any of the provisions of any Exhibit hereto are inconsistent with the express
terms of this Agreement, the terms of this Agreement shall prevail. This
Agreement may only be modified or supplemented by an instrument in writing
executed by a duly authorized representative of each party and delivered to the
party relying on the writing.
ARTICLE XXVIII.
NO PERSONAL LIABILITY
28.1 Each action or claim against any party arising under or relating to this
Agreement shall be made only against such party as a corporation, and any
liability relating thereto shall be enforceable only against the corporate
assets of such party. No party shall seek to pierce the corporate veil or
otherwise seek to impose any liability
Page 33
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CONFIDENTIAL TREATMENT
relating to, or arising from, this Agreement against any shareholder, employee,
officer or director of the other party. Each of such persons is an intended
beneficiary of the mutual promises set forth in this Article and shall be
entitled to enforce the obligations of this Article.
ARTICLE XXIX.
RELATIONSHIP OF THE PARTIES
29.1 The relationship between GTE and QWEST shall not be that of partners,
agents, or joint venturers for one another, and nothing contained in this
Agreement shall be deemed to constitute a partnership or agency agreement
between them for any purposes, including, but not limited to federal income tax
purposes. GTE and QWEST, in performing any of their obligations hereunder, shall
be independent contractors or independent parties and shall discharge their
contractual obligations at their own risk subject, however, to the terms and
conditions hereof.
ARTICLE XXX.
LATE PAYMENTS
30.1 In the event a party shall fail to make any payment under this Agreement
when due, such amounts shall accrue interest, from the date such payment is due
until paid, including accrued interest compounded monthly, at an annual rate
equal to
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
of the prime rate of interest published by The Wall Street Journal as the base
rate on corporate loans posted by a substantial percentage of the nation's
largest banks on the date any such payment is due or, if lower, the highest
percentage allowed by law.
ARTICLE XXXI.
SEVERABILITY
31.1 If any term, covenant or condition contained herein shall, to any
extent, be invalid or unenforceable in any respect under the laws governing this
Agreement, the remainder of this Agreement shall not be affected thereby, and
each term, covenant or condition of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
ARTICLE XXXII.
COUNTERPARTS
32.1 This Agreement may be executed in one or more counterparts, all of which
taken together shall constitute one and the same instrument.
ARTICLE XXXIII.
CERTAIN DEFINITIONS
33.1 The following terms shall have the stated definitions in this Agreement.
(a) "Cable" means the fiberoptic cable and the fibers contained therein, and
associated splicing connections, splice boxes, and vaults to be installed by
QWEST as part of the QWEST System.
(b) "Costs" means actual, direct costs paid or payable in accordance with
the established accounting procedures generally used by QWEST and which it
utilizes in billing third parties for reimbursable projects which costs shall
include, without limitation, the following: (i) internal labor costs, including
wages and salaries, and benefits and overhead allocable to such labor costs
(with the overhead allocation percentage equal to
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
), and (ii) other direct costs and out-of-pocket expenses on a pass-through
basis (e.g., equipment, materials, supplies, contract services, etc.).
(c) "Dark Fiber" means fiber provided without electronics or optronics, and
which is not "lit" or activated; provided that such fiber may be used in any
manner and for any purpose permitted under Article XI.
(d) "Estimated Delivery Date" means, with respect to each Segment of the
QWEST System to be delivered hereunder, the date set forth in Exhibit A hereto
with respect to such Segment, as any such
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<PAGE>
CONFIDENTIAL TREATMENT
date may be extended for and during (A) the period of any delay described in
Article XX and/or (B) the period of any payment default pursuant to Section 18.1
with respect to any Segment and/or (C) the aggregate number of days of the GTE
Review Period or Periods (in the event of multiple remedy attempts) under
Section 4.2 with respect to such Segment.
(e) "Impositions" means all taxes, fees, levies, imposts, duties, charges or
withholdings of any nature (including, without limitation, gross receipts taxes
and franchise, license and permit fees), together with any penalties, fines or
interest thereon (except for penalties or interest imposed as a direct result of
acts or failures to act on the part of QWEST) arising out of the transactions
contemplated by this Agreement and/or imposed upon the QWEST System by any
federal, state or local government or other public taxing authority.
(f) "Indefeasible Right of Use" or "IRU" means (i) an exclusive,
indefeasible right of use, for the purposes described herein, in the GTE Fibers,
as granted in Article II, and (ii) an associated non-exclusive, indefeasible
right of use, for the purposes described herein, in the Associated Property;
provided that the IRUs granted hereunder do not provide GTE with any ownership
interest in or other rights to physical access to, control of, modification of,
encumbrance in any manner of, or other use of the QWEST System except as
expressly set forth herein.
(g) This item left blank intentionally.
(h) "POP" means the GTE point of presence at locations along the QWEST
System route.
(i) "PSWP" means Planned System Work Period, which is a prearranged period
of time reserved for performing certain work on the QWEST System that may
potentially impact traffic. Generally, this will be restricted to weekends,
avoiding the first and last weekend of each month and high-traffic weekends. The
PSWP shall be agreed upon pursuant to Exhibit H.
(j) "QWEST System" shall have the meaning ascribed thereto in Recital A.
(k) When used herein in connection with a covenant of a party to this
Agreement "best efforts" shall not obligate such party, unless otherwise
specifically required by the operative covenant, to make unreimbursed
expenditures (other than costs or expenditures that would have been required of
such party in the absence of the requirements of such covenant) that are
material in amount, in light of the circumstances to which the requirement to
use best efforts applies. In confirmation of their consent and agreement to the
terms and conditions contained in this IRU Agreement and intending to be legally
bound hereby, the parties have executed this IRU Agreement as of the date first
above written.
"QWEST":
QWEST COMMUNICATIONS CORPORATION, a
Delaware corporation
By: /s/ Albert Dean Wandry
----------------------
Name: Albert Dean Wandry
Title: Senior Vice President-NBD
"GTE":
GTE INTELLIGENT NETWORK SERVICES INCORPORATED, a
Delaware corporation
By: /s/ Thomas W. White
-------------------
Name: Thomas W. White
Title: President GTE Intelligent Network Services Incorporated
EXHIBIT A
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CONFIDENTIAL TREATMENT
QWEST System Description
EXHIBIT A-1: QWEST System Description and Delivery Dates
GTE - Exhibit A-1
System Description and Delivery Dates
<TABLE>
<CAPTION>
Estimated Estimated
Segment System Route Delivery
No. Segment Miles Date
<S> <C> <C> <C>
1A Chicago - Detroit 305 1/31/98
1B Detroit - Cleveland 165 2/15/98
1C Cleveland - Pittsburgh 162 3/1/98
1D Pittsburgh - Philadelphia 356 3/31/98
1E Philadelphia - Washington, D.C. 138 4/30/98
Chicago - Detroit - Cleveland -
1 Washington DC Total 1,126 4/30/98
2A Cleveland - Columbus 133 10/31/97
2B Columbus - Cincinnati 125 10/31/97
2 Cleveland - Columbus Total 258 10/31/97
3 Cincinnati - Louisville 107 7/30/98
4 Indianapolis - Chicago 215 12/31/97
5 Indianapolis - St. Louis 248 10/31/97
6 St. Louis - Kansas City 297 10/31/97
7 Kansas City - Topeka 75 10/31/97
8 Denver - Topeka 565 10/31/97
9A Denver - Grand Junction 271 10/31/97
9B Grand Junction - Salt Lake City 295 10/31/97
9 Denver - Salt Lake Total 566 10/31/97
10A Salt Lake City - Reno 575 10/31/97
10B Reno - Roseville 136 10/31/97
10 Salt Lake - Roseville Total 711 10/31/97
11A Roseville - Oakland 111 10/31/97
11B Oakland - San Jose 43 10/31/97
11 Roseville - San Jose Total 154 10/31/97
12A San Jose - Salinas 71 10/31/97
12B Salinas - San Luis Obispo 132 10/31/97
12C San Luis Obispo - Santa Barbara 119 10/31/97
12D Santa Barbara - Los Angeles 107 10/31/97
12 San Jose - Los Angeles Total 429 10/31/97
13A Los Angeles - Anaheim 32 10/31/97
13B Anaheim - San Diego 132 10/31/97
13C San Diego - Yuma 235 12/31/97
13D Yuma - Phoenix 187 1/31/98
13 LA - San Diego - Phoenix Total 586 1/31/98
14A Phoenix - Tucson 123 2/29/98
14B Tucson - El Paso 310 3/31/98
14 Phoenix - Tucson - El Paso Total 433 3/31/98
</TABLE>
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<PAGE>
CONFIDENTIAL TREATMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C>
15A El Paso - San Antonio 586 5/31/98
15B San Antonio - Austin 85 1/31/98
15C Austin - Houston 221 12/31/97
15 El Paso - San Antonio - Houston Total 892 5/31/98
16 Houston - Dallas 269 10/31/97
17A Dallas - Oklahoma City 264 1/31/98
17B Oklahoma City - Tulsa 119 1/31/98
17C Tulsa - Kansas City 256 1/31/98
17 Dallas - Kansas City Total 639 1/31/98
18 Cincinnati - Indianapolis 117 10/31/97
19A Louisville - Nashville 189 9/30/98
19B Nashville - Chattanooga 147 10/31/98
19C Chattanooga - Atlanta 137 10/31/98
19 Louisville - Nashville - Atlanta Total 473 10/31/98
20A Atlanta - Charlotte 261 10/31/98
20B Charlotte - Raleigh 174 8/31/98
20C Raleigh - Richmond 301 10/31/98
20D Richmond - Washington D.C. 110 10/31/98
20 Atlanta - Raleigh - Washington Total 846 10/31/98
21A Chicago - Milwaukee 84 10/31/98
21B Milwaukee - Green Bay 118 10/31/98
21C Green Bay - Minneapolis 295 10/31/98
21D Minneapolis - Des Moines 281 10/31/98
21 Chicago - Des Moines Total 778 10/31/98
22C Des Moines - Omaha 140 10/31/98
22D Omaha - Topeka 224 10/31/98
22 Des Moines - Topeka Total 364 10/31/98
23 Denver - El Paso Total 746 3/31/98
24A Roseville - Chico 98 1/31/98
24B Chico - Redding 75 1/31/98
24C Redding - Medford 177 1/31/98
24D Medford - Eugene 206 1/31/98
24E Eugene - Portland 123 1/31/98
24 Roseville - Portland Total 679 1/31/98
25 Portland - Seattle 182 1/31/98
27 San Jose - San Francisco 56 10/31/97
28A Boston - Albany 208 12/31/97
28B Albany - Buffalo 298 12/31/97
28C Buffalo - Cleveland 197 12/31/97
28 Boston - Cleveland Total 703 12/31/97
29 Albany - New York City 157 5/31/98
30 New York City - Philadelphia 95 5/31/98
Total 12,766 10/31/98
</TABLE>
EXHIBIT A-2: General Route Map
[MAP APPEARS HERE]
EXHIBIT A-3: Detailed Route Maps
[MAPS APPEAR HERE]
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CONFIDENTIAL TREATMENT
EXHIBIT A-4: Designated End Point and Intermediate Point
Cities
Exhibit A-4
DESIGNATED ENDPOINT and INTERMEDIATE CITIES
<TABLE>
<CAPTION>
CITY ST LATA LATA NAME
<S> <C>
Base Phoenix AZ 666 PHOENIX
Tucson AZ 668 TUCSON
Yuma AZ 666 PHOENIX
Anaheim CA 730 LOS ANGELES
Chico CA 724 CHICO
Los Angeles CA 730 LOS ANGELES
Oakland CA 722 SAN FRANCISCO
Redding CA 724 CHICO
Roseville CA 726 SACRAMENTO
Sacramento CA 726 SACRAMENTO
Salinas CA 736 MONTEREY
San Diego CA 732 SAN DIEGO
San Francisco CA 722 SAN FRANCISCO
San Jose CA 722 SAN FRANCISCO
San Luis Obispo CA 740 SAN LUIS OBISPO
Santa Barbara CA 730 LOS ANGELES
Colorado Springs CO 658 COLORADO SPR.
Denver CO 656 DENVER
Grand Junction CO 656 DENVER
Pueblo CO 658 COLORADO SPR.
Washington DC 236 WASH DC
Atlanta GA 438 ATLANTA
Des Moines IA 632 DES MOINES
Chicago IL 358 CHICAGO
Indianapolis IN 336 INDIANAPOLIS
South Bend IN 332 SOUTH BEND
Topeka KS 534 TOPEKA
Bowling Green KY 464 OWENSBORO
Louisville KY 462 LOUISVILLE
Boston MA 128 EAST MASS
Baltimore MD 238 BALTIMORE
Battle Creek MI 348 GRAND RAPIDS
Detroit MI 340 DETROIT
Minneapolis MN 628 MINNEAPOLIS
Owatonna MN 620 ROCHESTER
Kansas City MO 524 KANSAS CITY
St. Louis MO 520 ST.LOUIS
Charlotte NC 422 CHARLOTTE
Greensboro NC 424 GREENSBORO
Raleigh NC 426 RALEIGH
Rocky Mount NC 951 ROCKY MOUNT
Lincoln NE 958 LINCOLN
Omaha NE 644 OMAHA
Newark NJ 224 NORTH JERSEY
Trenton NJ 222 DELAWARE VALLEY
Albuquerque NM 664 NEW MEXICO
Santa Fe NM 664 NEW MEXICO
Reno NV 720 RENO
Albany NY 134 ALBANY
Buffalo NY 140 BUFFALO
New York NY 132 NEW YORK METRO
Poughkeepsie NY 133 POUGHKEEPSIE
Rochester NY 974 ROCHESTER
Syracuse NY 136 SYRACUSE
Utica NY 136 SYRACUSE
</TABLE>
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CONFIDENTIAL TREATMENT
<TABLE>
<S> <C>
White Plains NY 132 NEW YORK METRO
Akron OH 325 AKRON
Cincinnati OH 922 CINCINNATI
Cleveland OH 320 CLEVELAND
Columbus OH 324 COLUMBUS
Dayton OH 328 DAYTON
Toledo OH 326 TOLEDO
Youngstown OH 322 YOUNGSTOWN
Oklahoma City OK 536 OKLAHOMA CITY
Tulsa OK 538 TULSA
Eugene OR 670 EUGENE
Medford OR 670 EUGENE
Portland OR 672 PORTLAND
Salem OR 672 PORTLAND
Harrisburg PA 226 CAPITOL,PA
Philadelphia PA 228 PHILADELPHIA
Pittsburgh PA 234 PITTSBURGH
Greenville SC 430 GREENVILLE
Chattanooga TN 472 CHATTANOOGA
Nashville TN 470 NASHVILLE
Austin TX 558 AUSTIN
Bryan TX 570 HEARNE
Dallas TX 552 DALLAS
El Paso TX 540 EL PASO
Ft. Worth TX 552 DALLAS
Houston TX 560 HOUSTON
Mexia TX 556 WACO
San Antonio TX 566 SAN ANTONIO
Provo UT 660 UTAH
Salt Lake City UT 660 SALT LAKE CITY
Fredericksburg VA 246 CULPEPER
Portsmouth VA 252 NORFOLK
Richmond VA 248 RICHMOND
Seattle WA 674 SEATTLE
Eau Claire WI 352 NORTHWEST WI
Green Bay WI 350 NORTHEAST WI
Milwaukee WI 356 SOUTHEAST WI
</TABLE>
EXHIBIT B
IRU Fee Payment Schedule
1. The IRU fee for each Segment shall be paid in accordance with the following
schedule:
i)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% upon execution of the IRU Agreement.
ii)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% upon commencement of the construction of a Segment.
iii)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% upon completion of conduit installation of such Segment.
iv)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% upon completion of fiber cable placement in such Segment.
v)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% upon completion of fiber splicing and completion of civil
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construction in such Segment.
vi)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% on the Acceptance Date for such Segment.
2. The IRU fee for Segment 23 shall be paid in accordance with the
following schedule:
i)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% upon execution of the IRU agreement.
ii)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% upon the Acceptance Date for the first 12 Dark Fibers delivered
in accordance with Exhibit A.
iii)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% upon the Acceptance Date for the second 12 Dark Fibers
delivered in accordance with Exhibit A.
3. For purposes of determining the occurrence of the construction
milestones triggering payment obligations hereunder, the
following shall apply:
i) Commencement of construction of a Segment shall mean
the establishment of a field office followed promptly by
mobilization of either in-house crews or the subcontract of
a construction manager.
ii) Completion of conduit installation shall mean the
completion of installation of the conduit system for the
Segment, with handholds and manholes, ready for Cable
pulling.
C. Completion of fiber cable placement shall mean the
fiber cable is either pulled into the conduit or completely
installed in aerial installation, but without splicing. In
the event of aerial construction, the IRU Fee installment
otherwise due upon completion of conduit installation shall
be due and payable at the same time as the installment due
upon completion of fiber cable placement.
D. Completion of fiber splicing and civil construction
shall mean all fibers are spliced and ready for testing and
civil facilities are ready for the customer to occupy and
install their equipment.
E. Acceptance Date shall have the meaning established in
the IRU Agreement.
IV. The IRU Fee shall be calculated at the rate of $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per mile.
V. Upon execution of the IRU Agreement, GTE shall pay QWEST an
amount equal to the sum of all payments due pursuant to Section 1
clauses (ii), (iii), (iv), (v), and (vi) of this Exhibit B for
each Segment for which construction has commenced.
EXHIBIT C
Construction Specifications
1.0 General.
The intent of this document is to outline the specifications for
construction of a fiber optic cable system. In all cases, the
standards contained in this document or the standards of the
federal, state, local or private agency having jurisdiction,
whichever is stricter, shall be followed.
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<PAGE>
CONFIDENTIAL TREATMENT
2.0 Material.
Steel or PVC conduit shall be minimum schedule ##MATERIAL OMITTED AND
SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## wall
thickness.
Any exposed steel conduit, brackets or hardware (i.e., bridge attachments)
shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##.
Handholes shall have a minimum ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## loading rating or ##MATERIAL OMITTED
AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## with
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT## to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT## inches of cover.
Manholes shall have a minimum ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## loading rating.
Innerducts used shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## or ##MATERIAL OMITTED AND SEPARATELY
FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##.
Buried cable warning tape shall be ##MATERIAL OMITTED AND SEPARATELY FILED
UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## wide and display ##MATERIAL
OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##.
Warning signs will display ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT##.
Fiber optic cable shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT##.
3.0 Minimum Depths.
Minimum cover required in the placement of conduit shall be ##MATERIAL OMITTED
AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches,
except in the following instances:
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CONFIDENTIAL TREATMENT
(a) The minimum cover in borrow ditches adjacent to roads, highways, railroads
and interstate highways is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## inches below the cleanout line or
existing grade, whichever is greater.
(b) The minimum cover across streams, river washes and other waterways is
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT## inches below the cleanout line or existing grade, whichever is
greater. Steel conduit will be placed at all such crossings unless the crossing
is directional bored.
(c) At locations where conduit crosses other subsurface utilities or other
structures, the conduit shall be installed to provide a minimum of ##MATERIAL
OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##
inches of vertical clearance and applicable minimum depth can be maintained;
otherwise, the conduit will be installed under the existing utility or other
structure. If, however, ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## inches cannot be obtained, the cable
shall be encased in steel pipe rather than conduit. No fiber optic cable shall
be buried without being surrounded by conduit or steel pipe.
(d) In rock, the conduit shall be placed to provide a minimum of ##MATERIAL
OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##
inches below the surface of the solid rock, or provide a minimum of ##MATERIAL
OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##
inches of total cover, whichever requires the least rock excavation. PVC or HDPE
conduit will be backfilled with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## inches of select materials (padding) in
rock areas.
(e) In the case of the use/conversion of existing steel pipelines or salvaged
conduit systems, the existing depth shall be considered adequate.
4.0 Buried Cable Warning Tape.
All conduit will be installed with buried cable warning tape except where
existing steel pipelines or salvaged conduit systems are used. The warning tape
shall generally be placed at a depth of ##MATERIAL OMITTED AND SEPARATELY FILED
UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below grade and
directly above the conduit.
5.0 Conduit Construction.
Conduits may be placed by means of trenching, plowing, jack and bore, or
directional bore. Conduits will generally be placed on a level grade parallel to
the surface, with only gradual changes in grade elevation.
Steel conduit will be joined with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER
AN APPLICATION FOR
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CONFIDENTIAL TREATMENT
CONFIDENTIAL TREATMENT##.
All paved city, state, federal and interstate highways and railroad crossings
will be encased in steel conduit. If the crossing is at grade, steel is not
required if the cable is placed with ##MATERIAL OMITTED AND SEPARATELY FILED
UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet of cover or more, and the
crossing is directional bored. All crossings of major streams, rivers, bays and
navigable waterways will be placed in ##MATERIAL OMITTED AND SEPARATELY FILED
UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit.
At all foreign utility/underground obstacle crossings, ##MATERIAL OMITTED AND
SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit will
be placed and will extend at least ##MATERIAL OMITTED AND SEPARATELY FILED UNDER
AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet beyond the outer limits of the
obstacle in both directions.
All jack and bores will use steel conduit.
All directional bores will use ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## conduit.
Any cable placed in rock will be placed in ##MATERIAL OMITTED AND SEPARATELY
FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit.
Any cable placed in swamp or wetland areas will be placed in ##MATERIAL OMITTED
AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit.
All conduits placed on bridges will be ##MATERIAL OMITTED AND SEPARATELY FILED
UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##.
All conduits placed on bridges shall have expansion joints placed ##MATERIAL
OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##
or at least every ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION
FOR
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<PAGE>
CONFIDENTIAL TREATMENT
CONFIDENTIAL TREATMENT## feet, whichever is the shorter distance.
6.0 Innerduct Installation.
Innerduct(s) shall be installed in all steel conduits. No cable will be placed
directly in any split/solid steel conduit without innerduct.
Innerduct(s) shall extend beyond the end of all conduits a minimum of
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT## inches.
7.0 Cable Installation.
The fiber optic cable shall be installed using a powered pulling winch and
hydraulic-powered assist pulling wheels. The maximum pulling force to be applied
to the fiber optic cable shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER
AN APPLICATION FOR CONFIDENTIAL TREATMENT## pounds.
Bends of small radii (less than 20 times the outside diameter of the cable) and
twists that may damage the cable shall be avoided during cable placement.
The cable shall be lubricated and placed in accordance with the cable
manufacturer specifications.
A pulling swivel break-away rated at ##MATERIAL OMITTED AND SEPARATELY FILED
UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## pounds shall be used at all
times.
All splices will be contained in a handhole or manhole.
A minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT## meters of slack cable will be left in all intermediate
handholes or manholes.
A minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT## meters of slack cable will be left in all splice
locations.
A minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT## meters of slack cable will be left in all facility
locations (i.e., POP sites, switch sites, regens or CEVs).
8.0 Manholes and Handholes.
Manholes shall be placed in traveled surface streets and shall have locking
lids.
Handholes shall be placed in all other areas and be installed with a minimum of
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CONFIDENTIAL TREATMENT
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT## inches of soil covering the lid.
9.0 EMS Markers.
EMS markers shall be placed 6 inches directly above the lid of all buried
handholes and assist points. EMS markers fabricated into the lids of handholes
are acceptable.
10.0 Cable Markers (Warning Signs).
Cable markers (with the same information as buried cable warning tape) shall be
installed at all changes in cable running line direction, splices, waterways,
subsurface utilities, handholes and at both sides of street, highway, bridge or
railroad crossings. At no time shall any markers be spaced more than ##MATERIAL
OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##
feet apart in metro areas and ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## feet apart in non-metro areas. Markers
shall be positioned so that they can be seen from the location of the cable and
generally set facing perpendicular to the cable running line.
11.0 Compliance.
All work will be done in strict accordance with federal, state, local and
applicable private rules and laws regarding safety and environmental issues,
including those set forth by OSHA and the EPA. In addition, all work and the
resulting fiber system will comply with the current requirements of all
governing entities (FCC, NEC, DEC and other national, state and local codes).
12.0 As Built Drawings.
As built drawings will contain a minimum of the following:
1) Information showing the location of running line, relative to permanent
landmarks, including but not limited to, railroad mileposts, boundary
crossings and utility crossings.
2) Splice locations
3) Manhole and handhole locations
4) Conduit information (type, length, expansion joints, etc.)
5) Cable information (manufacturer, type of fiber, type of cable, fiber
assignments, final cable lengths)
6) Notation of all deviations from specifications (depth, etc.)
7) ROW detail (type, centerline distances, boundaries, waterways, road
crossings, known utilities and obstacles)
8) Cable marker locations and stationing
9) Regeneration locations and floorplans to include FDP
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assignments (also labeled on site)
Drawings will be updated with actual field data during and after construction.
Metro areas scale shall not exceed 1 inch = 200 feet.
Rural areas scale shall not exceed 1 inch = 500 feet.
As-builts will be provided within ##MATERIAL OMITTED AND SEPARATELY FILED UNDER
AN APPLICATION FOR CONFIDENTIAL TREATMENT## days after acceptance, in both hard
copy and electronic format (Auto-CAD version 13.0 or later). Updates to the as-
builts will be provided within ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## days of completion of change, like a
relocation project.
13.0 Aerial Construction.
Subject to prior approval by both parties (which approval shall not be
unreasonably withheld), aerial construction methods will only be used when
buried construction techniques are impractical due to environmental conditions,
schedule or economic considerations, right-of-way issues, or code restrictions.
The parties acknowledge that aerial construction on utility towers (not utility
poles) using optical groundwire or all dielectric self-support methods may be
used without GTE approval provided QWEST agrees to give GTE reasonable prior
notice of its decision to use such aerial methods.
Aerial design standards and construction techniques will conform with industry-
accepted practices for aerial fiber optic cable systems. All aerial plant must
comply with applicable national (NEC, NESC, etc.), state and local codes.
The fiber optic cable placed on an aerial system shall be armored and designed
for aerial applications.
The cable will be placed in accordance with manufacturer specifications. Cable
tension will be monitored during placement. Cable rollers will be placed at a
maximum interval of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT## feet. Cable expansion loops will be placed at every
pole. Cable identification/warning tags will be placed at every pole. All cable
splices will be buried in handholes or manholes.
Cable sheath to suspension strand bonds and grounding will be performed at the
first and last pole of the system and at ##MATERIAL OMITTED AND SEPARATELY FILED
UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## mile intervals.
Fiber optic cable at all riser poles will be protected with galvanized steel U-
guard from ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT## inches below grade to a point
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##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT## inches below the suspension strand. Conduit sweeps will be used to
transition from the U-guard to either a handhole or manhole.
All aerial plant will be designed and constructed with 10M EHS (Class A
galvanized) suspension strand unless otherwise dictated by the pole owners or
field conditions. The fiber optic cable will be double lashed to the suspension
strand using 45 mil stainless lashing wire.
Span length shall account for storm loading (wind and ice) in accordance with
zones outlined in NESC code. Sags and tensions will be calculated in accordance
with industry accepted practices and account for strand size, span length,
ambient temperature at placement and loading. The suspension strand will be
tensioned with a strand dynamometer. A catenary suspension system may be used if
the system exceeds maximum span length specifications.
Prior to attachment to any existing pole line, the system will be inspected for
compliance with applicable codes and standards, as well as the physical
condition of the poles and existing hardware. Any make-ready work will be
reviewed with the pole owner and specifically addressed prior to construction.
If a pole line need be constructed, the preferred poles will be Class 4 (40
feet) and Class 5 (35 feet). Use of the preferred poles will make it unnecessary
to calculate pole loading (horizontal, vertical and bending moments) in most
field conditions. Some unusual conditions may require the use of a stronger
class pole. Depth of placement will be dictated by soil conditions, slope of
terrain and length of pole. Poles will be guyed in accordance with industry-
accepted standards. All pole attachment hardware will be galvanized steel.
Aerial cable will be placed below power attachments and above all other
attachments unless otherwise dictated by the pole owner. Pole contact clearances
and locations will be dictated by current NESC code and the presence of existing
attachments; however, the following minimum objective clearances will apply:
a) Power line -##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT## inches (below)
b) Non-current carrying power line -##MATERIAL OMITTED AND SEPARATELY FILED
UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches
c) Telephone, CATV and other signal lines -##MATERIAL OMITTED AND
SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches
(above) Verticle clearances for crossings or parallel lines will be dictated by
current NESC code; however, the objective clearance for most objects (roads,
alleys, etc.) Is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT## feet (at 100 F) with the exception of railroad
tracks and waterways which have an objective of ##MATERIAL OMITTED AND
SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet (at
100 F).
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14.0 Approval of Deviations From Specifications.
QWEST will seek the approval of GTE, which approval shall not be unreasonably
withheld or delayed, prior to undertaking any construction which will deviate
from the Construction Specifications set forth in this Exhibit C.
EXHIBIT D
Fiber Cable Splicing, Testing and Acceptance Procedures
1. All splices will be performed with an industry-accepted fusion splicing
machine. Qwest will perform two stages of testing during the construction of a
new fiber cable route. Initially, OTDR tests will be taken from one direction.
As soon as fiber connectivity has been achieved to both regen sites, Qwest will
verify and record the continuity of all fibers. Qwest will take and record power
level readings on all fibers in both directions. Qwest will bi-directional OTDR
test all fibers.
2. During the initial construction, it is only possible to measure the fiber
from one direction. Because of this, splices will be qualified during initial
construction with an OTDR from only one direction. The profile alignment system
or light injection detection system on the fusion splicer may be used to qualify
splices as long as a close correlation to OTDR data is established. The pigtails
will also be qualified at this stage using an OTDR and a minimum 1 km launch
reel. All measurements at this stage in construction will be taken at ##MATERIAL
OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##
nm.
3. After Qwest has provided end-to-end connectivity on the fibers, bi-
directional span testing will be done. These measurements must be made after the
splice manhole or handhole is closed in order to check for macro-bending
problems. Continuity tests will be done to verify that no fibers have been
"frogged" or crossed in any of the splice points. Once the pigtails have been
spliced, loss measurements will be recorded using an industry-accepted laser
source and a power meter. OTDR traces will be taken and splice loss measurements
will be recorded. Qwest will also store OTDR traces on diskette and on data
sheets. Laser Precision format will be used on all traces. Qwest will provide
three copies of all data sheets and tables, and one set of diskettes with all
traces.
a. The power loss measurements shall be made at ##MATERIAL OMITTED AND
SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm, and
performed bi-directionally.
b. OTDR traces shall be taken in both directions at ##MATERIAL OMITTED AND
SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm.
4. The splicing standards are as follows:
a. The loss value of the pigtail connector and its associated splice will not
exceed ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT## dB. This value does not include the insertion loss from
its connection to the FDP. For values greater than this, the splice will be
broken and respliced
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until an acceptable loss value is achieved. If, after five attempts, Qwest is
not able to produce a loss value less than ##MATERIAL OMITTED AND SEPARATELY
FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB, the splice will be
marked as Out-of-Spec ("OOS") on the data sheet. Each splicing attempt shall be
documented on the data sheet.
b. During initial uni-directional OTDR testing, the objective for each splice
is a loss of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT## or less. If, after three attempts, Qwest is not able to
produce a loss value of less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER
AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB, then ##MATERIAL OMITTED AND
SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB will be
acceptable. If, after two additional attempts, a value of less than ##MATERIAL
OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##
dB is not achievable, then the splice will be marked as OOS on the data sheet.
Each splicing attempt shall be documented on the data sheet.
c. During end-to-end testing of a span (a span shall be FDP to FDP), the
objective for each splice is a bi-directional average loss of ##MATERIAL OMITTED
AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB or
less.
d. The standard for each fiber within a span shall be an average bi-
directional loss of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT## dB or less for each splice. For example, if a given
span has 10 splices, each fiber shall have total bi-directional loss (due to the
10 splices) of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT## or less. Each individual splice may have a bi-
directional loss of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT## dB or less, but the average bi-directional splice
loss across the span must be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## dB or less.
5. The entire fiber optic cable system shall be properly protected from
foreign voltage and grounded with an industry-accepted system. The current
system in use by Qwest is depicted in the attached schematic-DWG No. SAH-1
(typical for Surge Arrestor HH Placement).
6. Customer fiber assignments will be consecutive in count and in a separate
buffer tube (or ribbon or fiber bundles) from others. The maximum number of
fibers within a single buffer tube (or ribbon or fiber bundles) shall be 12.
7. The fibers shall be terminated to the FDP with Ultra FC-PC connectors,
unless another type of connector is specified. The pigtails shall be
manufactured with the same glass as the backbone cable to minimize splice loss.
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EXHIBIT E
Fiber Specifications
[This exhibit contains product specification information that is
largely set forth in graphic format]
EXHIBIT E-1
Fiber Deployment Diagram
[Exhibit E-1 is a map of the United States with the heading "Fiber Deployment
Diagram" showing state lines and routes of the fiber optic network upon
completion.]
EXHIBIT F
Specifications for Regeneration Facilities
Qwest will install modular, prefabricated, conditioned space along the right-
of-way to house regenerations and other electronic equipment (supplied by User)
necessary for the operation of the Qwest System.
Regeneration site facilities consist of ##MATERIAL OMITTED AND SEPARATELY FILED
UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## square feet of caged space in
such facilities with separate, lockable, secured 24 hour access. The buildings
will be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT## feet wide by approximately ##MATERIAL OMITTED AND
SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet interior
length to provide such square footage. Also included is access to ##MATERIAL
OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##
amps of DC power provided from a common source backed up by a standby generator
as described below. To the extent provided in the Agreement, any additional
space and/or power required may be made available, with User responsible for
QWEST'S incremental cost. Following are the general specifications of the
buildings and support equipment.
Standard production, metal-framed buildings with steel substructure or
concrete; bullet resistant to 30-06 slugs from 15 feet; walls and ceilings R-19
insulated.
Security-type weatherproof exterior light fixtures, equipped with motion
sensors.
Building is equipped with Marvair Compact II or equivalent redundant HVAC units.
The building platform comes equipped with an external ##MATERIAL OMITTED AND
SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## kw backup
generator designed to provide power during emergency periods. The generator fuel
tanks will have a minimum ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN
APPLICATION FOR CONFIDENTIAL TREATMENT## gallon capacity. As part of the normal
maintenance, the generator will be exercised twice monthly, running on a load
bank for a minimum
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of
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
.
Fire extinguishers are provided one inside the main door, and one
located near the HVAC systems.
A fire suppression system (FM-200) will be in place as the main
overall fire protection coverage.
The building will have an earth ground termination bar (safety
green wire ground) terminated to building steel and/or driven
ground rod.
The building will be equipped with A/C duplex isolated outlets
for testing and miscellaneous equipment. Such outlets shall be
national electronic code and placed every 6 feet around perimeter
walls.
The building will have sufficient lighting.
Two properly sized cable racks will be installed, one from the DC
power source and once from the FDP. Qwest will run properly
sized cables from the common DC power plant to the User-supplied
fuse panel in the User space.
DC power in the amount of
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
amps shall be provided based upon a one (1) for N rectifier format
(i.e.,
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
amp units or
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
amp units). A battery plant capable of handling the load for a
minimum of four (4) hours to ensure uninterruptable power will be
installed in the building. At remote regeneration locations,
QWEST will also provide a battery plant designed to provide at
least
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
, and
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
at all other locations, in both cases with sufficient generator fuel
to provide
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
backup in the event of a power outage. The battery plant shall
incorporate load disconnect protection and batteries capable of
recharging in 12 hours. The battery plant shall also include
dual battery strings with battery disconnects for maintenance
purposes.
Power will be monitored twenty-four (24) hours per day, seven (7)
days a week.
Each party's fibers will be terminated in a separate bulkhead
module within the QWEST fiber distribution panel.
Upon execution of the IRU Agreement, the parties will finalize
the locations of the regeneration facilities in accordance with
Section 7.2 of the IRU Agreement.
Estimated Points
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Segment Route of
Amplifier
No. Segment Miles Presence
Sites
Exhibit G
POP/Regeneration Facility Sites
Segment Estimated Points
Route of Amplifier
No. Segment Miles Presence Sites
1A Chicago to Detroit 305
Chicago to South Bend 2 1
South Bend to Battle Creek 1 1
Battle Creek to Detroit 1 2
1B Detroit to Cleveland 165
Detroit to Toledo 1 0
Toledo to Cleveland 1
1C Cleveland to Pittsburgh 162 1 0
Akron to Youngstown 1 0
Youngstown to Pittsburgh 1 0
1D Pittsburgh to Philadelphia 356
Pittsburgh to Harrisburg 1 3
Harrisburg to Philadelphia 1 1
1E Philadelphia to Washington 138
Philadelphia to Baltimore 2 0
Baltimore to Washington 1 0
2A Cleveland to Columbus 133 1 2
2B Columbus to Cincinnati 125
Columbus to Dayton 1 1
Dayton to Cincinnati 1 0
4 Indianapolis to Chicago 215 1 3
5 Indianapolis to St. Louis 248 1 4
6 St. Louis to Kansas City 297 1 4
7 Kansas City to Topeka 75 1 0
8 Topeka to Denver 565 1 9
9A Denver to Grand Junction 271 1 4
9B Grand Junction to Salt Lake City 295
Grand Junction to Provo 1 4
Provo to Salt Lake City 1 0
10A Salt Lake City to Reno 575 1 9
10B Reno to Roseville 136 1 2
11A Roseville to Oakland 111
Roseville to Sacramento 1 0
Sacramento to Oakland 1 1
11B Oakland to San Jose 43 1 0
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12A San Jose to Salinas 71 1 1
12B Salinas to San Luis Obispo 132 1 2
12C San Luis Obispo to Santa Barbara 119 1 1
12D Santa Barbara to Los Angeles 107 1 1
13A Los Angeles to Anaheim 32 1 0
13B Anaheim to San Diego 132 1 2
13C San Diego to Yuma 235 1 3
13D Yuma to Phoenix 187 1 3
14A Phoenix to Tucson 123 1 1
14B Tucson to El Paso 310 1 5
15A El Paso to San Antonio 586 1 9
15B San Antonio to Austin 85 1 1
15C Austin to Houston 221 1 3
16 Houston to Dallas 269
Houston to Bryan 1 1
Bryan to Dallas 1 2
17A Dallas to Oklahoma City 264 1 0
Ft. Worth to Oklahoma City 1 3
17B Oklahoma City to Tulsa 119 1 1
17C Tulsa to Kansas City 256 1 4
18 Cincinnati to Indianapolis 117 0 1
23 Denver to El Paso 746
Denver to Colorado Springs 1 0
Colorado Springs to Pueblo 1 0
Pueblo to Lamy 1 4
Lamy to Albuquerque 1 0
Albuquerque to El Paso 0 4
Lamy to Santa Fe 1 0
24A Sacramento to Chico 98 1 1
24B Chico to Redding 75 1 0
24C Redding to Medford 177 1 2
24D Medford to Eugene 206 1 3
24E Eugene to Portland 123
Eugene to Salem 0
Salem to Portland 1 0
25 Portland to Seattle 182 1 2
27 San Jose to San Francisco 56 1 0
28A Boston to Albany 208 2 3
28B Albany to Buffalo 298
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Albany to Syracuse 2 1
Syracuse to Rochester 1 1
Rochester to Buffalo 1 0
28C Buffalo to Cleveland 197 0 3
29 Albany to New York City 157 3 1
30 New York City to Philadelphia 95 2 0
21A Chicago to Milwaukee 84 1 1
21B Milwaukee to Green Bay 118 1 1
21C Green Bay to Minneapolis 295
Green Bay to Eau Claire 1 3
Eau Claire to Minneapolis 1 1
21D Minneapolis to Des Moines 281
Minneapolis to Owatonna 1 1
Owatonna to Des Moines 1 3
22C Des Moines to Omaha 140 1 2
22D Omaha to Topeka 224
Omaha to Lincoln 1 1
Lincoln to Topeka 0 2
3 Cincinnati to Louisville 107 0 1
19A Louisville to Nashville 189
Louisville to Bowling Green 1 1
Bowling Green to Nashville 1 0
19B Nashville to Chattanooga 147 1 2
19C Chattanooga to Atlanta 137 1 2
20A Atlanta to Charlotte 261
Atlanta to Greenville 1 2
Greenville to Charlotte 1 1
20B Charlotte to Raleigh 174
Charlotte to Greensboro 1 1
Greensboro to Raleigh 1 1
20C Raleigh to Richmond 301
Raleigh to Rocky Mount 1 0
Rocky Mount to Portsmouth 1 1
Portsmouth to Richmond 1 1
20D Richmond to Washington 110
Richmond to Fredericksburg 1 0
Fredericksburg to Washington 0 0
Total 12,766 93 149
EXHIBIT H
Qwest System Maintenance Specifications and Procedures
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Any party responsible for providing maintenance of the Qwest
System hereunder shall be referred to herein as the "Service
Provider". The Party receiving maintenance services from the
Service Provider hereunder shall be referred to herein as the
"Service Recipient". All other capitalized terms not otherwise
defined herein shall have their respective meanings as set forth
in the IRU Agreement of which this Exhibit forms a part.
1. Maintenance.
(a) Scheduled Maintenance. Routine maintenance and
repair of the Qwest System described in this section ("Scheduled
Maintenance") shall be performed by or under the direction of
Service Provider, at Service Provider's reasonable discretion or
at Service Recipient's request. Scheduled Maintenance shall
commence with respect to each Segment upon the effective date of
the grant of the IRU therein, as provided in the IRU Agreement.
Scheduled Maintenance shall include the following activities:
(i) Patrol of Qwest System route on a regularly
scheduled basis, which will be weekly unless hyrail access is
necessary, in which case, it will be quarterly;
(ii) Maintenance of a "Call-Before-You-Dig"
program and all required and related cable locates;
(iii) Maintenance of sign posts along the
Qwest System right-of-way with the number of the local "Call-Before-
You-Dig" organization and the "800" number for Qwest's
"Call-Before-You-Dig" program; and
(iv) Assignment of fiber maintenance technicians
to locations along the route of the Qwest System at approximately
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
intervals dependent upon terrain and accessability.
(b) Unscheduled Maintenance. Non-routine maintenance
and repair of the Qwest System which is not included as Scheduled
Maintenance ("Unscheduled Maintenance"), shall be performed by or
under the direction of Service Provider. Unscheduled Maintenance
shall commence with respect to each Segment upon the effective
date of the grant of the IRU therein, as provided in the IRU
Agreement. Unscheduled Maintenance shall consist of:
(i) "Emergency Unscheduled Maintenance" in
response to an alarm identification by Service Provider's
Operations Center, notification by Service Recipient or
notification by any third party of any failure, interruption or
impairment in the operation of the Qwest System, or any event
imminently likely to cause the failure, interruption or
impairment in the operation of the Qwest System.
(ii) "Non-Emergency Unscheduled Maintenance" in
response to any potential service-affecting situation to prevent
any failure, interruption or impairment in the operation of the
Qwest System.
Service Recipient shall immediately report the need for
Unscheduled Maintenance to Service Provider in accordance with
procedures promulgated by Service Provider from time to time.
Service Provider will log the time of Service Recipient's report,
verify the problem and dispatch personnel immediately to take
corrective action.
2. Operations Center.
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Service Provider shall operate and maintain an
Operations Center ("OC") staffed twenty-four (24) hours a day,
seven (7) days a week by trained and qualified personnel.
Service Provider's maintenance employees shall be available for
dispatch twenty-four (24) hours a day, seven (7) days a week.
Service Provider shall have its first maintenance employee at the
site requiring Emergency Unscheduled Maintenance activity within
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
after the time Service Provider becomes aware of an event requiring
Emergency Unscheduled Maintenance, unless delayed by
circumstances beyond the reasonable control of Service Provider.
Service Provider shall maintain a toll-free telephone number to
contact personnel at the OC. Service Provider's OC personnel
shall dispatch maintenance and repair personnel along the system
to handle and repair problems detected in the Qwest System, (i)
through the Service Recipient's remote surveillance equipment and
upon notification by Service Recipient to Service Provider, or
(ii) upon notification by a third party.
3. Cooperation and Coordination.
(a) Service Recipient shall utilize an Operations
Escalation List, as updated from time to time, to report and seek
immediate initial redress of exceptions noted in the performance
of Service Provider in meeting maintenance service objectives.
(b) Service Recipient will, as necessary, arrange for
unescorted access for Service Provider to all sites of the Qwest
System, subject to applicable contractual, underlying real
property and other third-party limitations and restrictions.
(c) In performing its services hereunder, Service
Provider shall take workmanlike care to prevent impairment to the
signal continuity and performance of the Qwest System. The
precautions to be taken by Service Provider shall include
notifications to Service Recipient. In addition, Service
Provider shall reasonably cooperate with Service Recipient in
sharing information and analyzing the disturbances regarding the
cable and/or fibers. In the event that any Scheduled or
Unscheduled Maintenance hereunder requires a traffic roll or
reconfiguration involving cable, fiber, electronic equipment, or
regeneration or other facilities of the Service Recipient, then
Service Recipient shall, at Service Provider's reasonable
request, make such personnel of Service Recipient available as
may be necessary in order to accomplish such maintenance, which
personnel shall coordinate and cooperate with Service Provider in
performing such maintenance as required of Service Provider
hereunder.
(d) Service Provider shall notify Service Recipient at
least ten (10) business days prior to the date in connection with
any PSWP of any Scheduled Maintenance and as soon as possible
after becoming aware of the need for Unscheduled Maintenance.
Service Recipient shall have the right to be present during the
performance of any Scheduled Maintenance or Unscheduled
Maintenance so long as this requirement does not interfere with
Service Provider's ability to perform its obligations under this
Agreement. In the event that Scheduled Maintenance is canceled
or delayed for whatever reason as previously notified, Service
Provider shall notify Service Recipient at Service Provider's
earliest opportunity, and will comply with the provisions of the
previous sentence to reschedule any delayed activity.
4. Facilities.
(a) Service Provider shall maintain the Qwest System
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in a manner which will permit Service Recipient's use, in
accordance with the terms and conditions of the IRU Agreement, of
the IRU, the User Fibers and the Associated Property required to
be provided under the terms of the IRU Agreement.
(b) Except to the extent otherwise expressly provided
in the IRU Agreement, Service Recipient will be solely
responsible for providing and paying for any and all maintenance
of all electronic, optronic and other equipment, materials and
facilities used by Service Recipient in connection with the
operation of the Dark Fibers, none of which is included in the
maintenance services to be provided hereunder.
5. Cable/Fibers.
(a) Service Provider shall perform appropriate
Scheduled Maintenance on the Cable contained in the Qwest System
in accordance with Service Provider's then current preventative
maintenance procedures as agreed to by Service Recipient, which
shall not substantially deviate from standard industry practice.
(b) Service Provider shall have qualified
representatives on site any time Service Provider has reasonable
advance knowledge that another person or entity is engaging in
construction activities or otherwise digging within five (5) feet
of the Cable.
(c) Service Provider shall maintain sufficient
capability to teleconference with Service Recipient during an
Emergency Unscheduled Maintenance in order to provide regular
communications during the repair process. When correcting or
repairing Cable discontinuity or damage, including but not
limited to in the event of Emergency Unscheduled Maintenance,
Service Provider shall use reasonable efforts to repair traffic-
affecting discontinuity within
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
after the Service Provider maintenance employee's arrival at the
problem site. In order to accomplish such objective, it is
acknowledged that the repairs so effected may be temporary in
nature. In such event, within
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
after completion of any such Emergency Unscheduled Maintenance,
Service Provider shall commence its planning for permanent
repair, and thereafter promptly shall notify Service Recipient of
such plans, and shall implement such permanent repair within an
appropriate time thereafter. Restoration of open fibers on fiber
strands not immediately required for service shall be completed
on a mutually agreed-upon schedule. If the fiber is required for
immediate service, the repair shall be scheduled for the next
available Planned Service Work Period (PSWP).
(d) In performing repairs, Service Provider shall
comply with the splicing specifications as set forth in Exhibit
D. Service Provider shall provide to Service Recipient any
modifications to these specifications as may be necessary or
appropriate in any particular instance for Service Recipient's
approval, which approval shall not be unreasonably withheld.
(e) Service Provider's representatives that are
responsible for initial restoration of a cut Cable shall carry on
their vehicles the typically appropriate equipment that would
enable a temporary splice, with the objective of restoring
operating capability in as little time as possible. Service
Provider shall maintain and supply an inventory of spare Cable in
storage facilities supplied and maintained by Service Provider at
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strategic locations to facilitate timely restoration.
6. Planned Service Work Period (PSWP).
Scheduled Maintenance which is reasonably expected to
produce any signal discontinuity must be coordinated between the
parties. Generally, this work should be scheduled after midnight
and before 6:00 a.m. local time. Major system work, such as
fiber rolls and hot cuts, will be scheduled for PSWP weekends. A
calendar showing approved PSWP will be agreed upon in the last
quarter of every year for the year to come. The intent is to
avoid jeopardy work on the first and last weekends of the month
and high-traffic holidays.
7. Restoration.
(a) Service Provider shall respond to any interruption
of service or a failure of the Dark Fibers to operate in
accordance with the specifications set forth in Exhibit D (in any
event, an "Outage") as quickly as possible (allowing for delays
caused by circumstances beyond the reasonable control of Service
Provider) in accordance with the procedures set forth herein.
(b) When restoring a cut Cable in the Qwest System,
the parties agree to work together to restore all traffic as
quickly as possible. Service Provider, promptly upon arriving on
the site of the cut, shall determine the course of action to be
taken to restore the Cable and shall begin restoration efforts.
Service Provider shall splice fibers tube by tube or ribbon by
ribbon or fiber bundle by fiber bundle, rotating between tubes or
ribbons operated by the separate Interest Holders (as defined in
paragraph 9(a)), including Service Recipient, in accordance with
the following described priority and rotation mechanics; provided
that, lit fibers in all buffer tubes or ribbons or fiber bundles
shall have priority over any dark fibers in order to allow
transmission systems to come back on line; and provided further
that, Service Provider will continue such restoration efforts
until all lit fibers in all buffer tubes or ribbons are spliced
and all traffic restored. In general, priority among Interest
Holders affected by a cut shall be determined on a rotating
restoration-by-restoration and Segment-by-Segment basis, to
provide fair and equitable restoration priority to all Interest
Holders, subject only to such restoration priority to which Qwest
is contractually obligated prior to the date of the Agreement.
Service Provider shall use all reasonable efforts to implement a
Qwest System-wide rotation mechanism on a Segment-by-Segment
basis so that the initial rotation order of the Interest Holders
in each Segment is varied (from earlier to later in the order),
such that as restorations occur, each Interest Holder has
approximately equivalent rotation order positions across the
Qwest System. Additional participants in the Qwest System that
become Interest Holders after the date hereof shall be added to
the restoration rotation mechanism.
(c) The goal of emergency restoration splicing shall
be to restore service as quickly as possible. This may require
the use of some type of mechanical splice, such as the "3M Fiber
Lock" to complete the temporary restoration. Permanent
restorations will take place as soon as possible after the
temporary splice is complete.
8. Subcontracting.
Service Provider may subcontract any of the maintenance
services hereunder; provided that Service Provider shall require
the subcontractor(s) to perform in accordance with the
requirement and procedures set forth herein. The use of any such
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CONFIDENTIAL TREATMENT
subcontractor shall not relieve Service Provider of any of its
obligations hereunder.
9. Fees and Costs.
(a) Scheduled Maintenance Fees. The fees payable for
any and all Scheduled Maintenance hereunder shall be determined
in accordance with the following provisions. During any time
after the Acceptance Date for any Segment but subject to
paragraph 10 below, Qwest shall be the Service Provider and
provide Scheduled Maintenance at a cost not to exceed $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile per year, subject to the CPI adjustment described below
(the "Qwest Fixed Fee") and Unscheduled Maintenance as provided
in subparagraph 9 below. The Scheduled Maintenance fee payable
by Service Recipient shall be equal to a pro rata share of
Qwest's Costs based first upon the number of conduits so
maintained by Qwest and included in such Costs and second upon
the number of Interest Holders (as defined in Section 10.4 of the
Agreement) in the portion of the Qwest System so maintained by
Qwest and included in such Costs; provided however, the total fee
shall in no event exceed the amount of the Qwest Fixed Fee as
adjusted by the CPI-U Adjustment.
A quarter of the first such Scheduled Maintenance fee with
respect to each Segment will be due and payable thirty (30) days
after the Acceptance Date with respect to such Segment.
Thereafter, one quarter of such fee shall be due quarterly. All
fees shall be paid by Service Recipient within thirty (30) days
of receipt of invoice therefor. The Qwest Fixed Fee, if
applicable, may be adjusted annually, in Qwest's Sole discretion,
beginning with the first anniversary date of the execution date
of this Agreement, for increases in the United States Bureau of
Labor Statistics, CPI-U All Services Index (unadjusted), as
originally published. Said adjustment shall be hereinafter
referred to as "CPI-U Adjustment". Such fee, as adjusted by the
CPI-U Adjustment, shall be equal to the product of the fee
specified herein multiplied by the fraction (i) whose numerator
is the CPI-U All Services for March of the previous calendar year
for which the adjustment to the fee is being made, and (ii) whose
denominator is the CPI-U All Services for March of the preceding
year. The adjusted fee shall remain in effect until the next
annual fee is due, when a new adjusted fee fixed pursuant to this
provision shall become effective. In no event shall the amount
of the fee as adjusted pursuant to this provision be less than
the amount of fee in effect for the immediately-preceding year.
The parties agree that the Index for March 1995 is defined as
151.4. In the event that the Bureau of Labor Statistics (or any
successor organization) changes the current base of the CPI-U
from 1982-84 = 100, the calculation of a fee under this provision
shall be adjusted to ensure that Qwest receives the same amount
as it would have had, had the base not been changed. In the
event the Bureau of Labor Statistics (or any successor
organization) no longer publishes the CPI-U, Qwest may, subject
to Service Recipient's agreement (which shall not be unreasonably
withheld), designate the statistical index it deems most
appropriate for collocation of adjustments to a fee and, from the
date the CPI-U ceased to be published, such index shall be used
to make adjustments in a fee under this provision.
(b) Unscheduled Maintenance Fees. If the aggregate
amount of the Costs of Unscheduled Maintenance required as a
result of any single event or multiple, closely-related events is
less than
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
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CONFIDENTIAL TREATMENT
, such Costs shall be borne by Service Provider. For any other
Unscheduled Maintenance, the Costs thereof shall be allocated
among the various Interest Holders in the conduit, cable an/or
fibers affected thereby as follows: (i) Costs of Unscheduled
Maintenance solely to or affecting a conduit or cable which
houses fibers of a single Interest Holder shall be borne 100% by
such Interest Holder; (ii) Costs of Unscheduled Maintenance to or
affecting a conduit which houses multiple innerduct conduits, not
including such Costs attributable to the repair or replacement of
fiber therein, shall be borne proportionately by the Interest
Holds in each of the affected innerduct conduits based on the
ratio that such affected conduit bears to the total number of
affected innerduct conduits, and (iii) Costs of Unscheduled
Maintenance attributable to the repair or replacement of fiber,
including the acquisition, installation, inspection, testing and
splicing thereof, shall be borne proportionately by the Interest
Holders in the affected fiber, based on the ratio that the number
of affected fibers subject to the interest of each such Interest
Holder bears to the total number of affected fibers. All such
Costs which are allocated to Service Recipient pursuant to the
foregoing provisions shall be the responsibility of and paid by
Service Recipient within thirty (30) days after its receipt from
Service Provider of an invoice therefor.
(c) Costs. "Costs" means the actual, direct costs
paid or payable in accordance with the established accounting
procedures generally used by each party, as the case may be, and
which it utilizes in billing third parties for reimbursable
projects, which costs shall include, without limitation, the
following: (i) labor costs, including wages and salaries, and
benefits and overhead allocable to such labor costs (overhead
allocation percentage shall not exceed the lesser of (x) the
percentage Service Provider typically allocates to its internal
projects or (y)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
, and (ii) other direct costs and out-of-pocket expenses on a pass-
through basis (e.g., equipment, materials, supplies, contract
services, etc.).
10. Term.
(a) Service Provider's obligation to perform
maintenance on the relevant portion of the Qwest System shall be
for an initial term expiring June 30, 2006. Qwest shall be the
Service Provider. Thereafter, Qwest shall have no obligation to
provide Scheduled or Unscheduled Maintenance hereunder, but shall
be entitled to continue to provide maintenance under the terms
and conditions of this agreement.
(b) Notwithstanding Section 10(a) above, Qwest
represents and warrants that it shall either (1) make a proposal
not later than June 30, 2004, to the several Service Recipients
to continue to serve as the Service Provider for the services
described in this Exhibit H under commercially reasonable terms
for the remainder of the Minimum Period following June 30, 2006,
or (2) provide notice to the Service Recipients that Qwest shall
not continue to provide those services beyond June 30, 2006.
Should Qwest make a proposal under clause (1), the Service
Recipients and Qwest shall negotiate in good faith toward
reaching agreement on those services. If the parties have not
concluded an agreement for continuing services by December 31,
2004, the Service Recipients shall be entitled to solicit
proposals from other vendors and may select whichever vendor or
vendors they jointly agree to use for all or separate portions of
the Qwest System and Service Recipient's fibers and Associated
Property, to include Qwest or separate vendors as each Service
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CONFIDENTIAL TREATMENT
Recipient individually selects for its portion of the Qwest System and for its
own fibers and Associated Property. Should Qwest provide notice under clause
(2), the Service Recipients may solicit proposals from other vendors and may
select another vendor or vendors to assume after June 30, 2006, the Service
Provider responsibilities, and Qwest agrees to cooperate fully in the
negotiations and transition period.
EXHIBIT I
UNDERLYING RIGHTS AND
---------------------
UNDERLYING RIGHTS REQUIREMENTS
------------------------------
Note: Prior to April 6, 1995 Qwest Communications Corporation was known as
"Southern Pacific Telecommunications Company," and the documents listed
below that predate April 6, 1995 are in that former name.
Pueblo Easements:
Easement Agreement dated October 25, 1995 between the Pueblo of Santa Ana and
Qwest Communications Corporation.
Easement Agreement dated February 2, 1996 between the Pueblo of Santo Domingo
and Qwest Communications Corporation.
Easement Agreement dated February 26, 1996 between the Pueblo of San Felipe and
Qwest Communications Corporation.
Easement Agreement dated April 12, 1996 between the Pueblo of Isleta and Qwest
Communications Corporation.
Easement Agreement dated June 6, 1996 between the Pueblo of Sandia and Qwest
Communications Corporation.
SPTCo Easement:
Easement Agreement dated September 30, 1991 between Southern Pacific
Transportation Company, as Grantor, and Southern Pacific Telecommunications
Company, as Grantee.
Fifth Amendment to Easement Agreement dated August 9, 1996 between Southern
Pacific Transportation Company, as Grantor, and Qwest Communications
Corporation, as Grantee.
D&RGW Easement:
Easement Agreement dated September 30, 1991 between Denver and Rio Grande
Western Railroad Company, as Grantor, and Southern Pacific Telecommunications
Company, as Grantee.
First Amendment to Easement Agreement dated July 14, 1993 between Denver and Rio
Grande Western Railroad Company, as Grantor, and Southern Pacific
Telecommunications Company, as Grantee.
Second Amendment to Easement Agreement dated May 1, 1995 between Denver and Rio
Grande Western Railroad Company, as Grantor, and Southern Pacific
Telecommunications Company, as Grantee.
SSW Easement:
Easement Agreement dated September 30, 1991 between St. Louis Southwestern
Railway, as Grantor, and Southern Pacific Telecommunications Company, as
Grantee.
Second Amendment to Easement Agreement dated November 16, 1994 between St. Louis
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CONFIDENTIAL TREATMENT
Southwestern Railway, as Grantor, and Southern Pacific Telecommunications
Company, as Grantee.
ATSF Easement
Master Rail Corridor Fiber Optic Agreement dated December 5, 1994 between The
Atchison, Topeka and Santa Fe Railway Company, as Grantor, and Southern Pacific
Telecommunications Company, as Grantee.
CSX Easement:
Fiber Optic Placement Agreement dated as of March 1, 1995 between CSX
Transportation, Inc., as Grantor, and Southern Pacific Telecommunications
Company, as Grantee.
Letter Agreement dated as of March 1, 1995 between CSX Transportation, Inc., as
Grantor, and Southern Pacific Telecommunications Company, as Grantee.
DART Easement:
Fiber Optics Agreement dated as of February 3, 1994 between Dallas Area Rapid
Transit, as Grantor, and Southern Pacific Telecommunications Company, as
Grantee.
First Amendment to Fiber Optics Agreement dated as of November 13, 1995 between
Dallas Area Rapid Transit, as Grantor, and Southern Pacific Telecommunications
Company, as Grantee.
Fiber Optics Easement dated as of December 21, 1994 between Dallas Area Rapid
Transit, as Grantor, and Southern Pacific Telecommunications Company, as
Grantee.
MTA Easement:
(SPTCo Easement Agreement dated September 30, 1991 was assigned as part of sale
of route.)
Amendment to Easement Agreement dated January 13, 1995 between the Los Angeles
County Metropolitan Transportation Authority, as Grantor, and Southern Pacific
Telecommunications Company, as Grantee.
First Severance Agreement and Amendment to Easement Agreement dated June 23,
1995 between Los Angeles County Metropolitan Transportation Authority and
Southern Pacific Telecommunications Company.
Public Easements:
License Agreement dated March 2, 1993 between the Utah Department of
Transportation and Southern Pacific Telecommunications Company.
Agreement dated March 17, 1992 between The Moffat Tunnel Improvement District
and Southern Pacific Telecommunications Company.
License Agreement dated September 11, 1995 between the City and County of
Denver, Board of Water Commissioners and SP Construction Services (covering the
Highline Canal Property).
License Agreement dated August 30, 1995 between the City and County of Denver,
Board of Water Commissioners and SP Construction Services (covering Conduit
Number 55).
License Agreement dated August 30, 1995 between the City and County of Denver,
Board of Water Commissioners and SP Construction Services (covering Conduit
Number 96).
License Agreement No. 95-01-25 dated July 24, 1995 between the City of Aurora,
Director of Utilities and Qwest Communications Corporation.
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CONFIDENTIAL TREATMENT
License Agreement dated August 18, 1995 between the City of Aurora, Director of
Utilities and Qwest Communications Corporation.
Arapahoe County Street Cut and R.O.W. Use Permit Nos. SC5212, SC5213, SC5193,
SC5191, SC5190, SC5194, SC5195, and SC5192 issued to Southern Pacific
Telecommunications Company by Arapahoe County.
Utility Permit Nos. 596067, 595099, 95-145, 95-147, and 95-149 issued to
Southern Pacific Telecommunications Company by the Colorado Department of
Transportation.
Permit for Right-of-Way Use and/or Construction Permit No. 1095 1262 E issued by
SP Construction Services by Douglas County.
Utility Permit Nos. 7528, 7526, and 7525 issued to Qwest Communications
Corporation by the Colorado Department of Transportation.
Permit dated March 3, 1995 issued to SP Telecom Construction Services by the
Huerfano County Road and Bridge Department.
Permit for Construction and Installation of Communication Facilities in Public
Rights of Way (Permit No. TFI-95-002) dated February 21, 1995 issued to
Southern Pacific Telecommunications Company by Las Animas County.
Contractor License No. 70 dated May 9, 1995 issued to Southern Pacific
Telecommunications by the Town of Aguilar.
Permit dated April 28, 1995 issued to Southern Pacific Telecommunications
Company by the Town of Aguilar.
Right-of-Way 2983, Book 29, dated March 22, 1995 between the State of Colorado,
State Board of Land Commissioners, as Grantor, and Qwest Communications
Corporation, as Grantee.
Letter dated April 25, 1995 from the City of Trinidad, authorizing SP Telecom to
proceed with construction on the North Linden Avenue Communication Conduits.
Ordinance No. 950310 issued by the City of Kansas City, Missouri, granting
Southern Pacific Telecommunications Company and MCI Telecommunications
Corporation the right to install and maintain underground telecommunication
lines.
Missouri Highway and Transportation Commission Permit Nos. 6-95-00288, 6-95-
00286, 6-95-00287, 4-95-00682, 4-95-00681, 4-95-00683, and 4-95-00662 and
Excavation Permit(s) Receipts.
Private Easements:
Easement dated November 21, 1995 between American Federation of Human Rights, as
Grantor and Qwest Communications Corporation, as Grantee.
Easement dated September 26, 1995 between Ray W. Harness and Dorothy Elaine
Harness, as Grantors and Qwest Communications Corporation, as Grantee.
Easement dated December 4, 1995 between James G. Armstrong and Bessie M.
Armstrong, as Grantors and Qwest Communications Corporation, as Grantee.
Easement dated March 29, 1995 between Louis P. Vezzani and Evelyn M. Vezzani, as
Grantors and Qwest Communications Corporation, as Grantee.
Easement dated March 29, 1995 between Walsenburg Sand and Gravel Company, as
Grantor and Qwest Communications Corporation, as Grantee.
Easement dated March 29, 1995 between Joe Mario Amedei, as Grantor and Qwest
Communications Corporation, as Grantee.
Easement dated March 30, 1995 between Lindo P. Vezzani and Sharron L. Vezzani,
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CONFIDENTIAL TREATMENT
as Grantors and Qwest Communications Corporation, as Grantee.
Easement dated May 19, 1995 between Ludvik Propane Gas, as Grantor and Qwest
Communications Corporation, as Grantee.
Easement dated March 30, 1995 between Samuel J. Capps, as Grantor and Qwest
Communications Corporation, as Grantee.
Easement dated April 17, 1995 between John James Fatur, as Grantor and Qwest
Communications Corporation, as Grantee.
Easement dated May 15, 1995 between Mark Bracco and Vicki Lynn Graham, as
Grantors and Qwest Communications Corporation, as Grantee.
Easement between Pamela L. Breitbarth (2/19/96), Virginia A. Buczek (4/17/95),
Ross A. Swanson (7/17/95), James R. Coressel (4/16/95) and Imogene Coressel
(4/16/95), as Grantors and Qwest Communications Corporation, as Grantee.
Easement dated March 30, 1995 between Bud Adams and Janna Adams, as Grantors,
and Qwest Communications Corporation, as Grantee.
Easement dated March 31, 1995 between Trinidad Properties, Inc. and MYBI
Partnership, as Grantors, and Qwest Communications Corporation, as Grantee.
Easement dated June 6, 1995 between Rose Wirth, as Grantor, and Qwest
Communications Corporation, as Grantee.
Easement dated May 5, 1995 between Harold A. Winter and Viola A. Winter, as
Grantors, and Qwest Communications Corporation, as Grantee.
Easement dated May 18, 1995 between Ayuda Me Dios, as Grantor, and Qwest
Communications Corporation, as Grantee.
Easement dated April 19, 1995 between Gabriel Saliba and Mary J. Saliba, as
Grantors, and Qwest Communications Corporation, as Grantee.
Easement dated June 1, 1995 between Interstate Underground Warehouse and
Industrial Park, Inc., as Grantor, and Qwest Communications Corporation, as
Grantee.
Easement dated May 26, 1995 between Delbert Rustman and Juanita Rustman, as
Grantors, and Qwest Communications Corporation, as Grantee.
Easement dated August 28, 1996 between Red Creek Ranch, Inc., as Grantor and
Qwest Communications, as Grantee (Pueblo, CO).
Miscellaneous Easements
Grant of Right of Way and Easement dated December 20, 1961 between J. A.
Humphrey and A. Pollard Simons, as Grantors, and American Liberty Pipe Line
Company, as Grantee.
Amendment to Right-of-Way Agreement dated April 19, 1994 between Haynes/LICO
Properties II, as Grantor, and Southern Pacific Telecommunications Company, as
Grantee.
Amendment to Right of Way Grant dated January 31, 1996 between Prestonwood Golf
Club Corporation, as Grantor, and Qwest Communications Corporation, as Grantee.
Miscellaneous Documents:
SP Construction Services Safety Manual
Railroad Safety-Rules Governing Contractors Working on Railroads
Railroad Rules and Instructions for Maintenance of Way and Engineering and
Operating Manuals for Southern Pacific Lines
Page 64
<PAGE>
CONFIDENTIAL TREATMENT
The Atchison, Topeka and Santa Fe Railway Company Manual
Page 65
<PAGE>
CONFIDENTIAL TREATMENT EXHIBIT 10.4
FIRST AMENDMENT TO IRU AGREEMENT
This Amendment to IRU Agreement ("Amendment") is made and entered into as
of the 13th day of August, 1997, by and between Qwest Communications Corporation
("Qwest") and GTE Intelligent Network Services Incorporated ("GTE").
RECITALS
A. Qwest and GTE previously entered into an IRU Agreement dated as of
May 2, 1997 (the "Agreement").
B. Qwest and GTE wish to amend the Agreement to add additional Segments
and make certain modifications to the Agreement.
AGREEMENT
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Qwest and GTE agree as follows:
1. Unless otherwise defined herein, all capitalized terms used herein
shall have the meanings given to them in the Agreement.
2. (a) In accordance with Section 1.1(a) and subject to the provisions
of the Agreement, Qwest hereby grants GTE an IRU in twenty four (24) Dark Fibers
in the following additional Segments which shall be included in the description
of Segments on Exhibits A-1 and A-3 of the Agreement (the "Additional Segments")
and shall be added to and included within the System Route for purposes of the
Agreement:
<TABLE>
<CAPTION>
Estimated Estimated
Segment No. Segment System Route Miles Delivery Date
- ---------- ------- ------------------ --------------
<S> <C> <C> <C>
43 Atlanta-Tallahassee 325 12/15/98
44 Lake City-Tampa 268 12/15/98
45 Tampa-Miami 285 3/31/98
46 Miami-Jacksonville 345 8/31/98*
47A Jacksonville-Augusta 282 2/28/99
42B&C Tallahassee-Jacksonville 164 12/15/98
48 Augusta-Charlotte 198 3/31/99
Total Estimated Mileage 1867
</TABLE>
* This delivery date is contingent upon the acquisition of an SMF-28 fiber
route. In the event the SMF-28 fiber route is not used, the estimated delivery
date for this Segment is 3/31/99.
<PAGE>
CONFIDENTIAL TREATMENT
(b) With respect to Segment 48 from Augusta to Charlotte, Qwest and GTE
agree that in the event Qwest is unable to secure the necessary underlying right
of way required to convey Segment 48 in accordance with the requirements of the
Agreement and this Amendment, Qwest shall have the right to replace Segment 48
with a Segment from Augusta to Greenville as follows (the "Alternate Segment"):
Estimated Estimated
Segment No. Alternate Segment System Route Miles Delivery Date
- ---------- ----------------- ------------------ -------------
49 Augusta-Greenville 155 3/31/99
In the event a substitution is made under this provision, the parties agree that
the consideration for the Alternate Segment shall reflect the mileage of that
Segment and GTE shall be entitled to a credit for any overages paid for mileage
attributable to Segment 48.
3. Notwithstanding Section 3.1 of the Agreement, Qwest shall have the
right to utilize SMF-28 fiber on Segment 46 from Miami to Jacksonville, Florida;
provided, that in the event SMF-28 fiber is used on said Segment, Qwest will
make space available to GTE, at no cost to GTE, in two (2) regeneration
facilities along the route from Miami to Jacksonville in accordance with Section
7.2(a) of the Agreement. In addition, in the event SMF-28 fiber is used, the
purchase price for Segment 46 shall be adjusted to reflect a price of [*Material
Omitted and Separately Filed Under an Application for Confidential Treatment]
per route mile for that Segment only.
4. Subject to all the provisions of Section 7.2, Qwest will provide GTE
with additional regeneration and terminal facilities as mutually agreed to by
the parties and to be included on Exhibit F to the Agreement upon identification
by the parties. GTE agrees to pay Qwest the sum of [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment] per site for
regeneration sites (estimated to be thirteen (13) regeneration sites) and
[*Material Omitted and Separately Filed Under an Application for Confidential
Treatment] per site for terminal sites (estimated to be twenty one (21) terminal
sites). Payment for facilities identified under this paragraph shall be due and
payable on a Segment by Segment basis upon completion of fiber splicing and
civil construction for the Segment associated with the facilities.
5. GTE hereby agrees to pay Qwest an amount equal to [*Material Omitted
and Separately Filed Under an Application for Confidential Treatment] per route
mile for the Additional Segments. The consideration for the Additional Segments
shall be payable according to the schedule set forth in paragraph 1 of Exhibit B
of the Agreement. The first payment shall be due and payable within [*Material
Omitted and Separately Filed Under an Application for Confidential Treatment]
after execution of this Amendment by both parties. The balance of the payments
shall be invoiced by Qwest as provided in Section 2.2 of the Agreement.
2
<PAGE>
CONFIDENTIAL TREATMENT
6. With respect to the Additional Segments only, Section 25.3(b) of the
Agreement is amended to provide that GTE shall not sell, assign, lease, grant an
IRU with respect to, exchange, encumber, or otherwise in any manner transfer or
make available in any manner to a Capacity Reseller any of GTE's rights in the
whole or discrete GTE Fibers at a capacity in excess of 24 DS-3s or 2 OC-12s or
any other designation for an equivalent band width, or engage in substantive
discussions or negotiations with respect thereto. GTE's obligations under
Section 25.3(a) remain in effect and are binding upon the Additional Segments.
7. Except as modified in this Amendment, all other provisions of the
Agreement shall be applicable to the Additional Segments and Qwest and GTE
hereby confirm and ratify in all respects the terms and conditions of the
Agreement, as amended by this Amendment.
Qwest and GTE have executed this Amendment effective as of the day first
written above.
QWEST COMMUNICATIONS GTE INTELLIGENT NETWORK SERVICES
CORPORATION INCORPORATED
By /s/ August B. Turturro By /s/ Michael Chaney
---------------------- ------------------
Name: August B. Turturro Name: Michael Chaney
Title: Sr. Vice Pres. Title: Director-Network Planning
Date: May 13, 1999 Date: May 11, 1999
3
<PAGE>
CONFIDENTIAL TREATMENT EXHIBIT 10.5
SECOND AMENDMENT TO IRU AGREEMENT
This Amendment to IRU Agreement ("Amendment") is made and entered
into as of the _____ day of May, 1998, by and between Qwest
Communications Corporation ("Qwest") and GTE Intelligent Network Services
Incorporated ("GTE").
RECITALS
A. Qwest and GTE previously entered into an IRU Agreement dated as of
May 2, 1997 (the "Agreement").
B. Qwest and GTE wish to amend the Agreement to add additional Dark
Fibers and make certain modifications to the Agreement.
AGREEMENT
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Qwest and GTE agree as follows:
1. Unless otherwise defined herein, all capitalized terms used herein
shall have the meanings given to them in the Agreement.
2. In accordance with Section 1.1(a) and subject to the provisions of
the Agreement, Qwest hereby grants GTE an IRU in six (6) Dark Fibers between the
Qwest POP in Oakland, California located at 250 5th Street and the Qwest manhole
at the east end of the Bay Bridge, a distance of approximately 4.5 miles (the
"Additional Dark Fibers"). The Additional Dark Fibers shall be included within
the System Route for purposes of the Agreement.
3. GTE hereby agrees to pay Qwest an amount equal to [*Material Omitted
and Separately Filed Under an Application for Confidential Treatment] per route
mile for the Additional Dark Fibers, being a total of [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment], payable
[*Material Omitted and Separately Filed Under an Application for Confidential
Treatment].
4. In addition to the Additional Dark Fibers, Qwest agrees to provide
GTE with six (6) Dark Fibers on a temporary lease basis between the manhole on
the San Francisco end of the Bay Bridge and the Qwest POP located at 60 Federal
Street (the "Lease Fibers"). The Lease Fibers will be provided to GTE [*Material
Omitted and Separately Filed Under an Application for Confidential Treatment]
for a term ending December 31, 1998.
5. Except as modified in this Agreement, all other provisions of the
Agreement shall be applicable to the Additional Dark Fibers.
<PAGE>
CONFIDENTIAL TREATMENT
Qwest and GTE have executed this Amendment effective as of the day first
written above.
QWEST COMMUNICATIONS GTE INTELLIGENT NETWORK SERVICES
CORPORATION INCORPORATED
By /s/ August B. Turturro By /s/ Majid Mir
---------------------- -------------
Name: August B. Turturro Name: Majid Mir
Title: Sr. Vice Pres. Title: AVP, GTE-GNI-CNE
Date: November 19, 1998 Date: November 17, 1998
2
<PAGE>
CONFIDENTIAL TREATMENT EXHIBIT 10.6
THIRD AMENDMENT TO IRU AGREEMENT
This Amendment to IRU Agreement ("Amendment") is made and entered into as
of the 16th day of November, 1998, by and between Qwest Communications
Corporation ("QWEST") and GTE Intelligent Network Services Incorporated ("GTE").
RECITALS
A. QWEST and GTE previously entered into an IRU Agreement dated as of May
2, 1997, as amended by the First Amendment dated August 13, 1997 and the
Second Amendment dated May 29, 1998 (the "Agreement").
B. QWEST and GTE wish to amend the Agreement to add additional Dark
Fibers and make certain modifications to the Agreement
AGREEMENT
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
QWEST and GTE agree as follows:
1. Unless otherwise defined herein, all capitalized terms used herein
shall have the meanings given to them in the Agreement.
2. In accordance with the provisions of Section 1.1(b), the parties
agree to amend the route of Segment 44, from Lake City to Tampa in accordance
with the map attached hereto as Exhibit A, and to include the spur from
Bellview, Florida to Orlando, Florida as part of Segment 44. The Segment shall
be subdivided in Subsegments as follows: Segment 44A, Lake City to Bellview,
Segment 44B, Bellview to Tampa, and Segment 44C, Bellview to Orlando. The total
estimated route mileage for the new Segment 44, including the spur, remains at
268. Further, in accordance with Section 1.1(a) and subject to the provisions of
the Agreement, QWEST hereby grants GTE and IRU in twenty four (24) Dark Fibers
in the new Segment 52, Orlando to Titusville, containing an estimated 42 route
miles. Further, in accordance with Section 1.1(a) and subject to the provisions
of the Agreement, QWEST hereby grants GTE an IRU in twenty four (24) Corning
SMF-28 Dark Fibers in a diverse route from QWEST's POP facility at 115 North
Harrington Avenue, Raleigh, NC, to GTE's POP facility at 3632 North Roxboro
Road, Durham, NC containing an estimated 72.2 route miles (42.8 miles of OPGW
and 29.4 miles of terrestrial fiber), hereinafter referred to as the GTE Durham
Endlink.
3. GTE hereby agrees to pay QWEST as follows for the additional fibers:
for the twenty four (24) Dark Fibers in Segment 52, Orlando to Titusville, GTE
will pay QWEST the lump sum of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. For the twenty four (24) Dark Fibers in
the GTE Durham Endlink, GTE will pay QWEST the lump sum of [*Material Omitted
and Separately Filed Under an Application for Confidential Treatment].
<PAGE>
CONFIDENTIAL TREATMENT
4. The Estimated Delivery Date for Segment 52, Orlando to Titusville, is
December 31, 1998. The Estimated Delivery Date for the GTE Durham Endlink is
June 15, 1999.
5. The route miles of Segment 52 and the GTE Durham Endlink are exempted
from the provisions of Article 1.1(c) of the Agreement.
6. Except as modified in this Agreement, all other provisions of the
Agreement shall apply.
QWEST and GTE have executed this Amendment effective as of the day first
written above.
QWEST COMMUNICATIONS GTE INTELLIGENT NETWORK SERVICES
CORPORATION INCORPORATED
By /s/ A. D. Wandry By /s/ Majid Mir
---------------- -------------
Name: A. D. Wandry Name: Majid Mir
Title: SRVP-NBD Title: Assistant Vice President
Date: June 5, 1998 Date: May 29, 1998
2
<PAGE>
CONFIDENTIAL TREATMENT EXHIBIT 10.7
FOURTH AMENDMENT TO IRU AGREEMENT
This Amendment to IRU Agreement ("Amendment") is made and entered into as
of the 5th day of February, 1999, by and between Qwest Communications
Corporation ("Qwest") and GTE Intelligent Networks Services Incorporated
("GTE").
RECITALS
A. Qwest and GTE previously entered into an IRU Agreement dated as of
May 2, 1997, as amended by the First Amendment dated August 13, 1997, the
Second Amendment dated May 29, 1998 and the Third Amendment dated
November 16, 1998 (the "Agreement").
B. Qwest and GTE wish to amend the Agreement to add additional Dark
Fiber.
AGREEMENT
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Qwest and GTE agree as follows:
1. Unless otherwise defined herein, all capitalized terms used herein
shall have the meanings given to them in the Agreement.
2. In accordance with Section 1.01(a) and subject to the provisions of
the Agreement, Qwest hereby grants GTE an IRU in twenty four (24) Dark Fibers in
a route in Dallas, Texas described as follow: Commencing at 4316 Bryan Street,
then proceeding south along N. Peak Street to Live Oak then, proceeding
southwest along Live Oak to N. Pearl, continuing northwest to San Jacinto,
continuing northeast to Leonard and then continuing southeast to 2323 Bryan;
then from 2323 Bryan Street along Bryan to 4316 Bryan Street (the "Dallas Ring
Fibers"), as shown on the map attached hereto.
3. GTE hereby agrees to pay Qwest an IRU Fee of [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment] for the Dallas
Ring Fibers. [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
4. Except as modified in this Amendment, all other provisions of the
Agreement shall be applicable to the Dallas Ring Fibers.
<PAGE>
CONFIDENTIAL TREATMENT
In Witness Whereof, Qwest and GTE have executed this Amendment effective
as of the day first written above.
QWEST COMMUNICATIONS GTE INTELLIGENT NETWORK SERVICES
CORPORATION INCORPORATED
By /s/ Tony Brodman By /s/ Thomas W. White
---------------- -------------------
Name: Tony Brodman Name: Thomas W. White
Title: Vice President-Strategy & Planning Title: President
Date: August 25, 1997 Date:
2
<PAGE>
Exhibit 10.8
CONFIDENTIAL TREATMENT REQUESTED
NETWORK SERVICES AGREEMENT
by and between
AMERICA ONLINE, INC.
and
BBN CORPORATION
Effective as of December 31, 1999
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
MASTER AGREEMENT
1. BACKGROUND, OBJECTIVES AND WAIVER........................................... 1
1.1. Background and Objectives............................................... 1
1.2. Termination of Original Agreement; Waiver............................... 1
2. TERM......................................................................... 2
3. PROVISION OF SERVICES........................................................ 2
3.1. General................................................................. 2
3.2. Resale of Dedicated Resources........................................... 3
3.3. Sale of Vendor Network.................................................. 3
4. ORDERING..................................................................... 3
4.1. General................................................................. 3
4.2. Order Tracking.......................................................... 3
5. ACCEPTANCE TESTING AND FINAL ACCEPTANCE...................................... 3
6. PROPRIETARY RIGHTS........................................................... 4
6.1. Ownership of Proprietary Information.................................... 4
6.2. Ownership of Vendor Network............................................. 4
6.3. Telephone Numbers....................................................... 4
7. SERVICE LEVELS............................................................... 4
8. CHARGES AND TAXES............................................................ 4
8.1. General................................................................. 4
8.2. Taxes................................................................... 5
8.3. Certain Obligations Corresponding to the Waiver......................... 6
9. INVOICING AND PAYMENT........................................................ 6
9.1. Invoicing............................................................... 6
9.2. Payment Due............................................................. 7
9.3. Accountability.......................................................... 7
9.4. Disputed Charges........................................................ 7
10. AUDIT....................................................................... 7
10.1. Audit Rights............................................................ 8
10.2. Records Retention....................................................... 8
11. CONFIDENTIALITY............................................................. 8
11.1. Confidential Information................................................ 8
11.2. Obligations............................................................. 8
11.3. Exclusions.............................................................. 9
11.4. Residual Knowledge...................................................... 9
11.5. Customer Data........................................................... 10
12. REPRESENTATIONS, WARRANTIES AND COVENANTS................................... 10
12.1. Compliance with Specifications and Applicable Laws...................... 10
12.2. Non-Infringement........................................................ 10
12.3. Technology.............................................................. 10
12.4. Year 2000............................................................... 10
13. TERMINATION................................................................. 11
13.1. Termination of Master Agreement for Cause............................... 12
13.2. No Implication Against Materiality...................................... 13
13.3. Termination for Change of Control....................................... 13
</TABLE>
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
<TABLE>
<S> <C>
13.4. Termination/Expiration Assistance; Transition Period..................... 14
14. LIABILITY AND FORCE MAJEURE................................................... 14
14.1. Liability Restrictions................................................... 14
14.2. Force Majeure............................................................ 14
15. INDEMNIFICATION............................................................... 15
16. GENERAL....................................................................... 15
16.1. Binding Nature and Assignment............................................ 15
16.2. Continued Performance and Governing Law.................................. 16
16.3. Entire Agreement......................................................... 16
16.4. Notices.................................................................. 16
16.5. Counterparts............................................................. 17
16.6. Relationship of Parties.................................................. 17
16.7. Severability............................................................. 17
16.8. Waiver of Default........................................................ 18
16.9. Cumulative Remedies...................................................... 18
16.10. Survival................................................................. 18
16.11. Publicity................................................................ 18
16.12. Certain Regulatory Events................................................ 18
16.13. Amendment................................................................ 19
16.14. Incorporation by Reference............................................... 19
16.15. Construction............................................................. 20
SCHEDULE A Definitions........................................................... A-1
SCHEDULE B Dial-Up Access Services, Service Levels, Pricing and Other Terms...... B-1
SCHEDULE C Broadband Backhaul Services, Service Levels, Pricing and Other Terms.. C-1
SCHEDULE D Other Services........................................................ D-1
</TABLE>
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
NETWORK SERVICES AGREEMENT
This Network Services Agreement (together with the attached Schedules and
Exhibits, the "Agreement"), effective as of December 31, 1999 (the "Effective
Date"), is entered into by and between America Online, Inc., a Delaware
corporation with offices located at 22000 AOL Way, Dulles, VA 20166
("Customer"), and BBN Corporation, a Massachusetts corporation, with offices
located at 3 Van de Graaff Drive, Burlington, MA 01803 ("Vendor"). As used in
this Agreement, "Party" means either Customer or Vendor, as appropriate, and
"Parties" means Customer and Vendor. The Parties agree that the following terms
and conditions shall apply to the products and services to be provided by Vendor
under this Agreement in consideration of certain payments to be made by
Customer. Defined terms used but not defined in the body of this Master
Agreement or the Schedules (other than Schedule A) shall have the meanings given
such terms in Schedule A.
1. BACKGROUND, OBJECTIVES AND WAIVER
1.1. Background and Objectives.
-------------------------
This Agreement is being made and entered into with reference to the
following:
(a) Customer is an interactive service provider that desires to
purchase (i) fully managed, end-to-end dial-up access services,
and (ii) certain broadband backhaul services.
(b) Customer and Vendor previously contracted for Vendor to provide
certain dial-up access services in that certain BBN-AOL Dial-Up
Network Services Agreement dated September 23, 1996, as amended
by (i) that certain BBN-AOL Dial-Up Network Services Agreement
Amendment 1, dated April 29, 1997, (ii) that certain BBN-AOL
Dial-Up Network Services Agreement Amendment 2, dated September
29, 1997, (iii) that certain BBN-AOL Dial-Up Network Services
Agreement Amendment 3, dated January 29, 1998, (iv) that certain
BBN-AOL Dial-Up Network Services Agreement Amendment 4, dated
February 11, 1998, (v) that certain BBN-AOL Dial-Up Network
Services Agreement Amendment 5, dated June 30, 1998 and (vi) that
certain BBN-AOL Dial-Up Network Services Agreement Amendment 6,
dated July 28, 1999 (such agreement as amended, the "Original
Agreement").
1.2. Termination of Original Agreement; Waiver.
-----------------------------------------
(a) The Original Agreement is hereby terminated as of the Effective
Date. Except to the extent otherwise provided in this Agreement,
the obligations of the Parties arising under the Original
Agreement before the Effective Date of this Agreement shall be
governed by the Original Agreement. The obligations of the
Parties arising after the Effective Date (including with respect
to Vendor's provision of Services during the Term) shall be
governed by this Agreement.
(b) As partial consideration for entering into this Agreement, for
the respective waivers and releases set forth below (collectively
the "Waiver"), and for Vendor's obligations set forth in Section
8.3 of this Master Agreement, each Party hereby irrevocably
waives and releases all claims, torts, liabilities, debts, suits,
demands, causes of action, actions and rights, whether known,
unknown,
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
contingent or fixed, against the other Party and its respective
predecessors, current and former Affiliates, successors, assigns,
attorneys, directors, officers, agents and employees arising from
or pertaining to the Original Agreement; provided, however, that:
(i) nothing contained in the Waiver shall release the Parties
from their respective obligations under this Agreement
(including with respect to the installed Dedicated Dial-Up
Access Ports previously provided under the Original
Agreement that Vendor is obligated to continue to provide
pursuant to Schedule B of this Agreement); and
(ii) nothing contained in the Waiver shall apply to disputes or
any other matters between the Parties under this Agreement,
or based upon or associated with the claims of unaffiliated
third parties arising under the Original Agreement or this
Agreement.
2. TERM
The term of the Master Agreement shall begin on the Effective Date and
shall expire on December 31, 2006, unless terminated earlier in accordance
with the Agreement or extended pursuant to the relevant section in the
appropriate Schedule or otherwise by mutual written agreement (such period,
as terminated earlier or so extended, the "Term"). Each Schedule to the
Agreement shall be effective for the period of time during the Term set
forth in such Schedule.
3. PROVISION OF SERVICES
3.1. General.
-------
(a) This Agreement sets forth the terms and conditions under which
Customer may purchase Services from Vendor. Customer may utilize
the Services purchased hereunder for any lawful purpose including
in connection with any service or product offering made available
by Customer or its Special Affiliates during the Term, providing
access to an AOL Information Service, providing the delivery of
Internet access or providing other subscriber-related services to
end-users. The Parties acknowledge that this Agreement does not:
(a) grant to Vendor an exclusive privilege to sell or otherwise
provide to Customer any products or services, or (b) except as
otherwise provided by Section 3.2 of the Master Agreement, or as
otherwise required by this Master Agreement or any of the
Schedules, restrict Vendor from providing products or services to
other customers of Vendor. Customer may contract with other
suppliers for the procurement of any products or services.
(b) Customer shall (i) remain the single point-of-contact with Vendor
with respect to those Services provided to Special Affiliates
pursuant to this Agreement, including with respect to any claims,
disputes or other actions that Special Affiliates desire to make
against Vendor, (ii) remain obligated to perform its payment
obligations under the Agreement with respect to those Services
provided by Vendor to Special Affiliates pursuant to this
Agreement, and (iii) Customer agrees to indemnify and hold Vendor
harmless for claims brought against Vendor by Special Affiliates
associated with the Services provided by
Page 2
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Vendor to Special Affiliates pursuant to this Agreement;
provided, however, that nothing herein applies to claims brought
directly by Customer for damages arising out of Services utilized
by Special Affiliates. For purposes of the Agreement, Services
provided to Special Affiliates pursuant to this Agreement shall
be deemed to be Services provided to Customer.
3.2. Resale of Dedicated Resources.
-----------------------------
Except as specifically set forth in Schedule B with respect to the
Dedicated Dial-Up Services, Vendor shall not resell or offer to resell any
dedicated Services ordered and accepted by Customer regardless of whether
or not such Services are utilized by Customer.
3.3. Sale of Vendor Network.
----------------------
(a) Notwithstanding anything to the contrary in this Agreement, Customer
shall have the right of first refusal with respect to any sale or transfer
other than to a Vendor Affiliate of any unit or division that has, as its
primary business, the provision of Dedicated Dial-Up Access Services to
Customer and has Dedicated Dial-Up Access Ports to Customer; provided,
however, in no event shall Customer have such right of first refusal in
connection with (i) the sale or transfer of a business unit that does not
relate to the provision of Services to Customer or (ii) the sale or
transfer of any Vendor assets to any entity created as a result of, or
arising out of, the closing of the proposed merger of GTE Corporation and
Bell Atlantic Corporation so long as the management of Vendor continues to
have primary management responsibility of the new entity; provided further,
however, that any transaction in which any assets of Vendor are transferred
back to any Affiliate of the combined GTE/Bell Atlantic corporation shall
not be covered by this Section.
4. ORDERING
4.1. General.
-------
The ordering of Services by Customer and the delivery of such Services
by Vendor shall be governed by the terms and conditions set forth in
the applicable Schedule of this Agreement corresponding to such
Services.
4.2. Order Tracking.
--------------
Vendor will provide Customer with weekly information on Orders as
reasonably requested by Customer in a format consistent with that
provided under the Original Agreement immediately prior to the
Effective Date of this Agreement. Vendor will provide Customer with
written reports relating to Orders as mutually agreed upon by the
Parties.
5. ACCEPTANCE TESTING AND FINAL ACCEPTANCE
Acceptance testing provisions associated with the Services are set forth in
the applicable Schedule for such Services.
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
6. PROPRIETARY RIGHTS
6.1. Ownership of Proprietary Information.
------------------------------------
(a) All right, title and interest in Customer developed software and
other Customer proprietary information (including any Customer
software or Customer proprietary information which may be
incorporated into written material or software delivered under
this Agreement), including all intellectual property rights
related thereto, will remain in Customer. Customer shall also
have all ownership rights, including copyright, to all written
reports prepared and delivered to Customer by Vendor under this
Agreement.
(b) All right, title and interest in Vendor developed software and
other Vendor proprietary information, including all intellectual
property rights related thereto, will remain in Vendor; provided,
however, any software developed by Vendor incidental to the
performance of Services for Customer, the cost of which is
separately charged to, and reimbursed by, Customer shall be
jointly owned by Vendor and Customer, with no duty of accounting.
(c) All right, title and interest in software jointly developed by
the Parties shall be jointly owned by Vendor and Customer, with
no duty of accounting.
(d) With respect to Subsections (b) and (c) above, each Party hereby
agrees to take all actions, and execute and deliver such
documentation as is necessary to evidence the other Party's
ownership interest in and to the developed Software.
(e) Each Party hereby grants to the other Party a limited proprietary
information in connection with Vendor's performance of, and
Customer's receipt of, the Services.
6.2. Ownership of Vendor Network.
---------------------------
Except to the extent that Customer owns or has rights in certain
equipment used to provide Dedicated Dial-Up Access Ports as of the
Effective Date, or purchases Vendor Network assets pursuant to Section
3.3 of the Master Agreement, Vendor retains title and ownership to the
Vendor Network.
6.3. Telephone Numbers.
-----------------
As between Vendor and Customer, Customer shall have title and
ownership to all telephone numbers used to provide Dial-Up Access
Services.
7. SERVICE LEVELS
All Services provided by Vendor shall comply with the applicable Service
Levels.
8. CHARGES AND TAXES
8.1. General.
-------
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Charges for a Service hereunder shall not begin to accrue until after
Final Acceptance of the Service. Charges for any Service shall be as
computed pursuant to the Schedule of this Agreement corresponding to
such Service. All charges specified in the Schedules fully compensate
Vendor for Services. Customer will not be liable to Vendor for any
charges not expressly set forth in the Schedules or the Master
Agreement unless such charges are mutually agreed upon by the Parties
in writing. Customer shall only be obligated to pay for Services
provided in accordance with the terms of this Agreement.
8.2. Taxes.
-----
The Parties' respective responsibilities for taxes arising under or in
connection with this Agreement shall be as follows:
(a) Vendor shall be responsible for any sales, use, excise, value-
added, services, consumption, and other taxes and duties payable
by Vendor on any goods or services that are used or consumed by
Vendor in providing the Services where the tax is imposed on
Vendor's acquisition or use of such goods or services and the
amount of tax is measured by Vendor's costs in acquiring such
goods or services.
(b) Customer shall be responsible for any sales, use, excise, value-
added, services, consumption, or other tax that is assessed on
any particular Service received by Customer from Vendor. Customer
shall also be responsible for any sales, use, excise, value-added
or consumption taxes imposed on goods purchased by Customer from
Vendor under the Agreement. If and to the extent any tax
described in this Subsection (b) is reduced or eliminated during
the Term, Vendor shall reduce or eliminate any charges for such
taxes, as appropriate. If and to the extent any tax described in
this Subsection (b) is increased during the Term, or a new tax is
imposed upon any particular Service received by Customer from
Vendor, then Customer shall have full responsibility for such
increase or tax.
(c) The Parties agree to cooperate with each other to enable each to
more accurately determine its own tax liability. Neither Party
will act unreasonably in assisting the other Party in minimizing,
to the extent legally permissible, such other Party's tax
liability to the extent legally permissible. Each Party shall
provide and make available to the other any resale certificates,
information regarding out-of-state or out-of-country sales or use
of equipment, materials or services, and other exemption
certificates or information reasonably requested by either Party.
(d) Each Party shall promptly notify the other Party of, and
coordinate with the other Party the response to and settlement
of, any claim for taxes asserted by applicable taxing authorities
for which a Party is responsible hereunder, it being understood
that with respect to any claim arising out of a form or return
signed by a Party to this Agreement, such Party shall have the
right to elect to control the response to and settlement of the
claim, but the other Party shall have all rights to participate
in the responses and settlements that are appropriate to its
potential responsibilities or liabilities. If Customer requests
Vendor to challenge the imposition of any tax, Customer shall
reimburse Vendor for the reasonable legal fees and expenses it
incurs. Customer shall be entitled to any tax refunds
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
or rebates granted to the extent such refunds or rebates are of
taxes that were paid by Customer, including taxes charged to
Customer as Out-of-Pocket Expenses. Customer shall be responsible
for interest and penalties incurred to the extent such interest
and penalties are related to taxes paid or payable by Customer.
8.3. Certain Obligations Corresponding to the Waiver.
-----------------------------------------------
Promptly after execution of this Agreement, Customer shall pay to
Vendor [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] dollars ($[*Material Omitted and
Separately Filed Under an Application for Confidential Treatment])
which amount represents an off-set of (i) the [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
dollars ($[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment]) withheld by Customer under the Original
Agreement and (ii) the [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] dollars ($[*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment]) that Vendor has agreed to pass-through to Customer from
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] or its Affiliates for [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
specifically affecting the Customer network in [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment].
9. INVOICING AND PAYMENT
9.1. Invoicing.
---------
(a) Vendor will invoice Customer for amounts due under this Agreement
(including with respect to provision of Services to Special
Affiliates) on a monthly basis in arrears. Each invoice shall
contain the same information as provided under the Original
Agreement immediately prior to the Effective Date of this
Agreement, additional, similar information with respect to the
Broadband Backhaul Services and Other Services, and any
additional information as the Parties may otherwise agree. Each
invoice will separately state those charges for the Dial-Up
Access Services that are attributable to the provision of
backhaul functions. Out-of-Pocket Expenses, if any, and Monthly
Pass-Through Expenses will be billed monthly based upon actual
and accrued costs, and such expenses shall be trued up on a
quarterly basis. Upon any request by Customer, Vendor will
provide Customer with access to books and records (including
bills and invoices) from third party providers for all Out-of-
Pocket Expenses and Monthly Pass-Through Expenses. Any refunds or
credits arising from an Out-of-Pocket Expense reimbursed by
Customer or a Monthly Pass-Through Expense shall be remitted to
Customer, and Vendor shall report and transmit to Customer any
misdirected refunds or credits.
(b) To the extent a credit may be due Customer pursuant to this
Agreement, Vendor shall provide Customer with an appropriate
credit against amounts then due and owing; if no further payments
are due to Vendor, Vendor shall pay such amounts to Customer
within thirty (30) calendar days. In the event such payment is
not made to Customer when due, Vendor will pay a late fee equal
to the lesser of (a)
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
one (1) percent of the amount of such charges per month; or (b)
the maximum amount permissible by law.
(c) The detailed accounting of actual and accrued costs described in
Section 3.D of the Original Agreement will be limited to costs
incurred in the first quarter of Customer's fiscal year 2000 and
the final true-up with respect to accrued costs(as described in
the Original Agreement) will be completed and provided to
Customer by March 31, 2000; and with respect to actual costs,
Vendor will use all commercially reasonable efforts to work with
its providers to reconcile actual costs as soon as reasonably
practicable. Subject to Section 8.3 of this Master Agreement and
to the last sentence of Section 8.1(a)(i) of Schedule B, Vendor
will invoice Customer for all amounts due under the Original
Agreement as of the Effective Date, and Customer will pay to
Vendor such amounts due, in accordance with Section 9.2 of this
Master Agreement.
9.2. Payment Due.
-----------
Subject to the other provisions of this Article 9, all undisputed
charges shall be due and payable by Customer within thirty (30)
calendar days after receipt of a proper invoice for such amount. In
the event that any such charges are not received by Vendor within five
(5) business days after receipt by Customer of written notice from
Vendor indicating that such charges have not been paid within such
thirty-day period, then commencing as of the original due date,
Customer will pay a late fee equal to the lesser of (a) one (1)
percent of the amount of such charges per month; or (b) the maximum
amount permissible by law. All undisputed amounts due and payable to
Vendor under this Article 9 shall be paid, at Customer's option,
either (i) by check payable to the order of Vendor or (ii) by
electronic funds transfer to Vendor from account(s) designated by
Customer.
9.3. Accountability.
--------------
Both Parties shall maintain complete and accurate records of and
supporting documentation for the amounts billable or owed and credits
applicable to either Party under the terms of this Agreement, in
accordance with generally accepted accounting principles applied on a
consistent basis. Both Parties agree to provide the other Party with
documentation and other information with respect to any amount claimed
or owed as may be reasonably requested by either Party to verify
accuracy and compliance with the provisions of this Agreement.
9.4. Disputed Charges.
----------------
Customer shall pay undisputed charges when such payments are due under
this Article 9. Customer may withhold payment of particular charges
that Customer disputes in good faith. To the extent that Vendor is
entitled to such payment withheld pursuant to resolution of the
underlying dispute, Customer shall pay to Vendor such payments plus
any interest accrued from the date such payments are withheld by
Customer at a rate equal to one percent (1%) per month on the disputed
amounts. Upon resolution of the dispute against Vendor, Vendor will
pay Customer interest equal to one percent (1%) per month on the
amounts overpaid or under-withheld by Customer.
10. AUDIT
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CONFIDENTIAL TREATMENT REQUESTED
10.1. Audit Rights.
------------
Each Party, after reasonable notice, shall have the right to conduct
reasonable audits of the other Party, through a third party
independent auditor as selected by the Party conducting the audit or
through any other mutually agreeable means, and subject to
reasonable confidential requirements, to enforce a Party's rights
and/or enforce the other Party's obligations under this Agreement.
10.2. Records Retention.
-----------------
Until three (3) years after document creation, each Party will
maintain, and provide to the other Party and its auditors access
upon request to, records, documents and other information subject to
audit under the Agreement.
11. CONFIDENTIALITY
11.1. Confidential Information.
------------------------
Vendor and Customer each acknowledge that they may be furnished
with, receive, or otherwise have access to Confidential Information
(as defined below) of or concerning the other Party. As used in this
Agreement and subject to Section 11.3 of the Master Agreement,
"Confidential Information" means any information, in any form,
furnished or made available directly or indirectly by one Party (the
"Disclosing Party") to the other (the "Receiving Party") relating to
or disclosed in the course of the negotiation or performance of this
Agreement, that is, or should be reasonably understood to be,
confidential or proprietary to the Disclosing Party, and shall
include the material terms of this Agreement (including all
information relating to prices and purchase commitments), invoices
and any supporting information provided by Vendor or Customer with
respect to such invoices, information audited pursuant to Article
10, all Customer Data, Customer's customer and member information,
automatic number identification ("ANI") data and information, the
relations of the Disclosing Party with its customers, employees and
service providers, technical processes and formulas, source codes,
product designs, sales, cost and other unpublished financial
information, product and business plans, projections and marketing
data.
11.2. Obligations.
-----------
(a) Any proprietary rights in Confidential Information disclosed by
a Party shall remain with such Party. Customer and Vendor shall
only disclose Confidential Information of the other Party
internally on a "need-to-know" basis. Customer and Vendor shall
each use at least the same degree of care, but in any event no
less than a reasonable degree of care, to prevent disclosing to
third parties the Confidential Information of the other as it
employs to avoid unauthorized disclosure, publication or
dissemination of its own information of a similar nature;
provided that a Party may disclose such information to an
entity performing or receiving Services hereunder or to an
independent third-party auditor on a "need-to-know" basis where
(i) the provision or receipt of Services or audit by such
entity is authorized under this Agreement, (ii) such disclosure
is necessary or otherwise naturally occurs in that entity's
scope of responsibility, and (iii) the entity agrees in writing
to assume confidentiality restrictions no less
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CONFIDENTIAL TREATMENT REQUESTED
stringent than those described in this Section 11.2. Any
disclosure to such entity shall be under the terms and
conditions as provided herein.
(b) Each Party shall take reasonable steps to ensure that its
employees, agents and to the extent applicable, third party
auditors comply with this Article 11. In the event of any
unauthorized disclosure or loss of, or inability to account
for, any Confidential Information of the Disclosing Party, the
Receiving Party shall promptly, at its own expense: (i) notify
the Disclosing Party in writing; (ii) take such actions as may
be necessary or reasonably requested by the Disclosing Party to
minimize the violation; and (iii) cooperate in all reasonable
respects with the Disclosing Party to minimize the violation
and any damage resulting therefrom. With respect to any
Confidential Information disclosed to the Receiving Party, the
nondisclosure obligation shall last for five (5) years from the
date of disclosure of such Confidential Information.
11.3. Exclusions.
----------
(a) "Confidential Information" shall exclude any particular
information that (i) was, at the time of disclosure to it,
lawfully in the public domain; (ii) after disclosure to it, is
lawfully published or otherwise lawfully becomes part of the
public domain through no fault of the Receiving Party; (iii)
except for the material terms of the Agreement, was lawfully in
the possession of the Receiving Party at the time of disclosure
to it; (iv) was received after disclosure to it from a third
party who had a lawful right to disclose such information to it
without any obligation to restrict its further use or
disclosure; and (v) was independently developed by the
Receiving Party without reference to Confidential Information
of the Disclosing Party. In addition, a Party shall not be
considered to have breached its obligations by disclosing
Confidential Information of the other Party to the minimum
extent required to satisfy any legal requirement of a competent
government body provided that, immediately upon receiving any
such request and to the extent that it may legally do so, such
Party advises the Disclosing Party promptly and prior to making
such disclosure in order that the Disclosing Party may
interpose an objection to such disclosure, take action to
assure confidential handling of the Confidential Information,
or take such other action as it deems appropriate to protect
the Confidential Information.
(b) Nothing in this Article 11 shall be construed or interpreted as
a representation or agreement to restrict assignment or
reassignment of a Party's employees. Subject to each Party's
obligations under the Agreement, neither Party shall be
precluded from participating in business activities that may be
competitive with the other Party.
11.4. Residual Knowledge.
------------------
Nothing contained in this Agreement shall restrict either Party from
the use of any ideas, concepts, know-how, methodologies, processes,
technologies, algorithms or techniques relating to the Services that
either Party, individually or jointly, develops or discloses under
this Agreement, provided that in doing so such Party does not breach
its obligations under this Article or infringe the intellectual
property rights of the other Party or third parties who have
licensed or provided materials to such Party.
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CONFIDENTIAL TREATMENT REQUESTED
11.5. Customer Data.
-------------
(a) Without limiting Vendor's obligations under Section 11.2 of the
Master Agreement with respect to Customer Data, Vendor shall
only use Customer Data to the extent necessary to fulfill its
obligations under this Agreement.
(b) Vendor shall institute "standard industry practices" physical
and logical security measures with respect to facilities and
systems used to provide the Services, including with respect to
any shared processing or network environments and with respect
to the access and controls it affords to its employees,
Affiliates and subcontractors (including the employees of each)
to guard against, identify and promptly terminate the
unauthorized access, alteration or destruction of Customer
Data.
12. REPRESENTATIONS, WARRANTIES AND COVENANTS
12.1. Compliance with Specifications and Applicable Laws.
--------------------------------------------------
Vendor covenants that it shall perform the Services in accordance
with the terms of this Agreement. Vendor represents that the
Services offered to Customer are, and warrants that after the
Effective Date Services purchased by Customer shall be, in
conformance with applicable federal, state and local laws and
regulations, including FCC requirements and specifications.
12.2. Non-Infringement.
----------------
Vendor warrants that the Services shall not knowingly infringe, and
that Vendor shall perform its responsibilities under this Agreement
in a manner that does not infringe, or constitute an infringement or
misappropriation of, any patent, copyright, trademark, trade secret
or other proprietary rights of Customer or any third party.
12.3. Technology.
----------
Vendor covenants that in the event that Vendor provides any hardware
and software upgrades as part of the Services, such upgrades shall
be without additional charge to Customer. Vendor will implement
software and hardware upgrades to the extent such upgrades are
necessary to maintain the quality of Services as specified in this
Agreement, stay consistent with industry standards and otherwise
meet its obligation to provide Services hereunder.
12.4. Year 2000.
----------
Vendor represents that the Services offered to Customer are, and
warrants that Services provided to Customer shall be, Year 2000
Compliant. "Year 2000 Compliant" means that the Services satisfy the
requirements set forth below:
(a) Limited Warranty. Vendor warrants that the Services will be
----------------
Year 2000 Compliant, pursuant to the terms of this Section 12.4
(hereinafter referred to in this Section as the "Year 2000
Compliance Limited Warranty"). Vendor warrants that in
connection with Calendar-Related data and Calendar-Related
processing of Date Data or of any System Date, the Services, as
a whole or by its
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CONFIDENTIAL TREATMENT REQUESTED
components, as to the Year 2000 will not malfunction, will not
cease to function, will not generate incorrect data, will not
produce incorrect results, and will represent dates without
ambiguity when providing Calendar-Related data to and accepting
Calendar-Related data from other automated, computerized,
and/or software systems and users via use interfaces,
electronic interfaces, and data storage.
In the event of any Year 2000 Noncompliance with respect to the
Services when and as specified herein, Vendor shall, as
Customer's sole and exclusive remedy, repair or replace the
affected Services within a reasonable period of time as
determined by the severity of the failure and the level of
effort necessary to correct such failure.
Vendor shall meet the obligations set forth in this Year 2000
Compliance Limited Warranty provided that all Customer or third
party supplied computer software, computer firmware, and
computer hardware that directly interface with the Services,
co-exist with the Services, or directly influence the Services'
operation, are also demonstrated to comply with this Year 2000
Compliance Limited Warranty.
(b) Disclaimer. Except as provided by this Year 2000 Compliance
----------
Limited Warranty, Vendor shall not be liable for any failure
of the AOLnet to be Year 2000 Compliant.
(c) Definitions. For the purposes of this Year 2000 Compliance
-----------
Limited Warranty, the following defined terms shall have the
following meanings:
(i) "AOLnet" means that portion of the Customer network in
the United States, which is managed by Vendor. "AOLnet"
does not include equipment, telephone circuits,
networks, network equipment, or telephone circuits not
owned or controlled by Vendor.
(ii) "Calendar-Related" refers to date values based on the
Gregorian calendar, which includes Leap Years, and to
all uses in any manner of those date values, including
without limitation, manipulations calculations,
conversions, comparisons, and presentation.
(iii) "Date Data" means any Calendar-Related data the
inclusive range January 1, 1900 through December 31,
2035, which the Services uses in any manner.
(iv) "System Date" means any Calendar-Related data value in
the inclusive range January 1, 1985 through December 31,
2035 (including the natural transition between such
values), which the Services shall be able to use as its
current date while operating.
(v) "Year 2000" Noncompliance" means any failure of the
Services to be Year 2000 Compliant.
13. TERMINATION
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CONFIDENTIAL TREATMENT REQUESTED
13.1. Termination of Master Agreement for Cause.
-----------------------------------------
(a) Customer's Right to Terminate. In addition to any other rights
-----------------------------
or remedies to which Customer may be entitled under this
Agreement, in the event that:
(i) Vendor commits a material breach of this Agreement,
which breach is not cured within thirty (30) calendar
days after notice of breach from Customer to Vendor;
(ii) Vendor commits repeated material breaches of this
Agreement, even if cured;
(iii) Vendor violates either Section 3.2 (Resale of Dedicated
Resources) or Vendor's core obligations with respect to
the most-favored customer provisions set forth in the
Schedules (e.g., Section 8.3(b) of Schedule B); or
(iv) there is a total or near-total outage of any of the
Services that, while it may last fewer than thirty (30)
calendar days, is widespread and prolonged enough to
justify a reasonable person, considering all relevant
industry standards, to terminate the Agreement,
then Customer may, at its option and in its sole discretion,
exercise the Agreement Termination Right for cause; provided,
however, if Customer's termination for cause right is solely
related to the Other Services, Customer may only exercise the
Agreement Termination Right with respect to the Other Services.
In the event of a termination of Customer's obligations with
respect to the Purchase Commitments as a result of termination
of the Agreement or any Schedule, Customer shall have no
further liability to Vendor with respect to such Purchase
Commitments. To the extent new services are added to this
Agreement, defaults will be as specified therein.
(b) Vendor's Right to Terminate. In addition to any other rights
---------------------------
or remedies to which Vendor may be entitled under this
Agreement, in the event that
(i) Customer commits a material breach of this Agreement,
including non-payment of undisputed amounts due and
owing to Vendor in accordance with the terms of this
Agreement, which breach is not cured within thirty (30)
calendar days after notice of breach from Vendor to
Customer; or
(ii) Customer fails to meet its obligations with respect to
the Purchase Commitments in accordance with and subject
to the terms of this Agreement, which failure is not
cured within thirty (30) calendar days after notice of
failure from Vendor to Customer; provided, however,
Customer shall be deemed not to have failed to meet its
Purchase Commitments if it pays Vendor such amounts that
Customer would have otherwise had to pay if Customer
actually met such Purchase Commitments,
then Vendor, at its option and in its sole discretion, may
terminate this Agreement; provided, however, if Vendor's
termination for cause right is solely
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CONFIDENTIAL TREATMENT REQUESTED
related to the Other Services, Vendor may only exercise the
Agreement Termination Right with respect to the Other
Services. To the extent new services are added to this
Agreement, defaults will be as specified therein.
13.2. No Implication Against Materiality.
----------------------------------
The inclusion of any provision, obligation or duty in Section 13.1,
or any statement in this Agreement, that a particular provision,
obligation or duty is "material" shall not be construed to imply that
any other provision, obligation or duty in this Agreement is not
material.
13.3. Termination for Change of Control.
---------------------------------
In the event of (a) a change in control of Vendor where such control
is acquired, directly or indirectly, in a single transaction or
series of related transactions, (b) all or substantially all of the
assets of Vendor are acquired by or transferred to any entity, or (c)
Vendor is merged with or into another entity to form a new entity,
then at any time after any such event, Customer may, at its option
and in its sole discretion, exercise the Agreement Termination Right;
provided, however, nothing in this Section shall apply in a change in
control resulting from or arising out of the closing of the proposed
merger of GTE Corporation and Bell Atlantic Corporation (including
any transaction in which any assets of Vendor are transferred back to
any Affiliate of the combined GTE/Bell Atlantic corporation), unless
the acquirer or merged entity is (i) a Significant Competitor of
Customer (as such list of Significant Competitors may be modified
from time-to-time by Customer on notice following August 31, 2000 to
add additional significant competitors of Customer) or (ii) one of
the following entities: MCI Worldcom, Sprint, Qwest or Level 3, or an
Affiliate of such entities.
13.4. Termination/Expiration Assistance; Transition Period.
----------------------------------------------------
Upon expiration of this Agreement or any Schedule, or upon any
termination or cancellation of this Agreement or any Schedule by
either Party (whether or not for cause), Customer may decommission
all Services corresponding to the Agreement or any such Schedule, as
applicable, and Vendor shall (i) provide Customer, or at Customer's
request Customer's designee, reasonable assistance and consultation
to enable Customer (or Customer's designee) to ensure a smooth and
timely transition of network control and management to Customer (as
applicable), and to transition Customer's purchase of services
similar to the Services then expiring or being terminated to another
vendor, and (ii) continue to provide the Services then expiring or
being terminated to Customer (at prices then in effect as of the date
of such expiration, termination or cancellation) and otherwise
perform all of its obligations under this Agreement (such obligations
described in this Section 13.4 collectively "Transition Assistance")
for a period (the "Transition Period") to be determined by Customer
in its sole and absolute discretion; provided, however, that unless
otherwise specified in a Schedule to the Agreement, the Transition
Period shall not be longer than twelve (12) months after the
effective date of such expiration, termination or cancellation. If
the provision of such Transition Assistance follows a notice of
termination by Vendor pursuant to Section 13.1(b) of this Master
Agreement as a result of Customer's non-payment of undisputed amounts
owed to Vendor, then Customer shall pay Vendor monthly in advance
plus an equitable portion of the unpaid charges giving rise to
termination that compensates Vendor for the provision of such
Transition Assistance.
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CONFIDENTIAL TREATMENT REQUESTED
As part of its obligation to provide Transition Assistance, Vendor
shall include transferring all rights to Customer at no additional
charge, for Customer and its designees' exclusive use, any telephone
numbers used in providing the Services so that Customer or its
designee may utilize such numbers in providing services (subject to
the provisions of Schedule B regarding Vendor's obligations to obtain
such telephone numbers for Customer).
14. LIABILITY AND FORCE MAJEURE
14.1. Liability Restrictions.
----------------------
The liability restrictions and limitation provisions for each Service
provided hereunder are set forth in the associated Schedule for such
Service.
14.2. Force Majeure.
-------------
(a) No Party shall be liable for any default or delay in the
performance of its obligations under this Agreement if and to the
extent such default or delay is caused, directly or indirectly,
by fire, flood, lightning, earthquake, elements of nature or acts
of God, strikes, lock-outs or other labor disturbance, riots,
civil disorders, rebellions or revolutions in any country, or any
other cause beyond the reasonable control of such Party;
provided, however, that the non-performing Party is without fault
in causing such default or delay, and such default or delay could
not have been prevented by reasonable precautions and cannot
reasonably be circumvented by the non-performing Party through
the use of alternate sources, workaround plans or other means
(each a "Force Majeure Event"). The failure of a supplier or
subcontractor of Vendor to perform under its agreement with
Vendor shall not constitute a Force Majeure Event for Vendor
except to the extent such supplier's or subcontractor's failure
to perform is caused by a Force Majeure Event.
(b) In such event the non-performing Party shall be excused from
further performance or observance of the obligation(s) so
affected for as long as such circumstances prevail and such Party
continues to use its commercially reasonable best efforts to
recommence performance or observance whenever and to whatever
extent possible without delay. In the event the Vendor is the
non-performing Party, Customer shall be excused from paying for
any Services affected by the Force Majeure Event. Any Party so
delayed in its performance shall immediately notify the Party to
whom performance is due by telephone (to be confirmed in writing
within two (2) business days of the inception of such delay) and
describe at a reasonable level of detail the circumstances
causing such delay.
15. INDEMNIFICATION
Each Party agrees to indemnify, defend and hold harmless the other
Party and its Affiliates and their respective officers, directors,
employees, agents, successors, and assigns, from any and all losses,
liabilities, damages and claims, and all related costs and expenses
(including reasonable legal fees and disbursements and costs of
investigation,
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CONFIDENTIAL TREATMENT REQUESTED
litigation, settlement, judgment, interest and penalties) arising
from, in connection with, or based on allegations of, any of the
following:
(a) third party claims arising from the indemnifying Party's material
breach of any obligation, representation or warranty under this
Agreement;
(b) any claims of infringement of any patent, trademark, trade
secret, copyright or other proprietary rights, alleged to have
occurred based upon the provision by the indemnifying Party of
materials, services or other resources to the indemnified Party;
(c) the death or bodily injury of any agent, employee, customer,
business invitee, or business visitor of the indemnified Party or
any other person caused by the tortious conduct of the
indemnifying Party; or
(d) the damage, loss or destruction of any real or tangible personal
property caused by the tortious conduct of the indemnifying
Party.
16. GENERAL
16.1. Binding Nature and Assignment.
-----------------------------
This Agreement shall accrue to the benefit of and be binding upon the
Parties hereto and any purchaser or any successor entity into which
either Party has been merged or consolidated or to which either Party
has sold or transferred all or substantially all of its assets.
Neither Party may, or shall have the power to, assign this Agreement
or delegate such Party's obligations hereunder without the prior
written consent of the other, which consent shall not be unreasonably
withheld or delayed, except that Customer may assign its rights and
obligations under this Agreement without the approval of Vendor to an
entity which acquires all or substantially all of the assets of
Customer, to any Affiliate of Customer, or to a successor in a merger
or acquisition of Customer. Notwithstanding anything to the contrary
in this Section, but not affecting any of Customer's rights under
Section 13.3, Customer hereby consents to the assignment of this
Agreement to any entity created as a result of or arising out of the
closing of the proposed merger of GTE Corporation and Bell Atlantic
Corporation, including any transaction in which any assets of Vendor
are transferred back to any Affiliate of the combined GTE/Bell
Atlantic corporation.
16.2. Continued Performance and Governing Law.
---------------------------------------
(a) Each Party agrees to continue performing its obligations under
this Agreement while any dispute is being resolved except to the
extent the issue in dispute precludes performance (dispute over
payment shall not be deemed to preclude performance).
(b) This Agreement and performance under it shall be governed by and
construed in accordance with the laws of the State of Delaware
without regard to its choice of law principles.
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CONFIDENTIAL TREATMENT REQUESTED
16.3. Entire Agreement.
----------------
This Agreement, including any attached Schedules, sets forth the
entire agreement of the Parties with respect to the transactions set
forth herein.
16.4. Notices.
-------
All notices, requests, demands, and determinations under this
Agreement (other than routine operational communications or as
otherwise specifically set forth herein (e.g., e-mail orders and
Customer acceptance/rejection of Dedicated Dial-Up Access Ports or
other Services)), shall be in writing and shall be deemed duly given
(i) when delivered by hand, (ii) one (1) business day after being
given to an express, overnight courier with a reliable system for
tracking delivery, (iii) when sent by confirmed facsimile with a copy
delivered by another means specified in this Section, or (iv) four (4)
business days after the day of mailing, when mailed by United States
mail, registered or certified mail, return receipt requested, postage
prepaid, and addressed as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
To Customer: To Vendor:
----------- ---------
<S> <C>
America Online, Inc. BBN Corporation
12100 Sunrise Valley Drive 9810 Patukent Woods Drive
Reston, Virginia 20190 Columbia, MD 21046
Attn: Geraldine MacDonald, Vice Attn: Vice President and General
President AOLnet Operations Manager
Fax: (703) 265-5988 Fax: (410) 309-8315
Copies to: Copy to:
--------- -------
America Online, Inc. GTE Internetworking
22000 AOL Way 3 Van de Graaff Drive
Dulles, Virginia 20166 Burlington, MA 01803
Attn: General Counsel Attn: General Counsel
Fax: (703) 265-1495 Fax: (781) 262-3408
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166
Attn: President Of Business Affairs
Fax: (703) 265-1206
-----------------------------------------------------------------------------------------------
</TABLE>
A Party may from time to time change its address or designee for
notification purposes by giving the other prior written notice of the
new address or designee and the date upon which it will become
effective.
16.5. Counterparts.
------------
This Agreement may be executed in several counterparts, all of which
taken together shall constitute one single agreement between the
Parties hereto.
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CONFIDENTIAL TREATMENT REQUESTED
16.6. Relationship of Parties.
-----------------------
The Parties to this Agreement are independent contractors. Neither
Party is an agent, representative, or partner of the other Party.
Neither Party shall have any right, power or authority to enter into
any agreement for or on behalf of, or incur any obligation or
liability of, or to otherwise bind, the other Party. This Agreement
shall not be interpreted or construed to create an association,
agency, joint venture or partnership between the Parties or to
impose any liability attributable to such a relationship upon either
Party.
16.7. Severability.
------------
In the event that any provision of this Agreement conflicts with the
law under which this Agreement is to be construed or if any such
provision is held invalid by a court with jurisdiction over the
Parties, such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in
accordance with applicable law. The remainder of this Agreement
shall remain in full force and effect.
16.8. Waiver of Default.
-----------------
No amendment, waiver or discharge hereof shall be valid unless in
writing and signed by an authorized representative of the Party
against which such amendment, waiver, or discharge is sought to be
enforced. A delay or omission by either Party hereto to exercise any
right or power under this Agreement shall not be construed to be a
waiver thereof. A waiver by either of the Parties hereto of any of
the covenants to be performed by the other or any breach thereof
shall not be construed to be a waiver of any succeeding breach
thereof or of any other covenant herein contained.
16.9. Cumulative Remedies.
-------------------
Except as otherwise expressly provided herein, all remedies provided
for in this Agreement shall be cumulative and in addition to and not
in lieu of any other remedies available to either Party at law, in
equity or otherwise.
16.10. Survival.
--------
Articles 10, 11, 14, 15, and 16 of this Master Agreement and,
Section 1.2 of this Master Agreement, Schedule A, and Section 6.6 of
Schedule B will survive the completion, expiration, termination or
cancellation of the Agreement. In addition, any obligations which
expressly or by their nature are to continue after termination,
cancellation or expiration of the Agreement shall survive and remain
in effect.
16.11. Publicity.
---------
(a) Promotional Materials. Each Party shall submit to the other
---------------------
Party, for its prior written approval, which will not be
unreasonably withheld or delayed, any marketing,
advertising, or other promotional materials to the extent
such materials reference the other Party or the other
Party's trade names, trademarks, and service marks (such
materials the "Promotional Materials").
(b) Press Releases. The Parties will prepare a mutually
--------------
acceptable joint press release for release following the
Effective Date. Each Party will submit to the
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CONFIDENTIAL TREATMENT REQUESTED
other Party, for its prior written approval, which will not
be unreasonably withheld or delayed, any press release or
any other public statement (each, a "Press Release") related
to the transactions contemplated hereunder. Without limiting
the generality of the foregoing, the inclusion in any such
Press Release of any Confidential Information or any
information relating to prices or purchase commitment terms
of this Agreement shall be grounds for withholding approval
of such Press Release.
16.12. Certain Regulatory Events.
-------------------------
In the event that Vendor is obligated under applicable law to
provide any of the Services in accordance with tariffs filed with a
governmental authority, then Vendor shall file the terms and
conditions of this Agreement with such authority such that
applicable law will require no change in the obligations of each
Party under the Agreement. In the event that Vendor fails to file
the terms and conditions of this Agreement in accordance with this
Section, Customer may, at its option and in its sole discretion,
exercise the Agreement Termination Right for cause for those
Schedules corresponding to the affected Services.
16.13. Amendment.
----------
This Agreement shall not be modified, amended or in any way altered
except by an instrument in writing signed by both Parties.
16.14. Incorporation by Reference.
--------------------------
Schedules A, B, C and D (including any Exhibits attached to such
Schedules) are hereby incorporated by reference into this Master
Agreement.
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16.15. Construction.
------------
The Parties agree that this Agreement was jointly drafted by the
Parties and each Party further agrees that they shall not assert a
claim that a particular provision should be construed against the
other Party as the drafter of the provision. In addition, the
headings and the table of contents in the Agreement are intended to
be for reference purposes only and shall in no way be construed to
modify or restrict, and shall not be considered in the construction
or interpretation of, any of the terms or provisions of the
Agreement.
IN WITNESS WHEREOF, Customer and Vendor have each caused this Agreement to be
signed and delivered by its duly authorized officer as of the Effective Date.
AMERICA ONLINE, INC. BBN CORPORATION
By: /s/ America Online, Inc. By: /s/ Paul R. Gudonis
------------------------- --------------------------
Printed: Printed:
_____________________ -----------------
Title:_______________________ Title: President
-------------------
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SCHEDULE A
Definitions
"Acceptance Criteria" means the criteria used to determine whether a Service is
ready for Final Acceptance. The Acceptance Criteria shall include the
requirements that the Service complies with all mutually agreed-upon testing
criteria as set forth in a Schedule to the Agreement and such other criteria as
may be developed and agreed upon by the Parties.
"Affiliate" of any entity means any other entity controlling, controlled by or
under common control with such entity.
"Agreement" has the meaning set forth in the preamble to the Master Agreement.
"Agreement Termination Right" means the right of a Party to terminate, without
cost or liability and as of the date specified in a written notice of
termination to Vendor, (a) the Schedule to which the breach giving rise to such
Agreement Termination Right relates, or (b) the entire Agreement. Any Schedule
not so terminated shall remain in full force and effect.
"Aggregate DSL Subscriber Lines" means the aggregate number of Subscriber Lines
providing xDSL broadband services that utilize the Broadband Backhaul Services
provided by Vendor or its Affiliates or the broadband backhaul services of any
other party. "Aggregate DSL Subscriber Lines" shall exclude Subscriber Lines of
any entity purchased, acquired, or merged with Customer or any Affiliate that,
as of the date of such purchase, acquisition or merger, are contractually
committed to another vendor of broadband backhaul services; provided that such
Subscriber Lines of such entity shall be excluded only for so long as the
duration (determined as of the date of such purchase, acquisition, or merger) of
such contractual commitment plus a mutually agreeable transition period.
"Aggregate Other Broadband Subscriber Lines" means the aggregate number of
Subscriber Lines providing broadband services that utilize the Broadband
Backhaul Services provided by Vendor or its Affiliates or the broadband backhaul
services of any other party. "Aggregate Other Broadband Subscriber Lines" shall
exclude (a) Subscriber Lines that transmit xDSL services, (b) Subscriber Lines
that utilize [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] that are[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], and (c) Subscriber Lines of any entity
purchased, acquired, or merged with Customer or any Affiliate that, as of the
date of such purchase, acquisition or merger, are contractually committed to
another vendor of broadband backhaul services; provided that such Subscriber
Lines of such entity shall be excluded only for so long as the duration
(determined as of the date of such purchase, acquisition, or merger) of such
contractual commitment plus a mutually agreeable transition period.
"Aggregate Subscriber Lines" means the Aggregate DSL Subscriber Lines and
Aggregate Other Broadband Subscriber Lines, collectively.
"All New Ports MP Change Date" shall mean, for any New Dial-Up Market Price
Notice, the later of (a) the New Dial-Up Market Price Effective Date
corresponding to such New Dial-Up Market Price Notice, and (b) [*Material
Omitted and Separately Filed Under an Application for Confidential Treatment].
"ANI" has the meaning set forth in Section 11.1 of the Master Agreement.
"AOL Average" means, for a particular Service Level metric, the average
performance achieved with respect to such metric by other vendors of Customer
providing services similar to the Services corresponding to such Service Level
metric covering the same measurement period as the corresponding Service Level
measurement period.
"AOL Information Service" means a service (a) containing branding owned or
controlled by Customer or a Customer Affiliate, or using all or a portion of
Customer's or a Customer Affiliate's network or backend systems, or (b) in which
content, communications services and/or transactions are provided to end-users
through the use of any protocols, standards, platforms, media or other
methodology now or hereafter existing (including the Internet and similar
protocols, standards and platforms) from host server computers through the use
of client software resident on other computers or access devices.
Schedule A - Page 1
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
"Applicable DUP Purchaser" has the meaning set forth in Section 8.3(b) of
Schedule B.
"Area Delivery Target" has the meaning set forth in Section 2.2(b) of
Schedule B.
"Base Port MP Change Date" shall mean, for any New Dial-Up Market Price Notice,
the later of (a) the New Dial-Up Market Price Effective Date corresponding to
such New Dial-Up Market Price Notice, and (b) [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
"BPS", whether or not capitalized, shall mean bits per second.
"Broadband Backhaul" shall means the facility and associated managed services,
however provided in terms of technology, for receiving broadband traffic from
the public switched telephone network, a cable network, or a wireless network,
satellite network or other technologies, and delivering that traffic to a
Customer facility, where the end-user has initiated the connection. "Broadband
Backhaul" includes the provision of interconnection to an aggregation point and
the transport of bits from that aggregation point to a Customer facility.
"Broadband Backhaul Delivery Period" means, with respect to any New LATA, the
period commencing on the date Customer provides Vendor with the corresponding
New LATA Notice and ending on the later of (a) [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] days following such date,
and (b) if and only if Vendor has performed its obligations with respect to the
ATM intra-LATA interconnect (e.g., ordering of the circuit, management of the
associated third-party vendors), [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] days following the date on which the
local access provider is ready to activate the ATM intra-LATA interconnect in
such New LATA.
"Broadband Backhaul Market Vendor" has the meaning set forth in 7.2(a)(i)(2) of
Schedule C.
"Broadband Backhaul Purchase Commitments" means the DSL Purchase Commitment and
the Other Broadband Purchase Commitment, collectively.
"Broadband Backhaul Services" means (i) Broadband Backhaul ordered by Customer
pursuant to an Order to the extent accepted by Vendor pursuant to Schedule C and
managed network services associated therewith (including those services
described in Article 5 of Schedule C), and (ii) any other services described in
an Order to the extent accepted by Vendor pursuant to Schedule C, each of (i)
and (ii) as such services may change in accordance with the Agreement.
"Broadband Specifications" has the meaning set forth in Article 8 of Schedule C.
"Broadband Term" has the meaning set forth in Article 1 of Schedule C.
"Comparable Broadband Backhaul Services" means managed broadband backhaul
services that are comparable to Broadband Backhaul provided under Schedule C
(including comparable nationwide geographic distribution of Subscriber Lines
utilizing Broadband Backhaul and comparable terms and conditions).
"Comparable Dial-Up Services" means dedicated, managed dial-up access services
(not including usage-based dial-up access services) that are comparable to Dial-
Up Access provided under Schedule B (including comparable nationwide geographic
distribution of Dedicated Dial-Up Access Ports, and comparable terms and
conditions).
"Confidential Information" has the meaning set forth in Section 11.1 of the
Master Agreement.
"Covered Subscriber Line" has the meaning set forth in Section 9.1(b) of Exhibit
C-2 of Schedule C.
"Customer" has the meaning set forth in the preamble to the Master Agreement.
"Customer Data" means (i) all information or data provided to, or otherwise
learned or exposed to Vendor, Vendor's Affiliates or subcontractors by or on
behalf of Customer or end users of Customer's services in conjunction with use
of the Services (including such information that is transmitted by or through
the network(s) used to provide the Services), and (ii) information derived from
such information.
"Dedicated Dial-Up Access Port" is a Dial-Up Access Port that is (a) available
solely to the Customer and Special Affiliates, as applicable, and the end users
of Customer's and Special Affiliates' services, and (b) is not available to any
other party.
Schedule A - Page 2
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CONFIDENTIAL TREATMENT REQUESTED
"Dial-Up Acceptance Test Period" has the meaning set forth in Section 2.7(a) of
Schedule B.
"Dial-Up Acceptance Testing" has the meaning set forth in Section 2.7(a) of
Schedule B.
"Dial-Up Access" is the facility and associated end-to-end, managed services,
however provided in terms of technology, for receiving analog or ISDN in-bound
calls from the public switched telephone network on demand and converting those
signals to digital form for transmission over digital networks, where the end-
user has initiated the call. "Dial-Up Access" includes the provision of Dial-Up
Access Ports.
"Dial-Up Access Port" is the capacity to offer Dial-Up Access to one (1)
incoming analog or ISDN in-bound call, plus signaling channels.
"Dial-Up Access Services" means (i) the "modems," managed, end-to-end network
services associated therewith, provided by Vendor to Customer under the Original
Agreement, (ii) Dial-Up Access ordered by Customer pursuant to an Order to the
extent accepted by Vendor pursuant to Schedule B and fully managed, end-to-end
network services associated therewith (including those services described in
Article 6 of Schedule B, and (iii) any other services described in an Order to
the extent accepted by Vendor pursuant to Schedule B, each of (i), (ii) and
(iii) as such services may change in accordance with the Agreement.
"Dial-Up Access Specifications" mean those Specifications described in
Section 9.1 of Schedule B.
"Dial-Up Access Term" shall have the meaning set forth in Article 1 of
Schedule B.
"Dial-Up Market Vendor" has the meaning set forth in Section 8.3(a)(i)(2) of
Schedule B.
"Dial-Up Market Vendor Trigger" has the meaning set forth in Section 8.3(a)(i)
of Schedule B.
"Dial-Up Nonconformity" has the meaning set forth in Section 2.7(b)(i) of
Schedule B.
"Dial-Up Purchase Commitment" has the meaning set forth in Section 2.8(a) of
Schedule B.
"Disclosing Party" has the meaning set forth in Section 11.1 of the Master
Agreement.
"DSL Purchase Commitment" has the meaning set forth in Section 2.1 of Exhibit
C-1 of Schedule C.
"Effective Date" has the meaning set forth in the preamble to the Master
Agreement.
"Existing Calling Areas" means any rate center or calling area in which Vendor
(a) before the Effective Date provided, or agreed to provide, Dial-Up Access
Services to Customer (e.g., pursuant to the Original Agreement), or (b) during
the Term provides, or agrees to provide (e.g., pursuant to an Order), Dial-Up
Access Services to Customer.
"Existing Dedicated Dial-Up Access Port" has the meaning set forth in Section
8.1(b) of Schedule B.
"Existing LATA" means, at any given point in time, any LATA in which Vendor has
already provisioned Broadband Backhaul for xDSL for any customer.
"Final Acceptance" has the meaning set forth in Section 2.7(c) of Schedule B.
"Force Majeure Event" has the meaning set forth in Section 14.2 of the Master
Agreement.
"Include," "includes", and "including", whether or not capitalized, shall mean
"include but are not limited to", "includes but is not limited to", and
"including but not limited to", respectively.
"Incremental New Ports MP Change Date" shall mean, for any New Dial-Up Market
Price Notice, the later of (a) the New Dial-Up Market Price Effective Date
corresponding to such New Dial-Up Market Price Notice, and (b) [*Material
Omitted and Separately Filed Under an Application for Confidential Treatment]..
"L2TP" means Layer Two Tunneling Protocol.
"Leased Items" has the meaning set forth in Section 8.1(a)(ii) of Schedule B.
"Master Agreement" shall mean the Agreement excluding the Schedules to the
Agreement.
"Measurement Date" has the meaning set forth in Section 3.1 of Exhibit C-1 of
Schedule C.
"Monthly Aggregate Subscriber Line Charge" has the meaning set forth in Section
2.3(a) of Exhibit C-2 of Schedule C.
Schedule A - Page 3
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
"Monthly DAP Charge" has the meaning set forth in Section 8.1(b) of Schedule B.
"Monthly EDAP Charge" has the meaning set forth in Section 8.1(a) of Schedule B.
"Monthly Pass-Through Expenses" has the meaning set forth in Section 7.1(b) of
Schedule C.
"Monthly Per Subscriber Line Charge" has the meaning set forth in Section 2.1 of
Exhibit C-2 of Schedule C.
"Monthly Subscriber Line Aggregate" has the meaning set forth in Section 2.3(a)
of Exhibit C-2 of Schedule C.
"Monthly Target" has the meaning set forth in Section 2.2 of Schedule B.
"New Broadband Backhaul Market Price" has the meaning set forth in Section
7.2(a)(i)(1) of Schedule C.
"New Broadband Backhaul Market Price Effective Date" means the date that is
ninety (90) calendar days after the New Broadband Backhaul Market Price Notice
Date corresponding to a New Broadband Backhaul Market Price Notice provided by
Customer.
"New Broadband Backhaul Market Price Notice" has the meaning set forth in
Section 7.2(a)(ii) of Schedule C.
"New Broadband Backhaul Market Price Notice Date" has the meaning set forth in
Section 7.2(a)(ii) of Schedule C.
"New Broadband Backhaul Market Price Response" has the meaning set forth in
7.2(a)(ii) of Schedule C.
"New Calling Area" means any rate center or calling area which is not an
Existing Calling Area.
"New Dial-Up Market Price" has the meaning set forth in Section 8.3(a) of
Schedule B.
"New Dial-Up Market Price Effective Date" means the date that is ninety (90)
calendar days after the New Dial-Up Market Price Notice Date corresponding to a
New Dial-Up Market Price Notice provided by Customer.
"New Dial-Up Market Price Notice" has the meaning set forth in Section
8.3(a)(ii) of Schedule B.
"New Dial-Up Market Price Notice Date" has the meaning set forth in Section
8.3(a)(ii) of Schedule B.
"New Dial-Up Market Price Response" has the meaning set forth in Section
8.3 (a)(ii) of Schedule B.
"New LATA" means, at a given point in time, any LATA in which Vendor has not
already provisioned Broadband Backhaul for xDSL for any customer.
"New LATA Notice" has the meaning set forth in Section 1(c) of Schedule C.
"New Port" means any Dedicated Dial-Up Access Port that is not a Existing Dial-
Up Access Port.
"NOC" means a network operations center.
"Non-Terminable Breach" means a breach that does not, in and of itself, give
rise to Customer's right to exercise the Agreement Termination Right.
"Normalization Methodology" has the meaning set forth in Section 8.4(a) of
Schedule B.
"Order" means any valid order submitted by Customer pursuant to a Schedule to
this Agreement to the extent accepted or deemed accepted by Vendor pursuant to
such Schedule.
"Order Fulfillment Period" has the meaning set forth in Section 2.2 of
Schedule B.
"Original Agreement" has the meaning given in Section 1.1(b) of the Master
Agreement.
"Other Broadband Purchase Commitment" has the meaning set forth in Section 2.2
of Exhibit C-1 to Schedule C.
"Other Services Purchase Commitment" has the meaning set forth in Schedule D.
"Other Vendors' Decom Share" means for any calendar quarter, the amount
calculated as (a) the total number of Dedicated Dial-Up Access Ports (including
usage-based Dial-Up Access Services adjusted using the Normalization
Methodology) provided to Customer other than by Vendor that are decommissioned
by Customer in such quarter, divided by (b) the total number of Dedicated Dial-
Up Access Ports (including usage-based Dial-Up Access
Schedule A - Page 4
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Services adjusted using the Normalization Methodology) provided to Customer
other than by Vendor that are installed and accepted at the beginning of such
quarter.
"Out-of-Pocket Expenses" shall mean reasonable, verifiable and actual out-of-
pocket expenses and associated taxes, if any, incurred by a Party, but excluding
that Party's overhead costs (or allocations thereof), administrative expenses or
other mark-ups.
"Owned Items" has the meaning set forth in Section 8.1(a)(ii) of Schedule B.
"Party" and "Parties" has the meaning set forth in the preamble to the Master
Agreement.
"Peak Resale Window" has the meaning set forth in Section 4(b) of Schedule B.
"POP" means point of presence.
"Pre-Term Private Line Agreements" has the meaning set forth in Schedule D.
"Press Release" has the meaning set forth in Section 16.11(b) of the Master
Agreement.
"Private Line Services" has the meaning set forth in Schedule D.
"Promotional Materials" has the meaning set forth in Section 16.11(a) of the
Master Agreement.
"Purchase Commitments" means (i) the Dial-Up Purchase Commitment, (ii) the
Broadband Backhaul Purchase Commitments, and (iii) the Other Services Purchase
Commitment, collectively.
"Receiving Party" has the meaning set forth in Section 11.1 of the Master
Agreement.
[*Material Omitted and Separately Filed Under an Application for Confidential
Treatment] has the meaning set forth in Section 8(e) of Schedule C.
"Reportless Ports" has the meaning set forth in Section 8.5(a) of Schedule B.
"Resold Dial-Up Access" has the meaning set forth in Section 4(a) of Schedule B.
"Service Levels" means the quantitative and qualitative service levels
identified as such the Schedules to this Agreement.
"Services" means, collectively (i) Dial-Up Access Services, (ii) Broadband
Backhaul Services, (iii) Other Services, and (iv) any other services that the
Parties mutually agree in writing that are governed by the terms of this
Agreement.
"Significant Competitor" means, solely with respect to Section 13.3 of the
Master Agreement, any of the following entities or their Affiliates (which
entities may be modified from time-to-time by Customer on notice following
August 31, 2000): [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment].
"Special Affiliate" means, with respect to Customer, (i) Customer's Affiliates,
(ii) any other entity in which Customer holds, either directly or indirectly, at
least an [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] equity interest, or (iii) any entity which operates or
distributes, or is authorized to operate or distribute, an AOL Information
Service.
"Specifications" means the specifications and other requirements for the
Services identified as such in a Schedule to the Agreement.
"Subscriber Line" means a dedicated connection, between an end user of services
of Customer or one of its Affiliates and an aggregation point, that is activated
and purchased by Customer or one or its Affiliates to provide services to such
end user.
"Term" has the meaning set forth in Article 2 of the Master Agreement.
"Transition Assistance" has the meaning set forth in Section 13.4 of the Master
Agreement.
"Transition Period" has the meaning set forth in Section 13.4 of the Master
Agreement.
"Valid Order Rejection Reason" has the meaning set forth in Section 2.3(a) of
Schedule B.
"Vendor" has the meaning set forth in the preamble to the Master Agreement.
"Vendor Broadband Subscriber Line" means a Subscriber Line used to transmit
broadband services that utilize the Broadband Backhaul Services provided by
Vendor or its Affiliates.
"Vendor Decom Share" means for any calendar quarter, the amount calculated as
(a) the total number
Schedule A - Page 5
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
of Dedicated Dial-Up Access Ports (including usage-based Dial-Up Access Services
adjusted using the Normalization Methodology) provided by Vendor that are
decommissioned by Customer in such quarter, divided by (b) the total number of
Dedicated Dial-Up Access Ports (including usage-based Dial-Up Access Services
adjusted using the Normalization Methodology) provided by Vendor that are
installed and accepted at the beginning of such quarter.
"Vendor ISP Affiliate" means any Affiliate of Vendor that offers online or
Internet connectivity services (e.g., an Internet service provider) to
consumers.
"Vendor Network" means any and all of the network or networks that support
Services ordered and accepted by Customer hereunder.
"Waiver" has the meaning set forth in Section 1.2(b) of the Master Agreement.
Schedule A - Page 6
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE B
Dial-Up Access Services, Service Levels, Pricing and Other Terms
1. TERM
The term of this Schedule B shall begin on the Effective Date and shall
expire on December 31, 2006, unless terminated earlier in accordance with
the Agreement, or extended by mutual written agreement (such period, as
terminated earlier or so extended, the "Dial-Up Access Term").
2. ORDERING
2.1. New Markets.
Vendor from time to time shall deliver to Customer a listing of any
new rate centers or calling areas that are in addition to the Existing
Calling Areas within which Vendor is willing to provide Dial-Up Access
Services.
2.2. Customer Submission of Orders.
-----------------------------
To order any Dial-Up Access Services, Customer shall submit to Vendor
an order for such services covering the three-calendar month period
beginning at least ninety (90) days following submission of the order
(such three-month period the "Order Fulfillment Period"). Each order
will set forth the following:
(a) the cumulative number of Dedicated Dial-Up Access Ports that
Vendor must have installed and activated as of the end of each
calendar month of an Order Fulfillment Period (for each calendar
month, such number the "Monthly Target"), and
(b) the number of incremental Dedicated Dial-Up Access Ports for each
calling area ordered by Customer during an Order Fulfillment
Period (for each calling area, the "Area Delivery Target").
Each order will be clearly marked as such, and will be delivered by
Customer via electronic mail to such individuals designated in writing
from time to time by Vendor. An e-mailed order will be valid only if
it is submitted by the Vice President of AOLnet Operations, the
Director for AOLnet Capacity Planning, or a designee of either.
2.3. Vendor Acceptance or Rejection of Orders.
----------------------------------------
(a) Acceptance and Rejection Process.
--------------------------------
Vendor shall, within ten (10) business days after receipt of a
valid order pursuant to Section 2.2 of this Schedule B, notify
Customer of one of the following:
(i) its acceptance of such order; or
Schedule B - Page 1
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(ii) its rejection of such order in whole or in part; provided
that Vendor may reject an order if and only to the extent
(1) the Monthly Target for a calendar month exceeds the
prior month's Monthly Target by more than [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment] Dedicated Dial-Up Access Ports, (2) such order
requests Dial-Up Access Services to be delivered in a New
Calling Area, (3) such order does not reflect the same
approximate weighted distribution of Dedicated Dial-Up
Access Ports across Existing Calling Areas, or (4) such
order requests the provision of Dedicated Dial-Up Access
Ports in excess of the Dial-Up Purchase Commitment (each of
(1), (2), (3) and (4) a "Valid Order Rejection Reason").
If Vendor fails to provide Customer with such notice within such
ten-day period, then such order shall be deemed accepted by
Vendor. Vendor shall be obligated to deliver, in accordance with
this Schedule B, the Dial-Up Access Services requested by
Customer in an order to the extent such order is accepted or
deemed accepted by Vendor. If Vendor rejects an order (or a
portion thereof) for the reason described in Subsection (ii)(3)
above, following notice of such objection by Vendor, the Parties
will mutually agree on an equitable resolution consistent with
the intent of this Section.
(b) Rejections by Vendor.
--------------------
To the extent that Vendor rejects an order (or portion thereof)
for any reason other than a Valid Order Rejection Reason, the
Dial-Up Purchase Commitment shall be reduced by the number of
Dedicated Dial-Up Access Ports wrongfully rejected by Vendor.
(c) Additional Tasking.
------------------
For any Order Fulfillment Period, in the event Vendor requests,
Customer will provide Vendor with additional tasking of Dedicated
Dial-Up Access Ports for Existing Calling Areas; provided,
however, that such additional tasking shall not result in total
tasking in excess of [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] Dedicated Dial-
Up Access Ports above the Monthly Target for the third month of
the such Order Fulfillment Period. Customer will designate the
Existing Calling Areas in which any of the Dedicated Dial-Up
Access Ports corresponding to such additional tasking will be
provided by Vendor. Any additional tasking shall not affect the
Monthly Targets.
2.4. Cancellation Without Cause and Rescheduling of Orders.
-----------------------------------------------------
(a) Pre-Acceptance or Pre-Rejection Cancellation or Modification
------------------------------------------------------------
by Customer.
-----------
Prior to acceptance or rejection of an order by Vendor, Customer
may rescind or modify, in whole or in part in its sole
discretion, such order.
(b) Post-Acceptance Cancellation or Modification by Customer.
--------------------------------------------------------
Schedule B - Page 2
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(i) Customer may cancel or modify an Order in whole or in part
at any time in its discretion prior to the delivery of the
corresponding Dedicated Dial-Up Access Ports set forth in
such Order; provided, however, that except to the extent
otherwise agreed by Vendor, such cancellation or
modification shall not result in circumstances that would
constitute a Valid Order Rejection Reason. For any such
cancellation or modification, Customer will pay to Vendor
any incremental Out-of-Pocket Expenses actually incurred as
a result of such cancellation or modification and that could
not reasonably have been avoided by Vendor. Customer shall
have no liability to Vendor for an Order cancelled pursuant
to this Subsection (i) other than payment to Vendor of such
Out-of-Pocket Expenses.
(ii) Customer's cancellation or modification of an Order pursuant
to this Subsection (b) shall not relieve Customer of its
obligations with respect to the Dial-Up Purchase Commitment.
In the event of significant changes to an Order by Customer,
Vendor may provide Customer with notice of impaired ability
to deliver, and the Parties shall mutually agree upon
appropriate changes to the Monthly Targets.
2.5. Delivery.
--------
(a) Notification of Delivery by Vendor.
----------------------------------
Vendor shall only deliver Dedicated Dial-Up Access Ports that
Vendor reasonably and in good faith believes will satisfy the
applicable Acceptance Criteria. Upon delivery of any Dedicated
Dial-Up Access Port (but no sooner than such delivery), Vendor
shall provide to Customer notification of such delivery by e-mail
to the Vice President of AOLnet Operations, the Director for
AOLnet Capacity Planning, or a designee of either. For purposes
of Subsection (e) of Section 2.5, delivery of any Dedicated Dial-
Up Access Port shall be deemed made upon Customer's receipt of
such e-mail from Vendor.
(b) Early Delivery By Vendor.
------------------------
Vendor may deliver Dedicated Dial-Up Access Ports ordered by
Customer before the commencement of the corresponding Order
Fulfillment Period.
(c) Initial Testing Failure of Dedicated Dial-Up Access Ports.
---------------------------------------------------------
Notwithstanding the deemed delivery date described in the last
sentence of Subsection (a) of this Section, if any Dedicated
Dial-Up Access Port provided in a month is not accepted by
Customer prior to the 15/th/ day of the next month, then such
Dedicated Dial-Up Access Port will be deemed not to have been
delivered during the first month.
(d) Delivery of Additional Tasking.
------------------------------
In any month, Customer shall not be required to accept any
Dedicated Dial-Up Access Ports in excess of [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment] Dedicated Dial-Up Access Ports
Schedule B - Page 3
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
above the Monthly Target for such month. With respect to any
calling area, Customer shall not be required to accept any more
Dedicated Dial-Up Access Ports in excess of the then-current Area
Delivery Target for such calling area.
(e) Vendor Failures to Deliver.
--------------------------
(i) Failure to Meet Monthly Target. If Vendor fails to deliver
------------------------------
the Monthly Target in any month by more than [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] Dedicated Dial-Up Access Ports, then
Customer may reduce the Dial-Up Purchase Commitment by the
number of Dedicated Dial-Up Access Ports over [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] that Vendor fails to so deliver.
(ii) Late Delivery.
-------------
Vendor shall use demonstrable good faith diligent efforts to
deliver Dedicated Dial-Up Access Ports in accordance with an
Order prior to the end of the corresponding Order
Fulfillment Period. Customer may reduce the Dial-Up Purchase
Commitment by the number of Dedicated Dial-Up Access Ports
included in an Order (A) for which Vendor has not delivered
a substantial portion of a Area Delivery Target by the end
of the corresponding Order Fulfillment Period and (B) with
respect to which Vendor has not used such efforts. In
addition, Customer may cancel, at no cost or liability to
Customer, the unfilled portion of the Order pertaining to
such Dedicated Dial-Up Access Ports. In the event of such
cancellation, Customer shall have no payment obligations to
Vendor with respect to the Dedicated Dial-Up Access Ports
corresponding to the cancelled portion or portions of the
Order. Upon Customer's request, Vendor shall provide
Customer with information and supporting documentation which
demonstrates Vendor's good faith diligent efforts to deliver
all Dedicated Dial-Up Access Ports set forth in an Order
prior to the end of the corresponding Order Fulfillment
Period (e.g., documents showing Vendor's ordering of
circuits from an access provider necessary to provision such
ordered Dedicated Dial-Up Access Ports as well as the
corresponding response from such access providers (e.g.,
firm order commitment)).
2.6. Ordering Process Review.
-----------------------
The Parties acknowledge that the ordering process set forth in this
Article 2 may require modification during the Dial-Up Access Term, and
that in such event the Parties shall meet to discuss amending this
Schedule to reflect any mutually agreed-upon modifications.
2.7. Acceptance Testing and Final Acceptance.
---------------------------------------
(a) Acceptance Testing. Dedicated Dial-Up Access Ports ordered
------------------
hereunder will require acceptance testing by Customer as
described in this Section. Customer will have up to a [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] business day period from the date
Schedule B - Page 4
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
such Dedicated Dial-Up Access Ports are delivered to Customer (the
"Dial-Up Acceptance Test Period") in which to perform any reasonable
testing as Customer in its sole discretion deems appropriate to
determine whether such Dedicated Dial-Up Access Ports conform to their
applicable Acceptance Criteria (the "Dial-Up Acceptance Testing"). If
such Dedicated Dial-Up Access Ports meet their applicable Acceptance
Criteria, Customer will notify Vendor (by electronic mail) that such
Dedicated Dial-Up Access Ports have received Final Acceptance pursuant
to Subsection (c) of this Section. Dedicated Dial-Up Access Ports
activated and accepted by Customer prior to the Effective Date in
accordance with the Original Agreement will be deemed accepted for
purposes of this Agreement.
(b) Failure to Satisfy Acceptance Criteria.
--------------------------------------
(i) If Dedicated Dial-Up Access Ports fail to conform to their
Acceptance Criteria (each such failure a "Dial-Up
Nonconformity"), Customer will notify Vendor within the
Acceptance Test Period (by electronic mail), specifying the
nature of the failure in reasonable detail. Vendor will remove
rejected Dedicated Dial-Up Access Ports from service pending
further troubleshooting and corrective action. At no additional
charge to Customer, Vendor shall use commercially reasonable
efforts to repair, replace or otherwise correct the Dial-Up
Nonconformity (and any other problems of which it has knowledge)
as soon as reasonably practicable after receiving notice from
Customer so that the Dedicated Dial-Up Access Ports meet the
applicable Acceptance Criteria.
(ii) Upon completion of such efforts and Vendor's re-release of
Dedicated Dial-Up Access Ports to Customer, Customer shall have
an additional [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] business day period to
retest the re-delivered Dedicated Dial-Up Access Ports to
determine whether the previously reported Dial-Up Nonconformity
has been corrected and if such Dedicated Dial-Up Access Ports
otherwise then meet the applicable Acceptance Criteria. This
process will be repeated as necessary until all Dial-Up
Nonconformities are corrected and such Dedicated Dial-Up Access
Ports meet the applicable Acceptance Criteria.
(iii) Notwithstanding Subsection (ii) above, if after [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] attempts for curing Dial-Up
Nonconformities, Vendor has not delivered such Dedicated Dial-Up
Access Ports conforming to the applicable Acceptance Criteria,
then Customer may:
(1) allow Vendor to continue to try to correct any Dial-Up
Nonconformities;
(2) if mutually agreed upon by the Parties, accept such
Dedicated Dial-Up Access Ports in their nonconforming
condition and reduce Vendor's charges for such Dedicated
Dial-Up Access Ports by a reasonable amount as mutually
determined by the
Schedule B - Page 5
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Parties that shall reflect the reduced value of
such Dedicated Dial-Up Access Ports; or
(3) (A) cancel, in whole or in part, at no cost or
liability to Customer the portion of the
corresponding Order that does not conform as of a
date specified in a written notice of cancellation
issued by Customer, and (B) so long as the Dial-Up
Nonconformities affect at least[*Material Omitted
and Separately Filed Under an Application for
Confidential Treatment] ([*Material Omitted and
Separately Filed Under an Application for
Confidential Treatment]) of the Order, cancel, in
whole or in part, at no cost or liability to
Customer the unfilled portion of the corresponding
Order as of a date specified in a written notice
of cancellation issued by Customer. Customer shall
have no payment obligations to Vendor with respect
to any cancelled portion of an Order.
(c) Final Acceptance. Dedicated Dial-Up Access Ports ordered by
----------------
Customer shall be deemed to be accepted (such acceptance the
"Final Acceptance") only upon the earlier of: (i) receipt by
Vendor of written notice by Customer certifying that such
Dedicated Dial-Up Access Ports conform to the applicable
Acceptance Criteria; or (ii) the expiration of the Dial-Up
Acceptance Testing Period for such Dedicated Dial-Up Access Ports
without notice of rejection by Customer. Notwithstanding anything
to the contrary herein, Final Acceptance of Dedicated Dial-Up
Access Ports shall only occur in accordance with the terms of
this Agreement. Use of Dedicated Dial-Up Access Ports for
business, profit, or any other purpose before Final Acceptance
shall not constitute Final Acceptance by Customer.
2.8. Dial-Up Purchase Commitments.
----------------------------
(a) Dial-Up Purchase Commitments.
----------------------------
The Monthly Targets for Customer's purchase commitments are set
forth in Exhibit B-1. The minimum commitments specified in
Exhibit B-1 collectively, and as may be adjusted pursuant to the
Agreement, shall be referred to as the "Dial-Up Purchase
Commitment". All Dedicated Dial-Up Access Ports ordered by
Customer pursuant to an Order shall contribute to Customer's
satisfaction of the Dial-Up Purchase Commitment. Customer shall
not be obligated to purchase any Dial-Up Access Services in
excess of the Dial-Up Purchase Commitment (as such commitment may
be adjusted pursuant to the Agreement).
(b) Application of Reductions in Purchase Commitments.
-------------------------------------------------
In the event that Customer is entitled to a reduction in the
Dial-Up Purchase Commitment pursuant to the Agreement, each
commitment described in Subsections (b), (c), (d), and (e) of
Exhibit B-1 shall be reduced by the amount of such reduction. The
Parties shall mutually agree upon a reasonable notification
process with respect to reductions in the Dial-Up Purchase
Commitment.
Schedule B - Page 6
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(c) Substitution of Purchase Commitments Under International
--------------------------------------------------------
Agreements.
----------
If Vendor offers Customer or Special Affiliates dial-up access
services for provision outside of the United States (excluding
Japan) at market competitive prices and terms:
(i) Customer will use commercially reasonable efforts to
encourage such Special Affiliates to purchase in the
aggregate for all such Special Affiliates [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment] Dial-Up Access Ports from Vendor or Vendor's
Affiliates at such market competitive prices and terms; and
(ii) If as of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] such Special
Affiliates have not ordered, committed to order or purchase,
or actually purchased, in the aggregate for all such Special
Affiliates, [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] Dial-Up Access Ports
from Vendor or Vendor's Affiliates at market competitive
prices and terms with durations of at least [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment], then Customer shall purchase a
number of Dedicated Dial-Up Access Ports under this
Agreement equal to the difference between [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment] Dedicated Dial-Up Access Ports and the actual
number of dial-up access ports that such Special Affiliates
in the aggregate ordered, committed to order or purchase, or
actually ordered from Vendor or Vendor's Affiliates as of
such date (as determined utilizing the Normalization
Methodology if applicable). Notwithstanding the foregoing,
if (1) a Special Affiliate is offered services by a third
party similar to the Dial-Up Access Services ordered or
purchased pursuant to this Agreement at prices and terms
more competitive than those offered by Vendor or Vendor's
Affiliates to such Special Affiliate in a country in which
Vendor either has operations or has indicated an intent in
which to operate, (2) such Special Affiliate, in its sole
discretion, requests Vendor to provide Dial-Up Access
Services at prices and terms at least as favorable to
Special Affiliate as such prices and terms offered by such
third party, and (c) Vendor or Vendor's Affiliates declines
to provide such services at such prices and terms, then
Customer's obligation under this Subsection (c) shall be
reduced by the aggregate amount of Dial-Up Access Ports
purchased by such Special Affiliate from such third party .
3. RELOCATION OF DIAL-UP ACCESS SERVICES
Customer shall have the right to direct at any time a change in the
location in which Dial-Up Access Services are provided within Existing
Calling Areas (including a reallocation of Dedicated Dial-Up Access Ports
among locations). In the event that Customer provides Vendor with notice
of such direction, Vendor shall comply with such direction within a
reasonable time; provided, however, that (a) any additional reasonable
costs incurred by Vendor, including any
Schedule B - Page 7
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
reasonable service termination or service activation costs, will be
reimbursed by Customer on an Out-of-Pocket Expenses basis, (b) with respect
to Dial-Up Access Services, Customer shall not direct relocation of more
than [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] Dedicated Dial-Up Access Ports in any given
calendar month; and (c) such relocation shall result in the same
approximate weighted distribution of Dedicated Dial-Up Access Ports across
Existing Calling Areas.
4. RESALE OF DIAL-UP ACCESS SERVICES
(a) Unless otherwise agreed by Customer in writing:
(i) Each Dedicated Dial-Up Access Port shall be exclusively
available to Customer and its Special Affiliates to whom
Vendor is providing Dedicated Dial-Up Services; and
(ii) Vendor shall not resell or offer to resell any Dedicated
Dial-Up Access Port ordered and accepted by Customer;
provided however, that Vendor may continue to provide access, at
current levels or levels that are lesser than current levels and
consistent with Vendor's obligations under section 10 of the
Original Agreement, as amended, with respect to (A) until (but no
later than) January 31, 2000, Dedicated Dial-Up Access Ports
(excluding the approximately [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] rotaries)
to those Vendor customers that are using such Dedicated Dial-Up
Access Ports as of the Effective Date, and (B) until (but no
later than) February 29, 2000, the approximately [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] rotaries to those Vendor customers that
are using the same as of the Effective Date (such access "Resold
Dial-Up Access"), subject to Vendor's payment to Customer of
access royalties calculated pursuant to this Article 4. At no
time during the Peak Resale Window (as defined below) may access
that Vendor is permitted to provide to customers pursuant to this
Subsection (a) exceed [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] ([*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] %) of the Dedicated Dial-Up Access Port
capacity that Vendor is required to provide pursuant to this
Schedule B.
(b) Access royalties payable by Vendor pursuant to Subsection (a) of
this Article 4 for Resold Dial-Up Access authorized pursuant to
such Subsection (a) and occurring before January 1, 2000 shall be
calculated as follows:
(i) For each of the first [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
aggregate hours of Resold Dial-Up Access in a calendar
month, the applicable access royalty shall be [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(ii) For each of the first [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] hours
of Resold Dial-Up
Schedule B - Page 8
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Access in a calendar month in excess of the [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] hours described in Subsection (i)
of this Subsection (b), the applicable access royalty
shall be [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] cents
($.[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]) per hour per
month.
(iii) For each hour of Resold Dial-Up Access in a calendar
month in excess of the [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
aggregate hours described in Subsections (i) and (ii) of
this Subsection (b), the applicable access royalty shall
be [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] cents
($.[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]) per hour per
month.
The number of hours of Resold Dial-Up Access during the hours
between 8:00 p.m. local time and midnight local time daily (such
daily period the "Peak Resale Window") for Resold Dial-Up Access
occurring before January 1, 2000 shall not exceed [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] ([*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]%) of the
aggregate number of hours of Resold Dial-Up Access, measured
quarterly, except that the number of hours of Resold Dial-Up
Access occurring before January 1, 2000 during the Peak Resale
Window shall not exceed [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] percent
([*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]%) for Dedicated Dial-Up Access Ports
beyond [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. In the event that Vendor
does not comply with such restriction, Vendor will pay Customer,
in addition to the access royalties described above, an
additional access royalty of [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] cents
($.[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment]) [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] per hour
for each hour of Resold Dial-Up Access sold in violation of such
restriction.
(c) Access royalties payable by Vendor pursuant to Subsection (a) of
this Article 4 for Resold Dial-Up Access authorized pursuant to
such Subsection (a) and occurring on or after January 1, 2000 but
before or during February 29, 2000, for each hour of Resold Dial-
Up Access shall be [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] cents ($.[*Material
Omitted and Separately Filed
Schedule B - Page 9
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Under an Application for Confidential Treatment]) per hour per
month. The number of hours of Resold Dial-Up Access during the
Peak Resale Window for Resold Dial-Up Access occurring on or
after January 1, 2000 but before February 29, 2000 shall not
exceed [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] percent ([*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]%) of the aggregate number of hours of
Resold Dial-Up Access during such period, measured quarterly. In
the event that Vendor does not comply with such restriction,
Vendor will pay Customer, in addition to the access royalties
described in this Subsection (c), an additional access royalty
of [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] cents ($[*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] per hour for each hour
of Resold Dial-Up Access sold in violation of such restriction.
(d) For any Resold Dial-Up Access occurring in violation of
Subsection (a) of this Article 4 with respect to the Vendor
customers referenced in the proviso of such Subsection (a),
Vendor shall pay Customer, as its sole and exclusive remedy, an
amount equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] dollars ($[*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]) [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] per hour for
each hour of Resold Dial-Up Access in violation of Subsection
(a) of this Article 4, and any such violation shall not be
deemed to be a breach triggering a termination right under
Section 13.1(a) of the Master Agreement. For any other resale of
Dedicated Dial-Up Access Ports in violation of Subsection (a) of
this Article 4, Vendor shall pay to Customer the [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] per hour charge described in this
Subsection, and such violation shall also be deemed a material
breach entitling Customer to terminate the Agreement in
accordance with Section 13.1(a) of the Master Agreement. Vendor
shall promptly report to Customer any Resold Dial-Up Access
occurring in violation of Subsection (a) of this Article 4.
(e) Promptly following the end of each of first three calendar
months after the Effective Date (i.e., December, 1999, and
January, February 2000), Vendor will provide Customer with a
report summarizing the aggregate number of hours of Resold Dial-
Up Access or other Services for such month and the corresponding
access royalties, if any, payable by Vendor pursuant to this
Article 4.
5. TRANSITION PERIOD AND LIMITATION OF LIABILITY
5.1. Transition Period.
-----------------
The Transition Period applicable to Dial-Up Access Services shall be
equal to three months for each [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] Dial-Up Access
Ports existing as of the effective date of expiration, termination or
cancellation (but in no event shorter than 12 months).
5.2. Liability Restrictions.
(a) Subject to Subsection (e) of this Section, the liability of
Vendor to Customer for all damages arising out of or related to
the Services provided under this Schedule will be limited to,
and will not exceed, in the aggregate during any calendar year,
Schedule B - Page 10
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] percent ([*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]%) of the aggregate amounts paid to Vendor by Customer
(excluding Out-of-Pocket Expenses) under this Schedule and the
Original Agreement during the twelve (12) month period preceding
the date of the event giving rise to such damages. Subject to
Subsections (c) and (e) of this Section, the liability of Vendor
to Customer for damages arising out of or related to Services
provided under this Schedule caused by the acts or omissions of
third parties beyond the reasonable control of Vendor will be
further limited and will not exceed, in the aggregate during any
calendar year, [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] Dollars ($[*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]).
(b) By way of example and without limitation, in the event that four
events occur in calendar year 2000, as described below, for
which Vendor would have liability to Customer under Subsection
(a) of this Section, then Vendor's liability to Customer for
each such event would be as follows:
(i) An event in March 2000 that is not caused by the acts or
omissions of third parties causing Customer damages of $17
million, with the preceding twelve month amounts paid of
$350 million, the liability of Vendor to Customer for such
event would be $[*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]; and
(ii) An event in June 2000 that is caused by the acts or
omissions of third parties beyond the reasonable control
of Vendor causing Customer damages of $12 million, with
the preceding twelve months amounts paid of $375 million,
the liability of Vendor to Customer for such event would
be $[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] subject to
Vendor's obligations set forth in Subsection (c) of this
Section; and
(iii) An event in October 2000 that is not caused by the acts or
omissions of third parties causing Customer damages of $15
million, with preceding twelve month amounts paid of $400
million, the liability of Vendor to Customer for such
event would be $[*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]; and
(iv) An event in December 2000 that is caused by the acts or
omissions of third parties beyond the reasonable control
of Vendor causing Customer damages of $3 million, with the
preceding twelve months amounts paid of $425 million, the
liability of Vendor to Customer for such event would be $
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] subject to
Vendor's obligations set forth in Subsection (c) of this
Section.
(c) In the event of any liability of Vendor to Customer for damages
arising out of or related to Services provided under this
Schedule caused by the acts or omissions
Schedule B - Page 11
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
of third parties beyond the reasonable control of Vendor, then
the Parties agree as follows:
(i) Vendor agrees to vigorously pursue the recovery of damages
against the third party causing the damage, including
through negotiations, dispute resolution, or both, to
maximize the damages recoverable against such third party;
(ii) Vendor agrees to pass through to Customer any amounts that
Vendor actually recovers from such third party relating to
damages incurred in connection with Services provided to
Customer under this Schedule; and
(iii) Customer agrees that in the event that Vendor has paid any
amounts to Customer pursuant to Subsection (a) of this
Section prior to the recovery of damages from a third
party, that Vendor may reduce the amount of recovery
received from such third party by the amount previously
paid to Customer in respect of such event causing the
damages.
(iv) Amounts recovered by Vendor from third parties shall first
be passed on to Customer until Customer's full damages are
satisfied.
(d) IN NO EVENT, WHETHER IN CONTRACT OR IN TORT (INCLUDING BREACH OF
WARRANTY, NEGLIGENCE AND STRICT LIABILITY IN TORT), SHALL A
PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT OR
CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR SPECIAL DAMAGES EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES
IN ADVANCE.
(e) The limitations set forth in Subsection (a) of this Section
shall not apply with respect to (i) intentional breach by
Vendor; (ii) damages occasioned by an intentional tort or the
gross negligence of Vendor; (iii) damages occasioned by Vendor's
breach of its obligations described in Article 11
(Confidentiality) of the Master Agreement, or (iv) claims
subject to indemnification pursuant to this Agreement (such
amounts paid by the indemnitee to third parties shall be deemed
to be direct damages) other than claims subject to the indemnity
set forth in Section 15(a) of the Master Agreement.
(f) Each Party shall have a duty to reasonably mitigate (i.e.,
minimize) damages for which the other Party is responsible.
6. DESCRIPTION OF DIAL-UP ACCESS SERVICES
Dial-Up Access Services shall include the provision of Dial-Up Access and
all associated fully managed, end-to-end network service functions
including the following:
6.1. General Requirements.
--------------------
(a) Vendor shall provide, for each individual Existing Calling Area,
a unique set of source IP addresses such that member
demographics can be identified through
Schedule B - Page 12
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
such source IP addresses. Customer shall be provided the source
IP addresses prior to use by Vendor to provide the Services.
(b) Vendor shall acquire and manage IP addresses for all protocols
utilized by Customer during the Term.
(c) Vendor shall provide domain name services, including the
following:
(i) provision of domain name service for Customer;
(ii) resolution of domain name service queries to Customer
destinations;
(iii) support of domain name service for Customer service access
to the Customer domain and any zones resident on Customer
name servers; and
(iv) maintenance of domain name service servers.
(d) In the event that Customer requests a change to its access
method(s), hub architecture, or network bandwidth from that
which is described in this Schedule B (other than a request for
increased throughput priced pursuant to Section 8.1(c) of this
Schedule B), Vendor will provide Customer with Vendor's proposed
increase, if any, to the prices set forth in this Schedule B. To
the extent that Customer accepts such proposal, Vendor shall
provide the Dial-Up Access Services in accordance with the
requested change and Vendor's proposal to the extent accepted by
Customer.
(e) Vendor will utilize GNI for delivery of data traffic to
Customer's data centers; provided that, in order to provide last
mile diversity, at Customer's request, for [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment] of the GNI last mile capacity to Customer's
facilities, Customer and Vendor agree to exchange local
facilities, at no cost to either Party for equivalent bandwidth
exchanged. The Parties agree to establish a mutually acceptable
bandwidth exchanging and circuit management process, including
co-location space, facility access, and helping hands where both
Parties have local facilities in each geography.
6.2. Network Engineering.
-------------------
Vendor agrees to provide network engineering to address operational
and long-term planning issues.
6.3. Operations.
----------
Vendor will provision, staff, and operate a NOC (currently in
Columbia, Maryland) with dedicated support for Customer and a backup
NOC at a separate location (such backup NOCs currently located in
Chantilly, Virginia). The scope of this task will include the
following Vendor support services for the network:
(a) Operation of the NOC and co-located systems with trained and
qualified personnel on a continuous, 24 hours per day, 7 days per
week basis;
Schedule B - Page 13
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(b) Operation of all NOC equipment, monitoring, and fault isolation
functions;
(c) Coordination of the dispatch of maintenance representatives for
corrective maintenance activities and recording information in a
Problem Report ("PR"). Vendor's responsibilities shall include:
(i) Initiation of a [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] by the
Vendor maintenance representative;
(ii) Upon arrival of the maintenance representative at the site,
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) Upon notification to the NOC by the on-site maintenance
representative of [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment
(iv) Upon restoration of service by the maintenance
representative, the NOC shall confirm, with assistance from
the maintenance representative, [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment];
(d) Initiation of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] resolution using a
commercially available [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] reporting
software system;
(e) Utilization of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] resident in the NOC for:
(i) Daily testing of [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment];
(ii) Measurements of the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] at the
times requested by Customer;
(iii) Monitoring and recording [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment];and
(iv) Accounting for the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment];
(f) Providing on-site analyst support, at the NOC utilized to provide
Dial-Up Access Services, [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]. A dedicated
access number shall be maintained for Customer's exclusive use,
which shall always be [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]. Analyst support
shall include the following:
Schedule B - Page 14
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(i) Supporting short-term and long-term problem identification,
analysis, and resolution;
(ii) Ensuring that proper steps are taken to resolve the
problem;
(iii) Identifying and tracking all software, baseline and
patches, deployed in the Vendor Network and NOC platforms;
(iv) Supporting the deployment of new software to the Vendor
Network, Customer's networks and NOC equipment as
coordinated with Customer;
(v) Providing support to network provisioning requirements; and
(vi) Maintaining a technical library for the NOC.
(g) Performing on-call analyst support of the Vendor Network on a
continuous 24 hour per day, 7 days per week basis. On-call
analyst personnel respond to urgent requests from the NOC in
conjunction with the on-site Vendor personnel. Procedures for the
conduct of network testing are in accordance with those developed
in conjunction with Customer representatives;
(h) Providing operational support to Customer in the area of network
testing in association with provisioning actions. Such testing
shall be conducted from the NOC in conjunction with the on-site
Vendor installation team personnel;
(i) Maintaining and providing updates and changes to NOC maps;
(j) Maintaining an authorized outage listing for NOC controller use;
(k) Acting as Customer's agent in network security matters on a day-
to-day basis as directed by Customer in accordance with
commercially reasonable practices, and making recommendations for
improvements;
(l) Using commercial teleconferencing facilities in the resolution of
network problems, escalation of problems, and planning
activities;
(m) Providing electronic mail service support for the NOC [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment];
(n) Providing a facsimile service resident in the NOC equipment;
(o) Subject to Section 8.5(a) of this Schedule B, delivering the
following reports to Customer-designated representatives:
(i) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
Schedule B - Page 15
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment;
(v) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(vi) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
Customer may request additional reports that assist in improving
the quality of the Vendor Network and Customer's networks.
Vendor will provide these additional reports, or the raw data,
subject to technical reasonableness.
6.4. Network Support Organization.
----------------------------
Vendor shall structure the provision of Services in a manner that will
enable Vendor to rapidly build out its networks and deliver quality
Services.
(a) Program Management: Vendor's program management group shall
------------------
responsible for the management of the Services as a whole. The
program management team shall be led by a program executive who
has direct and immediate access to the senior management of
Vendor and a program manager who reports to such program
executive. The program management team shall be (i) the primary
point of contact between Vendor and Customer and shall coordinate
the activity of all functional groups within Vendor and (ii)
responsible for project and financial management of the Services.
(b) Engineering: Vendor shall maintain an network engineering
-----------
group that shall handle the technical aspects of the Services,
resolution of problems escalated by the NOC, planning for future
network expansion, and improvement of performance and process.
Such engineering group shall interact directly with Customer and
the NOC.
(c) Deployment: Vendor shall maintain a deployment team
----------
consisting of field engineers and technicians, as well as others
who have experience dealing directly with telcos, preparing
sites, and installing equipment. Part of this team will be based
at Vendor's facilities to coordinate activities and provide
support for installers.
(d) Operations: Vendor's NOC shall handle the operation and
----------
maintenance of the Vendor Network. The NOC will be connected to
Customer's central facilities, including a direct telephone link
to the Customer operations center. The NOC's monitoring
capability shall be set up to detect and correct most network
problems before they are visible to Customer or its customers.
6.5. Other Services.
--------------
Schedule B - Page 16
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(a) The NOC shall direct maintenance activities based on input from
the monitoring systems and Customer. Vendor shall handle a large
majority of repair tasks over the telephone with technicians at
the Dial-Up Access Port equipment locations by storing Dial-Up
Access subsystems at these locations, establishing working
agreements with the service providers at these locations, and by
providing written procedures. When it is necessary to send
technicians to deal with problems, Vendor shall use its existing
infrastructure of satellite offices and field engineers.
(b) Vendor agrees not to restrict Customer's dial-up traffic to and
from Customer unless requested to do so by Customer or required
to do so by court order or applicable law.
(c) The Parties shall use commercially reasonable efforts to
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(d) Vendor shall announce [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(e) Vendor shall reasonably coordinate with Customer regarding
any maintenance activity.
6.6. Telephone Numbers Used to Provide Dial-Up Access Services.
---------------------------------------------------------
(a) Upon (i) the request of Customer from time to time, (ii)
expiration of the Agreement or Schedule B of the Agreement, or
(iii) any termination of the Agreement or Schedule B of the
Agreement, Vendor shall provide Customer with a complete listing
of telephone numbers used to provide Dial-Up Access Services.
Ownership of such telephone number shall be governed by the
Master Agreement. Vendor shall not provide such telephone numbers
for use by Vendor (except to the extent necessary for Vendor to
provide the Dial-Up Access Services) or any third party (other
than third parties designated by Customer from time to time)
without prior written permission from Customer.
(b) For each telephone number to a Dial-Up Access Port equipment
location, and upon the decommissioning of corresponding Dial-Up
Access Services and upon the expiration or termination of this
Schedule B or the Agreement:
(i) If such telephone number is provided by Vendor or an
Affiliate of Vendor, Vendor shall, to the extent legally
permitted to do so, obtain the rights necessary for Customer
or a designee of Customer to utilize such telephone number
to provide services upon any expiration or termination of
this Schedule B; and
(ii) If such telephone number is provided by an entity other than
by Vendor or an Affiliate of Vendor, then Vendor shall use
commercially reasonable efforts to obtain the rights
necessary for Customer or a designee of Customer to utilize
such telephone number to provide services upon any
expiration or termination of this Schedule B.
Schedule B - Page 17
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(c) Vendor shall provide Customer with no less than thirty (30) days
advance written notice before it changes any telephone number to
a Dial-Up Access Port equipment location. Vendor shall not
utilize any new telephone number to provide Dial-Up Access
Services until Customer has accepted such telephone number in the
manner described in Section 2.7 of this Schedule B. In the event
of any such change, (i) Vendor shall provide Dial-Up Access
Services using both the original telephone number and the new
telephone number for a minimum of seven (7) calendar days after
acceptance by Customer of the new number, and (ii) the total
number of Dedicated Dial-Up Access Ports utilized for both
telephone numbers shall at all times be equal to or greater than
the total number of Dedicated Dial-Up Access Ports utilized for
the original telephone number.
7. SERVICE LEVELS FOR DIAL-UP ACCESS SERVICES
This Article 7 sets forth the Service Levels that Vendor is required to
meet or exceed pursuant to Article 7 of the Master Agreement, certain
remedies for Vendor's failure to achieve the Service Levels, as well as
terms and conditions with respect to Service Level reporting and
adjustment. For each of the Service Levels set forth in this Article 7,
scheduled maintenance by Vendor (or a third party) coordinated with
Customer pursuant to Section 6.5(a) of this Schedule B will be excluded
from the Service Level performance calculations.
7.1. Service Levels.
--------------
Dial-Up Access Services provided under the Agreement shall be
implemented with redundancy. In addition, any Dial-Up Access Port
equipment locations in which Vendor provides Services [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment]
(a) Vendor Network Availability.
---------------------------
(i) "Network Availability" shall mean the percentage of the
time that each access device used to provide Dial-Up Access
Services is reachable through the Vendor Network from the
Customer's front-end hosts and vice-versa.
(ii) The Service Level applicable to Network Availability shall
be as follows: Network Availability for each calendar month
shall exceed [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] percent
([*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] %). Vendor's
performance relative to such Service Level shall be
reported by Vendor on a monthly basis for each calendar
month.
(iii) In the event that Network Availability is below [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] percent ([*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] %) as measured in [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], such event shall constitute a material breach
of the Agreement.
Schedule B - Page 18
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(b) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] for any day of a
calendar month is calculated as (A) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], divided by (B) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(ii) The Service Level applicable to[*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] shall be as follows: [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] Percentage for each calendar month of the Term
shall not be greater than [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] for
such month. Customer will provide reporting to Vendor
summarizing Vendor's performance with respect to this
Service Level.
(iii) In the event that Vendor fails to meet the Service Level
corresponding to [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] for each
of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. In the event that
Vendor fails to meet the Service Level corresponding to
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] by at least
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] for each of
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], then Customer
may, at its option and in its sole discretion, [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].Vendor shall be relieved of its
obligation to meet the Service Level applicable to
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] to the extent that
such failure is caused by a significant change in the
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] over the same
period.
(c) Call Blocking.
-------------
(i) "Call Blocking Event" means the occurrence of a Blocked Call
during the time when any Dedicated Dial-Up Access Port
corresponding to a telephone number is not being utilized.
"Blocked Call" means an attempted call, by Customer
equipment to a telephone number used to provide the Dial-Up
Access Services, to a Dedicated Dial-Up Access Port that
results in the return of a busy signal or other failure to
connect. Vendor shall provide to Customer reporting each
calendar day of each calendar month showing the usage of all
Dedicated Dial-Up Access Ports corresponding to each
telephone number used to provide Dial-Up Access Services
[*Material Omitted and Separately Filed Under an
Schedule B - Page 19
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Application for Confidential Treatment]. Using such
reporting and other information, Customer will measure daily
the number of Call Blocking Events; provided, however, that
no Dedicated Dial-Up Access Port shall account for more than
one Call Blocking Event until Vendor reports such Dedicated
Dial-Up Access Port is available or such Dedicated Dial-Up
Access Port actually becomes available.
(ii) The Service Level applicable to Call Blocking Events shall
be as follows: For any Call Blocking Event, Vendor shall
remedy the circumstances causing such event within
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] hours after Customer's
notification of the same. Vendor's performance relative to
such Service Level shall be reported by Customer on a
monthly basis for each calendar month.
(iii) In the event that the Vendor does not satisfy the Service
Level set forth in Subsection (ii) of this Subsection (c)
(i.e., the causes of the Call Blocking Event are not
remedied pursuant to Subsection (ii) of this Subsection
(c)), then Customer, as its sole and exclusive remedy, shall
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] equal to (A) [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment], multiplied by (B) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(d) Training Failure Event Percentage.
---------------------------------
(i) "Training Failure Event" means, for any call by Customer
equipment to a Dedicated Dial-Up Access Port, the failure of
the modem devices utilized for such call to properly
complete modem handshake and negotiate a communications
session. "Training Failure Event Percentage" for any
telephone number means (A) the aggregate number of Training
Failure Events occurring during a calendar day for such
number, divided by (B) the aggregate number of calls by
Customer equipment to a Dedicated Dial-Up Access Port
corresponding to such telephone number during such day, with
the result expressed as a percentage. Vendor will measure
the occurrence of Training Failure Events, and will
calculate the Training Failure Event Percentage for each
day.
(ii) The Service Level applicable to Training Failure Event
Percentage shall be as follows: The Training Failure Event
Percentage for each calendar day of the Term shall be less
than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] for such day.
(e) Ineffective Call Percentage.
---------------------------
(i) "Ineffective Call Percentage" means, for any calendar month,
the amount calculated as (A) the aggregate number of calls
that are successfully placed to an access device used to
provide Dial-Up Access
Schedule B - Page 20
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Services but that are not able to connect to Customer's
front end host other than as a result of problems with
Customer's front-end host or Customer-managed equipment,
divided by (B) the aggregate number of calls that are
successfully placed to an access device used to provide
Dial-Up Access Services.
(ii) The Service Level applicable to Ineffective Call Percentage
shall be as follows: Ineffective Call Percentage for each
calendar month shall not exceed [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] percent ([*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]%).
Vendor's performance relative to such Service Level shall be
reported by Vendor on a daily basis.
(f) Customer Reported Problems.
--------------------------
(i) "Customer Reported Problem" means any problem, reported by a
user of Customer's services, that is related to the Dial-Up
Access Services. "Customer Reported Problem Average" for
any calendar month means the average number of Customer
Reported Problems per one million user sessions during such
month.
(ii) The Service Level applicable to Customer Reported Problem
Average shall be as follows: The Customer Reported Problem
Average for each calendar month of the Term shall be less
than the [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] for such month.
Vendor's performance relative to such Service Level shall be
reported by Customer on a monthly basis for each calendar
month.
(g) Monthly Abnormal Disconnect Percentage.
--------------------------------------
(i) "Daily Abnormal Disconnect Percentage" means, for each
calendar day of the Term, the amount calculated as (A) the
aggregate number of disconnected Dedicated Dial-Up Port
sessions during such day that are not initiated by a user
logoff sequence and that are caused by a problem with
respect to the Dial-Up Access Port or Vendor Network between
the access device used to provide Dial-Up Access Services
and the Vendor-managed Customer hub routers at Customer's
facilities, divided by (B) the aggregate number of all
Dedicated Dial-Up Port sessions commencing during such
calendar day, with the result expressed as a percentage.
"Monthly Abnormal Disconnect Percentage" means, for each
calendar month of the Term, the amount calculated as (x) the
percentage-point aggregate of the Daily Abnormal Disconnect
Percentages for such calendar month, divided by (y) the
aggregate number of calendar days in such calendar month.
(ii) The Service Level applicable to Monthly Abnormal Disconnect
Percentage shall be as follows: Monthly Abnormal Disconnect
Percentage during a calendar month shall be less than
[*Material Omitted and Separately Filed Under an Application
for Confidential
Schedule B - Page 21
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Treatment] percentage points above the corresponding
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] for such month. Vendor's
performance relative to such Service Level shall be reported
by Customer on a monthly basis for each calendar month.
(iii) In the event that Vendor fails to meet the Service Level
corresponding to Monthly Abnormal Disconnect Percentage for
each of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. In the event that
Vendor fails to meet the Service Level corresponding to
Monthly Abnormal Disconnect Percentage by [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment] above [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] for each
of[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. Vendor shall be
relieved of its obligation to meet the Service Level
applicable to Monthly Abnormal Disconnect Percentage to the
extent that such failure is caused by [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] Average over the same period.
(h) Packet Loss Percentage.
----------------------
(i) "Packet Loss Percentage" means, for a calendar month, the
quantity calculated as (A) the aggregate number of data
packets dropped from the Vendor Network between the Ethernet
interface on an access device and the Vendor-managed
Customer hub routers during such month, divided by (B) the
aggregate number of all data packets introduced into the
Vendor Network between the Ethernet interface on an access
device and the Vendor-managed Customer hub routers during
such calendar month, the result expressed as a percentage.
(ii) The Service Level applicable to Packet Loss Percentage shall
be as follows: Packet Loss Percentage for each calendar
month of the Term shall be less than [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] percent ([*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]%) for such
month. Vendor's performance relative to such
Schedule B - Page 22
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Service Level shall be reported by Customer on a monthly
basis for each calendar month.
(j) Time to Respond and Time to Restore Service Levels.
--------------------------------------------------
(i) "Time to Respond" means the elapsed time between (i) the
time that Customer reports a problem to Vendor with respect
to the Services (or the time that Vendor otherwise becomes
aware of such a problem), until (ii) the moment that Vendor
notifies appropriate Customer personnel of such problem and
of those efforts being undertaken by Vendor to resolve such
problem. "Mean Time to Respond" for a calendar month shall
mean the average of all times corresponding to Time To
Respond during such calendar month. "Time to Restore" means
the elapsed time between (i) the time that Customer reports
a problem to Vendor with respect to the Services (or the
time that Vendor otherwise becomes aware of such a problem),
until (ii) the moment that the affected Services are
restored to normal operations in accordance with applicable
Service Levels, Acceptance Criteria and Specifications.
"Mean Time to Restore" for a calendar month shall mean the
average of all times corresponding to Time To Repair during
such calendar month. "Mean Maximum Time to Restore" for a
calendar month shall mean the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. Vendor will not close any problem ticket
associated with a particular problem until the appropriate
Customer representative and a Vendor representative agree
that such problem ticket may be closed.
(ii) The Service Levels applicable to Mean Time to Respond and
Mean Time to Restore shall be as follows:
(1) Mean Time to Respond for each calendar month shall be
less than [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] minutes;
(2) Mean Time to Restore for each calendar month shall be
less than or equal to [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
minutes;
(3) Mean Maximum Time to Restore for each calendar month
shall be less than [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
hours.
Vendor's performance relative to the foregoing Service
Levels shall be reported by Vendor on a monthly basis for
each calendar month.
7.2. Failure to Perform.
------------------
If Vendor fails to meet any Service Level, Vendor shall (a) promptly
notify Customer of such failure (unless Customer first discovered and
notified Vendor of such failure), (b) investigate and report on the
causes of the failure; (c) advise Customer, as and to the extent
requested by Customer, of the status of remedial efforts being
undertaken with
Schedule B - Page 23
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
respect to such failure; (d) take commercially reasonable efforts to
correct the failure, and begin meeting the Service Levels; and (e)
take appropriate preventive measures to minimize the likelihood of the
failure recurring. Notwithstanding the foregoing, Vendor's failure to
use commercially reasonable efforts to meet or correct Service Level
failures with respect to the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] in and of itself
shall not constitute a breach of the Agreement. With respect to those
Service Levels for which Vendor's performance is measured against
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment], Vendor shall not be deemed in breach of such
Service Levels to the extent that Customer uses [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment].
7.3. Reporting.
---------
Vendor shall provide Customer with the following reports, in a
detailed format reasonably satisfactory to Customer:
(a) Usage Reports, including:
(i) Daily reports on [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]
(ii) Daily reports on percentage of ineffective calls; and
(b) Daily reports on [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
In addition, upon Customer's request, Vendor shall provide Customer
with [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. In addition, for all other components of the
Vendor Network that are utilized to provide Dial-Up Access Services
under this Schedule B, Vendor shall provide to Customer a daily report
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. In the event of a Network outage, Vendor
will work cooperatively with Customer to share additional [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment] which may be pertinent to the analysis and resolution of
any such outage.
7.4. Meetings.
--------
Vendor and Customer shall hold weekly meetings at Customer's site or
via telephone conference call (unless otherwise requested by Customer)
to assess Vendor's performance under this Schedule B. During
emergency situations, meetings will be held at least on a daily basis.
7.5. Periodic Review of Service Levels.
---------------------------------
As requested by Customer or Vendor, Customer and Vendor shall review
the Service Levels described in this Schedule B and shall make
mutually agreed-upon adjustments to them as appropriate to reflect
performance capabilities associated with advances in the technology
and methods used to provide the Dial-Up Access Services.
Schedule B - Page 24
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
8. PRICING
This Article 8 describes the methodologies for calculating the charges
under this Schedule B and relating pricing terms and conditions. The
charges calculated pursuant to this Schedule B, and any other charges
expressly set forth in the Master Agreement, shall fully compensate Vendor
for the provision of the Dial-Up Access Services.
8.1. Pricing for Dial-Up Access Services.
-----------------------------------
(a) Monthly EDAP Charge.
-------------------
(i) The monthly recurring charge (such charge, as may be
adjusted pursuant to the Agreement, the "Monthly EDAP
Charge") for one (1) Dedicated Dial-Up Access Port
corresponding to the first [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
Dedicated Dial-Up Access Ports of the Dial-Up Purchase
Commitment only (such port an "Existing Dedicated Dial-Up
Access Port") shall be set at the Existing DAP Market Price,
as set forth in Exhibit B-2, and shall be automatically
reduced according to the schedule set forth in Exhibit B-2.
In addition, the Monthly EDAP Charge may be further reduced
as provided in this Article 8 of this Schedule B. The
Parties acknowledge that the Monthly EDAP Charge described
in the first sentence of Article 2 of Exhibit B-2 shall
apply retroactively to October 1, 1999, and Vendor shall
provide Customer with a refund of any amounts paid for the
corresponding Dial-Up Access Services in excess of such
price under the Original Agreement.
(ii) Following a review of the applicable leases (but in no event
later than 45 days after the Effective Date), Vendor shall
inform Customer as to the extent to which it desires to (1)
assume the operating leases for certain modems, racks and
cables for the Existing Dedicated Dial-Up Access Ports
leased by Customer (collectively the "Leased Items"), and
(2) purchase certain modems, racks and cables for the
Existing Dedicated Dial-Up Access Ports owned by Customer
(collectively, the "Owned Items"). To the extent that the
Parties agree, the Parties shall enter into an amendment
under which (A) Vendor shall assume the operating leases for
the Leased Items, subject to the terms of such leases and to
the rights of third parties in such Leased Items, and (B)
Customer shall pass to Vendor title for the Owned Items
pursuant to economic terms to be mutually agreed upon,
subject to Customer's rights in such equipment. Such
amendment shall reflect that, with respect to Vendor's
assumption of the leases of the Leased Items, Customer will,
on a pass-through expense basis (i.e., without markup), pay
leasing costs as and when required under the terms of the
leases for the Leased Items. Such amendment shall also
reflect that any cost savings achieved by Vendor with
respect to leasing and capital costs for the Leased Items
will be shared equally between Customer and Vendor. If
Vendor decides not to assume the leases for the Leased
Items, the rights and obligations of the Parties with
respect to the Leased Items shall be as described in the
Original Agreement. If Vendor decides not to purchase the
Owned
Schedule B - Page 25
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Items, Customer shall continue to bear the actual
capital costs of the Owned Items in accordance with the
terms of the Original Agreement.
(b) Monthly DAP Charge.
------------------
The monthly recurring charge (such charge, as may be reduced
pursuant to the Agreement, the "Monthly DAP Charge") for one (1)
Dedicated Dial-Up Access Port other than an Existing Dedicated
Dial-Up Access Port shall be set at the DAP Initial Market Price,
as set forth in Exhibit B-2, and shall be automatically reduced
according to the schedule set forth in Exhibit B-2. In addition,
the Monthly DAP Charge may be further reduced as provided in this
Article 8 of Schedule B. The Monthly DAP Charge shall fully
compensate Vendor for the provision of the corresponding Dial-Up
Access Services (including all capital costs of providing the
corresponding Dial-Up Access Services (excluding hub routers
resident at Customer's data centers)).
(c) Additional Bandwidth.
--------------------
For each additional [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] bps of average
bandwidth available at peak per user outbound (and [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] bps inbound) per Dedicated Dial-Up Access
Port that Customer requests Vendor to provide hereunder, Vendor
shall provide such additional bandwidth at a charge to Customer
that is no greater than [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] ($[*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]) per Dedicated Dial-Up Access Port per
month for each additional [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] bps of such
bandwidth.
8.2. Decommissioning of Dedicated Dial-Up Access Ports.
-------------------------------------------------
(a) Beginning [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], Customer may
decommission Dedicated Dial-Up Access Ports that either
contribute to the satisfaction of the Dial-Up Purchase Commitment
or to Customer's satisfaction of its obligation described in
Section 2.8(c)(ii) of this Schedule B, without liability, subject
to the following:
(i) Customer will provide one hundred twenty (120) days prior
written notice of the calling areas in which Dedicated
Dial-Up Access Ports are to be decommissioned, as well as
the associated quantities of Dedicated Dial-Up Access Ports
to be decommissioned in each such area;
(ii) the Vendor Decom Share for a calendar quarter shall not (in
the cumulative and not more than a de minimis amount)
exceed the Other Vendors' Decom Share for such quarter;
(iii) the decommissioning of Dedicated Dial-Up Access Ports
pursuant to this Subsection (a) shall not materially change
Customer's proportional
Schedule B - Page 26
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
distribution of Dedicated Dial-Up Access Ports across
Existing Calling Areas; and
(iv) if the decommissioning of Dedicated Dial-Up Access Ports
pursuant to this Subsection (a) causes the aggregate number
of Dial-Up Access Ports to fall below [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] of the number of Dedicated Dial-Up Access Ports
comprising the Dial-Up Purchase Commitment, then Vendor may,
upon six months' prior notice to Customer, [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment], Vendor shall provide Transition
Assistance pursuant to Section 13.4 of the Master Agreement.
(b) Customer may decommission any Dedicated Dial-Up Access Ports
other than those to which Subsection (a) of this Section applies
(including (A) any Dedicated Dial-Up Access Ports ordered at any
time for delivery after [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], and (B) any
Dedicated Dial-Up Access Ports ordered in excess of those
necessary to satisfy the Dial-Up Purchase Commitment), without
liability and as of a decommissioning date specified by Customer
upon one hundred twenty (120) days' prior written notice to
Vendor; provided, however, that Customer may decommission
Dedicated Dial-Up Access Ports pursuant this Subsection only to
the extent that the first day of the month in which Final
Acceptance occurred for such ports is at least twelve (12) months
prior to the decommissioning date requested by Customer pursuant
to this Subsection (b).
(c) Customer shall not be responsible for any charges for a Dedicated
Dial-Up Access Port to the extent such charges correspond to the
time after the requested decommissioning date of which Customer
provides Vendor with notification pursuant to this Schedule B.
8.3. Adjustments to Pricing for Dial-Up Access Services.
--------------------------------------------------
(a) New Dial-Up Market Price.
------------------------
(i) Definitions.
(1) "New Dial-Up Market Price" for any Dial-Up Access shall
mean the price [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] to
Customer by any Dial-Up Market Vendor for Comparable
Dial-Up Services. To calculate the New Dial-Up Market
Price pursuant to this Subsection, the price for
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] shall be
reasonably adjusted to reflect the difference between
the [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] that (A) do not
include [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment], (B) do not
include [*Material Omitted and Separately Filed Under
Schedule B - Page 27
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
an Application for Confidential Treatment], or (C) do
not include[*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(2) "Dial-Up Market Vendor" shall mean a vendor (not
including a Special Affiliate) that at any time
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. For the
purpose of this Subsection, Special Affiliate shall
only be deemed to include Subsections (i) and (ii) of
the definition of "Special Affiliate" in Schedule A.
(ii) Notification Process.
Customer may provide Vendor with notice at any time of a New
Dial-Up Market Price (each such notice, a "New Dial-Up
Market Price Notice" and the date of such notice as
determined pursuant to Section 16.4 of the Master Agreement,
the "New Dial-Up Market Price Notice Date"). Each New Dial-
Up Market Price Notice will contain (A) the New Dial-Up
Market Price calculation and [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], and (B) [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]. No later
than thirty (30) calendar days after the New Dial-Up Market
Price Notice Date corresponding to a New Dial-Up Market
Price Notice, Vendor will respond to Customer by notifying
Customer in writing whether it will:
(1) accept the validity of the proposed New Dial-Up Market
Price and reduce prices to the applicable New Dial-Up
Market Price in accordance with Subsection (iii) of
this Subsection (a),
(2) Price and decline to reduce prices to the New Dial-Up
Market Price in accordance with the corresponding New
Dial-Up Market Price Notice, or
(3) dispute the validity of the proposed New Dial-Up Market
Price.
(each a "New Dial-Up Market Price Response"). Vendor shall
not unreasonably dispute the validity of a proposed New
Dial-Up Market Price.
(iii) Reduction Process.
In the event Vendor accepts a proposed New Dial-Up Market
Price pursuant to clause (1) of Subsection (ii) of this
Subsection (a), then:
(1) Effective as of the Incremental New Ports MP Change
Date, the Monthly DAP Charge for [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] Date will be reduced to the New Dial-Up
Market Price set forth in the corresponding New Dial-Up
Market Price Notice, and
Schedule B - Page 28
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
with respect to such New Ports, Vendor will, if
requested by Customer, [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] corresponding to such New Dial-Up Market
Price.
(2) Effective as of the All New Ports MP Change Date, the
Monthly DAP Charge [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
will be reduced to the New Dial-Up Market Price set
forth in the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment, and
with respect to such New Ports, Vendor will, if
requested by Customer, [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] corresponding to such New Dial-Up Market
Price.
(3) Effective as of the Base Port MP Change Date, the
Monthly EDAP Charge [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
will be reduced to the New Dial-Up Market Price set
forth in the corresponding New Dial-Up Market Price
Notice, and with respect to such New Ports and Existing
Dial-Up Access Ports, Vendor will, if requested by
Customer, [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]
corresponding to such New Dial-Up Market Price.
Notwithstanding the foregoing:
(4) If Vendor accepts the validity of a proposed New Dial-
Up Market Price and reduces prices to the applicable
New Dial-Up Access Market Price in a given calendar
year, then Vendor shall not be obligated to provide
Customer with any additional New Dial-Up Market Price
Response with respect to any New Dial-Up Market Price
Notice for which the corresponding New Dial-Up Market
Price Effective Date occurs in such calendar year.
(5) Vendor shall not be obligated to reduce the Monthly DAP
Charge or the Monthly EDAP Charge, as the case may be,
at a rate that is [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
For example, if the [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment],
then Vendor will only be obligated to reduce the
Monthly DAP Charge or Monthly EDAP Charge, as the case
may be, for [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]. If
during the following month [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], then Vendor will be obligated to reduce the
Monthly DAP Charge or Monthly EDAP Charge, as the case
may be, [*Material Omitted and
Schedule B - Page 29
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Separately Filed Under an Application for Confidential
Treatment].
(6) Vendor shall not be obligated to [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] corresponding to a New Dial-Up Market Price
at a rate that is [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
for Comparable Dial-Up Services relative to the
applicable Dial-Up Market Vendor Trigger, as measured
monthly.
(7) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(iv) Decommissioning Process.
If Vendor declines to reduce the Monthly DAP Charge or the
Monthly EDAP Charge to the New Dial-Up Market Price pursuant
to clause (2) of Subsection (ii) of this Subsection (a),
then Customer may, in its sole discretion, do either or both
of the following: (A) terminate the Dial-Up Purchase
Commitment, and (B) decommission Dedicated Dial-Up Access
Ports, subject to the following restrictions:
(1) Customer will provide [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
days prior written notice of the calling areas in which
Dedicated Dial-Up Access Ports are to be
decommissioned, as well as the associated quantities of
Dedicated Dial-Up Access Ports to be decommissioned in
each such area;
(2) Customer may only decommission a number of Dedicated
Dial-Up Access Ports no greater than the number of
Dedicated Dial-Up Access Ports that [*Material Omitted
and Separately Filed Under an Application for
Confidential Treatment].
(3) The effective date of decommission applicable to a
Existing Dial-Up Access Port shall not be earlier than
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(4) The decommissioning of Dedicated Dial-Up Access Ports
pursuant to this Subsection (iv) shall result in the
same approximate weighted distribution of Dedicated
Dial-Up Access Ports across Existing Calling Areas.
(5) The right to decommission arising from any particular
New Dial-Up Market Price Notice shall cease, on a
prospective basis if and when Vendor delivers a New
Dial-Up Market Price Response, in response to a later
New Dial-Up Market Price Notice, accepting a proposed
New Dial-Up Market Price pursuant to clause (1) of
Subsection (ii) of this Subsection (a).
Schedule B - Page 30
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(v) Dispute Resolution Process.
If Vendor reasonably disputes the validity of the New Dial-
Up Market Price pursuant to clause (3) of Subsection (ii) of
this Subsection (a), then each Party shall promptly escalate
to the senior-executive level all efforts by such Party to
resolve such dispute.
(vi) Example.
For example:
(1) If Customer provides Vendor with a New Dial-Up Market
Price Notice for which the New Dial-Up Market Price
Notice Date is [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], and
Vendor accepts the proposed New Dial-Up Market Price
pursuant to clause (A) of Subsection (ii) of this
Subsection (a), then (x) the New Dial-Up Market Price
Effective Date would be [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], and (y) pursuant to Schedule A, the
Incremental New Ports MP Change Date would be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], the All New
Ports MP Change Date would be [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], and the Base Port MP Change Date would be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(2) Pursuant to Subsection (iii)(1) of this Subsection (a),
and except as otherwise required pursuant to the
restrictions described in Subsections (iii)(5),
(iii)(6), and (iii)(7) of this Subsection (a), as of
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], the Monthly
DAP Charge for [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] would
be reduced to the New Dial-Up Market Price set forth in
the corresponding New Dial-Up Market Price Notice, and
with respect to such [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment],
Vendor would, if requested by Customer, [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] peak provided for the
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] corresponding
to such New Dial-Up Market Price. Pursuant to
Subsection (iii)(4) of this Subsection (a), Vendor
would not be obligated to provide Customer with any
additional New Dial-Up Market Price Response with
respect to any New Dial-Up Market Price Notice for
which the corresponding New Dial-Up Market Price
Effective Date occurs in [*Material Omitted and
Schedule B - Page 31
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Separately Filed Under an Application for Confidential
Treatment].
(3) Pursuant to Subsection (iii)(2) of this Subsection (a),
as of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], the Monthly
DAP Charge for [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] would
be reduced to the New Dial-Up Market Price set forth in
the corresponding New Dial-Up Market Price Notice, and
with respect to such [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment],
Vendor would, if requested by Customer, [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] corresponding to such New Dial-
Up Market Price. Such reduction would not be
inconsistent with Subsection (iii)(4) of this
Subsection (a), because such reduction was made
pursuant to the same New Dial-Up Market Price Notice
that reduced the Monthly DAP Charge pursuant to
Subsection (2) of this Subsection (vi).
(4) Pursuant to Subsection (iii)(3) of this Subsection (a),
as of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] will be reduced
to the New Dial-Up Market Price set forth in the
corresponding New Dial-Up Market Price Notice, and with
respect to such all [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment],
Vendor will, if requested by Customer, [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] corresponding to such New Dial-
Up Market Price.
(5) If Customer provides Vendor with another New Dial-Up
Market Price Notice for which the New Dial-Up Market
Price Notice Date is [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment],
Vendor would be obligated to provide Customer with a
New Dial-Up Market Price Response pursuant to
Subsection (ii) of this Subsection. Such obligation
would not be contrary to Subsection (iii)(4) of this
Subsection (a), because the New Dial-Up Market Price
Effective Date for such New Dial-Up Market Price Notice
would be [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]. If Vendor
accepts such proposed New Dial-Up Market Price pursuant
to clause (1) of Subsection (ii) of this Subsection
(a), then effective [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment],
the Monthly DAP Charge for [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] would be reduced to such New Dial-Up Market
Price, and with respect to such
Schedule B - Page 32
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], Vendor would,
if requested by Customer, [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] corresponding to such New Dial-Up Market
Price. Further, pursuant to Subsection (iii)(3) of this
Subsection (a), as of [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment],
the Monthly EDAP Charge will be reduced to such New
Dial-Up Market Price, and with respect to [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment], Vendor will, if requested by
Customer, [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]
corresponding to such New Dial-Up Market Price.
(b) Most-Favored Customer.
---------------------
(i) As long as the aggregate number of Dial-Up Access Ports then
being purchased or ordered by Customer exceeds that of any
other customer of Vendor, Vendor shall not provide dial-up
access services that are Comparable Dial-Up Services to any
other Applicable DUP Purchaser (1) at prices that are lower
than those charged or available to Customer under this
Agreement, [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], or (2) pursuant to
terms and conditions more favorable to such Applicable DUP
Purchaser than the terms and conditions of this Schedule B
and Master Agreement, in each case, without first offering
such lower price and other more favorable terms and
conditions to Customer, within thirty (30) calendar days of
contractually committing to such price and other terms with
another customer. As of the Effective Date, Vendor
acknowledges that the aggregate number of Dial-Up Access
Ports being purchased or ordered by Customer exceeds that of
any other customer of Vendor. In the event that the
aggregate number of Dial-Up Access Ports being purchased or
ordered by Customer at any time during the Term does not
exceed that of any other customer of Vendor, Vendor shall
provide Customer with written notification of such event
within thirty (30) calendar days of the occurrence of such
event. For the purposes of this Subsection, prices "charged
or available to Customer hereunder" for Dedicated Dial-Up
Access Ports shall be determined by [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. "Applicable DUP Purchaser" shall mean any party
(including any Vendor Affiliate that resells Dial-Up Access
purchased from Vendor or another Vendor Affiliate) that is
obligated to purchase, that actually purchases, or that
seeks to purchase from Vendor or its Affiliates Dial-Up
Access at any time equivalent to more than [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] Dial-Up Access Ports.
(ii) As long as the aggregate number of Dial-Up Access Ports then
being purchased or ordered by Customer exceeds that of any
other customer of
Schedule B - Page 33
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Vendor, to the extent that Vendor provides dial-up access
services that are not [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment, then
Vendor shall offer, on a quarterly basis, to provide to
Customer such dial-up access services at the prices charged
or available to, and upon the terms and conditions
applicable to, [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]; provided,
however, that if Customer's service requirements would
necessitate changes to such terms and conditions, the
Parties shall work in good faith to adjust such terms and
conditions as mutually agreed to satisfy such requirements.
To the extent that Customer accepts such offer of dial-up
access services that are not [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] from Vendor, Vendor shall provide such services
as ordered by Customer pursuant to a separate Schedule to
the Master Agreement, such services shall be deemed Services
to which the Master Agreement applies, such services shall
be subject to most-favored customer terms and conditions
substantially similar to those set forth in this Subsection
(b), and Customer may [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]. In
the event of [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment], Customer shall
have no further liability to Vendor with respect to such
portion of the Dial-Up Purchase Commitment replaced pursuant
to this Subsection (ii).
(iii) As long as the aggregate number of Dial-Up Access Ports then
being purchased or ordered by Customer exceeds that of any
other customer of Vendor, Vendor shall offer to Customer,
Comparable Dial-Up Services provided or offered by any
Vendor Affiliate to an Applicable DUP Purchaser (1) at
prices that are equal to or lower than those charged or
available to such Applicable DUP Purchaser for such
services, for a commitment by such Applicable DUP Purchaser
to order or purchase volumes, or for actual orders or
purchases of volumes, that are in the aggregate equal to or
less than the equivalent volumes that Customer is obligated
to purchase under the Agreement, and (2) pursuant to terms
and conditions that are at least as favorable or more
favorable to Customer than the terms and conditions
applicable to or available to an Applicable DUP Purchaser.
(iv) For any price proposal made by Vendor to Customer at any
time during the Term, Vendor shall in good faith represent
to Customer in writing whether or not such proposal is being
made for reasons that include Vendor's belief that an
adjustment may be required pursuant to this Subsection (b).
(v) Customer may audit Vendor's compliance with this Subsection
(b) pursuant to Article 10 of the Master Agreement. In the
event that Vendor fails to comply with this Subsection (b)
(e.g., fails to adjust pricing in accordance with this
Subsection (b)), then Vendor shall rebate to Customer, with
respect to each Dedicated Dial-Up Access Port
Schedule B - Page 34
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
purchased hereunder, the difference between (1) the price
actually paid by Customer hereunder, and (2) the lower price
provided to the third party purchasing the Comparable Dial-
Up Services from Vendor, retroactive to the date Vendor
provided the lower price to such third party, together with
interest computed in the same manner as described in Section
9.2 of the Master Agreement on such rebated amounts from
such date.
(c) Regulatory Changes Affecting Pricing.
------------------------------------
In the event that any change in applicable Federal regulations
results in a significant, demonstrable change in Vendor's costs
to provide the Dial-Up Access Services, then:
(i) in the case of a cost increase, Vendor may pass such
applicable cost increase along to Customer on an Out-of-
Pocket Expense basis so long as such increase is passed
along to all of Vendor's other Dial-Up Access customers to
which such costs are not prohibited from being passed;
provided, however, Customer may elect, with 120 days notice,
to decommission in accordance with Subsection (a)(iv) of
this Section any of the Dial-Up Access Ports affected by
such Federal regulatory cost increase (however, Customer
shall not be required to pay such cost increase during the
120-day decommissioning notice period); provided further,
however, that (A) the decommissioning of Dedicated Dial-Up
Access Ports across the Vendor Network pursuant to this
Subsection shall be in proportion to the approximate
weighted distribution of Dedicated Dial-Up Access Ports
across Existing Calling Areas, and (B) the date and,
proportional rate restrictions on decommissioning in
Subsection (a)(iv) of this Section shall not apply with
respect to decommissioning under this Section; and
(ii) in the event of a cost decrease, Vendor shall pass such
decrease to Customer.
In connection with any such increase or decrease, Vendor shall
identify the Dial-Up Access Ports affected by such regulatory
cost change and the amount of the applicable change to the
Monthly EDAP Charge or Monthly DAP Charge for such affected Dial-
Up Access Ports. Any such regulatory cost change passed -through
to Customer shall take effect as of the first day of the calendar
month immediately following delivery of the regulatory cost
change notice and shall continue in effect until the date on
which the next New Dial-Up Market Price becomes applicable to
such affected Dial-Up Access Ports.
8.4. Normalization Methodology And Conversion Of Services.
----------------------------------------------------
(a) Normalization Methodology.
-------------------------
For purposes of Sections 2.8(c) and 8.3(b)(ii) of this Schedule
B, and for purposes of the definitions of "Other Vendors' Decom
Share" and "Vendor's Decom Share" set forth in Schedule A, in
order to normalize a commitment to order or purchase dial-up
access provided on a usage basis with a commitment to
Schedule B - Page 35
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
order or purchase Dedicated Dial-Up Access Ports provided under
this Agreement, a commitment to order or purchase [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] shall be deemed equivalent to a
commitment to purchase one (1) Dedicated Dial-Up Access Port for
such month (such conversion methodology collectively the
"Normalization Methodology").
(b) Conversion of Services.
----------------------
Upon Customer's request, Vendor shall reasonably and in good
faith discuss with Customer without further obligation the
modification of the pricing methodologies applicable to the Dial-
Up Access Services that may be purchased by Customer under this
Schedule B as necessary to convert certain Dial-Up Access
Services to hourly or similar usage based pricing.
8.5. Technological Change.
--------------------
Vendor acknowledges that quality of the Dial-Up Access Services is
critical to the satisfaction of the users of Customer's services and
will work to minimize any quality issues associated with the rapid
implementation of new service technologies.
(a) Changes in Dial-Up Access Platform.
----------------------------------
(i) In the event that Vendor determines that an access platform
different from that which is used as of the Effective Date
to provide Dedicated Dial-Up Access Ports to Customer
represents a superior value, or otherwise may make such
platform desirable, Vendor may utilize such different
access technology; provided, however, that:
(ii) Vendor shall provide Customer with notification of such
different access technology upon Vendor's determination to
utilize such different access technology, which notice
shall be provided no less than sixty (60) days' before
deploying such change;
(iii) such different access technology is not utilized in
conjunction with then-existing access technology for any
given telephone number for more than forty-five (45) days;
and
(iv) if such different access technology does not provide (or
enable Vendor to provide) any reports required under
Section 6.3(o) or 7.3(a) of this Schedule B other than the
reports described in Section 7.3(a)(i) of this Schedule B,
then:
(1) Vendor may deploy not more than [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] such Dedicated Dial-Up Access Ports (in the
aggregate for all such different access technologies
that do not provide such reports) (each of such ports
a "Reportless Port");
(2) with respect to any Reportless Port, Vendor shall use
all commercially reasonable efforts to provide such
reports as soon
Schedule B - Page 36
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
as practicable, but in no event later than [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] after acceptance of such
Reportless Port; and
(3) if Vendor is unable to provide such reports for a
Reportless Port for [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
days of acceptance of such Reportless Port, then Vendor
shall immediately remove from service any such
Reportless Port.
In no event shall Vendor provide any Dedicated Dial-Up Access
Ports that do not provide the reports described in Section
7.3(a)(i) of this Schedule B. Upon the request of Customer,
Vendor shall identify which access platform is then being
utilized for each telephone number used to provide Dedicated
Dial-Up Access Ports.
(b) Technology Briefing.
-------------------
Vendor will provide Customer with a semi-annual technology
briefing detailing Vendor's near- and medium- term plans for the
introduction of new technology and new Internet-related services.
Information exchanged by the Parties in conjunction with such
briefing shall be deemed Confidential Information for the
purposes of the Agreement.
9. SPECIFICATIONS AND ACCEPTANCE CRITERIA
9.1. Specifications.
--------------
Dedicated Dial-Up Access Ports provided hereunder shall fully conform
with the following Specifications (collectively, the "Dial-Up Access
Specifications"):
(a) By [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment], Vendor will provision end-to-end
bandwidth such that average bandwidth available per user at peak
will be [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(b) The Dial-Up Access Services shall fully support and be in
conformance with Customer's access methods, access technology,
hub architecture, and other access methods that may become
available to Customer from time to time. Access methods shall
include:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
Schedule B - Page 37
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(v) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(vi) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(vii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(viii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] (including those
provided by Customer and any other Customer-offered
service) as requested by Customer at [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment], provided that the cost of [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment], subject to prior agreement by Vendor and
Customer on how routing is implemented. Interconnect costs
of service to [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] will be
treated as an [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] until the
earlier of [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment], and [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] the date on which [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]; provided however that any such
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] charged to
Customer by Vendor will be reduced on a monthly basis by
an amount equal to the [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment];
(ix) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], provided that the
cost of user's [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], subject
to prior agreement by Vendor and Customer on how routing
is implemented; and
(x) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], provided that the
cost [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] does not exceed
the cost of [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment], subject to
prior agreement by Vendor and Customer on how routing is
implemented.
(c) Vendor, in its network design and topology, shall comply with
IETF approved and adopted standards applicable to the access
methods described in Subsection (b) of this Section.
Schedule B - Page 38
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
9.2. Acceptance Criteria.
-------------------
The following Acceptance Criteria shall apply to Dedicated Dial-Up
Access Ports:
Newly activated Dedicated Dial-Up Access Ports will fail Dial-Up
Acceptance Testing if any of the following thresholds is met:
(a) greater than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(b) greater than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(c) greater than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]
provided, however, that notwithstanding the foregoing, [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment].The Acceptance Test Period will be [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment].
Customer will not [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
Schedule B - Page 39
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT B-1
Dial-Up Purchase Commitment
1. CONFIDENTIALITY
This Exhibit specifies the Monthly Targets for Customer's Dial-Up Purchase
Commitments pursuant to Schedule B. The Parties specifically acknowledge
that the purchase commitment information contained herein is highly
confidential and that its disclosure to the public or third parties could
cause significant harm to either Customer or Vendor or both.
2. DIAL-UP PURCHASE COMMITMENT
(a) The [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] Target for the
following [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] shall be as follows:
(b) For [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] Target shall be an
amount determined [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment];
(c) For [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] Target shall be an
amount determined [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment];
(d) For [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] Target shall be an
amount determined [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]; and
(e) For[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] Target shall [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] (except as otherwise mutually agreed upon by the
Parties).
Exhibit B-1 - Page 1
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT B-2
Prices for Dial-Up Access Services
1. CONFIDENTIALITY
This Exhibit specifies the prices for Dial-Up Access Services provided
pursuant to the Master Agreement and Schedule B. The Parties specifically
acknowledge that the pricing information contained herein is highly
confidential and that its disclosure to the public or third parties could
cause significant harm to either Customer or Vendor or both.
2. MARKET PRICE FOR EXISTING DIAL-UP ACCESS PORTS
The Monthly EDAP Charge shall be set at [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment], which price,
effective from [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] through [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], shall be [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment] dollars ($[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]). [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]:
(a) From [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] through [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] shall be [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment];
(b) From [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] through [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] shall be [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment];
(c) From [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] through [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment shall be [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
Notwithstanding the foregoing, [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] may be [*Material Omitted
and Separately Filed Under an Application for Confidential Treatment (A)
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] (B) t[*Material Omitted and Separately Filed Under
an Application for Confidential Treatment (2) [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment].
3. MARKET PRICE FOR DIAL-UP ACCESS PORTS
Exhibit B-2 - Page 1
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
The Monthly DAP Charge shall be set at [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment], which price,
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment], shall be [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]. From
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. Notwithstanding the foregoing, [*Material Omitted
and Separately Filed Under an Application for Confidential Treatment].
Exhibit B-2 - Page 2
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE C
Broadband Backhaul Services, Service Levels, Pricing and Other Terms
1. TERM
The term of this Schedule C shall begin on the Effective Date and shall
expire on December 31, 2004, unless terminated earlier in accordance with
the Agreement; provided that Customer may, with the consent of Vendor,
renew such term for three (3) additional one (1) year periods by giving
Vendor at least thirty (30) days notice prior to the end of the applicable
term or renewal period (such period, as terminated earlier or so extended,
the "Broadband Term").
2. CONSTRUCTION OF AGREEMENT WITH RESPECT TO NON-XDSL BROADBAND SERVICES
(a) Although this Agreement governs Broadband Backhaul Services for
both xDSL and other broadband services, the Parties acknowledge
that the particular rights, duties and obligations set forth
herein, including service levels, delivery of service, failure
to meet service levels, failure to deliver service, the
Broadband Specifications, and other provisions, and the impact
of such matters on related purchase commitments as well as
other rights and remedies, have been worked out in the
particular context of xDSL broadband services. Therefore,
although the rights, duties and obligations herein apply to
broadband services other than xDSL, the Parties agree to
negotiate in good faith how certain provisions herein that are
stated in terms particularly relevant to xDSL broadband
services will apply in the context of broadband services other
than xDSL.
(b) The Parties acknowledge and agree that with respect to certain
Broadband Backhaul Services used to provide any non-xDSL or
non-cable broadband service with [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment utilized for an xDSL or cable broadband service and
for which delivery of such non-xDSL or non-cable service
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment], the Other Broadband Purchase
Commitment and the pricing set forth in Exhibit C-2 of this
Schedule C shall each be adjusted, as mutually agreed, to
reflect an appropriate methodology; provided, however, that (i)
with respect to the adjustment to the Other Broadband Purchase
Commitment, such adjustment shall only be made to reflect such
appropriate methodology, and the commitment [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment] shall not be increased or reduced but shall be
applied to the adjusted methodology, and (ii) Section 7.2 of
this Schedule C shall continue to apply to the Other Broadband
Purchase Commitment and pricing, as adjusted.
3. ORDERING AND ACCEPTANCE CRITERIA
3.1. Ordering.
--------
Schedule C - Page 1
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(a) Forecasts of Customer's Expected Broadband Backhaul Services
------------------------------------------------------------
Needs in New LATAs. At the start of every calendar quarter,
------------------
Customer will provide Vendor with a non-binding forecast that
sets forth those New LATAs in which Customer expects it will
need Broadband Backhaul Services over the next three (3)
calendar quarters.
(b) Ordering Broadband Backhaul Services in Existing LATAs.
------------------------------------------------------
The Parties shall mutually agree upon the standards and
procedures for ordering Broadband Backhaul Services in Existing
LATAs (including (i) scheduling procedures, timelines,
performance metrics and remedies, (ii) the ongoing sharing of
information back and forth between the Parties as appropriate
or necessary to maximize efficiencies and minimize provisioning
turnarounds times and (iii) such other issues as the Parties
may mutually agree). The Parties specifically agree that a
principal objective of the ordering process shall be to meet in
a timely manner Customer's Subscriber Line demand. The Parties
shall mutually agree upon changes from time to time to the
ordering process to facilitate the provision of Broadband
Backhaul Services to Customer.
(c) Launch of Broadband Backhaul Services in New LATAs.
--------------------------------------------------
Customer shall direct the launch of New LATAs consistent with
the timing of the local access provider and Customer becoming
ready to provide xDSL service in that LATA. Any time Customer
requests that Vendor provision Broadband Backhaul Services in a
New LATA, Customer will provide Vendor with notice (each, a
"New LATA Notice") specifying such LATA (as applicable), the
initial capacity to be provided in such LATA, and the date
Customer anticipates it will begin utilizing such Broadband
Backhaul Services in such LATA. In the event that Customer
notifies Vendor of a requested change in the specifics of a New
LATA Notice provided to Vendor, the Parties will mutually agree
upon the extent, if any, that (i) such requested change will
affect the time period specified in Section 3.2(a) of this
Schedule C, and (ii) Customer will pay Vendor Out-of-Pocket
Expenses incurred by Vendor as a result of such requested
change.
(d) Geographic Distribution. Notwithstanding the foregoing:
-----------------------
(i) the distribution of Vendor Broadband Subscriber Lines
providing xDSL broadband services will be approximately
proportional to the nationwide distribution of all of the
Aggregate DSL Subscriber Lines; and
(ii) the distribution of Vendor Broadband Subscriber Lines
providing broadband services other than xDSL will be
approximately proportional to the nationwide distribution
of all of the Aggregate Other Subscriber Lines.
For the purposes of this Subsection (d), "distribution" means
the distribution of the corresponding Vendor Broadband
Subscriber Lines across rural versus urban areas, across the
contiguous states of the United States, and between Covered
Subscriber Lines and non-Covered Subscriber Lines. In the event
that Vendor believes Customer has provided Vendor with tasking
that is inconsistent with this Subsection (d), the Parties will
mutually agree on an equitable resolution consistent with the
intent of this Section. In January and July of each calendar
Schedule C - Page 2x
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
year, Customer shall provide Vendor with relevant information
regarding the distribution of Aggregate Subscriber Lines.
(e) Reports on Subscriber Line Activations. At least once per
--------------------------------------
week Customer will provide Vendor a report on the number of
Vendor Broadband Subscriber Lines activated from each service
provider by LATA for the previous seven (7) day period.
3.2. Delivery.
-----------
(a) General. Vendor shall provision Broadband Backhaul Services
-------
for each Existing LATA in accordance with the standards and
procedures described in Section 1(b) of this Schedule C. Vendor
shall use demonstrable good faith diligent efforts to provision
Broadband Backhaul Services for each New LATA within [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] days of its receipt of a New LATA
Notice corresponding to such New LATA.
(b) Reductions in Broadband Purchase Commitments for Delivery
---------------------------------------------------------
Failures.
--------
(i) Definitions.
(1) "Failure Percentage" means, as of a Measurement
Date, the percentage resulting from (i) [*Material
Omitted and Separately Filed Under an Application
for Confidential Treatment] that as of such
Measurement Date, Vendor has failed to [*Material
Omitted and Separately Filed Under an Application
for Confidential Treatment], divided by the (ii)
the sum of (A) [*Material Omitted and Separately
Filed Under an Application for Confidential
Treatment] plus (B) [*Material Omitted and
Separately Filed Under an Application for
Confidential Treatment].
(2) "Failure Threshold Percentages" means the
percentage set forth in the following table:
<TABLE>
<S> <C> <C>
--------------------------------------------------------------------
[*Material Omitted and
Separately Filed Under an Failure Threshold
Application for Confidential Percentage
Treatment]
--------------------------------------------------------------------
[*Material Omitted and
Separately Filed Under an
Application for Confidential
Treatment]
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
Schedule C - Page 3
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(3) "Threshold Difference" as of a Measurement Date
equals the Failure Percentage minus the Failure
Threshold Percentage, except that the Threshold
Difference can never be less than zero.
(ii) Reduction Calculation. Reduction of the Broadband Purchase
Commitments shall be as set forth in Section 3.1 of
Exhibit C-1 of this Schedule C.
(iii) Examples. Examples of reductions in the Broadband Purchase
Commitments for delivery failures are set forth in Section
3.2 of Exhibit C-1 of this Schedule C.
(c) If Vendor fails to (i) provision Broadband Backhaul Services for
a New LATA within [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] days of its receipt of
a New LATA Notice corresponding to such New LATA, and (ii) use
demonstrable good faith diligent efforts to provision Broadband
Backhaul Services for such New LATA, then Customer may terminate
its obligations with respect to the Broadband Backhaul Purchase
Commitments. Upon Customer's request, Vendor shall provide
Customer with information and supporting documentation which
demonstrates Vendor's good faith diligent efforts to provision
such services for the applicable New LATA within [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] days of receipt of the corresponding New
LATA Notice (e.g., documents showing Vendor's ordering of
circuits in such New LATA).
3.3. Acceptance Criteria.
-------------------
(a) Prior to notifying Customer that Broadband Backhaul Services are
available in any geographic area, Vendor will conduct testing
utilizing [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] connectivity from the
service provider's [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] that validate
connectivity [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. Once connectivity
described in Subsections (i) and (ii) of this Subsection (a)
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment], Vendor will provide Customer with notice
that the Broadband Backhaul Services are ready for use by
Customer.
(b) The Broadband Backhaul Services will be deemed accepted for a
specific LATA or other relevant geographic area when the
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] in accordance with the [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment]. Vendor will reasonably cooperate with acceptance
testing by Customer. Customer will begin providing the Broadband
Backhaul Services to its end-customers as soon as reasonably
practicable after Customer completes its acceptance testing.
3.4. Broadband Backhaul Purchase Commitments.
---------------------------------------
Schedule C - Page 4
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Customer agrees to purchase Broadband Backhaul Services according
to the purchase commitments set forth in Exhibit C-1 of this
Schedule C.
4. TERMINATION
4.1. Vendor Termination.
------------------
(a) In the event that the aggregate number of Vendor Broadband
Subscriber Lines:
(b) is less than [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] as of [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment];
(c) is less than [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] as of [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment];
(d) is less than [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] as of [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]; or
(e) is less than [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] as of [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment],
Vendor may within thirty (30) calendar days of the applicable
calendar day set forth above for the corresponding Vendor
Broadband Subscriber Line threshold provide Customer with notice
of termination of this Schedule C. Such termination shall become
effective on the date specified in such notice (which date shall
be no earlier than one hundred fifty (150) calendar days
following the date of such notice and no later than the end of
the Broadband Term) unless within thirty (30) calendar days of
the date of such notice, the number of Vendor Broadband
Subscriber Lines is equal to or greater than such corresponding
threshold . In the event of such termination, (i) Customer shall
have no liability to Vendor for failure to achieve the Broadband
Purchase Commitments, and (ii) except with respect to the
provision of Transition Assistance pursuant to this Section,
Vendor shall have no liability to Customer. Upon such
termination, Vendor shall provide Transition Assistance in
accordance with Section 13.4 of the Master Agreement. Nothing in
this Section shall be deemed to affect the obligations of
Customer with respect to the Broadband Purchase Commitments so
long as Vendor has not provided Customer with a notice of
termination pursuant to this Section.
4.2. Termination of xDSL Field Trials.
--------------------------------
The xDSL field trials described in the Original Agreement for (a)
Phoenix, Arizona, (b) San Francisco, California, (c) Birmingham,
Alabama, (d) northern Virginia, and (e) Redmond, Washington shall
be terminated as of January 31, 2000; provided, however, that any
of such field trials will be continued upon the request of
Customer. In the event of any such continuation, Customer shall
reimburse Vendor for Out-of-Pocket Expenses incurred by Vendor as
a result of such continuation.
Schedule C - Page 5
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
5. DESCRIPTION OF SERVICES
Vendor shall provide nationwide (i.e., within the forty-eight contiguous
states of the United States plus Hawaii) broadband (including xDSL, cable,
wireless and satellite technologies) backbone integration services
combining inter- and intra-LATA interconnects, aggregation equipment, co-
location, backbone transport and network management control. Such services
shall include the provision of the services described in this Article 5.
5.1. Summary and Implementation Plan.
-------------------------------
Vendor will provide program management, network engineering,
deployment, and operations support for broadband network services
integration for Customer.
(a) Program Management.
------------------
Vendor will assign a Program Management Team that will be
responsible for the management of the provision of Broadband
Backhaul Services as a whole. The Program Management Team will
serve as Vendor's primary point of contact for Customer. Such
team will coordinate the activity of all functional groups within
Vendor and will be responsible for project and financial
management of the Broadband Backhaul Services.
(b) Network Engineering.
-------------------
Vendor will provide network engineering expertise to address
technical issues that arise during the deployment of the
Broadband Backhaul Services and operation of the Vendor Network.
Vendor will be responsible for performing network design;
planning network expansion; documenting technical procedures;
resolving problems escalated by the NOC; addressing architecture,
implementation and performance issues; providing cost reduction
recommendations; and performing continuous process improvement.
(c) Deployment.
----------
Vendor will assign a Deployment Team that will consist of field
engineers and technicians. Such team will be responsible for
planning and implementing logistics, procuring equipment and
circuits, coordinating with network service providers' access
points, staging, integration, testing, shipping, and installing
equipment.
(d) Operations.
----------
Vendor's NOCs will handle the operation and maintenance of the
Vendor Network. The NOC shall be connected to Customer's central
facilities using a direct leased line to Customer's operations
center.
5.2. Design and Topology of the Vendor Network.
-----------------------------------------
Vendor will utilize its Global Network Infrastructure (GNI) backbone
for transport of broadband traffic to Customer data centers; provided
that in order to provide last mile diversity, at Customer's request,
for [*Material Omitted and Separately Filed Under
Schedule C - Page 6
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
an Application for Confidential Treatment] of the GNI last mile
capacity to Customer's facilities, Customer and Vendor agree to
exchange local facilities, at no cost to either Party, for equivalent
bandwidth exchanged. The Parties agree to establish a mutually
acceptable bandwidth-exchanging and circuit-management process,
including with respect to co-location space, facility access, and
helping hands where both Parties have local facilities in each
geography.
(a) Equipment Configuration.
-----------------------
Vendor acknowledges that quality of the Broadband Backhaul
Services is critical to the satisfaction of the users of
Customer's services and will work to minimize any quality issues
associated with the rapid implementation of new service
technologies (other than to the extent that such quality issues
are caused by new service technologies directed by Customer).
Vendor will utilize a complement of equipment at broadband POPs.
Customer will reasonably cooperate with Vendor in the testing and
implementation of any alternative equipment at the broadband POPs
that Vendor desires to implement. A sample configuration of
equipment is described below.
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(b) Points of Presence (POPs).
-------------------------
Vendor currently locates broadband POPs in GTE Internetworking
GNI facilities. Such GNI facilities provide space for 19" racks,
associated power, cabling and environmental conditioning.
(c) Network Topology.
----------------
(i) The Vendor Network utilized to provide Broadband Backhaul
Services is currently structured as a [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment]. Broadband POPs will be located at [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(ii) Traffic from [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment].
(iii) Vendor's NOCs will maintain [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] Under this Schedule
C, Vendor is not currently responsible for [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(d) Vendor agrees that any changes to the Broadband Backhaul Services
or to the Vendor Network used to provide the Broadband Backhaul
Services will be fully functional with services provided by
Customer without modification of, or
Schedule C - Page 7
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
addition to, client or host software used to provide services
provided by Customer that utilize the Broadband Backhaul
Services.
(e) In the event that Customer requests a change to the hub
architecture, or network bandwidth from that which is described
in this Schedule C (other than a request for increased throughput
priced pursuant to Section 8(a) of this Schedule C), Vendor will
provide Customer with Vendor's proposed increase, if any, to the
prices set forth in this Schedule C. To the extent that Customer
accepts such proposal, Vendor shall provide the Broadband
Backhaul Services in accordance with the requested change and
Vendor's proposal to the extent accepted by Customer.
5.3. Deployment.
----------
(a) Vendor will take the following steps in preparation for deploying
equipment used to provide the Broadband Backhaul Services as may
be appropriate:
(i) Coordinating provisioning schedules with Customer
representatives;
(ii) Negotiating with telecommunications vendors for procurement
and installation of appropriate access and network
connections;
(iii) Negotiating with telecommunications vendors for
reservations of floor space for installation of such
equipment;
(iv) Coordinating with site organizations for housing such
equipment and spares, and for developing agreements to
assist with troubleshooting activities as directed by the
NOC;
(v) Procuring equipment;
(vi) Receiving, storing, and tracking equipment; and
(vii) Scheduling installations.
(b) Preparation.
-----------
(i) Site Survey. Vendor will conduct site surveys in order to
identify site preparation which must be completed prior to
installation, special equipment requirements, interface
requirements, and the physical placement of equipment.
(ii) Inventory of Materials. Vendor will prepare inventories of
materials prior to installation of equipment at each site
identifying all components by common nomenclature, part
number, quantity required, and size or length, as
applicable.
(iii) Equipment Staging. Vendor will stage and test all equipment
in a central location and then ship such equipment to the
appropriate site. Vendor will assemble, tag and stage for
shipping all equipment required for
Schedule C - 8
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
installation at the site. Staging consists of assembling
and testing pre-configured interfaces and other components
at the Vendor facility.
(iv) Shipping. Vendor will arrange for shipping of the staged
equipment to the installation locations and ensure that all
equipment arrives at the installation sites prior to the
scheduled site visit date. Equipment scheduled for
installation by Vendor will be held at the site until the
Vendor installation team arrives to uncrate and install it.
(v) Installation. Vendor will install equipment onsite and
verify functionality according to specifications.
Installation includes the following activities:
(1) Briefing site personnel;
(2) Taking inventory of equipment and resolving
discrepancies;
(3) Relocating equipment to footprint;
(4) Bolting cabinets together (if applicable);
(5) Installing intra-cabinet and inter-cabinet cables;
(6) Connecting power and station ground;
(7) Dressing and labeling cables, fantails, ports, and
mod-taps; and
(8) Connecting to the network and ensuring operability.
(c) Maintenance.
-----------
(i) Vendor will perform maintenance of equipment used to
provide the Broadband Backhaul Services based on input from
the monitoring systems and Customer. Vendor will handle
most [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(ii) Vendor will cooperate with Customer with respect to new
versions of software used to provide those services
provided by Customer that utilize the Broadband Backhaul
Services.
(iii) Vendor shall reasonably coordinate with Customer regarding
any maintenance activity.
(d) Quality Control.
---------------
Vendor will maintain a Quality Control Program to ensure all
reasonable commercial standards applicable to Broadband Backhaul
Services are adhered to.
5.4. Management of Circuits.
----------------------
Schedule C - 9
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Vendor will manage the [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]. Vendor will utilize
existing procedures and systems for [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].. As part of
the installation activities outlined above, Vendor will [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment].
5.5. Operations.
----------
Vendor will provision, staff and operate a NOC (currently in Columbia,
Maryland) with dedicated support for Customer and a backup NOC at a
separate location (such backup NOC is currently located in Chantilly,
Virginia). Responsibilities of Vendor's operations support team
include the following:
(a) Operation of the NOC and co-located systems with trained and
qualified personnel on a continuous 24-hours-per-day, seven-days-
per-week basis.
(b) Operation of all NOC equipment, monitoring, and fault
isolation functions.
(c) Utilization of network management capabilities and Vendor
diagnostic software resident in the NOC for:
(i) Monitoring [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment].
(ii) Measuring [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] .
(iii) Monitoring [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment].
(iv) Tracking the disposition of [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(d) Coordination and management of field technicians for
maintenance activities associated with the Vendor Network.
(e) Coordination and reporting of all support activities using a
commercial trouble reporting system [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(f) Support of short-term and long-term problem identification,
analysis, and resolution.
(g) Identification and tracking of all software changes deployed
in the Vendor Network and NOC platforms.
(h) Support for the deployment of new software and hardware (as
coordinated with Customer).
Schedule C - 10
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(i) Provision of operational support to the Vendor Network for
testing in association with provisioning activities.
(j) Maintenance of NOC maps.
(k) Coordination of Vendor Network change management activities
and maintenance of authorized outage lists.
(l) Support of Customer in security matters in accordance with
customary industry practices.
(m) Delivery of reports to pre-designated Customer
representatives addressing the following:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(v) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(vi) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(vii) Upon Customer's request, Vendor shall provide Customer
with [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] that are utilized
to provide Broadband Backhaul Services under this Schedule
C. In addition, for [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
that are utilized to provide Broadband Backhaul Services
under this Schedule C, Vendor shall provide to Customer a
daily report covering the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] as such data is collected by Vendor. In the
event of a Vendor Network outage, Vendor will work
cooperatively with Customer to share additional [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] data which may be pertinent to the
resolution of any such outage, and, upon Customer's
reasonable request, Vendor will provide [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment]to assist in the outage resolution. In the event
of a Vendor Network performance degradation, Vendor will
work cooperatively with Customer to share additional
[*Material Omitted and Separately Filed Under an
Application for Confidential
Schedule C - 11
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Treatment] data which may be pertinent to the resolution
of any such degradation, and, upon Customer's reasonable
request, Vendor will provide [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] to assist in the problem resolution. All access
by Customer will be coordinated with Vendor in advance,
and the polling frequency for any device will be as
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(viii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], including the
following:
(1) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(2) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(3) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(4) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(5) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(6) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(7) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(8) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(9) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(10) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(11) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]
(12) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment
provided that Vendor shall provide Customer with weekly reports
on [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] in accordance with Section 8(a) of
this Schedule C, and, as soon as
Schedule C - 12
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
technically feasible, Vendor shall provide such reports to
Customer on a daily basis. Customer may periodically request
additional reports that assist in improving network quality and
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. Vendor will provide these additional
reports, or the raw data, subject to technical reasonableness.
5.6. Aggregation Router Equipment.
----------------------------
(a) Aggregation router equipment used to provide the Broadband
Backhaul Services shall be [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] of
Broadband Backhaul Services to Customer under this Agreement and
shall not be [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(b) Customer may specify the operating system features to be utilized
for aggregation router equipment selected by Vendor and used to
provide the Broadband Backhaul Services.
5.7. Excluded Functions.
------------------
Vendor shall not be responsible for providing the following with
respect to the Broadband Backhaul Services:
(a) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(b) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(c) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(d) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment].
6. SERVICE LEVELS
For each of the Service Levels set forth in this Article 6, scheduled
maintenance by Vendor (or a third party) coordinated with Customer
pursuant to Section 5.3(c)(i) of this Schedule C will be excluded from
the Service Level performance calculations.
6.1. Availability.
------------
(a) "Broadband Network Availability" for a calendar month is
defined as the percentage calculated as (i) the total time
in each month that [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] is
reachable through the [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment],
divided by (ii) the sum of the total time in such month.
Schedule C - Page 13
<PAGE>
(b) The Service Level applicable to Broadband Network
Availability for a calendar month shall be as follows:
Broadband Network Availability for each calendar month shall
exceed [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. Vendor shall
provide Customer on a daily basis with reports on Broadband
Network Availability, and Vendor's performance relative to
such Service Level shall be measured on a monthly basis for
each calendar month.
(c) In the event that Broadband Network Availability is below
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] percent ([*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] %) as measured in [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], such event shall constitute a material breach of
the Agreement.
6.2. Packet Loss.
-----------
(a) "Broadband Packet Loss Percentage" means, for a calendar
month, the quantity calculated as (i) the aggregate number
of data packets dropped from the Vendor Network between the
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment], divided by (ii) the aggregate
number of all data packets introduced into the Vendor
Network between the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], during
such month, the result expressed as a percentage.
(b) Percentage shall be as follows: Broadband Packet Loss
Percentage for each calendar month shall be less than or
equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] percent ([*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]%) for such month. Vendor shall
provide Customer on a daily basis with reports on Broadband
Packet Loss Percentage, and Vendor's performance relative to
such Service Level shall be measured on a monthly basis for
each calendar month.
6.3. Failed Sessions.
(a) "Failed Sessions" means point-to-point protocol sessions
that are successfully placed to the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] and which do not fail as a result of problems
with[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(b) The Service Level applicable to Failed Sessions shall be
that no more than [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] percent
([*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]%) of [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] that are successfully placed
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] during the month shall be Failed
Sessions. Vendor shall provide Customer on a daily basis
with reports on Failed
Schedule C - 14
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Sessions, and Vendor's performance relative to such Service
Level shall be measured on a monthly basis for each calendar
month.
6.4. Abnormal Disconnects.
(a) "Broadband Abnormal Disconnect Percentage" means, for each
calendar day of the Broadband Term, the amount calculated as
(i) the aggregate number of disconnected sessions utilizing
the Broadband Backhaul Services during such day that are not
initiated by a user logoff sequence and that are caused by
problems in the network between [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], divided by (ii) the aggregate number of all
sessions utilizing the Broadband Backhaul Services
commencing during such calendar day, with the result
expressed as a percentage. "Monthly Broadband Abnormal
Disconnect Percentage" means, for each calendar month of the
Broadband Term, the amount calculated as (x) the percentage-
point aggregate of the Broadband Abnormal Disconnect
Percentages for such calendar month, divided by (y) the
aggregate number of calendar days in such calendar month.
(b) The Service Level applicable to Monthly Broadband Abnormal
Disconnect Percentage shall be as follows: Monthly
Broadband Abnormal Disconnect Percentage during a calendar
month shall not exceed [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
percent ([*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]%). Vendor's
performance relative to such Service Level shall be reported
by Customer on a monthly basis for each calendar month, if
technically feasible.
6.5. Failure to Perform.
(a) If Vendor fails to meet any Service Level, Vendor shall (i)
promptly notify Customer of such failure (unless Customer
first discovered and notified Vendor of such failure), (ii)
investigate and report on the causes of the failure; (iii)
advise Customer, as and to the extent requested by Customer,
of the status of remedial efforts being undertaken with
respect to such failure; (iv) take commercially reasonable
efforts to correct the failure, and begin meeting the
Service Levels; and (v) take appropriate preventive measures
to minimize the likelihood of the failure recurring.
(b) Notwithstanding the foregoing, Vendor's failure to meet or
correct Service Level failures under this Schedule C during
the first six months following the Effective Date shall not
constitute a breach of the Agreement.
(c) Notwithstanding the foregoing, Vendor's failure to use
commercially reasonable efforts to meet or correct Service
Level failures with respect to the Abnormal Disconnects in
and of itself shall not constitute a breach of the
Agreement.
(d) Vendor shall not be deemed in breach of such Service Levels
to the extent that such breach is attributable to the
offered data load from Customer data centers or subscribers
exceeding the specified bandwidth per user or Customer
having oversubscribed the intra-LATA interconnect circuits.
Schedule C - Page 15
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(e) Notwithstanding anything to the contrary to this Agreement,
under no circumstances shall Customer be permitted to
terminate any portion of the Agreement other than this
Schedule C as a result of any material breaches, whether
cured or uncured, of the Service Levels in this Schedule C.
6.6. Meetings.
--------
Vendor and Customer shall hold weekly meetings at Customer's site or
via telephone conference call (unless otherwise requested by Customer)
to assess Vendor's performance under this Schedule C. During emergency
situations, meetings will be held at least on a daily basis.
6.7. Periodic Review of Service Levels.
---------------------------------
As requested by Customer or Vendor, Customer and Vendor shall review
the Service Levels described in this Schedule C and shall make
mutually agreed-upon adjustments to them as appropriate to reflect
performance capabilities associated with advances in the technology
and methods used to provide the Broadband Backhaul Services.
7. PRICING
7.1. Charges for Broadband Backhaul Services.
---------------------------------------
(a) The monthly charges for the Broadband Backhaul Services shall be
computed as the applicable Monthly Aggregate Subscriber Line
Charges calculated pursuant to Exhibit C-2 plus the Monthly Pass-
Through Expenses calculated pursuant to Subsection (b) of this
Section.
(b) Monthly Pass-Through Expenses.
-----------------------------
(i) "Monthly Pass-Through Expenses" means the following third-
party charges incurred by Vendor to provide the Broadband
Backhaul Services (including Broadband Backhaul Services not
yet accepted by Customer) during a calendar month of the
Broadband Term, for which Customer shall reimburse Vendor on
an Out-of-Pocket Expenses basis:
(1) Third-party charges for the [*Material Omitted and
Separately Filed Under an Application for
Confidential Treatment] is necessary to provide
the Broadband Backhaul Services; and
(2) Third-party charges approved in advance by
Customer for the acquisition of hub equipment at
Customer's facilities.
(ii) Vendor shall act as payment agent for Customer with
respect to the Monthly Pass-Through Expenses and shall
pay the corresponding third-party charges comprising
the Monthly Pass-Through Expenses.
(iii) Vendor shall use commercially reasonable efforts to
minimize the amount of Monthly Pass-Through Expenses,
by among other means
Schedule C - Page 16
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
identifying and considering multiple sources for the
services and materials corresponding to such expenses.
7.2. Adjustments to Pricing for Services.
-----------------------------------
(a) Broadband Backhaul Market Price.
-------------------------------
(i) Definitions.
(1) "New Broadband Backhaul Market Price" shall mean the
price (or, if applicable, prices and corresponding
volumes) [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]. To
calculate the New Broadband Backhaul Market Price
pursuant to this Subsection, the price for Comparable
Broadband Backhaul Services shall be reasonably
adjusted to reflect the difference between [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] that (A) do not [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment], or (B) do not [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(2) "Broadband Backhaul Market Vendor" shall mean a vendor
(not including a Special Affiliate) that [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. For the purpose of this
Subsection, Special Affiliate shall only be deemed to
include Subsections (i) and (ii) of the definition of
"Special Affiliate" in Schedule A.
(ii) Notification Process.
Customer may provide Vendor with notice at any time of a New
Broadband Backhaul Market Price (each such notice, a "New
Broadband Backhaul Market Price Notice" and the date of such
notice as determined pursuant to Section 16.4 of the Master
Agreement, the "New Broadband Backhaul Market Price Notice
Date"). Each New Broadband Backhaul Market Price Notice will
contain (A) the New Broadband Backhaul Market Price
calculation and [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], and (B)
information sufficient to [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]. No
later than thirty (30) calendar days after the Broadband
Backhaul Market Price Notice Date corresponding to a New
Broadband Backhaul Market Price Notice, Vendor will respond
to Customer by notifying Customer in writing whether it
will:
(1) accept the validity of the proposed New Broadband
Backhaul Market Price and reduce prices to the
applicable New Broadband Backhaul Market Price in
accordance with Subsection (iii) of this Subsection
(a),
Schedule C - Page 17
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(2) accept the validity of the proposed New Broadband Backhaul
Market Price and decline to reduce prices to the New
Broadband Backhaul Market Price in accordance with
Subsection (iii) of this Subsection (a), or
(3) dispute the validity of the proposed New Broadband Backhaul
Market Price
(each a "New Broadband Backhaul Market Price Response"). Vendor
shall not unreasonably dispute the validity of a proposed New
Broadband Backhaul Market Price.
(iii) Reduction Process.
In the event Vendor accepts a proposed New Broadband Backhaul
Market Price pursuant to clause (1) of Subsection (ii) of this
Subsection (a), then effective as of the later of (a) the New
Broadband Backhaul Market Price Effective Date corresponding to
such New Broadband Backhaul Market Price Notice, and (b)
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment], the Monthly Per Subscriber Line Charge
will be reduced to the New Broadband Backhaul Market Price set
forth in the corresponding New Broadband Backhaul Market Price
Notice, and with respect to such Broadband Backhaul Services,
Vendor will, if requested by Customer, [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
corresponding to such New Broadband Backhaul Market Price;
provided, however, that Vendor shall not be obligated to reduce
the Monthly Per Subscriber Line Charge [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
for which Vendor reduced prices pursuant to this Subsection
(iii).
Notwithstanding the foregoing:
(1) Vendor shall not be obligated to reduce the Monthly Per
Subscriber Line Charge at a rate that is more rapid than the
rate at which the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] provides
Customer with [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] relative to the
applicable [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], as measured
monthly.
Example 1 - [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. For example, if the
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] at the New Broadband Backhaul Market
Price, but immediately following the Broadband Backhaul Market
Price Effective Date, the Broadband Backhaul Market Vendor has
only provided Customer with [*Material Omitted and Separately
Filed
Schedule C - Page 18
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Under an Application for Confidential Treatment], then
Vendor will only be obligated to reduce the Monthly Per
Subscriber Line Charge [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment], then
Vendor will be obligated to reduce the Monthly Per
Subscriber Line Charge for [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
Example 2 - [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. For example, if,
instead, [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. If as of the New
Broadband Backhaul Market Price Effective Date, [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment], then Vendor will only be obligated
to reduce the Monthly Per Subscriber Line Charge [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. If in the following month,
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment], then Vendor will be obligated
to reduce the Monthly Per Subscriber Line Charge for fifty
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment]. If in following month,
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment], then Vendor will be obligated
to reduce the Monthly Per Subscriber Line Charge [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. If in the following month,
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment]
(2) Vendor shall not be obligated [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] provides [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
relative to the applicable [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(3) A New Broadband Backhaul Market Price shall be
applicable only during such periods as [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(iv) Decommissioning Process.
If Vendor declines to reduce the Monthly Per Subscriber Line
Charge to the New Broadband Backhaul Market Price pursuant
to clause (2) of Subsection (ii) of this Subsection (a),
then Customer may, in its sole discretion, do either or both
of the following: (A) terminate the Broadband Backhaul
Purchase Commitment, and (B) disconnect Vendor Broadband
Subscriber Lines from the Vendor Network, subject to the
following restrictions:
(1) Customer will provide [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
days
Schedule C - Page 19
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
prior written notice of the LATA or other geographic
area in which Vendor Broadband Subscriber Lines are to
be disconnected from the Vendor Network, as well as the
associated quantities of Vendor Broadband Subscriber
Lines to be disconnected in each such LATA or other
geographic area.
(2) Customer may not order the disconnection of Vendor
Broadband Backhaul Subscriber Lines from the Vendor
Network in amounts greater than the number of the
Aggregate Subscriber Lines utilizing Comparable
Broadband Backhaul Services that are provided to
Customer by other entities at or below such New
Broadband Backhaul Market Price.
(3) The disconnection of Vendor Broadband Subscriber Lines
from the Vendor Network pursuant to this Subsection
7.2(a)(iv) shall result in the same approximate
weighted distribution of Vendor Broadband Subscriber
Lines across all Existing LATAs. For the purposes of
this Subsection (3), "distribution" means the
distribution of the corresponding Subscriber Lines
across rural versus urban areas, across the contiguous
states of the United States, and between Covered
Subscriber Lines and non-Covered Subscriber Lines.
(v) Dispute Resolution Process.
If Vendor reasonably disputes the validity of the New
Broadband Backhaul Market Price pursuant to clause (3) of
Subsection (ii) of this Subsection (a), then each Party
shall promptly escalate to the senior-executive level all
efforts by such Party to resolve such dispute.
(b) Most-Favored Customer.
---------------------
(i) As long as the aggregate number of Vendor Broadband
Subscriber Lines exceeds that of any other customer of
Vendor, Vendor shall not provide Comparable Broadband
Backhaul Services to any other Applicable BB Purchaser (1)
at prices that are lower than those charged or available to
Customer under this Agreement, or (2) pursuant to terms and
conditions more favorable to such Applicable BB Purchaser
than the terms and conditions of this Schedule C and Master
Agreement, in each case, without offering such lower price
and other more favorable terms and conditions to Customer
within thirty (30) calendar days of contractually committing
to such price and other terms with another customer. For
the purposes of this Subsection, prices "charged or
available to Customer under this Agreement" for Broadband
Backhaul Services shall be a [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. In the event that the aggregate number of
Vendor Broadband Subscriber Lines then being purchased or
ordered by Customer at any time during the Broadband Term
exceeds that of any other customer of Vendor, Vendor shall
provide Customer with written notification of such event
within thirty (30) calendar days of the occurrence of such
event, and thereafter, once the aggregate number of
Schedule C - Page 20
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Vendor Broadband Subscriber Lines then being purchased or
ordered by Customer falls below that of any other customer
of Vendor, Vendor shall provide Customer with written
notification of such event within thirty (30) calendar days
of the occurrence of such event. "Applicable BB Purchaser"
shall mean any party (including any Vendor Affiliate that
resells Broadband Backhaul Services purchased from Vendor)
that is obligated to purchase, that actually purchases, or
that seeks to purchase from Vendor Broadband Backhaul
Services at any time for more than the Applicable BB Volume
for the then-current calendar year. "Applicable BB Volume"
means (A) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] subscriber lines,
(B) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] subscriber lines,
(C) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] subscriber lines,
(D) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]subscriber lines, and
(E) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] subscriber lines.
(ii) As long as the aggregate number of Vendor Broadband
Subscriber Lines exceeds that of any other customer of
Vendor, to the extent that Vendor provides broadband
backhaul services that are not Comparable Broadband Backhaul
Services, then Vendor shall offer, on a quarterly basis, to
provide to Customer such broadband backhaul services at the
prices charged or available to, and upon the terms and
conditions applicable to, any Applicable BB Purchaser;
provided, however, that if Customer's service requirements
would necessitate changes to such terms and conditions, the
Parties shall work in good faith to adjust such terms and
conditions as mutually agreed to satisfy such requirements.
To the extent that Customer accepts such offer of broadband
backhaul services that are not Comparable Broadband Backhaul
Services from Vendor, Vendor shall provide such services
pursuant to a separate Schedule to the Master Agreement,
such services shall be deemed Services to which the Master
Agreement applies, and such services shall be subject to
most-favored customer terms and conditions substantially
similar to those set forth in this Subsection (b), and any
such services will [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]. For
purposes of this Subsection (ii), broadband backhaul
services that are not Comparable Broadband Backhaul Services
include, but are not limited to, an end-to-end broadband
service which includes the local loop, and usage-based
broadband backhaul services.
(iii) As long as the aggregate number of Vendor Subscriber Lines
exceeds that of any other customer of Vendor, Vendor shall
offer to Customer Comparable Broadband Backhaul Services
provided or offered by any Vendor Affiliate to an Applicable
BB Purchaser (1) at prices that are equal to or lower than
those charged or available to such Applicable BB Purchaser
for such services, and (2) pursuant to terms and conditions
Schedule C - Page 21
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
that are at least as favorable to Customer than the terms
and conditions applicable to or available to an Applicable
BB Purchaser.
(iv) For any price proposal made by Vendor to Customer at any
time during the Term, Vendor shall in good faith represent
to Customer in writing whether or not such proposal is being
made for reasons that include Vendor's belief that an
adjustment may be required pursuant to this Subsection (b).
(v) Customer may audit Vendor's compliance with this Subsection
(b) pursuant to Article 10 of the Master Agreement. In the
event that Vendor fails to comply with this Subsection (b)
(e.g., fails to adjust pricing in accordance with this
Subsection (b)), then Vendor shall rebate to Customer, with
respect to the aggregate volume of Broadband Backhaul
Services purchased hereunder, the difference between (1) the
price actually paid by Customer hereunder, and (2) the lower
price provided to the Applicable BB Purchaser, retroactive
to the date Vendor committed to provide the lower price to
such Applicable BB Purchaser, together with interest
computed in the same manner as described in Section 9.2 of
the Master Agreement on such rebated amounts from such date.
8. SPECIFICATIONS
The Broadband Backhaul Services provided hereunder shall fully conform with
the following Specifications (collectively, the "Broadband
Specifications"):
(a) Vendor will provision end-to-end bandwidth such that [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. For each [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
Line that Customer requests Vendor to provide hereunder, Vendor
shall provide [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] at a charge to Customer
that is no greater than [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] cents
($[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment]) [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
(b) Each circuit used to provide Broadband Backhaul Services between
the Vendor Network and Customer's facilities shall have capacity
equal to or greater than DS-3.
(c) Aggregation router equipment will be fully compliant with (i)
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment], and (ii) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], as such referenced specifications may change from
time to time, provided that Vendor shall not be required to
replace aggregation router equipment to meet any changed
specifications, but shall be required to implement any software
provided by the manufacturer of
Schedule C - Page 22
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
such aggregation router equipment within a commercially
reasonable period of time after such software is provided
and after successful testing by Vendor.
(d) If Vendor changes aggregation router equipment, it will be
fully functional with services provided by Customer without
modification of, or addition to, client or host software
used to provide services provided by Customer that utilize
the Broadband Backhaul Services. As of the Effective Date,
aggregation router equipment must comply with the following
protocol requirements in order to comply with the
requirements of this Subsection (d):
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(e) The Broadband Backhaul Services will support the following
software features being developed for Customer [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] as of the Effective Date:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(v) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(vi) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(vii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(viii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ix) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(x) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]
Schedule C - Page 23
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(xi) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
The Parties acknowledge and agree that as of the Effective
Date, the Redback Networks Inc. ("Redback") router
aggregation equipment utilized to provide the Broadband
Backhaul Services as of the Effective Date satisfy the
Broadband Specifications set forth in Subsections (c) and
(d) of this Article 8. The Broadband Backhaul Services will
support any additional software features provided by the
aggregation router vendor after the Effective Date as
mutually agreed by the Parties. Vendor shall use
commercially reasonable efforts to cause [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment].
(f) Any Broadband Backhaul Market Vendor shall support the
Broadband Specifications set forth in Subsections (c), (d)
and (e) of this Article 8 in a manner comparable to that
required of Vendor pursuant to such Subsections.
The Parties acknowledge and agree that this Article 8 does not set
forth a complete listing of required specifications applicable to
Broadband Backhaul Services that are used to provide any non-xDSL
services. Any such specifications not set forth in this Article 8
shall be mutually agreed upon by the Parties pursuant to Article 2 of
this Schedule C.
9. LIABILITY RESTRICTIONS
(a) Subject to Subsection (d) of this Section, the liability of
Vendor to Customer for all damages arising out of or related
to the Services provided under this Schedule will be limited
to, and will not exceed, in the aggregate during any
calendar year, ten percent (10%) of the aggregate amounts
paid to Vendor by Customer (excluding Out-of-Pocket Expenses
and Monthly Pass-Through Expenses) under this Schedule
during the twelve (12) month period preceding the date of
the event giving rise to such damages; provided, however,
for the initial twelve (12) months following the Effective
Date, the foregoing cap shall be no less than Five Million
Dollars ($5,000,000). Subject to Subsections (b) and (d) of
this Section, the liability of Vendor to Customer for
damages arising out of or related to Services provided under
this Schedule caused by the acts or omissions of third
parties beyond the reasonable control of Vendor will be
further limited and will not exceed, in the aggregate during
any calendar year, the lesser of (i) five percent (5%) of
the aggregate amounts paid to Vendor by Customer (excluding
Out-of-Pocket Expenses and Monthly Pass-Through Expenses)
under this Schedule during the twelve (12) month period
preceding the date of the event giving rise to such damages,
or (ii) Ten Million Dollars ($10,000,000); provided,
however, for the initial twelve (12) months following the
Effective Date, the foregoing cap shall be no less than
Three Million Dollars ($3,000,000).
(b) In the event of any liability of Vendor to Customer for
damages arising out of or related to Services provided under
this Schedule caused by the acts or omissions of third
parties beyond the reasonable control of Vendor, then the
Parties agree as follows:
Schedule C - Page 24
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(i) Vendor agrees to vigorously pursue the recovery of damages
against the third party causing the damage, including
through negotiations, dispute resolution, or both, to
maximize the damages recoverable against such third party;
(ii) Vendor agrees to pass through to Customer any amounts that
Vendor actually recovers from such third party relating to
damages incurred in connection with Services provided to
Customer under this Schedule;
(iii) Customer agrees that in the event that Vendor has paid any
amounts to Customer pursuant to Subsection (a) of this
Section prior to the recovery of damages from a third
party, Vendor may reduce the amount of recovery received
from such third party by the amount previously paid to
Customer in respect of such event causing the damages; and
(iv) Amounts recovered by Vendor from third parties shall be
first passed on to Customer until Customer's full damages
are satisfied.
(c) IN NO EVENT, WHETHER IN CONTRACT OR IN TORT (INCLUDING BREACH OF
WARRANTY, NEGLIGENCE AND STRICT LIABILITY IN TORT), SHALL A PARTY
BE LIABLE TO THE OTHER PARTY FOR INDIRECT OR CONSEQUENTIAL,
EXEMPLARY, PUNITIVE OR SPECIAL DAMAGES EVEN IF SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
(d) The limitations set forth in Subsection (a) of this Section shall
not apply with respect to (i) intentional breach by Vendor; (ii)
damages occasioned by an intentional tort or the gross negligence
of Vendor; (iii) damages occasioned by Vendor' breach of its
obligations described in Article 11 (Confidentiality) of the
Master Agreement, or (iv) claims subject to indemnification
pursuant to this Agreement (such amounts paid by the indemnitee
to third parties shall be deemed to be direct damages) other than
claims subject to the indemnity set forth in Section 15(a) of the
Master Agreement.
(e) Each Party shall have a duty to reasonably mitigate (i.e.,
minimize) damages for which the other Party is responsible.
Schedule C - Page 25
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT C-1
Broadband Backhaul Purchase Commitment
1. CONFIDENTIALITY
This Exhibit specifies Customer's Broadband Backhaul Purchase Commitments
pursuant to Schedule C. The Parties specifically acknowledge that the
purchase commitment information contained herein is highly confidential and
that its disclosure to the public or third parties could cause significant
harm to either Customer or Vendor or both.
2. BROADBAND BACKHAUL PURCHASE COMMITMENTS
2.1. DSL Purchase Commitment.
Customer agrees to order Broadband Backhaul Services such that:
(a) Commencing upon the Effective Date through [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], no less than [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment];
(b) Commencing upon [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] through [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(such commitment, as may be reduced pursuant to the Agreement, the "DSL
Purchase Commitment").
2.2. Other Broadband Purchase Commitments.
------------------------------------
Customer agrees to order Broadband Backhaul Services such that, during
the [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment], no less [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] as may be
reduced pursuant to the [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment].
2.3. Provision of Subscriber Line Information.
----------------------------------------
Customer will provide Vendor with information regarding the number of
Vendor [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment].
3. REDUCTION IN BROADBAND PURCHASE COMMITMENTS FOR DELIVERY FAILURE
3.1. Reduction Calculation.
---------------------
Exhibit C-1 - Page 1
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Reduction of the Broadband Backhaul Purchase Commitments pursuant to
Section 3.2(b)(ii) of Schedule C shall be determined in accordance
with this Section. As of the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], . the Parties will
calculate [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment]from and after [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment].(1)
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. (2) either if (A) [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment].is
on or before [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].(B) [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment].
3.2. Example of Reduction Calculation.
--------------------------------
This Section 3.2 sets forth examples, referenced in Section
3.2(b)(iii) of Schedule C, of reductions in the Broadband Backhaul
Purchase Commitments for delivery failures pursuant to Section 3.2(b)
of Schedule C.
(a) As of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(b) As of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(c) As of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]:
Exhibit C-1 - Page 2
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(d) As of[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment]:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
Exhibit C-1 - Page 3
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT C-2
Prices for Broadband Backhaul Access Services
1. CONFIDENTIALITY
This Exhibit C-2 specifies the prices for Broadband Backhaul Services
provided pursuant to the Master Agreement and Schedule C. The Parties
specifically acknowledge that the pricing information contained herein is
highly confidential and that its disclosure to the public or third parties
could cause significant harm to either Customer or Vendor or both.
2. PRICES FOR BROADBAND BACKHAUL SERVICES
2.1. Monthly Per Subscriber Line Charge.
----------------------------------
"Monthly Per Subscriber Line Charge" shall be defined as follows:
(a) If a Vendor Broadband Subscriber Line is a Covered Subscriber
Line, and
(i) the Monthly Subscriber Line Aggregate is equal to or
greater [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].but less
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].shall be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) the Monthly Subscriber Line Aggregate is greater than or
equal [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].but less
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].shall be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) the Monthly Subscriber Line Aggregate is greater than or
equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. but less than
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].shall be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) the Monthly Subscriber Line Aggregate is greater than or
equal [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].but less than
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].shall be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(v) the Monthly Subscriber Line Aggregate is greater than or
equal to [*Material Omitted and Separately Filed Under an
Application for
Exhibit C-2 - Page 1
<PAGE>
Confidential Treatment].but less than [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment].shall be [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
(vi) the Monthly Subscriber Line Aggregate is greater than
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].shall be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(b) If a Vendor Broadband Subscriber Line is not a Covered Subscriber
Line, and
(i) the Monthly Subscriber Line Aggregate is equal to or
greater than [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]. but less than
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].shall be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(ii) the Monthly Subscriber Line Aggregate is greater than or
equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. but less than
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].shall be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) the Monthly Subscriber Line Aggregate is greater than or
equal [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].but less than
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].shall be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) the Monthly Subscriber Line Aggregate is greater than or
equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].but less than
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].shall be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(v) the Monthly Subscriber Line Aggregate is greater than or
equal [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].but less than
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].shall be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(vi) the Monthly Subscriber Line Aggregate is greater than
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].shall be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
Exhibit C-2 - Page 2
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Notwithstanding the foregoing, each of the foregoing Monthly Per
Subscriber Line Charges may be [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].. As used herein,
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].means a [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]. (A) [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment]., (B) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].r, (C) [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]. (D)
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
2.2. Proration of Monthly Per Subscriber Line Charge.
-----------------------------------------------
If Customer is able to provide Vendor with information [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment]. then Vendor shall [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]..If Customer is not
able to provide Vendor with such information, then
(a) no later than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].days after the end of
each calendar month, Customer will provide Vendor [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].and
(b) for each [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment],.Customer shall pay
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment],
2.3. Monthly Aggregate Subscriber Line Charge.
----------------------------------------
(a) "Monthly Aggregate Subscriber Line Charge" for a calendar month
shall mean the greater of:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]; and
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. (A) [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. (B) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
For example, if (A) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. (B) [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]:
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
Exhibit C-2 - Page 3
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(b) Except with respect to [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];.
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].;
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].;
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(c) Notwithstanding the foregoing, Vendor [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
Exhibit C-2 - Page 4
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE D
Other Services
During the Term, Customer will order from Vendor services (excluding Dial-Up
Access Services, Broadband Backhaul Services and Dial-Up Access Services
provided outside of the United States) (such services to be ordered the "Other
Services") such that the aggregate charges paid to Vendor and Vendor's
Affiliates for such Other Services are equal to or greater than [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment].dollars ($[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].) (such commitment the "Other Services
Purchase Commitment"); provided, however, that charges payable for such Other
Services ordered or purchased by Customer or a Special Affiliate of Customer
during December 1999 (collectively, the "Pre-Term Private Line Agreements")
shall contribute toward Customer's satisfaction of the Other Services Purchase
Commitment. Any orders or purchases of Other Services shall be subject to terms
and conditions mutually agreed upon by the Parties, which may include terms and
conditions similar to those set forth in the Master Agreement. Any agreement for
Vendor to provide Other Services to Customer that are private line services
(such services collectively the "Private Line Services") shall contain a most-
favored customer provision substantially similar to the one set forth in Section
8.3(b) of Schedule B. In the event that (i) Customer is offered by a third party
services similar to the Private Line Services at prices and terms more
competitive that those offered by Vendor or Vendor's Affiliates to Customer,
(ii) Customer, in its sole discretion, requests Vendor to provide Private Line
Services at prices and terms at least as favorable to Customer as such prices
and terms offered by such third party, and (iii) Vendor or Vendor's Affiliates
declines to provide Private Line Services at such prices and terms, then the
Other Services Purchase Commitment shall be reduced by the aggregate charges
paid to such third party for such services.
Schedule D - Page 1
<PAGE>
EXHIBIT 10.9
AGREEMENT FOR TRANSITION SERVICES
This Agreement for Transition Services is made between GTE Service Corporation,
a New York corporation, with offices at 1255 Corporate Drive, Irving, Texas
75038 and its affiliates (individually and collectively "GTE") on one hand, each
only with respect to the Services (defined below) it provides, and Genuity Inc.,
a Delaware corporation, with offices at 3 Van de Graaff Drive, Burlington,
Massachusetts 01803 ("GENUITY"), and its subsidiaries and successors in
interest, on the other hand.
Whereas, GENUITY desires to obtain certain administrative services including
accounting and cash processing, billing, real estate management, and human
resources services on a transitional basis, with the term of the agreement being
one year or as otherwise set forth in a specific statement of work, terminable
by GENUITY at its sole discretion on 120 days notice; and
Whereas, GTE desires to provide such services to GENUITY.
Now therefore, in consideration of the mutual terms and conditions of this
Agreement, the parties agree as follows:
1. GENERAL.
(a) Services. GENUITY desires to obtain certain administrative transitional
--------
services on a non-exclusive basis from GTE or an affiliate company of GTE
under the terms and conditions of this agreement and statements of work
("Statements of Work") entered into by the parties (this agreement and all
attached Statements of work are collectively referred to as the
"Agreement"), and GTE or its affiliate shall provide to GENUITY such
administrative transitional services (individually and collectively,
"Services"). If there is any conflict or inconsistency between the terms
and conditions of a Statement of Work and the terms and conditions of this
Agreement (excluding for this purpose the Statements of Work), the terms
and conditions of the Statement of Work shall control.
(b) Statements of Work - Generally. Each of the Statements of Work entered
-------------------------------
into by the parties shall: (i) refer expressly to this Agreement; (ii)
designate the date as of which the provisions of the Statement of Work
shall be effective and, if applicable, the term or period of time during
which GTE shall perform Services, provide resources or otherwise discharge
its obligations as specified in the Statement of Work if different from the
term set out in this Agreement (excluding for this purpose the Statement of
Page 1 of 114
<PAGE>
Work); (iii) describe the Services to be performed, Work Product (as
defined herein) to be delivered, resources to be provided or obligations to
be discharged by GTE pursuant to the Statement of Work; (iv) describe the
obligations of GENUITY related to the Statement of Work, including any
facilities, equipment, personnel and tasks or other support to be provided
or performed by GENUITY; (v) specify the payments to be made to GTE under
the Statement of Work, or, if applicable, the basis on which such payments
shall be computed; and (vi) specify any other terms and conditions
appropriate to the Services to be performed and the obligations of the
parties. In the event of conflict or inconsistency between the terms and
conditions of a Statement of Work and the terms and conditions of this
Agreement (excluding for this purpose the Statement of Work), the terms and
conditions of the Statement of Work shall control.
(c) Milestones, Phases and Timing; Changes. Each of the Statements of Work
--------------------------------------
shall set out, if applicable, milestones and phases of the work. When
phases are specified, GTE shall not be obligated to proceed with work on
the next phase until GENUITY has provided written authorization to proceed.
If GENUITY has not provided GTE with written authorization to proceed on a
specific phase, and it is necessary to commence or complete such phase in
order to meet any milestones specified in the Statement of Work, GTE shall
not have any obligations with respect to such milestones and the Statement
of Work shall be deemed to be modified accordingly. The Statement of Work
may be modified by mutual written agreement, signed by both parties. No
verbal changes to the Statement of Work are permitted.
(d) Performance. All Services shall be performed in accordance with the terms
-----------
and conditions of this Agreement and the requirements, order of performance
and delivery dates specified in each Statement of Work. GTE shall devote
such time, efforts and resources to the performance of Services as are
necessary to accomplish the tasks specified in any Statement of Work. GTE
may call upon the expertise and/or assistance of its affiliates,
subcontractors or consultants in the performance of such Services, provided
that GTE shall obtain the prior written consent of GENUITY in the event it
desires to use outside subcontractors or consultants. If a Statement of
Work specifies that some or all of the work will be done by a
subcontractors or consultant, no additional approval shall be required.
(e) Third Party Software Licenses. GENUITY acknowledges that GTE and its
-----------------------------
affiliates may be required to use certain software licensed to GTE by third
parties to provide Services pursuant to this Agreement. If any licensor of
such third party software requires the payment of any
Page 2 of 114
<PAGE>
consideration to permit GTE to use the vendor's software in order to
perform its obligations under this Agreement, GTE shall provide GENUITY
with thirty (30) days prior written notice of such additional
consideration. GENUITY shall have the option to (i) procure its own license
to such software at its own expense, or (ii) authorize GTE to incur such
required additional consideration on its behalf and at GENUITY'S expense.
In the event that GENUITY does not agree to either (i) or (ii) above, GTE
shall not be required to provide the Services for which such third party
licenses are required. If the third party requires GENUITY to secure rights
in such third party software to receive the Services or to use the result
of such Services, GENUITY shall be responsible for securing such rights at
its own cost and expense.
2. COMPENSATION AND BILLING.
(a) Invoices. The charges for the Services shall be set out in the applicable
--------
Statement of Work. GTE shall invoice GENUITY for Services in accordance
with the payment schedule set forth in the applicable Statement of Work.
Each invoice shall reference this Agreement and the applicable Statement of
Work. The invoices shall be itemized to show the details as to all billed
items. Payments shall be made within thirty (30) days from the date each
invoice is received by GENUITY.
(b) Sales, Use and Other Taxes. In addition to the charges for Services,
--------------------------
GENUITY shall pay GTE an amount equal to any sales, use, privilege, gross
revenue, excise, or any other tax (except income and franchise taxes), as
well as any assessments or duties with respect to the Services lawfully
levied by a duly constituted governmental authority and for which GTE is
required, by law, to collect from GENUITY. In addition each party shall be
responsible for all real and personal property taxes imposed on software
and equipment owned by the respective parties on January 1 of every year.
If GENUITY determines that any Services are exempt from a tax, GENUITY must
provide GTE a properly completed exemption certificate, for each
jurisdiction for which GENUITY is claiming an exemption, before GTE will
exclude the respective tax from amounts charged to GENUITY. GENUITY will
not deduct any tax amount from remittances to GTE until a properly
completed exemption certificate, for all jurisdictions for which GENUITY is
claiming an exemption, has been provided to GTE.
(c) Expense Reimbursement. GENUITY shall reimburse GTE for reasonable expenses
---------------------
for travel, meals and lodging incurred by GTE in the performance of its
obligations under this Agreement. Any such
Page 3 of 114
<PAGE>
charges shall be in compliance with GTE's employee expense policies. There
shall be no mark-up of such expense charges. GTE shall maintain
documentation of expenses incurred, and shall provide copies of invoices of
$100 or more upon GENUITY's request. GTE shall bill GENUITY monthly for
expenses as they accrue. The parties will specify any limitation on the
reimbursement of expenses in the applicable Statement of Work. It is
acknowledged and agreed that if GTE is reasonably required to incur
expenses beyond such limitation in order to provide the Services, then GTE
is excused from performing such Services until said expense limitation is
removed or changed as mutually agreed, provided that GTE promptly notifies
GENUITY of the need to exceed the limitation.
(d) Records. GTE shall maintain complete and accurate records in a form
-------
consistent with generally accepted accounting practices, to substantiate
GTE charges. GTE shall retain, and make available upon request, such
records for a period of three (3) years from the date of invoice for
Services. GENUITY and its authorized agents, subject to obligations of
confidentiality as set forth in this Agreement, shall have access to such
records upon prior written request during normal business hours during the
term of this Agreement and during the respective periods in which GTE is
required to maintain such records pursuant to this subsection. Access to
the records shall be made at the location where such records are normally
maintained.
3. TERM.
This Agreement is effective as of _____________ and shall continue in
effect for a term of one (1) year, or such term as may be set out in a
Statement of Work, or until GENUITY exercises its right in its sole
discretion to terminate for convenience under Section 24 (c) of this
Agreement. This Agreement shall remain in effect with respect to and for
the duration of any Statement of Work that is agreed by the parties to
extend beyond the end of the term. In the event of any termination or
expiration, the Parties agree to reasonably cooperate in transitioning the
work to any successor service provider, and upon GENUITY's request and at
its expense, GTE shall use commercially reasonable efforts to secure
GENUITY's continued use of applicable third party licenses.
4. ACCEPTANCE.
(a) Acceptance. Each Statement of Work shall specify the criteria that GTE must
----------
meet in order for the Work Products described in the Statement of Work to
be accepted by GENUITY. It shall also specify a test plan, and such other
information as GTE and GENUITY
Page 4 of 114
<PAGE>
mutually deem appropriate and the period of time that GENUITY shall have
to review such Work Product and provide notice of acceptance or rejection
to GTE. Failure to accept or reject such Work Product within the
specified period of time or the commercial use of such Work Product by or
for the benefit of GENUITY shall be deemed to be acceptance.
(b) Rejection and Revision. If GENUITY rejects any Work Product, it shall
----------------------
specify in reasonable detail in writing the reasons for rejection and the
requirements for revision. If the notice of rejection is not sufficiently
detailed to allow GTE to determine why such Work Product is unacceptable,
GTE may request in writing that GENUITY provide sufficient additional
information. If GTE and GENUITY have joint responsibility for the Work
Product and the Work Product requires revision, GTE shall assist GENUITY in
making revisions necessary for the Work Product to meet the acceptance
criteria within a period of time that is reasonable under the
circumstances. If GTE has sole responsibility for the Work Product, then
it shall make the necessary revisions within a period of time that is
reasonable under the circumstances.
5. CONFIDENTIAL INFORMATION.
(a) Confidentiality. In the course of requesting and performing Services
---------------
pursuant to this Agreement, each party may receive or acquire from the
other information or data pertaining to specifications, drawings, sketches,
models, samples, computer programs, methods, concepts, know-how,
techniques, processes, and other technical or business information that the
other party desires to protect against unauthorized use or further
disclosure. Unless otherwise expressly set forth in a Statement of Work,
for purposes of this Agreement, "Confidential Information" shall mean: (i)
any information in written, other tangible or electronic form which is
labeled by the disclosing party as "confidential", "proprietary" or with a
legend of similar import; (ii) software in any form (including related
documentation), whether or not labeled in accordance with the preceding;
(iii) Services and Work Products provided pursuant to this Agreement, with
the ownership of and proprietary interest therein being defined in the
applicable Statement of Work; or (iv) information orally disclosed and
identified as confidential at the time of such disclosure which is
summarized in writing within thirty (30) days of such disclosure. Each
party shall remain the exclusive owner of its Confidential Information.
(b) Use of Confidential Information. The Confidential Information of the
-------------------------------
disclosing party may be used by the receiving party only for the
performance or use of Services or Work Products to be provided pursuant
Page 5 of 114
<PAGE>
to this Agreement and may only be disclosed to those employees,
subcontractors or agents of the receiving party who have a need to know in
order to perform or use Services or Work Products pursuant to this
Agreement. Except and to the extent set forth in Section 5(c), the
receiving party may not disclose Confidential Information of the other
party to any other person, entity, or the public without the prior written
consent of the disclosing party. However, such Confidential Information may
be disclosed by the receiving party without the necessity of prior written
consent, to the receiving party's subcontractors or consultants who require
access to such Confidential Information to perform or use the Services
under this Agreement, provided such persons have entered into written
agreements which contain obligations of nondisclosure and nonuse no less
restrictive than set forth in this Section. It is agreed that such written
agreements shall be enforceable by the disclosing party.
(c) Exceptions. The obligations in Section 5(b) shall not apply to that
----------
portion of any information received from the disclosing party which is:
lawfully in the receiving party's possession, with no restriction on use or
disclosure, prior to its acquisition from the disclosing party; received in
good faith by the receiving party, with no restrictions on use or
disclosure, from a third party not subject to any confidential obligation
to the disclosing party; now or later becomes publicly known through no
breach of confidential obligation by the receiving party; released by the
disclosing party to any other person, firm or entity (including
governmental agencies or bureaus) without restriction on use or disclosure;
or independently developed by or for the receiving party without any
reliance on or use of Confidential Information of the disclosing party.
(d) Disclosure and Notification. If a receiving party receives a request to
---------------------------
disclose any Confidential Information of the disclosing party (whether
pursuant to a subpoena, an order issued by a court or other governmental
authority of competent jurisdiction or otherwise) and, on advice of legal
counsel, determines that disclosure is required under applicable law, the
receiving party agrees that, prior to disclosing any Confidential
Information of the disclosing party, it shall (i) notify the disclosing
party of the existence and terms of such request or advice, (ii) cooperate
with the disclosing party in taking legally available steps to resist or
narrow any such request or to otherwise eliminate the need for such
disclosure at the disclosing party's sole expense, if requested to do so by
the disclosing party, and (iii) if disclosure is required, it shall be the
obligation of the disclosing party to use its commercially reasonable
efforts to obtain a protective order or other reliable assurance that
confidential treatment shall be afforded to such portion of the
Confidential Information of the disclosing party as is required to be
disclosed.
Page 6 of 114
<PAGE>
(e) Continuing Obligation. The obligation of non-disclosure and non-use with
---------------------
respect to Confidential Information of the disclosing party shall survive
termination of this Agreement and shall continue for a period of 5 years
thereafter, provided that the obligations of non-disclosure and non-use
shall continue in perpetuity for software included in Confidential
Information.
6. OWNERSHIP AND LICENSE OF WORK PRODUCTS.
(a) Ownership. Unless expressly provided otherwise in the applicable Statement
---------
of Work, the ownership of any and all right, title and interest in and to
work products (including without limitation: computer programs and
documentation; photographs; logos; drawings; artistic and graphical works;
reports; data; information; and other works of authorship) made by Service
Provider, or its suppliers or contractors, during performance of Services
for Service Recipient in accordance with the applicable Statement of Work
(all such works herein "Work Products"), shall be determined in accordance
with the terms and conditions of the Software Development and Technical
Services Agreement relating to ownership of intellectual property, with
those terms and conditions being applied to any Statement of Work issued
hereunder and being incorporated herein in their entirety by this
reference.
(b) License. Unless expressly provided otherwise in the applicable Statement
-------
of Work:
(1) If Service Provider owns any Work Products, any license granted
to Service Recipient by Service Provider in or to any such Work
Products shall be on the same terms and conditions as the license
grant by GTE to GENUITY contained in the Software License
Agreement, with such terms and conditions being incorporated
herein in their entirety by this reference.
(2) If Service Recipient owns any Work Products, and subject to
Service Provider's obligations with respect to Service
Recipient's Confidential Information, Service Provider shall
retain a non-exclusive, perpetual, world-wide, royalty-free
license to use any such Work Product for its ordinary and usual
business purposes.
7. DISPUTE RESOLUTION.
(a) General. Except as provided in subparagraph 7(d) below, any controversy or
-------
claim arising out of or relating to this Agreement, or the
Page 7 of 114
<PAGE>
breach thereof, shall attempt to be settled first, by good faith efforts of
the parties to reach mutual agreement, and second, if mutual agreement is
not reached to resolve the dispute, by final, binding arbitration as set
out in paragraph 6(c) below.
(b) Initial Resolution. A party that wishes to initiate the dispute resolution
------------------
process shall send written notice to the other party with a summary of the
controversy and a request to initiate these dispute resolution procedures.
Each party shall appoint a knowledgeable, responsible representative from
the company who has the authority to settle the dispute, to meet and
negotiate in good faith to resolve the dispute. The discussions shall be
left to the discretion of the representatives, who may utilize other
alternative dispute resolution procedures such as mediation to assist in
the negotiations. Discussions and correspondence among the representatives
for purposes of these negotiations shall be treated as Confidential
Information developed for purposes of settlement, shall be exempt from
discovery and production, and shall not be admissible in the arbitration
described above or in any lawsuit pursuant to Rule 408 of the Federal Rules
of Evidence. Documents identified in or provided with such communications,
which are not prepared for purposes of the negotiations, are not so
exempted and may, if otherwise admissible, be admitted in evidence in the
arbitration or lawsuit. The parties agree to pursue resolution under this
subsection for a minimum of 60 days before requesting arbitration.
(c) Arbitration. If the dispute is not resolved under the preceding subsection
-----------
within 60 days of the initial written notice, either party may demand
arbitration by sending written notice to the other party. The parties
shall promptly submit the dispute to the American Arbitration Association
for resolution by a single neutral arbitrator acceptable to both parties,
as selected under the rules of the American Arbitration Association. The
dispute shall then be administered according to the American Arbitration
Association's Commercial Arbitration Rules, with the following
modifications: (i) the arbitration shall be held in a location mutually
acceptable to the parties, and if the parties do not agree, the location
shall be New York City; (ii) the arbitrator shall be licensed to practice
law; (iii) the arbitrator shall conduct the arbitration as if it were a
bench trial and shall use, apply and enforce the Federal Rules of Evidence
and Federal Rules of Civil Procedure; (iv) except for breaches related to
Confidential Information the arbitrator shall have no power or authority to
make any award that provides for consequential, punitive or exemplary
damages; (v) the arbitrator shall control the scheduling so that the
hearing is completed no later than 60 days after the date of the demand for
arbitration; and (vi) the arbitrator's decision shall be given within 5
days thereafter in summary form that states the award, without written
decision, which shall follow the
Page 8 of 114
<PAGE>
plain meaning of this Agreement, the relevant documents, and the intent of
the parties. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction over the parties. Each party to
the dispute shall bear its own expenses arising out of the arbitration,
except that the expenses of the facilities to conduct the arbitration and
the fees of the arbitrator shall be shared equally by the parties.
(d) Injunctive Relief. The foregoing notwithstanding, each party shall have
-----------------
the right to seek injunctive relief in an applicable court of law or equity
independent of any resolution of the dispute in accordance with the
foregoing.
8. RELATIONSHIP OF PARTIES.
(a) Independent Contractors. In providing any Services pursuant to this
-----------------------
Agreement, GTE and its affiliates are independent contractors and not
agents or representatives of GENUITY. Persons furnished by the respective
parties shall be solely the employees or agents of such parties,
respectively, and shall be under the sole and exclusive direction and
control of such parties. They shall not be considered employees of the
other party or parties for any purpose. Each party shall also be
responsible, respectively, for payment of taxes, including federal, state,
and municipal taxes, chargeable or assessed with respect to its employees
or agents, such as social security, unemployment, worker's compensation,
disability insurance and federal and state income tax withholding.
(b) No Performance. Neither party undertakes by this Agreement or any
--------------
Statement of Work to conduct the business or operations of the other party.
Nothing contained in this Agreement or any Statement of Work is intended to
give rise to a partnership or joint venture between the parties or to
impose upon the parties any of the duties or responsibilities of partners
or joint venturers.
9. FORCE MAJEURE.
If performance of any Services under this Agreement is prevented,
restricted or interfered with by reason of acts of God, wars, revolution,
civil commotion, acts of public enemy, embargo, acts of government in its
sovereign capacity, labor difficulties, including without limitation,
strikes, slowdowns, picketing or boycotts, communication line failures,
power failures, or any other circumstances beyond the reasonable control
and not involving any fault or negligence of the party affected, the party
affected, upon giving prompt notice to the other party, shall be excused
from such performance on a day-to-day basis during the continuance of
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<PAGE>
such prevention, restriction, or interference (and the other party shall
likewise be excused on a day-to-day basis during the same period, from
performance of its obligations which are dependent upon or affected by such
nonperformance), provided, however, that the party so affected shall use
its commercially reasonable efforts to avoid or remove such causes of
nonperformance and both parties shall proceed immediately with the
performance of their obligations under this Agreement whenever such causes
are removed or cease.
If a force majeure condition continues to prevent a party from performing
for more than (30) consecutive days, then the other party may terminate the
applicable Statement of Work.
10. REGULATORY COMPLIANCE.
(a) Cooperation. This Agreement is subject at all times to any statute,
-----------
order, rule, or regulation or any state or federal regulatory agency having
competent jurisdiction over one or both of the parties hereto or the
Services provided hereby. The parties agree to cooperate with each other
and with any applicable regulatory agency so that any and all necessary
approvals may be obtained. During the term of this Agreement, the parties
agree to continue to cooperate with each other in any review of this
Agreement by a regulatory agency so that the benefits of this Agreement may
be achieved.
(b) Filing Agreement. Notwithstanding the effective date and term of this
----------------
Agreement as stated elsewhere, to the extent that any statute, order, rule
or regulation or any regulatory agency having competent jurisdiction over
one or both parties to this Agreement, shall require that this Agreement or
subsequent amendment be filed with or approved by such regulatory agency
before the Agreement or amendment may be effective, this Agreement or
amendment shall not be effective in such jurisdiction until the first
business day after such approval or filing shall have occurred.
11. INDEMNIFICATION.
(a) General. GTE and GENUITY, to the fullest extent permitted by law, each
-------
shall defend, indemnify and hold harmless the other and its affiliates,
officers, agents and employees from any and all amounts payable under any
judgment, verdict, court order or settlement (and associated fees and
disbursements of counsel) arising from or related to any third-party claims
for injury, sickness, disease or death of any person or damage to any real
or tangible personal property or assets to the extent arising from the
indemnitor's (either directly or through its officers, agents,
subcontractors or representatives) negligence or willful misconduct in the
Page 10 of 114
<PAGE>
performance of this Agreement provided, however, that if a claim is the
result of the joint negligence or joint willful misconduct of GTE and
GENUITY, the amount of the claim for which each party is entitled to
indemnification shall be limited to that portion of such claim that is
attributable to the negligence or willful misconduct of the indemnifying
party. The parties agree that the price for Services provided under this
Agreement includes consideration for the obligation to indemnify as set out
in this Section.
(b) Losses. GENUITY and GTE each shall be responsible for any and all claims,
------
actions, damages, liabilities, costs and expenses, including reasonable
attorneys' fees and expenses (collectively, "Losses"), to their respective
tangible personal or real property (whether owned or leased), and each
party agrees to look only to its own insuring arrangements (if any) with
respect to such Losses. Subject to the procedures set forth below, each
party shall indemnify, defend, and hold the other party harmless from any
and all Losses arising out of, under or in connection with claims for which
the indemnitor is responsible under the preceding sentence.
(c) Waivers. GENUITY and GTE waive all rights to recover against each other
-------
for any Loss to their respective tangible personal property (whether owned
or leased) from any cause covered by insurance maintained by each of them,
including their respective deductibles or self-insured retentions. GENUITY
and GTE shall cause their respective insurers to issue appropriate waivers
of subrogation rights endorsements to all property insurance policies
maintained by each Party. Each Party shall give the other written notice
if a waiver of subrogation is unobtainable or obtainable only at additional
expense. If the Party receiving such notice agrees to reimburse the other
Party for such additional expense, the other Party shall obtain such waiver
of subrogation. If a waiver is unobtainable or if a Party elects not to
pay the additional expense of a waiver, then neither Party nor their
insurers shall waive such subrogation rights.
(d) Defense. Except as otherwise set forth in the applicable Statement of
-------
Work, and subject to the limitations and procedures set forth below, GTE
agrees to defend GENUITY against any action to the extent that such action
is based upon a claim that the Service provided by GTE pursuant to this
Agreement (i) infringes a United States copyright, (ii) infringes a United
States patent or (iii) constitutes an unlawful disclosure, use or
misappropriation of another party's trade secret and not as the result of
any prohibited use or transfer by GENUITY. GTE shall bear the expense of
such defense and pay any Losses finally
Page 11 of 114
<PAGE>
awarded by a court of competent jurisdiction that are directly attributable
to such claim.
(e) Contributory Infringement. GTE shall not be liable to GENUITY for claims
-------------------------
of indirect or contributory infringement. Further, GTE shall have no
liability to GENUITY hereunder if (i) the claim of infringement is based
upon the use of Services or Work Products provided by GTE hereunder in
connection or in combination with equipment, devices, data or software not
supplied by GTE, and such infringement would not have occurred but for such
use, (ii) such Services or Work Products are used outside of the scope of
the rights and licenses granted to GENUITY; (iii) the Services or Work
Products are modified by or for GENUITY (including by GTE at GENUITY's
direction or instructions), and such infringement would not have occurred
but for such modification; (iii) GENUITY uses any of the Services or Work
Products in the practice of a patented process and there would be no
infringement in the absence of such practice, or (iv) the claim of
infringement arises out of the GTE's compliance with written directions
provided by GENUITY and such infringement would not have occurred but for
such compliance. For all of the foregoing exclusions, GENUITY shall defend
and indemnify GTE for any infringement claims to the extent set forth in
Section 11(d).
(f) Mitigation. If a Service or Work Product becomes the subject of an
----------
infringement claim, or in GTE's opinion is likely to become the subject of
such a claim, then, in addition to defending the claim and paying any
damages and attorneys' fees as required above, GTE may, at its option and
in its sole discretion, and at its own cost and expense: (i) replace or
modify such Service or Work Product to make it noninfringing or cure any
claimed misuse of any third party trade secret; (ii) procure for GENUITY
the right to continue using such Service or Work Product pursuant to this
Agreement; or if neither (i) nor (ii) are possible at a commercially
reasonable cost, (iii) require the return of such Service or Work Product,
terminate the Statement of Work (to the extent it has not yet been
completed) and terminate GENUITY's right to use the same and refund to
GENUITY a pro-rata portion of the amount actually paid to GTE by GENUITY
for such Service or Work Product. Notwithstanding the foregoing, if GTE
exercises its right to require the return of such Service or Work Product
and terminates GENUITY's right to use the same, to the extent permitted by
applicable law, GENUITY may retain and continue to use such Service Work
Product to the extent GENUITY agrees in writing to defend and indemnify GTE
for any and all expenses, costs and liabilities associated with such
continued possession and use of such
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<PAGE>
Service or Work Product. The foregoing sets forth GTE's sole and exclusive
obligations, and GENUITY's sole remedies, for infringement of intellectual
property by Services or Work Product.
(g) Conditions. The indemnification obligations set forth in this Section
----------
shall not apply unless the party claiming indemnification: (i) notifies
the other promptly in writing of any matters in respect of which the
indemnity may apply and of which the notifying party has knowledge, in
order to allow the indemnitor the opportunity to investigate and defend the
matter; provided, however, that the failure to so notify shall only relieve
the indemnitor of its obligations under this Section if and to the extent
that the indemnitor is prejudiced thereby; and (ii) gives the other party
full control of the response thereto and the defense thereof, including any
agreement relating to the settlement thereof. However, if the indemnitor
fails to promptly assume the defense of the claim, the party entitled to
indemnification may assume the defense at the indemnitor's cost and
expense. The indemnitor shall not be responsible for any settlement or
compromise made without its prior written consent, unless the indemnitee
has tendered notice and the indemnitor has then refused to assume and
defend the claim and it is later determined that the indemnitor was
obligated to assume and defend the claim. The indemnitee agrees to
cooperate in good faith with the indemnitor at the request and expense of
the indemnitor.
12. LIMITATION OF LIABILITY.
(a) General. A party's and its affiliates' liability arising out of or
-------
relating to a Statement or Statements of Work and this Agreement, including
without limitation on account of performance or nonperformance of
obligations hereunder, regardless of the form of the cause of action,
whether in contract, tort (including without limitation negligence),
statute or otherwise, shall in no event exceed the lesser of (i) the price
to be paid to GTE for the completed Statement of Work (whether set out as a
fixed price, estimated price, not-to-exceed amount, or other similar
expression of the total price for the work to be performed under the
Statement of Work); or (ii) the amount actually paid by GENUITY to GTE for
the particular Statement of Work from which the claim arises. The
limitation in the immediately preceding sentence does not apply to a
party's obligations under the Sections entitled Indemnification and
Confidential Information, nor does it apply to willful misconduct or gross
negligence on the part of a party.
(b) Limitation. EXCEPT FOR BREACHES RELATED TO CONFIDENTIAL INFORMATION,
----------
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL,
PUNITIVE, EXEMPLARY, SPECIAL
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<PAGE>
OR CONSEQUENTIAL DAMAGE OR LOST PROFITS OF ANY KIND WHATSOEVER EVEN IF A
PARTY OR ITS AFFILIATES HAVE BEEN APPRISED OF THE LIKELIHOOD OF SUCH
DAMAGES OCCURRING.
(c) Benefits Under Licenses. Anything contained herein to the contrary
-----------------------
notwithstanding, this Agreement shall not constitute an agreement to start
work, to provide Services or Work Product or to make available to GENUITY
the benefits under any agreement, license or arrangement if doing so
without the consent of and/or payment to another party thereto would
constitute a breach thereof or in any material way affect the rights of GTE
thereunder, unless and until such consent is obtained and payment, if any,
made to such party by GTE, provided however, that GTE will use commercially
reasonable efforts to secure such consents and benefits under any such
agreement or arrangement. If GTE cannot: (i) obtain such consent; or (ii)
GTE and the third party vendor cannot agree on a commercially reasonable
payment, if such is required, or (iii) if providing the Services or Work
Products or making the benefits under any such agreement, license or
arrangement available would materially affect GTE's rights thereunder, GTE
shall not be required to provide any Services or Work Products which are
dependent upon such agreement, license or arrangement. GENUITY may,
however, obtain the requisite license or rights, or pay such fees necessary
for GTE to provide the Services.
13. CHANGES IN MANNER OF PROVIDING SERVICES.
GENUITY acknowledges that GTE and its affiliates may in the future
determine to outsource certain information technology functions or perform
such functions using different computer software operating systems or
applications. These changes may prevent GTE from providing certain
Services or Work Products to GENUITY pursuant to this Agreement in the
manner in which they have been provided prior to such change. In the event
GTE determines to take any such action, it will provide GENUITY with one
hundred twenty (120) days prior written notice and will cooperate with
GENUITY to enable GENUITY to continue to receive any affected Services and
Work Products through arrangements with GTE's outsource providers or
through conversion of GENUITY data for use on such operating systems or
applications. In the event GTE determines to make such changes, GENUITY
shall have the right to terminate this Agreement or any affected STATEMENT
OF WORK without any liability or penalty. Any customizations requested by
GENUITY within or to the systems utilized by GTE to provide the Services
shall be at GTE's discretion. GENUITY shall be required to pay the mutually
agreed upon cost of such customizations.
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<PAGE>
14. INSURANCE.
(a) Coverage. GTE agrees to maintain in full force and effect during the term
--------
of this Agreement, and so long as the indemnity obligations hereunder are
in effect, for GTE the following minimum insurance coverages: (i) Worker's
Compensation and Occupational Disease covering GTE's full liability under
the Statutory Workers' Compensation Laws for the state in which the Service
is being performed; (ii) Employer's Liability Insurance in the minimum
amount of $100,000 per accident, $100,000 disease per employee, and
$500,000 disease aggregate; (iii) General Liability Insurance - Broad
Form, including, but not limited to GTE's Protective Liability, Blanket
Contractual Liability and Products Liability/Completed Operations in the
minimum amounts of $1,000,000 per occurrence; and (iv) If the use of motor
vehicles is required, comprehensive Motor Vehicle Liability Insurance to
include, but not limited to owned, non-owned, leased, and hired vehicles in
the minimum amounts of $1,000,000 combined single limit per occurrence for
Property Damage and any accident resulting in bodily injury or the death of
one or more persons, and the consequential damages arising therefrom.
(b) Certificates of Insurance. Certificates of Insurance, incorporating the
-------------------------
above-described endorsements, shall be furnished to GENUITY upon request.
15. REPRESENTATIONS AND WARRANTIES.
GTE represents, warrants, and covenants to GENUITY that:
(a) In performing Services, GTE shall comply with all applicable laws, codes,
ordinances, orders, rules and regulations of local, state, and federal
governments and agencies and instrumentalities, including, but not limited
to, applicable wage and hour, safety and environmental laws, and all
standards and regulations of appropriate regulatory commissions and similar
agencies.
(b) All Services furnished by GTE shall be performed by qualified personnel at
a level of professional performance standard within the industry in which
the Services are provided.
(c) GTE has all rights and licenses to perform the Services contemplated by
this Agreement and any Statement of Work incorporated herein.
(d) THE WARRANTIES IN THIS SECTION 15 AND ANY WARRANTY IN A STATEMENT OF WORK,
BUT ONLY IF SPECIFICALLY IDENTIFIED
Page 15 of 114
<PAGE>
AS AN EXPRESS WARRANTY IN SUCH STATEMENT OF WORK (INCLUDING SERVICE LEVEL
AGREEMENTS), ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, OR
WHETHER ARISING BY COURSE OF DEALING OR PERFORMANCE, CUSTOM, USAGE IN THE
TRADE OR PROFESSION OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR
WARRANTIES AGAINST INFRINGEMENT. Except for the warranties expressly set
forth in this Section 15 and any Statement of Work, GENUITY acknowledges
and agrees that it has relied on no other representations or warranties and
that no other representations or warranties have formed the basis of its
bargain hereunder.
(e) All representations, warranties and covenants of GTE contained in this
Section shall continue for the term of this Agreement and shall survive its
termination.
16. ASSIGNMENT AND SUBCONTRACTING.
(a) Neither this Agreement nor any rights or obligations hereunder shall be
assignable by either of the parties hereto; provided that GTE may delegate
all or any portion of its obligations to perform Services under this
Agreement to one or more of its affiliates or either party may assign to
any affiliate without the consent of the other party.
(b) GTE may use subcontractors to perform the Services under this Agreement as
specified in Section 1(d). GTE shall be responsible for the fulfillment of
its obligations hereunder, notwithstanding the performance of such
obligations by its subcontractors.
17. EQUAL EMPLOYMENT.
(a) General Compliance. Without limitation of Section 18, COMPLIANCE WITH
------------------
LAWS, each party shall comply with applicable laws concerning employment,
including, but not limited to the following, which are incorporated herein
by specific reference:
(1) The Equal Employment Opportunity Clause set forth in Section 202,
paragraphs I through 7, of Executive Order 11246, as amended, relative
to Equal Employment Opportunity and the implementing Rules and
Regulations of the Office of Federal Contract Compliance (hereinafter
referred to as "the OFCCP") relating to equal employment opportunity.
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<PAGE>
(2) The Affirmative Action Clause set forth in Section 60-741.4 of the
Affirmative Action Regulations on Handicapped Workers, issued by the
OFCCP pursuant to Section 503 of the Vocational Rehabilitation Act of
1973, as amended.
(3) The Affirmative Action Clause set forth in Section 60-250.4 of the
regulations issued by the OFCCP under Section 402 of the Vietnam Era
Veteran's Readjustment Assistance Act of 1974.
(4) Public Law 95-507 and Executive Orders 11625 and 12138.
(5) The Immigration Reform and Control Act of 1986 and any and all rules
and regulations pertaining thereto. In compliance with the Act,
GENUITY requires all approved contracting firms to supply only persons
authorized to work in the United States pursuant to the Act. GTE shall
be responsible for complying with the Act with regard to all employees
supplied to GENUITY.
(6) Title I of the Americans with Disabilities Act, 42 U.S.C.A. 12101
et seq.
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(b) ADA. If any persons furnished by either party under the Agreement or any
---
Statement of Work have a disability as defined in the Americans with
Disabilities Act, 42 U.S.C.A. 12101 et seq. (the ADA), the furnishing party
shall, where required by Title I of the ADA and at its sole expense,
provide "reasonable accommodations" that may be required under Title I of
the ADA. If GTE performs Services at facilities operated by GENUITY,
GENUITY shall be responsible, at its sole expense, for any physical changes
to GENUITY's facility that may be required under the ADA with respect to
persons utilized by GTE in performing the Services.
(c) Work Environment. Both parties agree to provide a work environment free
----------------
from all forms of sexual harassment, including but not limited to, any
unwelcome sexual advances, requests or demands for sexual favors, and other
visual, verbal, or physical conduct of a sexual nature.
18. COMPLIANCE WITH LAWS.
GTE and GENUITY shall each comply with the provisions of all applicable
federal, state, and local laws, ordinances, regulations and codes
(including procurement of required permits or certificates) in
fulfillment of their obligations under this Agreement. The Confidential
Information of each party may be subject to U.S. export and foreign
transactions control regulations. Each
Page 17 of 114
<PAGE>
party undertakes that it will not export, nor cause nor permit to be
exported, the other party's Confidential Information out of the United
States of America without such other party's prior written consent and
without compliance with applicable law and regulation; nor will such
Confidential Information be made available, directly or indirectly, for
use in any project associated with the design, development, production,
testing, stockpiling or use of: (a) nuclear weapons or facilities to
produce nuclear explosives; or, (b) missiles; or, (c) chemical or
biological warfare agents. Each party agrees to comply with all
applicable laws and regulations relating to the exportation of technical
information, as they currently exist and as they may be amended from time
to time.
19. PLANT WORK RULES AND RIGHT OF ACCESS.
(a) Compliance. Employees, subcontractors, and agents of the parties, while on
----------
the premises of the other, shall comply with all plant rules, regulations
and reasonable company standards for security, including (when required by
U.S. government regulations) submission of satisfactory clearance from U.S.
Department of Defense and other federal authorities concerned.
(b) Access. Each party shall permit reasonable access during normal working
------
hours to its facilities that are used in connection with the performance of
Services. No charge shall be made for such visits. Reasonable prior notice
shall be given when access is required.
(c) Limitation on Access. If either party is given access, whether on-site or
--------------------
through remote facilities, to any computer or electronic data storage
system of the other party in order to accomplish the Services called for in
this Agreement, the party that receives such access shall limit such access
and use solely to perform Services within the scope of this Agreement and
shall not access or attempt to access any computer system, electronic file,
software or other electronic services other than those specifically
required to accomplish the Services required under this Agreement. Under
no circumstances shall either party's personnel access any networks or
facilities of the other party for the purpose of accessing other external
networks, nor shall any such capabilities for such access be published or
made known via any medium, as for example and not by way of limitation,
posting on bulletin boards or E-mail. Any such use or publication shall be
a material breach of this Agreement. Neither party shall use back doors,
data capture routines, games, viruses, worms, or Trojan horses and any
intentional introduction of such into the other party's data networks shall
be deemed a material breach of this Agreement. The party receiving access
shall limit such access to those of its employees whom the other party has
authorized in writing to have such access in connection with this Agreement
or the applicable Statement of Work, and shall strictly follow all security
rules and procedures for use of
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<PAGE>
the providing party's electronic resources. All user identification
numbers and passwords and any information obtained as a result of access
to and use of a party's computer and electronic data storage systems
shall be deemed to be, and shall be treated as, Confidential Information
under applicable provisions of this Agreement. Each party agrees to
cooperate with the other in the investigation of any apparent
unauthorized access to a party's computer or electronic data storage
systems.
20. GENUITY RESPONSIBILITIES.
GENUITY agrees to perform in a timely fashion those tasks, and to provide
the personnel, facilities and accurate information as agreed by the
parties and set forth in the applicable Statement of Work. GENUITY
further agrees to cooperate with GTE in its performance of this
Agreement, to not unreasonably withhold its consent to any matter for
which consent is required or requested.
21. PERMITS.
Unless otherwise specifically provided for in this Agreement, GTE shall
obtain and keep in full force and effect, at its expense, any permits,
licenses, consents, approvals and authorizations ("Permits") necessary
for and incident to the performance and completion of the Services.
Notwithstanding the foregoing, GENUITY shall obtain and keep in full
force and effect, at its expense, any Permits related to its facilities
and the conduct of its business.
22. PUBLICITY.
The parties agree to submit to one another, for prior written approval,
all advertising, sales promotion, press releases and other publicity
matters relating to the Services performed pursuant to this Agreement,
when its respective name or mark is mentioned or language from which the
connection of said name or mark may be inferred or implied. The parties
further agree not to publish or use such advertising, sales promotions,
press releases, or publicity matters without such prior written approval.
Any approval required under this Section shall not be unreasonably
withheld or delayed by either party.
23. TRADEMARKS, TRADENAMES AND OTHER INTELLECTUAL PROPERTY.
Except as expressly set forth in this Agreement or in a separate written
agreement between GTE and GENUITY, nothing in this Agreement or any
Statement of Work shall grant, suggest or imply any right, license or
authority for one party to use the name, trademarks, service marks, trade
names or domain names of the other for any purpose whatsoever. Except and
to the
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<PAGE>
extent expressly set forth in this Agreement or in a separate written
agreement between GTE and GENUITY, nothing in this Agreement or any
Statement of Work shall be deemed to grant to either party any right or
license under any intellectual property of the other party.
24. TERMINATION.
(a) Termination Events. Either party may terminate or cancel this Agreement or
------------------
any Statement of Work, effective immediately, upon written notice to the
other party, if any of the following events occur:
(1) The other files a voluntary petition in bankruptcy (other than as
creditor).
(2) The other is adjudged bankrupt.
(3) A court assumes jurisdiction of the assets of the other under a
federal reorganization act.
(4) A trustee or receiver is appointed by a court for all or a substantial
portion of the assets of the other.
(5) The other becomes insolvent or suspends its business.
(6) The other makes an assignment of its assets for the benefit of its
creditors except as required in the ordinary course of business.
(b) Termination for Breach. Either party may terminate or cancel this
----------------------
Agreement or a Statement of Work, for a material breach or default of any
of the terms, conditions or covenants of this Agreement by the other,
provided that such termination or cancellation may be made only following
the expiration of a thirty (30) day period ("Cure Period") during which the
breaching party has failed to cure such breach after having been given
written notice thereof. In such event, the non-breaching party may
terminate by giving 10 days written notice of termination, after the
expiration of the Cure Period.
(c) Termination for Convenience. GENUITY may terminate this Agreement or a
---------------------------
Statement of Work during the term of this Agreement or a Statement of Work,
for convenience on one hundred twenty (120) days prior written notice to
GTE. In the event of termination by GENUITY pursuant to this Section,
prior to the end of the term, GENUITY will reimburse GTE for all GENUITY-
approved, third party costs for equipment or
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<PAGE>
software which have been incurred by GTE after the execution of this
Agreement as a direct result of GTE's provision of Services under this
Agreement or any Statement of Work, provided that GENUITY shall be entitled
to any right, license or title related to any such equipment or software to
the extent GTE has the ability to convey such right, license or title.
(d) Termination under Statement of Work. Statements of Work may be terminated
-----------------------------------
as set out under their specific terms, if different from those set out in
(a), (b) and (c) above.
25. NOTICE.
Any written notice either party may give the other concerning the subject
matter of this Agreement shall be in writing and given or made by means
that obtain a written acknowledgment of receipt. If the notice pertains
to a STATEMENT OF WORK performed by any of the following entities notice
shall be sent to the applicable company addresses shown below, which may
be changed by written notice:
To GTE SERVICE CORPORATION:
1255 Corporate Drive
Irving, Texas 75038
Attention:__________
To GTE DATA SERVICES INCORPORATED:
One East Telecom Parkway
Temple Terrace, Florida 33637
Attention:____________
To GTE CONSOLIDATED SERVICES INCORPORATED:
1255 Corporate Drive
Irving, Texas 75038
Attention:___________
To GTE COMMUNICATION SYSTEMS INCORPORATED:
5616 High Point
Drive, Irving, Texas 75038
Attention:_____________
To GENUITY:
3 Van de Graaff Drive
Burlington, Massachusetts 01803
Attention:_____________
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<PAGE>
Notice shall be deemed to have been given or made when actually received,
as evidenced by written acknowledgment of receipt.
26. WAIVER OF TERMS AND CONDITIONS.
Failure to enforce any of the terms or conditions of this Agreement shall
not constitute a waiver of any such terms or conditions, or of any other
terms or conditions.
27. SEVERABILITY.
Where any provision of this Agreement is declared invalid, illegal, void
or unenforceable, or any changes or modifications are required by
regulatory or judicial action, and any such invalid, illegal, void or
unenforecable provision, or such change or modification, substantially
affects any material obligation of a party hereto, the remaining
provisions of this Agreement shall remain in effect and the parties shall
mutually agree upon a course of action with respect to such invalid
provision or such change or modification to the end that the purposes of
this Agreement are carried out.
28. SURVIVAL OF OBLIGATIONS.
The provisions in the Agreement relating to Confidentiality,
Indemnification, Dispute Resolution, Termination, Compensation and
Billing, Limitation of Liability, and Insurance shall survive any
termination, cancellation or expiration of this Agreement.
29. APPLICABLE LAW.
This Agreement, and the rights and obligations contained in it, shall be
governed by and construed in accordance with the laws of the State of New
York, without regard to any conflicts of law principles that would
require the application of the laws of any other jurisdiction.
30. NO UNREASONABLE DELAY OR WITHHOLDING.
Where agreement, approval, acceptance, consent or similar action by
GENUITY or GTE is required, such action shall not be unreasonably delayed
or withheld.
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31. ENTIRE AGREEMENT
This Agreement represents the entire understanding between the parties
with the respect to its provisions and cancels and supercedes all prior
agreements or understandings, whether written or oral, with respect to
the subject matter. This Agreement may only be modified or amended by an
instrument in writing signed by duly authorized representatives of the
parties. This Agreement shall be deemed to include all Exhibits, Addenda
and Statements of Work issued hereunder.
32. RULES OF INTERPRETATION
Headings in this Agreement are for convenience of reference only and
shall not affect the interpretation or construction hereof. Unless
otherwise specified, (i) the terms "hereof", "herein" and similar terms
refer to this Agreement as a whole and (ii) references herein to
"Sections" refer to parts or sections of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement through
their authorized representatives.
Genuity Inc. GTE Service Corporation
By:_______________________________ By:__________________________________
Name:_____________________________ Name:________________________________
Title:____________________________ Title:_______________________________
Date:_____________________________ Date:________________________________
Page 23 of 114
<PAGE>
STATEMENT OF WORK
-----------------
ACCOUNTING AND CASH PROCESSING SERVICES
---------------------------------------
This Statement of Work is appended to the Transition Services Agreement
("Agreement") dated ______________ by and between Genuity Inc. and GTE Service
Corporation and shall be governed by the terms and conditions thereof. The
services described herein shall be provided for a period of twelve (12)
consecutive months effective upon the date of execution of the Transition
Services Agreement.
The purpose of this SOW is to provide for the transition of a variety of
accounting related services, since Genuity will not initially have in place the
infrastructure necessary to perform the services. The services as described in
this SOW relate to accounts payable, payroll, cash processing, and asset
accounting. Genuity desires to retain GTE to provide these services during a
transitional period while Genuity prepares itself to handle these services
independently of GTE.
Genuity understands and acknowledges that GTE plans to fulfill its obligations
hereunder utilizing the systems ("Systems") set out in the attached Exhibit A to
this Statement of Work, and agrees not to change its systems such that its
systems become incompatible with such Systems as long as this Statement of Work
is effective.
ACCOUNTS PAYABLE SERVICES
As requested, and at the discretion of Genuity, GTE will provide the following
Accounts Payable services:
1. Perform all invoice and expense report processing for Genuity.
. Invoices for purchase order related items are mailed directly to
Accounts Payable Shared Services Center ("AP/SSC") from the vendor.
. Expense reports and miscellaneous purchases are input into the system
by the originator, then approved by the appropriate supervisor/manager
and mailed to the AP/SSC.
. Expense reports are electronically processed, from submission to
notification.
. Genuity electronic files are transmitted by Genuity and uploaded into
system by accounts payable ("A/P").
2. Work with Genuity purchasing group as required on issues related to
payment of purchase order related invoices, including resolution of
invoices that do not meet existing criteria for payment.
Page 24 of 114
<PAGE>
3. Print and distribute all checks for Genuity vendors nightly.
. Maintain appropriate level of security for the equipment and check
stock.
4. Perform vendor maintenance function to add new vendors and/or employees to
the vendor file or change address information as needed. Mail out W-9
forms to all new vendors to obtain vendor's tax identification.
5. Prepare 1099 forms at year-end.
6. Administer field checking accounts for checks written at field locations.
. Maintain log of authorized check locations and signature file for each
account.
. Print blank check stock and supplies to check locations when requested.
7. Perform general ledger account reconciliations and bank reconciliations.
8. Perform stop payment requests and provide status of checks as requested.
Deposit vendor checks, refunds, returned checks, and other checks directly
to the Genuity bank account and perform accounting accordingly.
9. Establish and maintain recurring payments for leased property and other
recurring items.
10. Coordinate requirements for bank wire transfer payments in both foreign
currency and US. Payments in foreign currency are coordinated with
treasury department, which determines the exchange rate and provides the
amount back to A/P in US dollars to journalize the transaction.
11. All Genuity vouchers exceeding $150,000 will be reviewed prior to payment
for compliance with Genuity payment policies and procedures. In addition,
a post processing sample audit of approximately 8% of employee expense
reports and 2% of other vouchers will be reviewed for compliance with
Genuity's policies and procedures.
12. Perform Electronic Funds Transfer ("EFT") for vendors and direct deposit
for reimbursement of employee expense reports.
13. Retain expense detail data as required by law that supports all required
tax and regulatory obligations.
14. Provide A/P payment services for international vendors.
. Foreign currency payment process
. General Ledger Accounting
15. Cash management of payment cycles (i.e. vendor terms and year-end payment
processing) as determined by Genuity.
16. Process A/P adjustment forms for Prism related data changes.
Page 25 of 114
<PAGE>
17. Provide ad-hoc vendor reporting.
18. Provide Genuity representatives electronic access to A/P scanned records.
19. Provide state and use tax accruals set up and processing.
GTE will provide the following metrics to Genuity relating to accounts payable
- ------------------------------------------------------------------------------
services:
- --------
1. Invoice and expense report volumes.
. Provide monthly invoice and expense report volumes within 5 days
following monthly expense cutoff.
2. Average days to process invoice and expense reports through the standard and
PME (procurement, match and error) queues.
. Until mechanical tracking is available, approximately 25 Genuity
invoices/expense reports per week will be sampled to determine the
average processing time. This information will be provided monthly
within 5 days following expense cutoff. Mechanical tracking capability
has been requested, and once functionality is available, will track
processing time for all invoices and expense reports.
3. Processing and response times on electronic feeds.
. A schedule will be developed (by A/P and system team) that will be
provided to Genuity each day and a cumulative monthly summary showing
files sent into The system by Genuity (including the date and timing
of the transmission) and the date and times these files were actually
processed into The system. Genuity will be required to notify both A/P
and system processing each day of the number and kinds of files sent
to verify that all files sent were actually received. This process is
planned to be in place by May 1, 2000.
4. General Ledger account reconciliations shall be prepared monthly by the
15th day of the second month following month end. (i.e. by August 15 for
the month of June.)
Genuity's Responsibilities with respect to Accounts Payable Services:
- ---------------------------------------------------------------------
Genuity shall provide all information/instructions regarding processing and
payment of invoices and expense reports.
Pricing Structure for Accounts Payable Services:
- ------------------------------------------------
Genuity shall pay GTE at the rate of $3.05 (three dollars and five cents) per
voucher or expense report for the first 250,000 vouchers and expense reports
processed in the 12-month period following the effective date of this Statement
of Work. During this 12-month period, vouchers and expense reports exceeding
250,000 and up to 500,000, shall be charged at the rate of $1.80 each (one
dollar and eighty cents). If the annual volume exceeds 500,000, a revised
charge per voucher shall be negotiated by GTE and Genuity. If no agreement can
be reached, GTE shall not be required to process vouchers in excess of 500,000
per year.
Page 26 of 114
<PAGE>
Changes or requests that necessitate the use of manual efforts instead of
current system processes, or up-front meetings, conference calls, training,
consulting, or other similar services to be billed at the rate of $25.00
(twenty-five dollars) per hour, plus any travel related costs if appropriate.
Any system cost increases attributable to Genuity, imposed by third party
vendors due to systems changes desired by Genuity such as license or user fees,
programming fees or maintenance fees, shall be paid by Genuity.
Programming/system work for new requirements or changes in systems to be billed
separately.
PAYROLL SERVICES
As requested, and at the direction of Genuity, GTE will provide the following
payroll services:
1. Printing and distribution of payroll checks and advices.
2. Manual checks provided as required.
3. Calculate payment to employees based on a standard 40/80 hours each pay-
period.
4. Process exception time reported (overtime, shift hours and
differential, on call hours and other work hours). Submission of
exception information, via the time entry system or by direct feed from
the Employee Time Reporting ("ETR") system into The system, is the
responsibility of Genuity. Submission between any other electronic file
format or means must be previously agreed to by Genuity and GTE.
5. Process direct deposits.
6. Process payroll taxes, including Federal, State and Local.
7. Process employee deductions sent to the payroll center for inclusion in
employee master file. Any change to existing benefits or third party
vendors, or not flowing this information through the Quincy Processing
Center in the same manner as is done as of the date hereof, will
require programming and processing changes. These deductions include:
. Bond deductions
. Union dues
. Health Clubs
. Garnishments, Child support, Bankruptcy, IRS Levy deductions, and
other such deductions
. United Way deductions
. Savings and Investment deductions (401K) from Fidelity
. FRP Plans - from Hewitt
. Insurance deductions - from Hewitt/KVI/MetLife
. Other miscellaneous deductions
8. Process all additional earnings as transmitted to payroll center for
payment and recording in employee earnings. Any change of outside vendors
providing this
Page 27 of 114
<PAGE>
information or not transmitting this information through the Quincy
Processing Center in the same manner as is done as of the date hereof will
require programming and processing changes. These items include:
. Awards
. Discretionary Bonus
. Incentive Compensation payments
. Sales Incentives
. Retroactive payments
. Choices earnings - from Hewitt
. High Housing cost allowances
. Cost of Living adjustments
. Field Premiums
. Site Allowances
. Per Diem
. Sign on Bonus
. Option exercise earnings from Smith Barney
. Imputed Income
. Tuition aid
. Military pay/jury duty
. Other, as required
9. Process Credit Union or Bank additions/changes/deletions.
10. Process any termination pay, including vacation, retirement pay or other
termination pay.
11. Process vehicle allowance or usage for personal or company owned vehicles.
12. Process tax gross-ups when required.
13. Maintain earnings and deduction codes tables.
14. Payment of employee deductions to appropriate vendors via check request to
Accounts Payable. If A/P is not used by Genuity, programming and processing
changes will be required.
15. Process W-4s submitted by employees to payroll center.
16. Provide all W-2 reporting requirements.
17. Maintain check distribution codes.
18. Reconcile payroll accounts.
19. Transmit journal entry file per established schedule on system web page, to
Genuity monthly to update its General Ledger.
20. Process employee master file updates into payroll system when received from
HR system.
Page 28 of 114
<PAGE>
21. Continue to provide current system generated payroll reports. Assist
Genuity employees in determining RAMIS system report requirements.
22. An employee rate file will be transmitted daily (or as required) back to
Genuity with adds/changes/deletes of employee rates for use in Genuity
cost systems.
23. Retain all data as required by law that supports normally required tax and
regulatory obligations.
24. Transmit journal entry file to Genuity biweekly for 401(k) employee match
to update Genuity's general ledger.
25. Reconcile all payroll interface and outerface files.
26. Reconcile/provide summary funding report as required for treasury on
Wednesday of pay-week.
27. Provide appropriate system access to Genuity payroll personnel consistent
with access as of the date hereof. (Additional access requirements will
need to be coordinated with, and approved by HR/PR and system security.)
28. Provide unemployment services with Gates MacDonald and keep rates updated
in payroll system. (A vendor change will require programming and process
changes.)
29. Provide employment verification and mortgage verification via TALX system.
(Assumes Genuity contracts with TALX for this service. Changing the vendor
will require programming and processing changes.)
GTE will provide the following metrics to Genuity with respect to payroll
services:
1. Number of employees supported - based on average number of employees per pay
period each month in a format to be mutually agreed upon by the parties.
2. Number of manual checks each month to Genuity employees
. Number of checks
. Reason for manual checks (i.e. legal requirements, payroll error, time
release issue, other reasons.)
3. General Ledger account reconciliations prepared monthly by the 15th day of
the second month following month end. (i.e. by August 15 for the month of
June)
Genuity's Responsibilities with respect to Payroll Services
- -----------------------------------------------------------
Genuity is responsible for providing all information and data required for GTE
to perform its duties hereunder including, but not limited to, all employee
information, changes, pay information and other information through The human
resource systems (including benefit providers).
Page 29 of 114
<PAGE>
Pricing Structure with respect to Payroll Services
- --------------------------------------------------
Genuity shall pay GTE at a rate of $10.72 (ten dollars and seventy-two cents)
per employee supported per month. All manual checks that are not the result of
legal requirements or payroll error are to be billed at the rate of $20.00
(twenty dollars) per check for the first 50 manual checks each month, $25.00
(twenty-five dollars) per check for the next 100 manual checks each month, and
$30.00 (thirty dollars) per check for all manual checks for the month exceeding
150, plus shipping and handling.
Changes or requests that necessitate the use of manual efforts instead of system
processes in effect as of the date hereof, or up-front meetings, conference
calls, testing, training or consulting to be billed at the rate of $25.00
(twenty-five dollars) per hour, plus any travel related costs if appropriate.
Any system cost increases attributable to Genuity, imposed by third party
vendors due to systems changes desired by Genuity such as license or user fees,
programming fees or maintenance fees, shall be paid by Genuity.
Programming/system work for new requirements or changes in systems to be billed
separately.
CASH PROCESSING SERVICES
As requested, and at the direction and under the policies developed and provided
by Genuity, GTE will provide the following administrative cash processing
services:
1. Funding and Liquidity:
. Support and assist with bank selection process and negotiation of
terms and conditions of bank facilities.
2. Daily Cash Processing:
. Electronically poll banks to obtain balance and transaction data and
report same to Genuity
. Concentrate cash flows from all sources pursuant to Genuity's
instructions
. Transmit payment of all obligations via wire, ACH, EDI (including
funding payroll and accounts payable) authorized by Genuity
. Administer short-term borrowing/investing activities pursuant to
Genuity's policies and directions
. Provide efficient treasury management workstation which integrates and
facilitates daily cash management and related accounting
services/activities
. Provide cash activity research, as requested
. Provide supporting information and documentation to Genuity
3. Cash Accounting and Reporting:
. Balance, journalize and upload:
. Receipts, disbursement transactions
. Temporary cash investments
. Short-term debt transactions
Page 30 of 114
<PAGE>
. Long-term debt transactions
. Accruals, as necessary, related to the above
. Provide supporting information and documentation to Genuity
. Process transactions and maintain/provide documentation for payable
and receivable transactions between and among Genuity subsidiaries and
affiliated companies
4. Bank Account Maintenance and Administration
. Provide routine bank account maintenance pursuant to Genuity banking
resolutions, policies and direction:
. Open/close accounts
. Maintain accurate authorized signatory records and resolutions
. Ensure Genuity-directed internal controls are carried out
. Monitor efficiency of bank account structure and recommend changes
for Genuity consideration, as needed
5. Foreign Currency Exchange Transactions
. Maintain mechanized system for spot transactions under $250,000
. Execute foreign exchange, futures, and options transactions
. Prepare foreign exchange drafts and initiate wires
6. International Project Finance
. Consult/advise on alternative sources of financing (OPIC, Exim, World
Bank, and others)
. Provide support and assistance in executing international financing
strategies
Genuity Responsibilities with respect to Cash Processing Services
- -----------------------------------------------------------------
Genuity shall be responsible for providing instructions, policies, guidelines,
and board resolutions where applicable, and for selecting and maintaining
banking relationships such that GTE can perform its duties hereunder.
Pricing Structure with respect to Cash Processing Services
- ----------------------------------------------------------
Genuity shall pay GTE a one-time initial set-up fee of $11,000 (eleven thousand
dollars).
Genuity shall pay GTE an annual fee of $265,000 (two hundred sixty-five thousand
dollars) payable in monthly installments in arrears, for provision of the Cash
Processing Services described above in items 1-5 for the 12 month period
following the effective date of this Statement of Work.
Genuity shall pay any and all bank fees incurred by GTE on behalf of Genuity in
the course of delivering Services under this Statement of Work.
Genuity shall pay the following hourly rate for any Cash Processing Services
outside the scope of items 1-6 described above, including but not limited to
consulting or vendor transition services provided in the event Genuity elects to
utilize an alternative vendor at a later time: $65.00 (sixty-five dollars) per
hour.
Page 31 of 114
<PAGE>
Genuity shall pay the following hourly rate for Services under 6 above
(International Project Finance): $100.00 (one hundred dollars) per hour.
Any system cost increases attributable to Genuity, imposed by third party
vendors due to systems changes desired by Genuity such as license or user fees,
programming fees or maintenance fees, shall be paid by Genuity.
ASSET ACCOUNTING SERVICES
GTE will provide the following asset accounting services for Genuity through its
- --------------------------------------------------------------------------------
Fixed Asset Shared Service Center:
- ----------------------------------
Processes
- ---------
1. Create asset detail records (monthly settlement procedures)
. Account for (settle) labor, material and overhead costs in accordance
with settlement rules created by Genuity.
. Account for (settle) final assets, via manual or mechanical process
for labor and materials costs, from internal orders and work breakdown
structures ("WBS's") - Triggering of the settlement process will based
upon one of the following:
. Technical close of an internal order ("IO") or WBS by Genuity
. Settlement rules established by Genuity
. Review of monthly "blanket" IO's and WBS's as identified by Genuity
. Receipt of summary information via TIMS system
. Receipt of notification of acceptance of Qwest Fiber segment
. Account for (settle) capital dollars relating to assets under
construction during the month end close as directed by Genuity.
2. Process transfers between locations, cost centers, and intra-legal entity
company codes based upon input through the plant maintenance module and
manual forms submitted by Genuity. Maintain documentation demonstrating
support for the transfer of assets to Genuity defined standards.
3. Calculate interest during construction amounts based upon Genuity policies
and procedures, and place amounts into service based upon Genuity
notification, or other established process.
4. Process affiliate transfers (between Genuity legal entities) based upon
information from Genuity. Maintain documentation demonstrating support for
the transfer of assets to Genuity defined standards.
5. Process retirements of assets based upon information supplied by Genuity.
Maintain documentation supporting the retirement of assets to Genuity
defined standards.
6. Record proceeds from the sale of assets, based upon cash receipts
information booked by Genuity.
Page 32 of 114
<PAGE>
7. Generate depreciation expense monthly according to the Genuity established
calendar, including:
. Running system depreciation program
. Addressing any errors and posting to the general ledger
. Reconciling and resolving any sub-ledger to general ledger discrepancies
8. Perform year-end rollover processes.
Data Maintenance
- ----------------
1. Maintain and update location code information as required by Genuity.
2. Maintain adequate data to support internal and external audit requests
along with tax and insurance requirements, in accordance with Genuity
policies and procedures.
Reporting
- ---------
1. Ensure access to monthly activity reports including asset history sheets
with acquisition, transfer, retirement and depreciation information.
2. Ensure access to month end asset detail positions.
3. Support ad-hoc reporting requests from Genuity.
4. Provide required reporting for year-end tax processes plus required property
tax and insurance reporting, as defined by the Genuity tax and insurance
groups.
5. Provide reconciliations of all asset accounting tracked accounts and
procedures (i.e., interest during construction) monthly by the 15th of the
month.
Ad-hoc Services
- ---------------
1. Maintain lease term schedule for leasehold information based upon
information from the facilities group.
2. Support capital lease related requirements for tracking and reporting.
3. Support revaluations of assets and other like special projects as required
by Genuity.
4. Supply supporting documentation as maintained.
5. Work with the system development team to implement any Genuity or GTE
desired upgrades or enhancements involving the system fixed asset module.
6. Support audit requests (including interface with other shared service
centers ("SSC's") for external and internal audit groups, including system
and process reviews, and sample detail testing in accordance with pre-
defined schedules.
Page 33 of 114
<PAGE>
Service Level Standards
- -----------------------
1. All assets under construction ("AUC") amounts that are triggered (under
Processes-first section above) for transfer to final assets by the 15th of
the month are expected to be depreciable assets for the given month end
close. Any items not processed are to be reported through a backlog
tracking process.
2. Asset records will be created to the level of detail procedurally defined by
Genuity.
3. Transfers, retirements, sales and affiliate transactions are transmitted
to the SSC by the 15th of the month and are expected to be booked prior to
the given month end close.
4. Location database updates will be provided on a 24-hour turnaround.
5. A depreciation roll-forward is expected for each month by the 3rd business
day after the posting of depreciation. This roll-forward should document
the change in depreciation by company code broken out by the impact of
additions, fully depreciated assets, and retirements.
6. Support document retrieval for records on transfers, affiliate sales, and
retirements will be provided on a 48-hour turn-around basis.
Pricing Structure with respect to Asset Accounting Services:
- ------------------------------------------------------------
Genuity shall pay GTE a monthly fee of $42,000 for the Services described
herein.
Changes or requests that necessitate the use of manual efforts instead of
current system processes, or up-front meetings, conference calls, training,
consulting, or other similar services to be billed at the rate of $25.00
(twenty-five dollars) per hour, plus any travel related costs if appropriate.
Any system cost increases attributable to Genuity, imposed by third party
vendors due to systems changes desired by Genuity such as license or user fees,
programming fees or maintenance fees, shall be paid by Genuity.
GTE SERVICE CORPORATION GENUITY INC.
By:____________________________ By:___________________________
Title:_________________________ Title:________________________
Date:__________________________ Date:_________________________
Page 34 of 114
<PAGE>
Exhibit A
[ICON APPEARS HERE]
Note: The sheets included in the Excel worksheet file referenced above are
attached to this document immediately following this page.
Page 35 of 114
<PAGE>
Exhibit A
Accounting and Cash Processing Statement of Work
Systems/Software Required to Serve Internetworking-Accounts Payable Services
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
System Name Function
- ------------------------ --------------------------------------------------
<S> <C>
AP ONE Used by Internetworking to enter employee
expense reports and check requisitions. Payment
data is entered into AP ONE. The printed
documents are sent to San Agnelo where they are
scanned. The AP ONE system sends a nightly file
to SAP A/P to journalize
AP Movers (subsystem System that takes all incoming files (EDI, AP
of VISION) ONE, and other internal interfaces) and edits
and formats the records for mechanical entry
into SAP A/P.
TSI (Mercator) Contains the mapping information to correctly
Trading Partner EC format EDI invoices from external vendors so
those invoices can be processed into SAP. Also
used in formatting outbound payment files back
to vendors.
Mercator Also used to facilitate processing of EDI
invoices into SAP and EFT payments out of SAP to
various external vendors.
CONNECT: Mailbox Used to "mail" EFT payments to various vendors.
SAP A/P Used to process A/P activity for
Internetworking, including vendor set-up,
processing of manual invoices, processing of
electronic invoices, outerfaces back to various
Internetworking systems, check printing and
electronic payments.
</TABLE>
Page 36 of 114
<PAGE>
Systems/Software Required to Serve Internetworking-Payroll Services
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
System Name Function
- ------------------------ --------------------------------------------------
<S> <C>
Fleet Bank's On-Line Used to perform maintenance on ACH records
Maintenance System before they are released, used to obtain check
impages of payroll checks, used for stop
payments, voids, etc. It is also used by Recons
for their bank reconciliation.
Fleet Bank's A program whereby NewCo receives its ACH return
Treasury Express items so it can initiate action in payroll for a
System replacement check.
Fed-Ex On-Line Used for all mailings done on a daily basis.
Powership System and
Airborne Express
On-Line System
Thomson Financial This is a CD-ROM based Windows System which
ABA Reference Guides provides a monthly ABA# database used for
reference purposes in Banking. In addition
Thomson provides a quarterly flat file used by
SAP to verify ABA#'s entered into the system
through the IVR and on-line info-
FLS Tax Reporting Used for all tax reporting and year-end tax
System processing.
Hessel System used to process relocation for employees.
SAP HR/Payroll System used to process HR and Payroll
transactions for bi-weekly payroll runs.
SAP/AP System payroll interfaces with to send third
party remittances for employee deductions and
withholding to be sent to various vendors and
taxing authorities.
RDM System used to generate bi-weekly base time and
to report exception time for the pay period.
ETR System used by employees to report their time in
on a daily basis.
FFE Front end system used to pass the time fed from
RDM through to SAP Payroll.
IVR Interactive Voice Response System used by
employees to update various deductions and
withholdings on their masterfile record.
</TABLE>
Page 37 of 114
<PAGE>
Systems/Software Required to Serve Internetworking-Cash Management
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
System Name Function
- ------------------------ --------------------------------------------------
<S> <C>
Treasury Management Control and management of all aspects of cash
Workstation management, including daily cash positioning,
cash journalization and reporting, investments,
long-term debt tracking and reporting, ST debt
tracking, etc.
Pinnacle Tax System Banking system utilized to effect EFTPS and
state tax payments
Bank Data Retrieval Bank polling system - internally developed
(CrossTalk)
WANDA FX System Banking system utilized to effect foreign
exchange transactions
Electronic Account System to assist in management and tracking of
Analysis System bank fees
Bank Fee Allocation System to allocate consolidated bank invoices
System (FoxPro)
Intranet Web Site Intranet utilized to disseminate cash and
accounting information and reports to end users
-- Internetworking would need access via
Intranet or Virtual Private Network
MicroTrade Facilitate preparation of letters of credit
Bank Account Facilitate management of bank account
Signatory System signatories and opening/closing of bank accounts
(FoxPro)
Banking Transaction Banking wire and concentration system utilized
System to effect wire/ACH transfers as well as
concentrate funds
Banking Transaction Banking system utilized to effect payroll via
System check and ACH (includes payroll imaging and
positive pay functionality)
Banking Transaction Banking system utilized to effect accounts
System payable checks
</TABLE>
Page 38 of 114
<PAGE>
Systems/Software Required to Serve Internetworking-Asset Accounting Services
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
System Name
- -----------------------
<S> <C>
SAP
</TABLE>
Page 39 of 114
<PAGE>
STATEMENT OF WORK
-----------------
HUMAN RESOURCES SERVICES
------------------------
This Statement of Work ("SOW") is appended to the agreement dated ____________,
2000, by and between Genuity Inc. ("Genuity") and GTE Service Corporation
("GTE") and shall be governed by the terms and conditions thereof. The services
described herein shall be provided by GTE to Genuity for a period of three
months beginning on the date of the agreement.
SUMMARY:
GTE administers human resources matters in an efficient and centralized manner
and wishes to make this administrative expertise available to Genuity so that
employees experience an orderly transition from GTE to Genuity. Similarly,
Genuity wishes to retain access to certain aspects of GTE's human resources
administrative expertise until such time as Genuity can develop its own
expertise in this area. Accordingly, GTE and Genuity are entering into this
SOW, which will govern the parties' relationship with respect to various human
resources matters, including employee benefits services, general human resources
administrative services, employee data warehousing, development of a company
intranet, health and welfare benefits funding matters, and development of a
benefits delivery system. By its terms, this SOW will govern the parties
relationship in this regard for a period of three months from the date of the
agreement between GTE and Genuity. However, it is anticipated that this SOW
will be extended through December 31, 2000.
EMPLOYEE BENEFITS SERVICES:
For the purposes of this document, "Employee Benefits Plans" is comprised of,
and limited to the following: CHOICES health, dental, disability, FRP, HMO,
DHMO, Life Insurance, AD&D, prescription, vision, adoption assistance, personal
lines of insurance, survivor support programs and long term care.
1. Provide vendor management assistance to Genuity on an as needed basis.
. Act as liaison between Genuity and its various employee benefit plan
vendors.
. Monitor non-ERISA claims made to vendors under health and welfare benefit
plans.
. Monitor vendor performance.
Page 40 of 114
<PAGE>
2. Provide assistance to Genuity on an as needed basis in performing various
administrative functions under employee benefit plans.
. Consult with Genuity on administrative interpretations of employee
benefit plan provisions.
. Provide Genuity with information regarding historical practices with
regard to employee benefit plan administration.
. Assist Genuity in developing administrative practices for its employee
benefit plans.
. Oversee annual enrollment processes and other administrative
responsibilities for Genuity employee benefit plans.
Note: The above benefits-related information is not accessible via a GTE web
---
site.
Genuity's Responsibilities with respect to Employee Benefits Services
- ---------------------------------------------------------------------
Genuity understands and agrees that any involvement by GTE with Genuity's
employee benefit plans will be in an advisory or consultative capacity and not
---
in a fiduciary capacity. This includes, but is not limited to the Claims and
Appeals processes. As between GTE and Genuity, all fiduciary responsibility and
accountability remains at all times with Genuity.
Genuity will act as the point of contact with all vendors for any matter
relating to fiduciary and plan design issues, with GTE acting merely in an
advisory or consultative capacity. GTE will act as the point of contact with
all vendors for all other issues.
Genuity shall provide all information/instruction regarding its employees,
employee benefit plans, and vendors as GTE may require to fulfill its
obligations.
Genuity agrees to provide a quarterly report of all former GTE employees that
terminate or retire from Genuity. This information should be provided to the
Director, Executive Compensation Administration and Director, Benefits
Administration. This information will be used to ensure these employees receive
any appropriate GTE benefits as a result of their prior GTE service.
Pricing Structure for Employees Benefits Services
- -------------------------------------------------
GTE COSTS:
Genuity shall pay GTE at a rate of $5,400 per month, plus any travel expenses
incurred.
Programming or system work for any employee benefits administrative services to
be billed separately at a rate to be mutually agreed upon.
Page 41 of 114
<PAGE>
Genuity will pay GTE actual costs incurred resulting from any GTE system
modifications for Genuity-specific administrative or plan design changes.
EXTERNAL VENDOR COSTS:
Genuity will pay GTE's costs for any increased vendor charges (directly to the
vendor, unless otherwise specified) associated with Genuity-specific
administrative or plan design changes. Additionally, Genuity will be invoiced
separately for regular, ongoing administrative services provided by vendor, for
the exclusive benefit of Genuity.
OTHER HUMAN RESOURCES ADMINISTRATIVE SERVICES
1. Provide assistance to Genuity on an as needed basis in accomplishing various
other administrative human resources services including:
. Training Administration: training registration and scheduling, shipment
of training materials and other miscellaneous support for Genuity
employees on an as-needed basis;
. Educational Assistance Administration;
. Employment Verification: To include employment verification via external
vendor (TALX). Requests for employment verification outside of vendor
capabilities will be directed to Genuity;
. Relocation Services Administration;
. International Human Resources Administration;
. Provide vendor management assistance to Genuity on an as needed basis
for the above services;
. GTE will monitor vendor performance and act as an intermediary between
Genuity and the various vendors who provide the services listed above;
and
. Although no other specific services will be provided by GTE in the areas
of Employee Services Operations or Support, other than those specifically
described herein, it is anticipated that some amount of transition
support, as well various technical support will be required by Genuity on
an as needed basis.
Page 42 of 114
<PAGE>
Pricing Structure:
- -----------------
Genuity will pay actual vendor costs incurred for the delivery of these services
and will pay GTE's costs for any increased vendor charges (directly to the
vendor, unless otherwise specified) associated with Genuity-specific
administrative or plan design changes.
For Training Administration Services, Genuity shall pay GTE at a rate of $25.00
per hour, plus any travel expenses incurred, to be invoiced monthly.
For Employee Services Operations/Support transitional and/or technical support,
Genuity shall pay GTE at a rate of $40.00 per hour, plus any travel expenses
incurred, to be invoiced monthly.
Programming or system work for any administrative services to be billed
separately at a rate to be mutually agreed upon.
Genuity will be billed separately for actual costs incurred by GTE for any GTE
system modifications for Genuity-specific administrative or program design
changes.
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<PAGE>
2. Provide support in the area of Workforce Development, specifically related
to providing non-strategic course development and delivery on an as-needed
basis
Pricing Structure:
- -----------------
Genuity shall pay GTE the following rates on an as needed basis:
Programming or system work for any administrative services to be billed
separately at a rate to be mutually agreed upon.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Price
Per Student
Hour
- -------------------------------------------------------------------------------------
<S> <C>
Sales & Marketing Delivery $ 40
MMDP (Marketing Mgmt Development Program) Delivery $ 46
Technical Delivery $ 15
IT Training $ 37
Management Delivery $ 30
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Curriculum Maint. & Development ($/curriculum developer hour) $ 85
( Represents average cost and is subject to adjustment based on project)
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Alternative Delivery License Fees Annual Cost
SkillSoft $ 71,625
NETg/Smartforce/Other $262,259
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Leadership Development Per Session
- -------------------------------------------------------------------------------------
LDW LD Workshop (1 day) $ 14,888
LDM LD for Management (3 days) $ 56,107
LDC LD for Coaches & Individual Contributors (2 days) $ 20,523
LDS LD for Senior Executives (2 days) $ 50,512
- -------------------------------------------------------------------------------------
</TABLE>
Genuity will be billed separately for actual costs incurred by GTE for any GTE
system modifications for Genuity-specific administrative or program design
changes or software changes.
3. Employee Opinion Survey (Viewpoints)
. Conduct Employee Opinion Surveys on behalf of Genuity utilizing current
process and program.
. Genuity will be administered as part of the main Viewpoints study.
Page 44 of 114
<PAGE>
. Includes monthly distribution and reporting (approximately 300 per
month, 3,600 annually)
Pricing Structure:
- -----------------
Genuity shall pay GTE as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
DUE COST
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Initial set-up costs One Time $1,000
including questionnaire and
Internet Survey revisions
- -------------------------------------------------------------------------------------------------------
Basic Study Costs Monthly $1,200
- -------------------------------------------------------------------------------------------------------
Printing, paper, Monthly $ 150
communication, promotion
- -------------------------------------------------------------------------------------------------------
TOTAL One Time: $1,000
Ongoing/monthly: $1,350
- -------------------------------------------------------------------------------------------------------
</TABLE>
Programming or system work for any employee opinion survey services to be billed
separately at a rate to be mutually agreed upon.
Genuity will be billed separately for actual costs incurred by GTE for any GTE
system modifications for Genuity-specific administrative or program design
changes or software changes.
Genuity's Responsibilities with respect to Other Human Resources Administrative
- -------------------------------------------------------------------------------
Services
- --------
Genuity understands and agrees that any involvement by GTE with Genuity's other
Human Resources Administrative Services will be in an advisory or consultative
capacity and not in a fiduciary capacity. As between GTE and Genuity, all
---
fiduciary responsibility and accountability remains at all times with Genuity.
Genuity will act as the point of contact with all vendors for any matter
relating to fiduciary and plan design issues, with GTE acting merely in an
advisory or consultative capacity. GTE will act as the point of contact with
all vendors for all other issues.
EMPLOYEE DATA WAREHOUSE DEVELOPMENT AND SUPPORT:
1. Develop Employee Data Warehouse logical view for Genuity Employees.
. Data will be a subset of GTE Employee Data Warehouse data elements
. Data will initially consist of SAP current and chronological history only
Page 45 of 114
<PAGE>
. The data will be a direct extract from source systems and will have
minimal cleanup
. Connectivity via ODBC will be provided to Genuity who will be responsible
for their own reporting tools
2. Maintain Employee Data Warehouse View for Genuity and provide Help Desk
support on an as needed basis.
. Provide regular feeds to Genuity Employee Data Warehouse View from SAP
. Make minor changes to view data elements and structure
. Maintain security profiles and provide access to the Employee Data
Warehouse
. Provide first level help desk support for questions on connectivity
. Provide option to Genuity to incorporate new data elements and
functionality in their Employee Data Warehouse view if and when they do
become available in the GTE Employee Data Warehouse. The cost will be
negotiated separately.
. Cost does not include training which will be negotiated separately.
Page 46 of 114
<PAGE>
Pricing Structure for Employee Data Warehouse Development and Support:
- ---------------------------------------------------------------------
The pricing quoted below takes into account the work involved in providing the
following services:
Development
Obtain and map required data elements
Create logical data view
Provide load balancing
Test logical data view
User Acceptance Testing (UAT)
Assign security profiles and give users access to view
Provide ODBC connectivity
Annual Support
First level help desk for questions on connectivity
Periodic refresh of view (Periodicity TBD)
Backup and Recovery support
Add new authorized user to view
Add new security profiles
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Item Cost Category Total Price
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
. Annual Support Costs ($3,383/month) RECURRING
(ANNUAL) $40,590
- ----------------------------------------------------------------------------------------------
. Development
ONE TIME $16,667
- ----------------------------------------------------------------------------------------------
. Total Price - first year $57,257
- ----------------------------------------------------------------------------------------------
</TABLE>
Genuity will pay an additional amount to be negotiated separately if it needs
any data element not in the current GTE Employee Data Warehouse or additional
functionality not outlined in the current document.
HR.GTE.COM:
For the purposes of this document, "HR.GTE.COM" is comprised of, and limited to
the following: Intranet Website shell with design, navigation, and Icons, for
page levels zero and one.
Page 47 of 114
<PAGE>
Assumptions:
1. No outerface links will be provided under this SOW.
2. No specific content will be included under this SOW. Note: All hr.gte.com
content is deemed to be GTE proprietary and will not be covered by this SOW.
3. This SOW includes a one -time copy of existing homepage and level one page
structures only.
4. Education & Training and Career Development and Training (CDAT) content and
functionality are not covered under this SOW. This can be explored with and
provided by Jim Roach.
5. No other specific services will be provided by GTE in the areas of
HR.GTE.COM Operations or Support.
Pricing Structure for HR.GTE.COM:
- --------------------------------
GTE Prices: All prices associated with this SOW are based on the number of
hours to create and deliver a shell version of hr.gte.com.
Pricing Structure: Genuity shall pay the following one-time costs:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Item Cost Category Total Price
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
. Initial Setup Level Zero through One
pages of hr.gte.com production site
. Place shell on separate environment ONE TIME $2,837
and quality assure product
. Package product for shipment
- ---------------------------------------------------------------------------------------------
. Total Price $2,837
- ---------------------------------------------------------------------------------------------
</TABLE>
HEALTH & WELFARE FUNDING SERVICES:
1. Provide administrative support to Genuity for employee Benefit Finance
Information System (BFIS).
. Input continually updated enrollment information into BFIS.
. Calculate monthly premiums to be paid to trust/custodial account.
. Calculate amounts paid by trust/custodial account to vendors.
. Monitor claims paid by custodial account to self-insured vendors and
report activity to Genuity.
. Advise self-insured vendors of administrative expense amounts generated
by the self-bill process.
Page 48 of 114
<PAGE>
. Maintain BFIS internal tables consistent with Genuity plan design.
. Provide management reports to maintain health care plan performance.
. Provide report of year-end claims outstanding.
2. Provide assistance to Genuity in vendor management and procurement.
. Provide additional review of performance reports and recommend
alternative corrective actions.
. Negotiate proposals on behalf of Genuity for national self-insured
contracts (to provide Genuity with the benefit of volume pricing under
GTE's umbrella).
3. Provide administrative support to Genuity with regard to its health and
welfare trust or custodial account.
. Calculate monthly payments to and from trust/custodian.
. Execute payments from trust/custodian.
. Reconcile trust activity between Genuity and the trustee/custodian.
4. Provide Genuity with benefit accounting guidance, cost analysis, and funding
strategies.
. Estimate annual cost and funding based on plan design and past experience
(to be used for budget and strategic plan projections).
. Estimate annual cash commitments.
5. Provide Genuity with financial analysis for employee benefit plan financial
analysis.
. Provide historical data from BFIS database to support benefit plan
financial analysis.
6. Oversee the completion of annual governmental reporting obligations.
. Prepare Form 5500 (Annual Report) for all ERISA-governed employee benefit
plans required to file Form 5500 each year.
. Prepare Summary Annual Reports (SARs) as required.
. Prepare Form 990 as required.
Page 49 of 114
<PAGE>
Genuity's Responsibilities with respect to Health & Welfare Funding Services
- ----------------------------------------------------------------------------
Genuity understands and agrees that any involvement by GTE with Genuity's
employee benefit plans will be in an advisory or consultative capacity and not
---
in a fiduciary capacity. As between GTE and Genuity, all fiduciary
responsibility and accountability remains at all times with Genuity.
Genuity shall provide all information/instruction regarding its employees,
employee benefit plans, and vendors as GTE may require to fulfill its
obligations.
Genuity understands and agrees that any proposed changes to plan design or
vendor choice must be compatible with BFIS.
Pricing Structure for Health & Welfare Funding Services
- -------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Item Cost Category Amount
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
. Health & Welfare Benefits Funding RECURRING
Annual Charge $40,500
- ----------------------------------------------------------------------------------------------
. Initial Set Up Costs to Establish
Genuity as a Separate Entity ONE TIME $20,500
- ----------------------------------------------------------------------------------------------
. Total $61,000
- ----------------------------------------------------------------------------------------------
</TABLE>
Genuity will pay an additional amount to be negotiated separately if GTE cannot
use BFIS to complete its obligations or if any third parties do not continue to
perform their current duties or if additional vendor charges (e.g., software
usage) are imposed upon GTE.
QUINCY PROCESSING CENTER - BENEFITS DELIVERY SYSTEM
For the purposes of this SOW, Benefits Delivery System represents the system
that interfaces with the GTE Payroll systems and the benefit plan vendors as
listed below.
Page 50 of 114
<PAGE>
SERVICES
- ---------
1. Reconcile and control interfaces from GTE SAP Payroll system.
2. Authorize funds transfers to benefit vendors.
3. Edit and post data to the Benefits Delivery System Data Base.
4. Process manual payments and adjustments.
5. Create outerfaces to vendors based on their specific data requirements, file
formats, and timing requirements.
Fidelity Investments
KVI
MetLife
Smith Barney
Federal & State Political Action Committee (PAC)
Hewitt Associates
AYCO
TALX
CORE
Cendant
Arthur Andersen
Edcor
Other vendors to be mutually agreed upon
6. Receive and process interface from vendors to GTE Payrolls.
ASSUMPTIONS
- -----------
. There will be no physical separation of data on the QPC Benefits Delivery
System (BDS).
. Assume no vendor changes.
. Assume that Flexible Benefit dollars (GUL, PLP/LTC, FRP, PAC) for Genuity can
be co-mingled with GTE Flex Ben $ on one interface to the vendors. If a
separate interface is required to vendors for Genuity information and
dollars, then a new development SOW would be required.
. Assume a separate reconciliation for Genuity.
. Assume that the QPC may potentially submit subsequent SOWs as details of the
Genuity benefits become more defined. At that time, we will evaluate what
additional time and costs will be necessary in order to provide the agreed
upon services.
Page 51 of 114
<PAGE>
Pricing:
- --------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Item Cost Category Total Price
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
. Benefit Delivery System Operations
($88,883/month) RECURRING $1,066,594
- ---------------------------------------------------------------------------------------------
. Total Price (Annual) $1,066,594
- ---------------------------------------------------------------------------------------------
</TABLE>
QUINCY PROCESSING CENTER: PENSTAR INTERFACE SYSTEM (interface to GTE's
pension calculation system at hewitt)
SERVICES:
None
ASSUMPTIONS
- -----------
The QPC will not track hours and earnings for the Genuity employees.
Hewitt will flag the employees that are due future GTE Pensions.
COSTS
- -----
None
QUINCY PROCESSING CENTER - PENSION PAYROLL SYSTEM:
Services
- --------
None
ASSUMPTIONS
- -----------
No retirees transfer to Genuity and there are no new retirees.
COSTS
- -----
None
Page 52 of 114
<PAGE>
GENERAL ASSUMPTIONS
General SOW Assumptions/Provisions for Employee Data Warehouse Development and
Support, HR.GTE.COM, Quincy Processing Center--Benefits Delivery System, Quincy
Processing Center: Penstar Interface System (Interface To Gte's Pension
Calculation System At Hewitt), and Quincy Processing Center--Pension Payroll
System:
1. The HR/Payroll tasks are outlined in several SOWs. HR Technology and
Information Services tasks in support of non-SAP systems are outlined within
this SOW. HR Technology and Information Services tasks in support of the SAP
System are covered under the SAP SOW. Payroll Service Center (PSC) tasks are
outlined in Finance Functional SOW.
2. The HR SOWs assume that all services performed for Genuity will continue in
a similar manner as performed today unless otherwise noted. Only those tasks
outlined within this SOW shall be performed. Any tasks not outlined within
this SOW would require a contractual direction from the GTE Account Manager.
3. (GTE Account Manager) is the Genuity point of contact for all contractual
matters related to this SOW. Any requests for any changes to tasks or new
functionality should be forwarded in writing to (GTE Account Manager).
4. The estimates outlined in this SOW assume support for 3,800 Genuity
employees. If this number increases, the resources assigned to support
Genuity would need to be reassessed.
5. It is expected that there will be several changes to the work outlined
within these SOWs over the next several weeks as benefit plans and other
specific Genuity processes become finalized. A key point to remember is that
these types of changes cannot be implemented overnight.
6. Maintenance tasks within this SOW are for minor Business As Usual (BAU)
tasks in support of production. If there are any BAU changes/modifications
beyond minor maintenance, such as mass re-organizations, benefit plan
changes, new functionality, etc., these changes/modifications will be
incorporated into a new development SOW. Specific tasks, prices and
schedules would be developed for the agreed upon SOW.
7. Genuity agrees to review HR audit reports and act upon any errors identified
in a timely manner to ensure data integrity within the system and with
downstream vendors.
8. Upgrades/Enhancements: For any systems where a common development
environment exists, e.g., SAP, Employee Data Warehouse (EDW), Quincy
Processing Center (QPC) systems, agrees to abide by the standards, changes,
Page 53 of 114
<PAGE>
upgrades, and enhancements that have been, or will be, developed and
implemented across the environment. A proportion of the on-going development
tasks will be apportioned to Genuity in the same manner as production costs
as allocated. Examples include Employee Self Service (ESS) enhancements,
Manager's Desktop, On-line Org Charts. Genuity will participate in a user
forum to assist in prioritizing these enhancements.
Should Genuity desire to not abide by, and share appropriate costs for, the
baseline system configuration and associated upgrades and enhancements, a
completely separate physical environment for Genuity would be warranted. GTE
would be pleased to develop a technical and cost proposal for such work at
the request of Genuity.
9. This SOW highlights both production tasks and one-time development tasks
that must also be performed to set up or establish the systems environment
for Genuity.
GTE SERVICE CORPORATION GENUITY INC.
By:___________________________ By:___________________________
Title:__________________________ Title:__________________________
Page 54 of 114
<PAGE>
STATEMENT OF WORK
-----------------
REAL ESTATE RELATED SERVICES
----------------------------
This Statement of Work is appended to the Agreement for Transition Services (the
"Agreement") dated ______________, by and between Genuity Inc. ("Genuity") and
GTE Service Corporation ("GTE"), and shall be governed by the terms and
conditions thereof. The services described herein shall be provided during the
initial one-year term of the agreement unless otherwise mutually agreed and
except as expressly set forth below in this SOW.
The purpose of this SOW is to provide for the transition of a variety of real
estate related services. The services as described in this SOW relate to real
estate project management, real estate administration, various building services
(including dispatch center services for building-related work requests, building
maintenance services for POP sites, and invoice processing services for invoices
associated with building-related work requests), environmental and safety
services, and building security services. Genuity desires to retain GTE to
provide these services during a transitional period while Genuity hires
necessary staff, implements necessary processes and procedures, and enters into
necessary third party contracts in order to permit the smooth operation of its
business until Genuity is better prepared to handle these services independently
of GTE. None of the services set forth in this SOW are expected to continue for
longer than the initial one-year term of the Agreement.
REAL ESTATE PROJECT MANAGEMENT SERVICES
GTE Corporate Real Estate provides project management services for major real
estate projects, including strategic planning, design and construction
management, and accounting project control. Genuity desires to retain GTE to
provide these services as needed and requested by Genuity through written
project authorizations. Any project authorization may be terminated by either
party on 30 days written notice as set forth below.
1. GTE shall provide real estate project management services for major real
estate projects, as requested and ordered by Genuity through a written
project authorization, which shall be subject to GTE's written acceptance
and approval. Project types may include new leases, lease renewals,
acquisitions by fee, relocations, build-to-suits and any other project
involving real estate services. Project management services include:
. Evaluate project alternatives to determine cost-effective real estate
strategies.
. Negotiate with outside real estate brokers and developers with respect
to acquisitions and/or dispositions of real property.
. Develop total project budgets.
. Coordinate the work of Genuity's outside consultants, including but not
limited to attorneys and environmental consultants.
. Manage the overall real estate project.
2. GTE shall provide design and construction management services for major real
estate projects, as requested and ordered by Genuity through a written
project authorization, which shall be subject to GTE's written acceptance
and approval. Project
Page 55 of 114
<PAGE>
types may include build-to-suits and any other project involving design
and construction of real estate improvements. Design and construction
management services include:
. Review Genuity's initial project assumptions and development of
preliminary cost estimates, preliminary project programming, and
preliminary schedule.
. Identify, evaluate and recommend outside project consultants.
. Coordinate and track the progress of overall design development and
construction document preparation process.
. Manage value engineering process.
. Conduct construction management activities.
. Coordinate the work of outside design and construction consultants,
including architects and engineers.
. Track and update budgets and schedules.
. Manage project closeout activities.
3. GTE shall provide project control services for major real estate projects,
as requested and ordered by Genuity through a written project authorization,
which shall be subject to GTE's written acceptance and approval. Project
control services include:
. Provide accounting project management support on all phases of a
project plan, design, construction and closeout.
. Issue control guidelines and ensure that project commitments and
expenditures are properly tracked against approved budgets.
. Create and update project's financial forecast (outlook).
. Prepare and issue a weekly project outlook to the project team.
. Review the project for compliance against accepted control practices
and issue an exception report.
. Process approvals for contractor, developer, architect and other vendor
change requests and reconcile approved change requests to the change
request log and project outlook.
. Audit construction and professional fee invoices to ensure compliance
to contracts, project control guidelines, and generally accepted
accounting principles.
4. Service Commitment. GTE shall follow all Genuity processes and procedures
that are communicated to GTE.
Genuity's Responsibilities with respect to Real Estate Project Management
- -------------------------------------------------------------------------
Services
- --------
Genuity shall prepare and submit a project authorization for any real estate
project management services requested under this SOW. The project authorization
shall include a description of the project and a description of any specific
services required by Genuity as part of the project management services. In
addition, Genuity shall provide project support staff as necessary to assist in
the coordination of IT, furniture and move requirements.
Pricing Structure with respect to Real Estate Project Management Services
- -------------------------------------------------------------------------
GTE may use GTE-approved subcontractors to provide any of the real estate
project management services under this SOW, with supervision of such
subcontractors to be provided by GTE. During the initial one-year term of the
agreement, Genuity shall pay GTE the following fees for these services:
Page 56 of 114
<PAGE>
GTE Project Director $145 per hour
GTE Project Manager $135 per hour
GTE Project Controller $115 per hour
GTE Project Accountant $ 70 per hour
Subcontractors direct cost
In addition to these fees and charges, Genuity shall reimburse GTE for (i) all
travel-related costs and expenses in accordance with the terms of the agreement,
(ii) all costs and expenses for long distance, communications, reproductions,
courier and delivery services, and postage incurred by GTE in the performance of
these services, and (iii) all costs and expenses of consultants or other 3rd
party services retained for or on behalf of Genuity in connection with the
performance of real estate project management services, such as appraisals,
surveys and marketing materials. GTE shall submit monthly invoices to Genuity
for the real estate project management services.
Other Specific Terms or Conditions with respect to Real Estate Project
- ----------------------------------------------------------------------
Management Services
- -------------------
GTE may use GTE-approved subcontractors to perform any of the real estate
project management services under this SOW.
Real estate project management services may be ordered by Genuity only through a
written project authorization. All project authorizations shall be subject to
GTE's written acceptance and approval.
Any project authorization may be terminated by either party for any or no reason
upon 30 days written notice. In the event of termination, Genuity shall pay GTE
for all services performed through the date of termination.
Notwithstanding the expiration of the term of this SOW, this SOW shall remain in
effect with respect to and for the duration of any project authorization entered
into under this SOW that by its terms extends beyond the expiration of this SOW.
REAL ESTATE ADMINISTRATION SERVICES
GTE Corporate Real Estate provides lease administration services, new lease and
lease renewal support, and support for acquisitions and dispositions of owned
real estate. In connection with these services, real estate information is
entered into a GTE-owned real estate database. Genuity desires to use the GTE-
owned real estate database and to retain GTE to provide these services during a
transition period while Genuity builds its own real estate organization and
evaluates the service options available to it from other third party providers.
The real estate administration services may be terminated by Genuity on 60 days
written notice as set forth below.
1. GTE shall furnish the GTE Real Estate Database for use by GTE, GTE's
subcontractors and Genuity personnel during the term of this SOW for
maintenance of Genuity's real estate data. Genuity's use of the GTE Real
Estate Database is limited to the use described in this SOW and the services
to be provided by GTE in connection therewith are expressly limited to the
following:
Page 57 of 114
<PAGE>
. Install a duplicate copy of the GTE Real Estate Database (RED),
transfer to this duplicate database (Duplicate RED) all Genuity records
residing on RED, and provide access rights to Duplicate RED to
appropriate GTE personnel and subcontractors.
. If and as requested by Genuity, setup additional Genuity users on
Duplicate RED and train Genuity personnel on use of RED.
Genuity's rights to use Duplicate RED shall automatically terminate upon
expiration or termination of this SOW.
2. GTE shall provide the following real estate lease administration services:
. Prepare lease abstract and lease responsibility matrix for all executed
leases. Lease abstracts shall include property information (such as
address and square footage), rent stream during entire term, escalation
clauses, sales tax, critical dates (such as scheduled rent increases
and renewal options), and other special options and clauses (such as
expansion rights and rights of first refusal)
. Enter lease data in Duplicate RED, including all actions required to
set up property on Duplicate RED and entry of data from lease abstract.
. File set-up, including distribution of new lease and/or lease renewal
notification letters to distribution list identified by Genuity,
together with copies of lease abstract and lease responsibility matrix.
. Coordinate insurance, including communication with insurance contacts
as identified and directed by Genuity to secure certificates of
insurance and follow-up with landlords to insure receipt.
. Complete and process payment forms as identified and directed by
Genuity.
. Critical date reporting, as well as on-going review of, and initiation
of actions identified on critical date reports.
. Operating expense true-ups, including review of landlords' operating
expense reconciliations to confirm consistency and compliance with
lease terms, including accuracy of landlords' computations.
. Process estoppel certificates and non-disturbance, subordination and
attornment agreements, including review and confirmation of lease terms
and coordination of legal review by Genuity's designated legal counsel.
. "Lease-To" administration, including preparation of forms for billing
tenants and subtenants for all leases-to's and subleases, notification
of rent payment adjustments, processing insurance certificates, and
abstracting new leases.
. Process standard reports from information resident in Duplicate RED.
. Budget support, such as provision of current rent information with
projected base rent increases and estimated operating expense
adjustments.
. Administer landlord/tenant communications, including escalation point
of contact with landlords on maintenance issues and follow-up with
Genuity and preparation of letters to landlords to communicate address
or reporting changes.
3. GTE shall provide new lease and complex lease renewal administrative
support, specifically:
. Database input, including entry of request/assignment in Duplicate RED
and coordination of responsibilities concerning the new lease or
complex renewal.
. On-going coordination and communication among all responsible persons.
Page 58 of 114
<PAGE>
. Coordinate and process internal approval documentation based on
approval matrix submitted by Genuity and as otherwise identified and
directed by Genuity, such as preparation of financial analyses and
Genuity requisition forms, comparison of business case information with
financial analyses to conform to Genuity requirements, and tracking of
internal approval documents until fully executed.
. Lease document review and preparation of proposed revisions and
comments.
. Coordinate legal review by Genuity's designated legal counsel.
. Submit approved lease documentation for execution.
. Weekly review of all current files, participation in project meetings
for communication with Genuity team, and preparation of any
correspondence or additional documents to resolve special issues.
4. GTE shall provide administrative support for simple lease renewals,
specifically:
. Coordinate and process internal approval documentation based on
approval matrix submitted by Genuity and as otherwise identified and
directed by Genuity.
. Review of lease document for terms and conditions of renewal.
. Prepare notification letters to landlords.
. Communicate with individuals designated by Genuity to ensure that rent
payments are current during the renewal phase.
. Coordinate legal review by Genuity's designated legal counsel.
. Submit approved documentation for execution.
5. GTE shall provide administrative support for "lease-to's" (both affiliate
and non-affiliate transactions), specifically:
. Receive and review initial request from prospective tenant, and
coordinate completion of any requisite internal approval forms based on
approval matrix submitted by Genuity and as otherwise identified and
directed by Genuity.
. Determine fair market value for lease rate.
. Coordinate and process any internal approvals as identified and
directed by Genuity.
. Respond to questions and requests and participate in meetings as
necessary.
. Prepare lease document and coordinate legal review and approval by
Genuity's designated legal counsel.
. Circulate approved lease documents for execution.
6. GTE shall provide administrative support for real property acquisitions,
specifically:
. Database input, including entry of request/assignment in Duplicate RED
and coordination of responsibilities concerning the acquisition, as
well as on-going entry of updates on progress of site selection.
. Distribute information about prospective sites to individuals
designated by Genuity.
. Prepare, submit and route any concurrence memoranda to various Genuity
departments and/or individuals as identified and directed by Genuity
(such as Environmental Affairs, Building Services and Network
Construction).
. Order appraisals and brokers' opinions of value as directed by Genuity.
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. Order title search and a survey and route to appropriate individuals as
identified and designated by Genuity.
. Coordinate and process internal approval documentation based on
approval matrix submitted by Genuity and as otherwise identified and
directed by Genuity, such as preparation of financial analyses and
Genuity requisition forms, comparison of business case information with
financial analyses to conform to Genuity requirements, and tracking of
internal approval documents until fully executed.
. Coordinate preparation of purchase contract, review purchase contract
and prepare proposed revisions and comments, and coordinate legal
review by Genuity's designated legal counsel.
. Submit approved purchase contract for execution by Genuity.
. Post-closing, prepare log of all charges associated with acquisition of
property.
. Notify individuals designated by Genuity of the property acquisition
and distribute copies of relevant closing documents as directed by
Genuity.
. Participate in project meetings for communication with Genuity team,
prepare any correspondence or additional documents to resolve special
issues, and route invoices for payment.
7. GTE shall provide administrative support for disposition of owned real
estate, specifically:
. Research inquiries from interested parties.
. Prepare, submit and track any concurrence memoranda to various Genuity
departments and/or individuals as identified and directed by Genuity.
. Prepare summary of responses to concurrence memoranda and submit to
Genuity for further direction.
. If Genuity declares property to be surplus, coordinate disposition.
Obtain appraisal or broker's opinion of value; compile property
information file and obtain any documents or information not received
during research phase; present information to Genuity for determination
of sales price; and handle and coordinate negotiations with prospective
buyer.
. Market property.
. Coordinate and process internal approval documentation based on
approval matrix submitted by Genuity and as otherwise identified and
directed by Genuity, such as preparation of financial analyses and
Genuity requisition forms, comparison of business case information with
financial analyses to conform to Genuity requirements, and tracking of
internal approval documents until fully executed.
. Coordinate preparation of sales contract, review sales contract and
prepare proposed revisions and comments, and coordinate legal review by
Genuity's designated legal counsel.
. Submit approved sales contract for execution by Genuity.
. Notify individuals designated by Genuity of the property disposition
and distribute copies of relevant closing documents as directed by
Genuity.
. Post-closing, prepare log of all charges associated with marketing and
sale of property.
. Participate in project meetings for communication with Genuity team,
prepare any correspondence or additional documents to resolve special
issues, and route invoices for payment.
. Maintain Genuity owned real estate information in Duplicate RED.
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8. Service Commitment. GTE shall follow all Genuity processes and procedures
that are communicated to GTE.
Genuity's Responsibilities with respect to Real Estate Administration Services
- ------------------------------------------------------------------------------
Genuity shall provide all information required for GTE to perform its duties
hereunder.
Pricing Structure with respect to Real Estate Administration Services
- ---------------------------------------------------------------------
GTE may use GTE-approved subcontractors to provide any of the real estate
administration services under this SOW, with supervision of such subcontractors
to be provided by GTE. During the initial one-year term of the agreement,
Genuity shall pay GTE the following fees for these services:
Annual Administrative Fee: $110,000.00, payable in equal
monthly installments of $9,166.67; this
administrative fee covers all travel, general
office expenses and other overhead
Subcontractors: direct cost for all services obtained from
subcontractors, including without limitation
all costs associated with installation and
administration of Duplicate RED and all
transaction fees payable in connection with
brokerage services, EXCEPT for any
administrative fee payable by GTE to Cushman
& Wakefield, Inc. and/or The Staubach Company
and/or any subcontractor providing similar
administrative services.
GTE estimates that the subcontractor fees associated with installation of
Duplicate RED will be approximately $13,000.00, plus approximately $400.00 for
each additional user designated by Genuity.
In addition to these fees and charges, Genuity shall reimburse GTE for all costs
and expenses of consultants or other 3rd party services retained for or on
behalf of Genuity in connection with the performance of real estate
administration services, such as appraisals, surveys and marketing materials.
GTE shall submit monthly invoices to Genuity for the real estate administration
services.
Other Specific Terms or Conditions with respect to Real Estate Administration
- -----------------------------------------------------------------------------
Services
- --------
GTE may use GTE-approved subcontractors to perform any of the real estate
administration services under this SOW. Without limiting the generality of the
foregoing, Genuity acknowledges and agrees that GTE may subcontract any or all
of the real estate administration services to Cushman & Wakefield, Inc. and The
Staubach Company and their respective affiliates.
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<PAGE>
Genuity may terminate the real estate administration services set forth herein
for any or no reason upon 60 days written notice. In the event of such
termination, Genuity shall pay GTE for all services performed through the date
of termination.
DISPATCH CENTER SERVICES
GTE Support Assets provides a 24-hour call center for entry and dispatching of
work requests for certain building services. Genuity desires to retain GTE to
provide these services during a transition period while Genuity makes alternate
arrangements for these services. GTE has agreed to provide these services
through December 31, 2000; however, Genuity may terminate these services at any
time as set forth below.
1. GTE shall provide 24-hour call center and dispatch function for building
operation, maintenance and repair and for furniture repairs and
rearrangements. Work will be dispatched to the employee or contractor
designated by Genuity.
2. Service Commitment. GTE will dispatch each work request within 10 minutes
of receiving the call.
Term for Dispatch Center Services
- ---------------------------------
GTE shall provide these dispatch center services through December 31, 2000,
subject to termination of these services by Genuity at any time in its sole and
absolute discretion.
Genuity's Responsibilities with respect to Dispatch Center Services
- -------------------------------------------------------------------
Genuity shall provide all information required for GTE to perform its duties
hereunder including, but not limited to, (a) the names and contact information
for all employees and contractors designated by Genuity to receive work requests
for (i) building operation, maintenance and repairs and (ii) furniture repairs
and rearrangements, and (b) location, contact information, and the nature of
services required for each work request.
Pricing Structure for Dispatch Center Services
- ----------------------------------------------
Genuity shall pay GTE at a rate of $9.70 per work request. GTE shall submit
quarterly invoices to Genuity for these dispatch center services.
Other Specific Terms or Conditions with respect to Dispatch Center Services
- ---------------------------------------------------------------------------
The parties understand and agree that GTE may cause these dispatch center
services to be provided by or through one of its Network Services affiliates.
POP SITE BUILDING TECHNICIAN SERVICES
GTE Support Assets manages building technicians who provide building maintenance
and repair services to certain points of presence (POP sites) on Genuity's fiber
optic network. Genuity desires to retain GTE to provide these building
maintenance and repair services during a transition period to allow Genuity to
make alternate arrangements for these
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<PAGE>
services. GTE has agreed to provide these services through December 31, 2000;
however, Genuity may terminate these services at any time as set forth below.
1. GTE shall provide building repairs and maintenance for (number) currently
existing Genuity POP sites as requested by Genuity. Maintenance shall
include preventative maintenance as well as maintenance and repairs
necessitated by equipment failure. No new POP sites will be added to the
number of POP sites covered by this agreement.
2. GTE is hereby authorized to purchase parts and materials up to $500.00 per
work request in connection with the performance of these services without
any other or further authorization from Genuity. GTE shall not purchase any
parts or materials in excess of $500 per work authorization without prior
authorization from Genuity.
3. Service Commitment. Building technicians will respond within the following
time frames:
Emergency (Priority 1) - within 24 hours
Non-emergency (Priority 3) - within 7 days
Term for POP Site Building Technician Services
- ----------------------------------------------
GTE shall provide these POP site building technician services through December
31, 2000, subject to termination of these services by Genuity at any time in its
sole and absolute discretion.
Genuity's Responsibilities with respect to POP Site Building Technician Services
- --------------------------------------------------------------------------------
Genuity shall provide all information required for GTE to perform its duties
hereunder. In addition, Genuity shall provide access to all sites, and contact
information for an Genuity contact with whom to discuss problem resolution.
Pricing Structure with respect to POP Site Building Technician Services
- -----------------------------------------------------------------------
Genuity shall pay GTE at a rate of $34.32 per hour for these services, including
travel time. In addition to the hourly fees, Genuity shall reimburse GTE for
all travel-related costs and expenses and the cost of all parts and materials
used by GTE and/or the building technicians in the performance of these
services, all in accordance with the terms of the agreement and this SOW. GTE
shall submit quarterly invoices to Genuity for these POP site building
technician services.
Other Specific Terms or Conditions with respect to POP Site Building Technician
- -------------------------------------------------------------------------------
Services
- --------
GTE may use GTE-approved subcontractors to perform the POP site building
technician services described in this SOW. Without limiting the generality of
the foregoing, the parties further understand and agree that GTE may cause these
building technician services to be provided by or through one of its Network
Services affiliates.
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FM INVOICE PROCESSING SERVICES
GTE Support Assets provides invoice processing services for invoices associated
with work requests generated by the call center and entered into its FM system.
Genuity desires to retain GTE to provide these invoice processing services
during a transition period to allow Genuity to make alternate arrangements for
these services. GTE has agreed to provide these services for all invoices
associated with a FM invoice through December 31, 2000; however, Genuity may
terminate these services at any time as set forth below.
1. GTE shall perform all invoice processing of all Genuity invoices for
building and furniture-related work associated with a FM work request. GTE
shall receive, review and electronically process these invoices for approval
and payment though the FM system and the GTE accounts payable system.
2. Service Commitment. GTE shall process each invoice within three business
days of receipt.
Term for FM Invoice Processing Services
- ---------------------------------------
GTE shall provide these FM invoice processing services through December 31,
2000, subject to termination of these services by Genuity at any time in its
sole and absolute discretion.
Genuity's Responsibilities with respect to FM Invoice Processing Services
- -------------------------------------------------------------------------
Genuity shall provide all information/instruction regarding processing and
payment of invoices.
Pricing Structure with respect to FM Invoice Processing Services
- ----------------------------------------------------------------
Genuity shall pay GTE $4.28 per invoice for these services. GTE shall submit
quarterly invoices to Genuity for these invoice processing services.
Other Specific Terms or Conditions with respect to FM Invoice Processing
- ------------------------------------------------------------------------
Services
- --------
GTE shall provide these services only for invoices related to a work request
generated from the FM system. The parties understand and agree that GTE may
cause these FM invoice processing services to be provided by or through one of
its Network Services affiliates.
ENVIRONMENTAL SERVICES - IN GENERAL
GTE Environmental Affairs provides a variety of environmental services,
including environmental investigation and inspection services in connection with
real estate transactions, environmental compliance services, and environmental
administration and project management. Genuity desires to retain GTE to provide
these environmental services during a transition period to allow Genuity to make
alternate arrangements for these services. GTE has agreed to provide
environmental real estate transaction services for all proposed POP sites and
for other sites as requested by Genuity, environmental compliance services as
needed and requested by Genuity, and environmental administration and project
management services. Genuity may terminate these services upon 60 days written
notice as set forth below.
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<PAGE>
ENVIRONMENTAL REAL ESTATE TRANSACTION SERVICES
1. Upon request by Genuity, GTE shall conduct a Step 1 Phase I. A Step I Phase
I is a site assessment with a limited scope that may be appropriate for
certain property transactions, for example a lease of office space where no
hazardous chemicals are used or stored. GTE may perform these assessments
or, depending on the location of the property and time constraints, a GTE
may retain a 3rd party consultant to perform these assessments on behalf of
Genuity. Upon completion of the Step I Phase I GTE shall deliver to Genuity
either an E-mail or letter report outlining the issues found at the site and
any recommendations for additional work.
2. GTE shall conduct a Phase I site assessment on all properties Genuity
proposes to use as a POP site and on other properties as requested by
Genuity. GTE shall retain 3rd party consultants to perform these
assessments. The Phase I site assessments shall be conducted as per American
Society for Testing and Materials (ASTM) standards, and shall include a
detailed history of the condition of the property and surrounding
properties, as well as data base searches to see if the site has ever been
listed with any of the Federal, State or local agencies. In addition, the
Phase I site assessment also determines if any types of hazards exist at the
site, either from past spills/releases or potential releases. GTE shall
deliver a preliminary E-mail report outlining the issues found at the site
and any recommendations for addition work, as well as a formal written Phase
I report from the 3rd party consultant.
3. Based upon GTE's recommendations and upon request by Genuity, GTE shall
conduct a Phase II site assessment on properties at which a Phase I site
assessment already has been completed and at which issues have been raised
about possible contamination. GTE shall retain 3rd party consultants to
perform these assessments. A Phase II site assessment typically includes
removal of samples and testing, such as soil samples and ground water
testing. GTE shall propose the scope of the Phase 2 site assessment, which
shall be subject to review and approval by Genuity. GTE shall deliver a
preliminary E-mail report outlining the lab results and any recommendations
for additional work, as well as a formal written Phase II letter report from
the 3rd party consultant.
4. Based upon GTE's recommendations and upon request by Genuity, GTE shall
conduct an Asbestos and Lead Survey on properties that are expected to
undergo construction renovations and on all properties being offered for
sale by Genuity. GTE shall retain a 3rd party consultant to perform the
Asbestos and Lead Survey. The surveys shall include the sampling of any
suspect asbestos containing materials (ACM) and any suspect lead painted
surfaces. GTE shall deliver a preliminary E-mail report outlining the lab
results from the survey and any recommendations on how to conduct any
recommended abatement, as well as a formal written ACM/Lead Report from the
3rd party consultant.
5. Follow-up Evaluation Remediations -If the environmental site assessment for
a property transaction reveals some type of contamination which must be
removed, abated, remediated or cleaned-up ("remediation"), GTE shall manage
the remediation if requested by Genuity. If Genuity retains GTE to manage
any remediation project, GTE will identify and evaluate 3rd party
consultants and remediation contractors, will
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<PAGE>
review all proposals and negotiate changes to the proposals, and make
recommendations to Genuity on the best appropriate course of action.
Genuity's Responsibilities with respect to Environmental Real Estate Transaction
- --------------------------------------------------------------------------------
Services
- --------
Genuity is responsible for providing all information and data required for GTE
to perform its duties hereunder, including, but not limited to, a detailed list
of all new facilities to be considered for new leases/ownership, including
address, point of contact, and age of building. Genuity also shall provide all
information/instruction regarding processing and payment of invoices and expense
reports.
ENVIRONMENTAL COMPLIANCE SERVICES
---------------------------------
1. SPCC Plans - Upon request by Genuity, GTE shall select and retain
consultants with a Registered Professional Engineer on staff to prepare SPCC
Plans for all properties as required by Federal regulations, including
aboveground tanks with a quantity of 660 gallons or an aggregate of 1,320
gallons or more of any petroleum product, and any underground storage tank
with an aggregate of 42,000 gallons. GTE shall select the consultant, review
the draft plan to determine if any corrections need to be made, and review
and approval the final plan. GTE shall send a copy of each final SPCC Plan
to the applicable site supervisor and maintain a copy on file. GTE also will
determine when SPCC Plans require updates.
2. SPCC Training - Upon request by Genuity, GTE shall provide an employee
lesson plan and roster sheet to site supervisors in order to permit Genuity
to comply with Federal regulations that require the annual training of
employees who may respond to a spill involving a SPCC regulated tank. GTE
will maintain a copy of the training roster and will follow-up on any
rosters not received.
3. Business Emergency Plans and SARA Title III Reporting - Upon request by
Genuity, GTE shall review Federal, State and Local regulations relating to
hazardous materials and complete all mandated reporting to the state-
administering agencies for SARA Title III reports and state-mandated
business emergency and other types of plans triggered by certain quantities
of hazardous materials. GTE shall retain a 3rd party consultant to write
site-specific business plans as required by the regulations.
4. Compliance Inspections - Upon request by Genuity, GTE shall perform
compliance inspections at a designated percentage of reportable facilities.
GTE shall verify the information submitted to the state agencies, including
Battery and Fuel Storage data and completion of the eleven-part GTE
Inspection report. GTE shall submit an inspection report to the site
supervisor so that the site supervisor may correct any deficiencies found
during the Inspection.
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5. Spill Kits for Batteries and Fuel Oil Tanks - Upon request by Genuity, GTE
shall provide spill control equipment as required at Genuity facilities that
use or store hazardous materials.
6. Hazardous and Regulated Chemical Wastes - Upon request by Genuity, GTE shall
manage the disposal of Genuity's Universal Wastes in accordance with
Federal, State and Local regulations. . GTE shall verify applicable disposal
requirements, select contractors/disposal firms to handle/dispose/recycle
the wastes, determine if facilities need an EPA ID number, complete all
applicable paperwork, schedule pickups, and obtain copies of the shipping
papers for permanent records.
7. Disposal/Recycling of Batteries - Upon request by Genuity, GTE will arrange
for the disposal of Genuity's lead-acid batteries if such a need arises
outside of the terms of Genuity's battery maintenance agreement. GTE shall
set up a national service agreement for battery disposal. If requested by
Genuity, GTE shall provide a list of battery recycling facilities and shall
audit the disposal/recycling facilities. In addition, GTE will check local
and state regulatory requirements to determine if there are any restrictions
on battery disposal. GTE will complete and submit all applicable
notifications/documentation required by regulatory agencies.
Genuity's Responsibilities with respect to Environmental Compliance Services
- ----------------------------------------------------------------------------
Genuity is responsible for providing all information and data required for GTE
to perform its duties hereunder including, but not limited to, copies of all
environmental violations or citations, notification of any spill/release of
chemical of concern, hazardous/regulated waste transportation records,
hazardous/regulated waste disposal records, and information about all new
Genuity facilities. For each new Genuity facility, Genuity shall advise GTE if
the facility has any aboveground storage tanks (AST's) or lead-acid batteries,
and if it does the size and contents of the AST's, as well as number,
manufacturer, make and model of lead-acid batteries. Genuity shall provide
access to sites for GTE and GTE's 3rd party contractor personnel as needed and
appropriate to complete reports, inventories, plans and assessments. Genuity
shall provide or confirm chemical inventory information, site contact
information and other data needed to complete reports, plans and inventories.
Genuity shall inform and/or train its employees concerning chemical safety,
emergency contingency procedures and chemical release provisions of written
plans at Genuity sites. Genuity shall inform GTE of facility changes that
trigger a need to revise inventories, business plans, spill plans or contingency
plans. Genuity also shall provide all information/instruction regarding
processing and payment of invoices and expense reports.
ENVIRONMENTAL ADMINISTRATION SERVICES
1. Record Retention - GTE shall administer the paperwork as well as process and
archive required records in a central system. GTE shall keep Genuity's
records separate from GTE environmental records. Genuity's records shall be
the property of Genuity and will be transferred to Genuity, at Genuity's
expense, as and when directed by Genuity.
2. Review Reports - In addition to the reports to be reviewed by GTE under
other provisions of this SOW, GTE will review and provide comments and
recommendations to
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Genuity concerning 3rd party consultants' work products and reports as
requested by Genuity. GTE also will edit, help define and make
recommendations to Genuity on applicable scopes of work for various
projects.
3. Vendor Contracts - Upon request by Genuity, GTE will assist Genuity with
contract negotiations with various 3rd party environmental consultants.
4. Review Invoicing - GTE will review all invoices submitted by 3rd parties
retained by GTE for accuracy and timely billing. GTE shall verify each
invoice against the original contract proposal and shall process invoices in
accordance with Genuity instructions to GTE.
Genuity's Responsibilities with respect to Environmental Administrative Services
- --------------------------------------------------------------------------------
Genuity is responsible for providing all information and data required for GTE
to perform its duties hereunder including, but not limited to, a list of vendors
with whom Genuity desires to enter into contracts and procedures for record
retention. Genuity also shall provide all information/instruction regarding
processing and payment of invoices and expense reports.
ENVIRONMENTAL PROJECT MANAGEMENT SERVICES
1. Point of Contact - GTE shall designate a single point of contact to
administer, monitor and follow-up on all work and program efforts. This
project manager will provide monthly reports on program and compliance
status to Genuity management.
2. Environmental Data Base - GTE shall establish an environmental database for
GNI environmental work. The database will summarize by facility
environmental work completed and key environmental characteristics of each
site.
3. Reports - GTE shall provide standardized reports and metrics concerning the
status of environmental programs to Genuity in mutually agreed formats. GTE
and Genuity shall jointly devise and mutually agree upon reports frequency
and content.
4. Invoicing - GTE will submit monthly invoices to Genuity for each month's
service fee. The invoices will include a break down of labor costs by
category and a separate line item for each expense category. GTE will retain
monthly time sheets for each staff member that worked on the Genuity program
showing their hours and the nature of the work performed. Invoices for
contractor work and travel expense accounts will also be available by month.
These backup records are to be maintained for three years. GTE shall make
supporting documentation available for Genuity's review at GTE's offices at
any time during normal business hours.
Genuity's Responsibilities with respect to Environmental Project Management
- ---------------------------------------------------------------------------
Services
- --------
Genuity shall provide all information and data required for GTE to perform its
duties hereunder including, but not limited to, providing GTE an Genuity point
of contact to coordinate project management services and data needed to develop
and maintain an
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<PAGE>
environmental database. Genuity also shall provide all
information/instruction regarding processing and payment of invoices and expense
reports.
Pricing Structure for All Environmental Services Described in this SOW
- ----------------------------------------------------------------------
Program Administrator $76.00 per hour
Program Manager $57.00 per hour
Administrative $31.00 per hour
Subcontractors and Consultants direct cost + 10%
In addition to these fees and charges, Genuity shall reimburse GTE for all
travel-related costs and expenses in accordance with the terms of the agreement
and for all costs and expenses for long distance, communications, reproductions,
courier and delivery services, postage and supplies incurred by GTE in the
performance of these services.
Other Specific Terms or Conditions with respect to Environmental Services
- -------------------------------------------------------------------------
GTE may use GTE-approved subcontractors to perform any of the environmental
services under this SOW.
Any or all of the Environmental Services described in this SOW may be terminated
by Genuity for any or no reason upon 60 days written notice. In the event of
termination, Genuity shall pay GTE for all services performed through the date
of termination.
LIMITATIONS WITH RESPECT TO ALL ENVIRONMENTAL SERVICES
- ------------------------------------------------------
GTE makes no representation or warranty concerning Genuity's environmental
compliance; it is not possible for GTE to warrant Genuity's environmental
compliance. GTE, acting in the capacity of an environmental consultant to
Genuity, shall perform the environmental services described in this SOW in
accordance with generally accepted practices in the environmental
consulting field. Genuity acknowledges and agrees that GTE must, of
necessity, rely upon information reported by Genuity employees and 3rd
parties. GTE is not responsible for the accuracy of information provided
by Genuity or any 3rd party, including without limitation subcontractors
and consultants retained by GTE. Although this SOW states that GTE shall
provide a variety of reports, the parties understand and agree that GTE's
primary responsibility with respect to reports generated by 3rd parties is
for GTE to coordinate and review such reports, using that degree of care
GTE routinely exercises with respect to similar reports for its own
properties.
Genuity shall inform GTE of all pertinent details of Genuity properties and
operations that have environmental implications. Genuity also has
responsibility to physically maintain its sites and the on-site records
specified by GTE. Genuity is responsible for ensuring that its on-site
personnel attend training and refresher reviews of the plans and procedures
written for their respective sites.
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SAFETY SERVICES
GTE Safety provides certain safety management, analysis, inspection and
administrative services. Genuity desires to retain GTE to provide these
services during an interim period while Genuity makes alternate arrangements for
these services. GTE has agreed to provide the identified safety services as
needed and requested by Genuity. Genuity may terminate these services upon 60
days written notice as set forth below.
1. GTE shall provide the following safety services upon request of Genuity:
. On-site safety management services. Genuity shall provide a single
point of contact to administer, monitor, and follow-up on program
activities.
. On-site job safety analysis to identify potential hazards and develop
site specific recommendations for corrective action.
. Inspection of Genuity facilities and operations to monitor compliance
with occupational safety regulations.
. Respond to or contest an OSHA citation at the informal hearing level
and higher.
. Identify site-specific safety training requirements, such as defensive
driving, first aid/CPR, lockout/tagout, hearing conservation, hazard
communication, emergency evacuation, and ergonomics. GTE may conduct
this training or coordinate the appropriate training through a third
party vendor.
. Provide local supervision with root-cause investigation support for
serious injuries or vehicle collisions that result in a loss time
injury or fatality.
. Coordination with a Certified Industrial Hygiene vendor to resolve
indoor air quality issues in facilities owned or leased by Genuity.
. Assist in the development of building emergency evacuation plans for
Genuity facilities.
2. In connection with such safety services, GTE shall provide the following
safety program administration services:
. Record Retention - GTE shall administer the paperwork as well as
process and archive required records in a central system. GTE shall
keep Genuity's records separate from GTE safety records. Genuity's
records shall be the property of Genuity and will be transferred to
Genuity, at Genuity's expense, as and when directed by Genuity.
. Vendor Contracts - Upon request by Genuity, GTE will assist Genuity
with contract negotiations with various 3rd party consultants. In
addition, as requested by Genuity, GTE shall monitor Genuity's
consultants for quality control, cost-effective solutions, timely
delivery of reports and otherwise to protect the interests of Genuity.
. Review Invoicing - GTE will review all invoices submitted by 3rd
parties retained by GTE for accuracy and timely billing. GTE shall
verify each invoice against the original contract proposal and shall
process invoices in accordance with Genuity instructions to GTE.
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. Standardized Reports - As requested by Genuity, GTE shall provide
standardized reports concerning the status of safety support activities
in a mutually agreeable format. Frequency and content of reports to be
mutually agreed upon.
. Invoicing - GTE will submit monthly invoices to Genuity for each
month's service fee. The invoices will include a break down of labor
costs by category and a separate line item for each expense category.
GTE will retain monthly time sheets for each staff member that worked
on the Genuity program showing their hours and the nature of the work
performed. Invoices for contractor work and travel expense accounts
also will be available by month. These backup records are to be
maintained for three years. GTE shall make supporting documentation
available for Genuity's review at GTE's offices at any time during
normal business hours.
Genuity's Responsibilities with respect to Safety Services
- ----------------------------------------------------------
Genuity shall provide all information required for GTE to perform its duties
hereunder. Genuity must inform GTE of the pertinent details of any of Genuity's
operations that may have employee safety implications.
Pricing Structure with respect to Safety Services
- -------------------------------------------------
Safety Director $76.00 per hour
Safety Specialist $57.00 per hour
Subcontractors and Consultants direct cost + 10%
In addition to these fees and charges, Genuity shall reimburse GTE for all
travel-related costs and expenses in accordance with the terms of the agreement
and for all costs and expenses for long distance, communications, reproductions,
courier and delivery services, postage and supplies incurred by GTE in the
performance of these services.
Other Specific Terms or Conditions with respect to Safety Services
- ------------------------------------------------------------------
GTE may use GTE-approved subcontractors to perform any of the safety services
under this SOW.
Any or all of the safety services described in this SOW may be terminated by
Genuity for any or no reason upon 60 days written notice. In the event of
termination, Genuity shall pay GTE for all services performed through the date
of termination.
LIMITATIONS WITH RESPECT TO SAFETY SERVICES
- -------------------------------------------
The purpose of this SOW with respect to safety services is to assist
Genuity in fulfilling its responsibility to establish and maintain a safe
work environment for employees. GTE does not (and cannot) warranty
Genuity's occupational safety compliance and does not assume any of
Genuity's safety responsibilities. Genuity must maintain its work place
free from recognized hazards in accordance with OSHA regulations, ensure a
safe environment for its employees, and take such steps as are necessary
and appropriate to prevent accidents or losses.
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Genuity shall inform GTE of all pertinent details of Genuity properties and
operations that have safety implications. Genuity also has responsibility
to physically maintain its sites and the on-site records specified by GTE.
IRVING-BASED BUILDING SECURITY SERVICES
GTE Security provides ID badge and card key issuance, alarm monitoring and
investigative services for certain Genuity buildings in the Irving, Texas area.
Genuity desires to retain GTE to provide these services during a transition
period while Genuity makes alternate arrangements for these services. Genuity
may terminate these services upon 60 days written notice as set forth below.
1. GTE shall issue ID badges and/or keycards to Genuity employees upon request
and approval by an authorized Genuity supervisor. Genuity shall submit the
ID badge and/or keycard request on a request form approved for use by GTE's
Employee & Asset Protection department.
2. GTE will provide 24 hour monitoring of alarms in accordance with current
practices and procedures in Genuity's buildings in Irving, TX and at which
GTE currently provides these services. GTE will provide notification of
alarms to Genuity in accordance with instructions from Genuity. Genuity
understands and agrees that GTE's sole responsibility under this paragraph
is to monitor the alarms and give notice of alarms in accordance with
instructions from Genuity. GTE has no obligations or responsibilities to
provide any other response to alarms.
3. Upon request of Genuity, GTE shall perform investigative services for
Genuity to facilitate fact finding and improve information gathering in
support of Genuity senior management, as well as to aid in prosecutorial
activities, facilitate recoveries and encourage loss prevention. GTE shall
report investigative findings in writing. Upon request of Genuity, GTE shall
report material findings of criminal acts to the appropriate State or
Federal criminal justice agency.
Genuity's Responsibilities with respect to Irving-Based Building Security
- -------------------------------------------------------------------------
Services
- --------
Genuity shall provide all information required for GTE to perform its duties
hereunder, including without limitation current notification information in the
event of an alarm.
Pricing Structure with respect to Irving-Based Building Security Services
- -------------------------------------------------------------------------
ID Badge $2.50 each
ID Badge & Keycard Combination $5.00 each
Alarm Monitoring $30.00 per month
Investigative Services (Other than
Computer Forensic Investigative Services) $60.00 per hour
Computer Forensic Investigative Services $150.00 per hour
Page 72 of 114
<PAGE>
Hourly rates will be charged for all time spent on investigative services,
including without limitation all time associated with conducting investigations,
reviewing documents, preparing reports and correspondence and attendance at
meetings.
In addition to these fees and charges, Genuity shall reimburse GTE for all
travel-related costs and expenses in accordance with the terms of the agreement
and for all costs and expenses for long distance, communications, reproductions,
courier and delivery services, postage and supplies incurred by GTE in the
performance of these services. GTE shall submit quarterly invoices to Genuity
for these Irving-based security services.
Other Specific Terms or Conditions with respect to Irving-Based Building
- ------------------------------------------------------------------------
Security Services
- -----------------
GTE may use GTE-approved subcontractors to provide any of the Irving-based
building security services described in this SOW, with supervision of such
subcontractors to be provided by GTE; however, Genuity shall not be responsible
for the costs of such subcontractors except as expressly set forth herein.
The parties acknowledge and agree that the alarm monitoring equipment located at
Genuity's premises is owned by Genuity and that Genuity has sole responsibility
for the repair and maintenance of such equipment. GTE has no obligations or
responsibilities with respect to repair and maintenance of such equipment.
Any or all of the Irving-based security services described in this SOW may be
terminated by Genuity for any or no reason upon 60 days written notice. In the
event of termination, Genuity shall pay GTE for all services performed through
the date of termination.
LIMITATIONS WITH RESPECT TO IRVING-BASED BUILDING SECURITY SERVICES
- -------------------------------------------------------------------
GTE does not warrant services against intrusion, loss, property damage,
vandalism, or injury to employees, visitors or contractors.
CAMBRIDGE-BASED BUILDING SECURITY SERVICES
Genuity Security provides ID badge and card key issuance, alarm monitoring,
guard services and investigative services for certain GTE buildings in
Cambridge, MA, New London, CT, Rosslyn, VA, and Columbia, MD. These services are
provided from a central security control center located in a GTE-owned building
in Cambridge, MA. Genuity uses this same security control center to monitor
numerous other Genuity sites. Accordingly, GTE has agreed to lease the security
control center to Genuity during a transition period to allow Genuity time to
design and construct an alternate security control center at another site. In
turn, during this transition period, while Genuity has exclusive use and control
of the security control center in Cambridge, MA, Genuity has agreed to provide
certain security services to GTE. These services shall terminate no later than
December 31, 2000; however, Genuity may terminate these services upon 30 days
written notice provided that Genuity's lease of the security control room
likewise terminates upon the date of termination of these services as set forth
below.
The Cambridge-Based Building Security Services to be provided under this SOW are
to be provided under the terms and conditions of the Agreement, EXCEPT for
purposes of these
Page 73 of 114
<PAGE>
Cambridge-Based Building Security Services the service
provider is Genuity and the customer is BBNT Solutions LLL ("BBNT"), an
affiliate of GTE. Accordingly, for purposes of these Cambridge-Based Building
Security Services, (i) Genuity agrees to be bound by the terms of the Agreement
as if it were GTE thereunder, and (ii) GTE and BBNT shall be bound by the terms
of the Agreement as if they were Genuity thereunder.
1. Genuity shall provide security management and system monitoring services as
described below:
. Genuity will provide 24 hour monitoring of the currently installed
security management system in BBNT's buildings in Cambridge, MA; New
London, CT; Rossalyn, VA; and Columbia, MD; and will provide
notification of alarms to BBNT in accordance with instructions from
BBNT. BBNT is responsible for providing current notification
information.
. Genuity will provide a weekly alarm report and a list of authorized
card users generated from the DSX security management system.
. Genuity will provide response to intrusion alarms on perimeter doors,
medical emergencies, and other emergency situations. Genuity also will
provide after-hour employee escorts and vehicle assistance. Genuity
will provide reasonable response time to service requests, but actual
time depends on other required duties performed by security personnel.
. Genuity will maintain the access control system in proper working order
at its cost and expense; however, BBNT shall reimburse Genuity for all
repair costs resulting from the negligence or willful misconduct of
BBNT or its employees, agents or contractors.
. BBNT owns the security system components located in its owned and
leased buildings covered by this SOW (specifically excluding BBNT's
subleased premises located at 70 Fawcett Street, Cambridge, MA), EXCEPT
Genuity owns the security console and the equipment located therein in
the security control center located at 77 Fawcett Street, Cambridge,
MA.
2. Genuity shall provide access control cards and keys as described below:
. Genuity will provide access control cards and photo identification to
BBNT employees in accordance with currently established procedures.
. Genuity "owns" the facility code presently used on access control
cards. Upon expiration or earlier termination of this SOW with respect
to Cambridge-based security services, BBNT will endeavor to recover and
return to Genuity the access control cards issued by Genuity.
. Genuity will process photo identification / access control cards in
accordance with the current badge office hours and procedures.
. BBNT will provide Genuity with photo badge templates in digital format.
. Cost of the first 100 badges per month is included in the monthly
Security Management Fee. BBNT shall pay a fee of $25 per badge for each
additional badge in excess of 100 badges issued in any month.
. Genuity will maintain the current mechanical key hierarchy until BBNT
installs an alternate hierarchy. Costs of keys will be included in the
Security Management Fee. Re-coring costs will be charged at cost + 10%.
Page 74 of 114
<PAGE>
3. Genuity shall perform investigative services for BBNT as described below:
. Genuity will provide initial response to reports of internal thefts,
security complaints and other security-related matters. Genuity's
initial response and report is included in the Security Management Fee.
. Upon request by BBNT, Genuity may provide further investigation beyond
initial response and report at a cost of $75 per hour. BBNT shall
reimburse Genuity for all travel-related costs and expenses associated
with investigations in accordance with BBNT's travel policy. If Genuity
does not have the capacity or desire to perform investigations beyond
initial response and report, Genuity shall decline to provide such
additional investigative services; Genuity shall not retain any third
party consultants or investigators for or on behalf of BBNT.
. BBNT is responsible for background investigations of BBNT new hires
4. Genuity shall provide guard services to BBNT as described below:
. Genuity shall provide routine guard services in accordance with
existing practices, including guard patrol services to internal and
external BBNT property and initial emergency response. Genuity will
manage the guard services.
. If BBNT requests any special guard services for moves or other special
events, BBNT shall pay the direct costs incurred by Genuity in
accordance with Genuity's guard service contract, plus a 10% management
fee, for such additional coverage.
. Routine guard tours will include required checks of government secured
containers and rooms.
. Genuity will provide government "cleared" guards until May 31, 2000 and
will provide required response to secure open government containers and
rooms in accordance with present practices. Genuity will not maintain
the capability to provide "cleared" response beyond May 31, 2000.
Term for Cambridge-Based Building Security Services and Transition of Services
- ------------------------------------------------------------------------------
The parties acknowledge that Genuity is leasing the space for the security
control center located at 77 Fawcett Street from BBNT under the terms of a Lease
Agreement of even date herewith. The parties further acknowledge and agree that
it is the intention of both parties to transition the security services covered
by this SOW from Genuity to BBNT on or before December 31, 2000. In furtherance
of this transition, Genuity hereby agrees to diligently proceed with the
selection, design, and build-out of an alternate security control center to
which it will migrate all non-BBNT security management and monitoring conducted
by Genuity at 77 Fawcett Street.
This SOW shall terminate with respect to the Cambridge-based security services
upon the earlier of (i) December 31, 2000, or (ii) 30 days after written notice
of termination from Genuity to BBNT; it being understood and agreed that
Genuity's lease of the security control room likewise shall terminate upon the
date of termination of this SOW. Upon termination of this SOW, the parties
agree to cooperate with each other in transitioning the security services
provided hereunder to BBNT or its designated third party provider.
Page 75 of 114
<PAGE>
In addition, and notwithstanding anything to the contrary contained in this SOW,
BBNT may terminate this SOW with respect to the guard services described in
paragraph 4 above upon 30 days written notice to Genuity.
BBNT's Responsibilities with respect to Cambridge-Based Building Security
- -------------------------------------------------------------------------
Services
- --------
BBNT shall provide all information required for Genuity to perform its duties
hereunder, including without limitation current notification information in the
event of an alarm. As stated above, BBNT also will provide Genuity with photo
badge templates in digital format.
Pricing Structure with respect to Cambridge-Based Building Security Services
- ----------------------------------------------------------------------------
Genuity may use Genuity-approved subcontractors to provide any of the Cambridge-
based building security services described in this SOW, with supervision of such
subcontractors to be provided by Genuity; however, BBNT shall not be responsible
for the costs of such subcontractors except as expressly set forth herein.
In addition to the fees set forth elsewhere herein, BBNT shall pay Genuity the
following fees for these services:
System Monitoring Service (including all
system maintenance and repairs, except
as expressly set forth in this SOW) $5,400.00 per month
Security Management Fee $2,675.00 per week
Routine Guard Services Fee $3,330.00 per week
Genuity shall submit monthly invoices to GTE for these Cambridge-based security
services.
LIMITATIONS WITH RESPECT TO CAMBRIDGE-BASED BUILDING SECURITY SERVICES
- ----------------------------------------------------------------------
Genuity does not warrant services against intrusion, loss, property damage,
vandalism, or injury to employees, visitors or contractors. The success of
any security program is contingent upon the active participation of all
employees, visitors and contractors and requires the support of all levels
of management.
GTE SERVICE CORPORATION GENUITY INC.
By:____________________________ By:_____________________________
Title:_________________________ Title:__________________________
Page 76 of 114
<PAGE>
Statement Of Work
For
Billing Services
This Statement of Work ("SOW") is made by GTE Consolidated Services
Incorporated, ("CSI") and Internetworking,Incorporated and its subsidiary
companies (collectively referred to as "INTERNETWORKING"), and is hereby made a
part of and shall be governed by the Transition Services Agreement.
This SOW establishes the terms and conditions pursuant to which INTERNETWORKING
wishes to obtain from CSI, and CSI shall provide to INTERNETWORKING, billing,
credit and collection services for INTERNETWORKING for a transitional period of
one (1) year, with an opportunity for two (2) one-year renewal terms, or
alternatively, 180 day termination for convenience, at any time during the term
or a renewal term, by INTERNETWORKING. During the transition period,
INTERNETWORKING requires various billing, credit and collection services in
order to properly bill and receive revenue from its customers. CSI has in the
past, and continues to possess, the capability of providing such billing, credit
and collection services to meet the billing, credit and collection needs of
INTERNETWORKING for the continuing and uninterrupted flow of revenue to
INTERNETWORKING.
1. SERVICES IN GENERAL.
(a) This SOW establishes the terms and conditions pursuant to which
INTERNETWORKING shall obtain from CSI, and CSI shall provide to INTERNETWORKING,
billing, credit and collection services regarding INTERNETWORKING
corporate/commercial customers (individually and collectively, "Services")
described in various schedules to this SOW (individually a "Schedule" and
collectively the "Schedules"). To the extent of any conflict or inconsistency
between the terms and conditions of a Schedule and the terms and conditions of
this SOW, the terms and conditions of the applicable Schedule shall control.
(b) All Schedules shall: be and are hereby incorporated by reference as a
part of this SOW and shall: (i) describe the type and scope of Services to be
performed, resources to be provided or obligations to be discharged by CSI
pursuant to the SOW; (ii) describe the obligations of INTERNETWORKING related to
this SOW, including any facilities, equipment, personnel and tasks or other
support to be provided or performed by INTERNETWORKING; (iii) specify any other
terms and conditions appropriate to the Services to be performed and the
obligations of the parties relative thereto. The attached Schedules are as
follows:
Schedule A-Description of Services
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Schedule B-Performance Standards
Schedule C- Current Products Billed
Schedule D-Change Request Procedures
Schedule E- Arbor Conversion
Schedule F-ATM Services
Schedule G- Pricing
Schedule H- Tax Services
(c) No changes to the scope of Services shall be permitted unless set
forth in writing pursuant to the procedures set forth in Schedule D, Change
Request Procedures.
2. CREDIT AND COLLECTION SERVICES.
(a) CSI shall perform the credit and collection Services set forth in the
Schedules, upon written request by INTERNETWORKING.
(b) In addition to the provisions of the Transition Services Agreement
concerning Compliance with Laws, with regard to Credit and Debt Collection, the
parties, their employees, contractors, agents and assigns shall comply with all
applicable federal, state and local credit and debt collection statutes,
ordinances, regulations, and codes including but not limited to the Fair Credit
Reporting Act, 15 U.S.C. Section 1681, et seq., The Equal Credit Opportunity
Act, 15 U.S.C. Section 1691, et seq., The Fair Debt Collection Practices Act, 15
U.S.C. Section 1692, et seq., and the Consumer Credit Protection Act, 15 U.S.C.
Section 1601, et seq.
3. INFORMATION TECHNOLOGY REQUIREMENTS.
CSI will provide such records and data processing tools as necessary, to provide
the Services set for herein, either through its own information technology
("IT") resources or those of its affiliates and third party contractors.
INTERNETWORKING will give CSI prompt written notice of any modifications to its
existing records and data systems, when it augments such systems or obtains new
records and data systems, that may materially affect CSI's ability to provide
services hereunder.
4. REPLACEMENT AND MODIFICATION OF SYSTEMS.
CSI reserves the right to modify or replace its billing systems at any time
during the term hereof, to support increased capacity or new products or
services requested by
2
<PAGE>
INTERNETWORKING or reqired for the performance of Services by CSI ("Changes"),
provided, however, such Changes will not result in any material loss of
functionality of such billing systems or Services. CSI shall give
INTERNETWORKING immediate notice of such Changes. . INTERNETWORKING understands
and agrees that as used herein, the term "billing systems" shall refer solely to
the protocol that CSI employs in tandem with the particular transmission medium
used by INTERNETWORKING that enables CSI to read and process INTERNETWORKING's
data as detailed in the Schedules and any attachments thereto.
5. SERVICES PRICING AND INVOICING
(a) Pricing for CSI Services is set out in Schedule G, Services Pricing.
Such pricing does not include applicable sales, use or similar taxes, which
shall be added to the amount invoiced.
(b) In addition to the provisions set forth in the Transition Services
Agreement, INTERNETWORKING agrees to pay the full invoiced amount represented on
each invoice, or in the event that an amount is in dispute, submit a written
request for review of the disputed portion of the invoice by the payment due
date of the invoice. If INTERNETWORKING fails to pay or submit a request for
review of a disputed billing procedure, as provided herein, by the payment due
date, CSI reserves the right to charge interest at a rate of 1 1/2 % per month
or at the highest allowable statutory rate. In the event of a dispute concerning
an invoice received by INTERNETWORKING, INTERNETWORKING shall promptly notify
CSI in writing of the disputed item(s) with a description of the dispute on or
before the due date of the invoice. CSI shall respond within 20 days of receipt
of such dispute. If the dispute cannot be resolved by the parties within 30 days
thereafter, the parties will resort to the dispute resolution procedures set
forth in the Transition Services Agreement.
(c) In addition to the provisions for expense reimbursement set forth in
the Transition Services Agreement, INTERNETWORKING shall reimburse CSI for all
reasonable expenses approved by INTERNETWORKING, incurred on INTERNETWORKING's
behalf for the purposes of providing the Services ("Expenses"). There shall be
no mark-up for invoiced Expenses. CSI shall invoice INTERNETWORKING for Expenses
as they accrue monthly.
(d) The parties shall negotiate pricing within 120 days of the anniversary
of this SOW as set out in Section 6 (b) Term with new pricing to be effective on
the anniversary date of this SOW. However, CSI reserves the right to increase
its rates and charges at any time during the term or any renewal term to include
increases in costs as the result of changes in Applicable Law, regulation, or
postal rates, or other similar circumstances beyond CSI's control, related to
CSI's provision of Services, whether recurring or non-recurring, upon thirty
(30) days written notice to INTERNETWORKING.
3
<PAGE>
Upon INTERNETWORKING's termination of this SOW, for convenience before the end
of the initial term, as provided in Section 6, prior to the end of the term,
INTERNETWORKING will reimburse CSI, its parent or affiliate, as the case may be,
for all INTERNETWORKING-approved, third party costs for equipment or software
which have been incurred by CSI after the execution of this SOW as a direct
result of CSI's provision of Services under this Agreement or any Statement of
Work, provided that INTERNETWORKING shall be entitled to any right, license or
title related to any such equipment or software to the extent CSI has the legal
authority to convey such right, license or title. In addition, in the event
INTERNETWORKING terminates this SOW for convenience during the term or any
renewal term, INTERNETWORKING will reimburse CSI for $8 million of the $16
million license fee paid by CSI, its parent or affiliated company, as the case
may be, for the Kenan-Arbor Software License.
6. TERM.
(a) This SOW is effective as of the Effective Date of the Transition
Services Agreement and shall continue in full force and effect for an initial
term ("Initial Term") of one (1) year and may be renewed at INTERNETWORKING's
option for two renewal terms of one year (each a "Renewal Term"), in accordance
with the procedures set out in subsection (b), below. Following the second
Renewal Term, the SOW may be renewed at the mutual agreement of the parties.
(b) In the event that INTERNETWORKING wishes to negotiate to renew this
SOW as set out in subsection (a), above, INTERNETWORKING will provide CSI with
notice of its intent to negotiate a Renewal Term and a forecast for such Renewal
Term ("Renewal Forecast") no later than one-hundred and twenty (120) days prior
to the end of the Initial Term or Renwal Term, as applicable. CSI will respond
to the Renewal Forecast with a pricing proposal within (30) thirty days of
receipt of the Renewal Forecast and INTERNETWORKING will notify CSI of
INTERNETWORKING's decision regarding it decision to enter into a Renewal Term
within thirty (30) days from the date INTERNETWORKING receives pricing from CSI.
If INTERNETWORKING fails to notify CSI of its intent to renew, by such renewal
notice date, the SOW will expire at the end of the then-current Term. In the
event that INTERNETWORKING does not wish to enter into a Renewal Term, the
parties shall mutually agree upon a reasonable period to wind down the Services
hereunder and allow for INTERNETWORKING to transfer to another service provider;
such period not to exceed 180 days post expiration. The parties shall proceed in
the post expiration period at the proposed pricing rates.
(c) Termination without Cause. Either party may terminate this Statement
-------------------------
of Work without cause upon a minimum of one hundred and eighty (180) days
written notice to terminate. The parties agree that this notice period is
longer than the 120 day termination provision set out in the basic Agreement,
and agree to the longer period in order to accommodate INTERNETWORKING's
minimum requirements in transitioning to another service provider or another
billing and collection mechanism.
4
<PAGE>
Upon receipt of notice of termination, the parties shall meet to determine a
plan for transition and termination, the termination date shall not be longer
than one year from the date the non-terminating party receives such notice of
termination.
(d) Termination for Cause. INTERNETWORKING may terminate this Statement of
---------------------
Work for cause, upon written notice and with an opportunity to cure pursuant to
the Transition Services Agreement, due to CSI's material failure to administer
INTERNETWORKING's established policies and procedures (which have been given to
CSI in writing prior to such alleged failure). For purposes of this agreement,
"material failure" is defined as the occurrence of either: (i) three (3) or more
breaches of separate policies or procedures within a twelve (12) month rolling
period or (ii) two (2) or more breaches of the same policy or procedure within a
rolling twelve (12) month period.
(e) In addition to the foregoing, this SOW may be terminated by: (i)
mutual agreement of the parties or (ii) in the event of termination of the
Transition Services Agreement, this SOW will terminate simultaneously therewith.
7. CSI ON- SITE PERSONNEL.
(a) CSI shall provide on-site personnel at specifically designated
INTERNETWORKING location(s) to support INTERNETWORKING's requirements as
mutually agreed by the parties. All such on-site personnel will work under the
direction and control of CSI.
(b) CSI shall be responsible for all timekeeping, payroll, applicable
benefits (if any), workers compensation, insurance, employment and other related
taxes, documentation and related administrative duties or other requirements
with respect to the CSI on-site personnel.
(c) CSI shall require all employees or subcontractors located on-site at
INTERNETWORKING's location(s) to comply with the published rules, regulations
and policies of INTERNETWORKING which shall be provided to all on-site employees
at the time the on-site employee is assigned to an INTERNETWORKING location(s).
(d) CSI and the on-site personnel shall treat and maintain all information
obtained at INTERNETWORKING's location(s) as Confidential Information as set
forth in the Transition Services Agreement.
(e) In the event that INTERNETWORKING requires on-site personnel,
INTERNETWORKING will provide adequate office space and accommodations to support
such on-site personnel. The term "adequate office space and accommodations"
means that INTERNETWORKING shall provide, including but not be limited to,
office space specifically designated for CSI employees in or near
5
<PAGE>
INTERNETWORKING's offices equipped with computers, telecommunications, e-mail,
internet access, ordinary and customary office furniture and equipment and mail
and janitorial services.
(f) In the event that INTERNETWORKING requires the office relocation of
any on-site personnel provided by CSI, INTERNETWORKING will reimburse CSI for
all business-related costs incurred by CSI associated with relocation of CSI
personnel as set forth herein. 8. ACCESS NEEDS OF PARTIES AND CONFIDENTIALITY
PROTECTIONS FOR PERSONNEL ON SITE TO EITHER PARTY.
In addition to the provisions set forth in the Transition Services Agreement,
each party shall permit reasonable access during normal working hours to its
facilities and systems that are used in connection with the performance of
Services. On-site personnel shall be given security authorization for limited
access to INTERNETWORKING's facilities for the purpose of performing the
Services. For all other types of access by non on-site personnel, reasonable
prior notice shall be given when access is required.
9. FORECASTING
In order to permit CSI to plan for and implement the Services, INTERNETWORKING
shall provide CSI with quarterly forecasts of billing volumes for each fiscal
quarter during the term hereof. Each quarterly forecast must be submitted to CSI
no later than 60 days prior to the end of the preceding quarter and such
forecast shall provide:
(1) volume of gross billing (in dollars),
(2) percentage increase or decrease in volume of amounts billed,
(3) billing volume for new customers and estimated dollar value.
(4) Number of Customers- Broken out into classifications: Total, New
and Incremental (increase or decrease)
(5) Number of Usage Records (for usage products) per month, per
product; date expected to be made available to billing; requested
in-service date
(6) Number of Non-Usage Billing Events: NRC's and MRC's per month, per
product; date expected to be made available to billing; requested
in-service date
(7) Volume of Individual Customer Basis contracts
(8) Activation time required for new customer or new products to
introduced in the applicable quarter and the effective date for the
following:
(i) new products
(ii) new customers
(iii) new pricing
(iv) bundled services and/or pricing
6
<PAGE>
(9) Requirements for development of new billing capabilities or
changes to existing capabilities pursuant to Schedule D,
Change Request Procedures.
The parties acknowledge that material changes to billing events
processed by the CSI system, including but not limited to,
introduction of new products, the addition of a significant number of
new customers, significant deviations from forecasted volumes or
significant increases in billing volumes, or delays from forecasted
dates in launching new products may lead to limitations on CSI's
ability to provide the Services. In order to provide CSI with the best
available information concerning INTERNETWORKING's projected volumes
and changes that have an impact on CSI's provision of the Services
described in this SOW, the parties shall meet quarterly to review
INTERNETWORKING's forecast for the next quarter to determine the
requirements of each party in order for CSI to provide the level of
Services required by this SOW.
10. CHANGE CONTROL.
(a) All requests for changes to or addition of Services for new
products, new customers, termination of customers, significant
increases/decreases to numbers of bills or other changes regarding the
Services must be made in accordance with the Change Request Procedures set
forth at Schedule D.
(b) In addition, INTERNETWORKING shall communicate all IT
requirements, changes, clarification, question or requests of any nature
regarding the CSI system directly to CSI personnel or management. In no
event shall INTERNETWORKING communicate directly with any affiliates or
subcontractors of CSI regarding such requests or other components or
services rendered pursuant to this SOW without the written consent of CSI.
11. TAXES.
(a) CSI shall provide the tax services described in Schedule H, Tax Services.
INTERNETWORKING shall be liable for all applicable sales, use or similar
taxes for amounts invoiced to INTERNETWORKING's customers and
INTERNETWORKING shall be responsible for preparation and filing of all tax
returns and applicable tax reporting to all taxing jurisdictions. Taxes
shall be added to each customer's invoice, however, CSI shall not be liable
for miscalculation or omissions with regard to such taxes.
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12. MODIFICATION
This SOW or any Schedule attached hereto may only be modified or amended by an
instrument in writing signed by duly authorized representatives of the parties
pursuant to the terms of the Transition Services Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this SOW through their
authorized representatives.
GTE Consolidated Services Incorporated Genuity Inc.
By:_____________________________ By:_____________________________
Name:___________________________ Name:___________________________
Title:__________________________ Title:__________________________
Date:___________________________ Date:___________________________
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<PAGE>
Schedule A
Description of Billing Services
The scope of the Services set forth herein may be modified by mutual agreement,
but all modifications must be in writing, signed by both parties. CSI shall
perform no services outside the scope of the Services as defined in writing in
this Schedule A. No changes to the scope of work shall be permitted unless set
forth in writing executed by an authorized manager of each party (for purposes
of authorization, e-mail will not be considered a "writing").
Under this SOW, CSI agrees to provide to INTERNETWORKING the following
functions, which collectively are defined as Billing Services:
. Data Accumulation
. Bill Processing
. Bill Format and Distribution
. Inquiry & Investigation
. Credit Verification
. Collections Administration
. Payment Processing
. Administration of Billing Capability
The following sections describe each of these functions and the roles and
responsibilities of CSI and INTERNETWORKING in fulfilling these functions.
Section 1.0 - Data Accumulation
1.0 Data accumulation consists of the validation and correction (as agreed
upon) of usage based billing events, trending, guiding of usage based events to
a customer account, provisioning of unrated and/or rated call detail files as
agreed upon and preparing usage based events for bill calculation process. Such
events may be voice, data, database lookups and value added services. Events can
be recorded by INTERNETWORKING'S network or received from an external company.
1.1 CSI will:
1.1.1 Validate and manage usage based billing events on a timely basis (daily),
from mediation to billing, and process those records for billing in
accordance with the business rules defined by INTERNETWORKING. In
situations where INTERNETWORKING performs the collection and mediation
processes, CSI will accept only those records which are in the standards
and format defined by CSI.
1.1.2 Provide balancing and control procedures to assure all usage based
billing events provided by INTERNETWORKING are processed and distributed
to the billing systems in an accurate and timely manner.
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1.1.3 Investigate all events in error and return to INTERNETWORKING for review
and disposition any errors that CSI cannot correct.
1.1.4 Perform trending on billing events and provide reporting to
INTERNETWORKING for their analysis of customer behavior and impact on
revenues
1.1.5 Provide monthly reports to INTERNETWORKING on the volume of usage based
billing events processed, volume of events determined to be unbillable
due to errors, and root cause analysis of event processing errors.
1.2 INTERNETWORKING will:
1.2.1 Provide to CSI scheduled usage based event transmissions in the format
and standards as mutually agreed to by the parties.
1.2.2 Provide to CSI usage based event transmission balancing and control
information in the format and standards as mutually agreed to by the
parties.
1.2.3 Notify CSI of any delays in scheduled transmissions and will not hold CSI
responsible for any missed cycle cutoffs due to delays caused by
INTERNETWORKING.
1.2.4 Notify CSI of usage rate changes in a timely manner and will not hold CSI
responsible for any missed rate change update due to delays caused by
INTERNETWORKING. Rate changes and any new usage based events to be billed
will be communicated to CSI as outlined in Schedule D- Change Request
Procedures
Section 2.0 - Bill Processing
2.0 Bill Processing consists of the creation of formatted billable data for all
customers at bill now time. This process includes the retrieval of all
usage-based events, customer specific product and services information,
recurring and non-recurring charges, adjustments to customer accounts and
payment data.
2.1 CSI will:
2.1.1 Maintain billing schedules in accordance with INTERNETWORKING business
requirements. Billing schedules will be prepared on a monthly basis and
approved by INTERNETWORKING and CSI. Any changes in final mail dates to
customers will be mutually agreed on by both parties.
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2.1.2 Calculate all federal, state, and local sales, use, excise, gross
receipts, and other taxes and tax-like charges imposed on
INTERNETWORKING's services in accordance with the tax application
guidelines provided by INTERNETWORKING.
2.1.3 Develop and maintain the billing process for INTERNETWORKING's pricing
and discounting plans for products and services offered by
INTERNETWORKING.
2.1.4 Perform quality assurance reviews of billing system outputs to verify the
accuracy of billing and take the required action to correct billing
exceptions identified.
2.1.5 Maintain financial and journalization tables to ensure the accurate
transmission of billing data to INTERNETWORKING's Financial Reporting
system, SAP.
2.1.6 Maintain billing data files for the period of time consistent with
applicable law and INTERNETWORKING business requirements.
2.1.7 Provide security controls for usage based event and billing data to
assure only those organizations/individuals authorized by INTERNETWORKING
have access to such data.
2.2 INTERNETWORKING will:
2.2.1 Provide to CSI information regarding new pricing and discount plans or
changes to existing pricing and discount plans as outlined in Schedule D-
Change Request Procedures.
2.2.2 Provide direction and business requirements to CSI regarding the
application and billing of Taxes, including, without limitation,
implementation of the following:
2.2.2.1 Procedures or information relating to taxes that are
applicable to INTERNETWORKING products and services for all taxing
jurisdictions.
2.2.2.2 Procedures or information arising from changes to Applicable
Law relating to Taxes.
2.2.2.3 Procedures or information relating to Taxes on new products
and services offered by INTERNETWORKING.
2.2.2.4 Procedures or information relating to Tax surcharges.
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2.2.2.5 Procedures or information relating to the tax status of a
particular customer.
2.2.3 Provide CSI with INTERNETWORKING's requirements related to the
information flow from the billing system as applicable to journalization
of revenues, cash, accounts receivable and uncollectible activity
processed by CSI's billing systems.
2.2.4 Provide CSI customer sales, order entry, and provisioning data on a daily
schedule as input to the billing function performed by CSI. These updates
shall include for new INTERNETWORKING customers, all account information
necessary to establish an account on the billing system customer account
database. For existing customers, these updates shall include all changes
to the account and the effective date of the change.
2.2.5 Provide to CSI such access to INTERNETWORKING sales, order entry,
provisioning and financial systems that are required in order to supply
the billing system with appropriate customer or product related data
required by CSI in the preparation of a customer bill.
2.2.6 Provide for CSI maintenance and training on INTERNETWORKING systems that
require access by CSI employees.
2.2.7 Provide to CSI an initial list of INTERNETWORKING employees authorized by
INTERNETWORKING to access and review customer data and product/service
data from CSI's billing systems. Updates to this list will be
communicated to CSI on no less than a monthly basis and immediately upon
the termination of any previously authorized employee.
2.2.8 Provide to CSI on no less than a monthly basis, a report of known or
suspected billing issues detected by INTERNETWORKING from any source,
including but not limited to customer feedback or inquiries and analysis
of financial reporting data.
Section 3.0 - Bill Format and Distribution:
3.0 Bill Format and Distribution consists of the processes used to support
the production of the bill in the format and on the media defined by
INTERNETWORKING business requirements and the distribution of the bill
and any supplemental information to the customer.
3.1 CSI will:
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3.1.1 Maintain and support bill presentation formats in paper media. Support
for invoice preparation on alternative media (CD-ROM, diskette,
electronic) will be evaluated through the Change Request Procedures based
on INTERNETWORKING's business requirements, See Schedule D.
3.1.2 Provide balancing and control processes to assure all print files are
received, processed and distributed in accordance with established Bill
Processing schedules.
3.1.3 Manage the investigation and corrective action associated with any
files/documents that are not successfully transmitted and printed.
3.1.4 Burst, fold, insert, apply postage and mail all customer bills in
accordance with Bill Processing schedules.
Administer the recovery of mutilated bills utilizing CSI's standard bill reprint
process.
3.1.5 Provide to INTERNETWORKING a confirmation of the total documents mailed
by cycle, by entity for each processing date.
3.1.6 Provide for the preparation and distribution of supplemental information,
primarily call detail reporting, in paper and electronic media. Support
for supplemental detail information on alternative media, including CD-
ROM and diskette will be evaluated through the Change Request Procedures
set forth in Schedule D based on INTERNETWORKING's business requirements.
3.1.7 Perform inventory control and ordering of forms for INTERNETWORKING bills
and envelopes to assure proper stock levels.
3.1.8 Adhere to required USPS regulations and will manage the distribution
process to assure the most favorable postage rates to INTERNETWORKING.
3.1.9 Support the mailing of promotional and informational material (commonly
referred to as bill inserts) in INTERNETWORKING's bill mailings or
through direct mailing to selected customers.
INTERNETWORKING will:
3.2.1 Notify CSI of any changes to paper stock or envelopes 75 days in advance
to allow for lead-time and restocking.
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3.2.2 Provide sample inserts to CSI for testing at least 5 business days prior
to designated bill dates.
3.2.3 Define business requirements and provide test data for any new bill
formats or media that INTERNETWORKING deems necessary to meet business or
customer demands. INTERNETWORKING will follow the guidelines in Schedule
D-Change Request Procedures, when requesting a change by CSI.
Section 4.0 - Inquiry and Investigation
4.0 Inquiry and Investigation consists of those processes necessary to answer
and resolve questions received from INTERNETWORKING's customers regarding
their bill or billing services, such as questions concerning receipt of
payment, request for duplicate bill copy, change of address, an
explanation of the bill or referral of a billing issue from an
INTERNETWORKING employee. An inquiry may be received by phone, automated
attendant, voice mail, facsimile, or electronic means.
4.1 CSI will, pursuant to INTERNETWORKING's policies, procedures and at
INTERNETWORKING's direction:
4.1.1 Support customer billing inquiry and adjustment functions as defined by
INTERNETWORKING, including providing Customer Billing Inquiry
Representatives to answer direct calls from INTERNETWORKING customers on
matters related to the customer bill.
4.1.2 Provide Customer Billing Inquiry Representative and management support
staffing for those hours of service currently defined as 8:00 AM to 5:00
PM Eastern and Central standard time.
4.1.3 Provide the necessary training and monitoring of employee performance to
assure that employees are performing in accordance with INTERNETWORKING
business policies.
4.1.4 Manage and perform billing-related problem investigation, resolution and
tracking for customer reported billing issues that cannot be handled
during the customer bill inquiry process. CSI will take the required
actions to correct problems within the billing processes and billing
systems. If the issue investigation process determines the problem is a
result of errors in systems or processes managed by INTERNETWORKING, CSI
will inform INTERNETWORKING and will assist INTERNETWORKING as requested
through the resolution process.
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4.1.5 Perform root cause analysis of bill inquiry calls to determine
appropriate level of resolution within the billing process to minimize
recurring customer impact and to reduce subsequent calls.
4.1.6 Provide to INTERNETWORKING monthly reports of compliance to performance
standards and service levels and of root cause analysis of inquiry calls.
4.2 INTERNETWORKING will:
4.3 Provide necessary telecommunications support and network integration to
meet service level standards and provide ongoing support of all 800
numbers assigned for customer inquiry.
4.2.1 Provide to CSI copies of all information necessary for CSI to train its
Customer Inquiry representatives and supervisory staff to answer customer
questions regarding information contained on their bill. This information
will include, but is not limited to: product and service descriptions,
availability of products and services, rate and pricing schedules,
promotional terms and conditions, and any customer specific contracts
and/or terms and conditions. Information should be received by CSI no
later than 15 days prior to the change being effective.
4.2.2 Provide to CSI business policies outlining its customer services
standards including, but not limited to the amount a CSI Customer Inquiry
representative may adjust from a customer's bill, supervisory approval
levels for adjustment activity, and escalation procedures for when a
customer should be referred to an INTERNETWORKING representative/officer
for problem resolution.
4.2.3 Provide CSI personnel with access to any non-billing systems that are
necessary for the investigation and resolution of billing related
questions. These systems include but are not limited to sales/order entry
systems, pending order activity, provisioning, trouble reporting systems.
INTERNETWORKING will provide the ongoing maintenance and support of these
systems, including the cost of access to and processing of transactions
generated by CSI personnel on behalf of INTERNETWORKING customers.
4.2.4 Commit to make the necessary changes in it's supporting systems for
errors that are causing errors in the billing system. All costs to
correct these systems will be borne by INTERNETWORKING. INTERNETWORKING
will also bear the costs of correcting problems in CSI maintained billing
systems.
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Section 5.0 - Credit Verification
5.0 Credit Verification consists of those administrative functions necessary
to perform credit checks to determine credit worthiness of new
INTERNETWORKING customers, in accordance with standards established by
INTERNETWORKING, and to communicate the results of these findings to
INTERNETWORKING management for further actions.
5.1 CSI will, pursuant to INTERNETWORKING's policies, procedures and at
INTERNETWORKING's direction:
5.1.1 Determine credit worthiness of new customers in accordance with standards
established by INTERNETWORKING.
5.1.2 Determine credit worthiness of current INTERNETWORKING customers who add
new products and services over their approved credit limit, in accordance
with standards established by INTERNETWORKING.
5.1.3 Notify INTERNETWORKING sales personnel when the credit verification
process determines a deposit may be required from a customer prior to the
establishment of service.
5.1.4 Refer to INTERNETWORKING management reports of customers who do not pass
credit checks and the reasons for denial under the standards established
by INTERNETWORKING.
5.1.5 Maintain contracts with major credit reporting bureaus, both domestic and
international, that are required in order to fulfill the credit
verification described above.
5.2 INTERNETWORKING will define credit worthiness standards for new and
current customers wishing to add services. Any changes to these policies
will be communicated to CSI no later than 15 days prior to their
effective date to allow for changes to operating procedures and system
parameters.
Section 6.0 - Collections Administration
6.0 Collections administration consists of those functions necessary to
support the risk management policies established by INTERNETWORKING and
to assist
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INTERNETWORKING in minimizing the loss of INTERNETWORKING billed
revenues.
6.1 CSI will:
6.1.1 For accounts that are in a delinquent status as defined by
INTERNETWORKING business policies, perform collection activities
including sending collection letters to customers, resolving billing
disputes and contacting customers in an attempt to collect.
6.1.2 In accordance with INTERNETWORKING business policies CSI will notify
INTERNETWORKING management when a customer'saccount reaches the
thresholds established by INTERNETWORKING for unacceptable balances or
delinquent payment, . Upon direction from INTERNETWORKING management, CSI
will return the customer account to INTERNETWORKING for disposition or
refer the debt to an outside collection agency.
6.1.3 Provide monthly, a report of accounts receivable aging, average
collection period and amount of uncollectible write-offs and recoveries
for the period.
6.1.4 Refer any accounts that are identified during the collections process as
being in bankruptcy, receivership, probate, etc. to INTERNETWORKING's
Legal department for further action. CSI will write off these accounts as
directed by INTERNETWORKING.
6.2 INTERNETWORKING will:
6.2.1 Define policies for the treatment and collection of delinquent accounts.
Any changes to these policies will be communicated to CSI no later than
15 days prior to their effective date to allow for changes to operating
procedures and system parameters.
Section 7.0 - Payment Processing
7.0 Payment Processing includes those activities necessary to post/update
payment activity to customer accounts, deposit funds, as required, in
INTERNETWORKING bank accounts, research and resolve any payment posting errors
and process returned items from banks or other financial institutions
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7.1 CSI will:
7.1.1 Process on a daily basis any customer payments received by CSI. This
processing will include the allocation of payment data to the appropriate
customer account and the transmission of payment data to the applicable
customer account database.
7.1.2 Perform balancing and control processes to ensure all payment data
transmitted to the billing systems are accepted and processed. CSI will
be responsible for resolving all out of balance conditions.
7.1.3 Deposit, on a daily basis, any funds it receives in the designated
INTERNETWORKING bank accounts. CSI will provide to INTERNETWORKING,
monthly reports of bank deposit activity.
7.1.4 Investigate and make any required adjustments to a customer's account as
the result of payment processing errors or as a result of returned items
from banks or other financial institutions.
7.1.5 Perform balancing and control processes to ensure all payment data
transmitted from external parties are accepted and processed to the CSI
billing systems. External parties may include a lockbox processor, a
credit card processor, electronic funds transfer or electronic data
interexchange. CSI will manage the resolution of any out of balance
conditions.
7.2 INTERNETWORKING will be responsible for defining performance standards,
negotiating pricing, and managing the relationships between its lock box and
credit card providers. Fees for these services will be directly billed from the
providers to INTERNETWORKING.
Section 8.0 - Administration of Billing Capabilities
8.0 The administration of billing capabilities includes those activities
necessary to assure the billing systems used by CSI to bill INTERNETWORKING
customer's are maintained and supported to assure that billings reflect the
correct rates, terms, prices and conditions for INTERNETWORKING's products and
services
8.1 CSI will, in accordance with INTERNETWORKING's policies, procedures and
at INTERNETWORKING's direction:
8.1.1 Administer, develop and implement changes to its billing systems in
support of objectives established by INTERNETWORKING for billing its customers,
including
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development of billing functionality to support new products and services as
identified by INTERNETWORKING.
8.1.3 Provide assessment of current and new billing capabilities and identify
alternative billing solutions to meet INTERNETWORKING's billing
requirements.
8.1.4 Administer and update billing system tables and business rules with
product and service changes requested by INTERNETWORKING as outline in
Schedule D -Change Request Procedures.
8.1.5 Perform user acceptance testing on behalf on INTERNETWORKING to ensure
system and/or table driven changes accurately reflect the intended
changes to INTERNETWORKING products and services and that such changes do
not adversely impact billing production. CSI will manage the resolution
of error conditions noted through testing.
8.1.6 Control, resolve and eliminate the cause of problems that occur due to
CSI caused errors in billing systems or processes.
8.1.7 Refer to INTERNETWORKING for investigation and resolution, errors
detected in the billing process that are due to systems or processes
performed or maintained by INTERNETWORKING, e.g. ordering and
provisioning errors.
8.1.8 INTERNETWORKING and CSI agree to provide the necessary systems interfaces
and connections for the transfer of customer account, product and
service, billing and financial data between CSI maintained billing
systems and INTERNETWORKING maintained systems including, but are not
limited to sales/order entry systems, pending order activity,
provisioning, trouble reporting systems.
8.2 INTERNETWORKING will:
8.2.1 Define changes to existing products and services and requirements for new
products and services in accordance with Change Request Procedures
outlined in Schedule D, including the definition of business requirements
and testing data.
8.2.2 Provide subject matter experts to answer questions and define test
scenarios.
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Schedule B
Billing Services Performance Measures
CSI and GENUITY agree to jointly define and establish a detailed action plan to
develop metrics that measure the effectiveness of the overall billing process
and compliance with the Billing Services business policies and procedures
established by GENUITY ("Action Plan") within sixty (60) days following the
effective date of this agreement. The Action Plan, will provide a mechanism to
establish guidelines ("Guidelines")based on performance metrics agreed upon by
the parties in accordance with the SOW and Transition Agreement. The Guidelines
will become effective upon the effective date of the renewal term, if any.
Included in the operating metrics will be measurements associated with the
services performed by CSI, as described in Schedule A-Description of Services,
as well as measures associated with the functions performed by GENUITY which are
an integral part of the total billing process, including but not limited to
usage polling and collection and provisioning timeliness.
Operating and compliance metrics will be defined and established relating to
billing timeliness and accuracy and credit and collections performance. CSI and
GENUITY agree to use the initial term of this agreement to establish threshold
levels of performance by CSI related to the metrics identified, and to establish
remedies to address CSI's inability to meet such performance levels in future
terms. The parties agree that assessment of actual performance against agreed
upon threshold levels, as well as implementation of the foregoing remedy
structure will begin in the renewal term, if any, of this agreement.
The Metrics established will be in substantially the form attached hereto.
Performance will be measured on a monthly basis, from the 1/st/ through the
31/st/. Metrics will exclude any jointly agreed upon holidays during which the
defined billing services may not be performed. Any variance from these
performance measures will be described in writing with actions identified to
bring performance to the agreed upon level.
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Schedule C
Products and Services Currently Billed
by CSI on Behalf of GENUITY
The following list represents those products and services that are currently
billed by CSI on behalf of GENUITY. CSI has established system and process
capabilities that support the billing for these products and services.
Any new products and services or any modifications to the billing for the
products and services outlined below will require changes to the current billing
systems and processes used by CSI. For any new products and services or
modifications, GENUITY will submit a request for change to CSI in accordance
with Schedule D, Change Request Procedures. CSI will evaluate the requested
change and provide to GENUITY a written estimate of the cost and timeframes
associated with the change as outlined in Schedule D.
Products Billed:
@Vault Web Advantage
ADSL Web Hosting
ATM PVC
BizConnect
Custom Hosting
Dialinx
Digital Subscriber
Ecache
Frame Relay
GNI Colocation
International ISP
Internet Advantage
Internet Advantage International
Internet Call Manager
Internet Server
IP Fax
ISP Direct
Managed Messaging
Private Line
Security Advantage
Site Patrol
Site Patrol International
Unified Messaging
Virtual Internet Service
Virtual Private Network
Voice Over IP
VPN International
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Schedule D
Change Request Procedures
1.0 Change request procedures to modify CSI's billing system or subprocess
support systems are initiated through a written Change Request (CR).
2.0 A high level estimate of the Time and Cost (T&C) for changes the CSI
systems or processes (order of magnitude) may be requested through the CHANGE
REQUEST process. An order of magnitude may also be requested at the early
stages of product or service development (INTERNETWORKING's PDMM or PD&L
processes) to project anticipated costs and roll-out schedules. Order of
magnitude estimates are not binding and will be estimated at CSI's
discretion. Should INTERNETWORKING wish to pursue implementation of the
change proposed in the order of magnitude, INTERNETWORKING shall issue a
formal request for a T&C estimate as outlined in Section 3.0.
3.0INTERNETWORKING may request a T&C estimate by submitting a T&C CHANGE REQUEST
form to CSI's Change Control Manager. CSI will normally respond to
INTERNETWORKING's request for an estimate within five (5) Business Days of
receipt for table changes, ten (10) Business Days for pricing or contract
changes and thirty (30) Business Days for new development. CSI's response
will include the cost for development and implementation activities, an
estimate of any new recurring charges, the implementation date, and all
assumptions and/or deviations from INTERNETWORKING's specifications. This
shall be a binding commitment from CSI to deliver the requested functionality
at the stated price and on the stated date except as noted in Section 11.0 of
this Attachment. For complex requests for new development a detailed break-
out of the cost by functionality may be requested by INTERNETWORKING.
3.1 All T&C CHANGE REQUEST responses shall include a listing of any new
or increased recurring billing functional or data processing charges
that shall apply. All recurring charges will require written
authorization by INTERNETWORKING prior to development and
implementation of the T&C CHANGE REQUEST.
3.2 In the event this information is unavailable on the day the T&C
CHANGE REQUEST quote is rendered to INTERNETWORKING, CSI will state
in the quote that the recurring rate will be provided at a later
date or a date to be negotiated between the Parties.
3.3 If a request is considered by CSI to be too complex to meet the
specified time requirement, or the information contained in the
request is deemed insufficient, CSI shall notify INTERNETWORKING
within
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fifteen (15) Business Days of receipt of original request and
the Parties shall negotiate a new response date for CSI's T&C CHANGE
REQUEST quote.
3.4 Upon agreement on the cost and implementation dates, the originator of
the T&C CHANGE REQUEST or INTERNETWORKING's executive management will
issue to CSI a formal authorization, in writing, authorizing the
entire quote or option selected, if applicable. In the event that such
authorization is received via e-mail or Internet, INTERNETWORKING
hereby releases CSI from any and all liability to confirm the
authenticity of the authorizing party or to otherwise validate the
authority of the record's originator to authorize CSI to proceed with
the development work.
4.0 INTERNETWORKING shall respond to CSI's requests for clarification of a
change request or for requests for additional information in a timely
manner. During the time period that questions pertaining to pending change
request are outstanding, the T&C CHANGE REQUEST will be considered on hold
by CSI. Once all questions are completely satisfied by the Parties, the
project status will change to "Active/in Progress." Any delays in receipt of
clarification or additional information requested may impact the delivery
date of CSI's response and/or implementation date. CSI will advise the
originator of the order regarding these delays.
5.0 INTERNETWORKING may issue a T&C CHANGE REQUEST to CSI to immediately
commence work on the project by preauthorizing a portion of the total cost
of the project.
5.1 Once the entire quote has been issued by CSI, INTERNETWORKING must
respond within ten (10) Business Days to authorize CSI to continue and
complete the project. If full authorization has not been received, CSI
may cease further project development when the preauthorized funded
amount has been exhausted.
5.2 If CSI ceases development of a T&C CHANGE REQUEST due to a delay in
obtaining INTERNETWORKING's authorization or clarifications, the
quoted costs and implementation date may be impacted.
6.0 All communications with INTERNETWORKING (written or oral) will be
coordinated through the originator of the change request. All changes to
the specifications of the requirement or interpretation of the
specifications shall be in writing. INTERNETWORKING shall make available to
CSI for each T&C CHANGE REQUEST an individual knowledgeable in all aspects
of the
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CHANCE REQUEST with whom the assigned CSI counterpart may discuss project
design and details in depth.
7.0 INTERNETWORKING shall notify CSI within ten (10) Business Days of the date
of the T&C CHANGE REQUEST estimate whether the proposed estimate is
accepted or rejected. The CHANGE REQUEST will be automatically rejected
upon the expiration of ten (10) Business Days and no further communication
is required for a rejected estimate. Where INTERNETWORKING is unable to
meet the ten (10) Business Day requirement, INTERNETWORKING will notify CSI
and the Parties will agree upon a new date. If INTERNETWORKING fails to
notify CSI within twenty (20) Business Days of the acceptance or rejection
of the T&C CHANGE REQUEST estimate, the estimate will be null and void and
the T&C CHANGE REQUEST shall be considered void and CSI will notify
INTERNETWORKING in writing of the canceled status.
8.0 INTERNETWORKING has the right to request a reconsideration when the T&C
CHANGE REQUEST estimate from CSI that does not meet INTERNETWORKING's
requirements or expectations. INTERNETWORKING shall notify CSI within ten
(10) Business Days that a reconsideration is necessary. CSI agrees to
discuss the basis for the estimate with INTERNETWORKING.
9.0 Any new recurring charges must be approved by INTERNETWORKING and by CSI
and shall be included in the Agreement via a written amendment.
10.0 If INTERNETWORKING cancels an authorized or preauthorized request after
receipt by CSI, INTERNETWORKING shall compensate CSI for all work completed
prior to cancellation and for any efforts required to remove system
functionality from code libraries. Within thirty (30) Business Days
following notification of cancellation, CSI will send written notice to
INTERNETWORKING regarding the amount owed by INTERNETWORKING, which shall
be due upon receipt of such notice by INTERNETWORKING.
11.0 For T&C CHANGE REQUEST changes, unless otherwise agreed, CSI shall complete
implementation by the agreed upon date stated in the quote. CSI shall use
reasonable efforts to notify INTERNETWORKING if the scheduled
implementation date will be in jeopardy. If an agreed upon implementation
date is missed, CSI shall orally notify INTERNETWORKING as soon as
possible. CSI shall provide written notification to INTERNETWORKING of its
new implementation date within five (5) Business Days.
12.0 If following CSI's commitment pursuant to Section 3.0, requested
functionality is not correctly implemented, by the agreed upon date, and
has
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affected INTERNETWORKING's Customer's' bills, INTERNETWORKING's sole
remedy shall be as follows:
12.1 CSI will make credit adjustments to the Customer's bills if required
If the cause of the incorrect functionality is due to incomplete or
inaccurate requirements by INTERNETWORKING or from INTERNETWORKING's sign
off on incomplete or inaccurate requirements or test results, CSI will not
be held responsible for incorrect bills issued to customers.
INTERNETWORKING will be responsible for any additional costs necessary for
correcting the incaccuracies.
13.0 INTERNETWORKING will provide in the initial T&C CHANGE REQUEST user
acceptance test criteria that will be used by CSI during user acceptance
testing and will specify if a test bill is required prior to implementing
the changes. If requested, and provided that INTERNETWORKING has
authorized or preauthorized development, CSI will use reasonable efforts
to provide a test bill sample to INTERNETWORKING. INTERNETWORKING agrees
to validate the accuracy of the requested changes and provide concurrence
to CSI in writing within five (5) Business Days or prior to the first mail
date if less than five (5) days. INTERNETWORKING shall hold CSI harmless
from any liability for billing errors that may result from the requested
changes.
14.0 INTERNETWORKING will note in the initial T&C CHANGE REQUEST if a post
implementation bill sample is required.
15.0 CSI shall notify INTERNETWORKING within ten (10) Business Days after
implementation that all work has been completed or procedures are in
place.
CSI shall begin to bill INTERNETWORKING at the time the estimate is authorized
and development work has begun. The payment schedule will be based upon work
incurred in a given month. Notwithstanding the foregoing, CSI shall have the
option, based on a credit review of INTERNETWORKING or CSI policies and
procedures, to require prepayment of CHANGE REQUE
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Schedule E
ARBOR Conversion
At the time of this agreement CSI and INTERNETWORKING are jointly involved in
converting from INTERNETWORKING's Oracle Billing platform to CSI's Kenan ARBOR
billing platform ("Arbor Platform"). INTERNETWORKING AND CSI agree that this
project is of strategic importance to INTERNETWORKING and commit to completion
of this project as outlined in this Schedule E.
Overall funding for this conversion is the responsibility of CSI and the overall
conversion project ("Conversion Project") will be managed by CSI. A detailed
implementation plan exists to migrate INTERNETWORKING current customer base from
Oracle to the Arbor Platform, develop new usage based mediation and rating
processes, and to write the business rules in support of INTERNETWORKING
products and services to be billed by CSI from the ARBOR Platform. The Arbor
Conversion project will go to production in the third quarter 2000 and will be
complete by 12/12/2000 when post Arbor Conversion activities are completed.
The project plan requires INTERNETWORKING resources, cooperation and support to
accomplish the Arbor Conversion and the parties will each contribute personnel
to accomplish the Arbor Conversion ("Conversion Team") Arbor Conversion
activities of the parties will include but are not limited to:
INTERNETWORKING will:
1. work with CSI First Rate team to ensure the various data collectors will pass
the required usage data to First Rate for mediation to ARBOR.
2. work with the CSI Conversion Team to provide the necessary customer data from
the Oracle legacy system to be migrated to ARBOR.
3. provide a full time representative to the Conversion Team.
4. will continue to participate on the Conversion Team to ensure that the
Conversion Team is current on all changes implemented in the interim.
5. INTERNETWORKING Data Control will continue to participate on the Conversion
Team to ensure all price book changes are communicated to the Conversion
Team.
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CSI will :
1. work with INTERNETWORKING to provide a detailed migration approach and plan
that encompasses all required tasks to complete the Oracle Financials to
Arbor conversion as it pertains to usage mediation and billing.
2. work with INTERNETWORKING to model all products within the Arbor 9.1 Billing
instance to meet the previously defined requirements.
3. work with INTERNETWORKING to develop an end-to-end set of test criteria and
scripts to perform a comprehensive test of the conversion and ensure billing
accuracy once conversion occurs.
4. design, develop, and provide all required interfaces to handle usage
mediation, general ledger, bill distribution, bill formatting, taxing,
commissions, compensation, data warehouse, reseller billing, payments, and
collections.
5. continue to work with INTERNETWORKING to develop all processes, teams, and
practices required to provide the core billing functions of data
accumulation, bill processing, bill format and distribution, inquiry and
investigation, credit verification, collections, and payment processing
evolving out of this conversion.
There may be other activities identified as the Conversion Team moves through
the project. INTERNETWORKING will support these activities as identified.
The Arbor Conversion Project plan calls for the Oracle/bp databases to be
available through 2003, as historical data contained in these databases will not
be converted. CSI may require access to the Oracle/bp database history for
resolution of billing inquiries and referrals. INTERNETWORKING agrees to
maintain and support the Oracle/bp historical databases thorough year-end 2003.
CSI will manage the ARBOR Conversion Project per the current schedule and will
engage other resources or affiliates as necessary. Status reporting will
continue as it exists today, as will the Core Team and the Executive Team.
INTERNETWORKING, INTERNETWORKING AND CSI commit to continued executive
representation on these teams.
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Schedule F
Agreement to Support Continuation
of
ATM SVC Usage Based Billing Implementation
At the time of this agreement CSI and INTERNETWORKING are jointly involved in
implementing ATM SVC Usage Based Billing on the Kenan ARBOR billing platform.
INTERNETWORKING AND CSI agree that this project is of strategic importance to
INTERNETWORKING and commit to completion of this project as outlined in this
agreement.
Overall funding for this project is being managed by INTERNETWORKING.
INTERNETWORKING will reimburse CSI for project work performed by CSI or CSI's
subcontractors as defined in the ATM SVC SOW. CSI will as required by
INTERNETWORKING provide support for expenses for which they are requesting
reimbursement.
A project plan exists to develop functional and system requirements, system
designs, new mediation and rating processes and to code, test and put into
production the ATM SVC UBB product on the ARBOR platform in support of
INTERNETWORKING's business requirements. The project will go to production in
the late second or early third quarter 2000 and will be complete by 12/12/2000
when post conversion activities are completed.
The project plan requires INTERNETWORKING and CSI resources and support.
Development project activities identified to date are:
1. INTERNETWORKING will continue to work with the CSI ATM SVC UBB Project Team
to:
. complete the project requirements and designs for the ATM SVC UBB product
. cooperate in the design and implementation of business processes to
provide necessary account, service instance, product, rate change, and error
correction information
. participate in the integration and User Acceptance Testing and to
participate in the roll out of the ATM SVC UBB product.
2. INTERNETWORKING will work with CSI First Rate team to ensure that the Ascend
ATM Accounting Server data collectors will pass the necessary usage data to
First Rate for mediation to ARBOR.
3. INTERNETWORKING will work with the CSI Billing Production Team to provide the
necessary billing information for input into ARBOR. This information includes
but is not limited to account, service instance and
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product information for new ATM SVC UBB customers and adds, changes and
deletions for existing ATM SVC UBB customers.
4. INTERNETWORKING will work with CSI Billing Change Management team to provide
information on all new ATM SVC UBB products and rate changes.
There may be other activities identified as the Project Team moves through the
project. INTERNETWORKING will support these activities.
Post conversion activities also require INTERNETWORKING and CSI resources and
support. Post conversion, "in production" activities identified include:
INTERNETWORKING:
1. manage the Ascend Accounting Servers and is responsible for providing CSI
with ATM SVC usage records on a daily basis.
2. provide CSI with account, service instance and product information for both
new customers and changes to existing customers ATM SVC services so that the
information can be input to the ARBOR billing platform.
3. provide CSI with new ATM SVC UBB product updates and rate changes so that the
information can be input to the ARBOR billing platform.
4. work with CSI to resolve errors involving account information, usage guiding
errors and rating errors.
CSI will:
1. provide a detailed deployment approach and plan that encompasses all required
tasks to complete the ATM SVC product rollout as it pertains to usage
mediation and billing.
2. work with INTERNETWORKING to model all features of the ATM SVC product, and
proposed account structures within the Arbor Billing system to meet
INTERNETWORKING requirements.
3. work with INTERNETWORKING to develop and execute an end-to-end set of test
scripts to perform a comprehensive test of the ATM SVC product.
4. CSI will develop and build rate tables to accommodate the ATM SVC usage
pricing
CSI will provide fast path rate changes for ATM SVC as necessary.
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There may be other ongoing production activities identified as the Project Team
moves into implementation. INTERNETWORKING will support these activities.
CSI will manage the ARBOR ATM SVC UBB implementation per the current schedule
and will engage other resources or affiliates as necessary. Reporting and
participation on ATM PDMM teams will continue as it exists with representation
from INTERNETWORKING and CSI.
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Schedule G
Billing Services Agreement
Services Prices
The following charges for the Services provided under this Agreement are
effective during the Term of the Agreement as specified in Section 5 of the
Agreement. Invoicing will be handled on a monthly basis.
Section 1 - Data Accumulation
1.1 Event Management, Data Accumulation, Usage Processing, Mediation:
1.1.1 Event Management hourly rate $56.00
Charge per man hour worked to balance and control
usage, work errors, resolve billing issues, etc.
1.1.2 UAT Testing (per month) $ 1,950.00
Routine UAT testing of the Event Management Platform
*Subject to change based on new Program Implementations (Change
Requests)
Section 2 - Bill Processing
2.1 Usage Processing (Arbor Message Processing System), Billing:
Charge to balance and control Usage, work MIU errors,
resolve guide file issues, resolve billing usage issues,
monitor the usage billing schedule and performance, etc.
2.1.1 Less than 10,000,001 messages per month $19,000.00
2.1.2 Between 10,000,001 and 15,000,000 messages per month $28,000.00
2.1.3 Between 15,000,001 and 20,000,000 messages per month $36,000.00
2.1.4 Between 20,000,001 and 30,000,000 messages per month $49,500.00
2.1.5 Between 30,000,001 and 40,000,000 messages per month $60,500.00
2.1.6 Between 40,000,001 and 60,000,000 messages per month $76,500.00
2.1.7 Between 60,000,001 and 80,000,000 messages per month $89,500.00
2.1.8 Above 80,000,001 per incremental 20M messages per month $11,000.00
2.2 Process Data:
2.2.1 Process Data production support (per month) $192,500.00
Balancing and controls, Error queue management
Tracking and correction, Bill review and investigation,
Order entry.
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Tracking and correction, Bill review and investigation,
Order entry.
*Subject to change based on new Program Implementations (Change
Requests)
Section 3 - Bill Format and Distribution
3.1 Bill Format:
3.1.1 Format tool support (per month) $11,000.00
Infrastructure support of the format tool:
-Manage the requirements and/or defects of the Arbor IDesign
product, which includes working with vendor and business owner.
-Manage installation of IDesign vendor release/patch installs on
NBO Tampa hardware.
-Work with IT to implement any Arbor billing system impacts with an
IGEN release.
-Identify embedded base template impacts resulting from new vendor
release installs.
-Work with IT on IGEN and IDesign processing and distribution
requirements for IDesign environments (unit test, UAT, production).
-Manage the distribution and installation of all format templates.
-Develop and maintain unit test tools.
3.1.2 Bill Format changes
(Included with Program Implementation Quote)
3.2 Bill Distribution:
3.2.1 Distribute via Paper - Bill Stock
Charge for bill stock branded with any logo (digitized) $.033/page
Charge for 9x12 remittance envelope branded with:
One Color Logo $.185/envelope
Two Color Logo $.218/envelope
Three Color Logo $.277/envelope
Charge for 9x12 expansion specialty envelopes (1" and 2") with:
One or Two Color Logo $2.09/envelope
Three Color Logo $2.31/envelope
BSS (Oracle platform) Charge for form & envelope $0.21/invoice
3.2.2 Distribute via Paper - Postage As Incurred
Rate charged will be actual incurred cost.
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Current (2/00) average number of pages per bill is as follows:
GNI - 6 pages
Telecom - 13 pages (mail out 3 copies)
VOIP - 8-10 pages
3.2.3 Alternate Media (Electronic, CD-Rom, Diskette)(Pricing available
upon request)
3.2.4 Electronic Bill Presentation and Payment (Pricing available upon
request)
3.3 Bill Distribution - Misc. Charges (Rates are per month per invoice)
Labor and warehousing costs associated with Bill Distribution
GNI $ 2.76
Telecom $ 1.02
VOIP $ 6.73
BSS $ 0.34
3.4 Bill Distribution - Additional Services:
3.4.1 Bill Message Page charge Individual case basis
3.4.2 Bill Insert charge Individual case basis
3.4.3 Direct Mail charge Individual case basis
3.4.4 Marketing Message / Bill Phrase charge Individual case basis
Section 4 - Inquiry and Investigation
4.1 Administrative - No research required (per contact) $ 11.25
Name/Address changes, information requests
4.2 Request for second copy of bill (per contact) $ 9.25
Includes costs for bill stock and postage
4.3 Error resolution (per initial contact) $210.00
Charge to investigate complaint, document
findings and resolve issue (including charge for adjustment)
Section 5 - Credit Verification
5.1 Domestic customer credit agency fee $ 27.50
Charge per customer reviewed to access
credit history via credit agency reports.
5.2 International customer credit agency fee $192.50
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<TABLE>
<S> <C>
Charge per customer reviewed to access
credit history via credit agency reports.
5.3 Customer credit research charge $ 290.50
Charge per customer reviewed to analyze
credit worthiness and provide recommendation.
Section 6 - Collections Management
6.1 Treatment
6.1.1 Per account in A/R Aging (31 - 60 days) $ 48.50
6.1.2 Per account in A/R Aging (61 - 90 days) $ 48.50
6.1.3 Per account in A/R Aging (greater than 90 days) $ 48.50
6.2 Collections
6.2.1 Per account recovered $ 56.00
Customer's account updated to reflect payment
(OCA fees will be deducted from gross amount collected)
Section 7 - Payment Processing
7.1 Payment processing costs per invoice processed $ 4.45
Charges to post customer payments, reconcile lockbox
receipts, work LIU errors, perform investigations,
deposit funds into company official bank accounts.
7.2 Returned check - processing (per item) $ 25.00
Customer's account and credit rating updated
Section 8 - Manage Billing Capabilities
8.1 Baseline routine changes (per month) $ 189,500.00
Covers up to 2,200 man hours per month of routine
requests for changes to GTE's billing system (i.e. table
changes for pricing updates) and production of routine
reports required by the business.
8.2 Additional routine changes rate per hour $ 76.00
Charge applies for routine requests for changes
beyond the baseline amount.
8.3 Program Management Consultation rate per hour $126.00 (plus travel)
</TABLE>
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<TABLE>
<S> <C>
Charge applies for general consultative activities.
8.4 Program Implementation lump sum charge (Pricing available upon request)
One-time non-recurring charge for a program implementation
and / or change request associated with a specific project
beyond activities defined in this schedule.
Section 9 - IT Costs
9.1 First Rate Continuing Operations (COPS) Maintenance - per hour $ 85.00
9.2 First Rate Continuing Operations (COPS) Production support
- per hour $ 85.00
9.3 First Rate License Fee (per month) $ 4,167.00
9.4 First Rate AM/FM (per month) 3,583.00
Recovery of hardware costs (i.e. servers)
9.5 Arbor Continuing Operations (COPS) Maintenance - per hour $ 85.00
9.6 Arbor Continuing Operations (COPS) Production support - per hour $ 85.00
9.7 Arbor AM/FM (per month) 100,000.00
Recovery of hardware costs (i.e. servers)
Section 10 - Miscellaneous Charges
10.1 General Consultative - per hour $ 126.00
10.2 Mileage charge $ 0.33
General mileage charge for all travel over 25 miles one-way
10.3 Expenses As Incurred
Meals, lodging, etc. associated with travel
10.4 Data Security (per month) $ 12,000.00
Support and Monitor/Control access to INTERNETWORKING
and CSI Instances of ARBOR
10.5 Arbor License Fee - CSI costs - (per month) $ 195,500.00
10.6 Arbor License Maintenance Fee first instance (per month) $ 85,500,00
Arbor License Maintenance Fee - per additional instance
(per month $ 18,300,00
</TABLE>
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10.7 Vertex software fee for tax application (per month) $ 4,400.00
10.8 GTE Software license and maintenance fee (per month) $56,000.000
10.9 Tax Department matrix clean-up, system testing, project driven tasks
(per hour) $ 60.00
10.10 Tax Department on going support, change control & training (per month)
$ 600.00
Section 11 - Minimum Monthly Charge
11.1 Minimum monthly charge for service rendered under this Agreement
$350,000.00
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Schedule H
Tax Services
The "GTE" Tax Department will perform the necessary tax research and other
services as required to provide on-going support for "INTERNETWORKING" billing
environment with related tax application matrices, change control, one-time
system testing and training.
I. Services
Tax Billing Matrix
- ------------------
Ongoing support includes determining the local, state and federal taxation rates
of new products and services, utilizing the "GTE" tax billing matrix as the
primary source ("Tax Services"). The Tax Billing Matrix will be the long-term
solution as the vehicle used to determine the tax rates of products and
Services. The Tax Billing Matrix will interface with the Arbor Billing System
within the term of the Billing and Collection SOW. The "GTE" Tax Department will
provide updates, changes, and corrections as required to the Tax Billing Matrix.
The interim method of communicating taxation rates of products and services will
be via email between CSI, INTERNETWORKING and GTE Tax Department.
Not included as a part of this Tax Billing Matrix services are: contract
reviews, projects such as nexus requirements, prototype design interaction,
products/services rollout implementation process, etc.
Change Control
- --------------
The introduction of new products and services will be incorporated with the
product standardization process with direct interaction from INTERNETWORKING
product managers.
The update of tax rates will continue to be handled by CSI.
System Testing
- --------------
System Testing includes auditing tables and functionality requirements for
existing and future INTERNETWORKING companies. In addition, report writing
functionality will be tested as required for tax compliance and other ad-hoc
reports.
II. PRICING
The Tax Services set forth herein will be provided at $600.00 per month.
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System Testing and other project driven tasks will be provided at $60.00 per
hour.
III. TAX LIABILITY
INTERNETWORKING shall be liable for all applicable sales, use or similar taxes
for amounts invoiced to INTERNETWORKING's customers and INTERNETWORKING shall be
responsible for preparation and filing of all tax returns and applicable tax
reporting to all taxing jurisdictions. Taxes shall be added to each customer's
invoice, however, GTE's Tax Department and/or CSI shall not be liable for
miscalculation or omissions with regard to such taxes.
IV. TERMINATION
From September 1, 2000 through the end of the Initial Term, upon thirty days
written notice, either party may terminate this Schedule H without liability.
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Exhibit 10.10
AGREEMENT FOR IT TRANSITION SERVICES
This Agreement for IT Transition Services is made between GTE Service
Corporation, a New York corporation, with offices at 1255 Corporate Drive,
Irving, Texas 75038 and its affiliates (individually and collectively "GTE") on
one hand, each only with respect to the Services (defined below) it provides,
and Genuity Inc., a Delaware corporation, with offices at 3 Van de Graaff Drive,
Burlington, Massachusetts 01803 ("GENUITY"), and its subsidiaries and successors
in interest, on the other hand.
Whereas, GENUITY and GTE each will procure from the other under this Agreement
information technology services, with the services defined in individual
Statements of Work, and the ownership and rights in intellectual property
deliverables defined in the Statements of Work being apportioned between the
parties, with the term of the Agreement being one year, or as other wise set
forth in a specific Statement of Work, but terminable by the party receiving the
services upon one hundred and twenty (120) days prior notice.
In consideration of the mutual terms and conditions of this Agreement, the
parties agree as follows:
1. GENERAL.
(a) Services. Each of GTE and GENUITY (each a "Service Recipient", as the
case may be) desires to obtain certain information technology
transitional services on a non-exclusive basis from the other party
hereto or one of its affiliate companies (each a "Service Provider",
as the case may be) under the terms and conditions of this agreement
and statements of work ("Statements of Work") entered into by the
parties (this agreement and all attached Statements of Work are
collectively referred to as the "Agreement"), and Service Provider
shall provide to Service Recipient such information technology
transitional services (individually and collectively, "Services"). If
there is any conflict or inconsistency between the terms and
conditions of a Statement of Work and the terms and conditions of this
Agreement (excluding for this purpose the Statements of Work), the
terms and conditions of the Statement of Work shall control.
(b) Statements of Work - Generally. Each of the Statements of Work entered
into by the parties shall: (i) refer expressly to this Agreement; (ii)
designate the date as of which the provisions of the Statement of Work
shall be effective and, if applicable, the term or period of time
during which
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Service Provider shall perform Services, provide resources or
otherwise discharge its obligations as specified in the Statement of
Work if different from the term set out in this Agreement (excluding
for this purpose the Statement of Work); (iii) describe the Services
to be performed, Work Product (as defined herein) to be delivered,
resources to be provided or obligations to be discharged by Service
Provider pursuant to the Statement of Work; (iv) describe the
obligations of Service Recipient related to the Statement of Work,
including any facilities, equipment, personnel and tasks or other
support to be provided or performed by Service Recipient; (v) specify
the payments to be made to Service Provider under the Statement of
Work, or, if applicable, the basis on which such payments shall be
computed; and (vi) specify any other terms and conditions appropriate
to the Services to be performed and the obligations of the parties. If
there is any conflict or inconsistency between the terms and
conditions of a Statement of Work and the terms and conditions of this
Agreement (excluding for this purpose the Statement of Work), the
terms and conditions of the Statement of Work shall control. Service
Recipient may request services through a letter, email, or other
written or electronic medium. The request for services will outline
the nature and scope of the services requested. Within thirty (30)
days after receipt of the request for services, Service Provider shall
provide a high-level estimate of the activities to be performed along
with an estimate of the number of hours required to perform each of
the activities. Preparation of the high level estimate shall be
charged at the hourly rates then in effect between Service Provider
and Service Recipient, or if no rate is specified, at Service
Provider's then-current rate for such activity. Service Recipient
shall have thirty (30) days to notify Service Provider if Service
Recipient desires Service Provider to prepare a Statement of Work.
Unless otherwise specified in a particular Statement of Work, the
Statement of Work shall be issued on a time and materials basis and
shall include an estimate of the hours needed to complete the
Statement of Work and the hourly rates applicable to the services
being provided. All services are contemplated to be performed at
Service Provider's location during normal business hours, excluding
weekends and Service Provider's holidays. If a Statement of Work
requires travel to Service Recipient's location or another location at
the request of Service Recipient, Service Provider shall bill travel
time incurred by Service Provider's employees at the hourly rate(s)
specified in the Statement of Work. Service Provider shall issue an
invoice monthly for such services in accordance with this Agreement.
For any Statement of Work for which GTE's GTEDS affiliate is a Service
Provider hereunder, the terms and conditions contained in Attachments
1 and 2, entitled "Service Level Agreement for Application Enhancement
and Development" and "SAP R/3 Service Level Agreement", respectively,
shall apply to such Statement of Work.
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(c) Order of Precedence. In the event of any conflict or inconsistency
between the terms and conditions of any Statement of Work, this
Agreement, the Software License Agreement among the parties and of
even date hereof, the Software Development and Technical Services
Agreement among the parties and of even date hereof, the Intellectual
Property Ownership and Cross License Agreement among the parties and
of even date hereof, and any other agreement among the parties hereof,
the terms and conditions shall take precedence in the following order:
(i) Statement of Work;
(ii) This Agreement (excluding for this purpose the Statements of
Work);
(iii) Software License Agreement or the applicable software license
agreement which is directed to the software for which the
Services are provided; and
(iv) Software Development and Technical Services Agreement.
(d) Milestones, Phases and Timing; Changes. Each of the Statements of
Work shall set out, if applicable, milestones and phases of the work.
When phases are specified, Service Provider shall not be obligated to
proceed with work on the next phase until Service Recipient has
provided written authorization to proceed. If Service Recipient has
not provided Service Provider with written authorization to proceed on
a specific phase, and it is necessary to commence or complete such
phase in order to meet any milestones specified in the Statement of
Work, Service Provider shall not have any obligations with respect to
such milestones and the Statement of Work shall be deemed to be
modified accordingly. The Statement of Work may be modified by mutual
written agreement, signed by both parties. No verbal changes to the
Statement of Work are permitted.
(e) Performance. All Services shall be performed in accordance with the
terms and conditions of this Agreement and the requirements, order of
performance and delivery dates specified in each Statement of Work.
Service Provider shall devote such time, efforts and resources to the
performance of Services as are necessary to accomplish the tasks
specified in any Statement of Work. The Service Provider may call upon
the expertise and/or assistance of its affiliates, subcontractors or
consultants in the performance of such Services, provided that Service
Provider shall obtain the prior written consent of Service Recipient
in the event it desires to use outside subcontractors or consultants.
If a
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Statement of Work specifies that some or all of the work will be
done by a subcontractors or consultant, no additional approval shall
be required.
(f) Third Party Software Licenses. The Service Recipient acknowledges
that Service Provider and its affiliates may be required to use
certain software licensed to GTE by third parties to provide Services
pursuant to this Agreement. If any licensor of such third party
software requires the payment of any consideration to permit Service
Provider to use the vendor's software in order to perform its
obligations under this Agreement, Service Provider shall provide
Service Recipient with thirty (30) days prior written notice of such
additional consideration. Service Recipient shall have the option to
(i) procure its own license to such software at its own expense, or
(ii) authorize Service Provider to incur such required additional
consideration on its behalf and at Service Recipient's expense. In the
event that Service Recipient does not agree to either (i) or (ii)
above, Service Provider shall not be required to provide the Services
for which such third party licenses are required. If the third party
requires Service Recipient to secure rights in such third party
software to receive the Services or to use the result of such
Services, Service Recipient shall be responsible for securing such
rights at its own cost and expense.
(g) Service Recipient Provided Software. If Service Recipient elects to
use Service Provider Hardware (as defined below) to operate and run
Service Recipient Provided Software (also as defined below) pursuant
to a Statement of Work, Service Recipient shall obtain all licenses
necessary for use of such software, pay any associated fees negotiated
with Service Provider for running such software for Service Recipient
and pay any costs related to obtaining required consents needed by
Service Provider to use such software for Service Recipient's benefit.
Service Recipient shall be responsible for all costs associated with
Service Recipient provided third party software. Service Recipient
agrees to indemnify and hold Service Provider harmless against any
loss, cost, claim, liability, damage, expense (including reasonable
attorney's fees), or demand by or on behalf of any person, firm,
corporation, or governmental authority resulting from or arising out
of Service Recipient's alleged violation of such third party software
rights, provided that prior to agreement on a Statement of Work, the
parties shall have worked diligently together to identify all license
rights needed by Service Recipient hereunder and to confirm that
Service Provider has the right to perform the services hereunder.
"Service Provider Hardware" shall mean the central processing units
and peripheral equipment installed in a Service Provider's facility
and utilized by Service Provider to provide Services described in any
Statement of Work. The term Service Provider Hardware does not include
circuit equipment from Service Recipient's site to Service
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Provider's facility, terminals, controllers, or telecommunications
equipment at Service Recipient's site(s) required to enable Service
Recipient to utilize Service Provider's Services, all of which are
Service Recipient's responsibility. "Service Recipient Provided
Software" shall mean software owned or licensed by Service Recipient
which is installed an operated at a Service Provider facility pursuant
to a Statement of Work.
2. COMPENSATION AND BILLING.
(a) Invoices. The charges for the Services shall be set out in the
applicable Statement of Work. Service Provider shall invoice Service
Recipient for Services in accordance with the payment schedule set
forth in the applicable Statement of Work. Each invoice shall
reference this Agreement and the applicable Statement of Work. The
invoices shall be itemized to show the details as to all billed items.
Payments shall be made within thirty (30) days from the date each
invoice is received by Service Recipient.
(b) Sales, Use and Other Taxes. In addition to the charges for Services,
Service Recipient shall pay Service Provider an amount equal to any
sales, use, privilege, gross revenue, excise, or any other tax (except
income and franchise taxes), as well as any assessments or duties with
respect to the Services lawfully levied by a duly constituted
governmental authority and for which Service Provider is required, by
law, to collect from Service Recipient. In addition each party shall
be responsible for all real and personal property taxes imposed on
software and equipment owned by the respective parties on January 1 of
every year. If Service Recipient determines that any Services are
exempt from a tax, Service Recipient must provide Service Provider a
properly completed exemption certificate, for each jurisdiction for
which Service Recipient is claiming an exemption, before Service
Provider will exclude the respective tax from amounts charged to
Service Recipient. Service Recipient will not deduct any tax amount
from remittances to Service Provider until a properly completed
exemption certificate, for all jurisdictions for which Service
Recipient is claiming an exemption, has been provided to Service
Provider.
(c) Expense Reimbursement. Service Recipient shall reimburse Service
Provider for reasonable expenses for travel, meals and lodging
incurred by Service Provider in the performance of its obligations
under this Agreement. Any such charges shall be in compliance with
Service Provider's employee expense policies. There shall be no mark-
up of such expense charges. Service Provider shall maintain
documentation of expenses incurred, and shall provide copies of
invoices of $100 or more upon Service Recipient's request. Service
Provider shall bill Service
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Recipient monthly for expenses as they accrue. The parties will
specify any limitation on the reimbursement of expenses in the
applicable Statement of Work. It is acknowledged and agreed that if
Service Provider is reasonably required to incur expenses beyond such
limitation in order to provide the Services, then Service Provider is
excused from performing such Services until said expense limitation is
removed or changed as mutually agreed, provided that Service Provider
promptly notifies Service Recipient of the need to exceed the
limitation.
(d) Records. Service Provider shall maintain complete and accurate
records in a form consistent with generally accepted accounting
practices, to substantiate Service Provider charges. Service Provider
shall retain, and make available upon request, such records for a
period of three (3) years from the date of invoice for Services.
Service Recipient and its authorized agents, subject to obligations of
confidentiality as set forth in this Agreement, shall have access to
such records upon prior written request during normal business hours
during the term of this Agreement and during the respective periods in
which Service Provider is required to maintain such records pursuant
to this subsection 2(d). Access to the records shall be made at the
location where such records are normally maintained.
(e) Late Payment. Late payment charges may be imposed by Service Provider
at the rate of 1 1/2% per month (18%) per year). Interest shall not be
payable by Service Recipient for amounts on invoices which it has
disputed in good faith provided that Service Recipient pays the
applicable amount due, if any, within thirty (30) days of the
resolution of the dispute. With respect to disputed invoices,
undisputed amounts must be paid within thirty (30) days from the date
of the invoice. Service Provider must be advised in writing of any
amounts disputed by Service Recipient and the basis for the dispute
within ten (10) days from the date of the invoice or the entire
invoice must be paid.
3. TERM.
This Agreement is effective as of _____________ and shall continue in
effect for a term of one (1) year, or such term as may be set out in a
Statement of Work, or until GENUITY exercises its right in its sole
discretion to terminate for convenience under Section 24 (c) of this
Agreement. This Agreement shall remain in effect with respect to and for
the duration of any Statement of Work that is agreed by the parties to
extend beyond the end of the term. In the event of any termination or
expiration, the Parties agree to reasonably cooperate in transitioning the
work to any successor service provider, and upon Service Recipient's
request and at its expense, Service Provider shall use commercially
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reasonable efforts to secure Service Recipient's continued use of
applicable third party licenses.
4. ACCEPTANCE.
(a) Acceptance. Each Statement of Work shall specify the criteria, if
any, that Service Provider must meet in order for the Work Products
described in the Statement of Work to be accepted by Service
Recipient. It may also specify a test plan, and such other information
as Service Provider and Service Recipient mutually deem appropriate
and the period of time, if any, that Service Recipient shall have to
review such Work Product and provide notice of acceptance or rejection
to Service Provider. Failure to accept or reject such Work Product
within the specified period of time or the commercial use of such Work
Product by or for the benefit of Service Recipient shall be deemed to
be acceptance.
(b) Rejection and Revision. If Service Recipient rejects any Work
Product, it shall specify in reasonable detail in writing the reasons
for rejection and the requirements for revision. If the notice of
rejection is not sufficiently detailed to allow Service Provider to
determine why such Work Product is unacceptable, Service Provider may
request in writing that Service Recipient provide sufficient
additional information. If Service Provider and Service Recipient have
joint responsibility for the Work Product and the Work Product
requires revision, Service Provider shall assist Service Recipient in
making revisions necessary for the Work Product to meet the acceptance
criteria within a period of time that is reasonable under the
circumstances. If Service Provider has sole responsibility for the
Work Product, then it shall make the necessary revisions within a
period of time that is reasonable under the circumstances.
5. CONFIDENTIAL INFORMATION.
(a) Confidentiality. In the course of requesting and performing Services
pursuant to this Agreement, each party may receive or acquire from the
other information or data pertaining to specifications, drawings,
sketches, models, samples, computer programs, methods, concepts, know-
how, techniques, processes, and other technical or business
information that the other party desires to protect against
unauthorized use or further disclosure. Unless otherwise expressly set
forth in a Statement of Work, for purposes of this Agreement,
"Confidential Information" shall mean: (i) any information in written,
other tangible or electronic form which is labeled by the disclosing
party as "confidential", "proprietary" or with a
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legend of similar import; (ii) software in any form (including related
documentation), whether or not labeled in accordance with the
preceding; (iii) Services and Work Products provided pursuant to this
Agreement, with the ownership of and proprietary interest therein
being defined herein or in the applicable Statement of Work; or (iv)
information orally disclosed and identified as confidential at the
time of such disclosure which is summarized in writing within thirty
(30) days of such disclosure. Each party shall remain the exclusive
owner of its Confidential Information.
(a) Use of Confidential Information. The Confidential Information of the
disclosing party may be used by the receiving party only for the
performance or use of Services or Work Products to be provided
pursuant to this Agreement and may only be disclosed to those
employees, subcontractors or agents of the receiving party who have a
need to know in order to perform or use Services or Work Products
pursuant to this Agreement. Except and to the extent set forth in
subsection 6(c), the receiving party may not disclose Confidential
Information of the other party to any other person, entity, or the
public without the prior written consent of the disclosing party.
However, such Confidential Information may be disclosed by the
receiving party without the necessity of prior written consent, to the
receiving party's subcontractors or consultants who require access to
such Confidential Information to perform or use the Services under
this Agreement, provided such persons have entered into written
agreements which contain obligations of nondisclosure and nonuse no
less restrictive than set forth in this Section 6. It is agreed that
such written agreements shall be enforceable by the disclosing party.
(b) Exceptions. The obligations in subsection 6(b) shall not apply to
that portion of any information received from the disclosing party
which is: lawfully in the receiving party's possession, with no
restriction on use or disclosure, prior to its acquisition from the
disclosing party; received in good faith by the receiving party, with
no restrictions on use or disclosure, from a third party not subject
to any confidential obligation to the disclosing party; now or later
becomes publicly known through no breach of confidential obligation by
the receiving party; released by the disclosing party to any other
person, firm or entity (including governmental agencies or bureaus)
without restriction on use or disclosure; or independently developed
by or for the receiving party without any reliance on or use of
Confidential Information of the disclosing party. The foregoing
exceptions shall not apply to software in any form.
(d) Disclosure and Notification. If a receiving party receives a request
to disclose any Confidential Information of the disclosing party
(whether pursuant to a subpoena, an order issued by a court or other
governmental
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authority of competent jurisdiction or otherwise) and, on
advice of legal counsel, determines that disclosure is required under
applicable law, the receiving party agrees that, prior to disclosing
any Confidential Information of the disclosing party, it shall (i)
notify the disclosing party of the existence and terms of such request
or advice, (ii) cooperate with the disclosing party in taking legally
available steps to resist or narrow any such request or to otherwise
eliminate the need for such disclosure at the disclosing party's sole
expense, if requested to do so by the disclosing party, and (iii) if
disclosure is required, it shall be the obligation of the disclosing
party to use its commercially reasonable efforts to obtain a
protective order or other reliable assurance that confidential
treatment shall be afforded to such portion of the Confidential
Information of the disclosing party as is required to be disclosed.
(e) Continuing Obligation. The obligation of non-disclosure and non-use
with respect to Confidential Information of the disclosing party shall
survive termination of this Agreement and shall continue for a period
of 5 years thereafter, provided that the obligations of non-disclosure
and non-use shall continue in perpetuity for software included in
Confidential Information.
6. OWNERSHIP AND LICENSE OF WORK PRODUCTS.
(a) Ownership. Unless expressly provided otherwise in the applicable
Statement of Work, the ownership of any and all right, title and
interest in and to work products (including without limitation:
computer programs and documentation; photographs; logos; drawings;
artistic and graphical works; reports; data; information; and other
works of authorship) made by Service Provider, or its suppliers or
contractors, during performance of Services for Service Recipient in
accordance with the applicable Statement of Work (all such works
herein "Work Products"), shall be determined in accordance with the
terms and conditions of the Software Development and Technical
Services Agreement relating to ownership of intellectual property,
with those terms and conditions being applied to any Statement of Work
issued hereunder and being incorporated herein in their entirety by
this reference.
(b) License. Unless expressly provided otherwise in the applicable
Statement of Work:
(1) If Service Provider owns any Work Products, any license granted
to Service Recipient by Service Provider in or to any such Work
Products shall be on the same terms and conditions as the license
grant by GTE to GENUITY contained in the Software
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License Agreement, with such terms and conditions being
incorporated herein in their entirety by this reference.
(2) If Service Recipient owns any Work Products, and subject to
Service Provider's obligations with respect to Service
Recipient's Confidential Information, Service Provider shall
retain a non-exclusive, perpetual, world-wide, royalty-free
license to use any such Work Product for its ordinary and usual
business purposes.
7. DISPUTE RESOLUTION.
(a) General. Except as provided in subsection 7(d) below, any controversy
or claim arising out of or relating to this Agreement, or the breach
thereof, shall attempt to be settled first, by good faith efforts of
the parties to reach mutual agreement, and second, if mutual agreement
is not reached to resolve the dispute, by final, binding arbitration
as set out in subsection 7(c) below.
(b) Initial Resolution. A party that wishes to initiate the dispute
resolution process shall send written notice to the other party with a
summary of the controversy and a request to initiate these dispute
resolution procedures. Each party shall appoint a knowledgeable,
responsible representative from the company who has the authority to
settle the dispute, to meet and negotiate in good faith to resolve the
dispute. The discussions shall be left to the discretion of the
representatives, who may utilize other alternative dispute resolution
procedures such as mediation to assist in the negotiations.
Discussions and correspondence among the representatives for purposes
of these negotiations shall be treated as Confidential Information
developed for purposes of settlement, shall be exempt from discovery
and production, and shall not be admissible in the arbitration
described above or in any lawsuit pursuant to Rule 408 of the Federal
Rules of Evidence. Documents identified in or provided with such
communications, which are not prepared for purposes of the
negotiations, are not so exempted and may, if otherwise admissible, be
admitted in evidence in the arbitration or lawsuit. The parties agree
to pursue resolution under this subsection 7(b) for a minimum of sixty
(60) days before requesting arbitration.
(c) Arbitration. If the dispute is not resolved under the preceding
subsection 7(b) within sixty (60) days of the initial written notice,
either party may demand arbitration by sending written notice to the
other party. The parties shall promptly submit the dispute to the
American Arbitration Association for resolution by a single neutral
arbitrator acceptable to both parties, as selected under the rules of
the American Arbitration
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Association. The dispute shall then be administered according to the
American Arbitration Association's Commercial Arbitration Rules, with
the following modifications: (i) the arbitration shall be held in a
location mutually acceptable to the parties, and if the parties do not
agree, the location shall be New York City; (ii) the arbitrator shall
be licensed to practice law; (iii) the arbitrator shall conduct the
arbitration as if it were a bench trial and shall use, apply and
enforce the Federal Rules of Evidence and Federal Rules of Civil
Procedure; (iv) except for breaches related to Confidential
Information, the arbitrator shall have no power or authority to make
any award that provides for consequential, punitive or exemplary
damages; (v) the arbitrator shall control the scheduling so that the
hearing is completed no later than 60 days after the date of the
demand for arbitration; and (vi) the arbitrator's decision shall be
given within 5 days thereafter in summary form that states the award,
without written decision, which shall follow the plain meaning of this
Agreement, the relevant documents, and the intent of the parties.
Judgment on the award rendered by the arbitrator may be entered in any
court having jurisdiction over the parties. Each party to the dispute
shall bear its own expenses arising out of the arbitration, except
that the expenses of the facilities to conduct the arbitration and the
fees of the arbitrator shall be shared equally by the parties.
(d) Injunctive Relief. The foregoing notwithstanding, each party shall
have the right to seek injunctive relief in an applicable court of law
or equity independent of any resolution of the dispute in accordance
with the foregoing.
8. RELATIONSHIP OF PARTIES.
(a) Independent Contractors. In providing any Services pursuant to this
Agreement, Service Provider and its affiliates are independent
contractors and not agents or representatives of Service Recipient.
Persons furnished by the respective parties shall be solely the
employees or agents of such parties, respectively, and shall be under
the sole and exclusive direction and control of such parties. They
shall not be considered employees of the other party or parties for
any purpose. Each party shall also be responsible, respectively, for
payment of taxes, including federal, state, and municipal taxes,
chargeable or assessed with respect to its employees or agents, such
as social security, unemployment, worker's compensation, disability
insurance and federal and state income tax withholding.
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(b) No Performance. Neither party undertakes by this Agreement or any
Statement of Work to conduct the business or operations of the other
party. Nothing contained in this Agreement or any Statement of Work is
intended to give rise to a partnership or joint venture between the
parties or to impose upon the parties any of the duties or
responsibilities of partners or joint venturers.
9. FORCE MAJEURE.
If performance of any Services under this Agreement is prevented,
restricted or interfered with by reason of acts of God, wars, revolution,
civil commotion, acts of public enemy, embargo, acts of government in its
sovereign capacity, labor difficulties, including without limitation,
strikes, slowdowns, picketing or boycotts, communication line failures,
power failures, or any other circumstances beyond the reasonable control
and not involving any fault or negligence of the party affected, the party
affected, upon giving prompt notice to the other party, shall be excused
from such performance on a day-to-day basis during the continuance of such
prevention, restriction, or interference (and the other party shall
likewise be excused on a day-to-day basis during the same period, from
performance of its obligations which are dependent upon or affected by such
nonperformance), provided, however, that the party so affected shall use
its commercially reasonable efforts to avoid or remove such causes of
nonperformance and both parties shall proceed immediately with the
performance of their obligations under this Agreement whenever such causes
are removed or cease. If a force majeure condition continues to prevent a
party from performing for more than (30) consecutive days, then the other
party may terminate the applicable Statement of Work.
10. REGULATORY COMPLIANCE.
(a) Cooperation. This Agreement is subject at all times to any statute,
order, rule, or regulation or any state or federal regulatory agency
having competent jurisdiction over one or both of the parties hereto
or the Services provided hereby. The parties agree to cooperate with
each other and with any applicable regulatory agency so that any and
all necessary approvals may be obtained. During the term of this
Agreement, the parties agree to continue to cooperate with each other
in any review of this Agreement by a regulatory agency so that the
benefits of this Agreement may be achieved.
(b) Filing Agreement. Notwithstanding the effective date and term of this
Agreement as stated elsewhere, to the extent that any statute, order,
rule or regulation or any regulatory agency having competent
jurisdiction over one or both parties to this Agreement, shall require
that this Agreement or
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subsequent amendment be filed with or approved by such regulatory
agency before the Agreement or amendment may be effective, this
Agreement or amendment shall not be effective in such jurisdiction
until the first business day after such approval or filing shall have
occurred.
11. INDEMNIFICATION.
(a) General. GTE and GENUITY, to the fullest extent permitted by law,
each shall defend, indemnify and hold harmless the other and its
affiliates, officers, agents and employees from any and all amounts
payable under any judgment, verdict, court order or settlement (and
associated fees and disbursements of counsel) arising from or related
to any third-party claims for injury, sickness, disease or death of
any person or damage to any real or tangible personal property or
assets to the extent arising from the indemnitor's (either directly or
through its officers, agents, subcontractors or representatives)
negligence or willful misconduct in the performance of this Agreement
provided, however, that if a claim is the result of the joint
negligence or joint willful misconduct of GTE and GENUITY, the amount
of the claim for which each party is entitled to indemnification shall
be limited to that portion of such claim that is attributable to the
negligence or willful misconduct of the indemnifying party. The
parties agree that the price for Services provided under this
Agreement includes consideration for the obligation to indemnify as
set out in this subsection 13(a).
(b) Losses. GENUITY and GTE each shall be responsible for any and all
claims, actions, damages, liabilities, costs and expenses, including
reasonable attorneys' fees and expenses (collectively, "Losses"), to
their respective tangible personal or real property (whether owned or
leased), and each party agrees to look only to its own insuring
arrangements (if any) with respect to such Losses. Subject to the
procedures set forth below, each party shall indemnify, defend, and
hold the other party harmless from any and all Losses arising out of,
under or in connection with claims for which the indemnitor is
responsible under the preceding sentence.
(c) Waivers. GENUITY and GTE waive all rights to recover against each
other for any Loss to their respective tangible personal property
(whether owned or leased) from any cause covered by insurance
maintained by each of them, including their respective deductibles or
self-insured retentions. GENUITY and GTE shall cause their respective
insurers to issue appropriate waivers of subrogation rights
endorsements to all property insurance policies maintained by each
party. Each party shall give the other written notice if a waiver of
subrogation is
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unobtainable or obtainable only at additional expense. If the party
receiving such notice agrees to reimburse the other party for such
additional expense, the other party shall obtain such waiver of
subrogation. If a waiver is unobtainable or if a party elects not to
pay the additional expense of a waiver, then neither party nor their
insurers shall waive such subrogation rights.
(d) Conditions. The indemnification obligations set forth in this Section
11 shall not apply unless the party claiming indemnification: (i)
notifies the other promptly in writing of any matters in respect of
which the indemnity may apply and of which the notifying party has
knowledge, in order to allow the indemnitor the opportunity to
investigate and defend the matter; provided, however, that the failure
to so notify shall only relieve the indemnitor of its obligations
under this Section 11 if and to the extent that the indemnitor is
prejudiced thereby; and (ii) gives the other party full control of the
response thereto and the defense thereof, including any agreement
relating to the settlement thereof. However, if the indemnitor fails
to promptly assume the defense of the claim, the party entitled to
indemnification may assume the defense at the indemnitor's cost and
expense. The indemnitor shall not be responsible for any settlement or
compromise made without its prior written consent, unless the
indemnitee has tendered notice and the indemnitor has then refused to
assume and defend the claim and it is later determined that the
indemnitor was obligated to assume and defend the claim. The
indemnitee agrees to cooperate in good faith with the indemnitor at
the request and expense of the indemnitor.
12. LIMITATION OF LIABILITY.
(a) General. A party's and its affiliates' liability arising out of or
relating to a Statement or Statements of Work and this Agreement,
including without limitation on account of performance or
nonperformance of obligations hereunder, regardless of the form of the
cause of action, whether in contract, tort (including without
limitation negligence), statute or otherwise, shall in no event exceed
the lesser of (i) the price to be paid to Service Provider for the
completed Statement of Work (whether set out as a fixed price,
estimated price, not-to-exceed amount, or other similar expression of
the total price for the work to be performed under the Statement of
Work); (ii) the amount actually paid by Service Recipient to Service
Provider for the particular Statement of Work from which the claim
arises; or (iii) if the price to be paid to Service Provider for the
Statement of Work is expressed as a recurring periodic charge, the
liability shall be limited to the average of three (3) months charges
for technical services based on the average previous twelve (12)
month's (or such lesser number of
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months that the Statement of Work has been in effect) of the invoices
actually paid by Service Recipient under the Statement of Work. The
limitation in the immediately preceding sentence does not apply to a
party's obligations under the Sections entitled Indemnification and
Confidential Information, nor does it apply to willful misconduct or
gross negligence on the part of a party.
(b) Limitation. EXCEPT FOR BREACHES RELATED TO CONFIDENTIAL INFORMATION,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT,
INCIDENTAL, PUNITIVE, EXEMPLARY, SPECIAL OR CONSEQUENTIAL DAMAGE OR
LOST PROFITS OF ANY KIND WHATSOEVER EVEN IF A PARTY OR ITS AFFILIATES
HAVE BEEN APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING.
(c) Benefits Under Licenses. Anything contained herein to the contrary
notwithstanding, this Agreement shall not constitute an agreement to
start work, to provide Services or Work Product or to make available
to Service Recipient the benefits under any agreement, license or
arrangement if doing so without the consent of and/or payment to
another party thereto would constitute a breach thereof or in any
material way affect the rights of Service Provider thereunder, unless
and until such consent is obtained and payment, if any, made to such
party by Service Provider. Service Provider shall use commercially
reasonable efforts to secure such consents and benefits under any such
agreement or arrangement. If Service Provider cannot: (i) obtain such
consent; or (ii) Service Provider and the third party vendor cannot
agree on a commercially reasonable payment, if such is required, or
(iii) if providing the Services or Work Products or making the
benefits under any such agreement, license or arrangement available
would materially affect Service Provider's right thereunder, Service
Provider shall not be required to provide any Services or Work
Products which are dependent upon any agreement, license or
arrangement as to which the third party provider has objected in
writing to making the benefits of such agreement, license or
arrangement available to Service Recipient. Service Recipient may,
however, obtain the requisite license or pay such fees that it deems
appropriate in order for Service Provider to provide the Services, if
Service Provider's provision of Services pursuant to such Service
Recipient License or payment is without any adverse material affect to
Service Provider.
13. CHANGES IN MANNER OF PROVIDING SERVICES.
Service Recipient acknowledges that Service Provider and its affiliates may
in the future determine to outsource certain information technology
functions or
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perform such functions using different computer software operating systems
or applications. These changes may prevent Service Provider from providing
certain Services or Work Products to Service Recipient pursuant to this
Agreement in the manner in which they have been provided prior to such
change. In the event Service Provider determines to take any such action,
it will provide Service Recipient with one hundred twenty (120) days prior
written notice and will cooperate with Service Recipient to enable Service
Recipient to continue to receive any affected Services and Work Products
through arrangements with Service Provider's outsource providers or through
conversion of Service Recipient data for use on such operating systems or
applications. In the event Service Provider determines to make such
changes, Service Recipient shall have the right to terminate this Agreement
or any affected Statement of Work without any liability or penalty. Any
customizations requested by Service Recipient within or to the systems
utilized by Service Provider to provide the Services shall be at Service
Provider's discretion. Service Recipient shall be required to pay the
mutually agreed upon cost of such customizations.
14. INSURANCE.
(a) Coverage. Each of GTE and GENUITY agrees to maintain in full force
and effect during the term of this Agreement, and so long as the
indemnity obligations hereunder are in effect, the following minimum
insurance coverages: (i) Worker's Compensation and Occupational
Disease covering each party's full liability under the Statutory
Workers' Compensation Laws for the state in which the Service is being
performed; (ii) Employer's Liability Insurance in the minimum amount
of $100,000 per accident, $100,000 disease per employee, and $500,000
disease aggregate; (iii) General Liability Insurance - Broad Form,
including, but not limited to each party's Protective Liability,
Blanket Contractual Liability and Products Liability/Completed
Operations in the minimum amounts of $1,000,000 per occurrence; and
(iv) If the use of motor vehicles is required, comprehensive Motor
Vehicle Liability Insurance to include, but not limited to owned, non-
owned, leased, and hired vehicles in the minimum amounts of $1,000,000
combined single limit per occurrence for Property Damage and any
accident resulting in bodily injury or the death of one or more
persons, and the consequential damages arising therefrom.
(b) Certificates of Insurance. Certificates of Insurance, incorporating
the above-described endorsements, shall be furnished to a party upon
request of the other party.
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15. REPRESENTATIONS AND WARRANTIES.
Each of GTE and GENUITY represents, warrants, and covenants to the other
party that:
(a) In performing Services, it shall comply with all applicable laws,
codes, ordinances, orders, rules and regulations of local, state, and
federal governments and agencies and instrumentalities, including, but
not limited to, applicable wage and hour, safety and environmental
laws, and all standards and regulations of appropriate regulatory
commissions and similar agencies.
(b) All Services furnished by it shall be performed by qualified personnel
at a level of professional performance standard within the industry in
which the Services are provided.
(c) It has all rights and licenses to perform the Services contemplated by
this Agreement and any Statement of Work incorporated herein.
(d) THE WARRANTIES IN THIS SECTION 15 AND ANY WARRANTY IN A STATEMENT OF
WORK, BUT ONLY IF SPECIFICALLY IDENTIFIED AS AN EXPRESS WARRANTY IN
SUCH STATEMENT OF WORK (INCLUDING SERVICE LEVEL AGREEMENTS), ARE IN
LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, OR WHETHER ARISING
BY COURSE OF DEALING OR PERFORMANCE, CUSTOM, USAGE IN THE TRADE OR
PROFESSION OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR
WARRANTIES AGAINST INFRINGEMENT. Except for the warranties expressly
set forth in this Section 15 and any Statement of Work, Service
Recipient acknowledges and agrees that it has relied on no other
representations or warranties and that no other representations or
warranties have formed the basis of its bargain hereunder.
(e) All representations, warranties and covenants of each of the parties
contained in this Section 15 shall continue for the term of this
Agreement and shall survive its termination.
16. ASSIGNMENT AND SUBCONTRACTING.
(a) Neither this Agreement nor any rights or obligations hereunder shall
be assignable by either of the parties hereto; provided that either
party may delegate all or any portion of its obligations to perform
Services under this
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Agreement to one or more of its affiliates or
either party may assign to any affiliate without the consent of the
other party.
(b) Each party may use subcontractors to perform the Services under this
Agreement as specified in Section 1(d). Each party shall be
responsible for the fulfillment of its obligations hereunder,
notwithstanding the performance of such obligations by its
subcontractors.
17. EQUAL EMPLOYMENT.
(a) General Compliance. Without limitation of Section 18, COMPLIANCE WITH
LAWS, each party shall comply with applicable laws concerning
employment, including, but not limited to the following, which are
incorporated herein by specific reference:
(1) The Equal Employment Opportunity Clause set forth in Section 202,
paragraphs I through 7, of Executive Order 11246, as amended,
relative to Equal Employment Opportunity and the implementing
Rules and Regulations of the Office of Federal Contract
Compliance (hereinafter referred to as "the OFCCP") relating to
equal employment opportunity.
(2) The Affirmative Action Clause set forth in Section 60-741.4 of
the Affirmative Action Regulations on Handicapped Workers, issued
by the OFCCP pursuant to Section 503 of the Vocational
Rehabilitation Act of 1973, as amended.
(3) The Affirmative Action Clause set forth in Section 60-250.4 of
the regulations issued by the OFCCP under Section 402 of the
Vietnam Era Veteran's Readjustment Assistance Act of 1974.
(4) Public Law 95-507 and Executive Orders 11625 and 12138.
(5) The Immigration Reform and Control Act of 1986 and any and all
rules and regulations pertaining thereto. In compliance with the
Act, each of the parties requires all approved contracting firms
to supply only persons authorized to work in the United States
pursuant to the Act. Each of the parties shall be responsible for
complying with the Act with regard to all employees supplied to
the other party.
(6) Title I of the Americans with Disabilities Act, 42 U.S.C.A. 12101
et seq.
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(b) ADA. If any persons furnished by either party under the Agreement or
any Statement of Work have a disability as defined in the Americans
with Disabilities Act, 42 U.S.C.A. 12101 et seq. (the ADA), the
furnishing party shall, where required by Title I of the ADA and at
its sole expense, provide "reasonable accommodations" that may be
required under Title I of the ADA. If Service Provider performs
Services at facilities operated by Service Recipient, Service
Recipient shall be responsible, at its sole expense, for any physical
changes to Service Recipient's facility that may be required under the
ADA with respect to persons utilized by Service Provider in performing
the Services.
(c) Work Environment. Both parties agree to provide a work environment
free from all forms of sexual harassment, including but not limited
to, any unwelcome sexual advances, requests or demands for sexual
favors, and other visual, verbal, or physical conduct of a sexual
nature.
18. COMPLIANCE WITH LAWS.
GTE and GENUITY shall each comply with the provisions of all applicable
federal, state, and local laws, ordinances, regulations and codes
(including procurement of required permits or certificates) in fulfillment
of their obligations under this Agreement. The Confidential Information of
each party may be subject to U.S. export and foreign transactions control
regulations. Each party undertakes that it shall not export, nor cause nor
permit to be exported, the other party's Confidential Information out of
the United States of America without such other party's prior written
consent and without compliance with applicable law and regulation; nor
shall such Confidential Information be made available, directly or
indirectly, for use in any project associated with the design, development,
production, testing, stockpiling or use of: (a) nuclear weapons or
facilities to produce nuclear explosives; or, (b) missiles; or, (c)
chemical or biological warfare agents. Each party agrees to comply with
all applicable laws and regulations relating to the exportation of
technical information, as they currently exist and as they may be amended
from time to time.
19. PLANT WORK RULES AND RIGHT OF ACCESS.
(a) Compliance. Employees, subcontractors, and agents of the parties,
while on the premises of the other, shall comply with all plant rules,
regulations and reasonable company standards for security, including
(when required by U.S. government regulations) submission of
satisfactory clearance from U.S. Department of Defense and other
federal authorities concerned.
(b) Access. Each party shall permit reasonable access during normal
working hours to its facilities that are used in connection with the
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performance of Services. No charge shall be made for such visits.
Reasonable prior notice shall be given when access is required.
(c) Limitation on Access. If either party is given access, whether on-
site or through remote facilities, to any computer or electronic data
storage system of the other party in order to accomplish the Services
called for in this Agreement, the party that receives such access
shall limit such access and use solely to perform Services within the
scope of this Agreement and shall not access or attempt to access any
computer system, electronic file, software or other electronic
services other than those specifically required to accomplish the
Services required under this Agreement. Under no circumstances shall
either party's personnel access any networks or facilities of the
other party for the purpose of accessing other external networks, nor
shall any such capabilities for such access be published or made known
via any medium, as for example and not by way of limitation, posting
on bulletin boards or E-mail. Any such use or publication shall be a
material breach of this Agreement. Neither party shall use back doors,
data capture routines, games, viruses, worms, or Trojan horses and any
intentional introduction of such into the other party's data networks
shall be deemed a material breach of this Agreement. The party
receiving access shall limit such access to those of its employees
whom the other party has authorized in writing to have such access in
connection with this Agreement or the applicable Statement of Work,
and shall strictly follow all security rules and procedures for use of
the providing party's electronic resources. All user identification
numbers and passwords and any information obtained as a result of
access to and use of a party's computer and electronic data storage
systems shall be deemed to be, and shall be treated as, Confidential
Information under applicable provisions of this Agreement. Each party
agrees to cooperate with the other in the investigation of any
apparent unauthorized access to a party's computer or electronic data
storage systems.
20. SERVICE RECIPIENT RESPONSIBILITIES.
Service Recipient agrees to perform in a timely fashion those tasks, and to
provide the personnel, facilities and accurate information as agreed by the
parties and set forth in the applicable Statement of Work. Service
Recipient further agrees to cooperate with Service Provider in its
performance of this Agreement, to not unreasonably withhold its consent to
any matter for which consent is required or requested.
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21. PERMITS.
Unless otherwise specifically provided for in this Agreement, Service
Provider shall obtain and keep in full force and effect, at its expense,
any permits, licenses, consents, approvals and authorizations ("Permits")
necessary for and incident to the performance and completion of the
Services. Notwithstanding the foregoing, Service Recipient shall obtain
and keep in full force and effect, at its expense, any Permits related to
its facilities and the conduct of its business.
22. PUBLICITY.
The parties agree to submit to one another, for prior written approval, all
advertising, sales promotion, press releases and other publicity matters
relating to the Services performed pursuant to this Agreement, when its
respective name or mark is mentioned or language from which the connection
of said name or mark may be inferred or implied. The parties further agree
not to publish or use such advertising, sales promotions, press releases,
or publicity matters without such prior written approval. Any approval
required under this Section 22 shall not be unreasonably withheld or
delayed by either party. Notwithstanding the foregoing, Service Provider
may list Service Recipient as a customer in promotional and marketing media
and describe in general terms the Services provided by Service Provider
under this Agreement in proposals and other marketing materials.
23. TRADEMARKS, TRADENAMES AND OTHER INTELLECTUAL PROPERTY.
Except as expressly set forth in this Agreement or in a separate written
agreement between GTE and GENUITY, nothing in this Agreement or any
Statement of Work shall grant, suggest or imply any right, license or
authority for one party to use the name, trademarks, service marks, trade
names or domain names of the other for any purpose whatsoever. Except and
to the extent expressly set forth in this Agreement or in a separate
written agreement between GTE and GENUITY, nothing in this Agreement or any
Statement of Work shall be deemed to grant to either party any right or
license under any intellectual property of the other party.
24. TERMINATION OF WORK.
(a) Termination Events. Either party may terminate or cancel this
Agreement or any Statement of Work, effective immediately, upon
written notice to the other party, if any of the following events
occur:
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(1) The other files a voluntary petition in bankruptcy (other than as
creditor).
(2) The other is adjudged bankrupt.
(3) A court assumes jurisdiction of the assets of the other under a
federal reorganization act.
(4) A trustee or receiver is appointed by a court for all or a
substantial portion of the assets of the other.
(5) The other becomes insolvent or suspends its business.
(6) The other makes an assignment of its assets for the benefit of
its creditors except as required in the ordinary course of
business.
(b) Termination for Breach. Either party may terminate or cancel this
Agreement or a Statement of Work, for a material breach or default of
any of the terms, conditions or covenants of this Agreement by the
other, provided that such termination or cancellation may be made only
following the expiration of a thirty (30) day period ("Cure Period")
during which the breaching party has failed to cure such breach after
having been given written notice thereof. In such event, the non-
breaching party may terminate by giving 10 days written notice of
termination, after the expiration of the Cure Period.
(c) Termination for Convenience. Service Recipient may terminate this
Agreement or a Statement of Work during the term of this Agreement or
a Statement of Work, for convenience on one hundred twenty (120) days
prior written notice to Service Provider. In the event of termination
by Service Recipient pursuant to this Sub-part, prior to the end of
the term, Service Recipient will reimburse Service Provider for all
Service Recipient-approved, third party costs for equipment or
software which have been incurred by Service Provider after the
execution of this Agreement as a direct result of Service Provider's
provision of Services under this Agreement or any Statement of Work,
provided that Service Recipient shall be entitled to any right,
license or title related to any such equipment or software to the
extent Service Provider has the ability to convey such right, license
or title.
(d) Termination Assistance. Upon termination of a Statement of Work,
Service Provider shall perform the following turnover services if
requested in writing by Service Recipient:
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(1) Prepare and submit a detailed turnover plan which includes the
overall strategy, schedule, itemization of turnover deliverables,
and tasks required to complete the turnover; and
(2) Transfer date files (archived and current), files, and
documentation to Service Recipient as may be provided in the
Statement of Work.
Service Recipient shall pay Service Provider for the turnover services
delineated in this subsection 24(d) at the hourly rates specified in
the Statement of Work or if no rates are specified, at Service
Provider's then current rates for such services. Except as expressly
stated herein, Service Recipient acknowledges that Service Provider
shall provide no turnover assistance except as specifically requested
in writing by Service Recipient and agreed to in writing by Service
Provider.
(e) Termination under Statement of Work. Statements of Work may be
terminated as set out under their specific terms, if different from
those set out in subsections (a), (b) and (c) of Section 24 above.
25. NOTICE.
Any written notice either party may give the other concerning the subject
matter of this Agreement shall be in writing and given or made by means
that obtain a written acknowledgment of receipt. If the notice pertains to
a Statement of Work performed by any of the following entities notice shall
be sent to the applicable company addresses shown below, which may be
changed by written notice:
To GTE SERVICE CORPORATION:
1255 Corporate Drive
Irving, Texas 75038
Attention: _____________
To GTE DATA SERVICES INCORPORATED:
One East Telecom Parkway
Temple Terrace, Florida 33637
Attention: _____________
To GTE CONSOLIDATED SERVICES INCORPORATED:
1255 Corporate Drive
Irving, Texas 75038
Attention: _____________
To GTE COMMUNICATION SYSTEMS INCORPORATED:
5616 High Point
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Drive, Irving, Texas 75038
Attention:_____________
To GENUITY:
3 Van de Graaff Drive
Burlington, Massachusetts 01803
Attention: _____________
Notice shall be deemed to have been given or made when actually received,
as evidenced by written acknowledgment of receipt.
26. WAIVER OF TERMS AND CONDITIONS.
Failure to enforce any of the terms or conditions of this Agreement shall
not constitute a waiver of any such terms or conditions, or of any other
terms or conditions.
27. SEVERABILITY.
Where any provision of this Agreement is declared invalid, illegal, void or
unenforceable, or any changes or modifications are required by regulatory
or judicial action, and any such invalid, illegal, void or unenforceable
provision, or such change or modification, substantially affects any
material obligation of a party hereto, the remaining provisions of this
Agreement shall remain in effect and the parties shall mutually agree upon
a course of action with respect to such invalid provision or such change or
modification to the end that the purposes of this Agreement are carried
out.
28. SURVIVAL OF OBLIGATIONS.
The provisions in the Agreement relating to Confidentiality,
Indemnification, Dispute Resolution, Termination, Compensation and Billing,
Limitation of Liability, and Insurance shall survive any termination,
cancellation or expiration of this Agreement.
29. APPLICABLE LAW.
This Agreement, and the rights and obligations contained in it, shall be
governed by and construed in accordance with the laws of the State of New
York, without regard to any conflicts of law principles that would require
the application of the laws of any other jurisdiction.
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30. NO UNREASONABLE DELAY OR WITHHOLDING.
Where agreement, approval, acceptance, consent or similar action by GENUITY
or GTE is required, such action shall not be unreasonably delayed or
withheld.
31. ENTIRE AGREEMENT.
This Agreement represents the entire understanding between the parties with
the respect to its provisions and cancels and supercedes all prior
agreements or understandings, whether written or oral, with respect to the
subject matter. This Agreement may only be modified or amended by an
instrument in writing signed by duly authorized representatives of the
parties. This Agreement shall be deemed to include all Exhibits, Addenda
and Statements of Work issued hereunder.
32. RULES OF INTERPRETATION.
Headings in this Agreement are for convenience of reference only and shall
not affect the interpretation or construction hereof. Unless otherwise
specified, (i) the terms "hereof", "herein" and similar terms refer to this
Agreement as a whole and (ii) references herein to "Sections" and
"subsections" refer to parts, sections or subsections of this Agreement.
[remainder of this page left blank]
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* * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement through
their authorized representatives.
Genuity Inc. GTE Service Corporation
By:______________________________ By:_________________________________
Name:____________________________ Name:_______________________________
Title:___________________________ Title:______________________________
Date:____________________________ Date:_______________________________
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EXHIBIT 10.11
CONFIDENTIAL TREATMENT REQUESTED
[An * Indicates Material that has been Omitted and Separately Filed Under an
Application for Confidential Treatment]
Purchase, Resale and Marketing Agreement
This Purchase, Resale and Marketing Agreement ("Agreement") is executed this ___
day of _____________ 2000 by and between Genuity Inc. with principal offices at
3 Van de Graaff Drive, Burlington, MA 01083 ("Genuity") and Bell Atlantic
Corporation with its principal office at 1320 North Courthouse Road, 5/th/
Floor, Arlington, VA 22201 ("Bell Atlantic")
WHEREAS, Genuity provides data and IP services;
WHEREAS, the parties estimate that there is a multi-billion dollar market
opportunity for such services during the next five years;
WHEREAS, where permitted by applicable federal law, Bell Atlantic desires to
market and resell Genuity's data and IP services to its customers;
WHEREAS, Bell Atlantic estimates that it could achieve revenues in excess of two
billion dollars ($2,000,000,000.00) through the sale of such services within the
next five years;
WHEREAS, Genuity desires to have Bell Atlantic market and resell, and Bell
Atlantic desires to market and resell Genuity's IP and data services subject to
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. SALE AND MARKETING OF GENUITY SERVICES
1.1 Appointment. Genuity hereby authorizes Bell Atlantic and those Bell
-----------
Atlantic affiliates who place orders hereunder ("Authorized Affiliate(s)")
during the term of this Agreement to purchase either for their own use, to use
in providing services to their customers, and/or to market and resell those
Genuity services defined in the Service Schedules attached hereto (collectively,
the "Genuity Services") to end users ("End Users") located in all geographic
areas where Genuity offers the Genuity Services and where Bell Atlantic may
lawfully offer the Genuity Services ("Territory"). The Genuity Services shall
be provided by Genuity or a Genuity affiliate as identified in the applicable
Service Schedule. An order for and the provision of a Genuity Service
establishes a contract between the Bell Atlantic or the Authorized Affiliate and
the Genuity-designated service provider for the Genuity Service under the terms
and conditions of this Agreement and the relevant Service Schedule. Bell
Atlantic and/or an Authorized Affiliate may designate another Bell Atlantic
affiliate or third party to act as a sales agent for such Authorized Affiliate.
Bell Atlantic shall be responsible for coordinating its program for such third
party sales agents, including providing necessary support and training. Bell
Atlantic shall indemnify Genuity for the actions of such third party agents as
set forth in Section 10. Bell Atlantic's right to distribute and market Genuity
Services shall be further defined in each Service Schedule. Such rights may
include the right to resell the Genuity Service as a standalone service, as part
of an integrated system or solution, or with value added services. (For the
purpose of this agreement, the term "affiliate" shall mean, with respect to any
person, any other person directly or indirectly controlling or controlled by, or
under direct or indirect common control with, such person.)
1.2 Lead Referrals. Bell Atlantic may in its discretion refer to Genuity any
--------------
offers to purchase or orders for (i) Genuity Services, or (ii) other services
offered by Genuity. Genuity may in its discretion refer to Bell Atlantic any
offers or prospective offers to purchase the Genuity Services. Any such
referral shall be made in accordance with applicable federal law and Section 2.4
of this Agreement. If either party makes such a referral, the referring party
shall not, without advance notice to the other, independently pursue sale of the
referred opportunity with the potential customer unless the other fails to
pursue such referral within a reasonable time. Genuity and Bell Atlantic shall
develop, no later than sixty (60) days
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following the Effective Date (as defined in Section 6.1 of this Agreement) a
mutually agreed upon lead referral program that includes a commission to be paid
by the party that completes a sale pursuant to a referral.
1.3 Non-Exclusivity. Genuity reserves the right to market, distribute and sell
---------------
Genuity Services, directly or indirectly, within and outside of the Territory,
and nothing in this Agreement shall limit in any manner Genuity's marketing or
distribution activities, or its right to sell directly or appoint other dealers,
distributors, licensees or agents within or outside the Territory to sell the
Genuity Services. Similarly, Bell Atlantic reserves the right to market,
distribute and sell, directly or indirectly, within or outside of the Territory,
services that compete with the Genuity Services.
1.4 Service Changes. Except as otherwise provided in a Service Schedule,
---------------
Genuity reserves the right to modify, change or add to any of the Genuity
Services at any time, upon forty-five (45) days' notice to Bell Atlantic, and to
remove or discontinue any of the Genuity Services at any time, upon ninety (90)
days' notice to Bell Atlantic, provided that any such change, modification,
addition, removal or discontinuance shall be part of a general action by Genuity
with respect to the affected service and its retail and wholesale customers, and
shall not affect any Bell Atlantic End User contracts or valid Genuity quotes in
existence at the time of the Genuity notice. Genuity specifically agrees to
continue to provide any Genuity Service and all related product support affected
by such change or discontinuance in accordance with the description of the
service and other terms and conditions in any Bell Atlantic End User contract
(provided that the End User contract is consistent with the Genuity Service
Description and other terms and conditions applicable at the time the contract
was signed) or valid Genuity quotes, for the duration of the term of such End
User contract or contract that results from such quote.
1.5 Service Schedules. Each Service Schedule shall, at a minimum, include:
-----------------
(i) a description of the service, term, and pricing, (ii) the obligations and
responsibilities of each party related to the Genuity Service offered under the
Service Schedule; (iii) any required End User contract terms (i.e., mandatory
flowdown terms) that apply when Bell Atlantic markets or resells the Genuity
Service; and (iv) applicable service level agreements.
2. RELATIONSHIP OF THE PARTIES
2.1 Independent Contractors. The relationship of Genuity and Bell Atlantic is
-----------------------
that of independent contractors, and nothing contained in this Agreement shall
be construed to: (i) give either party the power to direct and control the day-
to-day activities of the other, (ii) constitute the parties as partners, joint
ventures, co-owners, or otherwise as participants in a joint or common
undertaking, (iii) create a relationship of principal and agent, or (iv) allow
either party to create or assume any obligation on behalf of the other except
for the obligations that may be specified in this Agreement.
2.2 No Authority to Bind. Each party acknowledges and agrees that it has
--------------------
neither express nor implied authority to accept orders or enter into or modify
contracts, whether oral or written, on behalf of the other party. Except for
the Genuity Services or as may be specifically set forth in other agreements
between the parties, Bell Atlantic shall not represent that any products and
services marketed, offered, or sold by Bell Atlantic are approved or endorsed by
Genuity in any way.
2.3 Actions by the Company, its Employees and Agents. Each party shall be
------------------------------------------------
solely responsible for the acts and omissions of its employees, agents, and
contractors, including, without limitation, all labor costs and expenses.
2.4 InterLATA Services. Bell Atlantic shall not provide or jointly market with
------------------
Genuity a Genuity Service that is, or includes as a necessary, bundled
component, an interLATA service in a state until Bell Atlantic has obtained any
necessary authorizations or approvals to do so.
3. GENUITY RESPONSIBILITIES
3.1 Provision of Services. Genuity shall provide the Genuity Services to Bell
---------------------
Atlantic and/or to End Users at the rates and in
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accordance with the Service Descriptions and other specifications set forth in
this Agreement and the Service Schedules. Genuity shall also provide to Bell
Atlantic training, marketing assistance, support, equipment and software and
other ancillary services and products as may be set forth in the Service
Schedules and this Agreement.
3.2 Operations.
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(a) Genuity shall provide Bell Atlantic with mechanized, electronic access and
interfaces to those Genuity systems that support Bell Atlantic's marketing,
provisioning and support of the Genuity Services to End Users. This access and
interface capability shall apply to the following information and functionality:
(i) pre-sales information; (ii) ordering and provisioning; (iii) new products
literature; (iv) problem identification and isolation to assist Bell Atlantic in
its provision of level one End User support; (v) repair/trouble ticketing; and
(vi) billing feeds, as appropriate, to the Genuity Services. Such access and
interfaces shall be provided in accordance with the implementation schedule set
forth in this Section 3.2. Genuity shall be solely responsible for the all costs
incurred for system development and implementation necessary to comply with this
Section 3.2. Genuity may recover the cost of such development and implementation
through the prices it charges all customers for the Genuity Services, but shall
not otherwise charge Bell Atlantic any portion of such costs.
(b) Promptly following the Effective Date, Genuity and Bell Atlantic shall each
designate by written notice a senior operations point of contact (O-POC) for
developing, implementing and maintaining business process interfaces throughout
the areas of each party's business affected by this Agreement. The parties shall
oversee the rollout of transaction processes for quotes, orders, provisioning,
customer care and billing across all Genuity Services. The shared design
principles shall be integration across all Genuity Services, customer
responsive, web based, scalable, and minimization of manual intervention. A
written process architecture shall be developed and maintained by both parties.
The first copy of this architecture shall be finalized within one hundred twenty
(120) days after the Effective Date. This shall be a dynamic document, available
online to both parties, that shall be the basis for identifying improvement
opportunities and for operations plans. The parties shall perform quarterly
reviews of these plans, with the O-POCs jointly managing the agenda and
attendees for such reviews. These reviews shall be alternately hosted by each
party at its facility of choice. Genuity shall work with Bell Atlantic to
develop and implement new support tools and process improvements with respect to
Bell Atlantic's purchase and sale of the Genuity Services. Genuity shall retain
all rights to tools and processes it develops, and, at its option, may implement
these tools and processes for other customers and resellers.
(c) Bell Atlantic shall be responsible for the End User relationship. Genuity
shall provide access to documentation, training materials, and on-line support
tools that facilitate Bell Atlantic in providing level one support services for
its End Users. At Bell Atlantic's request and at Genuity's expense, Genuity
shall provide one time "train the trainer" sessions for level one support for
each product or service. These training sessions shall be held at Genuity
facilities for class sizes not to exceed 12 people, at mutually agreed times.
Bell Atlantic shall pay travel and living expenses for its attendees. At Bell
Atlantic's request, Genuity shall provide to Bell Atlantic quotes for fees on a
daily basis (plus travel and living expenses) for subsequent "train the trainer"
sessions, which sessions shall be held at Bell Atlantic facilities. Genuity
shall provide such subsequent sessions upon Bell Atlantic's acceptance of such
quote(s).
(d) Genuity shall provide at its expense level two and level three support for
the Genuity Services. Bell Atlantic shall provide at its expense level one
support for the Genuity Services it resells. For maintenance of Genuity-supplied
customer premises equipment, Genuity shall act as service agent for Bell
Atlantic on Level II and Level III support situations. This service and support
shall be Bell Atlantic branded where practical. Genuity shall work cooperatively
with Bell Atlantic and/or Bell Atlantic customers for identification/isolation
of
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difficult end-to-end or otherwise elusive problems. Genuity shall assume all
escalation and interface responsibilities for its suppliers.
(e) The parties shall agree upon and publish written Bell Atlantic and Genuity
escalation and communication paths for the Genuity Services. These documents
shall be an addendum to the business process architecture discussed above.
(f) Bell Atlantic and Genuity shall establish an operations review process to
review the performance measurements under the service level agreements for each
Genuity Service on a monthly basis, and establish action plans and "next steps"
as appropriate. These monthly reviews may be conducted by telephone or in face-
to-face meetings.
3.3 Business Practices. Genuity and Genuity's representatives and employees
------------------
shall at all times give prompt, courteous and efficient service to End Users it
has contact with pursuant to its obligations under this Agreement, or otherwise
on behalf of Bell Atlantic. Both parties shall follow all End User interface
procedures set forth in a Service Schedule and/or developed and agreed upon by
the parties.
3.4 Training Support. Genuity shall specify the level of training required to
----------------
sell and support the Genuity Services. Genuity shall make available, at its
expense (other than travel and lodging expenses for Bell Atlantic employees)
training support materials and training for the Genuity Services that is
substantially equivalent to the training Genuity provides to its internal sales
force (excluding Genuity-proprietary content such as strategic planning,
internal sales discussions, Genuity market focus, Genuity customer specific
information, and similar content) and is sufficient to qualify Bell Atlantic
employees to provide the necessary technical expertise to design where
applicable (on a pre-sale basis), sell and support the volume and type of
Genuity Services which Bell Atlantic has forecast. This training shall be made
available initially for a reasonable number of Bell Atlantic sales personnel, as
mutually determined by the parties. Genuity shall make subsequent training
available for new Genuity Services and significant enhancements to the services,
and periodically during the term of this Agreement (no more frequently than once
each calendar year) for a reasonable number of new sales personnel. Additional
training required by Bell Atlantic shall be provided by Genuity at Bell
Atlantic's expense, at a price not to exceed Genuity's reasonable costs of
providing the training. The parties shall develop a training support plan
within ninety (90) days of the effective date of this Agreement.
3.5 Marketing Support. Genuity shall reasonably assist Bell Atlantic in Bell
-----------------
Atlantic's marketing and provision of the Genuity Services to End Users
identified by Bell Atlantic. The parties shall develop procedures and
guidelines for such marketing support within ninety (90) days following the
Effective Date. Such assistance shall include making sales support and
technical experts reasonably available for consultation with Bell Atlantic and
the End User. At Bell Atlantic's request, Genuity shall provide qualified sales
and/or technical support individual(s) to accompany Bell Atlantic on sales calls
End Users. In such joint presentation to an End User, Bell Atlantic shall
determine whether the proposed service shall be identified as a co-branded
offering. Genuity's sales support and technical personnel who work on End User
accounts associated with Bell Atlantic marketing activities shall not
concurrently provide services pertaining to that End User to either Genuity's
internal sales channels or any other reseller of Genuity. Any information about
the End User, to include the identification of the sales opportunity, that is
provided by Bell Atlantic, or that is developed by Genuity in its support of
Bell Atlantic's sales efforts, shall be Bell Atlantic Confidential Information.
In providing business and marketing support to Bell Atlantic pursuant to this
Section 3.5, Genuity shall not sell or attempt to sell the products or services
of any party other than Bell Atlantic, provided, however, that Genuity may,
-----------------
while providing such support and in consultation with Bell Atlantic, make
recommendations to End Users regarding other Genuity Services available from
Bell Atlantic.
3.6 Availability of Services and Support.
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(a) Genuity shall provide to Bell Atlantic the same type and quality of Genuity
Services (including, without limitation, Service Descriptions, service level
agreements and remedies, geographic availability, and support) as Genuity
provides to other resellers and to its own internal sales channel and retail
customers. Genuity shall modify the Genuity Services and add new Genuity
Services as reasonably necessary to keep the portfolio of Genuity Services
(including, without limitation, Service Descriptions, service level agreements
and remedies, capacity availability in the Territory, and support) available
under this Agreement competitive and current with comparable services available
from other suppliers. Genuity shall not reduce the geographic coverage of a
Genuity Service existing as of the date the parties executed this Agreement.
Subject to the foregoing, Genuity shall be the sole determiner of its services
portfolio and its market strategy, including the market segments upon which it
shall focus and the levels of investment it shall make in particular services or
market segments, or the geographic locations in which it will offer the Genuity
Services.
(b) Genuity shall keep Bell Atlantic informed about new service offerings and
significant product enhancements, and shall offer any new services and service
enhancements to Bell Atlantic so that Bell Atlantic may market such new services
or enhancements to End Users on as timely a basis as Genuity's internal sales
channel or Genuity's other resellers or sales agents. In the event that Bell
Atlantic has information that one or more of the Genuity Services are not
competitive in the market, Bell Atlantic shall provide evidence thereof to
Genuity and Genuity shall review this information and meet with Bell Atlantic to
provide Genuity's response to Bell Atlantic's information.
(c) Within ninety (90) days of the Effective Date, the parties shall develop a
benchmarking process to track prices and related terms for services comparable
to the Genuity Services for the purpose of administering this Section 3.6.
3.7 Availability of Competitive Terms and Prices For Individual Customer
--------------------------------------------------------------------
Requests
- --------
(a) Bell Atlantic may request that Genuity provide reduced prices or discounts,
different terms, or changed Service Descriptions ("Custom Bids") for purposes of
responding to individual End User requests for proposals or negotiation with the
End User. When Bell Atlantic has quoted Genuity Services and the End User has
requested a Custom Bid, Bell Atlantic shall as soon as possible consult with
Genuity regarding such requests. Genuity agrees to give good faith consideration
to such requests, to offer such changes as Genuity determines it is willing to
make and to respond to Bell Atlantic within the timeframes of the individual
transaction which has generated such request. Bell Atlantic may obtain offers of
services comparable to, or as reasonable substitutes for, Genuity Services from
third parties. Where prices and/or other terms for such services are both
responsive to the particular customer request and more favorable to Bell
Atlantic than the prices and/or terms for Genuity Services, Bell Atlantic may
notify Genuity that it has received offers that include such favorable prices
and terms and request Genuity to meet such prices and terms. Genuity shall
respond within the timeframes of an individual sales transaction as requested by
Bell Atlantic. The parties agree to establish procedures under which such
requests shall be handled, no later than ninety (90) days after the Effective
Date, and to add such procedures as a schedule to this Agreement. Genuity shall
treat information concerning price reductions and other information requested as
Confidential Information of Bell Atlantic. Bell Atlantic shall treat Genuity's
response, including any information developed by Genuity and provided to Bell
Atlantic regarding pricing and other competitive information, as Confidential
Information of Genuity and shall not provide such information to any third party
other than in connection with providing a bid to the End User or as otherwise
permitted by this Agreement.
(b) Genuity shall be obligated to provide Custom Bids to Bell Atlantic with
respect to a Genuity Service where Genuity customarily provides such Genuity
Service to other customers on a custom basis. In situations not covered by the
preceding sentence, Genuity
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shall not be obligated to respond to Bell Atlantic requests for Custom Bids to
the extent they exceed twenty percent (20%) of the quotes requested by Bell
Atlantic for a particular Genuity Service in a calendar quarter.
3.8 Proposal Materials. Unless otherwise agreed by Bell Atlantic, all sales
------------------
collateral, proposals, contracts and related proposal documents for Genuity
Services covered by this Agreement and marketed by Bell Atlantic shall be
prepared and presented by Bell Atlantic, using Bell Atlantic letterhead and
other indicia. Genuity shall provide content that may be used without Genuity
identification, as requested by Bell Atlantic. Bell Atlantic agrees to take all
reasonable steps necessary to protect Genuity's intellectual property rights in
such content, including reproducing all copyright notices, if any. Bell
Atlantic further agrees that Genuity shall retain all rights in such content.
If the End User indicates interest in Genuity services that are outside the
scope of the Genuity Services, Genuity shall coordinate with Bell Atlantic
before making a proposal for such services. Genuity may submit proposal
materials and customer contracts for such other services using Genuity
letterhead, forms and indicia.
3.9 Return of Materials. Upon request from Bell Atlantic, Genuity shall return
-------------------
or destroy all materials provided by Bell Atlantic related to any proposal
development or other marketing activity pertaining to an End User identified by
Bell Atlantic. In such event, Bell Atlantic shall return to Genuity or destroy
all proposal development or marketing material Genuity has provided to Bell
Atlantic relating to such End User.
4. OBLIGATION OF BOTH PARTIES
4.1 No Disparaging Conduct. Neither party shall do anything that would tend to
----------------------
discredit, dishonor, reflect adversely upon, or in any manner injure the
reputation of the other party or any affiliate. This provision shall not,
however, prevent either party from marketing competing services of either itself
or other entities.
4.2 Identification with a Party. Representatives of a party shall not
---------------------------
represent themselves as employees of the other party in contacts with End Users
or others.
5. BELL ATLANTIC OBLIGATIONS
5.1 Sales. Bell Atlantic is authorized to sell the Genuity Services in the
-----
Territory. Bell Atlantic may not market or sell the Genuity Services to End
Users located outside of the Territory without the prior written consent of
Genuity.
5.2 Bell Atlantic End User Support. Unless otherwise addressed in a Service
------------------------------
Schedule or in this Agreement, or separately agreed between Bell Atlantic and
Genuity, Bell Atlantic shall provide pre- and post-sales support to End Users.
5.3 Representations. Bell Atlantic shall not make any representations or
---------------
statements regarding Genuity Services other than those contained in the
applicable Genuity Service Description or approved in writing by Genuity.
5.4 Quotations/End User Billing. Bell Atlantic shall be responsible for
---------------------------
issuing quotations to End Users for Genuity Services at prices to be determined
by Bell Atlantic. Bell Atlantic is solely responsible for credit checks, credit
approvals, billing and collection of fees for Genuity Services provided to End
Users.
5.5 End User Prices. Bell Atlantic shall be responsible for determining the
---------------
prices at which it shall offer the Genuity Services to End Users, and for
communicating pricing information, including quotations, to End Users.
5.6 Compensation. Bell Atlantic shall be responsible for compensating its
------------
employees, contractors, agents and other representatives for sales of Genuity
Services to End Users.
5.7 End-User Agreement(s). Bell Atlantic shall sell the Genuity Services by
---------------------
means of written agreements by and between End User and Bell Atlantic. Such
agreements shall contain terms and conditions that are at least as
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protective of Genuity as the mandatory flowdown terms specified in the
applicable Service Schedule.
5.8 Order Forecasts, Bell Atlantic shall provide Genuity with calendar
---------------
quarterly forecasts no later than the first day of the calendar quarter. The
forecast shall reflect anticipated demand for the Genuity Services for the next
eighteen (18) months by volume for each Genuity Service and shall reflect, if
the information is available, the anticipated geographic areas where the Genuity
Services shall be sold. Genuity shall treat the forecasts as Bell Atlantic
Confidential Information. Within sixty (60) days following the Effective Date of
this Agreement, the parties shall develop mutually agreed upon detailed
forecasting requirements for each Genuity Service that shall be set forth as
supplements to the applicable Service Schedules. The parties agree to work
together to make the forecasting process a mutually beneficial business
arrangement that supports each party's planning. Bell Atlantic shall make
reasonable efforts to provide Genuity with the most complete and accurate
forecast information possible for Genuity to effectively plan service
availability. Reasonable efforts shall be made by Genuity to make the Genuity
Services available to meet Bell Atlantic's forecasts.
6. TERM AND TERMINATION
6.1 Term. This Agreement shall take effect on the date on which, pursuant to
----
their Agreement and Plan of Merger, Bell Atlantic Corporation and GTE
Corporation cause a Certificate of Merger to be executed, acknowledged, and
filed with the Secretary of State of New York as provided in New York
Corporation Law, Section 907 ("Effective Date"), and unless terminated earlier
as provided herein, shall continue for a period of five (5) years thereafter
(the "Initial Term"). The Agreement shall then renew for successive one (1)
year renewal terms ("Renewal Term") unless either party provides the other with
notice at least sixty (60) calendar days prior to the end of the Initial or
Renewal Term of its intent to allow this Agreement to expire at the end of the
current term. Upon expiration of this Agreement, in the event a Service
Schedule or Schedules has or have a term ("Service Schedule Term") that
extend(s) beyond the Initial or Renewal Term, as applicable, the Term shall be
automatically extended and remain in effect until such time as all such Service
Schedule Terms have been completed.
6.2 Termination for Default. Either party may terminate this Agreement, and/or
-----------------------
one or more Service Schedule if the default applies to such Service Schedules,
without liability to the other party immediately by written notice in the event
the other party (i) materially breaches this Agreement and fails to cure such
breach within thirty (30) days following written notice thereof, provided,
however, that if such breach cannot reasonably be cured during that time, the
defaulting party must use reasonable commercial efforts to cure such breach as
soon as practicable but in any event within ninety (90) days, (ii) engages in
fraud, criminal conduct or willful misconduct in connection with the business
relationship of the parties, or (iii) becomes insolvent, becomes involved in any
liquidation or termination of its business, is adjudicated as bankrupt or
effects an assignment for the benefit of creditors. In the event Bell Atlantic
elects to terminate this Agreement pursuant to this Section, Genuity shall
continue to provide the Genuity Services to any existing Bell Atlantic End Users
receiving Genuity Services under a valid End User contract with Bell Atlantic as
of the effective date of such termination provided however, that Genuity shall
have no obligation to provide services to any such End User beyond the then
current term of the End User's contract with Bell Atlantic. The parties shall
negotiate in good faith with respect to any additional Genuity Services that
Bell Atlantic may wish to acquire after the effective date of such termination,
but Genuity shall have no obligation to agree to provide such services to Bell
Atlantic. In the event Genuity terminates this Agreement pursuant to this
Section, Bell Atlantic agrees to cooperate with Genuity and perform the same
obligations described in Section 6.3 below to effect the transition of all
outstanding End User agreements for the services to Genuity. Bell Atlantic
shall provide its assistance at no charge to Genuity.
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6.3 Early Termination by Bell Atlantic. In the event a legislature, regulatory
----------------------------------
agency, court or other governmental entity, by act or omission, materially and
adversely changes the rights, obligations or risks of Bell Atlantic with respect
to the sale of the Genuity Services, then Bell Atlantic may terminate this
Agreement or any Service Schedule without liability by providing at least ninety
(90) days advance written notice thereof to Genuity. In such event, to the
extent permitted by the End User, Bell Atlantic shall provide Genuity with
copies of all End User agreements for the affected Genuity Service(s) and other
End User information and shall cooperate to effect an orderly and seamless
transition to Genuity of all outstanding End User agreements for affected
Genuity Services (including the assignment to Genuity of such agreements). Bell
Atlantic shall reimburse Genuity for reasonable out-of-pocket costs incurred
with respect to such transition. Genuity shall not be required to assume an End
User agreement if it does not contain a mandatory flowdown provision or contains
other terms and conditions that are materially different from Genuity's standard
terms and conditions and if Genuity and Bell Atlantic are unable, despite
reasonable efforts to amend such agreements to add such mandatory flowdown
terms. Notwithstanding the foregoing, where Genuity has designated pursuant to
Section 1.1 a Genuity service provider that is a private carrier for the
provision of capacity services (e.g., private line and ATM), then Genuity's
obligations under this Section 6.3 with respect to the affected End User
agreements shall be limited to Genuity using commercially reasonable efforts to
arrange for another reseller of the Genuity Services to assume such End User
agreements, provided, however, that Genuity may itself assume some or all of
such End User agreements.
6.4 Effect of Expiration. At Bell Atlantic's request, upon expiration, Genuity
--------------------
shall (i) use commercially reasonable efforts in making an orderly and seamless
transition of End Users from the Genuity Services to other services that Bell
Atlantic may choose to offer such End Users; and (ii) continue providing the
Genuity Services to Bell Atlantic as necessary to complete the then-current term
of each End User contract that extends beyond such expiration or termination.
6.5 Use of Program Materials Upon Termination. Except for any use that may be
-----------------------------------------
necessary to perform its obligations under any existing End User agreements,
Bell Atlantic shall, upon termination or expiration of this Agreement,
immediately cease the use of all Genuity program materials and the Genuity marks
related to the affected Genuity service and Bell Atlantic shall cease to
represent itself as a Genuity reseller for the affected Genuity Service. Bell
Atlantic shall return to Genuity all material previously provided by Genuity to
Bell Atlantic.
7. PRICING; PAYMENT TERMS; MINIMUM ORDER
7.1 Purchase Price. The price for each of the Genuity Services is set forth
--------------
in the applicable Service Schedule. Some Genuity Services may include
installation fees, usage fees and telco circuit connection and cancellation
fees. To the extent Genuity is unable to identify such fees in the Service
Schedule or at the time an order is placed, it shall provide Bell Atlantic with
a good faith estimate thereof and notify Bell Atlantic as soon as it becomes
aware of the amount of such fees. Genuity shall pass through such fees to Bell
Atlantic at the cost and shall use commercially reasonable efforts to obtain the
lowest cost. Such prices, including the above mentioned fees and costs,
constitute the totality of charges for which Genuity may bill Bell Atlantic in
connection with the purchase of the Genuity Services and performance of its
obligations under this Agreement; no other charges (except for taxes as
permitted below) shall appear on any invoice to Bell Atlantic unless otherwise
agreed upon in writing by the parties.
7.2 Minimum Order. Any minimum purchase commitment applicable to individual
-------------
Genuity Services shall be set forth in the applicable Service Schedule.
7.3 Volume Purchase Commitment. In consideration of the performance
---------------------------
commitments
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and other promises of Genuity as set out in this Agreement, Bell Atlantic agrees
to purchase the Genuity Services in the dollar volumes as set out in Attachment
1 (the "Purchase Commitment") or pay to Genuity the amounts described therein in
the event it fails to satisfy the Purchase Commitment.
7.4 Most Favored Customer.
---------------------
(a) The Multiple Services Discount (as defined in the pricing attachments
hereto) offered to Bell Atlantic under this Agreement shall be at least as
favorable to Bell Atlantic as any Multiple Services Discount, or any similar
discount, offered, to any other non-government customer of the Genuity Services
who has made a comparable or lower purchase or volume commitment for the Genuity
Services under similar financial terms and conditions.
(b) The individual Genuity Service Baseline Pricing and Volume Discounts (as
such terms are defined in the pricing attachments hereto) offered to Bell
Atlantic for each of the Genuity Services (other than Genuity Services that are
customized for Bell Atlantic pursuant to Section 3.7) available under this
Agreement will be at least as favorable to Bell Atlantic as the pricing and/or
discounts offered to any other non-government customer of the Genuity Services.
(c) Exclusions: The foregoing subsection (b) shall not apply to:
(1) Discounts offered for Genuity Service(s) (or service components) to a
customer that are offset by lesser discounts on other Genuity Service(s) (or
service components) such that, given such customer's purchase commitments for
such Genuity Services, Bell Atlantic's discounts in aggregate are more
favorable;
(2) Discounts are offered in good faith in exchange for corresponding (and
quantifiable, if practicable) value from a customer (e.g., in settlement of a
claim, in exchange for marketing or advertising, in consideration of customer-
unique cost reductions, etc.); provided, however, that in the event such
consideration could reasonably apply to Bell Atlantic and Genuity, then Genuity
shall offer such discounts along with the corresponding terms and conditions
reasonably and economically required to offer such pricing, in accordance with
section (d), below;
(4) Discounts offered by Genuity on an exceptional basis resulting in pricing
with no margin for the purpose of securing strategic accounts; or
(5) Discounts or pricing offered for beta tests or pilot programs that are
significantly limited in time and scope, in error, for charitable or promotional
purposes; or for any de minimus contracts (less than $24,000 per year in
aggregate per customer or affiliate).
(d) Process. Genuity will give Bell Atlantic written notice (in accordance with
this Agreement) of any more favorable discounts and/or pricing offered to
another buyer pursuant to sections (a) or (b) above, within thirty (30) days of
execution of a service agreement between Genuity and such buyer. Within thirty
(30) days of receipt of such notice from Genuity, Bell Atlantic shall provide
Genuity with written notice in accordance with this Agreement of whether it
accepts such prices. If Bell Atlantic accepts such prices, this Agreement shall
be amended accordingly by a writing that is signed by the parties, and such
prices shall be deemed to apply as of the date the same were first offered to
such buyer. If a credit is due Bell Atlantic as a result of the application of
such prices, then Genuity shall either apply the resulting credit to Bell
Atlantic's account on the next invoice sent by Genuity to Bell Atlantic, or
refund the amount to Bell Atlantic, at Bell Atlantic's election.
7.5 Payment Terms. Payments by Bell Atlantic in consideration of provision of
-------------
Genuity Services by Genuity in accordance with this Agreement are due in United
States dollars in the United States net thirty (30) calendar days from receipt
of a valid and complete invoice. In the event Genuity has not received payment
from Bell Atlantic within forty-five (45) days from the date of issuance of the
invoice by Genuity, and Bell Atlantic has not disputed the
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invoice pursuant to the terms of Section 7.7, Genuity may, without limiting its
remedies at law or equity for any default, upon thirty (30) days written notice
to Bell Atlantic, suspend service to the End User for the affected service, if
Bell Atlantic has not within this period provided payment; provided, however,
that Genuity shall give Bell Atlantic written notice at least fifteen (15) days
in advance of taking such action which shall identify the End Users to whom
Genuity proposes to suspend service.
7.6 Interest on Overdue Amounts. Genuity may charge Bell Atlantic interest at
---------------------------
the lower of 1.5% per month or the highest monthly rate permitted by law on all
invoiced amounts that are not in dispute, as provided in Section 7.7, below, for
which payment has not been received by the due date of such invoice.
7.7 Disputed Invoices. In the event Bell Atlantic disputes an invoice issued
-----------------
by Genuity for services performed under this Agreement, Bell Atlantic may, no
later than the due date of the invoice, notify Genuity in writing of such
dispute. Such notice shall identify and describe in detail the basis for such
dispute. Within thirty (30) days of the receipt of such notice by Genuity,
Genuity shall either correct the invoice, resolve the dispute, or respond in
writing to Bell Atlantic providing specific reasons why the invoice is correct.
If, within forty-five (45) days of the date of Genuity's response, the dispute
is not resolved, Bell Atlantic and Genuity shall each designate an executive to
meet and negotiate in good faith to resolve the dispute. Bell Atlantic shall
pay any undisputed amount within the time frame noted in section 7.5, above, and
may withhold disputed amounts pending resolution of the dispute. Within thirty
(30) days following the resolution of a dispute over an invoice, the party owing
an amount shall pay or credit the other the amount due. Failure to raise a
dispute over an invoice in accordance with the procedures of this section shall
not prevent or prejudice Bell Atlantic in subsequently raising the matter.
7.8 Taxes and Duties. Bell Atlantic shall be responsible for the payment of
----------------
any and all sales, value added, withholding or other taxes, duties, levies, fees
and other charges that are or may be imposed by any governmental entity based on
Bell Atlantic's sale of the Genuity Services to End Users.
8. TRADEMARKS, TRADENAMES; PROPRIETARY RIGHTS
8.1 Co-Branded Genuity Services. The Genuity Services and related customer
---------------------------
support services may be co-branded (e.g., "Bell Atlantic Web Hosting powered by
Genuity," etc.). The form and content of such co-branding is set forth in the
Service Schedules. Bell Atlantic may brand resold Genuity Services otherwise as
determined by Bell Atlantic, if Bell Atlantic makes no use of a Genuity name,
servicemark or trademark in association with the service. Any co-branding shall
be in accordance with applicable federal law and Section 2.4 of this Agreement.
8.2 Trademark License. (i) Each party hereby grants to the other during the
-----------------
Agreement Term a limited, nontransferable, and nonexclusive license, without the
right to grant sublicenses to use such party's Program Marks (as set out in the
Trademark Schedule or otherwise provided in writing) solely in connection with
the production and dissemination of co-branded marketing materials in the
Territory for the Genuity Services and in connection with co-branded customer
care materials for the Genuity Services to be performed by Genuity hereunder,
subject to the terms and conditions of this Agreement, to include compliance
with applicable federal law and Section 2.4 of this Agreement. (ii) Any and all
such materials using a party's Program Marks shall be developed in consultation
with that party, and shall not be publicly disseminated without the party's
prior written approval as to their form. If a party at any time finds any
materials using its Program Marks to be deficient in quality or finds any
materials being marketed in a misleading or deceptive manner or otherwise in
violation of this Agreement, then it must notify the other in writing of such
deficiency, and the other party shall eliminate such deficiency within thirty
(30) days after receiving written notice. A party shall have the right to
publish additional conditions and quality standards,
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from time to time, as is necessary to protect its Program Marks, provided such
conditions and standards are imposed on other use of the same marks by that
party or any of its Affiliates. A party shall not, directly or indirectly,
license or attempt to license, whether orally or in writing, any other person to
use any of the other party's Program Marks, and, shall make no assignment of any
right to use the Program Marks. Any attempt to assign any right to use Program
Marks other than as contemplated hereby as well as any attempt to license
another person or entity to use the Program Marks shall result in immediate
cancellation of the license granted herein. A party shall not have any right,
title, or interest in and to the other's Program Marks, or in the registrations
or applications for registration thereof, except only the right to use the
Program Marks as specifically authorized by this Agreement. Each party
acknowledges that its use of the other's Program Marks shall not create in its
favor any right, title, or interest therein. Neither party shall use any
trademark, service mark, corporate name, business name, trade name or domain
name identical with or confusingly similar to the other party's Program marks,
except for the Program Marks and then only as expressly permitted by this
Agreement. Each party agrees that it shall never directly or indirectly
challenge, contest or call into question or raise any questions concerning the
validity or ownership of the other party's Program marks or any registration or
application for registration for the Program Marks of the other party. Neither
party shall use any of the other's Program Marks except in the graphic format
set forth in Schedule A-2, or as otherwise provided for herein. If a party
decides in its sole discretion to modify or discontinue the use of any of its
Program Marks, the other party shall refrain from using the unmodified or
discontinued marks, destroy all designs, stationery, promotional materials,
advertising or other materials of every kind using any of the unmodified or
discontinued marks, and to commence using the modified or substituted marks in
accordance with this Agreement as if such marks had been identified herein,
provided that the party so modifying or discontinuing its Program Marks shall
promptly reimburse the other for any and all costs and expenses it incurs in
connection with the reprinting of new documentation and materials for use in
connection with such Program Marks and such other costs as it shall reasonably
incur.
8.3 Ownership of Work Product. Subject to pre-existing rights as to elements
-------------------------
incorporated in the co-branded marketing and customer care materials ("Work
Product"), each party shall have and retain all ownership rights (including,
without limitation, ownership of any copyrights) in the work product that it
creates, and prepares, and all such work product shall remain the exclusive
property of that party. Each party's trade name(s), trademark(s), logo(s) and
icon(s) shall remain its exclusive property, notwithstanding the fact that its
trade name(s), trademark(s), logo(s) and icon(s) have been included in a work
product prepared by the other party. Each party hereby grants to the other
until the effective date of termination of this Agreement a limited,
nontransferable, and nonexclusive license to use its work product in the
Territory solely as necessary to perform such party's obligations hereunder.
9. CONFIDENTIALITY
9.1 Nondisclosure and Nonuse Obligations. Each party shall not disclose to
------------------------------------
third parties all information and know-how in any form, transmitted to the other
that the disclosing party has identified, by letter or other written notice, as
being proprietary or confidential ("Confidential Information"), and shall make
no use of such information and know-how except under the terms and during the
term of this Agreement. Each party shall treat as Confidential Information of
the other party information regarding the other party's pricing, marketing and
sales strategies, and internal operations procedures as proprietary and
confidential, regardless of whether such information has been identified
proprietary or confidential at the time of disclosure. Neither party shall have
an obligation pursuant to the foregoing to protect that portion of such
information that (i) it rightfully received from another party, without
restriction on use or disclosure prior to its receipt from the disclosing party;
(ii) the disclosing party has disclosed to a third party without any
restrictions on use or disclosure; (iii) enters the public domain (i.e.
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without any restrictions on use or disclosure) by some action other than breach
of this Agreement by the receiving party; (iv) is independently developed by or
for the receiving party; or (v) is disclosed pursuant to a valid subpoena or
other government order. Each party shall safeguard proprietary or confidential
information disclosed by the other using the same degree of care it uses to
safeguard its own proprietary and confidential information but, in no event,
shall use less than a reasonable degree of care. Each party's obligation under
this paragraph shall extend for a period of three (3) years following
termination or expiration of this Agreement.
9.2 End User Information. The parties agree to treat End User information, to
--------------------
include proposals, pricing and type of services provided, as Confidential
Information under the terms of the preceding subsection. In addition, the
parties agree that, as between them, the End User information of a customer that
is identified and brought into the Genuity - Bell Atlantic relationship as a
customer or potential customer, shall be the Confidential Information of the
party that identified and brought the End User to the relationship. If the
parties assist each other in the marketing of the Genuity Services, the End User
information related to that marketing shall be the confidential information of
the party that has the primary relationship with the End User. A party that
receives End User information of the other party shall restrict its use of that
information solely to the transactions relating to the Genuity Services, and
shall not disclose any such End User information to other parts of the party's
organization, to include any other sales channel.
10. INDEMNIFICATION.
10.1 Infringement. Genuity shall defend and indemnify Bell Atlantic and hold
------------
Bell Atlantic harmless from any damages, costs and attorneys fees finally
awarded against Bell Atlantic and its End Users based upon a claim that Genuity
Services infringe any U.S. patent, copyright, trademark, trade secret or other
intellectual property right provided that Bell Atlantic promptly notifies
Genuity in writing of such claim and cooperates with Genuity by providing
Genuity with the opportunity, full authority, and assistance (at Genuity's
expense) to defend or settle the claim. Should any Genuity Service become, or
likely to become, in Genuity's opinion, the subject of a claim, Genuity may at
its option and expense: (i) replace or modify the Services so that that
infringement does not exist; (ii) procure for Bell Atlantic and its End Users
the right to continue to use the infringing Genuity Services; or, if (i) and
(ii) are not commercially reasonable, (iii) cease providing the infringing
Genuity Services and refund to Bell Atlantic any payments made for the
terminated Genuity Service for the period after the termination date. This
section states the entire liability of Genuity with respect to infringement of
any intellectual property rights by Genuity and its suppliers and Genuity and
its suppliers shall have no additional liability with respect to any alleged or
proven infringement. Genuity shall have no liability for and Bell Atlantic shall
indemnify and hold Genuity and its suppliers harmless from any and all claims,
damages, costs and attorneys fees Genuity incurs from any claim arising solely
from (a) the combination, by Bell Atlantic or its End Users, of Genuity Services
with other products or services not provided by Genuity that are not authorized
by Genuity or are not reasonably intended to be used in combination with the
Genuity Services, or (b) any alteration or modification of Genuity Services that
were not made or authorized by Genuity or (c) the use of a Genuity Service by
either Bell Atlantic or its End Users in a manner for which it was neither
intended or designed. The parties disclaim the implied warranty of non-
infringement, relying instead on the terms of this Section.
10.2 General Indemnity. Genuity and Bell Atlantic shall each indemnify, defend
-----------------
and hold the other party and its affiliates, and their respective agents,
representatives, employees, directors, officers and assigns harmless against any
losses, damages, liabilities, claims or demands (including all costs, expenses
and attorneys' fees on account thereof or in connection with any investigation
or preparation related thereto or the enforcement of the indemnification
provisions of this Agreement) that may be made as a result of claims made: (i)
by anyone for bodily injuries (including death) to persons or damage to or theft
of tangible or
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intangible property resulting from the indemnifying party's or its agents'
intentional and willful misconduct or negligent acts or omissions or those of
persons furnished by such party while performing work hereunder pursuant to this
Agreement or in connection with materials furnished by such party pursuant to
this Agreement excluding any claims based on lost data or information unless
such claims are based on intentional and willful misconduct; (ii) by persons
furnished by the indemnifying party or any contractors based on employment
contract, or federal, state or local laws prohibiting discrimination in
employment; (iii) by persons furnished by the indemnifying party or any
contractors under worker's compensation or similar acts; or (iv) resulting from
or in connection with the indemnifying party's or its agents' breach of any
applicable law, statute, order, decree, or regulation in performance of its
obligations hereunder. In addition, Bell Atlantic shall indemnify, defend and
hold harmless Genuity and its affiliates, and their respective agents,
representatives, employees, directors officers and assigns harmless against any
losses, damages, liabilities, claims or demands (including all costs, expenses
and attorneys' fees on account thereof or in connection with any investigation
or preparation related thereto or the enforcement of this indemnification
provision) that may be made by any third party for claims arising from Bell
Atlantic or Bell Atlantic's End Users' use of the Genuity Services and that are
not (i) otherwise subject to indemnification under this Agreement or a Service
Schedule, or (ii) proximately caused by the negligent acts or omissions or other
willful misconduct of Genuity or its affiliates, or their respective agents,
representatives, employees, directors officers or assigns. The indemnified party
shall provide written notice to the other party of any written claims or demands
against it for which the other party is responsible hereunder and shall be
entitled, at its option, to assume the defense or settlement of any such claim.
11. WARRANTY
11.1 Service Warranty. Genuity warrants that the Genuity Services shall be
----------------
provided by qualified personnel in a professional and workmanlike manner in
accordance with the industry standards, and that the Genuity Services shall
perform in substantial accordance with the terms of this Agreement, including,
but not limited to, the service descriptions for the Genuity Services set forth
in the Service Schedules. Genuity further warrants that it has and shall
maintain all rights, authorizations and permits that may be necessary to provide
the Genuity Services.
11.2 Year 2000 Warranty. Genuity shall provide the Year 2000 warranty for the
------------------
Genuity Service as specified in the Service Schedule for that particular Genuity
Service.
11.3 Warranty Remedy. If a Genuity Service fails to meet the warranty set out
---------------
in Section 11.1 or 11.2, upon notice from Bell Atlantic, Genuity shall at its
expense promptly correct the deficiency so that the Genuity Service is compliant
with the warranty and shall refund to Bell Atlantic the charges paid by Bell
Atlantic for the affected service during the period the Service failed to meet
the particular warranty. The foregoing shall not apply to the extent the
deficiency is covered by a service level agreement for which there is a monetary
remedy.
11.4 Service Level Guarantee. If the Service Schedule for a Genuity Service
-----------------------
provides for a service level guarantee and a remedy for failure to attain such
guarantee, then such service level guarantee may be extended to Bell Atlantic
End Users by Bell Atlantic as Bell Atlantic's Service Level Guarantee. Except
as stated in Section 11.3, the service level guarantee remedy shall be in
addition to the remedy set out in Section 11.3.
11.5 EXCLUSION OF OTHER WARRANTIES /REMEDIES. THE WARRANTIES AND REMEDIES
---------------------------------------
PROVIDED IN THIS AGREEMENT ARE BELL ATLANTIC'S SOLE AND EXCLUSIVE WARRANTIES AND
REMEDIES FOR BREACH OF WARRANTY WITH RESPECT TO THE GENUITY SERVICES. GENUITY
SPECIFICALLY DISCLAIMS ALL OTHER WARRANTIES WITH REGARD TO GENUITY SERVICES
PROVIDED UNDER
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THIS AGREEMENT, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. BELL ATLANTIC MAKES NO WARRANTIES UNDER THIS
AGREEMENT, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE.
12. ORDERS BY AFFILIATES
Any Authorized Affiliate of Bell Atlantic may place orders under this Agreement.
Genuity shall provide the Genuity Services to such affiliates pursuant to such
order in accordance with the terms and conditions of this Agreement.
13. LIMITATION OF LIABILITY
13.1 EXCEPT FOR BREACHES OF CONFIDENTIALITY OR OTHER INTELLECTUAL PROPERTY
RIGHTS AND THE PARTIES' INDEMNIFICATION OBLIGATIONS, NEITHER PARTY SHALL BE
LIABLE FOR SPECIAL, CONSEQUENTIAL, INDIRECT, PUNITIVE, OR INCIDENTAL DAMAGES
(INCLUDING, WITHOUT LIMITATION, LOST PROFITS OR LOSS OF OR DAMAGE TO DATA), EVEN
IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
13.2 EXCEPT FOR BREACHES OF CONFIDENTIALITY OR OTHER INTELLECTUAL PROPERTY
RIGHTS, THE PARTIES' INDEMNIFICATION OBLIGATIONS, OR BELL ATLANTIC'S OBLIGATIONS
UNDER SECTION 7.3, NEITHER PARTY'S TOTAL AGGREGATE LIABILITY FOR ALL CLAIMS
HEREUNDER SHALL EXCEED TWENTY-FIVE MILLION DOLLARS ($25,000,000.00).
13.3 NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT, GENUITY SHALL HAVE NO
RESPONSIBILITY OR LIABILITY IN CONTRACT, TORT, OR OTHERWISE FOR ANY LOSS, CLAIM,
OR DELAY RESULTING FROM THE INTERRUPTION OR DEGRADATION OF SERVICES CAUSED BY
THE PROVISION BY BELL ATLANTIC OR A THIRD PARTY (OTHER THAN A THIRD PARTY ACTING
UNDER GENUITY'S DIRECTION OR CONTROL) OF TRANSIT OR OTHER SERVICES OR PRODUCTS
IN CONNECTION WITH THE GENUITY SERVICES.
14. GENERAL
14.1 Notices. All notices required to be given in connection with this
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Agreement shall be sent by a means that obtains an acknowledgment of receipt.
Notices shall be sent to the following addresses:
Bell Atlantic:
1320 North Courthouse Road
5th Floor
Arlington, VA 22201
Attention: President
with a copy to:
Bell Atlantic Legal Department
1320 North Courthouse Road
8th Floor
Arlington, VA 22201
Attention: General Counsel
Genuity:
Genuity Inc.
3 Van de Graaff Drive
Burlington, MA 01803
Tel: 800/472-4565
Attention: President
with a copy to:
Genuity Inc.
3 Van de Graaff Drive
Burlington, MA 01803
Tel: 800/472-4565
Attention: General Counsel
or to such other address as the party to receive the notice so designates by
written notice to the other. Notices shall be deemed effective upon receipt.
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14.2 Entire Agreement. This Agreement constitutes the entire agreement between
----------------
the parties with respect to the subject matter hereof and supersedes all prior
and contemporaneous communications, representations and agreements. The recitals
in this Agreement are illustrative only and shall not be binding on the parties.
This Agreement shall not be modified except by a written agreement dated
subsequent to the date this Agreement is executed by both parties, and signed on
behalf of the Bell Atlantic and Genuity by their respective duly authorized
agent. The provision of any Genuity Service to Bell Atlantic that was, prior to
the Effective Date of this Agreement, provided under another agreement, shall be
provided pursuant to this Agreement after the Effective Date. If the prices,
terms or conditions applicable to such Genuity Service are more favorable to the
End User under the prior agreement, the more favorable prices, terms or
conditions shall apply for that End User.
14.3 Severability. If any provision of this Agreement is declared or found to
------------
be illegal, unenforceable or void, then it shall be amended to the extent
necessary to make it legal and enforceable while preserving its intent; the
unenforceability of any provision of this Agreement shall not impair the
enforceability of any other provision of this Agreement.
14.4 No Waiver. No waiver of any breach of any provisions of this Agreement
---------
shall constitute a waiver of any prior, concurrent or subsequent breach of the
same or any other provisions hereof, and no waiver shall be effective unless
made in writing and signed by an authorized representative.
14.5 Nonassignability and Binding Effect. (i) Neither party shall assign any
-----------------------------------
right or interest under this Agreement, except for monies due or to become due,
nor delegate any work or other obligation to be performed or owed under this
Agreement to any third party without the prior written consent of the other
party, provided, however, that the merger or consolidation of one party into, or
the sale of all or substantially all of the assets of such party to, a third
party shall not be deemed to be an assignment. Any attempted assignment or
delegation in contravention of the above shall be void and ineffective. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their permitted successors and assigns.
Notwithstanding the above, each party shall have the right to assign this
agreement and to assign its rights and delegate its duties under this agreement,
either in whole or in part (an "assignment"), at any time and without the other
party's consent, to any wholly-owned subsidiary or affiliate of the assignor.
The assignor shall give the non-assigning party written notice of any
assignment. The assignment shall neither affect nor diminish any rights or
duties that either party may then or thereafter have as to Genuity Services
ordered by Bell Atlantic prior to the effective date of the assignment. (ii)
Any assignment of monies by the assignor shall be void and ineffective to the
extent that (i) the assignor has not given the non-assigning party at least
sixty (60) days prior written notice of such assignment and (ii) such assignment
attempts to impose upon the non-assigning party obligations to the assignee
additional to payments of such monies or to preclude the non-assigning party
from dealing solely with the other party in all matters pertaining to the
Agreement.
14.6 Force Majeure. Neither party shall be in default of any obligation under
-------------
this Agreement or any Service Schedule nor liable for any delay or failure in
performance which results directly or indirectly from Acts of God, casualty,
acts of civil or military authorities, civil disturbances, war, strikes or other
labor-related disputes, fires, disruption in transportation, flood, lock out,
epidemic, destruction or shut-down of facilities, railroad disaster, cable cut,
shortage or curtailment, or other causes beyond the party's reasonable control.
14.7 Regulatory Compliance. This Agreement is subject at all times to any
---------------------
statute, order, rule, or regulation or any state or federal regulatory agency
having competent jurisdiction over one or both of the parties hereto or the
services provided hereby. The parties agree to cooperate with each other and
with any applicable regulatory agency so that any and all
15
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necessary approvals may be obtained. During the term of this Agreement, the
parties agree to continue to cooperate with each other in any review of this
Agreement by a regulatory agency so that the benefits of this Agreement may be
achieved. Notwithstanding the Effective Date and term of this Agreement as
stated elsewhere, to the extent that any statute, order, rule or regulation or
any regulatory agency having competent jurisdiction over one or both parties to
this Agreement, shall require that this Agreement or subsequent amendment be
filed with or approved by such regulatory agency before the Agreement or
amendment may be effective, this Agreement or amendment shall not be effective
in such state until the first business day after such approval or filing shall
have occurred.
14.8 Continuing Obligations. Notwithstanding termination or expiration of this
----------------------
Agreement or any Service Schedule hereunder, Bell Atlantic's obligation to pay
for Genuity Services provided hereunder shall continue. Any obligations,
duties, or rights that may, by their nature, extend beyond the expiration or
termination of this Agreement or any particular Service Schedule, shall survive
any such expiration or termination. Nothing in this section shall affect either
party's rights or remedies at law or in equity in the event of a breach by the
other party.
14.9 Governing Law. This Agreement shall be governed by the laws of the
-------------
Commonwealth of Massachusetts without regard to its conflicts of laws
principles.
14.10. Compliance with Laws. The parties shall comply with all applicable
--------------------
laws, statutes, ordinances, directives, rules, regulations, orders and decrees
of any court or regulatory authority of competent jurisdiction in performing
this Agreement. If Bell Atlantic requires Genuity to temporarily adjust its
business as set forth in this Paragraph, Bell Atlantic shall provide Genuity
with 180 days prior written notice of the date on which Bell Atlantic intends to
exercise its option to convert its B Shares of Genuity stock ("Bell Atlantic
Notice"). In the Bell Atlantic Notice, Bell Atlantic may, at its discretion,
designate certain States in which it does not expect to have legal authority
under applicable federal law ("Bell Atlantic Designated States"), to operate
Genuity at the time of the Bell Atlantic conversion. Upon receipt of the Bell
Atlantic Notice, Genuity shall temporarily adjust its business in the Bell
Atlantic Designated States in such a manner, as Genuity determines in its sole
discretion, as will allow Genuity to operate in compliance with applicable
federal law in such States on or before the conversion date set forth in the
Bell Atlantic Notice. In no event shall (1) the Bell Atlantic Designated States
account for greater than 3 percent of Genuity's total revenue, as measured by
comparing the revenue arising out of Genuity business in the Bell Atlantic
Designated States to Genuity's revenue for its overall operations for the prior
12 months before the date of the Bell Atlantic Notice and/or (2) the
adjustment of Genuity's operations result in the loss to Genuity of overall
revenue of more than 3% of its revenue for the prior 12 months before the date
of the Bell Atlantic notice. Bell Atlantic agrees to pay an amount necessary to
make Genuity financially whole as a result of Genuity's modifications to its
business under this Paragraph. Such amount shall not be greater than 3 percent
of Genuity's total revenue, as described above.
14.11. Additional Remedies. The rights and remedies set forth in this Agreement,
-------------------
unless otherwise stated in this Agreement, are in addition to and not in
substitution of all rights and remedies available to the parties at law, in
equity, or otherwise.
14.12. Audit. During the Term and for a period of three (3) years thereafter,
-----
each party shall keep and maintain records of amounts billed to and paid by Bell
Atlantic for Genuity Services under this Agreement in accordance with generally
accepted accounting principles. Each party shall also keep and maintain for the
same three (3) year period, records showing compliance with the terms of this
Agreement other than billing and payment terms. Each party shall provide the
other and its representatives full and complete access to such records at all
reasonable times for purposes of audit related to a party's performance under
this Agreement, during the Term hereof and for such three (3) year period. At
the request of the audited party, the audit shall be conducted by an
16
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independent auditor chosen by the auditing party and reasonably acceptable to
the audited party. Such independent auditor shall not be permitted to disclose
any confidential customer contract, pricing or other proprietary information of
the audited party to the auditing party, except as and to the extent permitted
elsewhere in this Agreement.
14.13. Dispute Resolution.
------------------
(a) The parties agree to seek resolution of any claim or dispute arising out of
or related to this Agreement through negotiations as set out in this section
prior to filing any lawsuit or administrative claim or complaint. The parties
shall first attempt in good faith to reach resolution through discussions at the
non-executive level. If such efforts are not successful, the parties shall
escalate the dispute to the vice president level in their respective
organizations. Either party may then submit a written notice to the other party
in accordance with the notice provisions of this Agreement, requesting
initiation of these dispute resolution procedures. The notice shall set out the
nature of the dispute and shall identify the person in the notifying party's
organization who has the authority to reach final decision on the dispute.
Within ten (10) days of receipt of such notice, the receiving party shall
respond in writing with designation of the person in its organization who has
the authority to reach final decision on the dispute. The representatives shall
then meet and negotiate in good faith to resolve the dispute. The discussions
shall be left to the discretion of the representatives, who may utilize other
alternative dispute resolution procedures such as mediation to assist in the
negotiations. Discussions and correspondence among the representatives for
purposes of these negotiations shall be treated as confidential information
developed for purposes of settlement, shall be exempt from discovery and
production, and shall not be admissible in any lawsuit or administrative
proceeding without the concurrence of all parties pursuant to Rule 408 of the
Federal Rules of Evidence. Documents identified in or provided with such
communications, which are not prepared for purposes of the negotiations, are not
so exempted and may, if otherwise admissible, be admitted in evidence in the
arbitration or lawsuit. The parties agree to pursue resolution under this
subsection for a minimum of 60 days following the first written notice
requesting initiation of these dispute resolution procedures before pursing
arbitration as set forth in subsection (b), below. The foregoing procedure
shall not apply to claims or disputes relating to confidential information,
other intellectual property, or indemnity rights or obligations.
(b) If the parties cannot resolve the dispute in accordance with subsection
(a), above, either party shall have the right to cause the parties to enter into
binding arbitration in accordance with the rules of the American Arbitration
Association then in effect. The place of arbitration shall be conducted in the
County of New York, in the State of New York. Three (3) arbitrators, each having
at least five (5) years of experience in the telecommunications field, shall be
appointed, one by each party, and then one selected jointly by those two
arbitrators, for such arbitration. Any award rendered therein shall specify the
findings of fact of the arbitrators and the reasons for such award, with
reference to and reliance on relevant law. The parties shall each be responsible
for their own costs in the arbitration and shall share equally in the cost of
the arbitrator and any related costs such as meeting space and the like.
14.14 Government Requirements. Genuity shall comply with applicable provisions
-----------------------
of Attachment 2, Government Requirements. Attachment 2 is hereby made a part of
this Agreement. The term Consultant" in Attachment 2 shall be deemed to mean
Genuity.
14.15 Good Faith Performance. Subject to the terms and provisions of this
----------------------
Agreement, each party covenants that it shall take, or cause to be taken, all
lawful actions to do, or cause to be done, all things necessary, proper, or
advisable to comply with the provisions of this Agreement. In the performance
of its obligations under this Agreement, each party covenants that it shall act
fairly and in good faith. Where notice, approval or similar action by a party
is permitted or required by any provision of this Agreement, such action shall
not be unreasonably delayed or withheld. The parties shall cooperate in good
faith to amend
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this Agreement to correct any inadvertent failure to include or inadvertent
inclusion of, any non-material terms or conditions, if any.
14.16 No Third Party Beneficiaries. Except as provided herein, this Agreement
----------------------------
is for the sole and exclusive benefit of the parties hereto and nothing in this
Agreement shall be construed to grant to any person other than the parties
hereto, and their respective successors and permitted assigns, any right, remedy
or claim under or in respect of this Agreement or any provision hereof.
14.17 Publicity. This Agreement shall be treated as confidential information
---------
of both parties and shall and protected in accordance with Section 9 hereto.
Without limiting the foregoing, neither party shall issue any press release,
advertising or other publicity material using the other party's name or marks or
describing in any way the terms of this Agreement without first receiving the
other party's written consent as to form and content, which consent shall not be
unreasonably withheld or delayed.
14.18 Headings. The headings contained herein are included solely for ease of
--------
reference and in no way shall limit, expand or otherwise affect either the
substance or construction of the terms and conditions of this Agreement or the
intent of the parties hereto.
Each of the parties has read, understood and agrees to comply with these terms
and conditions.
BELL ATLANTIC CORPORATION GENUITY INC.
By: ___________________________ By: ___________________________
Name: _________________________ Name: _________________________
Title: ________________________ Title: ________________________
Date: _________________________ Date:__________________________
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Attachment 1
Purchase Commitment
Bell Atlantic will use Genuity as its preferred provider of the types of
services covered in the Agreement. Accordingly, Bell Atlantic will spend no
less than five hundred million dollars (US $500,000,000) ("Purchase Commitment")
to purchase the Genuity Services during the Initial Term, subject to the terms
and conditions of the Agreement and the following:
A. Included Items
The following amounts, not counting taxes paid to Genuity pursuant to Section
7.8, shall be counted toward the Purchase Commitment:
1. Any and all amounts paid and/or owed by Bell Atlantic and/or an Authorized
Affiliate to Genuity for the Genuity Services.
2. Any and all amounts received by or owed to Genuity for the Genuity Services
or similar services that are sold by Genuity pursuant to a referral made by Bell
Atlantic under the lead referral program described in Section 1.2.
3. Any and all amounts paid and/or owed by Bell Atlantic and/or an Authorized
Affiliate to one or more third part(ies) (i.e., a non-Bell Atlantic affiliate)
for the purchase of substitute services in the event that Genuity does not
maintain a competitive and current portfolio of services under Section 3.6, and
such failure is the proximate cause of the events described above.
4. Any and all amounts paid and/or owed by Bell Atlantic and/or an Authorized
Affiliate to one or more third part(ies) (i.e., a non-Bell Atlantic affiliate)
for the purchase of substitute services in the event that: (i) Genuity fails to
adjust its prices or service offerings in response to commercially reasonable
End User bid opportunities pursuant to Section 3.7, and (ii) Bell Atlantic
and/or an Authorized Affiliate despite commercially reasonable efforts is or are
unable to meet commercially reasonable End User's requirements with the Genuity
Services, and (iii) and Genuity's failure to adjust its prices or service
offerings is the proximate cause of Bell Atlantic's and/or and Authorized
Affiliate's purchase of substitute services or inability to meet commercially
reasonable End User's requirement.
5. Any and all amounts (i) paid and/or owed by Bell Atlantic and/or an
Authorized Affiliate to one or more third part(ies) (i.e., a non-Bell Atlantic
affiliate) for the purchase of substitute services, in the event that Genuity
fails to comply with Section 7.4 and such failure is the proximate cause of the
events described in subsection above. To the extent such amounts are included
in Section 4 of this Attachment 1, they shall not also be counted herein.
6. Any and all amounts that Bell Atlantic can reasonably establish would have
been paid and/or owed by Bell Atlantic or an Authorized Affiliate to Genuity for
one or more of the Genuity Services to the extent that Bell Atlantic terminates
the Service Schedule with respect to such Genuity Services due to a default in
accordance with Section 6.2, or due to a regulatory or legal prohibition in
accordance with Section 6.3.
B. Interim Purchase Commitment Milestone
There shall be an interim Purchase Commitment (the "Interim Purchase
Commitment") of two hundred million dollars ($200,000,000) measured at the end
of the third year following the Effective Date.
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C. Shortfall Charge
In the event that Bell Atlantic has failed to satisfy the Interim Purchase
Commitment by the end of the third year following the Effective Date, and to the
extent such failure is not proximately caused by negligent or otherwise wrongful
acts or omissions of Genuity or any Genuity agent or by Genuity's breach of the
Agreement, or is not otherwise excused under the Agreement (e.g., Force
majeure), Bell Atlantic shall pay Genuity the difference between the Interim
Purchase Commitment and the total of the Included Items specified in Section A,
above, for years 1 through 3 (the "Interim Shortfall Charge").
In the event that Bell Atlantic has failed to satisfy the Purchase Commitment by
the end of the Initial Term, and to the extent such failure is not proximately
caused by negligent or otherwise wrongful acts or omissions of Genuity or any
Genuity agent or by Genuity's breach of the Agreement, or is not otherwise
excused under the Agreement (e.g., Force majeure), Bell Atlantic shall pay
Genuity the difference between: (i) the Purchase Commitment less any Interim
Shortfall Charge; and (ii) and the total of the Included Items specified in A,
above for the Initial Term (the "Shortfall Charge").
D. Payment
Genuity shall invoice Bell Atlantic for any Interim Shortfall Charge owed within
ninety (90) days after the completion of year 3, and for any Shortfall Charge
within ninety (90) days after the expiration of the Initial Term. Such invoices
shall set forth with particularity the basis for the Interim Shortfall Charge or
the Shortfall Charge, as applicable. Bell Atlantic may dispute such invoice in
accordance with Section 14.13 of the Purchase, Resale and Marketing Agreement,
and may, prior to attempting to end such dispute, conduct an audit of all of
Genuity's or its agents' records that may be reasonably relevant in calculating
the Shortfall Charge.
E. Exclusive Remedy
The remedies set forth herein shall constitute the exclusive remedy and the
entire liability of the parties under Section 7.3; and shall also constitute the
exclusive remedy (other than the remedy set forth in Section 6.2) of the parties
under Sections 3.6 and 3.7.
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Attachment 2
Government Requirements
To the extent that this Agreement is subject to them, Consultant shall comply
with the applicable provisions of the following: Exec. Order No. 11246, Exec.
Order No. 11625, Exec. Order No. 12138, Exec. Order No. 11701, Exec. Order No.
11758, Section 503 of the Rehabilitation Act of 1973 as amended by PL93-516 and
PL102-569, Vietnam Era Veteran's Readjustment Assistance Act of 1974, Veteran's
Compensation, Education and Employment Amendments of 1982, and the rules,
regulations and relevant orders of the Secretary of Labor pertaining to the
Executive Orders and Statutes listed above. The following table describes the
clauses which are included in the Agreement.
Annual Contract Value Clauses
Under - $10,000 5#
$10,000 - $50,000 1, 2, 5#, 6, 7, 8, 9
$50,000 - $500,000 1, 2, 3##, 4##, 5, 6, 7, 8, 9
Over $500,000 1, 2, 3##, 4##, 5, 6, 7, 8###, 9
1. Equal Employment Opportunity Provisions
In accordance with Executive Order 11246, dated September 24, 1965 and Subpart
22.8 of Subchapter D of Chapter 1 of Title 48 of the Code of Federal Regulations
as may be amended from time to time, the parties incorporate herein by this
reference the regulations and clauses required by those provisions to be made a
part of government contracts and subcontracts.
2. Certification of Non-Segregated Facilities
The Consultant certifies that it does not and shall not maintain any facilities
it provides for its employees in a segregated manner, or permit its employees to
perform their SERVICES at any location under its control, where segregated
facilities are maintained; and that it shall obtain a similar certification,
prior to the award of any nonexempt subcontract.
3. Certification of Affirmative Action Program (if applicable by law, rule,
regulation, or order to Consultant)
The Consultant affirms that it has developed and is maintaining an Affirmative
Action Plan as required by Subpart 22.8 of Subchapter D of Chapter 1 of Title 48
of the Code of Federal Regulations.
4. Certification of Filing of Employer's Information Reports (if applicable by
law, rule, regulation, or order to Consultant)
The Consultant agrees to file annually on or before the 31st day of March
complete and accurate reports on Standard Form 100 (EEO-1) or such forms as may
be promulgated in its place.
5. Utilization of Small Business Concerns and Small Disadvantaged Business
Concerns
(a) It is the policy of the United States that small business concerns and
small business concerns owned and controlled by socially and
economically disadvantaged individuals shall have the maximum
practicable opportunity to participate in performing contracts let by
any Federal agency.
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(b) The Consultant hereby agrees to carry out this policy in the awarding
of subcontracts to the fullest extent consistent with efficient
contract performance. The Consultant further agrees to cooperate in
any studies or surveys as may be conducted by the United States Small
Business Administration or the awarding agency of the United States as
may be necessary to determine the extent of the Consultant's
compliance with this clause.
(c) As used in this contract, the term "small business concern" shall mean
a small business as defined pursuant to section 3 of the Small
Business Act and relevant regulations promulgated pursuant thereto.
The term "small business concern owned and controlled by socially and
economically disadvantaged individuals shall mean a small business
concern - (1) Which is at least fifty-one percent (51%) owned by one
or more socially and economically disadvantaged individuals; or, in
the case of any publicly owned business, at least fifty-one percent
(51%) of the stock of which is owned by one or more socially and
economically disadvantaged individuals; and (2) Whose management and
daily business operations are controlled by one or more of such
individuals. The Consultant shall presume that socially and
economically disadvantaged individuals include Black Americans,
Hispanic Americans, Native Americans, Asian-Pacific Americans, Asian-
Indian Americans and other minorities, or any other individual found
to be disadvantaged by the Administration pursuant to section 8 (a) of
the Small Business Act.
(d) Consultants acting in good faith may rely on written representations
by their subcontractors regarding their status as either a Small
Business Concern or a Small Business Concern owned and controlled by
socially and economically disadvantaged individuals.
6. Utilization of Women-Owned Small Businesses
(a) "Women-owned small businesses," as used in this clause, means
businesses that are at least 51 percent owned by women who are
United States citizens and who also control and operate the business.
"Control," as used in this clause, means exercising the power to make
policy decisions.
"Operate," as used in this clause, means being actively involved in
the day-to-day management of the business.
(b) It is the policy of the United States that women-owned small
businesses shall have the maximum practicable opportunity to
participate in performing contracts awarded by any Federal agency.
(c) The Consultant agrees to use its best efforts to give women- owned
small businesses the maximum practicable opportunity to participate in
the subcontracts it awards to the fullest extent consistent with the
efficient performance of its contract.
7. Affirmative Action for Disabled Veterans and Veterans of the Vietnam Era
In accordance with Exec. Order 11701, dated January 24, 1973, and Subpart
22.13 of Subchapter D of Chapter 1 of Title 48 of the Code of Federal
Regulations, as may be amended from time to time, the parties incorporate
herein by this reference the regulations and contract clauses required by
those provisions to be made a part of Government contracts and
subcontracts.
8. Affirmative Action for Handicapped Workers
In accordance with Exec. Order 11758, dated January 15, 1974, and Subpart
22.14 of Subchapter D of Chapter 1 of Title 48 of the Code of Federal
Regulations as may be amended from time to
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<PAGE>
time, the parties incorporate herein by this reference the regulations and
contract clauses required by those provisions to be made a part of
Government contracts and subcontracts.
9. Employment Reports on Special Disabled Veterans and Veterans of the Vietnam
Era
(a) The Consultant agrees to report at least annually, as required by the
Secretary of Labor, on:
(1) The number of special disabled veterans and the number of
veterans of the Vietnam era in the work force of the Consultant by job
category and hiring location; and
(2) The total number of new employees hired during the period
covered by the report, and of that total, the number of special
disabled veterans, and the number of veterans of the Vietnam era.
(b) The above items shall be reported by completing the form entitled
"Federal Contractor Veterans' Employment Report VETS-100."
(c) Reports shall be submitted no later than March 31 of each year.
(d) The employment activity report required by paragraph (a) (2) of this
section shall reflect total hires during the most recent 12-month
period as of the ending date selected for the employment profile
report required by paragraph (a) (1) of this section. The
Consultant may select an ending date: (1) As of the end of any pay
period January through March 1st of the year the report is due, or
(2) as of December 31, if the Consultant has previous written approval
from the Equal Employment Opportunity Commission to do so for
purposes of submitting the Employer Information Report EEO-1
(Standard Form 100).
(e) The count of veterans reported according to paragraphs (a) above shall
be based on voluntary disclosure. Each Consultant subject to the
reporting requirements at 38 U.S.C. 2012(d) shall invite all special
disabled veterans and veterans of the Vietnam era who wish to
benefit under the affirmative action program at 38 U.S.C. 2012 to
identify themselves to the Consultant. The invitation shall state
that the information is voluntarily provided, that the information
shall be kept confidential, that disclosure or refusal to provide the
information shall not subject the applicant or employee to any
adverse treatment, and that the information shall be used only in
accordance with the regulations promulgated under 38 U.S.C. 2012.
Nothing in this paragraph (e) shall preclude an employee from
informing the Consultant at a future time of his or her desire to
benefit from this program. Nothing in this paragraph (e) shall
relieve the Consultant from liability for discrimination under 38
U.S.C. 2012.
# Applies only if this Agreement has further subcontracting
opportunities.
## Applies only to businesses with 50 or more employees.
### Consultant must also adopt and comply with a small business and
small disadvantaged business subcontracting plan pursuant to Title
48 of the Code of Federal Regulations.
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PURCHASE, RESALE AND MARKETING AGREEMENT
SERVICE SCHEDULE
IP SERVICES
This Service Schedule is issued under the Purchase, Resale and Marketing
Agreement between Bell Atlantic Corporation ("Bell Atlantic") and Genuity Inc.
("Genuity") dated _____________ ("the Agreement"). The terms and conditions of
the Agreement are incorporated herein by reference and made a part hereof. In
the event of a conflict between the terms of this Service Schedule and the
Agreement, the terms of this Service Schedule shall prevail. Capitalized terms
are defined in the Agreement.
Section I: The following terms apply to all Services under this Service
- ---------
Schedule:
1. Appointments. Genuity Inc. ("Genuity") hereby authorizes Bell Atlantic
-------------
Corporation ("Bell Atlantic") to purchase for its own use, to use in providing
services to its customers, and to market and resell Genuity BizConnect
Connection Services, DiaLinx Services, Enterprise Advantage Services, Internet
Advantage Connection Services, Internet Advantage International Connection
Services, ISP Direct Services, Managed VPN Services, Security Advantage
Services, Site Patrol Services, Site Scan Services, Vulnerability Scan Services,
and VPN Advantage Services as described on attached Attachment A (collectively
the "Services," or individually "BC Service," "DiaLinx," "EA Service" "IA
Service," "IAI Service," "ISP Direct Service," "Managed VPN Service," "Security
Advantage Service" "Site Patrol Service," "Site Scan Service," "Vulnerability
Scan Service," and "VPNA Services" respectively).
2. Service Schedule Term. The term of this Service Schedule shall be for five
----------------------
(5) years as set out in the Agreement.
3. Purchase Price. The purchase prices and/or discount levels for Services are
---------------
stated in Attachment B. Prices may be decreased on notice. Prices may be
increased for a renewal Term upon ninety (90) days notice prior to the end of
the then current term. With respect to Web Hosting services, Bell Atlantic
understands discount pricing is subject to fluctuations in the base prices for
such services. All pricing related issues are subject to Section 7.4 of the
Agreement.
4. Genuity End User Support. Genuity will provide support to Bell Atlantic and
-------------------------
Bell Atlantic's End Users in accordance with this Agreement and Service Schedule
for issues related to the installation or operation of the Services purchased by
the End User. Genuity shall also provide such support in accordance with the
support requirements set out in the Agreement. Genuity support may directly
contact Bell Atlantic's End Users only as set forth in the Agreement or Service
Schedule, or as otherwise authorized by Bell Atlantic.
5. Genuity and Bell Atlantic Joint End User Support. All processes for joint
------------------------------------------------
End User support will be agreed upon by the Parties in accordance with the
procedures set forth in Section 3.2 of the Agreement.
6. End User Agreements. Bell Atlantic agrees to sell and distribute the
-------------------
Genuity Services by means of written agreements by and between each End User and
Bell Atlantic that are at least as protective of Genuity as those stated in
Attachment C "Mandatory Flowdown Terms" and, where appropriate, shall contain
terms and conditions that are consistent with the respective obligations of Bell
Atlantic and Genuity. In those cases where the Bell Atlantic purchases the
Genuity Services for its own internal use or for use in providing services to
End Users, then the terms stated in Attachment C apply to Bell Atlantic,
provided, however, that in the event the terms of Attachment C conflict with the
terms in the Agreement or Service Schedule the Agreement or Service Schedule
will control. The term for Bell Atlantic End User Agreements will be set at
Bell Atlantic's discretion provided that however, End User Agreement terms will
be for a minimum of one year and will not exceed five (5) years in length for IA
and ISP Direct Services, and will not exceed three (3) years in length with
respect to all other services.
7. Operational Support. Genuity shall provide Operations Support in accordance
--------------------
with the terms set forth in this Service Schedule and Section 3.2 of the
Agreement. Operational Support shall consist of the following (as may be
modified
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from time to time by the parties in accordance with Section 3.2 of the
Agreement):
A. Sales and Order Entry
(i) Genuity Shall provide Bell Atlantic access to Genuity systems, which
will provide Bell Atlantic the ability to develop End User pricing quotes,
transmit Bell Atlantic customer orders to Genuity, access to Genuity
product training support materials and pre and post sales documentation.
Systems to be accessed by Bell Atlantic will be in the same manner as
Genuity provides system access to other resellers. Information to be
accessed by Bell Atlantic shall include, but not be limited to, the
following product specific information (as available): detailed product
descriptions, product advisories, product white papers, technical
documentation (i.e. system administration and configuration manuals,
standard operating procedures, and all information relative to product
hardware/software revisions).
(ii) For EA Services, Genuity will provide Bell Atlantic with the same list
of changes for each update to the price list that Genuity supplies to its
own internal personnel.
(iii) Genuity will provide access to full POP information including physical
addresses to coordinate opportunities where such knowledge is necessary.
(iv) Genuity will contact Bell Atlantic End Users to obtain critical
information required to support provisioning activities.
(v) Jeopardies - A jeopardy occurs when it appears likely that an order
due date ("ODD") will be missed. For jeopardy conditions discovered at
least twenty-four (24) hours prior to the ODD, Genuity will notify Bell
Atlantic by providing a new ODD via E-mail prior to the original ODD.
Jeopardies that occur on the ODD, the jeopardy condition will be
communicated immediately by Genuity to Bell Atlantic via a phone call and
E-mail to the designated Bell Atlantic contact. Genuity will provide real
time jeopardy/reason missed notification and estimated time to resolve.
(vi) Upon request, Genuity will order the LEC/CAP circuit for Bell
Atlantic's customer on behalf of Bell Atlantic. Genuity will use
commercially reasonable efforts to obtain discounts commensurate with
volume from underlying access circuit providers. Where such charges are
priced as "pass-through", Genuity will pass through actual charges without
mark-up.
(vii) Upon Bell Atlantic End User order completion, Genuity will provide
Bell Atlantic the same End User raw data utilized by Genuity in the
development of a Service Implementation Kit (SIK).
B. Order Processing for Services
(i) Bell Atlantic will send Genuity a complete and accurate order for
circuits, equipment, and services. Bell Atlantic will ensure the End User
Customer Sales Agreement has been signed by its customer prior to
submitting a sales order to Genuity. Within two (2) business days of
receipt of the order, Genuity will notify Bell Atlantic that it has either
accepted or rejected the order. Acceptance of the order means that Genuity
has approved of the form of the order, e.g., the order is complete, all
fields are filled in, and that Genuity will commence processing the order.
If Genuity has not responded to Bell Atlantic within two (2) business days
of Genuity's receipt of the order, the order will be presumed accepted by
Bell Atlantic unless Genuity informs Bell Atlantic to the contrary.
(ii) Genuity will provide time frame commitment for cancellation of service
after notification by Bell Atlantic.
(iii) Genuity will provide current order status log by 5:00 AM Eastern Time
daily.
(iv) Genuity will post order status log on a secure internet site in a
mutually agreeable format.
(v) Any and all changes to order provisioning processes will be mutually
agreed upon by both Parties.
C. Repair
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(i) Genuity will provide Bell Atlantic a twenty-four (24) hour by seven-
(7) day a week support for all services. Upon receipt of a problem reported
by Bell Atlantic, Genuity will record and resolve the problem according to
the event management guidelines found on the Genuity Knowledge Bank.
(ii) Bell Atlantic will provide Level I Technical support to Bell Atlantic
End Users. Level I Technical Support includes taking the initial call,
trouble identification, isolation, and resolution. In the event Bell
Atlantic is unable to identify, isolate or correct the trouble, Bell
Atlantic shall notify Genuity that Level II End User support is required
via electronic transmission of a repair ticket. Genuity will receive the
trouble ticket and be responsible for all Level II Technical Support (where
required). Level II Technical Support is invoked when Bell Atlantic is
unable to identify, isolate or correct the trouble. Such trouble may be
complex and require technical expertise and broad product and service
knowledge. In the event Genuity receives the trouble report from Bell
Atlantic's End User, or from Genuity's internal electronic monitoring
systems, Genuity shall agree to notify Bell Atlantic via phone and/or
E-mail with all pertinent information. Both Parties will mutually agree
upon exceptions and/or modifications to repair processes.
(iii) When multiple Genuity and Bell Atlantic personnel need to be involved
in trouble resolution, such support will include tracking, status reporting
and closing the ticket with Bell Atlantic, based on the
processes/procedures outlined in Attachment D, "Severity Levels." Bell
Atlantic will be responsible for providing status reports to the end-user
customer.
(iv) Genuity shall contact Bell Atlantic via e-mail with an explanation of
the trouble resolution, test with Bell Atlantic's End User and verify that
the problem has been corrected. Genuity shall perform a mutual ticket
closeout process with Bell Atlantic. Genuity shall close trouble reports
with cause and disposition sub codes. Genuity will notify Bell Atlantic by
electronic mail within one (1) hour of mutual ticket closeout with Bell
Atlantic's customer.
(v) Genuity will provide repair/event status reports to Bell Atlantic
according to the instructions more specifically defined in Attachment D
"Severity Levels".
(vi) Genuity will provide Bell Atlantic emergency broadcast support
utilizing its standard procedures. The emergency broadcast support is
utilized by Genuity based on the best judgement of Customer Care's Duty
Manager. The emergency broadcast support mechanism is considered for use
when there is a service outage impacting 10 or more customers.
D. Point of Contact (POC) Information - Both Parties agree to provide POCs for
the following functional areas: product price list releases, order
provisioning, repair, test and turn up, billing and contracts. Genuity
further agrees to provide technical support contacts for each Service as
mutually agreed upon by both Parties. POC information shall include contact
name, title, telephone number, e-mail address, and mailing address. Both
Parties will provide updated POC information as changes in POC information
occur.
E. Escalation Process - Genuity shall provide Bell Atlantic escalation
procedures for, but not limited to, back office issues, i.e. ordering,
order provisioning, test and turn up, billing, bill inquiry; and pricing
for relief on strategic opportunities. Escalation processes will provide
for at least three upward levels of escalation contacts.
8. Expedites For Services. Bell Atlantic reserves the right to negotiate
-----------------------
expedited installation dates. Service expedites are available for all Genuity
Services exceptEA Service, and will be reviewed by Genuity on a case by case
basis. Genuity will inform Bell Atlantic if an expedite is not feasible within 2
business days. Genuity reserves the right to limit the maximum number of
expedites submitted for a given service to 10%, of the Bell Atlantic order
volume associated with that service for the preceding calendar month, or five
(5) concurrent orders, which ever is greater. Genuity will provide a monthly
report of total orders placed, number of expedites requested, number granted
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and number completed as scheduled. Genuity and Bell Atlantic will re-evaluate
the number of expedite requests as business volumes dictate. Genuity will notify
Bell Atlantic of service availability within one business day of service being
installed and passing acceptance testing.
9. Processes To Be Completed. Both Parties mutually agree to develop and
--------------------------
complete the following processes within 120 (one hundred twenty) days of the
effective date the Agreement, and in the interim, to develop mutually acceptable
interim processes to allow the transactions contemplated by this agreement to
occur:
(i) Genuity to provide specific rules for start of Services billing when
multiple Services with different install dates are ordered.
(ii) For EA Services, Bell Atlantic and Genuity shall, in accordance with
the procedures set forth in Section 3.2 of the Agreement, agree upon (i)
the method(s) Genuity uses to communicate its rejection of Bell Atlantic's
quotation request packages, (ii) conventions for the documents required by
Genuity for quotation request packages and orders, and (iii) the
communication of changes made by Genuity to End User systems, including the
extent and method of the communication.
(iii) Genuity shall either provide monthly reports in a mutually agreeable
format, or access to systems, which analyze network performance and SLA
history for all SLAs.
(iv) Genuity shall provide Bell Atlantic real time access to required
information enabling Bell Atlantic to furnish Level 1 repair support.
(v) Genuity shall provide Bell Atlantic confirmation of current Bell
Atlantic End User configuration information.
(vi) Genuity agrees that any future systems development to incorporate Bell
Atlantic's requirements for, but not limited to, sales quotation, order
submission, order provisioning, repair and billing will be at Genuity's
expense
10. New Releases Notification and Development Genuity agrees to provide Bell
-----------------------------------------
Atlantic with forty-five (45) days advance written notice of any new releases of
Genuity Services; provided, however, that if time-to-market considerations make
forty-five (45) days advance written notice impracticable, Genuity will provide
such lesser notice as is practicable. Generally, a New Release occurs when a
new Service Description for an existing Service is published (e.g. upgrade from
Site Patrol for FireWall-1 version 5.2 to 5.3). For purposes of this section, a
New Release shall also include the publication of a new Service Description for
a Service which is a natural extension or alternative for Genuity Services
offered under this Schedule (e.g. Managed VPN offered as an extension of the VPN
Advantage line of services). Genuity agrees to make available to Bell Atlantic
any New Releases of Services. In the event there are any impacts to pricing,
order entrance criteria, contact and escalation contacts, back office, order,
test and turn up processes, expedite policies and processes, rejection policies,
and relevant language, scripting, or training for Bell Atlantic's first level
customer support, and billing start policy, Genuity agrees to provide all
relative documentation to the Service release within thirty (30) days.
11. Service Enhancements. Genuity will provide Bell Atlantic with forty five
--------------------
(45) days advance written notice of any significant services enhancements;
provided, however, that if time-to-market considerations make forty five (45)
advance written notice impractical, Genuity will provide such lesser notice as
is practicable. For purposes of this section, "Significant Enhancements" mean
updates to the available Services that entail an amendment or expansion of the
existing Service Description for that Service, but do not constitute a New
Release. In the event there are any impacts to pricing, order entrance
criteria, test and turn up processes, rejection policies, and relevant language,
scripting, or training for Bell Atlantic's first level customer support, and
billing start policy, Genuity agrees to provide all relative documentation to
the Service enhancement within thirty (30) days.
12. New Services Notification and Development. Genuity will provide Bell
------------------------------------------
Atlantic sixty (60) days advance notice in writing of any new IP Services not
covered by Sections 10 and 11, above; provided, however,
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that if time-to-market considerations make sixty (60) days advance written
notice impractical, Genuity will provide such lesser notice as is practicable.
Genuity agrees to make available to Bell Atlantic any new IP services Genuity
develops; provided that Bell Atlantic and Genuity mutually agree on the terms
and conditions for the new services. Bell Atlantic, in its sole discretion,
shall select the calendar date on which Bell Atlantic shall elect to roll out
new Genuity Services. Bell Atlantic shall provide Genuity forty-five (45) days
advance written notice of new service roll out by Bell Atlantic of new Genuity
service. Genuity shall provide the following thirty (30) days prior to Bell
Atlantic's roll out of new Services; order entrance criteria, pricing, contact
and escalation contacts, high level review of back office, order, test and turn
up processes, expedite policy and process, rejection policy, and relevant
language, scripting or training for Bell Atlantic's first level customer
support, and billing start policy.
13. Genuity Support of Bell Atlantic Trial Offerings. Genuity reserves the
-------------------------------------------------
right to offer Bell Atlantic new service capabilities and/or enhancements prior
to Genuity's market introduction of same services. Genuity will give Bell
Atlantic requests for participation in Trial Offering due consideration.
Genuity agrees to provide full support to Bell Atlantic for any Trial Offerings
agreed to by both Parties.
14. Performance Measurement. Bell Atlantic and Genuity will mutually develop a
------------------------
Performance Report Card to include categories, identified by Bell Atlantic and
Genuity, which will reflect Genuity's performance. The Performance Report Card
will be produced and reviewed in accordance with the procedures established
pursuant to Section 3.2 of the Agreement. Both Parties agree to work
cooperatively in the production of the report card. Refer to Attachment E for
the initial Performance Report Card format.
15. Forecast Reports. Forecasts shall be provided to Genuity as set forth in
----------------
the Agreement. Forecast Reports shall be considered Confidential Information as
defined in the Agreement.
16. Epidemic. "Epidemic" shall mean a situation where for a given Service,
--------
within a ninety (90) day period, the same, or substantially the same, Material
Defect has been discovered to exist in either: (i) twenty percent (20%) of the
Services Installed Base; (ii) twenty percent (20%) of the Services Installed
Base shipped by Genuity under this Service Schedule within the same ninety (90)
day period; or (iii) twenty percent (20%) of all Services shipped to or
installed at one or more of all Genuity customers within the same ninety (90)
day period. Material Defect shall mean a malfunction, error or other defect in
the Services that: (i) can be reproduced by Bell Atlantic and/or GENUITY, (ii)
constitutes a substantial nonconformity with the Specifications for the
Services, including nonconformity with GENUITY's Year 2000 Compliance Warranty
and (iii) constitutes a major impediment to the performance of the Services as
specified in the Services Description.
In the event an Epidemic condition is found Genuity shall:
(i) as soon as practical, investigate the cause of the epidemic and determine
appropriate corrective actions;
(ii) provide Bell Atlantic with all material, at no cost, required to implement
a remedy on all affected Bell Atlantic End Users as soon as is
commercially practical; and
(iii) Provided such remedy cannot be performed by Genuity within sixty (60)
days, and in the event the affected End User actually terminates its
agreement with Bell Atlantic, allow Bell Atlantic to terminate Services
for those affected End User Customers and shall refund to Bell Atlantic
100% of the Pro-Rata portion of the fees actually paid by Bell Atlantic
for the affected service during the period the service failed to meet this
particular warranty. TERMINATION AND REFUND ARE THE SOLE AND EXCLUSIVE
REMEDIES UNDER THIS PROVISION.
16. Year 2000 Compliance. Genuity warrants that the Warranted Services will be
---------------------
Century Compliant, pursuant to the terms of this Century Compliance Limited
Warranty herein. Genuity warrants that in connection with Calendar-Related data
and Calendar-Related processing of Date Data or of any System Date, the
Warranted Services, as a whole or by its components, as to century will not
malfunction, will not cease to function, will not generate incorrect data, will
not produce incorrect results, and will represent
5
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dates without ambiguity when providing Calendar-Related data to and accepting
Calendar-Related data from other automated, computerized, and/or software
systems and users via user interfaces, electronic interfaces, and data storage.
In the event of any Century Noncompliance with respect to the Warranted Services
when and as specified herein, Genuity shall, as Customer's sole and exclusive
remedy under this Section, repair or replace the affected Warranted Services
within a reasonable period of time as determined by the severity of the failure
and the level of effort necessary to correct such failure.
Genuity shall meet the obligations set forth in this Century Compliance Limited
Warranty provided that all other customer or third party supplied computer
software, computer firmware, and computer hardware that directly or indirectly
interface with the Warranted Services, co-exist with the Warranted Services,
directly or indirectly influence the Warranted Services' operation are also
demonstrated to comply with this Century Compliance Limited Warranty.
For the purposes of this Century Compliance Limited Warranty, "Calendar-Related"
----------------
refers to date values based on the Gregorian calendar, which includes Leap
Years, and to all uses in any manner of those date values, including without
limitation, manipulations, calculations, conversions, comparisons, and
presentation. "Date Data" means any Calendar-Related data the inclusive range
---------
January 1, 1900 through December 31, 2035, which the Warranted Services uses in
any manner. "System Date" means any Calendar-Related data value in the inclusive
-----------
range January 1, 1985 through December 31, 2035 (including the natural
transition between such values), which the Warranted Services shall be able to
use as its current date while operating. "Century Compliant" means that the
-----------------
Warranted Services satisfy the requirements set forth in this Century Compliance
Limited Warranty. "Century Noncompliance" means any failure of the Warranted
---------------------
Services to be Century Compliant. Genuity Network means the Genuity-provided
---------------
Autonomous System Number 1, 7176, and 201 (AS1, AS7176, and AS201)
telecommunications network, which is comprised of all equipment within each
active Genuity AS1, AS7176, and AS201 Point of Presence (POP), all wiring within
each active Genuity AS1, AS7176, and AS201 POP, all telephone circuits between
active Genuity AS1, AS7176, and AS201 POPs, and any frame relay network
connected to Genuity AS7176 and AS201 POPs (international locations); The
Genuity Network does not include equipment located at Customer's premises
whether or not provided by Genuity, telephone circuits or networks between a POP
and Customer's location, inactive POPs, or any networks, network equipment, or
telephone circuits not owned or controlled by Genuity.
For the purposes of this Century Compliance Limited Warranty, "Warranted
---------
Services" shall mean:
- --------
For DiaLinx: the Genuity managed modem pools, the Genuity Network and the
Genuity Network Operations Center at Genuity's Burlington, Massachusetts
facility (the "NOC");
For Internet Advantage, BizConnect, VPN Advantage, Managed VPN, and ISP
Direct Services: the Genuity Network, the Genuity Network Operations Center
at Genuity's Burlington, Massachusetts facility (the "NOC"), and Genuity
managed customer premise equipment;
For Site Patrol, Site Scan, and Security Advantage: the Genuity Network,
the Genuity Network Operations Center at Genuity's Burlington,
Massachusetts facility (the "NOC"), and Genuity managed customer premise
equipment; and
For Enterprise Advantage: the Genuity Network, the Genuity Network
Operations Center at Genuity's Burlington, Massachusetts facility (the
"NOC"), the services and equipment that comprise the shared infrastructure
(such as environmental control systems and uninterrupted power supply) of
each of the Genuity Data Centers, and the hardware and software components
of the Common Hosting Platform (as described in the Enterprise Advantage
Service Description);
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17. Limited Warranty. The Genuity warranty is set out in Section 11, including
----------------
Sections 11.1 and 11.2 of the Agreement.
18. Sub-Licensing Rights. Subject to the terms of the Agreement and this
--------------------
Service Schedule, Genuity hereby grants to Bell Atlantic a non-exclusive,
revocable and non-transferable right to (i) use (in those cases where Bell
Atlantic is the actual End User) and (ii) sub-license to End Users located in
the Territory the right to use: software solely for the purpose of enabling the
End User to use Services purchased by such End User during the term of the End
User Agreement and in accordance with the applicable Service Description.
Except as provided in the preceding sentence, no right or license is granted by
this Service Schedule or the Agreement to Bell Atlantic or its End Users, to
use, copy, sub-license or otherwise transfer the software, or to make any
modifications to or create derivative works relating to the software. Bell
Atlantic shall use all commercially reasonable efforts not to allow its End
Users to copy the software in whole or in part. Neither Bell Atlantic nor its
End Users shall remove any proprietary marks, legends and copyright notices that
appear on the software. Bell Atlantic shall require its End Users to sign any
license terms required by the manufacturer prior to End Users use of the
software.
19. Service Level Agreements for Services. Except as expressly set forth in
--------------------------------------
this Service Schedule, Genuity will extend to Bell Atlantic the standard End
User Service Level Agreements offered with the Genuity Services as set forth in
the relevant service documentation, including the payment to Bell Atlantic of
designated remedies due under such SLAs. Standard End User SLAs available for
DiaLinx are excluded. Genuity offers the additional Network Service Level
Agreements as set forth in Attachment F, and the Non-Network Service Level
Agreements set forth in Attachment G to Bell Atlantic. Except as otherwise set
forth in the Agreement, such SLAs will be available to Bell Atlantic under this
Service Schedule. These additional SLAs may not be passed through to End Users.
The remedies set forth in the SLAs are the sole and exclusive remedies for
failure to meet the metrics set forth in the SLAs.
20. Return of Equipment: Bell Atlantic shall be responsible for ensuring the
-------------------
return of equipment provided to End Users. In the event that equipment is not
returned to Genuity within 60 (sixty) days of the end of the relevant service
period, Bell Atlantic will be responsible for paying the depreciated value of
the equipment.
21. Compliance with Laws and Content Responsibility: Bell Atlantic shall not
-----------------------------------------------
use, or permit the Services to be used: (a) in violation of any applicable
export laws (including without limitation any U.S. export laws); (b) in
violation of any applicable national, state, or local laws or regulations,
including without limitation any laws governing the import of the Services, or
governing the content which may be available via the Services; (c) in violation
of Genuity's acceptable use policy which is published on Genuity's web site at
http://www.bbn.com/aup/; or (d) in ways that infringe the rights of others, or
interfere with other users of Genuity's network or other networks. For example,
Bell Atlantic shall not permit its end users to distribute chain letters or
unsolicited bulk electronic mail ("spamming"); propagate computer worms or
viruses; use a false identity; attempt to gain unauthorized entry to any site or
network; distribute child pornography, obscenity or defamatory material over the
Internet; or infringe copyrights, trademarks or other intellectual property
rights. Whenever practicable, Genuity will notify Bell Atlantic of any violation
of this Section either by Bell Atlantic or an End User. Bell Atlantic's
obligation with respect to its End Users is to include appropriate wording
concerning this Section in its contracts with its End Users and to respond
appropriately to notice from Genuity of a violation. Genuity reserves the right
to immediately suspend or terminate the Services (or any portion thereof) if in
Genuity's reasonable judgment Bell Atlantic fails to take appropriate action, or
if necessary to comply with the law or to prevent harm to Genuity's network,
other networks or other Genuity customers.Genuity reserves the right to prohibit
incidences of unacceptable use of e-mail (as defined in this section) by
restricting all outbound IP data packets using port 25 to a single IP address
equating to an SMTP mail relay/post office controlled by Bell Atlantic or Bell
Atlantic's End User. Bell Atlantic acknowledges that Genuity has no control over
or liability for the actions of local jurisdictions, which may restrict or block
the Services.
Section II: The following additional terms apply to Internet Advantage, ISP
- ----------
Direct, and
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BizConnect Services (and bundles containing such services as a component):
1. Service Cancellation: Bell Atlantic may cancel a Service connection at any
--------------------
time by providing 60 days prior written notice via email to the designated
cancellation point of contact. Bell Atlantic will be responsible in all events
for any telephone company circuit cancellation charges incurred by Genuity as a
result of the cancellation.
2. Deployment Contingencies. Bell Atlantic acknowledges that offering of
------------------------
Internet connectivity internationally may be subject to regulation. Genuity will
endeavor to obtain the necessary approvals for each international site ordered.
Bell Atlantic agrees to cooperate with Genuity as may be reasonably necessary to
satisfy the required approvals. Bell Atlantic agrees to secure the reasonable
cooperation of End User to assist in obtaining the requisite approvals.
Genuity's acceptance of an order for Service, and Genuity's obligation to
provide Service, in any given non-U.S. location is expressly conditioned on
Genuity's ability to obtain the regulatory, legal, vendor, and import and export
approvals (including those required for resale of Internet connectivity) as
Genuity deems necessary and under such terms and conditions as Genuity deems
adequate, in Genuity's sole discretion. In the event that Genuity is unable to
obtain such approvals for a given location, Genuity may decline to accept or
void the order quotation for Services at that location without penalty or
obligation. For applicable international Services, this section shall supercede
any acceptance criteria stated elsewhere in the agreement.
Section III: The following additional terms apply to Enterprise Advantage
- -----------
Services (and bundles containing such services as a component):
1. Service Cancellation: Bell Atlantic may cancel an End User;s EA Service at
- -------------------------
any time by providing 60 days prior written notice via email to the designated
cancellation point of contact. Bell Atlantic agrees to pay all EA Service fees
accrued as of the effective cancellation date and an early cancellation fee
equal to: (a) 100% of the outstanding fees due for any hardware or software
licenses, and (b) for one-year Service quotations, 25% of the other monthly fees
due for the canceled portion of the Service period, or for multi-year Service
quotations, 25% of the other monthly fees due either (i) until the end of the
2nd year of the quotation's Service period, or (ii) for one (1) year following
the effective cancellation date, whichever is greater. The early cancellation
fee shall not apply to those instances where service was terminated due to
Genuity's failure to timely cure a material breach of its obligations, as
established in this Service Schedule.
Section IV: The following additional terms apply to VPN Advantage, Managed VPN,
- ----------
SitePatrol, and Security Advantage Services (and bundles containing such
services as a component):
1. Approved Internet Connectivity. Bell Atlantic agrees to use only such
------------------------------
Internet connection services as are compatible with the Services, as determined
by Genuity in advance.
2. Service Cancellation: Bell Atlantic may cancel a Service connection at any
--------------------
time by providing 60 days prior written notice via email to the designated
cancellation point of contact. Bell Atlantic agrees to pay all Service fees
accrued as of the effective cancellation date and an early cancellation fee
equal to: for one-year Service quotations, 25% of the other monthly fees due for
the canceled portion of the Service period, or for multi-year Service
quotations, 25% of the other monthly fees due either (i) until the end of the
2nd year of the quotation's Service period, or (ii) for one (1) year following
the effective cancellation date, whichever is greater. The early cancellation
fee shall not apply to those instances where service was terminated due to
Genuity's failure to timely cure a material breach of its obligations, as
established in this Service Schedule.
3. Deployment Contingencies. Bell Atlantic acknowledges that deployment of
------------------------
encryption technology internationally may be subject to restrictions. Genuity
will endeavor to obtain the necessary approvals for each international site
ordered. Bell Atlantic agrees to cooperate with Genuity as may be reasonably
necessary to satisfy the required approvals. In some cases, approval may
require the passing of title of certain customer premises equipment to the End
User. Bell Atlantic agrees to secure the reasonable cooperation of End User to
assist in obtaining the requisite approvals. Genuity's acceptance of an order
for Service, and Genuity's obligation to provide Service, in any
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given non-U.S. location is expressly conditioned on Genuity's ability to obtain
the regulatory, legal, vendor, and import and export approvals (including those
required for encryption technology) as Genuity deems necessary and under such
terms and conditions as Genuity deems adequate, in Genuity's sole discretion. In
the event that Genuity is unable to obtain such approvals for a given location,
Genuity may decline to accept or void the order quotation for Services at that
location without penalty or obligation. For applicable international Services,
this section shall supercede any acceptance criteria stated elsewhere in the
agreement.
4. Security Policy. End Users remain responsible for their network security
---------------
policy and security violation response procedures. VPN Service enhances End
Users' ability to create and secure a virtual private network and impede
unauthorized access to the End User's network and data transmitted using the VPN
service. Bell Atlantic acknowledges that VPN Service does not by itself
guarantee network security or prevent security incidents, that neither Genuity
nor its suppliers is responsible for unauthorized access to the End User's
facilities or for damages arising out of unauthorized access, and that it is the
End User's responsibility to design a comprehensive security program in
conjunction with any other service providers or professionals chosen by End
User.
5. Restrictions on system access. Genuity configures and remotely manages the
-----------------------------
software for all systems Genuity installs on an end user's premises in
conjunction with VPN service (e.g., The VPN gateway device). Bell Atlantic shall
include terms in its agreements with end users which allow Genuity (or
designated representative) to access End Users' premises for the purpose of
installing and maintaining such equipment. End User may access the configuration
of such systems only when authorized by Genuity; therefore, neither Bell
Atlantic nor end user will need or receive a software license. Bell Atlantic
agrees to abide by, and ensure that end users abide by, the license terms to the
VPN client software. Bell Atlantic agrees not to, nor permit End Users to,
remove, obliterate or cover any marks, logos, or notices included with the
equipment Genuity installs on End Users' premises.
6. Return of Equipment and Software. Upon termination or expiration of the
--------------------------------
Service Period applicable to any End User (unless extended by the parties), Bell
Atlantic agrees to return or cause End User to either return to Genuity or
dispose of all hardware and software which Genuity has provided to in connection
with the VPN Service in accordance with the following:
6. 1. Genuity-Owned Equipment and Software. Bell Atlantic agrees to
------------------------------------
return to Genuity all Genuity-owned hardware and software which Genuity has
provided to Bell Atlantic and/or End User in connection with the VPN
Service. If such hardware and software are not returned to Genuity within
sixty (60) days following such termination or expiration, Bell Atlantic and
End User will permit Genuity to remove such hardware and software from End
User's premises upon reasonable notice during normal business hours, at
Bell Atlantic's or End Users cost and expense. Bell Atlantic will also be
responsible for all applicable late return fees, as stated in the Service
Description.
6.2 Genuity-Provided Equipment. In certain cases, Genuity may pass
--------------------------
title of equipment to End User for a given site, as specified in the
service order (or otherwise agreed to in writing between the parties). In
the event that title to equipment is passed to End User, then, at the end
of the applicable service period, End Users shall agree to either: (a)
transfer title to the equipment to Genuity or a designated agent in
exchange for its remaining salvage value; or (b) to destroy the equipment,
and certify such destruction, in accordance with U.S. and local laws.
6.3 Genuity-Provided Software. Regardless of the origin or ownership of
-------------------------
the hardware End Users shall agree that, at the end of the applicable
Service Period End User shall, at Genuity's option, either: (a) certify
that End User has returned and/or destroyed any software which Genuity has
provided to End User (or End User's foreign affiliate) in connection with
the VPN Service including media containing copies thereof (e.g. CD ROM); or
(b) permit Genuity to remove and/or delete such software, copies and media.
7. Export Restrictions. The customer premises equipment and software (e.g. the
-------------------
VPN Gateway Device) installed on the customer premises are authorized by the
U.S. government (and other applicable regulatory authorities) for export only
9
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to the country/location authorized in the applicable Service Order or otherwise
authorized in writing by Genuity. They may not be resold, diverted,
transferred, transshipped, or otherwise be disposed of in any other country,
either in their original form or after being incorporated through an
intermediate process into other end items, without the prior written approval of
the U.S. Department of Commerce and Genuity. Bell Atlantic acknowledges that
the VPN client software contains encryption technology subject to export
control, and agree to abide by, and ensure that end users abide by, laws and
regulations applicable to import and export of the VPN client software.
8. Warranties Regarding Third Party Equipment. In the event that Genuity
------------------------------------------
transfers title to equipment to Bell Atlantic or End User, Genuity will endeavor
to pass through such representations and warranties provided by the manufacturer
of any equipment purchased from Genuity hereunder. Bell Atlantic understands
and agrees that the sole and exclusive recourse for any claims or damages
relating to the third party equipment shall be to the manufacturer of such
equipment, and not to Genuity. Except as expressly provided elsewhere in the
Agreement, Genuity is providing the equipment AS IS, AND GENUITY DISCLAIMS ALL
WARRANTIES OR REPRESENTATIONS, BOTH EXPRESS AND IMPLIED, INCLUDING BUT NOT
LIMITED TO THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. UNDER NO CIRCUMSTANCES SHALL GENUITY BE LIABLE FOR ANY DAMAGES THAT
MAY RESULT FROM THE USE OF OR INABILITY TO USE THE EQUIPMENT.
Section V: The following additional terms apply to DiaLinx Services, including
- ---------
DiaLinx VISP Services (and bundles containing such services as a component):
1. End User Responsibility: Bell Atlantic agrees to be responsible for all
-----------------------
billing and collection from individual users and that Bell Atlantic will pay
Genuity on a timely basis, regardless of whether Bell Atlantic collects payment
fromusers. Bell Atlantic agrees to be responsible for all communications to and
business relations withusers. Unless Bell Atlantic has purchased optional help
desk services from Genuity, Bell Atlantic shall be responsible for providing all
technical support related to DiaLinx Service access for users, including but not
limited to responding to inquiries and questions, hot-line support, problem
resolution, providing system configuration, installation and support, as
applicable and other such services and shall maintain an organization which is
highly trained and qualified to provide such support. Bell Atlantic is
responsible for authenticating and authorizing access by Bell Atlantic's users
to the DiaLinx Service. Unless Bell Atlantic has purchased optional RADIUS
hosting services from Genuity, Bell Atlantic shall install, operate, and
maintain a dedicated RADIUS server meeting the RADIUS specifications published
in Internet RFC 2138 and 2139 and all published derivative RFC's. Genuity's
RADIUS server will prompt each end user for the end user's identification and
password, and poll Bell Atlantic's RADIUS server for access information. Unless
otherwise additional realms are purchased, Genuity will support up to a maximum
of five (5) authentication realms (e.g. companyname.com) per End User.
2. Service Cancellation: Bell Atlantic may cancel a Service connection at any
--------------------
time by providing 60 days prior written notice via email to the designated
cancellation point of contact.
3. Equipment and Telephone Service. Bell Atlantic is solely responsible for
-------------------------------
obtaining and providing the telephone services and user modems necessary to
access DiaLinx Service. In no event will Genuity be responsible for end user
telephone charges.
4. Network Access Availability. ACCESS TO THE DIALINX NETWORK CANNOT BE
---------------------------
GUARANTEED TO BELL ATLANTIC OR BELL ATLANTIC'S END USERS. END USERS MAY BE
UNABLE TO ACCESS THE DIALINX SERVICE AT ANY GIVEN TIME, AND DISCONNECTIONS MAY
OCCUR FROM TIME TO TIME. BELL ATLANTIC AGREES THAT GENUITY WILL NOT BE LIABLE
FOR ANY DAMAGES THAT BELL ATLANTIC OR BELL ATLANTIC'S END USERS MAY INCUR
ARISING OUT OF THE USE OR INABILITY TO USE THE DIALINX SERVICE. THIS DISCLAIMER
IS IN ADDITION TO, NOT INSTEAD OF, THE DISCLAIMER, LIMITATION OF LIABILITY AND
LIMITATION OF DAMAGES CONTAINED IN THE AGREEMENT.
10
<PAGE>
5. Regulatory Changes. Genuity shall flow through to Bell Atlantic any local
------------------
exchange carrier (LEC) price changes (a) that are attributable to changes in
Federal or state regulation, or (b) for Federally regulated services, that are
treated as exogenous regulatory cost changes by the Federal Communications
Commission (the "FCC") under its price caps regulations as defined in the FCC
Rules, 47 C.F.R. Section 61.45. For purposes of this paragraph, price changes
attributable to changes in regulation include, but are not necessarily limited
to, price changes reflecting total or partial elimination of any enhanced
services provider exemption from payment of interexchange access charges or any
regulatory decision which results in application of multiple Subscriber Line
Charges to ISDN Primary Rate interface circuits or channelized T1 circuits.
6. Local Access Numbers. Genuity expects the DiaLinx network to change over
--------------------
time in order to meet the needs of customers. Genuity reserves the right to add
to, delete or change the dial-in access numbers associated with a specified
service category from time to time. Bell Atlantic will be notified of changes to
the DiaLinx network or access numbers via periodic e-mail updates. Genuity may
periodically add additional dial up access service categories as the DiaLinx
network evolves. These additional services and respective prices will be made
available on an on-going basis, via e-mail updates notifying Bell Atlantic of
the additional service. Use of such additional services by Bell Atlantic or Bell
Atlantic end users will be deemed Bell Atlantic's acceptance of the updated
service and pricing. For a current list of services, pricing, and dial up access
numbers associated with each service, please consult Genuity's Web page as
listed in the DiaLinx Service Description.
BELL ATLANTIC GENUITY INC.:
By: _______________________ By: _______________________
Name: _______________________ Name: _______________________
Title: _______________________ Title: _______________________
Date: _______________________ Date: _______________________
11
<PAGE>
ATTACHMENT A
PRODUCT DESCRIPTIONS
All Product Descriptions in Attachment A are to be considered Baseline
documents. Current up-to-date Service Descriptions will be maintained on the
reseller portion Genuity's Knowledge Bank. In the event of a conflict between
the Product Descriptions in Attachment A, terms of the Agreement, the Service
schedule, or any other attachment hereto, the terms of the Agreement, Service
Schedule or other attachment shall control.
A.1 - BizConnect(SM) Internet Access Service
A.2 - DiaLinx (Corporate and ISP)
A.3 - DiaLinx VISP
A.4 - Enterprise Advantage
A.5 - Internet Advantage(SM) Connection Service
A.6. - Internet Advantage(SM) International Connection Service
A.7 - ISP Direct(SM) Connection Service
A.8 - Managed VPN (SM) (MVPN) Service
A.9 - Security Advantage (SM) Service
A.10 - Site Patrol for FireWall-1 Managed Service
A.11 - Site Patrol for FireWall-1 Managed Plus Service
A.12 - Site Patrol for FireWall-1 Shared Service
A.13 - Site Patrol for FireWall-1 Shared Plus Service
A.14 - Site Scan / Vulnerability Scan Service
A.15 - VPN Advantage Service
A.16 - VPN Advantage International Service
<PAGE>
ATTACHMENT B
PRODUCT PRICING
<PAGE>
Attachment B
PRODUCT PRICING AND DISCOUNTS
The following shall be the structure for the pricing and discounts set forth in
this Attachment:
Baseline Pricing
- --------------------------------------------------------------------------------
Attached are the following current pricing schedules, by line of Service which
indicate the baseline pricing and applicable Volume Discount for Services
offered to Bell Atlantic:
Attachment B-1 Security Services
-----------------
B-1-1 Security Advantage and Site Scan Services
B-1-2 VPN Advantage
B-1-3 Site Patrol for Firewall 1
B-1-4 Managed VPN
Attachment B-2 Managed Connectivity Services (MCS)
-----------------------------------
B-2-1 IA Services
B-2-2 IAI Services
B-2-3 BizConnect Services
B-2-4 ISP Direct Services
B-2-5 IA Additional Features
B-2-6 IAI Additional Features
Attachment B-3 DiaLinx
-------
Attachment B-4 E Business Hosting
------------------
B-4-1 Current Price List for EA Services
B-4-2 Discount Schedule
Discounts
- --------------------------------------------------------------------------------
1). Volume Discounts
Volume Discounts will be calculated in accordance with the attached pricing
schedules. Volume discounts apply to each Service, except for Services and/or
Service components excluded within the applicable price schedule.
2). Multi-Service Discounts
The Multi-Service Discount for a particular calendar month shall be based upon
the total monthly volume of all eligible Genuity Services purchased by Bell
Atlantic under this Agreement in that calendar month. The Genuity Services
eligible for such discount are those services and products listed in Attachments
B-1, B-2, B-3 and B-4 ("Eligible Services").
However, the Multi-Service Discount shall not be available if more that 60% of
the total monthly volume in the particular calendar month is derived solely from
one Genuity Service.
<PAGE>
Certain line items and "pass through" costs within certain Genuity Services
shall not be eligible for a Multi-Service Discount ("Excluded Services"). Such
items are listed in Attachment B-5 ("Summary of Exclusions from Multi-Service
Discount").
The Multi-Service Discount will apply as follows:
Total billing to Bell Atlantic for all Eligible Services (excluding any
Excluded Services) per month:
$5m - #$10m = 1% Multi-Service Discount
$10m - #$20m = 2% Multi-Service Discount
$20m + = 3% Multi-Service Discount
# Less than
<PAGE>
Attachment B-1
Security Services Pricing for Bell Atlantic
________________________________________________________________________________
The Volume Discount schedule below applies to all standard service quotations
for Security Services.
Security Services include:
Current Price List
------------------
. Security Advantage Attachment #B-1-1
. Site Scan Service Attachment #B-1-1
. VPN Advantage Attachment #B-1-2
. Site Patrol for Firewall 1 Attachment #B-1-3
. Managed VPN Attachment #B-1-4
The combined, aggregate revenue associated with all standard Security Services
shall be considered when computing both Volume Discounts.
For Volume Discounts, the following schedule shall be applicable to Security
Services:
VOLUME DISCOUNTS
- ------------------------------------------------------------------------
Actual Monthly Revenue Additional
Discount
- ------------------------------------------------------------------------
less than $250,000 /month of Security Services None
- ------------------------------------------------------------------------
$250,000 to $750,000 /month of Security Services 5%
- ------------------------------------------------------------------------
greater than $750,000 /month of Security Services 10%
- ------------------------------------------------------------------------
Exclusions:
- -----------
The Volume Discount shall apply to all standard Security Services, except:
. the existing installed customer base at time the Agreement is executed.
Notes
- -----
A "standard service quotation" for purposes of this Attachment is one in which
all the Security Services and products purchased by Bell Atlantic or Bell
Atlantic's customer are found in the applicable Security Services Service
Description at the time the quotation is generated.
Page 1
<PAGE>
The pricing for each Security Service assumes at least a one-year term
commitment per connection; these prices are independent of the actual per-
customer term commitments Bell Atlantic orders from Genuity.
Page 2
<PAGE>
Attachment B-1-1
Pricing for Security Advantage and Site Scan
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Security Advantage (1) (3)
---------------------------------------------------------------------------------------------------------------
---------------- ---------------------
Configurations per month Domestic Pricing International Pricing
---------------- ---------------------
<S> <C> <C> <C> <C>
Monthly Fees
Bronze Up to 2 $* $* Per month
Silver Up to 6 $* $* Per month
Gold Up to 12 $* $* Per month
Other
Installation (2) One-time $* $* One-time
Additional Configuration Per change $* $* Per change
On-site Spare Service Per month $* $* Per month
---------------- ---------------------
---------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Site Scan Service
---------------------------------------------------------------------------------------------------------------
Domestic Pricing International Pricing
---------------- ---------------------
<S> <C> <C> <C> <C>
Monthly Scans Per year $* $*
Quarterly Scans Per year $* $*
One-time Vulnerability
Scan (Pre Sales tool) One-time $* $*
---------------- ---------------------
---------------------------------------------------------------------------------------------------------------
</TABLE>
All prices have been changed to MONTHLY, unless otherwise noted.
Notes:
(1) Pricing excludes administration of customers' user authentication or
accounting databases, VPN configuration on the firewall, and configuration,
management, and administration of customer De-Militarized Zones (DMZ) which
will be quoted on a Time and Materials (T&M) basis for each individual
customer opportunity. These additional charges are not eligible for
Multi-Service Discounts.
(2) Installation Fee for Security Advantage is not eligible for Multi-Service
Discounts.
(3) The pricing set forth above for Security Advantage shall be effective upon
execution of the Agreement. GTEI and NEWCO shall review Security Advantage
pricing on a quarterly basis. At each quarterly review GTEI shall notify
NEWCO (1) if it has experienced reductions in the operating costs
applicable to the Security Advantage product or (2) if it has offered
pricing to other purchasers of the Security Advantage product which is
below the then current NEWCO pricing. In the event GTEI has experienced
such cost reductions, GTEI shall reduce the NEWCO pricing for the Security
Advantage product accordingly, to the extent such cost reductions are
commercially practicable. In the event GTEI has offered other purchasers
more advantageous pricing, GTEI shall reduce the NEWCO pricing for the
Security Advantage product to be at least as beneficial as such pricing.
This pricing schedule shall be amended to reflect any such pricing
reduction.
<PAGE>
LOGO Attachment B-1-2
________________________________
G T E C O M M U N I C A T I O N
C O R P O R A T I O N
Pricing for VPN Advantage
-------------------------------------------
<TABLE>
<CAPTION>
-----------------------------------------
Pricing
-----------------------------------------
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VPN Gateway Devices
-----------------------------------------
US Int'l
On Net (1) (2)
Installation $* $* One time
Service Fees:
Timestep 4520 VPN Gateway $* $* Per month
Timestep 1520 VPN Gateway $* $* Per month
-----------------------------------------
-----------------------------------------
US Int'l
Off Net (1) (2)
Installation $* $* One time
Service Fees:
Timestep 4520 VPN Gateway $* $* Per month
Timestep 1520 VPN Gateway $* $* Per month
-----------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
VPN Client Software (US & Int'l) (2)
--------------------------------------------
Number of Users On Net Software Off Net Software
Licenses (per user) Licenses (per user)
<S> <C> <C> <C>
1-50 $* $* Per month
51-100 $* $* Per month
101-250 $* $* Per month
251-500 $* $* Per month
501-1,000 $* $* Per month
1,001-2,500 $* $* Per month
2,501+ $* $* Per month
-----------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Optional Services
<S> <C> <C>
-------------------------------------------
On Site Installation $* per install (surcharge)
-------------------------------------------
-------------------------------------------
On Site 4 hour Repair Option $* per device per month
-------------------------------------------
-------------------------------------------
US Int'l
On Site Spare VPN Gateway
Installation - Per install $* $* One time
Service Fee - Monthly per device $* $* Per month
-------------------------------------------
Help Desk Services
-------------------------------------------
Setup Fee - One time charge $* per user
Service Fee - Monthly $* per user
-------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) Pricing excludes implementation, support, and administration of "group"
functionality which will be quoted on an Time and Materials (T&M) basis for
each individual customer opportunity. These additional charges are not
eligible for Multi-Service Discounts.
(2) Pricing includes standard Authenticated Web Server (AWS) services (if
applicable). Custom branding of AWS will be quoted on an individual case
basis. These additional charges for custom branding are not eligible for
Multi-Service Discounts.
<PAGE>
[LOGO] Attachment B-1-3
_________________________________
G T E C O M M U N I C AT I O N S
C O R P O R A T I O N S
Pricing for Site Patrol for Firewall 1 - Monthly Fees
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Domestic Pricing (1)
---------------------------------------------------------------------------------------------------------------------
---------------- ----------------------------------------------------------------------------
Configuration Up to 2 T1s 4 T1s 6 T1s Up to Over
Changes/Month T1 (3Mb) (4-6Mb) (7-10Mb) 15Mb 15Mb
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Managed Plus
Bronze Up to 2 $* $* $* $* $* TBD Per month
Silver Up to 6 $* $* $* $* $* TBD Per month
Gold Up to 12 $* $* $* $* $* TBD Per month
$* $* $* $* $*
Managed $* $* $* $* $*
Bronze Up to 2 $* $* $* $* $* TBD Per month
Silver Up to 6 $* $* $* $* $* TBD Per month
Gold Up to 12 $* $* $* $* $* TBD Per month
$* $* $* $* $*
Shared Plus N/A $* $* $* $* $* TBD Per month
$* $* $* $* $*
Shared N/A $* $* $* $* $* TBD Per month
-------------- ------------- -----------
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
International Pricing (1)
---------------------------------------------------------------------------------------------------------------------
---------------- ----------------------------------------------------------------------------
Configuration Up to 2 T1s 4 T1s 6 T1s Up to Over
Changes/Month T1 (3Mb) (4-6Mb) (7-10Mb) 15Mb 15Mb
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Managed Plus
Bronze Up to 2 $* $* $* $* $* TBD Per month
Silver Up to 6 $* $* $* $* $* TBD Per month
Gold Up to 12 $* $* $* $* $* TBD Per month
$* $* $* $* $*
Managed $* $* $* $* $*
Bronze Up to 2 $* $* $* $* $* TBD Per month
Silver Up to 6 $* $* $* $* $* TBD Per month
Gold Up to 12 $* $* $* $* $* TBD Per month
$* $* $* $* $*
Shared Plus N/A $* $* $* $* $* TBD Per month
$* $* $* $* $*
Shared N/A $* $* $* $* $* TBD Per month
-------------- ------------
---------------------------------------------------------------------------------------------------------------------
</TABLE>
All prices have been changed to MONTHLY unless otherwise noted.
Notes:
(1) Pricing excludes administration of customers' user authentication or
accounting databases, VPN configuration on the firewall, and
configuration, management, and administration. These additional charges
are not eligible for Multi-Service Discounts. of customer De-Militarized
Zones (DMZ) which will be quoted on a Time and Materials (T&M) basis for
each individual customer opportunity.
These additional charges are not eligible for Multi-Service Discounts.
<PAGE>
<TABLE>
<CAPTION>
Attachment B-1-3 (continued)
[LOGO OF GTE]
__________________________________ Pricing for
G T E C O M M U N I C A T I O N S Site Patrol
C O R P O R A T I O N ------------------------------------------------------------------------------------------
-------------------------------------- -------------------------------------
Installation and Domestic Pricing International Pricing
-------------------------------------- -------------------------------------
Other Optional Items
<S> <C> <C> <C> <C>
-------------------------------------- -------------------------------------
Up to 2 T1s up to 15 Up to 2 T1s up to 15
T1 T1
Managed Plus
Installation $* $* $* $* One-time
Additional Configuration $* $* $* $* Per change
4-Hr Response $* $* $* $* Per month
On-site Spare Lease $* $* $* $* Per month
On-site Spare Install $* $* $* $* One-time
$* $* $* $*
Managed $* $* $* $*
Installation $* $* $* $* One-time
Additional Configuration $* $* $* $* Per change
4-Hr Response $* $* $* $* Per month
On-site Spare Setup $* $* $* $* One-time
$* $* $* $*
Shared Plus $* $* $* $*
Installation - Custom Policy $* $* $* $* One-time
Installation - Implicit Deny $* $* $* $* One-time
4-Hr Response $* $* $* $* Per month
On-site Spare Lease $* $* $* $* Per month
On-site Spare Install $* $* $* $* One-time
Site Scan Upgrade $* $* $* $* Per month
$* $* $* $*
Shared $* $* $* $*
Installation - Custom Policy $* $* $* $* One-time
Installation - Implicit Deny $* $* $* $* One-time
4-Hr Response $* $* $* $* Per month
On-site Spare Setup $* $* $* $* One-time
Site Scan Upgrade $* $* $* $* Per month
$* $* $* $*
Reporting (All Platforms) (1) $* $* $* $*
Setup $* $* $* $* One time
Monthly Service $* $* $* $* Per month
</TABLE>
All prices have been changed to MONTHLY, unless otherwise noted.
Notes:
(1) Reporting Service is only available for Site Patrol for FireWall-1
platforms. Service is not available for Security Advantage.
<PAGE>
<TABLE>
<CAPTION>
[LOGO OF GTE] Attachment B-1-4
__________________________________
G T E C O M M U N I C A T I O N S Pricing for Managed VPN
C O R P O R A T I O N ---------------------------------------------------------------------------------
-------------------------------------------
Pricing
-------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
VPN Gateway Devices
-------------------------------------------
US Int'l (1)
On Net (2) (3)
Installation $* $* One time
Service Fees:
Nortel 4500 VPN Gateway $* $* Per month
Nortel 2500 VPN Gateway $* $* Per month
Nortel 1500 VPN Gateway $* $* Per month
-------------------------------------------
-------------------------------------------
US Int'l
Off Net (2) (3)
Installation $* $* One time
Service Fees:
Nortel 4500 VPN Gateway $* $* Per month
Nortel 2500 VPN Gateway $* $* Per month
Nortel 1500 VPN Gateway $* $* Per month
-------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
VPN Client Software (3)
-------------------------------------------
Number of Users On Net Software Off Net Software
Licenses (per user) Licenses (per user)
1-50 $* $* Per month
51-100 $* $* Per month
101-250 $* $* Per month
251-500 $* $* Per month
501-1,000 $* $* Per month
1,001-2,500 $* $* Per month
2,501+ $* $* Per month
-------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Optional Services
-------------------------------------------
On Site Spare VPN Gateway US Int'l
Installation - per install $* $* One time
Service Fee - Nortel $* $* Per month
-------------------------------------------
per device per month
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) Managed VPN Service International is not available as of writing. It
is anticipated to become available by May 2000.
(2) Pricing excludes implementation, support, and administration of
"group" functionality which will be quoted on an Time and Materials basis
for each individual customer opportunity. These additional charges are
not eligible for Multi-Service Discounts.
(3) Pricing includes standard Authenticated Web Server (AWS) services (if
applicable). Custom branding of AWS will be quoted on an individual case
basis. These additional charges for custom branding are not eligible for
Multi-Service Discounts.
<PAGE>
Attachment B-2
MCS Pricing for Bell Atlantic
________________________________________________________________________________
The Volume Discount schedule below applies to all standard service quotations
for Managed Connectivity (MCS) Services.
Managed Connectivity Services include:
. Internet Advantage Connection Service (IA)
. Internet Advantage International Connection Service (IAI)
. BizConnect Internet Access Service (BizConnect)
. ISP Direct Connection Service (ISP Direct)
Attached is the current baseline price list for:
. IA Services Attachment #B-2-1
. IAI Services Attachment #B-2-2
. BizConnect Attachment #B-2-3
. ISP Direct Services Attachment #B-2-4
. IA additional features Attachment #B-2-5
. IAI additional features Attachment #B-2-6
The combined, aggregate revenue associated with all standard MCS Services, less
the excluded MCS services noted below, shall be considered when computing both
Volume Discounts (as well as Multi-Service Discounts)
For Volume Discounts, the following schedule shall be applicable to MCS
Services:
VOLUME DISCOUNTS
- -------------------------------------------------------------
Actual Monthly Revenue Additional
Discount
- -------------------------------------------------------------
less than $6Million /month of MCS Services None
- -------------------------------------------------------------
$6M to $10Million /month of MCS Services 5%
- -------------------------------------------------------------
greater than $10Million/month of MCS Services 10%
- -------------------------------------------------------------
Exclusions:
- -----------
The Volume Discount shall apply to all standard MCS Services with the exception
of the following MCS service components which are excluded:
. the existing installed customer base at the time the Agreement is
executed;
. customer premises equipment (CPE) and
. local loops (recurring and non-recurring charges).
<PAGE>
Notes:
- ------
A "standard service quotation" for purposes of this Attachment is one in which
all the MCS services and products purchased by Bell Atlantic or Bell Atlantic's
customer are found in the applicable MCS Service Description at the time the
quotation is generated.
Price lock-in per ordered connection: Each new connection will be priced at the
- -------------------------------------
baseline price in effect at the time the connection is originally ordered for at
least 12 months following its installation. Each renewed connection will be
priced at the baseline price in effect at the time the connection is renewed for
at least 12 months following its renewal. That means that when baseline pricing
changes, the new prices only apply to new orders and some subset of renewals. In
particular, in the case of renewals, new pricing will not be applicable unless
the connection's previous price had been in effect for at least 12 months.
<PAGE>
Attachment B-2-1
Pricing for Internet Advantage
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------------------------- -------------------------------
AGREED BY DATACO & NEWCO
------------------------------------------- -------------------------------
-------------------------------------------
SILVER,
BRONZE,
PORT
NRC GOLD MRC ONLY MRC
-------------------------------------------
<S> <C> <C> <C> <C> <C>
56 Kbps (renewals only) $* $* $*
Fixed Price T1 $* $* $*
Flexible T1
Up to 128 Kbps $* $* $*
Up to 256 Kbps $* $* $*
Up to 384 Kbps $* $* $*
Up to 768 Kbps $* $* $*
Over 768 Kbps $* $* $*
Backup T1
Up to 2 Kbps $* $* $*
Up to 128 Kbps $* $* $*
Up to 256 Kbps $* $* $*
Up to 384 Kbps $* $* $*
Up to 768 Kbps $* $* $*
Over 768 Kbps $* $* $*
Flexible Multi-T1
Up to 1 Mbps $* $* $*
Up to 2 Mbps $* $* $*
Up to 3 Mbps $* $* $*
Up to 4 Mbps $* $* $*
Up to 5 Mbps $* $* $*
Up to 6 Mbps $* $* $*
Up to 7 Mbps $* $* $*
Up to 8 Mbps $* $* $*
Over 8 Mbps $* $* $*
Backup Multi-T1
Up to 10 Kbps $* $* $*
Up to 1 Mbps $* $* $*
Up to 2 Mbps $* $* $*
Up to 3 Mbps $* $* $*
Up to 4 Mbps $* $* $*
Up to 5 Mbps $* $* $*
Up to 6 Mbps $* $* $*
Up to 7 Mbps $* $* $*
Up to 8 Mbps $* $* $*
Over 8 Mbps $* $* $*
Fixed Price Multi-T1
3 Mbps $* $* $*
4.5 Mbps $* $* $*
6 Mbps $* $* $*
7.5 Mbps $* $* $*
9 Mbps $* $* $*
Fixed Price T3 $* $* $*
Flexible T3
Up to 3 Mbps 3 $* $* $*
Up to 6 Mbps 6 $* $* $*
Up to 9 Mbps 9 $* $* $*
Up to 12 Mbps 12 $* $* $*
Up to 15 Mbps 15 $* $* $*
Up to 18 Mbps 18 $* $* $*
Up to 21 Mbps 21 $* $* $*
Over 21 Mbps 30 $* $* $*
</TABLE>
<PAGE>
Attachment B-2-1
Pricing for Internet Advantage
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------------------------- -------------------------------
AGREED BY DATACO & NEWCO
------------------------------------------- -------------------------------
-------------------------------------------
SILVER,
BRONZE,
PORT
NRC GOLD MRC ONLY MRC
-------------------------------------------
<S> <C> <C> <C> <C> <C>
Backup T3
Up to 2 kbps $* $* $*
Up to 3 Mbps $* $* $*
Up to 6 Mbps $* $* $*
Up to 9 Mbps $* $* $*
Up to 12 Mbps $* $* $*
Up to 15 Mbps $* $* $*
Up to 18 Mbps $* $* $*
Up to 21 Mbps $* $* $*
Over 21 Mbps $* $* $*
Fractional T3
3 Mbps 3 $* $* $*
6 Mbps 6 $* $* $*
9 Mbps 9 $* $* $*
12 Mbps 12 $* $* $*
15 Mbps 15 $* $* $*
18 Mbps 18 $* $* $*
21 Mbps 21 $* $* $*
24 Mbps 24 $* $* $*
27 Mbps 27 $* $* $*
30 Mbps 30 $* $* $*
33 Mbps N/A N/A N/A
36 Mbps N/A N/A N/A
39 Mbps N/A N/A N/A
42 Mbps N/A N/A N/A
45 Mbps N/A N/A N/A
Fixed Price OC-3c $* $* $*
Flexible OC-3c
Up to 20 Mbps 20 $* $* $*
Up to 30 Mbps 30 $* $* $*
Up to 40 Mbps 40 $* $* $*
Up to 50 Mbps 50 $* $* $*
Up to 60 Mbps 60 $* $* $*
Up to 70 Mbps 70 $* $* $*
Up to 80 Mbps 80 $* $* $*
Up to 90 Mbps 90 $* $* $*
Up to 100 Mbps 100 $* $* $*
Over 100 Mbps 120 $* $* $*
Fractional OC-3c
45 Mbps 45 $* $* $*
60 Mbps 60 $* $* $*
75 Mbps 75 $* $* $*
100 Mbps 100 $* $* $*
155 Mbps 155 $* $* $*
$* $* $*
$* $* $*
T1 Frame Relay $* $* $*
56 Kbps (32 Kbps CIR) $* $* $*
128 Kbps (64 Kbps CIR) $* $* $*
256 Kbps (128 Kbps CIR) $* $* $*
384 Kbps (192 Kbps CIR) $* $* $*
512 Kbps (256 Kbps CIR) $* $* $*
T1 (768 Kbps CIR) $* $* $*
$* $* $*
</TABLE>
<PAGE>
Attachment B-2-1
Pricing for Internet Advantage
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------------------------- -------------------------------
AGREED BY DATACO & NEWCO
------------------------------------------- -------------------------------
-------------------------------------------
SILVER,
BRONZE,
PORT
NRC GOLD MRC ONLY MRC
-------------------------------------------
<S> <C> <C> <C> <C> <C>
T3 Frame Relay $* $* $*
3 Mbps (1.5 Mbps CIR) $* $* $*
6 Mbps (3 Mbps CIR) $* $* $*
9 Mbps (4.5 Mbps CIR) $* $* $*
10 Mbps (5 Mbps CIR) $* $* $*
12 Mbps (6 Mbps CIR) $* $* $*
15 Mbps (7.5 Mbps CIR) $* $* $*
18 Mbps (9 Mbps CIR) $* $* $*
21 Mbps (10.5 Mbps CIR) $* $* $*
30 Mbps (15 Mbps CIR) $* $* $*
45 Mbps (22.5 Mbps CIR) $* $* $*
$* $* $*
ATM $* $* $*
3 Mbps $* $* $*
5 Mbps $* $* $*
10 Mbps $* $* $*
15 Mbps $* $* $*
20 Mbps $* $* $*
45 Mbps $* $* $*
$* $* $*
$* $* $*
</TABLE>
<PAGE>
Attachment B-2-2
Pricing for Internet Advantage International
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
AGREED BY GENUITY AND BELL ATLANTIC
----------------------------------------------------------
NRC :
SILVER SILVER &
NRC : BRONZE BRONZE
GOLD GOLD MRC POC MRC
----------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed Frame Relay United Kingdom
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
1024kbps $* $* $* $*
Point to Point for the UK to the London PoP
Fixed E1 $* $* $* $*
Flex E1 $* $* $* $*
Up to 128kbps $* $* $* $*
Up to 256kbps $* $* $* $*
Up to 512kbps $* $* $* $*
Up to 768kbps $* $* $* $*
Up to 1024kbps $* $* $* $*
Over 1024kbps $* $* $* $*
Multi E1 (Bronze Only) $* $* $* $*
4 Mbps (N=2) $* $* $* $*
6 Mbps (N=3) $* $* $* $*
8 Mbps (N=4) $* $* $* $*
Fractional E3 (Bronze Only) $* $* $* $*
4 Mbps $* $* $* $*
8 Mbps $* $* $* $*
12 Mbps $* $* $* $*
16 Mbps $* $* $* $*
24 Mbps $* $* $* $*
34 Mbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Ireland $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
Point to Point for Ireland to the Dublin PoP $* $* $* $*
Fixed E1 $* $* $* $*
Flex E1 $* $* $* $*
Up to 128kbps $* $* $* $*
Up to 256kbps $* $* $* $*
Up to 512kbps $* $* $* $*
Up to 768kbps $* $* $* $*
Up to 1024kbps $* $* $* $*
Over 1024kbps $* $* $* $*
Multi E1 $* $* $* $*
4 Mbps (N=2) $* $* $* $*
6 Mbps (N=3) $* $* $* $*
8 Mbps (N=4) $* $* $* $*
Fractional E3 $* $* $* $*
4 Mbps $* $* $* $*
8 Mbps $* $* $* $*
12 Mbps $* $* $* $*
16 Mbps $* $* $* $*
24 Mbps $* $* $* $*
34 Mbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for the Netherlands $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
1024kbps $* $* $* $*
$* $* $* $*
</TABLE>
<PAGE>
Attachment B-2-2
Pricing for Internet Advantage International
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
AGREED BY GENUITY AND BELL ATLANTIC
----------------------------------------------------------
NRC :
SILVER SILVER &
NRC : BRONZE BRONZE
GOLD GOLD MRC POC MRC
----------------------------------------------------------
<S> <C> <C> <C> <C>
Point to Point for the Netherlands to
the Amsterdam PoP $* $* $* $*
Fixed E1 $* $* $* $*
Flex E1 $* $* $* $*
Up to 128kbps $* $* $* $*
Up to 256kbps $* $* $* $*
Up to 512kbps $* $* $* $*
Up to 768kbps $* $* $* $*
Up to 1024kbps $* $* $* $*
Over 1024kbps $* $* $* $*
Multi E1 $* $* $* $*
4 Mbps (N=2) $* $* $* $*
6 Mbps (N=3) $* $* $* $*
8 Mbps (N=4) $* $* $* $*
Fractional E3 $* $* $* $*
4 Mbps $* $* $* $*
8 Mbps $* $* $* $*
12 Mbps $* $* $* $*
16 Mbps $* $* $* $*
24 Mbps $* $* $* $*
34 Mbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for France $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
1024kbps $* $* $* $*
$* $* $* $*
Point to Point for France to the Paris PoP $* $* $* $*
Fixed E1 $* $* $* $*
Flex E1 $* $* $* $*
Up to 128kbps $* $* $* $*
Up to 256kbps $* $* $* $*
Up to 512kbps $* $* $* $*
Up to 768kbps $* $* $* $*
Up to 1024kbps $* $* $* $*
Over 1024kbps $* $* $* $*
Multi E1 $* $* $* $*
4 Mbps (N=2) $* $* $* $*
6 Mbps (N=3) $* $* $* $*
8 Mbps (N=4) $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Germany $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
1024kbps $* $* $* $*
$* $* $* $*
Point to Point for Germany to the Frankfurt PoP $* $* $* $*
Fixed E1 $* $* $* $*
Flex E1 $* $* $* $*
Up to 128kbps $* $* $* $*
Up to 256kbps $* $* $* $*
Up to 512kbps $* $* $* $*
Up to 768kbps $* $* $* $*
Up to 1024kbps $* $* $* $*
Over 1024kbps $* $* $* $*
Multi E1 $* $* $* $*
4 Mbps (N=2) $* $* $* $*
6 Mbps (N=3) $* $* $* $*
8 Mbps (N=4) $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Italy $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
1024kbps $* $* $* $*
$* $* $* $*
</TABLE>
<PAGE>
Attachment B-2-2
Pricing for Internet Advantage International
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
AGREED BY GENUITY AND BELL ATLANTIC
----------------------------------------------------------
NRC :
SILVER SILVER &
NRC : BRONZE BRONZE
GOLD GOLD MRC POC MRC
----------------------------------------------------------
<S> <C> <C> <C> <C>
Point to Point for Italy to the Milan PoP $* $* $* $*
Fixed E1 $* $* $* $*
Flex E1 $* $* $* $*
Up to 128kbps $* $* $* $*
Up to 256kbps $* $* $* $*
Up to 512kbps $* $* $* $*
Up to 768kbps $* $* $* $*
Up to 1024kbps $* $* $* $*
Over 1024kbps $* $* $* $*
Multi E1 $* $* $* $*
4 Mbps (N=2) $* $* $* $*
6 Mbps (N=3) $* $* $* $*
8 Mbps (N=4) $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Spain $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Belgium $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
1024kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Switzerland $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Sweden $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
1024kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Europe Zone 1 (EU1) $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
1024kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Europe Zone 2 (EU2) $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Europe Zone 3 (EU3) $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Japan $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
1024kbps $* $* $* $*
$* $* $* $*
</TABLE>
<PAGE>
Attachment B-2-2
Pricing for Internet Advantage International
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
AGREED BY GENUITY AND BELL ATLANTIC
----------------------------------------------------------
NRC :
SILVER SILVER &
NRC : BRONZE BRONZE
GOLD GOLD MRC POC MRC
----------------------------------------------------------
<S> <C> <C> <C> <C>
Point to Point for Japan to the Tokyo PoP $* $* $* $*
Fixed T1 $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Hong Kong $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
1024kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for South Korea $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Taiwan $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Australia $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
1024kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Asia Zone 1 (Asia1) $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
1024kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Asia Zone 2 (Asia2) $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Mexico $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Brazil $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Argentina $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for South America Zone 1 (SA1) $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
</TABLE>
<PAGE>
Attachment B-2-2
Pricing for Internet Advantage International
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------
AGREED BY GENUITY AND BELL ATLANTIC
----------------------------------------------------------
NRC :
SILVER SILVER &
NRC : BRONZE BRONZE
GOLD GOLD MRC POC MRC
----------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed Frame Relay for South America Zone 2 (SA2) $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Puerto Rico $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
512kbps $* $* $* $*
$* $* $* $*
Fixed Frame Relay for Canada $* $* $* $*
64kbps $* $* $* $*
128kbps $* $* $* $*
256kbps $* $* $* $*
$* $* $* $*
</TABLE>
<PAGE>
[LOGO] Attachment B-2-3
__________________
GTE COMMUNICATIONS Pricing for BizConnect
CORPORATION ------------------------------
<TABLE>
<CAPTION>
------------------------
AGREED BY DATACO & NEWCO
------------------------
NRC MRC
------------------------
<S> <C> <C>
Fixed Price T1 $* $*
$* $*
Frame Relay $* $*
128 Kbps (64 Kbps CIR) $* $*
256 Kbps (128 Kbps CIR) $* $*
384 Kbps (192 Kbps CIR) $* $*
512 Kbps (256 Kbps CIR) $* $*
T1 (768 Kbps CIR) $* $*
------------------------
</TABLE>
CONFIDENTIAL INFORMATION-SUBJECT TO PROTECTIVE ORDER
IN CC Docket No. 98-184 before the Federal Communications Commission
COPYING PROHIBITED
<PAGE>
[LOGO] Attachment B-2-4
__________________ Pricing for ISP Direct
GTE COMMUNICATIONS ----------------------------------------
CORPORATION
<TABLE>
<CAPTION>
--------------------------------
AGREED BY DATACO & NEWCO
---------------------------------
NRC PREMIUM STANDARD
---------------------------------
<S> <C> <C> <C>
Fractional T1
128 Kbps $* $* $*
256 Kbps $* $* $*
384 Kbps $* $* $*
512 Kbps $* $* $*
768 kbps $* $* $*
$* $* $*
Backup T1 $* $* $*
Up to 56 Kbps $* $* $*
Up to 128 Kbps $* $* $*
Up to 256 Kbps $* $* $*
Up to 384 Kbps $* $* $*
Up to 512 Kbps $* $* $*
Up to 768 Kbps $* $* $*
Over 768 Kbps $* $* $*
$* $* $*
Fixed T1 $* $* $*
$* $* $*
Flexible Multi-T1 $* $* $*
Up to 3 Mbps $* $* $*
Up to 4 Mbps $* $* $*
Up to 5 Mbps $* $* $*
Up to 6 Mbps $* $* $*
Up to 7 Mbps $* $* $*
Up to 8 Mbps $* $* $*
Over 8 Mbps $* $* $*
$* $* $*
Fixed Price Multi-T1 $* $* $*
3 Mbps $* $* $*
4.5 Mbps $* $* $*
6 Mbps $* $* $*
7.5 Mbps $* $* $*
9 Mbps $* $* $*
$* $* $*
Fixed Price T3 $* $* $*
$* $* $*
Flexible Ethernet $* $* $*
Up to 1.5 Mbps $* $* $*
Up to 2.4 Mbps $* $* $*
Up to 3.9 Mbps $* $* $*
Up to 5.9 Mbps $* $* $*
Over 5.9 Mbps $* $* $*
$* $* $*
Fixed Price Ethernet $* $* $*
$* $* $*
Flexible T3 $* $* $*
Up to 3 Mbps $* $* $*
Up to 6 Mbps $* $* $*
Up to 9 Mbps $* $* $*
Up to 12 Mbps $* $* $*
Up to 15 Mbps $* $* $*
Up to 18 Mbps $* $* $*
Up to 21 Mbps $* $* $*
Over 21 Mbps $* $* $*
$* $* $*
$* $* $*
$* $* $*
Backup T3 $* $* $*
Up to 1 Mbps $* $* $*
Up to 3 Mbps $* $* $*
Up to 6 Mbps $* $* $*
Up to 9 Mbps $* $* $*
Up to 12 Mbps $* $* $*
</TABLE>
CONFIDENTIAL INFORMATION-SUBJECT TO PROTECTIVE ORDER
IN CC Docket No. 98-184 before the Federal Communications Commission
COPYING PROHIBITED
<PAGE>
[LOGO] Attachment B-2-4
__________________ Pricing for ISP Direct
GTE COMMUNICATIONS ----------------------------------------
CORPORATION
<TABLE>
<CAPTION>
--------------------------------
AGREED BY DATACO & NEWCO
---------------------------------
NRC PREMIUM STANDARD
---------------------------------
<S> <C> <C> <C>
Up to 15 Mbps $* $* $*
Up to 18 Mbps $* $* $*
Up to 21 Mbps $* $* $*
Over 21 Mbps $* $* $*
$* $* $*
Fractional T3 $* $* $*
3 Mbps $* $* $*
6 Mbps $* $* $*
9 Mbps $* $* $*
12 Mbps $* $* $*
15 Mbps $* $* $*
18 Mbps $* $* $*
21 Mbps $* $* $*
24 Mbps $* $* $*
27 Mbps $* $* $*
30 Mbps $* $* $*
$* $* $*
Flexible Fast Ethernet Fee Schedule $* $* $*
Up to 4 Mbps $* $* $*
Up to 6 Mbps $* $* $*
Up to 8 Mbps $* $* $*
Up to 10 Mbps $* $* $*
Up to 12 Mbps $* $* $*
Up to 14 Mbps $* $* $*
Up to 16 Mbps $* $* $*
Up to 18 Mbps $* $* $*
Up to 20 Mbps $* $* $*
Up to 22 Mbps $* $* $*
Up to 24 Mbps $* $* $*
Up to 26 Mbps $* $* $*
Up to 28 Mbps $* $* $*
Up to 30 Mbps $* $* $*
Up to 32 Mbps $* $* $*
Up to 34 Mbps $* $* $*
Up to 36 Mbps $* $* $*
Up to 38 Mbps $* $* $*
Up to 40 Mbps $* $* $*
Up to 42 Mbps $* $* $*
Up to 44 Mbps $* $* $*
Up to 46 Mbps $* $* $*
Up to 48 Mbps $* $* $*
Up to 50 Mbps $* $* $*
Up to 52 Mbps $* $* $*
Up to 54 Mbps $* $* $*
Up to 56 Mbps $* $* $*
Up to 58 Mbps $* $* $*
Up to 60 Mbps $* $* $*
Up to 70 Mbps $* $* $*
Up to 80 Mbps $* $* $*
Up to 90 Mbps $* $* $*
Up to 100 Mbps $* $* $*
$* $* $*
Fixed Fast Ethernet $* $* $*
$* $* $*
Virtual Transit Access Service $* $* $*
4 Mbps $* $* $*
6 Mbps $* $* $*
8 Mbps $* $* $*
10 Mbps $* $* $*
12 Mbps $* $* $*
14 Mbps $* $* $*
16 Mbps $* $* $*
18 Mbps $* $* $*
</TABLE>
CONFIDENTIAL INFORMATION-SUBJECT TO PROTECTIVE ORDER
IN CC Docket No. 98-184 before the Federal Communications Commission
COPYING PROHIBITED
<PAGE>
[LOGO] Attachment B-2-4
__________________ Pricing for ISP Direct
GTE COMMUNICATIONS ------------------------------------------
CORPORATION
<TABLE>
<CAPTION>
--------------------------------
AGREED BY DATACO & NEWCO
---------------------------------
NRC PREMIUM STANDARD
---------------------------------
<S> <C> <C> <C>
20 Mbps $* $* $*
22 Mbps $* $* $*
24 Mbps $* $* $*
26 Mbps $* $* $*
28 Mbps $* $* $*
30 Mbps $* $* $*
32 Mbps $* $* $*
34 Mbps $* $* $*
36 Mbps $* $* $*
38 Mbps $* $* $*
40 Mbps $* $* $*
42 Mbps $* $* $*
44 Mbps $* $* $*
$* $* $*
Fixed Price OC-3c $* $* $*
$* $* $*
Fractional OC-3c $* $* $*
45 Mbps $* $* $*
60 Mbps $* $* $*
75 Mbps $* $* $*
100 Mbps $* $* $*
125 Mbps $* $* $*
155 Mbps $* $* $*
$* $* $*
Fixed Price OC-12c $* $* $*
$* $* $*
Flexible OC-12c $* $* $*
$* $* $*
</TABLE>
CONFIDENTIAL INFORMATION-SUBJECT TO PROTECTIVE ORDER
IN CC Docket No. 98-184 before the Federal Communications Commission
COPYING PROHIBITED
<PAGE>
<TABLE>
<CAPTION>
[LOGO OF GTE] Attachment B-2-5
Pricing for Internet Advantage Additional Features
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
GOLD SILVER BRONZE PORT ONLY
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
NRC NRC NRC MRC NRC MRC NRC MRC
----------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Primary DNS (per additional 10 pack) $* $* $* $* $* $* $* $*
Secondary DNS (per add'l 10 pack) $* $* $* $* $* $* $* $*
Packet Filtering (per LAN) included included $* $* N/A N/A N/A N/A
Network News Feed (additional) $* $* $* $* $* $* $* $*
News Access $* $* $* $* $* $* $* $*
Domain Name Email $* $* $* $* $* $* $* $*
Network Address Translation $* $* $* $* N/A N/A N/A N/A
@Vault $* $*
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
[LOGO OF GTE] Attachment B-2-6
Pricing for Internet Advantage International Additional Features
-----------------------------------------------------------------------
-----------------------------------------------------------------------
GOLD SILVER BRONZE
-----------------------------------------------------------------------
-----------------------------------------------------------------------
NRC NRC NRC MRC NRC MRC
-----------------------------------------------------------------------
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Primary DNS (per additional 10 pack) $* $* $* $* $* $*
Secondary DNS (per add'l 10 pack) $* $* $* $* $* $*
Packet Filtering (per LAN) included included $* $* N/A N/A
Network News Feed (primary) $* $* $* $* $* $*
Network News Feed (secondary) $* $* $* $* $* $*
ISDN Backup Service $* $* $* $* N/A N/A
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Attachment B-3
DIALINX v2.3 BELL ATLANTIC WHOLESALE RATE SCHEDULE
Definitions: (for purposes of this Attachment only)
- -------------
. Genuity Inc. Genuity
. GTE/Bell Atlantic Bell Atlantic
. Customer Each and every direct customer of Bell Atlantic
. End User Each and every end user of a Customer of Bell Atlantic
. Service rates correspond to the rates outlined below. Network volume
discounts are automatic and dynamic, (e.g., Bell Atlantic may receive a
lower component price one month, and higher rate the next month due to
monthly usage variables.)
. During the month in which any link, equipment, or service is installed or
de-installed, the Pro-Rated Monthly Charge, will be billed based upon a 30
day calendar month for each day following Genuity's commencement of the
applicable service. For example, for equipment installed or de-installed,
the Customer will be billed 1/30 of the Monthly Charge, for each day
following commencement of the service for that billing period.
CUSTOMER SET-UP FEES
. Bell Atlantic will be charged a per customer set-up fee based on
provisioning up to 5 realms pointing to the same RADIUS IP address.
Additional realms are outlined in more detail elsewhere in this document.
. Per Customer Set-up fee (NRC): $*
NORTH AMERICAN DIAL ACCESS NETWORKING HOURLY SERVICE FEES
North American rates reflect use of the Bell Atlantic's local access points in
the U.S. and Canada, (currently approximately 850 local access numbers). 800
rates are priced separately for the U.S. and Canada as noted below. A complete,
up to date list of the North American local access numbers in Excel format can
be found at:
http://www.bbn.com/support/dialinx/napops.htm
North American Rates
<TABLE>
<CAPTION>
Monthly Hourly 800/888 800/888
Hours US US Canada
Analog (per hr) (per hr)
(USDL)# (US8A, (CA8A)#
US8B)#
- ------------------------------------------------------
<S> <C> <C> <C>
0-3M $*
- ------------------------------
3M+ $*
- ------------------------------
6M+ $*
- ------------------------------
12M+ $* $* $*
- ------------------------------
24M+ $*
- ------------------------------
48M+ $*
- ------------------------------
72M+ $*
- ------------------------------------------------------
</TABLE>
#Genuity DiaLinx Rate Codes
WORLDWIDE DIAL ACCESS NETWORKING HOURLY SERVICE FEES
Bell Atlantic customers will be provided DiaLinx v2.3 international access to
Genuity DiaLinx at the rates outlined below. These items are pass through
charges and our not subject to any further discounts. There are two networks
available to Bell Atlantic, the DiaLinx International network, and the
International Partner network via iPass. These networks are differentiated by
Genuity billing codes as noted in the table below. A complete, up to date list
of the international local access numbers (with billing codes) in Excel format
can be found at:
http://www.bbn.com/support/dialinx/intlpops.htm
<PAGE>
DiaLinx International Rates
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
UK Europe/ Australia NZ Mexico Asia Mexico 800 Freephone Caribbean/
Puerto Rico /Puerto Rico Access Thailand
Zone 3 800
Zone 1 Zone 2 (IDLB, IDLK)# Zone 4 Zone 5 Zone 6 Zone 7 Zone 8
(IDLM)# (IDLA, IDLL)# (IDLC)# (IDLD)# (IDLE)# (IDLF)# (IDLH)#
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$* $* $* $* $* $* $* $*
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
International Partner Network Rates
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Code A Code B Code C Code D (IPAD)# Code E Code F Code G
(IPAA)# (IPAB)# (IPAC)# (IPAE)# (IPAF)# (IPAG)#
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$* $* $* $* $* $* $*
- ----------------------------------------------------------------------------------------
</TABLE>
#Genuity Bill Codes
VISP SET-UP CHARGES
. Per Customer Set-up fee (NRC): $*
Includes the T & M support for choosing the application components,
bundling and deploying a CD Master on a per customer basis, as well as
the set-up the back office services to support registration, email,
and news. This fee is inclusive of the customer set-up fee noted under
Customer set-up fees above, but only includes one realm as part of
this service offering. Provisioning of additional realms for a VISP
customer is a non-standard implementation and will incur T & M charges
to be determined on an ICB.
. Per User Set-up fee (NRC): $*
This is the per-user fee for all new end users added to the customer's
database on a monthly basis.
DIALINX VISP - Base Components, including the following services:
. Base Services: $*
RADIUS Authentication
Registration Servers
CD Master (includes the following software):
Customized Registration Software
Customized Dialer Software
Netscape 4.0 and/or IE 4.0
Email (Up to 3 mail boxes per user)
News Feed
DIALINX VISP - Credit Card Billing Option
. End User Credit Card Billing $* per month per user
Please note Base Services must also be selected for this option.
DIALINX VISP - Help Desk Option
. End User Help Desk (7X24) $* per month per user
DIALINX VISP - Personal Web Space Option
. End User Personal Web Space - 3 Megabytes/user. (If selected charge is for
all users/realm) $* per user per month
Please note Base Services must also be selected for this option.
<PAGE>
ADDITIONAL OPTIONAL SERVICES
RADIUS Hosting:
- ---------------
Genuity can setup and host a RADIUS authentication server at a physically secure
and redundant server farm. Genuity also provides a secure Web-based
administration tool for easy username administration. Price is based on
individual end-user volume from Bell Atlantic. One time fee for set up is based
on each individual end customer of Bell Atlantic who chooses this option.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Service Volume Pricing
- --------------------------------------------------------------------
<S> <C>
under 5,000 accounts - $* user/month
RADIUS Hosting 5,001 - 10, 000 accounts - $* user/month
10,001 - 20,000 accounts - $* user/month
20,001 - 50,000 accounts $* user/month
- --------------------------------------------------------------------
</TABLE>
. Per Customer Set-up fee (NRC): $*
Additional Realms:
- -----------------
Genuity will support five (5) RADIUS authentication realms to you. Customers
who require additional realms will be charged the following fee for each block
of five (5) additional realms.
. Per Customer Monthly fee (MRC): $*
Tunnel Routers:
- ---------------
PLEASE NOTE: A Tunnel Router solution requires a DiaLinx QRT Review Process.
See the DiaLinx QRT Request Process & Procedures Guide location on the KBank for
instructions on submitting a request.
Genuity leases the DiaLinx Tunnel Router to the customer, provisioning the
equipment and pre-configuring the router prior to delivery. The DiaLinx Tunnel
Router is a Cisco 4700M router with one Ethernet card. A minimum term of one
year is required on all tunnel routers. If a tunnel router is de-installed
prior to the one year period, a service fee equal to the remainder of a one year
term will be incurred.
. Pre Customer Set-up fee (NRC): $*
. Per Customer Monthly fee (MRC): $*
Real-Time RADIUS Accounting:
- ----------------------------
PLEASE NOTE: Real-Time Radius Accounting requires a DiaLinx QRT Review Process.
See the DiaLinx QRT Request Process & Procedures Guide location on the KBank for
instructions on submitting a request.
Genuitywill provide Real-Time RADIUS Accounting feeds to Bell Atlantic customers
through the DiaLinx QRT Process. Bell Atlantic customers should review the
DiaLinx Real-Time RADIUS Accounting Product Guide for additional information on
proper implementation.
. Per Customer Set-up fee (NRC): $*
. Per Customer Monthly fee (MRC): $*
Time and Materials
. Out of Scope Work $* per hour
<PAGE>
Attachment B-4
E Business Hosting Pricing for Bell Atlantic
The discount schedule below applies to all standard service quotations for
Enterprise Advantage (EA) services.
Attached is the current price list for EA services (Attachment #B-4-1).
Baseline discounts are available based on the term of Bell Atlantic's customer's
contract, and vary according to the service component as documented in the
attached schedule (Attachment #B-4-2, "Baseline Discounts").
Escalated Discount Schedule
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
RECURRING HOSTING SERVICES Bell Atlantic's Customer Contract Term
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Bell Atlantic Customer's Contractual Commitment One Year Multi-Year
for
Recurring Hosting Services
(On an individual quotation (deal-by-deal) basis,
not in the aggregate)
- ------------------------------------------------------------------------------------------------------------------------------
less than $20K/month of recurring hosting services Baseline Baseline
- ------------------------------------------------------------------------------------------------------------------------------
$20K to $200K/month of recurring hosting services Baseline + 3% Baseline + 4%
- ------------------------------------------------------------------------------------------------------------------------------
greater than $200K/month of recurring hosting services Baseline + 5% Baseline + 7%
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
MONTHLY BANDWIDTH COMMITMENT Bell Atlantic's Customer Contract Term
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Bell Atlantic Customer's One Year Multi-Year
Monthly Bandwidth Commitment
(On an individual quotation (deal-by-deal) basis,
not in the aggregate)
- ---------------------------------------------------------------------------------------------------------------------------
less than 50 Mbps monthly bandwidth commitment Baseline Baseline
- ---------------------------------------------------------------------------------------------------------------------------
50 Mbps - 100 Mbps monthly bandwidth commitment Baseline + 2% Baseline + 4%
- ---------------------------------------------------------------------------------------------------------------------------
greater than 100 Mbps monthly bandwidth commitment Baseline + 5% Baseline + 6%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Exclusions:
- -----------
Genuity limits the following service components to the Baseline discount
schedule: they are not eligible for the Escalated Discounts:
. All 3/rd/ party hardware, hardware maintenance, software and software
maintenance purchased by Genuity.
Any EA Services provided to Bell Atlantic in Genuity's Japan Data Center are
subject to tariffs and are not eligible for any discounts (either Baseline or
the Escalated Discounts above)
Notes:
- ------
<PAGE>
Genuity and Bell Atlantic agree to enter into good faith discussions to
determine how Bell Atlantic may purchase its own hardware for use as part of a
standard EA service. The discussions shall take place within 120 days of the
effective date of the Agreement.
A "standard service quotation" for purposes of this Attachment is one in which
all the EA services and products purchased by Bell Atlantic's customer are found
in the EA Service Description at the time the quotation is generated and the
customer's web site architecture is a Genuity-approved architecture.
<PAGE>
Enterprise Advantage Price List as of March 10, 2000
<TABLE>
<CAPTION>
ITEM_CODE ITEM_DESCRIPTION UOM PLATFORM MODELS
ENTERPRISE COMMERCE
<S> <C> <C> <C> <C>
wh-store-b2 B2 Additional Storefront EA NT
wh-imp-b2b B2B Commerce - Installation EA NT
wh-swrent-b2b B2B Commerce - License Fee DAY NT
wh-imp-b2c B2C Commerce - Installation EA NT
wh-swrent-b2c B2C Commerce - License Fee DAY NT
wh-sw-cr B2C Commerce/MS Site Server 1x License Fee EA NT
wh-fm-cr B2C Commerce/MS Site Server Fault Monitoring DAY NT
wh-imp-cr B2C Commerce/MS Site Server Installation EA NT
wh-swrent-cr B2C Commerce/MS Site Server License Fee DAY NT
wh-swrent-comsrv-b2 Commerce Server Add-on DAY NT
wh-swrent-mbrsrv-b2 Membership Server Add-on DAY NT
wh-imp-mscsic Microsoft Commerce Server w/IC Installation EA NT
wh-swrent-mscsic Microsoft Commerce Server Fee DAY NT
wh-sw-mscsic Microsoft Commerce Server w/IC EA NT
wh-sw-msssic Microsoft Site Server 7.0 w/IC EA NT
wh-swrent-msssic Microsoft Site Server 7.0 w/IC Fee DAY NT
wh-imp-msssic Microsoft Site Server 7.0 w/IC Installation EA NT
wh-swrent-sqlsrv-b2 Microsoft SQL Server 7.0 Add-on DAY NT
wh-sw-sqlent Microsoft SQL Server 7.0 Enterprise Upgrade EA NT
wh-swrent-sqlent Microsoft SQL Server 7.0 Enterprise Upgrade DAY NT
wh-sw-sqlsrvwic Microsoft SQL Server 7.0 w/IC EA NT
wh-swrent-sqlsrvwic Microsoft SQL Server 7.0 w/IC Fee DAY NT
wh-sw-sqlsrvic Microsoft SQL Server Internet Connector EA NT
wh-swrent-sqlsrvic Microsoft SQL Server Internet Connector Fee DAY NT
wh-swrent-sqlsrvic-b2 MS SQL Server 7.0 Internet Connector Add-on DAY NT
wh-imp-tandata Tan Data Installation EA NT
wh-swrent-tandata Tan Data License Fee DAY NT
wh-sw-tandata Tan Data Onetime License Fee EA NT
wh-swrent-add-carrier TanData Additional Carrier License DAY NT
wh-swrent-add-origin TanData Additional Origin License DAY NT
wh-swrent-add-tandata TanData Add-on License Fee DAY NT
wh-bts-taxware Tax Ware Basic Technical Support DAY NT
wh-imp-taxware Tax Ware Installation EA NT
wh-swrent-taxware Tax Ware License Fee DAY NT
wh-sw-taxware Tax Ware Onetime License Fee EA NT
wh-swrent-add-nexus Taxware Additional Nexus DAY NT
wh-swrent-add-taxware Taxware Add-on License Fee DAY NT
ENTERPRISE PERFORMANCE
Traffic Distribution & Load Balancing
wh-band-100-cach-add-man 100Mbps/Mo Caching Commitment - Add Usage Fee EA NT,UNIX
wh-band-100-cach-man 100Mbps/Mo Caching Commitment - Min Usage Fee DAY NT,UNIX
wh-band-10-cach-add-man 10Mbps/Mo Caching Commitment - Addl Usage Fee EA NT,UNIX
wh-band-10-cach-man 10Mbps/Mo Caching Commitment - Min Usage Fee DAY NT,UNIX
wh-band-20-cach-add-man 20Mbps/Mo Caching Commitment - Addl Usage Fee EA NT,UNIX
wh-band-20-cach-man 20Mbps/Mo Caching Commitment - Min Usage Fee DAY NT,UNIX
wh-band-2-cach-add-man 2Mbps/Mo Caching Commitment - Addl Usage Fee EA NT,UNIX
wh-band-2-cach-man 2Mbps/Mo Caching Commitment - Min Usage Fee DAY NT,UNIX
wh-band-4-cach-add-man 4Mbps/Mo Caching Commitment - Addl Usage Fee EA NT,UNIX
wh-band-4-cach-man 4Mbps/Mo Caching Commitment - Min Usage Fee DAY NT,UNIX
wh-band-50-cach-add-man 50Mbps/Mo Caching Commitment - Addl Usage Fee EA NT,UNIX
wh-band-50-cach-man 50Mbps/Mo Caching Commitment - Min Usage Fee DAY NT,UNIX
wh-band-6-cach-add-man 6Mbps/Mo Caching Commitment - Addl Usage Fee EA NT,UNIX
wh-band-6-cach-man 6Mbps/Mo Caching Commitment - Min Usage Fee DAY NT,UNIX
wh-band-8-cach-add-man 8Mbps/Mo Caching Commitment - Addl Usage Fee EA NT,UNIX
wh-band-8-cach-man 8Mbps/Mo Caching Commitment - Min Usage Fee DAY NT,UNIX
wh-imp-cach Activation Fee, Caching EA NT,UNIX
<CAPTION>
---------------------------------------------------------
ITEM_CODE COMP_CLASS EA-US Mar00 EA-JP Mar00 EA-UK Mar00 EA Shared Mar00
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ENTERPRISE COMMERCE
B2
wh-store-b2 Enterprise Commerce *
wh-imp-b2b Enterprise Commerce *
wh-swrent-b2b Enterprise Commerce *
wh-imp-b2c Enterprise Commerce *
wh-swrent-b2c Enterprise Commerce *
wh-sw-cr Enterprise Commerce * *
wh-fm-cr Enterprise Commerce * *
wh-imp-cr Enterprise Commerce * *
wh-swrent-cr Enterprise Commerce * *
wh-swrent-comsrv-b2 Enterprise Commerce * *
wh-swrent-mbrsrv-b2 Enterprise Commerce *
wh-imp-mscsic Enterprise Commerce *
wh-swrent-mscsic Enterprise Commerce *
wh-sw-mscsic Enterprise Commerce *
wh-sw-msssic Enterprise Commerce *
wh-swrent-msssic Enterprise Commerce *
wh-imp-msssic Enterprise Commerce *
wh-swrent-sqlsrv-b2 Enterprise Commerce *
wh-sw-sqlent Enterprise Commerce *
wh-swrent-sqlent Enterprise Commerce *
wh-sw-sqlsrvwic Enterprise Commerce *
wh-swrent-sqlsrvwic Enterprise Commerce *
wh-sw-sqlsrvic Enterprise Commerce *
wh-swrent-sqlsrvic Enterprise Commerce *
wh-swrent-sqlsrvic-b2 Enterprise Commerce *
wh-imp-tandata Enterprise Commerce *
wh-swrent-tandata Enterprise Commerce *
wh-sw-tandata Enterprise Commerce *
wh-swrent-add-carrier Enterprise Commerce *
wh-swrent-add-origin Enterprise Commerce *
wh-swrent-add-tandata Enterprise Commerce *
wh-bts-taxware Enterprise Commerce *
wh-imp-taxware Enterprise Commerce *
wh-swrent-taxware Enterprise Commerce *
wh-sw-taxware Enterprise Commerce *
wh-swrent-add-nexus Enterprise Commerce *
wh-swrent-add-taxware Enterprise Commerce *
ENTERPRISE PERFORMANCE
Traffic Distribution & Load Balancing
wh-band-100-cach-add-man Enterprise Commerce *
wh-band-100-cach-man Enterprise Commerce *
wh-band-10-cach-add-man Enterprise Commerce *
wh-band-10-cach-man Enterprise Commerce *
wh-band-20-cach-add-man Enterprise Commerce *
wh-band-20-cach-man Enterprise Commerce *
wh-band-2-cach-add-man Enterprise Commerce *
wh-band-2-cach-man Enterprise Commerce *
wh-band-4-cach-add-man Enterprise Commerce *
wh-band-50-cach-add-man Enterprise Commerce *
wh-band-50-cach-man Enterprise Commerce *
wh-band-6-cach-add-man Enterprise Commerce *
wh-band-6-cach-man Enterprise Commerce *
wh-band-8-cach-add-man Enterprise Commerce *
wh-band-8-cach-man Enterprise Commerce *
wh-imp-cach Enterprise Commerce *
</TABLE>
1
<PAGE>
Enterprise Advantage Price List as of March 10, 2000
<TABLE>
<CAPTION>
ITEM_CODE ITEM_DESCRIPTION UOM PLATFORM MODELS
<S> <C> <C> <C> <C>
wh-imp2-url-cach Additional URL Fee, Caching EA NT,UNIX
wh-eq-distdir Cisco Distributed Director EA NT,UNIX
wh-imp-distdir Cisco Distributed Director Installation EA NT,UNIX
wh-mnt-distdir Cisco Distributed Director Maintenance DAY NT,UNIX
wh-eqpmt-distdir Cisco Distributed Director Rent-To-Own DAY NT,UNIX
wh-eq-ld416 Cisco Local Director 416 EA NT,UNIX
wh-eqrent-ld416 Cisco Local Director 416 Rental Fee DAY NT,UNIX
wh-eqpmt-ld416 Cisco Local Director 416 Rent-To-Own DAY NT,UNIX
wh-eq-ld430 Cisco Local Director 430 EA NT,UNIX
wh-eqrent-ld430 Cisco Local Director 430 Rental Fee DAY NT,UNIX
wh-eqpmt-ld430 Cisco Local Director 430 Rent-To-Own DAY NT,UNIX
wh-ops-ddir Distributed Director Fee DAY NT,UNIX
wh-ops-hs Hopscotch Fee DAY NT,UNIX
wh-imp-hs Hopscotch Installation EA NT,UNIX
wh-imp-hscp Hopscotch Customer Premise Configuration EA NT,UNIX
wh-ops-hscp Hopscotch Customer Premise Fee DAY NT,UNIX
Traffic-Host
wh-imp-lb1 Activation Fee, Load Balancer 1 EA NT,UNIX
wh-imp-lb2 Activation Fee, Load Balancer 2 EA NT,UNIX
wh-ops-lb1 Load Balancer 1 Service Fee DAY NT,UNIX
wh-ops-lb2 Load Balancer 2 Service Fee DAY NT,UNIX
Replication Services
wh-ops-siterep Site Replicator Fee DAY UNIX
wh-imp-siterep Site Replicato Installation EA UNIX
HARDWARE
NT-Internal Disk Storage
wh-eqpmt-id18.2 Compaq 18.2 GB (WU SCSI-3) Int Dr Rent-To-Own DAY NT
wh-eq-id18.2 Compaq 18.2 GB (WU SCSI-3) Int Drive EA NT 250,450,U2
wh-eqrent-id18.2-nt Compaq 18.2 GB (WU SCSI-3) Int Drive Rental DAY NT
wh-eqpmt-id18.2-wu2-nt Compaq 18.2 GB (WU2 SCSI) Int Dr Rent-To-Own DAY NT
wh-eq-id18.2-wu2-nt Compaq 18.2 GB (WU2 SCSI) Int Drive EA NT
wh-eqrent-id18.2-wu2-nt Compaq 18.2 GB (WU2 SCSI) Int Drive Rental DAY NT
wh-eqpmt-id9.1-nt Compaq 9.1 GB (WU SCSI-3) Int Dr Rent-To-Own DAY NT
wh-eq-id9.1-nt Compaq 9.1 GB (WU SCSI-3) Int Drive EA NT
wh-eqrent-id9.1-nt Compaq 9.1 GB (WU SCSI-3) Int Drive Rental DAY NT
wh-eqpmt-id9.1-wu2-nt Compaq 9.1 GB (WU2 SCSI) Int Dr Rent-To-Own DAY NT
wh-eq-id9.1-wu2-nt Compaq 9.1 GB (WU2 SCSI) Int Drive EA NT
wh-eqrent-id9.1-wu2-nt Compaq 9.1 GB (WU2 SCSI) Int Drive Rental DAY NT
wh-imp-id-nt Compaq Internal Drive Installation EA NT
NT-Miscellaneous
wh-eq-nic-nt Compaq NIC Card EA NT
wh-eqpmt-nic-nt Compaq NIC Card Rent-To-Own DAY NT
wh-eqrent-nic-nt Compaq NIC Card Rental DAY NT
NT-Processors
wh-eq-piii500 Pentium III 500 EA NT
wh-eqrent-piii500 Pentium III 500 Rental DAY NT
wh-eqpmt-piii500 Pentium III 500 Rent-To-Own DAY NT
wh-eq-piii600 Pentium III 600 EA NT
wh-eqrent-piii600 Pentium III 600 Rental DAY NT
wh-eqpmt-piii600 Pentium III 600 Rent-To-Own DAY NT
wh-eq-px500 Pentium Xeon 500 EA NT
wh-eqrent-px500 Pentium Xeon 500 Rental DAY NT
wh-eqpmt-px500 Pentium Xeon 500 Rent-To-Own DAY NT
wh-eq-px550 Pentium Xeon 550 EA NT
wh-eqrent-px550 Pentium Xeon 550 Rental DAY NT
wh-eqpmt-px550 Pentium Xeon 550 Rent-To-Own DAY NT
NT-External RAID
wh-imp-er0+1-nt Compaq Ext RAID0+1 Installation EA NT
<CAPTION>
---------------------------------------------------------
ITEM_CODE COMP_CLASS EA-US Mar00 EA-JP Mar00 EA-UK Mar00 EA Shared Mar00
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
wh-inp2-url-cach Enterprise Performance *
wh-eq-distdir Enterprise Performance *
wh-imp-distdir Enterprise Performance *
wh-mnt-distdir Enterprise Performance *
wh-eqpmt-distdir Enterprise Performance *
wh-eq-ld416 Enterprise Performance *
wh-eqrent-ld416 Enterprise Performance *
wh-eqpmt-ld416 Enterprise Performance *
wh-eq-ld430 Enterprise Performance *
wh-eqrent-ld430 Enterprise Performance *
wh-eqpmt-ld430 Enterprise Performance *
wh-ops-ddir Enterprise Performance *
wh-ops-hs Enterprise Performance * * *
wh-imp-hs Enterprise Performance * * *
wh-imp-hscp Enterprise Performance *
wh-ops-hscp Enterprise Performance *
Traffic-Host
wh-imp-lb1 Enterprise Performance *
wh-imp-lb2 Enterprise Performance *
wh-ops-lb1 Enterprise Performance *
wh-ops-lb2 Enterprise Performance *
Replication Services
wh-ops-siterep Enterprise Performance *
wh-imp-siterep Enterprise Performance *
HARDWARE
NT-Internal Disk Storage
wh-eqpmt-id18.2 Hardware * * *
wh-eq-id18.2 Hardware * * *
wh-eqrent-id18.2-nt Hardware * * *
wh-eqpmt-id18.2-wu2-nt Hardware * * *
wh-eq-id18.2-wu2-nt Hardware * * *
wh-eqrent-id18.2-wu2-nt Hardware * * *
wh-eqpmt-id9.1-nt Hardware * * *
wh-eq-id9.1-nt Hardware * * *
wh-eqrent-id9.1-nt Hardware * * *
wh-eqpmt-id9.1-wu2-nt Hardware * * *
wh-eq-id9.1-wu2-nt Hardware * * *
wh-eqrent-id9.1-wu2-nt Hardware * * *
wh-imp-id-nt Hardware *
NT-Miscellaneous
wh-eq-nic-nt Hardware * * *
wh-eqpmt-nic-nt Hardware * * *
wh-eqrent-nic-nt Hardware * * *
NT-Processors
wh-eq-piii500 Hardware * * *
wh-eqrent-piii500 Hardware * * *
wh-eqpmt-piii500 Hardware * * *
wh-eq-piii600 Hardware *
wh-eqrent-piii600 Hardware *
wh-eqpmt-piii600 Hardware *
wh-eq-px500 Hardware * * * *
wh-eqrent-px500 Hardware * * * *
wh-eqpmt-px500 Hardware * * * *
wh-eq-px550 Hardware *
wh-eqrent-px550 Hardware *
wh-eqpmt-px550 Hardware *
NT-External RAID
wh-imp-er0+1-nt Hardware *
</TABLE>
2
<PAGE>
Enterprise Advantage Price List as of March 10,2000
<TABLE>
<CAPTION>
ITEM_CODE ITEM_DESCRIPTION UOM PLATFORM MODELS COMP_CLASS
<S> <C> <C> <C> <C> <C>
wh-imp-er1-nt Compaq Ext RAID1 Installation EA NT Hardware
wh-imp-er5-nt Compaq Ext RAID5 Installation EA NT Hardware
wh-eq-ru2-nt Compaq RAID Chassis Model U2 EA NT Hardware
wh-eq-rehsd-nt Compaq RAID Hot Spare Disk EA NT Hardware
wh-mnt-proraid Compaq RAID Maintenance DAY NT Hardware
wh-eq-u2108-er0+1-nt Compaq U2 108GB (7x36) Ext RAID0+1 EA NT Hardware
wh-eqpmt-u2108-er0+1-nt Compaq U2 108GB 7x36 Ext RAID0+1 Rent-To-Own DAY NT Hardware
wh-eq-u2180-er5-nt Compaq U2 180GB (7x36) Ext RAID5 EA NT Hardware
wh-eqpmt-u2180-er5-nt Compaq U2 180GB (7x36) Ext RAID5 Rent-To-Own DAY NT Hardware
wh-eq-u254-er0+1-nt Compaq U2 54GB (7x18) Ext RAID0+1 EA NT Hardware
wh-eqpmt-u254-er0+1-nt Compaq U2 54GB (7x18) Ext RAID0+1 Rent-To-Own DAY NT Hardware
wh-eq-u290-er5-nt Compaq U2 90GB (7x18) Ext RAID5 EA NT Hardware
wh-eqpmt-u290-er5-nt Compaq U2 90GB (7x18) Ext RAID5 Rent-To-Own DAY NT Hardware
NT-Internal RAID
wh-imp-r0+1id-nt Compaq RAID0+1 Internal Disk Installation EA NT Hardware
wh-imp-r1id-nt Compaq RAID1 Internal Disk Installation EA NT Hardware
wh-imp-r5id-nt Compaq RAID5 Internal Disk Installation EA NT Hardware
wh-eq-cntr-sa221-nt Compaq Smart Array 221 Controller EA NT Hardware
wh-eqrent-cntr-sa221-nt Compaq Smart Array 221 Controller Rental DAY NT Hardware
wh-eqpmt-cntr-sa221-nt Compaq Smart Array 221 Controller Rent-To-Own DAY NT Hardware
wh-eq-cntr-sa3200-nt Compaq Smart Array 3200 Controller EA NT Hardware
wh-eqrent-cntr-sa3200-nt Compaq Smart Array 3200 Controller Rental DAY NT Hardware
wh-eqpmt-cntr-sa3200-nt Compaq Smart Array 3200 Controller Rent-To-Own DAY NT Hardware
wh-eq-rihsd-nt NT RAID Internal Hot Spare Disk EA NT Hardware
NT-RAM
wh-eq-edoram1g-nt Compaq 1 GB Mem Expansion (EDO) EA NT Hardware
wh-eqrent-edoram1g-nt Compaq 1 GB Mem Expansion (EDO) Rental DAY NT Hardware
wh-eqpmt-edoram1g-nt Compaq 1 GB Mem Expansion (EDO) Rent-To-Own DAY NT Hardware
wh-eq-edoram128-nt Compaq 128MB Mem Expansion (EDO) EA NT Hardware
wh-eqrent-edoram128-nt Compaq 128MB Mem Expansion (EDO) Rental DAY NT Hardware
wh-eqpmt-edoram128-nt Compaq 128MB Mem Expansion (EDO) Rent-To-Own DAY NT Hardware
wh-eq-ram128-nt Compaq 128MB Mem Expansion (SDRAM) EA NT Hardware
wh-eqrent-ram128-nt Compaq 128MB Mem Expansion (SDRAM) Rental DAY NT Hardware
wh-eqpmt-ram128-nt Compaq 128MB Mem Expansion SDRAM Rent-To-Own DAY NT Hardware
wh-eq-edoram256-nt Compaq 256MB Mem Expansion (EDO) EA NT Hardware
wh-eqrent-edoram256-nt Compaq 256MB Mem Expansion (EDO) Rental DAY NT Hardware
wh-eqpmt-edoram256-nt Compaq 256MB Mem Expansion (EDO) Rent-To-Own DAY NT Hardware
wh-eq-ram256-nt Compaq 256MB Mem Expansion (SDRAM) EA NT Hardware
wh-eqrent-ram256-nt Compaq 256MB Mem Expansion (SDRAM) Rental DAY NT Hardware
wh-eqpmt-ram256-nt Compaq 256MB Mem Expansion SDRAM Rent-To-Own DAY NT Hardware
wh-eq-edoram512-nt Compaq 512MB Mem Expansion (EDO) EA NT Hardware
wh-eqrent-edoram512-nt Compaq 512MB Mem Expansion (EDO) Rental DAY NT Hardware
wh-eqpmt-edoram512-nt Compaq 512MB Mem Expansion (EDO) Rent-To-Own DAY NT Hardware
wh-eq-ram512-nt Compaq 512MB Mem Expansion (SDRAM) EA NT Hardware
wh-eqrent-ram512-nt Compaq 512MB Mem Expansion (SDRAM) Rental DAY NT Hardware
wh-eqpmt-ram512-nt Compaq 512MB Mem Expansion SDRAM Rent-To-Own DAY NT Hardware
NT-Servers
wh-eq-pro1850r-2x600 Compaq 1850R (2x600MHz) EA NT Hardware
wh-eqrent-pro1850r-2x600 Compaq 1850R (2x600MHz) Rental DAY NT Hardware
wh-eqpmt-pro1850r-2x600 Compaq 1850R (2x600MHz) Rent-To-Own DAY NT Hardware
wh-eq-pro1850r-600 Compaq 1850R (600MHz) EA NT Hardware
wh-eqrent-pro1850r-600 Compaq 1850R (600MHz) Rental DAY NT Hardware
wh-eqpmt-pro1850r-600 Compaq 1850R (600MHz) Rent-To-Own DAY NT Hardware
wh-eq-pro6400r-550X2 Compaq 6400R (550mhz w/ 2 Xeon) EA NT Hardware
wh-eqrent-pro6400r-550X2 Compaq 6400R (550MHz w/ 2 Xeon) Rental DAY NT Hardware
wh-eqpmt-pro6400r-550X2 Compaq 6400R (550MHz w/ 2 Xeon) Rent-To-Own DAY NT Hardware
wh-eq-pro6400r-550X4 Compaq 6400R (550mhz w/ 4 Xeon) EA NT Hardware
wh-eqrent-pro6400r-550X4 Compaq 6400R (550MHz w/ 4 Xeon) Rental DAY NT Hardware
<CAPTION>
-----------------------------------------------------------
ITEM_CODE EA-US Mar00 EA-JP Mar00 EA-UK Mar00 EA Shared Mar00
-----------------------------------------------------------
<S> <C> <C> <C> <C>
wh-imp-er1-nt *
wh-imp-er5-nt *
wh-eq-ru2-nt *
wh-eq-rehsd-nt *
wh-mnt-proraid *
wh-eq-u2108-er0+1-nt *
wh-eqpmt-u2108-er0+1-nt *
wh-eq-u2180-er5-nt *
wh-eqpmt-u2180-er5-nt *
wh-eq-u254-er0+1-nt *
wh-eqpmt-u254-er0+1-nt *
wh-eq-u290-er5-nt *
wh-eqpmt-u290-er5-nt *
NT-Internal RAID
wh-imp-r0+1id-nt *
wh-imp-r1id-nt *
wh-imp-r5id-nt *
wh-eq-cntr-sa221-nt * *
wh-eqrent-cntr-sa221-nt * *
wh-eqpmt-cntr-sa221-nt * *
wh-eq-cntr-sa3200-nt * * *
wh-eqrent-cntr-sa3200-nt * * *
wh-eqpmt-cntr-sa3200-nt * * *
wh-eq-rihsd-nt *
NT-RAM
wh-eq-edoram1g-nt * * *
wh-eqrent-edoram1g-nt * * *
wh-eqpmt-edoram1g-nt * * *
wh-eq-edoram128-nt * * *
wh-eqrent-edoram128-nt * * *
wh-eqpmt-edoram128-nt * * *
wh-eq-ram128-nt * * *
wh-eqrent-ram128-nt * * *
wh-eqpmt-ram128-nt * * *
wh-eq-edoram256-nt * * *
wh-eqrent-edoram256-nt * * *
wh-eqpmt-edoram256-nt * * *
wh-eq-ram256-nt * * *
wh-eqrent-ram256-nt * * *
wh-eqpmt-ram256-nt * * *
wh-eq-edoram512-nt * * *
wh-eqrent-edoram512-nt * * *
wh-eqpmt-edoram512-nt * * *
wh-eq-ram512-nt * * *
wh-eqrent-ram512-nt * * *
wh-eqpmt-ram512-nt * * *
NT-Servers
wh-eq-pro1850r-2x600 *
wh-eqrent-pro1850r-2x600 *
wh-eqpmt-pro1850r-2x600 *
wh-eq-pro1850r-600 *
wh-eqrent-pro1850r-600 *
wh-eqpmt-pro1850r-600 *
wh-eq-pro6400r-550X2 *
wh-eqrent-pro6400r-550X2 *
wh-eqpmt-pro6400r-550X2 *
wh-eq-pro6400r-550X4 *
wh-eqrent-pro6400r-550X4 *
</TABLE>
3
<PAGE>
Enterprise Advantage Price List as of March 10, 2000
<TABLE>
<CAPTION>
ITEM_CODE ITEM_DESCRIPTION UOM PLATFORM MODELS
<S> <C> <C> <C> <C>
wh-eqpmt-pro6400r-550X4 Compaq 6400R (550MHz w/ 4 Xeon) Rent-To-Own DAY NT
wh-eq-pro8500r-550X4 Compaq 8500R (550MHz w/ 4 Xeon) EA NT
wh-eqpmt-pro8500r-550X4 Compaq 8500R (550MHz w/ 4 Xeon) Rent-To-Own DAY NT
wh-eq-pro8500r-550X8 Compaq 8500R (550MHz w/ 8 Xeon) EA NT
wh-eqpmt-pro8500r-550X8 Compaq 8500R (550MHz w/ 8 Xeon) Rent-To-Own DAY NT
wh-imp-prosrv-1000 Compaq Server Install - 1850 EA NT
wh-imp-prosrv-5000 Compaq Server Install - 6400, 8500 EA NT
wh-mnt-prosrv-1000 Compaq Server Maintenance - 1000, 2000 DAY NT
wh-mnt-prosrv-3000 Compaq Server Maintenance - 3000, 5000 DAY NT
wh-mnt-prosrv-6000 Compaq Server Maintenance - 6000, 7000 DAY NT
UNIX-Internal Disk Storage
wh-eqpmt-id18.2-10-unx Sun 18.2 GB 10000 RPM Int Drive Rent-To-Own DAY UNIX 250,450,U2
wh-eq-id18.2-10-unx Sun 18.2 GB 10000 RPM Internal Drive EA UNIX
wh-eqrent-id18.2-10-unx Sun 18.2 GB 10000 RPM Internal Drive Rental DAY UNIX 250,450,U2
wh-eqpmt-id18.2-72-unx Sun 18.2 GB 7200 RPM Int Drive Rent-To-Own DAY UNIX 250,450,U2
wh-eq-id18.2-72-unx Sun 18.2 GB 7200 RPM Internal Drive EA UNIX 250,450,U2
wh-eqrent-id18.2-72-unx Sun 18.2 GB 7200 RPM Internal Drive Rental DAY UNIX 250,450,U2
wh-eq-id18.2a-unx Sun 18.2GB Internal Drive (3500) EA UNIX
wh-eqrent-id18.2a-unx Sun 18.2GB Internal Drive Rental (3500) DAY UNIX
wh-eqpmt-id18.2a-unx Sun 18.2GB Internal Drive Rent-To-Own (3500) DAY UNIX
wh-eq-db18-unx Sun 18GB Disk Board Purchase (4500) EA UNIX
wh-eqrent-db18-unx Sun 18GB Disk Board Rental (4500) DAY UNIX
wh-eqpmt-db18-unx Sun 18GB Disk Board Rent-To-Own (4500) DAY UNIX
wh-eq-id8.2-unx Sun 8.2GB Internal Drive EA UNIX 4500
wh-eqrent-id8.2-unx Sun 8.2GB Internal Drive Rental DAY UNIX 4500
wh-eqpmt-id8.2-unx Sun 8.2GB Internal Drive Rent-To-Own DAY UNIX 4500
wh-eqpmt-id9.1-10-unx Sun 9.1GB 10000 RPM Int Drive Rent-To-Own DAY UNIX 250,450,U2
wh-eq-id9.1-10-unx Sun 9.1GB 10000 RPM Internal Drive EA UNIX 250,450,U2
wh-eqrent-id9.1-10-unx Sun 9.1GB 10000 RPM Internal Drive Rental DAY UNIX 250,450,U2
wh-eq-id9.1-72-unx Sun 9.1GB 7200 RPM Internal Drive EA UNIX 250,450,U2
wh-eqrent-id9.1-72-unx Sun 9.1GB 7200 RPM Internal Drive Rental DAY UNIX 250,450,U2
wh-eqpmt-id9.1-72-unx Sun 9.1GB 7200 RPM Internal Drive Rent-To-Own DAY UNIX 250,450,U2
wh-eq-id9.1a-unx Sun 9.1GB Internal Drive (3500) EA UNIX
wh-eq-id9.1-unx Sun 9.1GB Internal Drive (5s 10s) EA UNIX
wh-eqrent-id9.1a-unx Sun 9.1GB Internal Drive Rental (3500) DAY UNIX
wh-eqrent-id9.1-unx Sun 9.1GB Internal Drive Rental Fee (5s 10s) DAY UNIX
wh-eqpmt-id9.1a-unx Sun 9.1GB Internal Drive Rent-To-Own (3500) DAY UNIX
wh-eqpmt-id9.1-unx Sun 9.1GB Internal Drive Rent-To-Own (5s 10s) DAY UNIX
wh-eq-pcmod-unx Sun Power Cooling Module Purchase (4500) EA UNIX
wh-eqrent-pcmod-unx Sun Power Cooling Module Rental (4500) DAY UNIX
wh-eqpmt-pcmod-unx Sun Power Cooling Module Rent-To-Own (4500) DAY UNIX
wh-imp-id-unx UNIX Internal Drive Installation EA UNIX
UNIX-Miscellaneous
wh-eq-nic-unx Sun NIC Card EA UNIX 5,10,250,450,3500,45
wh-eqpmt-nica-unx Sun NIC Card Rent-To-Own (1300 2300) DAY UNIX
wh-eq-nica-unx Sun NIC Card (1300 2300) EA UNIX
wh-eqrent-nic-unx Sun NIC Card Rental DAY UNIX
wh-eqrent-nica-unx Sun NIC Card Rental (1300 2300) DAY UNIX
UNIX-Processors
wh-eq-cpumb-unx Sun CPU/ Memory Board EA UNIX
wh-eqrent-cpumb-unx Sun CPU/ Memory Board Rental DAY UNIX
wh-eqpmt-cpumb-unx Sun CPU/ Memory Board Rent-To-Own DAY UNIX
wh-eq-u2-400 Sun Ultrasparc II 400Mhz (250 450) EA UNIX
wh-eq-u2-400a Sun Ultrasparc II 400Mhz (3500 4500) EA UNIX
wh-eqrent-u2-400 Sun Ultrasparc II 400Mhz Rental (250 450) DAY UNIX
wh-eqrent-u2-400a Sun Ultrasparc II 400Mhz Rental (3500 4500) DAY UNIX
wh-eqpmt-u2-400 Sun Ultrasparc II 400Mhz Rent-To-Own 250 450 DAY UNIX
wh-eq-u2-450 Sun Ultrasparc II 450MHz (420) EA UNIX
<CAPTION>
-----------------------------------------------------------
ITEM_CODE COMP_CLASS EA-US Mar00 EA-JP Mar00 EA-UK Mar00 EA Shared Mar00
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
wh-eqpmt-pro6400r-550X4 Hardware *
wh-eq-pro8500r-550X4 Hardware *
wh-eqpmt-pro8500r-550X4 Hardware *
wh-eq-pro8500r-550X8 Hardware *
wh-eqpmt-pro8500r-550X8 Hardware *
wh-imp-prosrv-1000 Hardware * * *
wh-imp-prosrv-5000 Hardware *
wh-mnt-prosrv-1000 Hardware * * *
wh-mnt-prosrv-3000 Hardware * * *
wh-mnt-prosrv-6000 Hardware * * *
UNIX-Internal Disk Storage
wh-eqpmt-id18.2-10-unx Hardware * * *
wh-eq-id18.2-10-unx Hardware * * *
wh-eqrent-id18.2-10-unx Hardware * * *
wh-eqpmt-id18.2-72-unx Hardware * * *
wh-eq-id18.2-72-unx Hardware * * *
wh-eqrent-id18.2-72-unx Hardware * * *
wh-eq-id18.2a-unx Hardware * * *
wh-eqrent-id18.2a-unx Hardware * * *
wh-eqpmt-id18.2a-unx Hardware * * *
wh-eq-db18-unx Hardware *
wh-eqrent-db18-unx Hardware *
wh-eqpmt-db18-unx Hardware *
wh-eq-id8.2-unx Hardware * * *
wh-eqrent-id8.2-unx Hardware * * *
wh-eqpmt-id8.2-unx Hardware * * *
wh-eqpmt-id9.1-10-unx Hardware * * *
wh-eq-id9.1-10-unx Hardware * * *
wh-eqrent-id9.1-10-unx Hardware * * *
wh-eq-id9.1-72-unx Hardware * * *
wh-eqrent-id9.1-72-unx Hardware * * *
wh-eqpmt-id9.1-72-unx Hardware * * *
wh-eq-id9.1a-unx Hardware * * *
wh-eq-id9.1-unx Hardware * * *
wh-eqrent-id9.1a-unx Hardware * * *
wh-eqrent-id9.1-unx Hardware * * *
wh-eqpmt-id9.1a-unx Hardware * * *
wh-eqpmt-id9.1-unx Hardware * * *
wh-eq-pcmod-unx Hardware *
wh-eqrent-pcmod-unx Hardware *
wh-eqpmt-pcmod-unx Hardware *
wh-imp-id-unx Hardware *
UNIX-Miscellaneous
wh-eq-nic-unx * * *
wh-eqpmt-nica-unx Hardware * * *
wh-eq-nica-unx Hardware * * *
wh-eqrent-nic-unx Hardware * * *
wh-eqrent-nica-unx Hardware * * *
UNIX-Processors
wh-eq-cpumb-unx Hardware * * *
wh-eqrent-cpumb-unx Hardware * * *
wh-eqpmt-cpumb-unx Hardware * * *
wh-eq-u2-400 Hardware * * *
wh-eq-u2-400a Hardware * * *
wh-eqrent-u2-400 Hardware * * *
wh-eqrent-u2-400a Hardware * * *
wh-eqpmt-u2-400 Hardware * * *
wh-eq-u2-450 Hardware *
</TABLE>
4
<PAGE>
Enterprise Advantage Price List as of March 10, 2000
<TABLE>
<CAPTION>
ITEM_CODE ITEM_DESCRIPTION UOM PLATFORM MODELS COMP_CLASS
<S> <C> <C> <C> <C> <C>
wh-eqrent-u2-450 Sun Ultrasparc II 450MHz (420) Rental DAY UNIX Hardware
wh-eqpmt-u2-450 Sun Ultrasparc II 450MHz (420) Rent-To-Own DAY UNIX Hardware
wh-eqpmt-u2-400a Sun Ultsparc II 400Mhz Rent-To-Own 3500 4500 DAY UNIX Hardware
UNIX-External RAID
wh-eq-cl108-er0+1-unx CLARiiON 108GB (7x36) Ext RAID0+1 EA UNIX Hardware
wh-mnt-cl108-er0+1-unx CLARiiON 108GB (7x36) Ext RAID0+1 Maintenance DAY UNIX Hardware
wh-eqpmt-cl108-er0+1-unx CLARiiON 108GB (7x36) Ext RAID0+1 Rent-To-Own DAY UNIX Hardware
wh-eq-cl126-er0+1-unx CLARiiON 126GB (9x18) Ext RAID5 EA UNIX Hardware
wh-mnt-cl126-er0+1-unx CLARiiON 126GB (9x18) Ext RAID5 Maintenance DAY UNIX Hardware
wh-eqpmt-cl126-er0+1-unx CLARiiON 126GB (9x18) Ext RAID5 Rent-To-Own DAY UNIX Hardware
wh-eq-cl216-er0+1-unx CLARiiON 216GB (14x36) Ext RAID0+1 EA UNIX Hardware
wh-mnt-cl216-er0+1-unx CLARiiON 216GB 14x36 Ext RAID0+1 Maintenance DAY UNIX Hardware
wh-eqpmt-cl216-er0+1-unx CLARiiON 216GB 14x36 Ext RAID0+1 Rent-To-Own DAY UNIX Hardware
wh-eq-cl252-er0+1-unx CLARiiON 252GB (9x36) Ext RAID5 EA UNIX Hardware
wh-mnt-cl252-er0+1-unx CLARiiON 252GB (9x36) Ext RAID5 Maintenance DAY UNIX Hardware
wh-eqpmt-cl252-er0+1-unx CLARiiON 252GB (9x36) Ext RAID5 Rent-To-Own DAY UNIX Hardware
wh-eq-cl54-er0+1-unx CLARiiON 54GB (7x18) Ext RAID0+1 EA UNIX Hardware
wh-mnt-cl54-er0+1-unx CLARiiON 54GB (7x18) Ext RAID0+1 Maintenance DAY UNIX Hardware
wh-eqpmt-cl54-er0+1-unx CLARiiON 54GB (7x18) Ext RAID0+1 Rent-To-Own DAY UNIX Hardware
wh-imp-cler0+1-unx CLARiiON Ext RAID0+1 Installation EA UNIX Hardware
wh-imp-cler1-unx CLARiiON Ext RAID1 Installation EA UNIX Hardware
wh-imp-cler5-unx CLARiiON Ext RAID5 Installation EA UNIX Hardware
wh-eq-rehsd-unx CLARiiON RAID Hot Spare Disk EA UNIX Hardware
UNIX-Internal RAID
wh-imp-ir5-unx Sun Int RAID5 Installation EA UNIX Hardware
wh-eq-rihsd-unx Sun RAID Internal Hot Spare Disk EA UNIX Hardware
wh-imp-r0+1id-unx Sun RAID0+1 Internal Disk Installation EA UNIX Hardware
wh-imp-r1id-unx Sun RAID1 Internal Disk Installation EA UNIX Hardware
UNIX-Ram
wh-eq-ram1g-unx Sun 1 GB Memory Expansion EA UNIX 3500,4500 Hardware
wh-eqrent-ram1g-unx Sun 1 GB Memory Expansion Rental DAY UNIX 3500,4500 Hardware
wh-eqpmt-ram1g-unx Sun 1 GB Memory Expansion Rent-To-Own DAY UNIX 3500,4500 Hardware
wh-eq-ram128-unx Sun 128MB Memory Expansion EA UNIX 250,450,U2 Hardware
wh-eq-ram128a-unx Sun 128MB Memory Expansion (5 10) EA UNIX Hardware
wh-eqrent-ram128-unx Sun 128MB Memory Expansion Rental DAY UNIX 250,450,U2 Hardware
wh-eqrent-ram128a-unx Sun 128MB Memory Expansion Rental (5 10) DAY UNIX Hardware
wh-eqpmt-ram128-unx Sun 128MB Memory Expansion Rent-To-Own DAY UNIX 250,450,U2 Hardware
wh-eqpmt-ram128a-unx Sun 128MB Memory Expansion Rent-To-Own (5 10) DAY UNIX Hardware
wh-eq-ram256-unx Sun 256MB Memory Expansion EA UNIX 250,450,U2 Hardware
wh-eq-ram256a-unx Sun 256MB Memory Expansion (3500 4500) EA UNIX Hardware
wh-eqrent-ram256-unx Sun 256MB Memory Expansion Rental DAY UNIX 250,450,U2 Hardware
wh-eqrent-ram256a-unx Sun 256MB Memory Expansion Rental (3500 4500) DAY UNIX Hardware
wh-eqpmt-ram256-unx Sun 256MB Memory Expansion Rent-To-Own DAY UNIX 250,450,U2 Hardware
wh-eqpmt-ram256a-unx Sun 256MB Memory Expn Rent-To-Own (3500 4500) DAY UNIX 3500,4500 Hardware
wh-eq-ram512-unx Sun 512MB Memory Expansion EA UNIX 450 Hardware
wh-eqrent-ram512-unx Sun 512MB Memory Expansion Rental DAY UNIX 450 Hardware
wh-eqpmt-ram512-unx Sun 512MB Memory Expansion Rent-To-Own DAY UNIX 450 Hardware
UNIX-Servers
wh-eq-d130 Sun D130 Storage (2x18) EA UNIX Hardware
wh-eqrent-d130 Sun D130 Storage (2x18) Rental DAY UNIX Hardware
wh-eqpmt-d130 Sun D130 Storage (2x18) Rent-To-Own DAY UNIX Hardware
wh-mnt-e420 Sun E 420 Maintenance DAY UNIX Hardware
wh-eq-e4500 Sun E 4500 EA UNIX Hardware
wh-eqpmt-e4500 Sun E 4500 Rent-To-Own DAY UNIX Hardware
wh-eq-e420-2x450 Sun Enterprise 420 (450mhz x 2) EA UNIX Hardware
wh-eqrent-e420-2x450 Sun Enterprise 420 (450MHz x 2) Rental DAY UNIX Hardware
wh-eqpmt-e420-2x450 Sun Enterprise 420 (450MHz x 2) Rent-To-Own DAY UNIX Hardware
wh-eq-e420-4x450 Sun Enterprise 420 (450mhz x 4) EA UNIX Hardware
<CAPTION>
------------------------------------------------------
ITEM_CODE ITEM_DESCRIPTION EA-US Mar00 EA-JP Mar00 EA-UK Mar00 EA Shared Mar00
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
wh-eqrent-u2-450 Sun Ultrasparc II 450MHz (420) Rental *
wh-eqpmt-u2-450 Sun Ultrasparc II 450MHz (420) Rent-To-Own *
wh-eqpmt-u2-400a Sun Ultsparc II 400Mhz Rent-To-Own 3500 4500 *
UNIX-External RAID
wh-eq-cl108-er0+1-unx CLARiiON 108GB (7x36) Ext RAID0+1 *
wh-mnt-cl108-er0+1-unx CLARiiON 108GB (7x36) Ext RAID0+1 Maintenance *
wh-eqpmt-cl108-er0+1-unx CLARiiON 108GB (7x36) Ext RAID0+1 Rent-To-Own *
wh-eq-cl126-er0+1-unx CLARiiON 126GB (9x18) Ext RAID5 *
wh-mnt-cl126-er0+1-unx CLARiiON 126GB (9x18) Ext RAID5 Maintenance *
wh-eqpmt-cl126-er0+1-unx CLARiiON 126GB (9x18) Ext RAID5 Rent-To-Own *
wh-eq-cl216-er0+1-unx CLARiiON 216GB (14x36) Ext RAID0+1 *
wh-mnt-cl216-er0+1-unx CLARiiON 216GB 14x36 Ext RAID0+1 Maintenance *
wh-eqpmt-cl216-er0+1-unx CLARiiON 216GB 14x36 Ext RAID0+1 Rent-To-Own *
wh-eq-cl252-er0+1-unx CLARiiON 252GB (9x36) Ext RAID5 *
wh-mnt-cl252-er0+1-unx CLARiiON 252GB (9x36) Ext RAID5 Maintenance *
wh-eqpmt-cl252-er0+1-unx CLARiiON 252GB (9x36) Ext RAID5 Rent-To-Own *
wh-eq-cl54-er0+1-unx CLARiiON 54GB (7x18) Ext RAID0+1 *
wh-mnt-cl54-er0+1-unx CLARiiON 54GB (7x18) Ext RAID0+1 Maintenance *
wh-eqpmt-cl54-er0+1-unx CLARiiON 54GB (7x18) Ext RAID0+1 Rent-To-Own *
wh-imp-cler0+1-unx CLARiiON Ext RAID0+1 Installation *
wh-imp-cler1-unx CLARiiON Ext RAID1 Installation *
wh-imp-cler5-unx CLARiiON Ext RAID5 Installation *
wh-eq-rehsd-unx CLARiiON RAID Hot Spare Disk *
UNIX-Internal RAID
wh-imp-ir5-unx Sun Int RAID5 Installation *
wh-eq-rihsd-unx Sun RAID Internal Hot Spare Disk *
wh-imp-r0+1id-unx Sun RAID0+1 Internal Disk Installation *
wh-imp-r1id-unx Sun RAID1 Internal Disk Installation *
UNIX-Ram
wh-eq-ram1g-unx Sun 1 GB Memory Expansion * * *
wh-eqrent-ram1g-unx Sun 1 GB Memory Expansion Rental * * *
wh-eqpmt-ram1g-unx Sun 1 GB Memory Expansion Rent-To-Own * * *
wh-eq-ram128-unx Sun 128MB Memory Expansion * * *
wh-eq-ram128a-unx Sun 128MB Memory Expansion (5 10) * * *
wh-eqrent-ram128-unx Sun 128MB Memory Expansion Rental * * *
wh-eqrent-ram128a-unx Sun 128MB Memory Expansion Rental (5 10) * * *
wh-eqpmt-ram128-unx Sun 128MB Memory Expansion Rent-To-Own * * *
wh-eqpmt-ram128a-unx Sun 128MB Memory Expansion Rent-To-Own (5 10) * * *
wh-eq-ram256-unx Sun 256MB Memory Expansion * * *
wh-eq-ram256a-unx Sun 256MB Memory Expansion (3500 4500) * * *
wh-eqrent-ram256-unx Sun 256MB Memory Expansion Rental * * *
wh-eqrent-ram256a-unx Sun 256MB Memory Expansion Rental (3500 4500) * * *
wh-eqpmt-ram256-unx Sun 256MB Memory Expansion Rent-To-Own * * *
wh-eqpmt-ram256a-unx Sun 256MB Memory Expn Rent-To-Own (3500 4500) * * *
wh-eq-ram512-unx Sun 512MB Memory Expansion * * *
wh-eqrent-ram512-unx Sun 512MB Memory Expansion Rental * * *
wh-eqpmt-ram512-unx Sun 512MB Memory Expansion Rent-To-Own * *
UNIX-Servers *
wh-eq-d130 Sun D130 Storage (2x18) *
wh-eqrent-d130 Sun D130 Storage (2x18) Rental *
wh-eqpmt-d130 Sun D130 Storage (2x18) Rent-To-Own *
wh-mnt-e420 Sun E 420 Maintenance *
wh-eq-e4500 Sun E 4500 *
wh-eqpmt-e4500 Sun E 4500 Rent-To-Own *
wh-eq-e420-2x450 Sun Enterprise 420 (450mhz x 2) *
wh-eqrent-e420-2x450 Sun Enterprise 420 (450MHz x 2) Rental *
wh-eqpmt-e420-2x450 Sun Enterprise 420 (450MHz x 2) Rent-To-Own *
wh-eq-e420-4x450 Sun Enterprise 420 (450mhz x 4)
</TABLE>
<PAGE>
Enterprise Advantage Price List as of March 10, 2000
<TABLE>
<CAPTION>
ITEM_CODE ITEM_DESCRIPTION UOM PLATFORM MODELS COMP_CLASS
<S> <C> <C> <C> <C> <C>
wh-eqrent-e420-4x450 Sun Enterprise 420 (450MHz x 4) Rental DAY UNIX Hardware
wh-eqpmt-e420-4x450 Sun Enterprise 420 (450MHz x 4) Rent-To-Own DAY UNIX Hardware
wh-eq-netra-t1 Sun Netra T1 EA UNIX Hardware
wh-mnt-netra-t1 Sun Netra T1 Maintenance DAY UNIX Hardware
wh-eqrent-netra-t1 Sun Netra T1 Rental DAY UNIX Hardware
wh-eqpmt-netra-t1 Sun Netra T1 Rent-To-Own DAY UNIX Hardware
wh-imp-ulte-400 Sun Server Install - 420, 4500 EA UNIX Hardware
wh-imp-ulte-2 Sun Server Install - Netra T1 EA UNIX Hardware
wh-eqrent-ulte10s Sun U E 10s (440MHz U Iii) Rental DAY UNIX Hardware
wh-eq-ulte10s Sun U Ent 10s (440MHz U Iii) EA UNIX Hardware
wh-eqpmt-ulte10s Sun U Ent 10s 440 MHz U Iii) Rent-To-Own DAY UNIX Hardware
wh-eq-ulte5s Sun U Ent 5S (270MHz U IIi) EA UNIX Hardware
wh-eqrent-ulte5s Sun U Ent 5S (270MHz U IIi) Rental DAY UNIX Hardware
wh-eqpmt-ulte5s Sun U Ent 5S 270MHz U Iii) Rent-To-Own DAY UNIX Hardware
wh-mnt-ulte4500 Sun Ultra Enterprise 4500 Maintenance DAY UNIX Hardware
Special/Non-Standard
wh-mnt-nonstd-nt Maintenance, NT Hardware DAY NT Hardware
wh-mnt-nonstd-unx Maintenance, UNIX Hardware DAY UNIX Hardware
wh-eq-nonstd Special Hardware Purchase EA NT,UNIX Hardware
wh-eqrent-nonstd Special Hardware Rental DAY NT,UNIX Hardware
wh-eqpmt-nonstd Special Hardware Rent-To-Own DAY NT,UNIX Hardware
HOSTING
wh-host-100-cmnt Customer Managed NT Hosting Fee, 100Mbps Line DAY NT Hosting
wh-host-10-cmnt Customer Managed NT Hosting Fee, 10Mbps Line DAY NT Hosting
wh-host-100-cmu Customer Managed UNIX Hosting, 100Mbps Line DAY UNIX Hosting
wh-host-10-cmu Customer Managed UNIX Hosting, 10Mbps Line DAY UNIX Hosting
wh-host-100-nt Managed NT Hosting Fee, 100Mbps Line DAY NT Hosting
wh-host-10-nt Managed NT Hosting Fee, 10Mbps Line DAY NT Hosting
wh-host-100-unx Managed UNIX Hosting Fee, 100Mbps Line DAY UNIX Hosting
wh-host-10-unx Managed UNIX Hosting Fee, 10Mbps Line DAY UNIX Hosting
wh-ops-vpn-nt VPN Hosting Fee DAY NT Hosting
Packet Filters
wh-ops-filt-nt Packet Filtering Fee DAY NT Networking & Connectivity
wh-ops-filt-unx Packet Filtering Fee DAY UNIX Networking & Connectivity
wh-imp-filt-nt Packet Filtering Installation EA NT Networking & Connectivity
wh-imp-filt-unx Packet Filtering Installation EA UNIX Networking & Connectivity
Network-Host
wh-ops-bend-nt NT Dedicated Back-end Connection Fee DAY NT Networking & Connectivity
wh-imp-bend-nt NT Dedicated Back-end Connection Installation EA NT Networking & Connectivity
wh-ops-bend-unx UNIX Dedicated Back-end Connection Fee DAY UNIX Networking & Connectivity
wh-imp-bend-unx UNIX Dedicated Back-end Connection Install EA UNIX Networking & Connectivity
Special Networks
wh-modem Modem EA NT,UNIX Networking & Connectivity
wh-imp-modem Modem Installation Fee EA NT,UNIX Networking & Connectivity
wh-ops-modem Modem Service Fee DAY NT,UNIX Networking & Connectivity
wh-ops-cat-nt NT Additional Catalyst Port Fee DAY NT Networking & Connectivity
wh-imp-cat-nt NT Additional Catalyst Port Installation EA NT Networking & Connectivity
wh-imp-pots POTS Installation Fee EA NT,UNIX Networking & Connectivity
wh-ops-pots POTS Service Fee DAY NT,UNIX Networking & Connectivity
wh-ops-cat-unx UNIX Additional Catalyst Port Fee DAY UNIX Networking & Connectivity
wh-imp-cat-unx UNIX Additional Catalyst Port Installation EA UNIX Networking & Connectivity
Managed Bandwidth
wh-band-.10-add-man Addl Usage Fee - Commitment .10Mbps EA NT,UNIX Networking & Connectivity
wh-band-.25-add-man Addl Usage Fee - Commitment .25Mbps EA NT,UNIX Networking & Connectivity
wh-band-.5-add-man Addl Usage Fee - Commitment .5Mbps EA NT,UNIX Networking & Connectivity
wh-band-100-add-man Addl Usage Fee - Commitment 100Mbps EA NT,UNIX Networking & Connectivity
wh-band-10g-add-man Addl Usage Fee - Commitment 10Gbps EA NT,UNIX Networking & Connectivity
wh-band-10-add-man Addl Usage Fee - Commitment 10Mbps EA NT,UNIX Networking & Connectivity
<CAPTION>
---------------------------------------------------------
ITEM_CODE ITEM_DESCRIPTION EA-US Mar00 EA-JP Mar00 EA-UK Mar00 EA Shared Mar00
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
wh-eqrent-e420-4x450 Sun Enterprise 420 (450MHz x 4) Rental *
wh-eqpmt-e420-4x450 Sun Enterprise 420 (450MHz x 4) Rent-To-Own *
wh-eq-netra-t1 Sun Netra T1 *
wh-mnt-netra-t1 Sun Netra T1 Maintenance *
wh-eqrent-netra-t1 Sun Netra T1 Rental *
wh-eqpmt-netra-t1 Sun Netra T1 Rent-To-Own *
wh-imp-ulte-400 Sun Server Install - 420, 4500 * * *
wh-imp-ulte-2 Sun Server Install - Netra T1 * * *
wh-eqrent-ulte10s Sun U E 10s (440MHz U Iii) Rental * *
wh-eq-ulte10s Sun U Ent 10s (440MHz U Iii) * *
wh-eqpmt-ulte10s Sun U Ent 10s 440 MHz U Iii) Rent-To-Own * *
wh-eq-ulte5s Sun U Ent 5S (270MHz U IIi) * *
wh-eqrent-ulte5s Sun U Ent 5S (270MHz U IIi) Rental * *
wh-eqpmt-ulte5s Sun U Ent 5S 270MHz U Iii) Rent-To-Own * *
wh-mnt-ulte4500 Sun Ultra Enterprise 4500 Maintenance * * *
Special/Non-Standard
wh-mnt-nonstd-nt Maintenance, NT Hardware *
wh-mnt-nonstd-unx Maintenance, UNIX Hardware *
wh-eq-nonstd Special Hardware Purchase *
wh-eqrent-nonstd Special Hardware Rental *
wh-eqpmt-nonstd Special Hardware Rent-To-Own *
HOSTING
wh-host-100-cmnt Customer Managed NT Hosting Fee, 100Mbps Line * * *
wh-host-10-cmnt Customer Managed NT Hosting Fee, 10Mbps Line * * *
wh-host-100-cmu Customer Managed UNIX Hosting, 100Mbps Line * * *
wh-host-10-cmu Customer Managed UNIX Hosting, 10Mbps Line * * *
wh-host-100-nt Managed NT Hosting Fee, 100Mbps Line * * *
wh-host-10-nt Managed NT Hosting Fee, 10Mbps Line * * *
wh-host-100-unx Managed UNIX Hosting Fee, 100Mbps Line * * *
wh-host-10-unx Managed UNIX Hosting Fee, 10Mbps Line * * *
wh-ops-vpn-nt VPN Hosting Fee *
Packet Filters
wh-ops-filt-nt Packet Filtering Fee *
wh-ops-filt-unx Packet Filtering Fee *
wh-imp-filt-nt Packet Filtering Installation *
wh-imp-filt-unx Packet Filtering Installation *
Network-Host *
wh-ops-bend-nt NT Dedicated Back-end Connection Fee *
wh-imp-bend-nt NT Dedicated Back-end Connection Installation *
wh-ops-bend-unx UNIX Dedicated Back-end Connection Fee *
wh-imp-bend-unx UNIX Dedicated Back-end Connection Install
Special Networks *
wh-modem Modem
wh-imp-modem Modem Installation Fee *
wh-ops-modem Modem Service Fee *
wh-ops-cat-nt NT Additional Catalyst Port Fee * *
wh-imp-cat-nt NT Additional Catalyst Port Installation * *
wh-imp-pots POTS Installation Fee *
wh-ops-pots POTS Service Fee * *
wh-ops-cat-unx UNIX Additional Catalyst Port Fee * *
wh-imp-cat-unx UNIX Additional Catalyst Port Installation *
Managed Bandwidth
wh-band-.10-add-man Addl Usage Fee - Commitment .10Mbps *
wh-band-.25-add-man Addl Usage Fee - Commitment .25Mbps *
wh-band-.5-add-man Addl Usage Fee - Commitment .5Mbps * *
wh-band-100-add-man Addl Usage Fee - Commitment 100Mbps * *
wh-band-10g-add-man Addl Usage Fee - Commitment 10Gbps *
wh-band-10-add-man Addl Usage Fee - Commitment 10Mbps * *
</TABLE>
<PAGE>
Enterprise Advantage Price List as of March 10, 2000
<TABLE>
<CAPTION>
ITEM_CODE ITEM_DESCRIPTION UOM PLATFORM MODELS COMP_CLASS
<S> <C> <C> <C> <C> <C>
wh-band-120-add-man Addl Usage Fee - Commitment 120Mbps EA NT,UNIX Networking & Connectivity
wh-band-140-add-man Addl Usage Fee - Commitment 140Mbps EA NT,UNIX Networking & Connectivity
wh-band-160-add-man Addl Usage Fee - Commitment 160Mbps EA NT,UNIX Networking & Connectivity
wh-band-180-add-man Addl Usage Fee - Commitment 180Mbps EA NT,UNIX Networking & Connectivity
wh-band-1-add-man Addl Usage Fee - Commitment 1Mbps EA NT,UNIX Networking & Connectivity
wh-band-200-add-man Addl Usage Fee - Commitment 200Mbps EA NT,UNIX Networking & Connectivity
wh-band-20-add-man Addl Usage Fee - Commitment 20Mbps EA NT,UNIX Networking & Connectivity
wh-band-2-add-man Addl Usage Fee - Commitment 2Mbps EA NT,UNIX Networking & Connectivity
wh-band-4-add-man Addl Usage Fee - Commitment 4Mbps EA NT,UNIX Networking & Connectivity
wh-band-50-add-man Addl Usage Fee - Commitment 50Mbps EA NT,UNIX Networking & Connectivity
wh-band-6-add-man Addl Usage Fee - Commitment 6Mbps EA NT,UNIX Networking & Connectivity
wh-band-8-add-man Addl Usage Fee - Commitment 8Mbps EA NT,UNIX Networking & Connectivity
wh-band-.10-man Minimum Usage Fee - Commitment .10Mbps DAY NT,UNIX Networking & Connectivity
wh-band-.25-man Minimum Usage Fee - Commitment .25Mbps DAY NT,UNIX Networking & Connectivity
wh-band-.5-man Minimum Usage Fee - Commitment .5Mbps DAY NT,UNIX Networking & Connectivity
wh-band-100-man Minimum Usage Fee - Commitment 100Mbps DAY NT,UNIX Networking & Connectivity
wh-band-10g-man Minimum Usage Fee - Commitment 10Gbps DAY NT,UNIX Networking & Connectivity
wh-band-10-man Minimum Usage Fee - Commitment 10Mbps DAY NT,UNIX Networking & Connectivity
wh-band-120-man Minimum Usage Fee - Commitment 120Mbps DAY NT,UNIX Networking & Connectivity
wh-band-140-man Minimum Usage Fee - Commitment 140Mbps DAY NT,UNIX Networking & Connectivity
wh-band-160-man Minimum Usage Fee - Commitment 160Mbps DAY NT,UNIX Networking & Connectivity
wh-band-180-man Minimum Usage Fee - Commitment 180Mbps DAY NT,UNIX Networking & Connectivity
wh-band-1-man Minimum Usage Fee - Commitment 1Mbps DAY NT,UNIX Networking & Connectivity
wh-band-200-man Minimum Usage Fee - Commitment 200Mbps DAY NT,UNIX Networking & Connectivity
wh-band-20-man Minimum Usage Fee - Commitment 20Mbps DAY NT,UNIX Networking & Connectivity
wh-band-2-man Minimum Usage Fee - Commitment 2Mbps DAY NT,UNIX Networking & Connectivity
wh-band-4-man Minimum Usage Fee - Commitment 4Mbps DAY NT,UNIX Networking & Connectivity
wh-band-50-man Minimum Usage Fee - Commitment 50Mbps DAY NT,UNIX Networking & Connectivity
wh-band-6-man Minimum Usage Fee - Commitment 6Mbps DAY NT,UNIX Networking & Connectivity
wh-band-8-man Minimum Usage Fee - Commitment 8Mbps DAY NT,UNIX Networking & Connectivity
OPERATIONS & ADMINISTRATION
Secure Authentication
wh-sid Secure Dynamics SecurID EA NT,UNIX Operations & Administration
Customer Statistics
wh-ops-cstats-nt Customer Statistics Fee DAY NT Operations & Administration
wh-ops-cstats-unx Customer Statistics Fee DAY UNIX Operations & Administration
wh-imp-cstats-nt Customer Statistics Setup Fee EA NT Operations & Administration
wh-imp-cstats-unx Customer Statistics Setup Fee EA UNIX Operations & Administration
DNS Administration
wh-imp-ip-nt NT IP Address(es) Setup/Domain Registration EA NT Operations & Administration
wh-imp-ip-unx UNIX IP Address(es) Setup/Domain Registration EA UNIX Operations & Administration
File Backup
wh-bu-100gb-nt NT File System Backup Fee Up to 100GB DAY NT Operations & Administration
wh-bu-20gb-nt NT File System Backup Fee Up to 20GB DAY NT Operations & Administration
wh-bu-250gb-nt NT File System Backup Fee Up to 250GB DAY NT Operations & Administration
wh-bu-50gb-nt NT File System Backup Fee Up to 50G DAY NT Operations & Administration
wh-bu-100gb-unx UNIX File System Backup Fee Up to 100GB DAY UNIX Operations & Administration
wh-bu-20gb-unx UNIX File System Backup Fee Up to 20GB DAY UNIX Operations & Administration
wh-bu-250gb-unx UNIX File System Backup Fee Up to 250GB DAY UNIX Operations & Administration
wh-bu-50gb-unx UNIX File System Backup Fee Up to 50G DAY UNIX Operations & Administration
Remote Adminstration
wh-imp-cgrpcg-nt NT Console Gateway/RPCG Installation EA NT Operations & Administration
wh-ops-cgrpcg-nt NT Console Gateway/RPCG Service Fee DAY NT Operations & Administration
wh-ops-remposs Remotely Possible License Fee DAY NT Operations & Administration
wh-imp-cgrpcg-unx UNIX Console Gateway/RPCG Installation EA UNIX Operations & Administration
wh-ops-cgrpcg-unx UNIX Console Gateway/RPCG Service Fee DAY UNIX Operations & Administration
Security Tools
wh-swrent-ctrst-nt NT CyberTrust Digital Certificate License Fee DAY NT Operations & Administration
<CAPTION>
---------------------------------------------------------
ITEM_CODE ITEM_DESCRIPTION EA-US Mar00 EA-JP Mar00 EA-UK Mar00 EA Shared Mar00
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
wh-band-120-add-man Addl Usage Fee - Commitment 120Mbps *
wh-band-140-add-man Addl Usage Fee - Commitment 140Mbps *
wh-band-160-add-man Addl Usage Fee - Commitment 160Mbps *
wh-band-180-add-man Addl Usage Fee - Commitment 180Mbps *
wh-band-1-add-man Addl Usage Fee - Commitment 1Mbps * *
wh-band-200-add-man Addl Usage Fee - Commitment 200Mbps *
wh-band-20-add-man Addl Usage Fee - Commitment 20Mbps * *
wh-band-2-add-man Addl Usage Fee - Commitment 2Mbps * *
wh-band-4-add-man Addl Usage Fee - Commitment 4Mbps * *
wh-band-50-add-man Addl Usage Fee - Commitment 50Mbps * *
wh-band-6-add-man Addl Usage Fee - Commitment 6Mbps * *
wh-band-8-add-man Addl Usage Fee - Commitment 8Mbps * *
wh-band-.10-man Minimum Usage Fee - Commitment .10Mbps *
wh-band-.25-man Minimum Usage Fee - Commitment .25Mbps *
wh-band-.5-man Minimum Usage Fee - Commitment .5Mbps * *
wh-band-100-man Minimum Usage Fee - Commitment 100Mbps * *
wh-band-10g-man Minimum Usage Fee - Commitment 10Gbps *
wh-band-10-man Minimum Usage Fee - Commitment 10Mbps * *
wh-band-120-man Minimum Usage Fee - Commitment 120Mbps *
wh-band-140-man Minimum Usage Fee - Commitment 140Mbps *
wh-band-160-man Minimum Usage Fee - Commitment 160Mbps *
wh-band-180-man Minimum Usage Fee - Commitment 180Mbps *
wh-band-1-man Minimum Usage Fee - Commitment 1Mbps * *
wh-band-200-man Minimum Usage Fee - Commitment 200Mbps *
wh-band-20-man Minimum Usage Fee - Commitment 20Mbps * *
wh-band-2-man Minimum Usage Fee - Commitment 2Mbps * *
wh-band-4-man Minimum Usage Fee - Commitment 4Mbps * *
wh-band-50-man Minimum Usage Fee - Commitment 50Mbps * *
wh-band-6-man Minimum Usage Fee - Commitment 6Mbps * *
wh-band-8-man Minimum Usage Fee - Commitment 8Mbps * *
OPERATIONS & ADMINISTRATION
Secure Authentication
wh-sid Secure Dynamics SecurID *
Customer Statistics
wh-ops-cstats-nt Customer Statistics Fee *
wh-ops-cstats-unx Customer Statistics Fee *
wh-imp-cstats-nt Customer Statistics Setup Fee *
wh-imp-cstats-unx Customer Statistics Setup Fee *
DNS Administration
wh-imp-ip-nt NT IP Address(es) Setup/Domain Registration * * *
wh-imp-ip-unx UNIX IP Address(es) Setup/Domain Registration * * *
File Backup
wh-bu-100gb-nt NT File System Backup Fee Up to 100GB *
wh-bu-20gb-nt NT File System Backup Fee Up to 20GB *
wh-bu-250gb-nt NT File System Backup Fee Up to 250GB *
wh-bu-50gb-nt NT File System Backup Fee Up to 50G * *
wh-bu-100gb-unx UNIX File System Backup Fee Up to 100GB *
wh-bu-20gb-unx UNIX File System Backup Fee Up to 20GB *
wh-bu-250gb-unx UNIX File System Backup Fee Up to 250GB *
wh-bu-50gb-unx UNIX File System Backup Fee Up to 50G * *
Remote Adminstration
wh-imp-cgrpcg-nt NT Console Gateway/RPCG Installation * * *
wh-ops-cgrpcg-nt NT Console Gateway/RPCG Service Fee * * *
wh-ops-remposs Remotely Possible License Fee *
wh-imp-cgrpcg-unx UNIX Console Gateway/RPCG Installation * * *
wh-ops-cgrpcg-unx UNIX Console Gateway/RPCG Service Fee * * *
Security Tools
wh-swrent-ctrst-nt NT CyberTrust Digital Certificate License Fee *
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
ITEM_CODE ITEM_DESCRIPTION UOM PLATFORM MODELS COMP_CLASS
<S> <C> <C> <C> <C> <C>
wh-sw-ctrst-nt NT CyberTrust Digital Certificates Onetime EA NT Operations & Administration
wh-imp-certs-nt NT Digital Certificates Installation EA NT Operations & Administration
wh-bts-ssh NT SSH Basic Technical Support DAY NT Operations & Administration
wh-swrent-vcert-nt NT Verisign Certificates License Fee DAY NT Operations & Administration
wh-sw-vcert-nt NT Verisign Certificates Onetime License Fee EA NT Operations & Administration
wh-fm-ssh SSH Component Fault Monitoring DAY UNIX Operations & Administration
wh-imp-ssh SSH Installation EA NT,UNIX Operations & Administration
wh-swrent-ssh SSH License Fee DAY NT,UNIX Operations & Administration
wh-sw-ssh SSH Onetime License Fee EA NT,UNIX Operations & Administration
wh-sw-ctrst-unx UNIX CyberTrust Digital Certificate Onetime EA UNIX Operations & Administration
wh-swrent-ctrst-unx UNIX CyberTrust Digital Certificates Lic Fee DAY UNIX Operations & Administration
wh-imp-certs-unx UNIX Digital Certificates Installation EA UNIX Operations & Administration
wh-bts-ssh-unx UNIX SSH Basic Technical Support DAY UNIX Operations & Administration
wh-sw-vcert-unx UNIX Verisign Certificates 1x License Fee EA UNIX Operations & Administration
wh-swrent-vcert-unx UNIX Verisign Certificates License Fee DAY UNIX Operations & Administration
Software Backup
wh-swrent-adsm-nt NT ADSM Licence Fee DAY NT Operations & Administration
wh-sw-adsm-nt NT ADSM Onetime Licence Fee EA NT Operations & Administration
wh-bts-bu-nt NT Backup Component Basic Technical Support DAY NT Operations & Administration
wh-fm-bu-nt NT Backup Component Fault Monitoring DAY NT Operations & Administration
wh-imp-bu-nt NT Backup Component Installation EA NT Operations & Administration
wh-swrent-leg-nt NT Legato License Fee DAY NT Operations & Administration
wh-sw-leg-nt NT Legato Onetime License Fee EA NT Operations & Administration
wh-swrent-adsm-unx UNIX ADSM License Fee DAY UNIX Operations & Administration
wh-sw-adsm-unx UNIX ADSM Onetime License Fee EA UNIX Operations & Administration
wh-bts-bu-unx UNIX Backup Component Basic Technical Support DAY UNIX Operations & Administration
wh-fm-bu-unx UNIX Backup Component Fault Monitoring DAY UNIX Operations & Administration
wh-imp-bu-unx UNIX Backup Component Installation EA UNIX Operations & Administration
wh-swrent-leg-unx UNIX Legato License Fee DAY UNIX Operations & Administration
wh-sw-leg-unx UNIX Legato Onetime License Fee EA UNIX Operations & Administration
URL Monitoring
wh-ops-url-cmnt URL Monitoring Fee DAY NT Operations & Administration
wh-ops-url-cmu URL Monitoring Fee DAY UNIX Operations & Administration
wh-imp-url-cmnt URL Monitoring Setup EA NT Operations & Administration
wh-imp-url-cmu URL Monitoring Setup EA UNIX Operations & Administration
Value Added
wh-eng-plan-nt NT Impl Planning & Mgt Fee EA NT Operations & Administration
wh-engsvc-acct-nt NT Tech Acct Supp Mgt Up to 8 Hrs/Mo DAY NT Operations & Administration
wh-engsvc-acpts-nt NT Technical Consulting DAY NT Operations & Administration
wh-eng-nonstd-nt Special NT Onetime Service Fee EA NT Operations & Administration
wh-engsvc-nonstd-nt Special NT Service Fee DAY NT Operations & Administration
wh-eng-nonstd-unx Special UNIX Onetime Service Fee EA UNIX Operations & Administration
wh-engsvc-nonstd-unx Special UNIX Service Fee DAY UNIX Operations & Administration
wh-eng-plan-unx UNIX Impl Planning & Mgt Fee EA UNIX Operations & Administration
wh-engsvc-acct-unx UNIX Tech Acct Supp Mgt Up to 8 Hrs/Mo DAY UNIX Operations & Administration
wh-engsvc-acpts-unx UNIX Technical Consulting DAY UNIX Operations & Administration
SOFTWARE
Databases
wh-swrent-informix Informix Dynamic Server 7.3 License Fee DAY UNIX Software
wh-sw-informix Informix Dynamic Server 7.3 Onetime Lic Fee EA UNIX Software
wh-ops-ats-db-nt NT Database Advanced Tech Support Fee DAY NT Software
wh-bu-nt NT Database Backup Fee DAY NT Software
wh-bts-db-nt NT Database Basic Technical Support DAY NT Software
wh-fm-db-nt NT Database Fault Monitoring DAY NT Software
wh-imp-nt NT Database Installation EA NT Software
wh-sw-ora-2-nt NT Oracle 8i Enterprise 1x License Fee EA NT Software
wh-swrent-ora-2-nt NT Oracle 8i Enterprise License Fee DAY NT Software
wh-swrent-ora-1-nt NT Oracle 8i Standard License Fee DAY NT Software
<CAPTION>
---------------------------------------------------------
ITEM_CODE ITEM_DESCRIPTION EA-US Mar00 EA-JP Mar00 EA-UK Mar00 EA Shared Mar00
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
wh-sw-ctrst-nt NT CyberTrust Digital Certificates Onetime *
wh-imp-certs-nt NT Digital Certificates Installation *
wh-bts-ssh NT SSH Basic Technical Support *
wh-swrent-vcert-nt NT Verisign Certificates License Fee *
wh-sw-vcert-nt NT Verisign Certificates Onetime License Fee *
wh-fm-ssh SSH Component Fault Monitoring *
wh-imp-ssh SSH Installation *
wh-swrent-ssh SSH License Fee *
wh-sw-ssh SSH Onetime License Fee *
wh-sw-ctrst-unx UNIX CyberTrust Digital Certificate Onetime *
wh-swrent-ctrst-unx UNIX CyberTrust Digital Certificates Lic Fee *
wh-imp-certs-unx UNIX Digital Certificates Installation *
wh-bts-ssh-unx UNIX SSH Basic Technical Support *
wh-sw-vcert-unx UNIX Verisign Certificates 1x License Fee *
wh-swrent-vcert-unx UNIX Verisign Certificates License Fee *
Software Backup
wh-swrent-adsm-nt NT ADSM Licence Fee *
wh-sw-adsm-nt NT ADSM Onetime Licence Fee *
wh-bts-bu-nt NT Backup Component Basic Technical Support *
wh-fm-bu-nt NT Backup Component Fault Monitoring *
wh-imp-bu-nt NT Backup Component Installation *
wh-swrent-leg-nt NT Legato License Fee *
wh-sw-leg-nt NT Legato Onetime License Fee *
wh-swrent-adsm-unx UNIX ADSM License Fee *
wh-sw-adsm-unx UNIX ADSM Onetime License Fee *
wh-bts-bu-unx UNIX Backup Component Basic Technical Support *
wh-fm-bu-unx UNIX Backup Component Fault Monitoring *
wh-imp-bu-unx UNIX Backup Component Installation *
wh-swrent-leg-unx UNIX Legato License Fee *
wh-sw-leg-unx UNIX Legato Onetime License Fee *
URL Monitoring
wh-ops-url-cmnt URL Monitoring Fee *
wh-ops-url-cmu URL Monitoring Fee *
wh-imp-url-cmnt URL Monitoring Setup *
wh-imp-url-cmu URL Monitoring Setup *
Value Added
wh-eng-plan-nt NT Impl Planning & Mgt Fee *
wh-engsvc-acct-nt NT Tech Acct Supp Mgt Up to 8 Hrs/Mo *
wh-engsvc-acpts-nt NT Technical Consulting *
wh-eng-nonstd-nt Special NT Onetime Service Fee *
wh-engsvc-nonstd-nt Special NT Service Fee *
wh-eng-nonstd-unx Special UNIX Onetime Service Fee *
wh-engsvc-nonstd-unx Special UNIX Service Fee *
wh-eng-plan-unx UNIX Impl Planning & Mgt Fee *
wh-engsvc-acct-unx UNIX Tech Acct Supp Mgt Up to 8 Hrs/Mo *
wh-engsvc-acpts-unx UNIX Technical Consulting *
SOFTWARE
Databases
wh-swrent-informix Informix Dynamic Server 7.3 License Fee *
wh-sw-informix Informix Dynamic Server 7.3 Onetime Lic Fee *
wh-ops-ats-db-nt NT Database Advanced Tech Support Fee *
wh-bu-nt NT Database Backup Fee *
wh-bts-db-nt NT Database Basic Technical Support *
wh-fm-db-nt NT Database Fault Monitoring *
wh-imp-nt NT Database Installation *
wh-sw-ora-2-nt NT Oracle 8i Enterprise 1x License Fee *
wh-swrent-ora-2-nt NT Oracle 8i Enterprise License Fee *
wh-swrent-ora-1-nt NT Oracle 8i Standard License Fee *
</TABLE>
8
<PAGE>
Enterprise Advantage Price List as of March 10, 2000
<TABLE>
<CAPTION>
ITEM_CODE ITEM_DESCRIPTION UOM PLATFORM MODELS COMP_CLASS
<S> <C> <C> <C> <C> <C>
wh-sw-ora-1-nt NT Oracle 8i Standard1x Lic Fee EA NT Software
wh-ops-ats-db-unx UNIX Database Advanced Tech Support Fee DAY UNIX Software
wh-bu-unx UNIX Database Backup Fee DAY UNIX Software
wh-bts-db-unx UNIX Database Basic Technical Support DAY UNIX Software
wh-fm-db-unx UNIX Database Fault Monitoring DAY UNIX Software
wh-imp-unx UNIX Database Installation EA UNIX Software
wh-sw-ora-2-unx UNIX Oracle 8i Enterprise 1x License Fee EA UNIX Software
wh-swrent-ora-2-unx UNIX Oracle 8i Enterprise License Fee DAY UNIX Software
wh-swrent-ora-1-unx UNIX Oracle 8i Standard License Fee DAY UNIX Software
wh-sw-ora-1-unx UNIX Oracle 8i Standard1x Lic Fee EA UNIX Software
Email & Conferencing
wh-imp-collabra351 Netscape Collabra 3.5.1 Cust Provided Install EA UNIX Software
wh-bts-email-nt NT Email/Conferencing Cmpnt Basic Tech Supp DAY NT Software
wh-fm-email-nt NT Email/Conferencing Cmpnt Fault Monitoring DAY NT Software
wh-imp-email-nt NT Email/Conferencing Component Installation EA NT Software
wh-sw-po-nt NT Software.com Post.Office 3.5 1x Lic Fee EA NT Software
wh-swrent-po-nt NT Software.com Post.Office 3.5 Lic Fee DAY NT Software
wh-fm-email-unx UNIX Email/Conference Cmpnt Fault Monitoring DAY UNIX Software
wh-bts-email-unx UNIX Email/Conferencing Cmpnt Basic Tech Supp DAY UNIX Software
wh-imp-email-unx UNIX Email/Conferencing Component Install EA UNIX Software
wh-sw-po-unx UNIX Software.com Post.Office 3.5 1x Lic Fee EA UNIX Software
wh-swrent-po-unx UNIX Software.com Post.Office 3.5 License Fee DAY UNIX Software
Extranet/Groupware
wh-imp-notes4.6 Lotus Notes 4.6 Cust Provided Install EA NT Software
wh-imp-exch5.5 Microsoft Exchange 5.5 Cust Provided Install EA NT Software
wh-imp-netmsg3.5 Netscape Messaging 3.5 Cust Provided Install EA UNIX Software
wh-bts-exgrp-nt NT Extranet/Groupware Cmpnt Basic Tech Supp DAY NT Software
wh-fm-exgrp-nt NT Extranet/Groupware Cmpnt Fault Monitoring DAY NT Software
wh-imp-exgrp-nt NT Extranet/Groupware Component Installation EA NT Software
wh-imp-exgrp-unx UNIX Extranet/Groupware Component Install EA UNIX Software
wh-bts-exgrp-unx UNIX Extranet/Grpware Cmpnt Basic Tech Supp DAY UNIX Software
wh-fm-exgrp-unx UNIX Extranet/Grpware Cmpnt Fault Monitoring DAY UNIX Software
High Availability
wh-fm-has High Availability Software Fault Monitoring DAY UNIX Software
wh-imp-has High Availability Software Installation EA UNIX Software
wh-bts-has High Availability Software Basic Tech Supp DAY UNIX Software
wh-swrent-veritas Veritas /Sun License Fee DAY UNIX Software
Advertising, Management & Multimedia
wh-imp-net3 NetGravity 3 Cust Provided Install EA NT,UNIX Software
wh-fm-media-nt NT Multimedia Cmpnt Fault Monitoring DAY NT Software
wh-bts-media-nt NT Multimedia Component Basic Tech Support DAY NT Software
wh-imp-media-nt NT Multimedia Component Installation EA NT Software
wh-imp-realg2 RealNetwks RealServerG2 Cust Provided Install EA NT,UNIX Software
wh-fm-media-unx UNIX Multimedia Cmpnt Fault Monitoring DAY UNIX Software
wh-bts-media-unx UNIX Multimedia Component Basic Tech Support DAY UNIX Software
wh-imp-media-unx UNIX Multimedia Component Installation EA UNIX Software
Non-Standard Software
wh-sw-customer Customer Provided Software Component EA NT,UNIX Software
wh-bts-nonstd-nt Special NT Component General Support DAY NT Software
wh-imp-nonstd-nt Special NT Component Installation EA NT Software
wh-sw-nonstd Special Software Component License EA NT,UNIX Software
wh-swrent-nonstd Special Software Component License Fee DAY NT,UNIX Software
wh-bts-nonstd-unx Special UNIX Component General Support DAY UNIX Software
wh-imp-nonstd-unx Special UNIX Component Installation EA UNIX Software
Common Hosting Platform/Operating System
wh-sw-chp-nt NT Common Hosting Platform 1x License Fee EA NT Software
wh-ops-ats-chp-nt NT Common Hosting Platform Adv Tech Supp DAY NT Software
wh-fm-chp-nt NT Common Hosting Platform Fault Monitoring DAY NT Software
<CAPTION>
-----------------------------------------------------------
ITEM_CODE EA-US Mar00 EA-JP Mar00 EA-UK Mar00 EA Shared Mar00
-----------------------------------------------------------
<S> <C> <C> <C> <C>
wh-sw-ora-1-nt *
wh-ops-ats-db-unx *
wh-bu-unx *
wh-bts-db-unx *
wh-fm-db-unx *
wh-imp-unx *
wh-sw-ora-2-unx *
wh-swrent-ora-2-unx *
wh-swrent-ora-1-unx *
wh-sw-ora-1-unx *
Email & Conferencing
wh-imp-collabra351 *
wh-bts-email-nt *
wh-fm-email-nt *
wh-imp-email-nt *
wh-sw-po-nt *
wh-swrent-po-nt *
wh-fm-email-unx *
wh-bts-email-unx *
wh-imp-email-unx *
wh-sw-po-unx *
wh-swrent-po-unx *
Extranet/Groupware
wh-imp-notes4.6 *
wh-imp-exch5.5 *
wh-imp-netmsg3.5 *
wh-bts-exgrp-nt *
wh-fm-exgrp-nt *
wh-imp-exgrp-nt *
wh-imp-exgrp-unx *
wh-bts-exgrp-unx *
wh-fm-exgrp-unx *
High Availability
wh-fm-has *
wh-imp-has *
wh-bts-has *
wh-swrent-veritas *
Advertising, Management & Multimedia
wh-imp-net3 *
wh-fm-media-nt *
wh-bts-media-nt *
wh-imp-media-nt *
wh-imp-realg2 *
wh-fm-media-unx *
wh-bts-media-unx *
wh-imp-media-unx *
Non-Standard Software
wh-sw-customer *
wh-bts-nonstd-nt *
wh-imp-nonstd-nt *
wh-sw-nonstd *
wh-swrent-nonstd *
wh-bts-nonstd-unx *
wh-imp-nonstd-unx *
Common Hosting Platform/Operating System
wh-sw-chp-nt *
wh-ops-ats-chp-nt *
wh-fm-chp-nt *
</TABLE>
CONFIDENTIAL INFORMATION-SUBJECT TO PROTECTIVE ORDER IN CC Docket No. 98-184
before the Federal Communications Commission
9
<PAGE>
Enterprise Advantage Price List as of March 10, 2000
<TABLE>
<CAPTION>
ITEM_CODE ITEM_DESCRIPTION UOM PLATFORM MODELS COMP_CLASS
<S> <C> <C> <C> <C> <C>
wh-imp-chp-nt NT Common Hosting Platform Installation EA NT Software
wh-sw-chp2.0i-unx UNIX CHP 2.0i Intl 1x License Fee EA UNIX Software
wh-ops-ats-chp2.0i-unx UNIX CHP 2.0i Intl Adv Tech Sup DAY UNIX Software
wh-fm-chp2.0i-unx UNIX CHP 2.0i Intl Fault Monitoring DAY UNIX Software
wh-imp-chp2.0i-unx UNIX CHP 2.0i Intl Installation EA UNIX Software
wh-swrent-chp2.0i-unx UNIX CHP 2.0i Intl License Fee DAY UNIX Software
wh-sw-chp-unx UNIX Common Hosting Platform 1x License Fee EA UNIX Software
wh-ops-ats-chp-unx UNIX Common Hosting Platform Adv Tech Supp DAY UNIX Software
wh-fm-chp-unx UNIX Common Hosting Platform Fault Monitoring DAY UNIX Software
wh-imp-chp-unx UNIX Common Hosting Platform Installation EA UNIX Software
Web Server Bundles
wh-imp-domino4.6 Lotus Domino 4.6 Cust Provided Install EA NT Software
wh-sw-iis-nt NT Microsoft Internet Info Server 4.0 EA NT Software
wh-sw-entsrv-nt NT Netscape Enterprise Server 3.5 1x Lic Fee EA NT Software
wh-swrent-entsrv-nt NT Netscape Enterprise Server 3.5 License Fee DAY NT Software
wh-sw-owas-nt NT Oracle Web Application Server 4.0 1x Lic EA NT Software
wh-swrent-owas-nt NT Oracle Web Application Server 4.0 Lic Fee DAY NT Software
wh-bts-was-nt NT Web Server Component Basic Tech Support DAY NT Software
wh-fm-ws-nt NT Web Server Component Fault Monitoring DAY NT Software
wh-imp-ws-nt NT Web Server Component Installation EA NT Software
wh-sw-entsrv-unx UNIX Netscape Enterprise Server 3.6 1x Lic EA UNIX Software
wh-swrent-entsrv-unx UNIX Netscape Enterprise Server 3.6 Lic Fee DAY UNIX Software
wh-sw-owas-unx UNIX Oracle Web Appl Server 4.0 1x Lic Fee EA UNIX Software
wh-swrent-owas-unx UNIX Oracle Web Application Server 4.0 Lic DAY UNIX Software
wh-sw-apache-unx UNIX Stronghold Apache 2.3 1x License Fee EA UNIX Software
wh-swrent-apache UNIX Stronghold Apache License Fee DAY UNIX Software
wh-bts-was-unx UNIX Web Server Component Basic Tech Support DAY UNIX Software
wh-fm-ws-unx UNIX Web Server Component Fault Monitoring DAY UNIX Software
wh-imp-ws-unx UNIX Web Server Component Installation EA UNIX Software
Web Site Building Tools
wh-sw-coldfus-nt NT Allaire Cold Fusion Server 4.0 Ent 1x Lic EA NT Software
wh-swrent-coldfus-nt NT Allaire Cold Fusion Server 4.0 Ent Lic Fee DAY NT Software
wh-sw-coldfusp-nt NT Allaire Cold Fusion Srv 4.0 Pro 1x Lic Fee EA NT Software
wh-swrent-coldfusp-nt NT Allaire Cold Fusion Srv 4.0 Pro Lic Fee DAY NT Software
wh-sw-fpage-nt NT Microsoft Front Page 98 Ext 1x License Fee EA NT Software
wh-swrent-fpage-nt NT Microsoft Front Page 98 Extensions Lic Fee DAY NT Software
wh-bts-wsite-nt NT Web Site Building Tool Basic Tech Support DAY NT Software
wh-fm-wsite-nt NT Web Site Building Tool Cmpnt Fault Monitor DAY NT Software
wh-imp-wsite-nt NT Web Site Building Tool Installation EA NT Software
wh-swrent-coldfus-unx UNIX Allaire Cold Fusion Server 4.0 Ent Lic DAY UNIX Software
wh-sw-coldfus-unx UNIX Allaire Cold Fusion Srv 4.0 Ent 1x Lic EA UNIX Software
wh-sw-fpage-unx UNIX Microsoft Front Page 98 Ext 1x Lic Fee EA UNIX Software
wh-swrent-fpage-unx UNIX Microsoft Front Page 98 Ext Lic Fee DAY UNIX Software
wh-fm-wsite-unx UNIX Web Site Bldg Tool Cmpnt Fault Monitor DAY UNIX Software
wh-bts-wsite-unx UNIX Web Site Building Tool Basic Tech Supp DAY UNIX Software
wh-imp-wsite-unx UNIX Web Site Building Tool Installation EA UNIX Software
wh-imp-story Vignette StoryServer Cust Provided Install EA UNIX Software
Web Statistics
wh-sw-analstat Analog Statistics 2.0 EA UNIX Software
wh-imp-stats-nt NT Web Statistics Component Installation EA NT Software
wh-imp-stats-unx UNIX Web Statistics Component Installation EA UNIX Software
wh-swrent-wtlogan Web Trends Log Analyzer License Fee DAY NT Software
wh-sw-wtlogan Web Trends Log Analyzer Onetime License Fee EA NT Software
<CAPTION>
-----------------------------------------------------------
ITEM_CODE EA-US Mar00 EA-JP Mar00 EA-UK Mar00 EA Shared Mar00
-----------------------------------------------------------
<S> <C> <C> <C> <C>
wh-imp-chp-nt *
wh-sw-chp2.0i-unx *
wh-ops-ats-chp2.0i-unx *
wh-fm-chp2.0i-unx *
wh-imp-chp2.0i-unx *
wh-swrent-chp2.0i-unx *
wh-sw-chp-unx *
wh-ops-ats-chp-unx *
wh-fm-chp-unx *
wh-imp-chp-unx * * *
Web Server Bundles
wh-imp-domino4.6 * *
wh-sw-iis-nt *
wh-sw-entsrv-nt *
wh-swrent-entsrv-nt *
wh-sw-owas-nt *
wh-swrent-owas-nt *
wh-bts-was-nt *
wh-fm-ws-nt *
wh-imp-ws-nt *
wh-sw-entsrv-unx *
wh-swrent-entsrv-unx *
wh-sw-owas-unx *
wh-swrent-owas-unx *
wh-sw-apache-unx *
wh-swrent-apache *
wh-bts-was-unx *
wh-fm-ws-unx *
wh-imp-ws-unx *
Web Site Building Tools
wh-sw-coldfus-nt *
wh-swrent-coldfus-nt *
wh-sw-coldfusp-nt *
wh-swrent-coldfusp-nt *
wh-sw-fpage-nt *
wh-swrent-fpage-nt *
wh-bts-wsite-nt *
wh-fm-wsite-nt *
wh-imp-wsite-nt *
wh-swrent-coldfus-unx *
wh-sw-coldfus-unx *
wh-sw-fpage-unx *
wh-swrent-fpage-unx *
wh-fm-wsite-unx *
wh-bts-wsite-unx *
wh-imp-wsite-unx *
wh-imp-story *
Web Statistics
wh-sw-analstat *
wh-imp-stats-nt *
wh-imp-stats-unx *
wh-swrent-wtlogan *
wh-sw-wtlogan *
</TABLE>
CONFIDENTIAL INFORMATION-SUBJECT TO PROTECTIVE ORDER IN CC Docket No. 98-184
before the Federal Communications Commission
10
<PAGE>
Attachment #B-4-2
Bell Atlantic E Business
Baseline Discount Schedule
This document explains the Baseline discounting allowance for Bell Atlantic for
each category of item sold.
Current Discount Schedule
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Item One Year (%) Multiyear (%)
- ---------------------------------------------------------------------------------
<S> <C> <C>
Hardware * *
- ---------------------------------------------------------------------------------
Hardware maintenance * *
- ---------------------------------------------------------------------------------
Hardware installation * *
- ---------------------------------------------------------------------------------
Other hardware items (RAM, memory) * *
- ---------------------------------------------------------------------------------
Software license * *
- ---------------------------------------------------------------------------------
Software installation * *
- ---------------------------------------------------------------------------------
Software maintenance * *
- ---------------------------------------------------------------------------------
Bandwidth * *
- ---------------------------------------------------------------------------------
Hosting Fee * *
- ---------------------------------------------------------------------------------
Other Installation fees * *
- ---------------------------------------------------------------------------------
Services * *
. Backup services
. DBA services
. DNS services
. Enterprise Performance
. Monitoring
. SecurIDs
. Special Networks
. System Administration
. Technical Support
- ---------------------------------------------------------------------------------
</TABLE>
<PAGE>
Attachment B-5
Summary Exhibit
Exclusions from Multi-Service Discount
by Service
I. All Services
______________________________________________________________________________
The Multi-Service Discount shall not apply to Services for:
. the existing installed customer base at time the Agreement is executed;
. non-standard quotations.
II. Service Specific Exclusions
______________________________________________________________________________
A. Security Services
______________________________________________________________________________
The following Security Service components are excluded from the Multi-Service
Discount, as indicated in the applicable Security Services price list:
. Security Advantage -
------------------
1) Installation Fee. The installation fee for Security Advantage.
-----------------
2) The prices for Security Advantage exclude administration of customers'
end user authentication or accounting databases, VPN configuration of the
firewall, and configuration, management, and administration of the
customer De-Militarized Zone (DMZ) which will be quoted on a T&M basis for
each individual customer opportunity. These additional charges are not
eligible for Multi-Service Discount.
. VPN Advantage -
---------------
A) VPN Gateway Devices (On Net and Off Net)
--------------------------------------------
1) "Group" functionality. The prices for VPN Advantage exclude
---------------------
implementation, support, and administration of "group" functionality
which will be quoted on a T&M basis for each individual customer
opportunity. These additional charges are not eligible for Multi-
Service Discount.
2) Custom Branding of AWS. Pricing includes standard Authenticated
----------------------
Web Server (AWS) services (if applicable). Custom branding of AWS will
be quoted on an individual basis. The charges for custom branding are
not eligible for Multi-Service Discount.
B) VPN Client Software
-----------------------
Page 1
<PAGE>
1) Custom Branding of AWS. Pricing includes standard Authenticated
----------------------
Web Server (AWS) services (if applicable). Custom branding of AWS will
be quoted on an individual basis. The charges for custom branding are
not eligible for Multi-Service Discount.
. Managed VPN -
-------------
A) VPN Gateway Devices (On Net and Off Net)
--------------------------------------------
1) "Group" Functionality. The prices for Managed VPN exclude
----------------------
implementation, support, and administration of "group" functionality
which will be quoted on a T&M basis for each individual customer
opportunity. These additional charges are not eligible for Multi-
Service Discount.
2) Custom Branding of AWS. Pricing includes standard Authenticated
-----------------------
Web Server (AWS) services (if applicable). Custom branding of AWS will
be quoted on an individual basis. The charges for custom branding are
not eligible for Multi-Service Discount.
B) VPN Client Software
-----------------------
1) Custom Branding of AWS. Pricing includes standard Authenticated
---------------------------
Web Server (AWS) services (if applicable). Custom branding of AWS will
be quoted on an individual basis. The charges for custom branding are
not eligible for Multi-Service Discount.
. Site Patrol for Firewall 1 (Domestic and International) --
----------------------------------------------------------
. The prices for Site Patrol for Firewall 1 exclude administration of
customers' end user authentication or accounting databases, VPN
configuration of the firewall, and configuration, management, and
administration of the customer De-Militarized Zone (DMZ) which will be
quoted on a T&M basis for each individual customer opportunity. These
additional charges are not eligible for Multi-Service Discount.
________________________________________________________________________________
III. Managed Connectivity Services (MCS)
________________________________________________________________________________
The Multi-Service Discount apply to all standard MCS Services. However, the
following MCS service components are excluded:
. customer premises equipment (CPE) and
. local loops (recurring and non-recurring charges).
________________________________________________________________________________
IV. DiaLinx
________________________________________________________________________________
The Multi-Service Discount shall not apply to the DiaLinx v.2.3 international
access. These items (i.e., the Worldwide Dial Access Networking Hourly Service
Fees) are pass through charges and are not subject to any further discounts.
Page 2
<PAGE>
______________________________________________________________________________
V. EBusiness Hosting
______________________________________________________________________________
Any EA Services provided to Bell Atlantic in Genuity's Japan Data Center are
subject to tariffs and are not eligible for any discounts (either baseline or
the escalated discounts above)
The Multi-Service Discount applies to all EA services, including non-standard
services. However, the following service components are excluded:
. Hardware and hardware maintenance purchased by Genuity,
. Software and software maintenance purchased by Genuity,
. All 3/rd/ party products and services that Genuity purchases and passes
through to Bell Atlantic with only an administrative markup,
. Any EA Services provided to Bell Atlantic in Genuity's Japan Data Center
Page 3
<PAGE>
ATTACHMENT C
MANDATORY FLOWDOWN TERMS
Bell Atlantic agrees to include terms substantially similar to the following
minimum terms in legally binding agreements with End Users. For the purpose of
this section, "Service Supplier" shall mean Genuity, "you" and "End User" shall
mean the End User and "Service" shall mean the respective services listed in
Attachment B.
I. The following mandatory flow down terms shall be included for all Services:
1. Warranty and Liability Limitations. THE SERVICE SUPPLIER AND COMPANY
----------------------------------
DISCLAIM ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. SERVICE SUPPLIER WILL
NOT BE LIABLE FOR UNAUTHORIZED ACCESS TO COMPANY'S OR END USER'S
TRANSMISSION FACILITIES OR PREMISES EQUIPMENT OR FOR UNAUTHORIZED ACCESS TO
OR ALTERATION, THEFT OR DESTRUCTION OF END USER'S DATA FILES, PROGRAMS,
PROCEDURES OR INFORMATION THROUGH ACCIDENT, FRAUDULENT MEANS OR DEVICES, OR
ANY OTHER METHOD, REGARDLESS OF WHETHER SUCH DAMAGE OCCURS AS A RESULT OF
SERVICE SUPPLIER'S NEGLIGENCE.
2. Disclaimer of Consequential Damages. IN NO EVENT WILL SERVICE SUPPLIER
-----------------------------------
BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, PUNITIVE OR INCIDENTAL
DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF DATA, LOSS OF REVENUE OR
PROFITS, ARISING OUT OF OR IN CONNECTION WITH THE USE OF OR INABILITY TO
USE SERVICES OR PRODUCTS PROVIDED HEREUNDER.
3. Compliance with Export and Applicable. End User further agrees to
-------------------------------------
compy with U.S. Export laws concerning the transmission of technical data
and other regulated materials via the Service. If the Service is
provisioned outside the U.S., End User agrees to abide by all applicable
local laws and regulations, including without limitation any laws governing
the import of the Service. The Services Supplier reserves the right to
suspend or terminate the Service (or any portion thereof) without notice in
the event that your use of the Service, in its reasonable judgment violates
any applicable export law, local law, regulation, or ordinance.
4. Content Responsibility. End User understands that Services Supplier is
----------------------
not responsible for the content of the transmissions which may pass through
the Internet and/or the Connectivity Services. End User agrees that it
will NOT use the Services in ways that violate laws, infringe the rights of
others, or interfere with the users, services, or equipment of the network.
For example, End User shall not distribute unsolicited advertising, chain
letters, or commercial electronic mail ("spamming"); propagate computer
worms or viruses; attempt to gain unauthorized entry to other computers,
data or networks; distribute child pornography, obscenity, or defamatory
material over the Internet; or infringe copyrights, trademarks, or other
intellectual property rights.
5. IP Addresses. Upon expiration, cancellation or termination of the
------------
Agreement, End-User shall relinquish any IP addresses or address blocks
assigned to End-User by Services Supplier.
6. Domain Name Fees. Domain name registration fees and periodic
----------------
maintenance fees are the End User's responsibility and will be billed
directly to the End User by InterNIC or another domain name registry. Such
fees are not included in the prices Services.
7. No Right of Resale. End User may not resell or redistribute any
------------------
Services. #
# "No Right of Resale" Does not apply to ISP Services as defined in Section
---------------------------------------------------------------------------
VI, below.
----------
<PAGE>
II. The following mandatory flow down terms shall be included for Enterprise
Advantage Services:
1. Third Party Software. In the event software is provided to you in
--------------------
connection with Enterprise Advantage Services, and such software is
licensed to its Services Supplier or developed by its Services Supplier
independently of this agreement, Bell Atlantic and/or its Services Supplier
grants you a personal, non-exclusive, non-transferable license for the
duration of the Service Period to use such software in object code form
only, on the hardware upon which it is installed, for the sole purpose of
enabling you to use Enterprise Advantage Services. You agree to accept any
additional license terms required by the suppliers of such software as
indicated in the Service Description. You acknowledge and agree that title
to all such software remains with the Services Supplier and its vendors, if
any, that the content and design of such software are valuable trade
secrets, and that you may use such software for the sole purpose of
enabling you to use Enterprise Advantage Services. You agree not to (a)
disclose or make available to third parties any portion of such software
without the advance written permission of the Services Supplier; (b) copy
or duplicate such software; (c) reverse engineer, decompile or disassemble
such software; or (d) modify or make derivative works of such software.
You agree not to use such software after the Service Period without
obtaining a valid license from the Services Supplier or from the third-
party software vendor. You also agree to accept any additional license
terms required by the Services Supplier's vendors for the Enterprise
Advantage options you have chosen. All such license terms are set forth in
the Service Description.
If you purchase a software option in which you are responsible for
acquiring the license and the Services Supplier agrees to install the
third-party software for you, you are solely responsible for obtaining a
valid license from the software vendor. If the Services Supplier purchases
any third-party software on your behalf, you agree to sign any required
third-party license agreements prior to delivery or installation of the
third-party software. If Service Supplier installs third-party software at
your request and acceptance of license terms is effected electronically,
you authorize the Services Supplier to accept the third-party license terms
on your behalf.
2. End User Responsibilities. You agree to assume all customer
-------------------------
responsibilities that are listed in the Service Description for the options
indicated in your Quotation, including but not limited to, the
responsibilities listed for Customer Managed Hosting services, Software
Support Options and System Management.
3. IP Addresses. During the Service Period, you may be required to
------------
renumber the IP addresses assigned by Services Supplier if it is deemed
necessary for technical reasons.
III. The following mandatory flow down terms shall be included for VPN
Advantage, VPN Advantage International, Managed VPN, Security Advantage,
SitePatrol, Site Scan and Vulnerability Scan Services (or bundles containing
such services as a component), collectively "Security Services" for purposes of
this section:
1. Security Policy. As a Security Service customer, you remain
---------------
responsible for your network security policy and security violation
response procedures. You acknowledge that Security Service does not by
itself guarantee network security or prevent security incidents, that the
Service Supplier is not responsible for unauthorized access to your
facilities or for damages arising out of unauthorized access, and that it
is your responsibility to design a comprehensive security program in
conjunction with any other service providers or professionals chosen by
you.
2. Restrictions on System Access. Service Supplier configures and
remotely manages the software for all systems installed on an End User's
premises in conjunction with Security Services (e.g., the VPN Gateway
device). End User may access the configuration of such systems only when
authorized by Service Supplier ; therefore, End User does not need or
receive a software license. End User agrees to abide by the license terms
to the VPN client software. End User agrees not to remove, obliterate or
cover any marks, logos, or notices included with the equipment Service
Provider installs on End Users' premises.
<PAGE>
3. Export Restrictions. The customer premises equipment and software
-------------------
(e.g. the VPN Gateway Device) are authorized by the U.S. government (and
other applicable regulatory authorities) for export only to the
country/locations authorized in writing by Service Supplier. They may not
be resold, diverted, transferred, transshipped, or otherwise be disposed of
in any other country, either in their original form or after being
incorporated through an intermediate process into other end items, without
the prior written approval of the U.S. Department of Commerce and the
Services Supplier. You acknowledge that the VPN client software contains
encryption technology subject to export control, and agree to abide by, and
ensure that end users abide by, laws and regulations applicable to import
and export of the VPN client software.
4. Prohibited Countries. Without limitation of the foregoing, you agree
--------------------
not to sell, license or distribute any hardware, software (including source
code), technology, or foreign-produced direct product of U.S. origin
software or technology, directly or indirectly, to a country or the
national of a country that is embargoed by the United States. The
countries that are embargoed may change from time to time, currently they
are Cuba, Iran, Iraq, Libya, Montenegro, N. Korea, Serbia, Sudan and Syria.
If the foreign-produced direct product of such technology is a complete
plant or major component of a plant and the direct product of such plant is
controlled to such country for national security reasons or under the U.S.
Department of State's International Traffic in Arms Regulations ("ITAR"),
you will not export the direct product of the plant to any such country.
5. Proliferation Controls. You agree not to sell, license or distribute
----------------------
any hardware, software (including source code), technology, or foreign-
produced direct product of U.S. origin software or technology, directly or
indirectly, for use in nuclear, chemical/biological warfare and/or missile
activities or any direct service, training and /or support of nuclear,
chemical/biological, and/or missile activities or to facilities engaged in
such activities or to an entity listed on the U.S. Bureau of Export
Administration's ("BXA") Entities List, without first obtaining written
authorization to do so from U.S. BXA and/or other appropriate U.S.
governmental agencies.
6. Prohibited Parties. End User agrees not to sell, license or distribute
------------------
any hardware, software (including source code), technology, or foreign-
produced direct product of U.S. origin software or technology, directly or
indirectly, to any individuals or entities listed on a prohibited list
issued by any U.S. government agencies, such lists include but are not
limited to the U.S. BXA Denied Persons List and the U.S. Office for Foreign
Assets Control Specially Designated Nationals List.
IV. The following mandatory flow down terms shall be included for any "Security
Services" (as defined above) which include non-U.S. installations:
1. Return of Equipment and Software. Upon termination or expiration of
--------------------------------
the Service Period (unless extended by the parties), you agree to return to
Service Supplier or dispose of all hardware and software which has been
provided to you in connection with the Security Service in accordance with
the following:
1.1 Service Supplier Owned Equipment and Software. You agree to
---------------------------------------------
return all Service Supplier -owned hardware and software which Service
Supplier provided to you in connection with the Security Service. In
the event such hardware and software are not returned within thirty
(30) days following such termination or expiration, you agree to
permit Service Supplier to remove such hardware and software from your
premises upon reasonable notice during your normal business hours, at
your cost and expense (on a time and materials basis).
1.2 Service Supplier Provided Equipment. In certain cases, Service
-----------------------------------
Supplier may pass title of equipment to you for a given site, as
specified in the quotation (or otherwise agreed to in writing between
the parties). In the event that title to equipment is passed to you,
at the end of the applicable service period you hereby agree to
either: (a) transfer title to the equipment to Service Supplier or a
designated agent in exchange for its
<PAGE>
remaining salvage value; or (b) to destroy the equipment, and certify
such destruction, in accordance with U.S. and local laws.
1.3 Service Supplier Provided Software. Regardless of the origin or
----------------------------------
ownership of the hardware, at the end of the applicable service period
you agree (at Service Supplier's option) to either: (a) certify that
you have returned and/or destroyed any software which we have provided
to you (or your foreign affiliate) in connection with the Security
Service including media containing copies thereof (e.g. CD ROM); or
(b) permit us remove and/or delete such software, copies and media.
V. The following mandatory flow down terms shall be included for DiaLinx
Services (or bundles containing such services as a component:
1. Network Access Availability. ACCESS TO THE DIAL NETWORK CANNOT BE
---------------------------
GUARANTEED TO YOU OR YOUR END USERS. END USERS MAY BE UNABLE TO ACCESS THE
DIAL SERVICE AT ANY GIVEN TIME, AND DISCONNECTIONS MAY OCCUR FROM TIME TO
TIME. YOU AGREE THAT SERVICE SUPPLIER WILL NOT BE LIABLE FOR ANY DAMAGES
THAT YOU OR YOUR END USERS MAY INCUR ARISING OUT OF THE USE OR INABILITY TO
USE THE DIAL SERVICE.
VI. The following mandatory flow down terms shall be included for any ISP
Services offered on a wholesale basis where the Bell Atlantic End User may
resell such services to individual users (e.g. DiaLinx ISP, DiaLinx VISP or ISP
Direct Services (or bundles containing such services as a component)
collectively called "ISP Services" for purposes of this section:
1. Mandatory Flow-down Terms. You agree to include terms substantially
-------------------------
similar to the following minimum terms in legally binding agreements with
Users. For the purpose of this section, "Network Service Supplier" shall
mean Service Supplier , "Company" shall mean [End User], "you" and "User"
shall mean the individual end user and "Services" shall mean the ISP
Service.
Content Responsibility. User understands that neither Company nor its
Network Services Supplier is responsible for the content of the
transmissions which may pass through the Internet and/or the
Connectivity Services. User agrees that it will NOT use the
Connectivity Services in ways that violate laws, infringe the rights
of others, or interfere with the users, services, or equipment of the
network. For example, User shall not distribute unsolicited
advertising, chain letters, or commercial electronic mail
("spamming"); propagate computer worms or viruses; attempt to gain
unauthorized entry to other computers, data or networks; distribute
child pornography, obscenity, or defamatory material over the
Internet; or infringe copyrights, trademarks, or other intellectual
property rights.
Warranty and Liability Limitations. THE NETWORK SERVICES SUPPLIER AND
COMPANY DISCLAIM ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
COMPANY DOES NOT WARRANT THAT THE SERVICES WILL BE AVAILABLE ON A
SPECIFIED DATE OR TIME OR THAT THE DIAL NETWORK WILL HAVE THE CAPACITY
TO MEET THE DEMAND OF USERS DURING SPECIFIC HOURS. DIAL USERS MAY BE
UNABLE TO ACCESS THE NETWORK AT ANY TIME, AND DISCONNECTION FROM THE
DIAL NETWORK MAY OCCUR FROM TIME TO TIME. NEITHER COMPANY NOR ITS
NETWORK SERVICES SUPPLIER WILL BE LIABLE FOR UNAUTHORIZED ACCESS TO
COMPANY'S OR USER'S TRANSMISSION FACILITIES OR PREMISE EQUIPMENT OR
FOR UNAUTHORIZED ACCESS TO OR ALTERATION, THEFT OR DESTRUCTION OF
USER'S DATA FILES, PROGRAMS, PROCEDURES OR INFORMATION THROUGH
ACCIDENT, FRAUDULENT MEANS OR DEVICES, OR ANY OTHER METHOD, REGARDLESS
<PAGE>
OF WHETHER SUCH DAMAGE OCCURS AS A RESULT OF COMPANY'S OR ITS NETWORK
SERVICE SUPPLIER'S NEGLIGENCE.
Disclaimer of Consequential Damages. IN NO EVENT WILL COMPANY OR ITS
NETWORK SERVICES SUPPLIERS BE LIABLE FOR ANY DAMAGES, INCLUDING BUT
NOT LIMITED TO LOSS OF DATA, LOSS OF REVENUE OR PROFITS, OR FOR ANY
OTHER SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, ARISING
OUT OF OR IN CONNECTION WITH THE USE OF OR INABILITY TO USE SERVICES
OR PRODUCTS PROVIDED HEREUNDER.
Export Compliance: User further agree to comply with U.S. Export laws
concerning the transmission of technical data and other regulated
materials via the Connectivity Services.
IP Addresses: Upon expiration, cancellation or termination of the
Agreement, End-User shall relinquish any IP addresses or address
blocks assigned to End-User by Company or its Network Services
Supplier.
No Right of Resale. User may not resell or redistribute any
Services.
VII. International Dispute Resolution: Bell Atlantic agrees that any disputes
arising out of the provision of Services shall be resolved in accordance with
section 14.13 "Dispute Resolution" of the Agreement, and agrees to include
appropriate dispute resolution clauses in its agreements with End Users for any
disputes arising out of the provisioning of the Services outside of the U.S.
<PAGE>
ATTACHMENT D
SEVERITY LEVELS
<TABLE>
<CAPTION>
Severity Type of Impact Description/Resulting Behavior Expected Response Level
Level
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0 Critical Impact Problems that cause critical impact to Status by e-mail, phone or pager
Multiple Sites Down the functions of multiple customers. at initial time ticket is opened
Justifies immediate management and every one (1) hour that the
attention and dedicated resources ticket is opened. Verbal
applying continuous efforts to resolve confirmation when ticket is closed
as soon as possible. followed by a copy of the ticket
face e-mailed.
- ------------------------------------------------------------------------------------------------------------
1 High Impact Single Problems that cause critical impact to Status by e-mail or phone every
site down service the function(s) of customer(s). one (1) hour that the ticket is
degradation of Justifies immediate management opened. Verbal confirmation when
multiple sites attention and dedicated resources ticket is closed followed by a
applying continuous efforts to resolve copy of the ticket face e-mailed.
as soon as possible.
- ------------------------------------------------------------------------------------------------------------
2 Medium Impact Problem causing degradation of service Status by e-mail to occur every
Service resulting in impact to functions of a twenty-four (24) hours that the
degradation of customer. Impact justifies priority ticket is open. E-mail sent when
single site attention and application of resources ticket is closed.
to resolve in a timely manner.
- ------------------------------------------------------------------------------------------------------------
3 Low Impact Problems causing low impact to the Status by e-mail to occur every
Administrative and function(s) of customer(s). Requires twenty-four (24) hours that the
requests timely resolution to minimize future ticket is open. E-mail sent when
impacts. Resources should be allocated ticket is closed.
in accordance with normal managerial
planning and prioritization.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ATTACHMENT E
PERFORMANCE REPORT CARD FORMAT
To be developed
<PAGE>
ATTACHMENT F - 1
NETWORK SERVICE LEVEL AGREEMENT DESCRIPTIONS
<PAGE>
THE SLAS SHOWN IN THIS ATTACHMENT ARE IN ADDITION TO THE END-USER SLAS THAT ARE
SPELLED OUT IN ATTACHMENT A WITH THE SERVICE DESCRIPTIONS (EXCEPT DIALINX).
Remote Access Network Service Level Agreements (SLAs) Violation and Remedies
Genuity's failure to meet the following Network SLAs will result in a percentage
credit on Bell Atlantic's total DiaLinx service bill for the month in which the
Service did not meet the respective SLA. The SLA credit percentage is dependent
on the number of consecutive months of SLA failure and the degree of failure.
With the exception of Network Availability, the SLA metrics will be based on
Inverse Network Technology, Inc. 24 hour North American Benchmark Test Results.
Terms and metrics not otherwise defined below will have the meaning set forth in
the standard remote access SLAs.
<TABLE>
<CAPTION>
DiaLinx Network Availability SLA Remedy
- ----------------------------------------------------------------------
% Availability Months in a row with SLA violations
- ----------------------------------------------------------------------
From To 1-2 3 4+#
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
*% *% 0% 0% 0%
- ----------------------------------------------------------------------
*% *% 1% 3% 5%
- ----------------------------------------------------------------------
(**)*% 3% 5% 7%
- ----------------------------------------------------------------------
</TABLE>
(**) Denotes less Than
<TABLE>
<CAPTION>
DiaLinx Call Success Rate SLA Remedy
- ---------------------------------------------------------------------
% Success Months in a row with SLA violations
- ---------------------------------------------------------------------
From To 1-2 3 4+#
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
*% *% 0% 0% 0%
- ---------------------------------------------------------------------
*% *% 1% 3% 5%
- ---------------------------------------------------------------------
(**)*% 3% 5% 7%
- ---------------------------------------------------------------------
</TABLE>
(**) Denote Less Than
<TABLE>
<CAPTION>
DiaLinx Busy Free Dial SLA Remedy
- ---------------------------------------------------------------------
% Busy Free Months in a row with SLA violations
- ---------------------------------------------------------------------
From To 1-2 3 4+#
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
*% *% 0% 0% 0%
- ---------------------------------------------------------------------
*% *% 1% 3% 5%
- ---------------------------------------------------------------------
(**)*% 3% 5% 7%
- ---------------------------------------------------------------------
</TABLE>
(**) Denote Less Than
<TABLE>
<CAPTION>
DiaLinx NA Initial Modem Connect Speed SLA Remedy
- -----------------------------------------------------------------------
Kbps Months in a row with SLA violations
- -----------------------------------------------------------------------
From To 1-2 3 4+#
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
* * 0% 0% 0%
- -----------------------------------------------------------------------
* * 1% 3% 5%
- -----------------------------------------------------------------------
(**)* 3% 5% 7%
- -----------------------------------------------------------------------
</TABLE>
(**) Denote Less Than
Miscellaneous Items
. Genuity agrees that all remote access SLAs are to be proactive, and will be
posted to the DiaLinx Customer Support Online (CSO) Web site. The foregoing
SLAs are in lieu of the standard End User SLAs for DiaLinx customers.
<PAGE>
Dedicated Internet Access Network Service Level Agreements (SLAs) Violation
and Remedies.
Genuity's failure to meet the following Network SLAs will result in a percentage
credit on the Bell Atlantic's bill for the following month for the affected
network. The SLA credit percentage is dependent on the number of consecutive
months of SLA failure and the degree of failure. Terms and metrics not otherwise
defined below will have the meaning set forth in the standard dedicated access
SLAs.
Note: Network Availability and Latency SLAs are mutually exclusive - for
example, a large latency timeframe would indicate a Network Outage. A
percentage of the affected Bell Atlantic customers' total recurring monthly fee
will be remitted back to Bell Atlantic as indicated in the tables below.
Bell Atlantic will require access to Genuity's Stats Advantage system to be able
to verify Network Outage and Latency for Bell Atlantic customers.
<TABLE>
<CAPTION>
Internet Advantage, Internet Advantage International and BizConnect
Network Availability SLA Remedy
- ----------------------------------------------------------------------------------------------------------------------------
If 5% or more of the Bell Atlantic Installed Months in a row with SLA violations
Base of Customers experience violation of
Network Outage SLA
(in minutes/hours)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From To 1-2 3 4+#
- ----------------------------------------------------------------------------------------------------------------------------
* * 0% 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
* * 3.33% 6.66% 10%
- ----------------------------------------------------------------------------------------------------------------------------
* * 6.66% 9.99% 13%
- ----------------------------------------------------------------------------------------------------------------------------
* * 16.65% 19.98% 23%
- ----------------------------------------------------------------------------------------------------------------------------
(**)* 20% 20% 25%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(**) Denote Greater Than
<TABLE>
<CAPTION>
Internet Advantage and BizConnect
Latency SLA Remedy
- ----------------------------------------------------------------------------------------------------------------------------
Latency of 5% or more of the Bell Atlantic Months in a row with SLA violations
Installed Base of Customers
(in Milliseconds)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
From To 1-2 3 4+#
- ----------------------------------------------------------------------------------------------------------------------------
* * 0% 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
* * 3.33% 6.66% 10%
- ----------------------------------------------------------------------------------------------------------------------------
* * 6.66% 9.99% 13%
- ----------------------------------------------------------------------------------------------------------------------------
* * 16.65% 19.98% 23%
- ----------------------------------------------------------------------------------------------------------------------------
(**)* 20% 20% 25%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(**) Denote Greater Than
<TABLE>
<CAPTION>
Internet Advantage International
Latency SLA Remedy
- ----------------------------------------------------------------------------------------------------------------------------
Latency of 5% or more of the Bell Atlantic Months in a row with SLA violations
Installed Base of Customers
(in Milliseconds)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM TO 1-2 3 4+#
- ----------------------------------------------------------------------------------------------------------------------------
* * 0% 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
* * 3.33% 6.66% 10%
- ----------------------------------------------------------------------------------------------------------------------------
* * 6.66% 9.99% 13%
- ----------------------------------------------------------------------------------------------------------------------------
* * 16.65% 19.98% 23%
- ----------------------------------------------------------------------------------------------------------------------------
(**)* 20% 20% 25%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(**) Denote Greater Than
<PAGE>
Web Hosting Service Level Agreements (SLAs) Violation and Remedies
Genuity's failure to meet the following Network SLAs will result in a percentage
credit on Bell Atlantic's Web Hosting service bill for the month in which the
service did not meet the SLA. The SLA credit percentage is dependent on the
number of consecutive months of SLA failure. Terms and metrics not otherwise
defined below will have the meaning set forth in the standard hosting SLAs
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Enterprise Advantage Network Uptime SLA Remedy
- -----------------------------------------------------------------------------------------------------------------------------
When Bell Consecutive Months of Violation
% of Customers Atlantic's ----------------------------------------------------------------------------------
Receiving SLA Installed Base of
Credit Web Hosting 1 2 3 4+#
Customers is
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
*% * 0% 1% Reduction in MRC 2% Reduction in MRC 3% Reduction in MRC
- ------------------------------------------- on Bell Atlantic's on Bell Atlantic's on Bell Atlantic's
*% * total hosting bill total hosting bill total hosting bill
- -------------------------------------------
*% *
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Enterprise Advantage Server Availability, Data Center Packet Loss, Response Time and Enterprise
Performance SLA Remedy
- -----------------------------------------------------------------------------------------------------------------------------------
When Bell Consecutive Months of Violation
% of Customers Atlantic's -------------------------------------------------------------------------------------
Receiving SLA Installed Base of
Credit Web Hosting 1 2 3 4+#
Customers is
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1% Reduction in MRC 2% Reduction in MRC 3% Reduction in MRC
*% * 0% on Bell Atlantic's on Bell Atlantic's on Bell Atlantic's
total hosting bill total hosting bill Total hosting bill
- ----------------------------------------------------------------------------------------------------------------------------------
*% *
- ----------------------------------------------------------------------------------------------------------------------------------
*% *
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
# In the event that Genuity misses a given SLA for four consecutive months, then
Bell Atlantic may terminate the affected Service without penalty or further
liability.
<PAGE>
ATTACHMENT F - 2
NON-NETWORK SERVICE LEVEL AGREEMENT DESCRIPTIONS
<PAGE>
Remote Access Service Level Agreements (SLAs) Violation and Remedies
This particular SLA is to apply to those ICB situations or one-offs that require
either technical assistance or special non-standard pricing. Forty eight hour
response times include only normal business days.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Quoting Service Level Agreements Turnaround Time Remedy
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Non-Standard Pricing Quotes requiring Genuity *hour response time, with updates $1000 reduction in Bell
assistance (one-offs) every * hours until completed. Atlantic's commitment for each
*hour delay
- -----------------------------------------------------------------------------------------------------------------------
Non-pricing Quotes (i.e. technical questions) *hour response time, with updates $1000 reduction in Bell
every * hours until completed. Atlantic's commitment for each
*hour delay
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Installation of New DiaLinx Services
The following provisioning intervals are contingent upon the receipt by Genuity
of complete order documentation. Excludes customer-dependent provisioning
(e.g., customer supplied RADIUS).
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Provisioning Intervals Interval Remedy**
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RADIUS Server *business days 1% reduction in Bell Atlantic's
customer's first month's MRC
service fee for every *hours beyond
target date
- -------------------------------------------------------------------------------------------------------------------------
Directional Filters *business days 1% reduction in Bell Atlantic's
customer's first month's MRC
service fee for every *hours beyond
target date
- -------------------------------------------------------------------------------------------------------------------------
Tunnel Routers *business days 1% reduction in Bell Atlantic's
customer's first month's MRC
service fee for every *hours beyond
target date
- -------------------------------------------------------------------------------------------------------------------------
News Service *business days 1% reduction in Bell Atlantic's
customer's first month's MRC
service fee for every *hours beyond
target date
- -------------------------------------------------------------------------------------------------------------------------
VISP Suite (or subset thereof) *business days 1% reduction in Bell Atlantic's
(Master CD/Registration/News/Email/Back Office customer's first month's MRC
services) service fee for every *hours beyond
. Non-standard services N/A target date
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
** If one of the service elements is dependent on another service element that
has a longer provisioning element, (e.g., RADIUS Servers/Directional Filtering)
then the longer provisioning interval is utilized. In some cases the intervals
may be additive if the provisioning one service is based on the completed
provisioning of another service. No more than 2 SLAs can be enacted per Bell
Atlantic customer.
<PAGE>
Remote Access Service Level Agreements (SLAs) Violation and Remedies
Administrative Network/Ancillary DiaLinx Service Changes
(and additional changes of a similar nature)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Provisioning Intervals Interval Remedy**
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Add Realm to existing RADIUS Server *business days 1% reduction in Bell Atlantic's
customer's first month's MRC
service fee for every *hours beyond
target date
- -------------------------------------------------------------------------------------------------------------------------
Modify existing Directional Filters *business days 1% reduction in Bell Atlantic's
customer's first month's MRC
service fee for every *hours beyond
target date
- -------------------------------------------------------------------------------------------------------------------------
Modify existing Tunnel Routers *business days 1% reduction in Bell Atlantic's
customer's first month's MRC
service fee for every *hours beyond
target date
- -------------------------------------------------------------------------------------------------------------------------
Add/Change Port 25 Filters *business days 1% reduction in Bell Atlantic's
customer's first month's MRC
service fee for every *hours beyond
target date
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Billing Feeds Interval Remedy
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accurate and Timely Receipt of Daily and As specified in IP Services 1% reduction in Bell Atlantic's
Monthly Billing Feeds Billing Agreement. customer's first month's MRC
service fee for every *hours beyond
target date
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Dedicated Internet Access Non Network Service Level Agreements (SLAs)
Violation and Remedies
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Quoting Service Level Agreements Turnaround Time Remedy
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Local Loop Quote (Domestic) * business days 95% of the time Genuity will remit back to Bell
within a one month period Atlantic a fee or credit equal to
$6,000 the month following the SLA
violation provided that Bell
Atlantic achieves a win rate equal
to or greater than 7.5%.
- -------------------------------------------------------------------------------------------------------------------------
Local Loop Quote (International) * business days 95% of the time Genuity will remit back to Bell
within a one month period Atlantic a fee or credit equal to
$6,000 the month following the SLA
violation provided that Bell
Atlantic achieves a win rate equal
to or greater than 7.5%requests
submitted to Genuity.
- -------------------------------------------------------------------------------------------------------------------------
ACE # * business days 95% of the time Genuity will remit back to Bell
within a one month period Atlantic a fee or credit equal to
$6,000 the month following the SLA
violation provided that Bell
Atlantic achieves a win rate equal
to or greater than 7.5%.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
________________________________________________________________________________
# includes all upgrades and downgrades (both in service level and speeds);
changes in pricing (flex, fixed, etc); moves; rehomes; and all other types of
quoting done through the ACE system
Dedicated Internet Access Non Network Service Level Agreements (SLAs)
Violation and Remedies
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Provisioning Intervals - New Connections Interval Remedy**
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BizConnect FR Within *business days of receipt 3% per *hour violation (as well as
of complete and accurate order 100% waiver of NRC as part of the
standard SLA)
- -------------------------------------------------------------------------------------------------------------------------
BizConnect T1 Within *business days of receipt 3% per *hour violation (as well as
of complete and accurate order 100% waiver of NRC as part of the
standard SLA)
- -------------------------------------------------------------------------------------------------------------------------
IA 56k-T1 Within * business days following 3% per * hour violation
completion of local loop (assumes
local loop provisioned to correct
location and passes all BER and
circuit quality tests)
- -------------------------------------------------------------------------------------------------------------------------
IA T3 Within * business days following 3% per * hour violation
completion of local loop (assumes
local loop provisioned to correct
location and passes all BER and
circuit quality tests)
- -------------------------------------------------------------------------------------------------------------------------
IA FR Within * business days following 3% per * hour violation
completion of local loop (assumes
local loop provisioned to correct
location and passes all BER and
circuit quality tests)
- -------------------------------------------------------------------------------------------------------------------------
IAI Within * business days following 3% per * hour violation
completion of local loop (assumes
local loop provisioned to correct
location and passes all BER and
circuit quality tests)
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Provisioning Intervals - Changes to existing Interval Remedy**
connections without circuit and CPE changes
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Upgrades/Downgrades Within * business days following 3% per * hour violation
receipt of complete and accurate
sales order
- -------------------------------------------------------------------------------------------------------------------------
Moves Within * business days following 3% per * hour violation
receipt of complete and accurate
sales order
- -------------------------------------------------------------------------------------------------------------------------
IAI Within * business days following 3% per * hour violation
receipt of complete and accurate
sales order
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Provisioning Intervals - Changes to existing Interval Remedy**
connections with circuit and CPE changes
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Upgrades/Downgrades Within * business days following 3% per * hour violation
receipt of complete and accurate
sales order
- -------------------------------------------------------------------------------------------------------------------------
Moves Within * business days following 3% per * hour violation
receipt of complete and accurate
sales order
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
** Remedy is a percentage credit to Bell Atlantic for the specific customer's
MRC for the next bill in Bell Atlantic's billing cycle.
*** Customers will also receive full credit of the NRC/Installation for
BizConnect if total installation takes * days or more.
If Genuity is not able to meet such requested provisioning date, Bell Atlantic
may, within five (5) business days, cancel Bell Atlantic order without incurring
cancellation charges. If Genuity is not able to deliver the services within *(*)
calendar days, Bell Atlantic has the right to terminate the service order
without penalty.
Delays caused by customer provided CPE shall not be factored into the SLA
compliance for any of the above-referenced SLAs. Orders shall be considered
"complete and accurate" if they meet the requirements specified by the PMO from
time to time.
<PAGE>
Enterprise Advantage Non Network Service Level Agreements (SLAs)
Violation and Remedies
Quoting SLA (For Standard EA Quotes only)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Turnaround Time Remedy
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Within * business days from the time Genuity receives a 25% off the standard installation fees for the Quotation
quotation request package from Bell Atlantic, Genuity (provided Genuity wins the business)
shall either:
(i) issue a quote if the quotation request package for
standard EA services is complete and accurate; or
(ii) reject the quotation request package if it is
incomplete and/or inaccurate. Genuity will also give
Bell Atlantic reasons for the rejection in a manner to
be mutually agreed upon in accordance with the
procedures under Section 3.2 of the Agreement.
A complete and accurate quotation request package
consists of a completed configuration template, a visio
diagram and a completed end-user questionnaire, all of
which have been approved by Genuity.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: If Genuity determines that the quotation process for Bell Atlantic is
unduly burdensome, Genuity can suspend the Enterprise Advantage Quoting SLA at
its discretion for 30 days while a new agreement is reached.
Provisioning SLA
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Provisioning Interval Remedy
- ---------------------------------------------------------------------------------------------------------
<S> <C>
TBD TBD
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Genuity will make an Enterprise Advantage provisioning SLA available to
Bell Atlantic (i) within 6 months of signing this Agreement, or (ii) when
Genuity makes a provisioning SLA generally available to its web hosting
customers, whichever is earlier.
At the present time, Genuity anticipates that the EA provisioning SLA that
will be provided to Bell Atlantic will be along the following lines:
For all EA Service Quotations, Genuity will meet the delivery date
given to Bell Atlantic upon completion of a successful kickoff
meeting, including receipt by Genuity of a complete and accurate order
package which has been approved by Genuity, for the EA Service
Quotation. In the event that Bell Atlantic or Bell Atlantic's End User
Customer has caused any delays that materially impact the provisioning
process, the delivery date given by Genuity shall be void and this SLA
shall not apply.
Remedy if Genuity fails to meet the SLA:
25% off the standard installation fees for the Quotation
The actual EA Provisioning SLA will be mutually agreed-upon by the parties.
<PAGE>
VPN Advantage and Internet Security Services Non Network
Service Level Agreements (SLAs)
Violation and Remedies
VPN Advantage and Managed VPN Services
Service Level Agreements (SLAs) Remedies
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Service Category Metric Remedy
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VPN Advantage . Hardware / Software Modifications . For major releases, (e.g. 5.2, Genuity will develop a product
etc.), Genuity will ensure that change request form that, once
VPN Advantage any and all changes to the filled out , will be submitted to
International product (including hardware/ BELL ATLANTIC for review and
software and product subsequent approval within * days
Managed VPN Service Note: Hardware / Software functionality) is provided to of submission
Modifications metrics and associated BELL ATLANTIC with the shorter
Managed VPN Service remedies apply to all managed of the standard notification
International Internet security services period (as specified in Section
XX of the IP Services Service
Description or * days notice.
. For minor releases (e.g. 5.2.1,
etc.) and/or patches, Genuity will
ensure that any and all changes to
the product (including
hardware/software and product
functionality) is provided to BELL
ATLANTIC * days prior to release,
excluding emergency patches required
to address security issues or
demanded by platform, operating
system, firewall, or application
manufacturers.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
VPN Advantage and Internet Security Services Non Network
Service Level Agreements (SLAs)
Violation and Remedies
Installation of New VPN Advantage and Managed VPN Services
The following provisioning intervals are contingent upon the receipt by Genuity
of complete order documentation. Excludes customer-dependent provisioning (e.g.,
customer supplied RADIUS).
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Provisioning Intervals Interval Remedy/2/
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
VPN Advantage - with Existing Customer 1% reduction in Bell Atlantic's
Internet Connection customer's first month's MRC
1-8 VPN devices * business days service fee for every 24 hours
9-17 VPN devices * business days beyond target date
18+ VPN devices individual case basis (per quoted
installation by Genuity)
- -------------------------------------------------------------------------------------------------------------------------
VPN Advantage - Ordered with IA/1/ 1% reduction in Bell Atlantic's
1-8 VPN devices IA interval + * business days customer's first month's MRC
9-17 VPN devices IA interval + * business days service fee for every 24 hours
18+ VPN DEVICES Individual case basis (per beyond target date
installation date by Genuity)
- -------------------------------------------------------------------------------------------------------------------------
VPN ADVANTAGE INTERNATIONAL - WITH EXISTING 1% reduction in Bell Atlantic's
CUSTOMER INTERNET CONNECTION customer's first month's MRC
Licensed Countries/3/ * business days service fee for every 24 hours
Non-licensed Countries Not applicable beyond target date
- -------------------------------------------------------------------------------------------------------------------------
VPN ADVANTAGE INTERNATIONAL - 1% reduction in Bell Atlantic's
ORDERED WITH IAI/1/ customer's first month's MRC
Licensed Countries/3/ IAI interval + * business days service fee for every 24 hours
Non-licensed Countries Not applicable beyond target date
- -------------------------------------------------------------------------------------------------------------------------
Managed VPN Service - with Existing Customer 1% reduction in Bell Atlantic's
Internet Connection customer's first month's MRC
1-8 VPN devices * business days service fee for every 24 hours
9-17 VPN devices * business days beyond target date
18+ VPN devices individual case basis (per
installation date by Genuity)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Provisioning Intervals Interval Remedy/2/
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MANAGED VPN SERVICE - ORDERED 1% reduction in Bell Atlantic's
WITH IA/1/ customer's first month's MRC
1-17 VPN devices IA interval + * business days service fee for every 24 hours
18+ VPN DEVICES Individual case basis (per beyond target date
installation date by Genuity)
- -------------------------------------------------------------------------------------------------------------------------
MANAGED VPN SERVICE 1% reduction in Bell Atlantic's
INTERNATIONAL - WITH EXISTING customer's first month's MRC
CUSTOMER INTERNET CONNECTION service fee for every 24 hours
Licensed Countries/3/ * business days beyond target date
NON-LICENSED COUNTRIES Not applicable
- ------------------------------------------------------------------------------------------------------------------------
MANAGED VPN SERVICE 1% reduction in Bell Atlantic's
INTERNATIONAL - ORDERED WITH IAI/1/ customer's first month's MRC
Licensed Countries/3/ IAI interval + * business days service fee for every 24 hours
Not applicable beyond target date
Non-licensed Countries
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Assumes both orders are completed at submission and placed together at the
same time. SLA is based on standard provisioning intervals for IA and IAI.
Expedited or accelerated orders are excluded.
/2/ If one of the service elements is dependent on another service element that
has a longer provisioning element, (e.g., Internet Advantage, etc.) then the
longer provisioning interval is utilized. In some cases the intervals may be
additive if the provisioning one service is based on the completed provisioning
of another service. No more than 2 SLAscan be enacted per Bell Atlantic
customer.
/3/ Licensed countries refers to those countries where Genuity has secured an
import and/or operating license (where required) to deliver VPN service. Genuity
will provide post an updated list of Licensed Countries to the Genuity Kbank for
Bell Atlantic reference.
Provisioning timeframe does not start until all required network diagrams and
architectures (collectively "artwork") have been received by Genuity
Provisioning. All applications are subject to a mandatory architecture review
prior to order acceptance.
If the customer is non-responsive after 3 consecutive phone calls from VPN
Provisioning, Bell Atlantic will be notified and the order will be placed on
hold and excluded from current or future provisioning SLAs for the affected
site(s).
Orders for international service will require customer cooperation in order to
complete export and import documentation for equipment delivery. If customer is
non-responsive after 3 consecutive calls from Genuity, Bell Atlantic will be
notified and the order will be placed on hold and excluded from current or
future provisioning SLAs for the affected sites.
<PAGE>
VPN Advantage and Internet Security Services Non Network
Service Level Agreements (SLAs)
Violation and Remedies
Site Patrol and Security Advantage Firewall Services
Service Level Agreements (SLAs) Remedies
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Service Category Metric Remedy
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Site Patrol . Configuration Changes . Configuration changes received . A penalty of 1% of the net
and authenticated by 6 p.m. EST will monthly service fees paid by
Site Patrol be completed by *-This applies to Bell Atlantic for the affected
International MODIFICATIONS of existing policies customer site(s) will be
REACTIVE SLA (CUSTOMER MUST REQUEST for certain supported services only credited by Genuity to BELL
Security Advantage CREDIT) ATLANTIC for customers
requesting credit from Genuity.
Security Advantage Note: All configuration changes
International metrics and associated remedies
apply to all managed Internet
security services (where
configuration change SLAs are
specified in the then current
Service Description)
- ------------------------------------------------------------------------------------------------------------------------------------
Site Patrol . Hardware / Software Modifications . For major releases, (e.g. 5.2, Genuity will develop a product
etc.), Genuity will ensure that any change request form that, once
Site Patrol and all changes to the product filled out , will be submitted
International (including hardware/software and to BELL ATLANTIC for review and
product functionality) is provided subsequent approval within *
Security Advantage Note: Hardware / Software to BELL ATLANTIC with the shorter of days of submission
Modifications metrics and associated the standard notification period (as
Security Advantage remedies apply to all managed specified in Section XX of the IP
International Internet security services Services Service Description or *
days notice.
Vulnerability Scan . For minor releases (e.g. 5.2.1,
etc.) and/or patches, Genuity will
Site Scan ensure that any and all changes to
the product (including
hardware/software and product
functionality) is provided to BELL
ATLANTIC * days prior to release,
excluding emergency patches required
to address security issues or
demanded by platform, operating
system, firewall, or application
manufacturers.
- ------------------------------------------------------------------------------------------------------------------------------------
Site Scan . Site Scan Report A written site scan test report is A penalty of 1% of the net
to be delivered to the customer monthly service fees paid by BELL
within * business days of completing ATLANTIC for the affected
the scan on the customer network customer site will be credited by
REACTIVE SLA (CUSTOMER MUST REQUEST Genuity to BELL ATLANTIC for
INQUIRY) customers requesting inquiry from
Genuity (excludes Site Scan
Services where bundled with Site
Patrol as part of a standard
service option).
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
VPN Advantage and Internet Security Services Non Network Service Level
Agreements (SLAs) Violation and Remedies
Installation of New Security Advantage or Site Patrol Services
The following provisioning intervals are contingent upon the receipt by Genuity
of complete order documentation. Excludes customer-dependent provisioning
(e.g., customer supplied RADIUS).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Provisioning Intervals Interval Remedy/2/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Security Advantage - With Existing Customer Internet * business days 1% reduction in Bell Atlantic's
Connection customer's first month's MRC service fee
for every 24 hours beyond target date
- ------------------------------------------------------------------------------------------------------------------------------------
Security Advantage - Ordered with IA/1/ IA interval + * business days 1% reduction in Bell Atlantic's
customer's first month's MRC service fee
for every 24 hours beyond target date
- ------------------------------------------------------------------------------------------------------------------------------------
Security Advantage International - with Existing * business days 1% reduction in Bell Atlantic's
Customer Internet Connection customer's first month's MRC service fee
for every 24 hours beyond target date
- ------------------------------------------------------------------------------------------------------------------------------------
Security Advantage International - Ordered with IAI/1/ IA interval + * business days 1% reduction in Bell Atlantic's
customer's first month's MRC service fee
for every 24 hours beyond target date
- ------------------------------------------------------------------------------------------------------------------------------------
Site Patrol for Firewall-1-- with Existing Customer * business days (plus * if circuit 1% reduction in Bell Atlantic's
Internet Connection has to be installed) customer's first month's MRC service fee
for every 24 hours beyond target date
- ------------------------------------------------------------------------------------------------------------------------------------
Site Patrol for Firewall-1 - Ordered with /IA1/ IA interval + * business days 1% reduction in Bell Atlantic's
customer's first month's MRC service fee
for every 24 hours beyond target date
- ------------------------------------------------------------------------------------------------------------------------------------
Site Patrol for Firewall-1 International - with * business days 1% reduction in Bell Atlantic's
Existing Customer Internet Connection customer's first month's MRC service fee
for every 24 hours beyond target date
- ------------------------------------------------------------------------------------------------------------------------------------
Site Patrol for Firewall-1 International - Ordered IAI interval + * business days 1% reduction in Bell Atlantic's
with IAI/1/ customer's first month's MRC service fee
for every 24 hours beyond target date
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Assumes both orders are completed at submission and placed together at the
same time. SLA is based on standard provisioning intervals for IA and IAI.
Expedited or accelerated orders are excluded.
/2/ If one of the service elements is dependent on another service element that
has a longer provisioning element, (e.g., Internet Advantage, etc.) then the
longer provisioning interval is utilized. In some cases the intervals may be
additive if the provisioning one service is based on the completed provisioning
of another service. No more than 2 SLAs can be enacted per Bell Atlantic
customer.
Provisioning timeframe does not start until all required network diagrams and
architectures (collectively "artwork") have been received by Genuity
Provisioning. All applications may be subject to a mandatory architecture
review prior to order acceptance.
If the customer is non-responsive after 3 consecutive phone calls from Genuity
Provisioning business days, Bell Atlantic will be notified and the order will be
placed on hold and excluded from current or future provisioning SLAs for the
affected site(s).
Orders for international service will require customer cooperation in order to
complete export and import documentation for equipment delivery. If customer is
non-responsive after 3 consecutive calls from Genuity, Bell Atlantic will be
notified and the order will be placed on hold and excluded from current or
future provisioning SLAs for the affected sites.
<PAGE>
PURCHASE, RESALE AND MARKETING AGREEMENT
SERVICE SCHEDULE
PRIVATE LINE TRANSPORT AND ATM TRANSPORT
This Service Schedule is issued under the Purchase, Resale and Marketing
Agreement between Bell Atlantic Corporation ("Bell Atlantic") and Genuity Inc.
("Genuity") dated _____________ ("the Agreement"). The terms and conditions of
the Agreement are incorporated herein by reference and made a part hereof. In
the event of a conflict between the terms of this Service Schedule and the
Agreement, the terms of this Service Schedule shall prevail. Capitalized terms
are defined in the Agreement.
1. Appointment and Exceptions. Genuity Inc. ("Genuity") hereby authorizes Bell
---------------------------
Atlantic Corporation ("Bell Atlantic")h to purchase for its own use, to use in
providing services to its customers, and to market and resell Genuity Domestic
Private Line Transport and Domestic ATM Transport described in Attachment A
(collectively the "Services," or individually as "PL Service," and "ATM"
respectively). Domestic shall mean continental United States. Notwithstanding
anything to the contrary in the Agreement, this Service Schedule and the
Agreement are not intended to supersede the following agreement categories: (i)
Capacity Agreements Associated with Asset Transfer, Collocation License
Agreements Associated with Asset Transfer and Trouble Management Agreement
Associated with Asset Transfer between GTE Telecom Incorporated and GTE
Communications Corporation; and (ii) agreements between GTE Telecom Incorporated
and affiliates of Bell Atlantic.
Pursuant to Section 1.1 of the Agreement, Genuity designates GTE Global Networks
Incorporated as the Service Provider for provision of the Services.
2. Service Schedule Term. The term of this Service Schedule shall be
----------------------
coterminous with the Agreement.
3. Purchase Price. The purchase prices for Services are stated in Attachment B.
---------------
Prices may be decreased on notice. Prices may be increased for a Renewal Term
of the Agreement upon ninety (90) days notice prior to the end of the then-
current term of the Agreement. Upon expiration of a Bell Atlantic Order,
Genuity will continue to provide those Services being provisioned at such time
on a month-to-month basis, which may be canceled by either Party upon thirty
(30) calendar days written notice. The prices for Services provided during any
such extension shall be consistent with the terms of this Schedule.
4. Use of Capacity. Bell Atlantic may use the Services for any lawful purpose
----------------
consistent with the transmission and switching parameters of the Network, and
may resell any capacity obtained hereunder to End-Users, subject to the
restrictions contained herein. If Bell Atlantic resells such services to a
Capacity Reseller, as defined below, Bell Atlantic's sales under this Agreement
to any such Capacity Reseller shall be limited to the equivalent of one OC-12 on
any one route. As used herein, a Capacity Reseller is any person or entity
which, in whole or in part, seeks to obtain
1
<PAGE>
telecommunications capacity for the purpose of reselling or otherwise providing
access thereto, to third parties for profit, whether or not such person or
entity actually realizes a profit as a result of such transaction.
5. New Services Notification and Development. Genuity agrees to notify Bell
------------------------------------------
Atlantic of any new services at the same time as these new services are made
available to Genuity's internal wholesale and/or retail Sales Channels. Genuity
agrees to make available to Bell Atlantic any new services Genuity develops;
provided that Bell Atlantic and Genuity mutually agree on the terms and
conditions for the new services. Bell Atlantic, in its sole discretion, shall
select the calendar date on which Bell Atlantic shall elect to roll out such new
Genuity Services. Bell Atlantic shall provide Genuity forty-five (45) days
advance written notice of new service roll out. Genuity shall provide the
following information not later than thirty (30) days prior to Bell Atlantic's
roll out of new Services: order entrance criteria, escalation contacts, high
level review of back office, order, test and turn up processes, expedite policy
and process, rejection policy, relevant language/scripting for Bell Atlantic's
first level customer support, and billing start policy.
6. Enhancements to Existing Services. Genuity shall provide Bell Atlantic
----------------------------------
thirty (30) days advance written notice of any material enhancements to
Services. In the event there are any impacts to order criteria, escalation
contacts, back office, order, test and turn up processes, expedite policies and
processes, rejection policies, relevant language / scripting for Bell Atlantic's
first level customer support, and billing start policy, Genuity agrees to
provide all relative documentation to Services enhancement.
7. Forecast Information. On a quarterly basis, Bell Atlantic will provide
---------------------
Genuity with demand and other forecasts for Services under this Agreement on a
Service by Service basis broken out by Metropolitan Statistical Area. Such
forecasts are not commitments by Bell Atlantic to purchase Services hereunder.
The format of such forecasts shall be mutually agreed to between the Parties.
Such forecast information shall be treated as Bell Atlantic confidential
information in accordance with Section 9 of the Agreement.
8. Genuity Responsibilities.
-------------------------
A. Genuity agrees to perform the following:
1) To provide pricing as set forth in Attachment B which shall be refreshed
on a quarterly basis.
2) To provide provisioning, installation, service management, maintenance,
repair and testing of the Services which are available on a nationwide basis
in the continental United States. Where Genuity has provisioned the local
Access for Bell Atlantic's End User, Genuity will have the responsibility
for coordinating the maintenance and repair of such Access.
2
<PAGE>
3) To provide on a monthly basis, a Service Availability Report containing
the most current Service availability locations by city and state, current
Access options (LEC/CAP/ALT/IXC) on a per PoP basis, and three month
projected PoP locations. The current Service Availability Report as of the
Effective Date of the Agreement is contained in Attachment C. This Service
Availability Report does not guarantee availability of Services at a given
location when an actual order is placed.
4) Genuity shall maintain the hardware and software in the Genuity Network
elements. This includes the storage, backup, restoration, and management of
configuration and connectivity information. Genuity shall maintain a
database of Genuity Network resources and their availability.
5) To comply with the applicable telecommunications industry Private Line,
ATM, and advanced data product standards, including but not limited to,
Telcordia, American National Standards Institute (ANSI) standards,
International Telecommunications Union Standards, and SONET ANSI Standards
and ATM Forum Standards.
6) To comply with the applicable safety and protection standards as set
forth by federal, state, and local regulatory agencies, including those
promulgated by the Occupational Safety and Health Act (OSHA).
7) Genuity shall select the network resources and design the circuits
needed to provide the Services ordered by Bell Atlantic.
B. Genuity is not responsible for the performance of the following:
1) Provisioning, installation, service management, maintenance, and/or
repair of Customer Premises Equipment for Bell Atlantic or End Users of Bell
Atlantic.
2) Protection of subscriber sites or traffic where such protection is
beyond Genuity's reasonable control.
9. Bell Atlantic Responsibilities.
------------------------------
A. Bell Atlantic will be the single point of contact for the End User.
B. Bell Atlantic is responsible for defining the Bell Atlantic product
offerings, sales of Bell Atlantic products, negotiations with End Users, End
User trouble reporting and End User billing (including calculation of the
applicable taxes and surcharges).
C. Bell Atlantic shall independently arrange for the installation of any
equipment if required at the End User premise. Bell Atlantic will ensure that
the Customer Premise Equipment (CPE) is ready for the End-to-End Service
testing.
3
<PAGE>
D. Bell Atlantic shall independently arrange for the installation of any
equipment if required at the End User premise. Bell Atlantic will ensure that
the Customer Premise Equipment (CPE) is ready for the End-to-End Service
testing.
E. Bell Atlantic has sole responsibility for installation, testing, and
operation of facilities, services, and equipment other than those specifically
provided by Genuity. In no event will the untimely installation or non-
operation of Bell Atlantic's or its End User's facilities, services, or
equipment (including local exchange Access, Bell Atlantic premise equipment and
CPE) relieve Bell Atlantic of its obligation to pay charges for Services as of
the Projected Delivery Date. Notwithstanding the immediately preceding
sentence, in the event Bell Atlantic notifies Genuity of any untimely
installation or non-operation of Bell Atlantic's or its End User's facilities,
equipment, or Services at least thirty (30) days prior to the Projected Delivery
Date, Bell Atlantic shall have the option of extending the Projected Delivery
Date for not more than thirty (30) days. All third party charges to Genuity
associated with the Services during that extension, shall be passed through to
Bell Atlantic, provided that local Access provided by Genuity as Bell Atlantic's
agent shall be charged pursuant to Section 10.
F. Bell Atlantic shall make the determination of whether an End User should be
disconnected due to security concerns provided that nothing in this Section
shall impact Genuity's rights under Section 21 of this Service Schedule.
G. Bell Atlantic shall be responsible for providing sales engineering, order
entry, first level repair support, coordination of provisioning activities, and
for billing and billing inquiries to Services for End Users, as applicable and
other such services.
10. Training. Within ninety (90) days after the Effective Date of the
--------
Agreement, Genuity and Bell Atlantic shall complete a mutually agreed training
plan that incorporates Bell Atlantic's training requirements. This training
plan will include, but not be limited to quarterly product capability training,
process and systems training with any system and process changes, participation
in quarterly product and technical update training. Furthermore, Genuity will
provide semi-annual technology seminars. These training sessions and technology
seminars will be limited to Bell Atlantic headquarters employees, including
Marketing, Product Management, Operations, Engineering and Alliance Management.
Genuity will not provide training or technology seminars to Bell Atlantic's End
Users or Bell Atlantic's sales channels.
11. Access Support Services. At Bell Atlantic's request, Genuity will order
------------------------
the LEC/CAP/ALT/IXC Access circuit for Bell Atlantic's End User on behalf of
Bell Atlantic, to facilitate and coordinate the interconnection between the
Bell Atlantic End User demarcation and Genuity point-of-presence. Genuity will
act in this capacity only when requested to do so by Bell Atlantic. Under such
circumstances, Bell Atlantic agrees to execute or obtain from its End User a
Letter of Authorization in a form acceptable to the underlying carrier. Genuity
shall provide firm fixed pricing for the Access circuits except where subject to
the underlying carriers' applicable tariffs. Within a period of six (6) months
from the Effective Date of the Agreement, Genuity shall use commercially
reasonable efforts to obtain competitive pricing from the Genuity approved
Access providers (as specified in the Service Availability Report) for Access
charges
4
<PAGE>
that shall be competitive with the prices from such Access providers to
Tier 1 carriers, including AT&T, Sprint, and MCI WorldCom to the extent that
Genuity aggregate volumes generate buying power is equivalent to the referenced
carriers. If, upon the expiration of the six (6) month period, Genuity have not
obtained such competitive pricing, the Parties will jointly retain a mutually
agreed upon independent third Party no more frequently than a semi-annual basis,
to obtain and provide benchmarking information for similar Access. The
independent third party will utilize the following criteria for conducting the
benchmarking review: purchasers of Access who are similarly situated to Genuity
by comparable geographic reach and comparable volumes, and who deliver SLAs
comparable to those specified in the Service Schedule. Genuity shall have
ninety (90) days after receipt of benchmarking information to meet the pricing
contained therein. If Genuity fails to meet this pricing, then Bell Atlantic
shall be entitled to relief pursuant to Section 7.3 and Attachment 1 of the
Agreement. The Parties shall review progress Genuity has made in completing
this process and upon mutual agreement, may extend the six (6) month period.
Genuity will provide Bell Atlantic Access pricing at Genuity's cost with no mark
up, using Genuity's special Access arrangements or tarriffs of the underlying
carrier(s), whichever is less and conforms with the requirements under this
Service Schedule.
The Parties acknowledge that it is their intention that Bell Atlantic should
enjoy network availability from LEC/CAP/ALT/IXC providers equivalent to the
Service SLAs detailed in Attachment A. Genuity shall make commercially
reasonable efforts to procure such network availability SLA from LEC/CAP/ALT/IXC
providers. In the event that Genuity is able to obtain from a LEC/CAP/ALT/IXC
provider a credit in the event that a given level of network availability is not
met, and Genuity's SLA remedies for network availability are not invoked, then
such credit shall be prorated to Bell Atlantic on the basis of actual Services
ordered by Bell Atlantic for such underlying carrier(s). Genuity shall provide
to Bell Atlantic and keep updated a list of LEC/CAP/ALT/IXC providers that
guarantee a minimum level of availability for such services. However, where a
LEC/CAP/ALT/IXC provider does not guarantee such availability, Genuity shall
have no liability to Bell Atlantic in the event that the LEC/CAP/ALT/IXC
provider fails to meet the availability target. In such circumstances, Genuity
shall notify Bell Atlantic promptly of the availability that is being offered by
the LEC/CAP/ALT/IXC provider in question.
12. Pre-Sales Support. In order to facilitate the quote and RFP process to
-----------------
Bell Atlantic, Genuity will provide the following:
A. Standard Quote Process Support for Access. Genuity will provide pricing
quotes for Access as specified in Section 10 within the time required in the
SLAs. Further details on this quote process, including identification of who
will submit and who will receive such quotes, will be mutually developed between
the Parties. Within ninety (90) days after the Effective Date of the Agreement,
Parties shall complete a mutually agreed upon plan to define specifications to
automate/mechanize the quote process.
B. Facilities Availability Inquiry. Genuity will conduct facility availability
inquiries for Services within the time required in the SLAs. Further details on
this inquiry process, including
5
<PAGE>
identification of who will submit and who will receive such inquiries, will be
mutually developed between the Parties.
C. Custom Bid Support. Genuity will provide support as mutually agreed and
pricing to Bell Atlantic for bids which have requirements beyond the scope of
Services and functionality in the Service Schedule (a "Custom Bid"). Pricing
for the Custom Bid shall consist of mutually agreed pricing limited to the scope
of Services and functionality proposed in the Custom Bid. Custom Bids include,
but are not limited to, customized responses relative to network operations or
installation requirements, network configuration, network buildout, significant
numbers of end user sites and/or significant bandwidth opportunities mix of U.S.
domestic and non-U.S. international cross border and/or non-U.S. domestic
venues, support of special billing arrangements and other similar extenuating
circumstances.
The Parties agree to use the following process in Custom Bid situations:
1) Bell Atlantic shall submit to Genuity a Custom Bid Request in a form,
which will be mutually agreed upon by the Parties within ninety (90) days
after the Effective Date of the Agreement. The Custom Bid Request form
shall contain, at a minimum, the following information: a summary of the
Custom Bids, technical specifications, and Bell Atlantic required response
date. The Custom Bid Request form will be reviewed and approved by Bell
Atlantic management prior to submission to Genuity.
2) Genuity will respond to Bell Atlantic within two (2) business days from
the receipt of the request with a representation as to whether Genuity will
respond to the request and if so, an estimated time of completion for
responding to such request.
3) Genuity is not primarily responsible for presentation of the Bell
Atlantic response but will, at Bell Atlantic's reasonable request, support
Bell Atlantic's response presentation;
4) The Parties will enter into an addendum to this Service Schedule to
cover each Custom Bid and its associated pricing agreed upon by the
Parties, and the Parties will perform the same in accordance with the
addendum.
5) Any information provided by Bell Atlantic to Genuity for the Custom Bid
shall be treated as confidential information in accordance with Section 9
of the Agreement.
D. Expedite Quotes Process. Upon Bell Atlantic request, Genuity will use
------------------------
commercially reasonable efforts to expedite quotes for Customer Bid and Access
to accommodate Bell Atlantic End User requirements.
13. Order Entry and Provisioning.
A. Order Process and Acceptance/Rejection Notification
To facilitate the ordering and provisioning of Services to Bell Atlantic, the
Parties will use mutually agreed processes for exchange of new, additional,
supplemental, change, pre-install cancellation and/or disconnect service orders.
Bell Atlantic will submit to Genuity Orders for Services in accordance with the
procedures contained in this Section and Attachment D of this Service Schedule.
These procedures may be amended from time to time by mutual agreement of
6
<PAGE>
both Parties. All such changes as agreed to by the Parties shall be made in
writing and incorporated into this Service Schedule. The following will be
applicable to all such Orders:
Bell Atlantic will send Genuity a complete and accurate Order for each
Service ("Order") in the form set forth in Attachment E as may be modified
from time to time by mutual agreement of the Parties, which shall contain,
among other things, the date that Bell Atlantic requests Service be
available for use ("Desired Due Date"). To the extent that the Service
has a standard Installation Interval as described in Attachment A, the
Desired Due Date shall be no earlier than the standard Installation
Interval unless the Desired Due Date has been approved pursuant to the
Installation Interval Expedite process set forth below.
Within two (2) business days of receipt of the Order, Genuity will notify
Bell Atlantic that it has either accepted or rejected the Order. An Order
may only be rejected if it is materially deficient or materially defective.
Acceptance of the Order means that Genuity has approved of the form of the
Order, e.g., the Order is complete, all fields are filled in, and that
Genuity will commence processing the Order. Notwithstanding the foregoing,
if Genuity accepts an Order for End-to End Service on the good faith belief
that it is complete and accurate, that Order may be subsequently rejected
if the LEC/CAP/ALT/IXC notifies Genuity that the Order is materially
defective or materially deficient. If Genuity rejects the Order, the
notice of rejection will provide an explanation for such rejection, e.g.,
the Order lacks sufficient information and specific details of such
deficiency. Resubmission of a rejected Order constitutes the submission of
a new Order for the purpose of Order processing.
If Genuity has not responded to Bell Atlantic with a status of the Order
within two (2) business days of Genuity's receipt of the Order, the Order
shall be deemed accepted by Genuity.
It is mutually recognized that these processes will to some extent be manual as
of the Effective Date of the Agreement, and Genuity shall use commercially
reasonable efforts to expedite the mechanization of these processes. To that
end, within ninety (90) days of the Effective Date of the Agreement, the Parties
will complete a mutually agreeable Order handling process which will incorporate
the following:
Genuity will provide to Bell Atlantic in a mutually agreed manner
mechanized access to the appropriate Genuity system(s) to allow for the
transmittal of Bell Atlantic Orders to Genuity, the transmittal of Order
acceptance notification, and rejection/jeopardy notification with detailed
explanation(s) thereof. Any future Genuity systems development will
incorporate all mutually agreed upon requirements for Bell Atlantic to
submit Orders for provisioning at Genuity's expense.
B. Firm Order Commitment
7
<PAGE>
Genuity shall issue to Bell Atlantic a Firm Order Commitment (FOC) within the
following timeframes: within ten (10) business days of Genuity's acceptance of a
Bell Atlantic Order for PoP-to-PoP Service; within eleven (11) business days of
Genuity's acceptance of a Bell Atlantic Order for DS-3 or lower End-to-End
Service; and within fourteen (14) business days of Genuity's acceptance of a
Bell Atlantic Order for OC-N End-to-End Service. Genuity will be relieved of
its obligation hereunder in the following circumstances: a) reasonable outside
construction delays; and b) delays caused by LEC/CAP/ALT/IXC providers. In the
event that Genuity determines prior to issuance of the FOC that it is unable to
provision an Order, Genuity shall promptly notify Bell Atlantic via email of the
specific reasons for such inability to provision the Order. The FOC shall
contain the following information: the installation date for the full circuit or
Service as ordered by Bell Atlantic ("Projected Delivery Date"); the Bell
Atlantic circuit ID (as provided to Genuity on the Service Order from Bell
Atlantic); the Genuity circuit ID; and, the circuit ID(s) and delivery date(s)
for all Access and/or interexchange service(s) ordered by Genuity on behalf of
Bell Atlantic in support of the Service Order. Issuance of the FOC shall
constitute Genuity's agreement to provision the Services in the applicable
Order. Bell Atlantic and Genuity agree to work cooperatively to meet specific
Bell Atlantic requirements relative to Orders.
C. Installation Interval Expedites
The Parties mutually agree that they will work together to facilitate requests
for installation intervals shorter than those otherwise agreed as standard on a
case-by-case basis. The Parties will utilize the Expedite process Attachment F
to the Service Schedule within ninety (90) days of the Effective Date of this
Agreement. Bell Atlantic shall be entitled to expedite the greater of ten
percent (10%) of all accepted but not installed Orders or five (5) accepted but
not installed Orders at any one time.
D. Facility Orders via Third Parties
Genuity will issue all applicable Access Service Requests ("ASRs") to the
appropriate LEC/CAP/ALT/IXC.
In the event that Bell Atlantic requests Customer Provided Access (CPA) on one
or more ends of a circuit/Service, Genuity will provide the appropriate Circuit
Facility Assignment (CFA)/Letter of Authorization (LOA) within three (3)
business days of Genuity acceptance of a Bell Atlantic Order. For purposes of
CPA, Bell Atlantic may only use Genuity approved Access providers for the
specific location as identified in the most current Service Availability Report
described in Section 8(A)(3) of this Service Schedule.
Genuity shall issue to Bell Atlantic a Circuit Layout Report (CLR) within the
following timeframes; ten (10) business prior to the Project Delivery Date for
PoP to PoP Service; and three (3) business days prior to the Projected Delivery
Date for End to End Service. The CLR shall contain the following information:
Details regarding the layout of the service as ordered and pending delivery;
confirmation of Projected Delivery Date for the full circuit or service as
8
<PAGE>
ordered by Bell Atlantic; the Bell Atlantic circuit ID (as provided to Genuity
on the service order from Bell Atlantic); the Genuity circuit ID; and, the
circuit ID(s) and confirmed delivery date(s) for all local loop or interexchange
service(s) ordered by Genuity in support of the service order.
In the event that Genuity becomes aware of any issue(s) which would have an
impact on the Projected Delivery Date at any point prior to installation,
Genuity shall make Bell Atlantic aware of such issue(s) and work diligently with
Bell Atlantic and with Genuity's own provider(s) to resolve any such issue(s).
14. Change Control Process
The Parties recognize that over the term of the Agreement, Bell Atlantic may
desire to change the scope of the Services as set forth in the Agreement to
account for, among other things, changes in market circumstances, new
technologies and strategic considerations (hereinafter "Service Changes"). The
purpose of this Section is to provide an overall startup process for
accomplishing such Service Changes.
A. Service Change Request
Right to Make Service Changes. Genuity shall perform Service Changes requested
by Bell Atlantic in regard to a Service where the terms of the Service Changes
are mutually agreed to by the Parties in advance in writing ("Service Change
Request"). Genuity shall consider any Service Changes requested by Bell
Atlantic unless (i) Genuity considers, at its absolute discretion, that it is
not commercially practical for it to meet the requirements of Bell Atlantic (ii)
the scope of Services after implementation of the requested Service Changes
would differ materially from the purposes and objectives of the applicable
Service or (iii) the Parties have not reached agreement on any associated
adjustment (if any) to Genuity's compensation and/or schedule for the requested
Service Changes. Where Genuity considers any Bell Atlantic request not
commercially practical, it shall give reasons therefor to Bell Atlantic and
shall work with Bell Atlantic to explore reasonable alternatives.
B. Service Change Process
1) Bell Atlantic Request. The Bell Atlantic Project Manager shall submit
---------------------
requests for Service Changes to the Genuity Channel Manager in written form.
The Service Change Request shall contain information concerning the nature of
the requested change (setting forth the business requirements in sufficient
detail for Genuity to respond in a timely and effective manner) as well as a
date by which the Service Change is reasonably required.
2) Genuity Response. Within ten (10) business days after receipt of a Service
----------------
Change Request, Genuity shall deliver to Bell Atlantic a statement stating its
intention with respect to providing the requested Service Change and
implementation plans where appropriate or practical, as further described below.
In the event that the Genuity responds to Bell Atlantic to the effect that such
requested Service Change cannot be implemented in the time frame desired but
that Genuity
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<PAGE>
intends to implement such Service Change, Genuity shall set forth the time frame
estimates within which it could implement the Service Change.
3) Bell Atlantic Approval. Within a reasonable time following receipt of
----------------------
Genuity's Response Bell Atlantic shall provide a written direction to Genuity as
to whether or not it desires Genuity to perform the Service Change. Genuity
shall have no obligation to undertake Service Changes and Bell Atlantic shall
have no responsibility or liability in connection with any Service Changes
undertaken, without specific prior written agreement between the Parties.
C. Service Change Pricing
The pricing for changing the Service, the pricing for the Service and the terms
and conditions under which the Service shall be provided to Bell Atlantic shall
be mutually agreed upon by the Parties in advance and in writing. Service Change
Pricing shall be consistent with the terms and conditions of this Service
Schedule and the Agreement. In the event Genuity cannot determine price with
certainty at the time of the initial Genuity Response, Genuity shall use
commercially reasonable efforts to provide a good faith estimate of the pricing
associated with a given Service Change Request, and shall provide firm pricing
to Bell Atlantic as soon thereafter as practicable.
15. Cancellation of Orders/Order Supplements & Change Orders/Disconnection of
Service
A. Cancellation of Orders
Bell Atlantic may cancel an Order at any time throughout the Order cycle. The
charge for cancellation is as follows:
<TABLE>
<CAPTION>
Timing Charge
- ------ ------
<S> <C>
Before issuance of the FOC to NERCO No charge
16 days or more prior to the Projected Due Date in the FOC: 50% of 1 month MRC, $500 minimum
15 days or less prior to the Projected Due Date in the FOC: 1 month MRC & NRC, $1,000 minimum
LEC/CAP/ALT/IXC Access circuits (following FOC issuance to Bell Atlantic): pass through with no mark up.
</TABLE>
For Services without standard Installation Intervals, if GTE's Projected Due
Date in the FOC is later than Bell Atlantic's Desired Due Date, then Bell
Atlantic may cancel the Order at no charge within five (5) business days of
receipt of the FOC.
B. Pre-Install Order Supplements
Bell Atlantic may issue a pre-install Order supplement at any time throughout
the Order cycle. The charge for such Order supplement shall be as follows:
<TABLE>
<CAPTION>
Timing Charge
- ------ ------
<S> <C>
Before issuance of the FOC to Bell Atlantic No charge
After FOC issuance but prior to projected due date in the FOC 10% of 1 month MRC, $250 minimum
LEC/CAP/ALT/IXC Access circuits (following FOC issuance to Bell Atlantic): Pass through with no mark up
</TABLE>
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<PAGE>
For Services without standard Installation Intervals, if Genuity's Projected Due
Date in the FOC is later than Bell Atlantic's Desired Due Date, then Bell
Atlantic may issue a supplemental modification on the Order at no charge within
five (5) business days of receipt of the FOC.
C. Post-Install Change of Orders
Bell Atlantic may issue a post-install change of an Order at any time throughout
the Service term for that Order. The charge for such change orders shall be as
follows (except for expedites which are covered in Section 13(C):
<TABLE>
<CAPTION>
Description Charge
- ----------- ------
<S> <C>
Increase in service (e.g., bandwidth), same or increased term No charge
Decrease in service (e.g., bandwidth), same term Decrease in MRC (if any) times
months remaining in term
Decrease in service (e.g., bandwidth), increased term Sum of [decrease in MRC (if any)
times months remaining in term]
minus [decrease in MRC (if any) times new
months of term]
Move order, same term Decrease in MRC (if any) times
months remaining in term, plus
pass-through of any third party NRC
Move order, increased term Pass-through of any third-party NRC
Engineering Change Pass-through of any third-party NRC
(if any)
Records-only Change (no physical impact) No charge
</TABLE>
D. Post-Install Disconnection
If Bell Atlantic disconnects a Service during the first year of the Service
Order or if Genuity disconnects a Service for Bell Atlantic default, Bell
Atlantic shall pay disconnection charges in the amount of one hundred percent
(100%) of the MRC for the remaining months of the first year and fifty percent
(50%) of the MRC for the balance of the Service Order term. If Bell Atlantic
disconnects a Service after the first year of the Service Order or if Genuity
disconnects a Service for Bell Atlantic default, Bell Atlantic shall pay a
disconnection charge in the amount of fifty percent (50%) of the MRC for the
balance of the Service Order term. No such disconnection charges shall apply if
Bell Atlantic terminates the Service pursuant to Sections 6.2 or 6.3 of the
Agreement.
E. Cancellation/Disconnection Liquidated Damages
It is agreed that Genuity's damages in the event of cancellation/disconnection
may be difficult or impossible to ascertain. The provision for
cancellation/disconnection charges set forth herein is intended, therefore, to
establish liquidated damages and are not intended as a penalty.
16. Testing and Handover
--------------------
A. Testing
11
<PAGE>
Bell Atlantic is responsible for coordination of overall End-to-End testing with
Bell Atlantic End User(s)/Bell Atlantic internal Parties.
Genuity will conduct test(s) of all Service(s) on the Genuity Network on an End-
to-End (full service), POP-to-POP (coordinated by Bell Atlantic with CPA), End-
to-Bell Atlantic Network Interface (full service in conjunction with Bell
Atlantic), or POP-to-Bell Atlantic Network Interface (coordinated by Bell
Atlantic/CPA and in conjunction with Bell Atlantic) basis, prior to releasing
the circuit to Bell Atlantic. Genuity will work cooperatively with Bell
Atlantic on coordination of testing as applicable.
Within ninety (90) days of the Effective Date of the Agreement, the Parties will
complete a mutually agreeable test plan for installation which shall include but
is not limited to: scheduling parameters, interactive testing, testing parameter
details and the necessary documentation.
B. Service Activation and Genuity Completion Notice
A Genuity Completion Notice shall be the means of notification of Service
installation provided by Genuity to Bell Atlantic as proof of date ("In Service
Date"), time and place of installation. The Genuity Completion Notice shall
include the Bell Atlantic circuit ID, the Genuity circuit ID, and any applicable
local loop and/or IXC circuit IDs associated with the installed Services. The
Genuity Completion Notice will also indicate that the installed Services are
functionally operational and available for use by Bell Atlantic. Upon handover,
Genuity's system(s) will be updated with the appropriate information to allow
for capture of trouble management and associated information.
The Genuity Completion Notice will be provided to Bell Atlantic by Genuity
within one (1) business day of Genuity completing all Genuity testing and turnup
on the ordered Service. Bell Atlantic will have five (5) business days to alert
Genuity of any issues and/or disputes regarding the information on the Genuity
Completion Notice, including the In Service Date. In the event that Bell
Atlantic has such a dispute, the Parties will work cooperatively to reach a
mutually agreed solution. Should Bell Atlantic fail to alert Genuity of any
dispute within the five (5) business day period from Genuity Completion Notice
receipt, the information supplied on the Genuity Completion Notice will be
deemed to be mutually accepted.
The Parties acknowledge that the format and method of transmittal for the
Genuity Completion Notice is to be mutually agreed within ninety (90) days of
the Effective Date of the Agreement.
Genuity performs test, turn-up, and acceptance functions during Business Hours,
8:00 A.M. to 5:00 P.M. local time. Upon Bell Atlantic's request and on a
prescheduled basis, Genuity shall perform such functions outside of Business
Hours upon mutually agreeable terms.
Any and all changes to order provisioning processes that affect how Bell
Atlantic supplies or receives data/reports from Genuity will be mutually agreed
upon by both Parties.
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<PAGE>
If the Service is available prior to the Projected Delivery Date, Bell Atlantic
may elect to receive such Service on the earlier date, in which case recurring
charges will commence on agreed-upon In-Service Date.
17. Monitoring, Trouble Administration, and Repair. Genuity shall monitor all
-----------------------------------------------
Genuity Network elements used to provide Service to Bell Atlantic with the
exception of Access provided by a LEC/CAP/ALT/IXC. When a Service affecting
alarm is detected by Genuity or received by Genuity from a LEC/CAP/ALT/IXC,
Genuity shall report the alarm to Bell Atlantic, the potential impact to Bell
Atlantic Services, and log all actions taken to clear the alarm. Genuity shall
perform or facilitate fault localization for the End-to-End Circuit to determine
the resolution. This may involve selecting and scheduling diagnostics or audits.
Genuity will report the results of the fault localization testing to Bell
Atlantic Repair, when Bell Atlantic has opened a specific trouble ticket with
Genuity and/or when Genuity has opened such a trouble ticket with Bell Atlantic.
Genuity shall repair the fault by scheduling, dispatching, and coordinating the
repair forces. This may involve working with other network vendors used to
provide Bell Atlantic service and to provide Bell Atlantic's required service
level objectives.
Genuity shall monitor (24 hours per day, 7 days per week) the Genuity equipment
necessary to provide the Service. Where Genuity provisions an End to End
circuit or End to Bell Atlantic network interconnect circuit, Genuity shall be
responsible for all trouble testing, isolation, coordination and resolution with
all LEC/CAP/ALT/IXC regarding expected Service restoration for the Genuity
provisioned elements as referenced above. This responsibility includes opening
trouble reports with any LEC/CAP/ALT/IXC providing local and/or IXC facilities
provisioned by Genuity and performing joint testing with such Parties and Bell
Atlantic. Bell Atlantic is responsible for coordinating any testing with non-
Genuity contracted Parties. Genuity shall test Circuits upon installation as
detailed in Section 16 of this Service Schedule and in response to a trouble
ticket. Within ninety (90) days of the Effective Date of the Agreement, the
Parties will complete a mutually agreeable test plan for repair which shall
include but is not limited to: scheduling parameters, interactive testing,
testing parameter details and the necessary documentation.
Genuity shall administer all trouble tickets referred by Bell Atlantic that
impact Bell Atlantic's purchased Services. This includes tracking the progress
of the trouble ticket and providing status reports, and keeping a log of the
progress electronically. Genuity shall contact Bell Atlantic with an
explanation of the trouble resolution and verify that the problem has been
corrected. Genuity shall perform a mutual ticket closeout process with Bell
Atlantic. Bell Atlantic shall assist Genuity in conducting Service testing when
such is requested by Genuity. Bell Atlantic shall close out the trouble ticket
with Genuity after Bell Atlantic verifies that the problem reported is resolved.
The trouble reporting process is set forth in Attachment G. The repair process
flow is set forth in Attachment H.
Genuity shall provide a method for Bell Atlantic to periodically gain
updates/status of Bell Atlantic circuit troubles, using a trouble ticket
reference number or circuit identification. Within ninety (90) days of the
Effective Date of the Agreement, Genuity will also provide Bell Atlantic
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<PAGE>
real time mechanized access to Genuity's trouble management system for the
purpose of initiating, reviewing and/or updating the status of Bell Atlantic
trouble tickets.
18. Maintenance and Outages
-----------------------
A. Planned Maintenance
(i) Maintenance Window. Genuity shall provide a maintenance window from 1:00
------------------
AM to 7:00 AM local time of the affected Network elements. Genuity shall
provide the planned maintenance notice to a Bell Atlantic designated e-mail
address followed up by a telephone call to the Bell Atlantic designated
maintenance contact(s) as specified in the POC Information/Escalation,
Attachment I. Bell Atlantic shall notify End Users of a scheduled outage. If a
Bell Atlantic End User requests a postponement of the outage, Genuity will use
commercially reasonable efforts to accommodate the requested postponement. If
during a scheduled maintenance window an unplanned outage occurs, Bell Atlantic
shall report such outage(s) pursuant to the trouble reporting process set forth
in Attachment G and any relevant SLAs shall apply. Bell Atlantic shall provide
End User categories, and the order in which Bell Atlantic wishes them to be
restored in the event of a Network outage and Genuity will use commercially
reasonable efforts to accommodate this order. Within four (4) months after the
Effective Date of the Agreement, the Parties shall complete a mutually
agreeable plan pursuant to which Genuity shall change the maintenance window to
1:00 A.M. to 6:00 A.M. local time of the affected network elements.
(ii) Planned Outage Notification. Genuity may add remove and/or modify network
---------------------------
elements to restore/maintain service. Genuity will use commercially reasonable
efforts to minimize the impact on Bell Atlantic Services during such
addition/removal/modification of network elements. If Genuity determines that
Bell Atlantic Services will be materially impacted, Genuity shall notify Bell
Atlantic seven (7) calendar days prior to the planned network activity and shall
obtain Bell Atlantic approval prior to commencement of such activity, which
approval shall not be unreasonably withheld or delayed. In such event, SLAs
shall not apply to such outage. Genuity shall provide the planned maintenance
notice to a Bell Atlantic designated email address followed up by a telephone
call to the Bell Atlantic designated maintenance contact(s) as specified in the
POC Information/Escalation, Attachment I. Within four (4) months after the
Effective Date of the Agreement, the Parties shall complete a mutually agreeable
plan pursuant to which Genuity shall change the notification timeframe to ten (1
0) business days.
B. Unplanned Outage. Genuity shall notify Bell Atlantic of unplanned outages
within a reasonable timeframe of the outage. Bell Atlantic shall notify Bell
Atlantic End User Network problems and outages to Genuity. Notification shall
follow the parameters set forth in the trouble reporting process in Attachment
G.
C. Emergency Maintenance. Genuity shall notify Bell Atlantic of emergency
maintenance activities as soon as practicable. Bell Atlantic shall notify Bell
Atlantic End User Network
14
<PAGE>
problems and outages to Genuity. Notification shall follow the parameters set
forth in Attachment G.
19. Performance Management. Genuity shall monitor the performance of the
-----------------------
Genuity Network and perform event correlation, filtering and data aggregation,
as applicable to the Services. Genuity shall monitor the performance of the
Genuity Network elements including the monitoring of threshold crossing alerts,
as applicable to the Services. Genuity shall manage the collection,
distribution, and storage of the data from the Genuity Network elements, as
applicable to the Services. Genuity shall analyze the Genuity Network data to
ensure that the integrity of the data is being maintained between Network
elements, as applicable to the Services. Genuity shall collect data on specific
Circuits as requested by Bell Atlantic; such collection of data on specific
circuits shall be mutually agreed upon as it pertains to Bell Atlantic's
concerns regarding performance of the Services. Genuity will proactively provide
monthly electronic performance reports for all Service Level parameters as
mutually agreed to by the Parties and as further outlined in Attachment A. The
format for these reports shall be mutually agreed to by the Parties within
ninety (90) days of the Effective Date of the Agreement.
20. Network Management System Plan
------------------------------
A. Within ninety (90) days after the Effective Date of the Agreement, Genuity
and Bell Atlantic shall complete a Network Management System Plan to allow Bell
Atlantic secured read only access to those parts of Genuity's network management
systems which relate specifically and solely to monitoring Services ordered by
Bell Atlantic. The Parties shall review the progress made by Bell Atlantic and
Genuity on this plan and, upon mutual agreement, may extend this period.
B. For ATM services, the NMS capabilities developed by Genuity in accordance
with the mutually agreed upon plan will conform to the requirements as contained
in Attachment J of this Service Schedule to the extent that such information is
available from the Genuity network elements. This information will include, but
not be limited to the following: service performance, fault and configuration
data (the "Statistics") collected for Bell Atlantic's PVCs / SVCs, UNIs and NNIs
from Genuity's Network as applicable. Such Statistics will be provided by
Genuity's Network and placed on a Genuity secured and provided Proxy Server, or
equivalent secured solution which will utilize the Simple Network Management
Protocol ("SNMP") protocol supporting RFCs (where applicable), including but not
limited to 1695, 1483, 1595, 1406, 1407, and conforming to SNMP standards 1213,
1573, 1441-52, as supported by the Internet Engineering Task Force ("IETF").
The NMS server shall keep the historical data for up to five (5) days and will
provide database review of historical data in a mutually agreed upon format
(Bell Atlantic's preferred format is Open Database Connectivity). If Genuity
fails to deliver the NMS
15
<PAGE>
Service for months four (4) through six (6). If Genuity fails to deliver the NMS
Service after this six (6) month period, then Bell Atlantic shall have the right
to terminate the ATM Service.
C. Upon the completion of written Network Management System Plan for each
Service, Genuity shall deliver the network management access to such Service in
conformance to the timeframe, cost, and SLAs as mutually agreed to by the
Parties. The Network Management System Plan shall be incorporated into this
Service Schedule after countersigned by the Parties.
21. Reports. Within ninety (90) days after the Effective Date of this
-------
Agreement, Genuity and Bell Atlantic shall complete a mutually agreed upon
report requirements for all reports to be provided by Genuity to Bell Atlantic.
The requirements shall include criteria such as, but are not limited to,
frequency, format, content, timing, media, and contacts for the reports. These
reports shall include, but are not limited to, Daily Order Status Report,
Network Performance Reports, Trouble Management Reports and others identified in
this Service Schedule.
A. Daily Order Status Report. Genuity shall provide to Bell Atlantic on each
business day a daily report ("Daily Order Status Report") indicating the status,
including jeopardy status, of all Orders received through the previous business
day. The Parties shall mutually agree to the format, frequency and timing of
such reports.
22. Continuation of Services/Transition Services
--------------------------------------------
A. Upon expiration or termination of the Agreement as provided below, Genuity
shall continue providing the Services as follows:
(i) Expiration. Upon expiration of the Agreement Genuity shall continue to
----------
provide Services to Bell Atlantic until the expiration of the term of the
Bell Atlantic Orders associated with Bell Atlantic existing End User
agreements for Services that have already been installed or for which a FOC
has been issued. Additionally, for any new Orders placed after expiration
or any Orders which a FOC has not been issued at time of expiration, Genuity
shall have sole discretion to accept or reject the Order. If Genuity accepts
the Order, the Parties will agree upon the terms and conditions applicable to
the Order.
(ii) Bell Atlantic Termination for Default. Upon termination of the Agreement
--------------------------------------
by Bell Atlantic for Genuity's default, Genuity shall, at Bell Atlantic's
request, continue to provide Services to Bell Atlantic, through the then-
current term of the End User agreement with Bell Atlantic; provided, however,
that if the term of such End User agreement exceeds the term of the Bell
Atlantic Order associated with the End User agreement, then Genuity shall not
be obligated to provide Service beyond the term of the Bell Atlantic Order.
Additionally, for a period not to exceed twelve (12) months from date of
termination, Bell Atlantic may place Orders with Genuity. Genuity shall
provide Services for such Orders pursuant to the terms of the Service
Schedule and the Agreement in effect at the time of termination; provided
that any Transition Services requested by Bell Atlantic for such Orders shall
be solely at Bell Atlantic's cost.
16
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(iii) Bell Atlantic Early Termination. Upon termination of the Agreement by
-------------------------------
Bell Atlantic pursuant to Section 6.3 of the Agreement as a result of action
by a legislature, regulatory agency, court, or other governmental entity, and
provided that Genuity does not assume Bell Atlantic's End User agreements,
Bell Atlantic shall not be entitled to place any new Orders after the
effective date of termination. Genuity shall continue to provide Services
for Orders that have already been installed or for which a FOC has been
issued as of the effective date of termination. Genuity shall provide those
Services for a period of twelve (12) months or such other period of time as
may be permitted by the regulatory agency, court, or other governmental
entity, whichever is shorter.
(iv) Genuity Termination for Default. Upon termination of the Agreement by
-------------------------------
Genuity for Bell Atlantic's default, and provided that Genuity does not
assume Bell Atlantic's existing End User agreements for Genuity Services,
Genuity's obligation to provide Services shall be as follows: If Genuity
terminates pursuant to Section 6.2(i) of the Agreement for non-payment, and
Bell Atlantic has not disputed such payment in accordance with Section 7.7 of
the Agreement, then Genuity may immediately cease providing Services on
Orders provisioned or pending under this Service Schedule. If Genuity
terminates pursuant to Section 6.2(ii) or 6.2(iii) of the Agreement, then
Genuity may immediately cease providing Services on Orders provisioned or
pending under this Service Schedule. If Genuity terminates pursuant to
Section 6.2(i) of the Agreement for any other reason than non-payment, then
Genuity shall continue to provide Services for Bell Atlantic Orders that have
already been installed or for which a FOC has been issued for a period not to
exceed twelve (12) months from the date of termination. Additionally, for any
new Orders placed after termination or any Orders which a FOC has not been
issued at time of termination, Genuity shall have sole discretion to accept
or reject the Order. If Genuity accepts the Order, the Parties will agree
upon the terms and conditions applicable to the Order.
B. The term "Transition Services" shall mean Services provided by Genuity to
Bell Atlantic at the expiration of this Agreement, or at termination as
described above. The Transition Services shall be provided for a period of
twelve (12) months from the date of termination or expiration. The Transition
Services will support the transition of Services from Genuity and its network
providers to Bell Atlantic's designated service providers. Subject to subsection
A above, the Transition Services will include, but will not be limited to,
continuation of all Genuity provisioning and installation support services,
continuation of all Genuity NOC maintenance services at service levels set forth
in this Agreement for Services, including any dispatches, coordination of
Genuity and LEC disconnect order dates, extraction of data concerning the
Services, including circuit ID and logical port information, trouble records,
order information and provisioning records, project management reasonably
required for transition coordination, moves, adds, and changes of Services, and
continuation of all Genuity support for NMS. For ATM Services, Transition
Services shall also include, if requested by Bell Atlantic, Genuity coordination
with LECs for extended due dates for disconnection of Bell Atlantic PVCs that
Bell Atlantic may identify to Genuity for the purpose of maintaining such PVCs
in an inactive state on Genuity's Network and in LEC networks for up to five (5)
business days after transition in order to permit transfer of Services to the
Bell Atlantic-designated service provider(s) including
17
<PAGE>
Bell Atlantic. All Bell Atlantic-designated service providers' charges shall be
the responsibility of Bell Atlantic.
23. Point of Contact (POC) Information/Escalation. Both Parties agree to
----------------------------------------------
provide POCs for the following as set forth in Attachment I: quote and pre-sale
support, order process Service provisioning, disaster recovery, contract
administration. POCs and escalation procedures for trouble reporting are
detailed in Attachment G. The POCs may be modified upon written notice by either
Party from time to time.
24. Initial Service Verification Testing and Operational Readiness Testing.
----------------------------------------------------------------------
A. Prior to Bell Atlantic's market introduction of Genuity's Service, Genuity
will conduct, at a minimum, the following Initial Service Verification Testing
between Genuity and Bell Atlantic, with respect to the Services at each of the
Network interface(s) where Services are to be installed prior to hand-over of
the Services to Bell Atlantic. Genuity shall carry out the Initial Service
Verification Testing in order to verify the Services are ready to use to and
from the ordered Network interface. The testing will include the following:
Test 1: Installation, testing and commissioning of a Network interface via
UNI to be compliant with ATM Forum 3.1 UNI Specifications, which
requirements will be further defined and mutually agreed upon by the
Parties.
Test 2: Installation, testing and commissioning of the Private Line Network-
to-Network Interconnection or equivalent to comply with Genuity and
Bell Atlantic Private Line commissioning requirements, which
requirements will be further defined and mutually agreed upon by the
Parties.
Test 3: Within sixty (60) days after completion of Test 1, the Parties shall
have completed the development of the test plan. The test plan shall
include, but not be limited to the following items: Installation,
testing and commissioning of the ATM Network-to-Network
Interconnection to comply with Genuity and Bell Atlantic ATM
commissioning requirements, which requirements will be further
defined and mutually agreed upon by the Parties.
Similar tests may be required and, in such event, will be conducted on future
Services or Service enhancements. In such event, the requirements will be
further defined and mutually agreed upon by the Parties.
The test results will be recorded and presented to Bell Atlantic at time of
hand-over for Bell Atlantic's reference during their own acceptance testing.
These results will also be recorded at Genuity's GNI Network Operations Center
(GNOC) for future reference.
B. Upon completion of the Network Verification Test, Genuity will issue by fax
an Acceptance Certificate, in the format attached as Attachment K, to the Bell
Atlantic Project Manager.
18
<PAGE>
C. Immediately upon receipt of the Acceptance Certificate, Bell Atlantic may
carry out its own testing and commence use of the Service(s) in accordance with
Section 8 of this Service Schedule, for which the Acceptance Certificate has
been issued.
D. Bell Atlantic will use all reasonable endeavors to test the service as soon
as possible, and to sign and return the Acceptance Certificate to Genuity as
notification of in accordance with this Service Schedule:
(i) Confirmation of the Initial Service Verification Tests being
successfully completed; or
(ii) Any failure of Bell Atlantic's own testing and the details thereof
The Acceptance Certificate shall be signed by the Bell Atlantic's Project
Manager, or such other authority as notified by Bell Atlantic in writing to
Genuity.
E. Bell Atlantic and Genuity will ensure that all facilities and assistance
reasonably required by either Bell Atlantic or Genuity shall be made available,
free of charge, to each Party for the performance of the Initial Service
Verification Test(s).
F. Acceptance of the Services shall occur or be deemed to occur on the earliest
of the following:
(i) The date on which Bell Atlantic signs an Acceptance Certificate (in
the format specified above); or
(ii) The close of business on the fifth (5th) business day following the
day on which Genuity notifies Bell Atlantic that Genuity believes
the Services have passed the Initial Service Verification Test in
all material respects; unless, after the date of such notice and
prior to the close of business on such fifth (5th) business day,
Bell Atlantic provides a notice to Genuity that rejects the Services
and sets forth in reasonable detail how the Services fail to satisfy
the Initial Service Verification Test in one or more material
respects; or:
(iii) The date the Services are put into operational use.
G. If the Services are rejected in accordance with this Service Schedule,
Genuity shall be given such time and facilities as are reasonable in all the
circumstances to rectify the Services and repeat the Initial Service
Verification Test(s) or any part of them. Genuity shall not be required to
repeat any tests included in the Initial Service Verification Test(s) which have
already been accepted or deemed accepted in respect of the Services.
H. The Acceptance Certificate signed by Bell Atlantic does not relieve in any
way the obligation upon Genuity to carry out in full all its obligations under
this Agreement.
19
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I. Bell Atlantic and Genuity shall cooperate in performing Operational
Readiness Test (ORT) prior to launch of Service(s) in order to test process
flows and network availability. Prior to commencement of testing, Bell Atlantic
shall produce and provide to Genuity an ORT plan that will map out the
anticipated dates for meeting certain milestones in the ORT process, with an ORT
completion date being not later than ninety (90) days from the commencement of
testing. Genuity will produce a matching plan and deliver same to Bell Atlantic
within five business days of Genuity's acceptance of the Bell Atlantic-delivered
ORT plan. In addition, the ORT plan will detail the types of circuits and orders
that will be tested (in terms of speeds, destinations, etc.). The Parties shall
agree on the ORT plan prior to such commencement, and the Parties shall promptly
work together in good faith to resolve any issues raised by either Party and,
upon resolution, testing shall commence as soon thereafter as practicable.
J. Testing of the operational support procedures shall be conducted at two
levels: (a) a non-physical testing which will ensure that End User orders are
generated properly and handled in an accurate and timely manner, and (b)
physical testing which will require the actual activation of a circuit,
maintenance and monitoring from Genuity over a mutually agreed to specified
period of time. The ORT plan shall set forth methods for identifying problems
in either the process flows or in network availability, and for escalating all
identified problems within each organization for appropriate and timely
resolution. For purposes of the actual testing of private line circuits Genuity
shall provide to Bell Atlantic one or more site addresses in Genuity served
regions in order to terminate the physical circuits. During the ORT testing
period the operations and communications flows within Genuity shall be monitored
and reported to Bell Atlantic as defined and mutually agreed to in the ORT plan,
and any problems identified shall be remedied in an agreed time frame or
escalated for resolution, as necessary.
K. Cooperative efforts around Market Readiness Testing (MRT), which involves
limited market introduction to Beta-customers, have to be agreed/detailed
between the Parties.
25. Network Review Meetings. Bell Atlantic and Genuity agree to hold quarterly
-----------------------
meetings or more frequently as mutually agreed, to work cooperatively on items
such as, but not limited to, forecast information, future network deployment
schedules, network enhancements, additional Access providers, Type II Access
arrangements, new services, performance reviews, defect resolution, business
processes and interaction, price reviews, and standards and specifications, and
Agreement performance. Chairpersons to be designated by Bell Atlantic and
Genuity will jointly chair this effort.
26. Security. Genuity shall administer access, both physically and
--------
electronically, to all Genuity Network elements, associated support and/or
management systems, and physical PoP facilities that are under direct control of
Genuity. Genuity shall maintain all data associated with the security of the
Genuity Network. Genuity will use commercially reasonable resources and/or means
available to detect Genuity Network security breaches. Genuity shall use
commercially reasonable efforts to promptly provide pertinent information to
Bell Atlantic to assist Bell Atlantic in the identification and potential
prosecution of Network intruders. Genuity shall use
20
<PAGE>
commercially reasonable efforts to promptly restore Genuity Network integrity
(not including End User databases) after Network intrusions. Genuity shall
provide protected storage of Genuity Network and Genuity Network element
configuration data. Genuity shall block and/or disconnect (as appropriate for
the Service) and with direction and/or authorization from Bell Atlantic, an End
User's access to the Network in which a security violation has occurred, at Bell
Atlantic request. Notwithstanding the foregoing, Genuity reserves the absolute
right to block or disconnect certain Services and/or connectivity if Genuity
reasonably believes that such Services/connectivity may affect Genuity Network
integrity or security; under such circumstances Genuity will provide notice to
Bell Atlantic of such action as soon as practicable and in advance where
feasible. Genuity shall provide access to Bell Atlantic for viewing of Bell
Atlantic Service data only as set forth in Section 15 of this Service Schedule.
27. Limited Warranty. The Genuity warranty is set out in Section 11 of the
----------------
Agreement.
28. Epidemic SLA Remedy.
-------------------
A. An Epidemic for a Service (e.g. ATM or Private Line) shall occur when the
elements in both subsections (i) and (ii) below have occurred with respect to
the affected Service:
(i) Failure of the greater of (a) the minimum number of circuits per Service or
(b) the minimum percentage of circuits per Service (as specified in the table
below) to meet certain network performance criteria.
-------------------------------------------------------------------------
Year Minimum Number of Minimum Percentage of
Circuits per Service Circuits per Service
-------------------------------------------------------------------------
1 10 20%
-------------------------------------------------------------------------
2 25 20%
-------------------------------------------------------------------------
3 and thereafter 50 20%
-------------------------------------------------------------------------
(a) The applicable network performance criteria for Private Line
Service shall consist of the following Private Line Service SLAs,
which are contained in Attachment A:
- Time to Restore Time
- Circuit Availability
- Auto Restore Time
(b) The applicable network performance criteria for ATM Service shall
consist of the following ATM Service SLAs, which are contained in
Attachment A:
- Average Network Availability
- Per PVC Network Availability
- Average Cell Loss Ratio
- Per PVC Cell Loss Ratio
- Peak to Peak Cell Delay Variation
21
<PAGE>
(ii) No more than fifty percent (50%) of the circuits experiencing SLA failure
may originate on a single node or among two (2) Adjacent nodes. For purposes of
this calculation, a node cannot be deemed Adjacent to more than one other node.
In the event of a multiple Adjacency, the node with the highest percentage of
circuits experiencing SLA failure will be the node utilized for purposes of this
calculation (e.g., 3 adjacent nodes will be treated as two (2) nodes for this
calculation; as between those two (2) nodes, the calculation will be made using
the two (2) nodes with the highest percentage of circuits experiencing SLA
failure). For purposes of this section, a "node" shall mean an ADM for Private
Line Service and a switch for ATM Service.
B. If a Service experiences an Epidemic for two (2) consecutive months, Bell
Atlantic may give written notice to Genuity during such Epidemic that Genuity
has thirty (30) days to cure the Epidemic. If Genuity does not cure the
Epidemic within thirty (30) days of receiving such written notice, Bell Atlantic
may terminate the affected Service. Election of this remedy supercedes any
other applicable SLAs for the terminated Service as of the date of election.
Any reduction in the Purchase Commitment shall be governed by the applicable
sections of the Agreement. To the extent Services are terminated, the Purchase
Commitment reductions shall only apply with respect to services comparable to
the terminated Service under this Service Schedule. Nothing herein shall limit
either party's right to conduct an audit pursuant to Section 14.12 of the
Agreement. The Purchase Commitment reduction for termination for a Service
resulting from an Epidemic shall be based upon the most current product-specific
forecast projected to the end of the Term for such Service or twenty percent
(20%) of the balance of the Purchase Commitment at the time of Service
termination, whichever is greater.
29. Service Level Agreements for Services. Genuity will meet the Service
-------------------------------------
Levels specified in Attachment A to this Service Schedule. If Genuity fails to
meet the SLAs, Bell Atlantic shall be entitled to associated remedies specified
in Attachment A and Section 28 above. The SLAs shall not apply in the event of
Force Majeure, Planned Outages or Bell Atlantic and/or Bell Atlantic's End Users
actions that materially impact Genuity's ability to meet the SLAs. The SLA
remedies identified herein shall be Bell Atlantic's sole and exclusive remedy
for SLA failure, except for the following: (i) Genuity's gross negligence; (ii)
Genuity's willful misconduct; (iii) Genuity's indemnity obligations for
infringement pursuant to Section 10.1 of the Agreement; (iv) Genuity's
confidentiality obligation pursuant to Section 9 of the Agreement; (v)
imposition of fines or penalties on Bell Atlantic by any regulatory agency to
the extent imposition of such fines or penalties is caused by Genuity's SLA
failures. Both Parties agree to monthly review meetings to discuss Service
Level performance related issues. Genuity agrees to initiate and coordinate the
monthly review meetings.
30. Definitions/Acronyms The terms used in this Service Schedule and its
--------------------
related Attachments shall have their normal or common meanings ascribed to them
by the telecommunications industry, unless defined otherwise herein. For the
purposes of this document, the following terms shall have the meanings below:
22
<PAGE>
Access shall mean a dedicated connection between the Bell Atlantic End User
- ------
network interface device and the Genuity-designated Access hub.
Adjacency/adjacent shall mean the relationship formed between neighboring ADM
- ------------------
and/or Regeneration Equipment for the purposes of exchanging information based
on the use of a common media segment.
Access Hub to Access Hub Circuit An Access Hub to Access Hub circuit that
- --------------------------------
originates and terminates at Genuity designated Access provider locations.
ADM "Add Drop Multiplexer"
- ---
ALT "Alternative Local Transport"
- ---
ATM "Asynchronous Transfer Mode"
- ---
Bit shall denote the smallest unit of information in a binary system of
- ---
notation.
Bits Per Second (bps) shall mean the number of bits transmitted in a one-second
- ---------------------
interval.
Business Day shall mean Monday through Friday from 8:00 a.m. to 5:00 p.m. Local
- ------------
Time excluding holidays.
CAP "Competitive Access Provider"
- ---
CDDD "Customer Desired Due Date" shall mean the date that Bell Atlantic
- ----
requests Service to be available for use.
Channel shall mean a path for electrical transmission between two or more points
- -------
with the path having a bandwidth and termination of subscriber's own choosing.
Circuit shall mean any individual DS-0 through OC-N or other data transmission
- -------
service Genuity furnishes to Bell Atlantic under the terms of this Service
Schedule.
CLR "Circuit Layout Record"
- ---
CPE "Customer Provided Equipment"
- ---
DS-3 Services shall mean Digital Signal Level 3, which is the equivalent of 28
- -------------
T-1 channels operating at 44.736 Mbps, and is also called T-3.
End to End. A circuit originating at a Bell Atlantic End User network interface
- -----------
and terminating at a separate Bell Atlantic End User network interface, or a
circuit originating at a Bell Atlantic network interface and terminating at the
Bell Atlantic/Genuity network interconnection point.
23
<PAGE>
FOC "Firm Order Confirmation"
- ---
ICB "Individual Case Basis"
- ---
IXC "Interexchange Carriers"
- ---
LEC "Local Exchange Carrier"
- ---
MRC "Monthly Recurring Charge"
- ---
MRT "Marketing Readiness Test"
- ---
Network-to-Network Interface "Network-to-Network Interface" (NNI) allows
- ----------------------------
connectivity between two networks (i.e. ATM cloud to ATM cloud.) This generally
consists of NNI port(s) and the interoffice transport between the ports.
NRC "Non-Recurring Charge"
- ---
Off-Net Any connection which is provisioned by Genuity but is not provisioned
- -------
on the Genuity network.
On-Net Any connection provisioned by Genuity to connect Bell Atlantic to the
- ------
Genuity POP used for interconnection to the Off-Net link (for connection to an
end user site).
ORT "Operational Readiness Test"
- ---
Outage shall mean a loss of the use of a Service.
- ------
Permanent Virtual Circuit (PVC) shall mean a pre-defined software routed
- -------------------------------
connection creating a virtual network path (circuit) which is always available
without any call set-up delay.
Planned Service Outage/Scheduled Outage shall mean any Service Outage, caused by
- ---------------------------------------
mutually agreed upon prior scheduled maintenance or planned enhancements or
upgrades to either Party's Network.
PoP "Point of Presence"
- ---
POP to POP shall mean either a connection from the Bell Atlantic / Genuity point
- ----------
of interconnection to a different Genuity POP, or a connection from one Genuity
POP to another Genuity POP.
Regenerator A receiver and transmitter combination used to reconstruct signals
- -----------
for digital and or optical transmission.
24
<PAGE>
SLA "Service Level Agreement" shall mean the performance commitment Genuity
- ---
will make to Bell Atlantic on selected products, services, and performance
criteria
SONET "Synchronous Optical Network"
- -----
UNI "User-to-Network Interface"
- ---
Bell Atlantic Genuity Inc.:
By: ______________________________ By: ___________________________
Name: ______________________________ Name: ___________________________
Title: ______________________________ Title: ___________________________
Date: ______________________________ Date: ___________________________
25
<PAGE>
ATTACHMENT A
SERVICES DESCRIPTIONS
INCLUSIVE OF SERVICE LEVEL AGREEMENTS
Attachment A.1 Private Line
Attachment A.2 ATM
Attachment A.3 Generic SLAs
<PAGE>
Attachment A.1
to
Purchase, Resale and Marketing Agreement
Service Schedule
"SONET Based Private Line Transport Service for Bell Atlantic"
<PAGE>
<TABLE>
<CAPTION>
Table of Contents:
<S> <C>
1. SONET Based Private Line Transport Service Overview 3
2. Product Features and Functionality 3
2.1 High Level Functionality 3
2.2 Product Features Set 3
2.3 Interconnection and Access 3
2.4 Performance and Reliability Requirements 4
2.4.1 Service Level Agreements for SONET Based Private Line Transport Service 4
2.4.2 Measurement Period 4
2.4.3 Commencement of SLA Credits 4
2.4.4 Time to Restore 4
2.4.5 Circuit Availability SLA Credit/Remedy 5
2.4.6 Auto Restoral Time 7
2.4.7 Latency SLA Credit/Remedy 7
2.4.8 Installation Intervals SLA Credit/Remedy 7
2.4.9 SLA Credit Policies 8
2.4.10 Exclusions from Computation of Circuit Performance SLA Failure 8
2.4.11 Bell Atlantic Right to Terminate Circuits 8
</TABLE>
<PAGE>
1. SONET Based Private Line Transport Service Overview
SONET Based Private Line Transport Service ("Private Line" or "Private Line
Service") products are point to point services derived from the basic SONET
building block of the Genuity backbone. Synchronous optical network (SONET)
defines optical carrier (OC) levels and electrical equivalent synchronous
transport signals (STS) for fiber optic based transmission hierarchy. It is a
standard specified by the Exchange Carriers Standards Association (ECSA) for
American National Standards Institute (ANSI). SONET uses a basic transmission
rate of STS-1 equivalent to 51.84 Mbps.
Higher rate transmissions are integer multiples of this base rate. Many types of
services ranging from voice to high-speed data and video are transmitted using
this format.
SONET provides the scalable bandwidth to transport information from one point to
another at a variety of speeds. Private Line Services can support the transport
of protocol services applied to voice or data service such as IP, ATM and Frame
Relay. These in turn support a range of applications used by Bell Atlantic
and/or Bell Atlantic End Users.
2. Product Features and Functionality
2.1 High Level Functionality
There are three principal classes of service of Genuity Private Line Services
available each with a subset of configurations.
a. End to End
b. Access Hub to Access Hub
c. Genuity POP to Genuity POP - This will become available with the
introduction of direct optical connect and collocation as may be set forth
in future amendments to the Agreement.
2.2 Product Features Set
Genuity is offering Private Line Services that include DS-3, OC-3, OC-12, OC-48
speeds. The OC-3, OC-12, circuits may be concatenated, as well.
Genuity products will make use of the SONET pointer capabilities to dynamically
align VT and STS payloads, thereby permitting easy dropping, inserting and cross
connecting of payloads in the network. Additional use of the SONET capabilities
will be drawn on to provision 1+1 capabilities to support wholesale customer
demands. The SONET rings on the Genuity backbone are four (4) fiber Bi-
Directional Line Switch Ring (BLSR).
2.3 Interconnection and Access
Bell Atlantic's interconnection to the Genuity network may be at the Access Hub
or Genuity POP. The standard interconnection option for Bell Atlantic customer
provided access (CPA) services is at the Access Hub. The Genuity backbone is
exclusively optical. For Access Hub to
<PAGE>
Access Hub and Genuity POP to Genuity POP, Bell Atlantic is responsible for
access. The End to End Service includes Access in accordance with the terms in
the Service Schedule.
2.4 Performance and Reliability Requirements
2.4.1 Service Level Agreements for SONET Based Private Line Transport Service
The Service Level Agreements (SLA) for SONET based Private Line Services are set
forth in the Table 2.4.1-1. Table 2.4.1-1 also contains references to metric
definitions and SLA remedies described within this document.
Table 2.4.1-1 SONET Based Private Line Service Level Commitments
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Metric Metric SLA Commitment SLA Failure Condition SLA
Described in Remedy
Section Described
in Section
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Time to Restore 2.4.4 (1)*hours (End - Refer to Section 2.4.5 2.4.4
End), *% of the time
(1)*Hours (POP -
POP) *% of the time
- ------------------------------------------------------------------------------------------------------------
2 Circuit 2.4.5 (2)*%(POP-POP linear) Refer to Section 2.4.5 2.4.5
Availability (2)*% (POP-POP ring)
(2)*% (End - End)
- ------------------------------------------------------------------------------------------------------------
3 Auto Restoral 2.4.6 (1)*ms (Ring) (3)*ms (Ring) 2.4.6
Time
- ------------------------------------------------------------------------------------------------------------
4 Latency 2.4.7 (1)*ms (3)*ms 2.4.7
- ------------------------------------------------------------------------------------------------------------
5 Installation 2.4.8 See Table 2.4.8-1 A. Actual installation 2.4.8
Intervals date is more than five (5)
business days beyond
Projected Due Date in FOC.
B. Actual installation
date is more than fifteen
(15) business days beyond
the Projected Due Date in
FOC.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) = Less than or equal to
(2) = Greater than or equal to
(3) = Greater than
2.4.2 Measurement Period
SLAs are measured on a calendar month basis.
<PAGE>
2.4.3 Commencement of SLA Credits
Circuits require a full calendar month of measurable activity. No credits will
be given for partial month activity.
2.4.4 Time to Restore
The SLA Credit/Remedy for Time to Restore (TTR) is accounted for in the Circuit
Availability SLA set forth in 2.4.5. TTR is not a parameter that is directly
measured for SLA crediting.
TTR shall be the cumulative amount of time (minutes/hours) between the opening
of a trouble ticket by Genuity and the closeout process set forth in the Service
Schedule and its' attachments.
2.4.5 Circuit Availability SLA Credit/Remedy
The Private Line Circuit Availability is designed to meet the availability
requirements as shown in Table 2.4.1-1. Tables 2.4.5-1, 2.4.5-2, and 2.4.5-3
contain references to metric definitions and SLA remedies described within this
document.
A Service outage ("Outage") shall begin upon the earlier of Genuity's actual
knowledge of the Outage or Genuity's receipt of a telephone call to the
telephone number designated in the Trouble Reporting Attachment of this Service
Schedule.
Table 2.4.5-1 Access Hub to Access Hub Circuit Availability SLA Credits
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Service Outage Duration SLA MRC Credit
- ------------------------------------------------------------------------------------
<S> <C>
- ------------------------------------------------------------------------------------
0(1)*# 0%
- ------------------------------------------------------------------------------------
*(1)* 5%
- ------------------------------------------------------------------------------------
*(1)* 10%
- ------------------------------------------------------------------------------------
*(1)* 20%
- ------------------------------------------------------------------------------------
*(1)* 40%
- ------------------------------------------------------------------------------------
*(1)* 80%
- ------------------------------------------------------------------------------------
*+ 100%
- ------------------------------------------------------------------------------------
</TABLE>
(1) = Less than or equal to
Table 2.4.5-2 End to End SONET Circuit Availability SLA Credits
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Service Outage Duration SLA MRC Credit
- ------------------------------------------------------------------------------------
<S> <C>
</TABLE>
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------
<S> <C>
0(1)*# 0%
- ------------------------------------------------------------------------------------
*(1)* 5%
- ------------------------------------------------------------------------------------
*(1)* 10%
- ------------------------------------------------------------------------------------
*(1)* 20%
- ------------------------------------------------------------------------------------
*(1)* 40%
- ------------------------------------------------------------------------------------
*(1)* 80%
- ------------------------------------------------------------------------------------
*+ 100%
- ------------------------------------------------------------------------------------
</TABLE>
(1) = Less than or equal to
Table 2.4.5-3 End to End Linear Circuit Availability SLA Credits
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Service Outage Duration SLA MRC Credit
- ------------------------------------------------------------------------------------
<S> <C>
0(1)*# 0%
- ------------------------------------------------------------------------------------
*(1)* 5%
- ------------------------------------------------------------------------------------
*(1)* 10%
- ------------------------------------------------------------------------------------
*(1)* 20%
- ------------------------------------------------------------------------------------
*(1)* 40%
- ------------------------------------------------------------------------------------
*(1)* 80%
- ------------------------------------------------------------------------------------
*+ 100%
- ------------------------------------------------------------------------------------
</TABLE>
(1) = Less than or equal to
# Three (3) Service affecting Outages on an individual circuit in any given
month will be treated as being equal to a one (1) hour POP to POP or End to End
SONET or four (4) hour End to End linear cumulative Outage or actual
accumulative Outage, whichever is greater.
The Outage durations identified in the above tables are cumulative on a monthly,
per circuit basis. Credit shall not exceed 100% of the MRC.
Access Hub to Access Hub Circuit - An Access Hub to Access Hub circuit that
originates and terminates at Genuity designated access provider locations.
End to End SONET Circuit - An End to End SONET circuit that originates and
terminates in Bell Atlantic specified locations, with the entire circuit,
including the backbone and local access, being provisioned on four (4) fiber
BLSR based technology.
End to End Linear Circuit - An End to End Linear circuit that originates and
terminates in Bell Atlantic specified locations. Some or all of the access
portions of this circuit may be linear.
2.4.6 Auto Restoral Time
<PAGE>
The Auto Restoral Time for a Private Line circuit (POP to POP only) on a SONET
ring is 50 - 110ms. The SLA Credit/Remedy for Auto Restoral Time is accounted
for in the Circuit Availability SLA set forth in this document. Auto Restoral
Time is not a parameter that is directly measured for SLA crediting.
2.4.7 Latency SLA Credit/Remedy
The Genuity SONET based Private Line Service is designed to meet the latency
requirements as shown in Table 2.4.1-1. Latency is a function of circuit miles
traversed. The one-way network latency is measured from the ingress interface
at the entry Genuity POP to the egress interface at the exiting Genuity POP.
Genuity shall agree to test latency on any circuit upon written request of Bell
Atlantic. If the latency constitutes an SLA failure, Genuity shall have thirty
(30) days from the date of test completion to make the circuit SLA compliant.
If the latency is SLA compliant, Bell Atlantic agrees to reimburse Genuity for
commercially reasonable costs of the testing, not to exceed $1,000 plus travel
costs per test performed. Bell Atlantic will have the option to request latency
test(s) on 1% of the installed circuit base or 5 per month, whichever is
greater. This SLA does not cover route specific requests from Bell Atlantic.
2.4.8 Installation Intervals SLA Credit/Remedy
If the actual installation date is more than five (5) business days beyond the
Projected Delivery Date contained in the FOC, Genuity shall waive the access
facility installation NRCs associated with the installation. In addition, if
the actual installation date is more than fifteen (15) business days beyond the
Projected Delivery Date, Bell Atlantic has the option to cancel the Order with
no cancellation charges.
Table 2.4.8-1 Installation Intervals
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
DS-3 OC-3 OC-12 OC-48
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Access Hub to 30 45 60 ICB
Access Hub
- ----------------------------------------------------------------------------------------------
End to End 60** ICB ICB ICB
- -----------------------------------------------------------------------------------------------
</TABLE>
The numbers delineated in Table 2.4.8-1 are business days.
** Genuity will provide a table (2.4.8-2) within ninety (90) days of the
Effective Date of the Agreement including a list of cities where forty-five (45)
business day intervals are available for End to End DS-3 Service. This table
shall be incorporated herein as Table 2.4.8-2 and table will be updated semi-
annually.
2.4.9 SLA Credit Policies
<PAGE>
Access Hub to Access Hub Circuit Availability performance credit(s) will be
proactively credited by Genuity to Bell Atlantic. End to End Circuit
Availability performance credits will be verified and applied upon Bell
Atlantic's written request. Genuity is responsible for verifying SLA non-
compliance, not later than the end of the calendar month following the SLA
failure, prior to crediting Bell Atlantic's account.
2.4.10 Exclusions from Computation of Circuit Performance SLA Failure
See the Section entitled "Service Level for Services" in the Service Schedule
for authorized exclusions in addition to any other exclusions as may be
specifically identified herein.
2.4.11 Bell Atlantic Right to Terminate Circuits
2.4.11.1
For Genuity provided circuits that suffer a cumulative monthly service Outage in
excess of two (2) hours for Access Hub to Access Hub and End to End SONET and
six (6) hours for End to End Linear for three (3) consecutive months in the
first six (6) months after the installation date, Bell Atlantic has the option
to terminate the affected circuits without liability, except for charges
incurred prior to discontinuance.
2.4.11.2
For Genuity provided circuits that suffer a cumulative monthly service Outage in
excess of one (1) hour for Access Hub to Access Hub and End to End SONET and
four (4) hours for End to End Linear for three (3) consecutive months, after six
(6) months of installation, Bell Atlantic has the option to terminate the
affected circuits without liability, except for charges incurred prior to
discontinuance.
2.4.11.3
For circuits that suffer a service Outage per the SLAs referenced in Section
2.4.11.1 and 2.4.11.2 in five (5) months out of any twelve (12) month period,
Bell Atlantic has the option to terminate the affected circuits without
liability, except for charges incurred prior to discontinuance.
2.4.11.4
Should Bell Atlantic decide to terminate circuits, Bell Atlantic must provide
written notice to Genuity of its intent to disconnect no later than sixty (60)
calendar days following the conclusion of the third consecutive month or the
fifth month out of any twelve (12) month period of service with SLA violations.
Genuity shall within thirty (30) calendar days following receipt of such notice,
terminate this circuit.
<PAGE>
Attachment A.2
to
Purchase, Resale and Marketing Agreement
Service Schedule
"ATM Transport Service for Bell Atlantic"
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1 INTRODUCTION................................................................................... 1
1.1 ATM Product Overview............................................................................ 1
1.2 Acronyms........................................................................................ 1
SECTION 2 PRODUCT FEATURES AND FUNCTIONALITY............................................................. 1
2.1 High Level Functionality Description............................................................ 1
2.2 Product Feature Set............................................................................. 1
2.2.1 Physical Connections.................................................................... 1
2.2.2 Virtual Connections..................................................................... 1
2.3 Technology Overview............................................................................. 2
2.3.1 Genuity ATM Switches.................................................................... 2
2.3.2 Integrated Local Management Interface (ILMI)............................................ 2
2.4 Product Functionality........................................................................... 2
2.4.1 Asymmetric PVCs......................................................................... 2
2.4.2 Performance and Reliability Requirements................................................ 2
2.4.2.1 Network Availability.......................................................... 2
2.4.2.2 Cell Latency.................................................................. 3
2.4.2.3 Cell Loss..................................................................... 3
2.4.2.4 Cell Delay Variation.......................................................... 3
2.4.2.5 ATM Maximum Burst Size........................................................ 3
2.4.2.6 ATM Over-subscription Parameters.............................................. 3
2.4.3 Fraud Control Requirements.............................................................. 3
2.4.4 Service Level Agreements:............................................................... 4
2.4.4.A Measurement Period............................................................ 4
2.4.4.1. SLA Cost to Customer.......................................................... 5
2.4.4.2 Commencement of SLA Credits................................................... 4
2.4.4.3 Circuits Covered by SLA....................................................... 4
2.4.4.4 Remedies for Average Network Availability and Average CLR SLA................. 4
2.4.4.5 SLA Credit Policies........................................................... 7
2.4.4.6 Verification of Non-Compliance................................................ 7
2.4.4.7 Time to Restore............................................................... 7
2.4.4.8 Exclusions from computation of Network Performance SLA Values................. 7
2.4.4.9 CLR Allowance for Sample Period Errors........................................ 7
2.4.4.10 Action Required of Genuity after 2 Months of Circuit Performance Violations... 7
2.4.4.11 Bell AtlanticRight to Terminate Networks...................................... 7
2.4.4.12 Bell Atlantic Right to Terminate Circuits..................................... 7
2.4.4.13 Per Virtual Circuit CLR Remedies.............................................. 7
2.4.4.14 Per Virtual Circuit Availability Remedies..................................... 7
2.4.4.15 Cell Delay SLA Remedies....................................................... 8
2.4.4.16 Peak to Peak Cell Delay Variation SLA Remedies................................ 8
2.4.4.17 Installation Interval SLA Remedies............................................ 8
2.4.4.18 CLR Allowance for SONET Layer Defined Fault Protection Mechanism.............. 8
SECTION 3 CUSTOMER SUPPORT............................................................................... 10
3.1 Trouble Management............................................................................. 10
3.2 OSS Integration................................................................................ 10
3.3 Network Operation.............................................................................. 10
SECTION 4 TERMS AND CONDITIONS ASSOCIATED WITH THE ATM PRICING........................................... 10
</TABLE>
ii
<PAGE>
LIST OF TABLES
<TABLE>
<S> <C>
Table 2.4.4-1 ATM Service Level Commitments........................... 4
Table 2.4.4.4-2 PoP-to-PoP Average Availability SLA Credits............. 5
Table 2.4.4.4-3 End-to-End Average Availability SLA Credits............. 6
Table 2.4.4.4-4 CLR SLA Credits......................................... 6
</TABLE>
iii
<PAGE>
Section 1 INTRODUCTION
1.1 ATM Product Overview
ATM is a high-bandwidth, fast-packet switching technology based on fixed-
length cells of 53 bytes. ATM combines the statistical multiplexing
efficiencies of packet-switching with the low delay characteristics of circuit
switching technologies. This document summarizes the ATM Transport Service
("ATM" or "ATM Service") and service level agreements (SLAs) provided by the
Genuity network for Bell Atlantic.
1.2 Acronyms
AAL ATM Adaptation Layer
ATM Asynchronous Transfer Mode
CBR Constant Bit Rate
CDV Cell Delay Variation
CLR Cell Loss Ratio
CTD Cell Transfer Delay
Genuity Genuity Global Network Infrastructure
ICB Individual Case Basis
ILMI Integrated Local Management Interface
Mbps Megabits per second
MBS Maximum Burst Size
MRC Monthly Recurring Charge
PCR Peak Cell Rate
POP Point of Presence
PVC Permanent Virtual Channel
PVP Permanent Virtual Path
QoS Quality of Service
SBU Strategic Business Unit
SCR Sustainable Cell Rate
SLA Service Level Agreement
TTR Time to Restore
UBR Unspecified Bit Rate
UNI User Network Interface
VBR-nrt Variable Bit Rate Non-Real Time
VBR-rt Variable Bit Rate Real Time
Section 2 PRODUCT FEATURES AND FUNCTIONALITY
2.1 High Level Functionality Description
Genuity ATM transport establishes ATM connections between a Bell Atlantic's
End User site and one or more locations, including, as applicable, a network
interconnection with Bell Atlantic. Each connection will be a permanent virtual
channel (PVC) or a permanent virtual path (PVP). Each supported ATM virtual
connection is a point-to-point (or point-to-interconnect) connection. Genuity
ATM is connection-oriented, cell-based data transport capable of physical access
interconnection speeds from DS-3 to OC-12c Genuity, on an individual case basis,
will work to develop alternatives to provide Bell Atlantic customers lower speed
physical interconnections to the Genuity network when business economics
warrant.
2.2 Product Feature Set
2.2.1 Physical Connections
The customer interfaces to the ATM Transport through DS3 (un-channelized),
OC-3c or OC-12c interfaces
ATM cell formatting and traffic policing are compliant with the ATM Forum
UNI v3.0/3.1 Specifications.
2.2.2 Virtual Connections
The ATM Transport supports the following categories of traffic for virtual
connections:
1
<PAGE>
A. Constant Bit Rate (CBR): An ATM category that supports a constant or
guaranteed rate to transport applications, such as video distribution, that
require rigorous timing control and performance parameters. The traffic
parameters associated with CBR are Peak Cell Rate (PCR), Cell Transfer Delay
(CTD) and Cell Delay Variation (CDV).
B. Real Time Variable Bit Rate (VBR-rt): The real-time VBR category is intended
for time-sensitive applications (i.e., those requiring tightly constrained
delay and delay variation), such as interactive multimedia. Sources are,
however, expected to transmit at a rate that varies with time. Traffic
parameters are PCR and Sustainable Cell Rate (SCR). Cells that are delayed
beyond CTD are assumed to be of significantly less value to the application.
Default value for PCR is set at 1.4 times SCR. Maximum Burst Size (MBS) is
also a traffic parameter for the real-time VBR with a default setting of 100
cells.
C. Non-Real-Time Variable Bit Rate (VBR-nrt): The non-real time VBR category is
intended for applications which have bursty traffic characteristics and do
not have tight constraints on delay and delay variation. Like VBR-rt, VBR-
nrt traffic parameters are PCR and SCR. For those cells that are transferred
within the traffic profile, the application expects a low CLR. Default value
for PCR is set at 2.0 times SCR. Maximum Burst Size (MBS) is also a traffic
parameter for the non-real time VBR service categories with a default
setting off 100 cells
D. Unspecified Bit Rate (UBR): An ATM category that does not specify traffic
related performance guarantees. Specifically, UBR does not include the
notion of a per-connection negotiated bandwidth. No numerical commitments
are made with respect to the CLR experienced by a UBR connection, nor to the
CTD experienced by cells on the connection.
For both PVC and PVP transport, the traffic profile may be subscribed for each
direction of the connection independently. The values for the parameters
indicated above are set forth in the data gathering form negotiated with the
customer. For the PVP option, the subscribed traffic profile must be able to
satisfy the QoS of the most demanding virtual channel connection (VCC) that may
be carried on that virtual path connection (VPC).
2.3 Technology Overview
2.3.1 Genuity ATM Switches
Genuity selected the Ascend models CBX-500 & GX-550 switch as its core network
ATM switches.
2.3.2 Integrated Local Management Interface (ILMI)
The Genuity ATM transport is compliant with the following ATM Forum
specifications:
A. ATM User-Network Specification V3.0, af-uni-0010.001, ATM Forum Technical
Committee, Sept 1993
B. ATM User-Network Specification V3.1, af-uni-0010.002, ATM Forum Technical
Committee, 1994
C. ILMI 4.0, af-ilmi-0065.000, ATM Forum Technical Committee, Sept 1996
Bell Atlantic's and Bell Atlantic's End Users' ATM equipment must be similarly
compliant with the above specifications.
2.4 Product Functionality
2.4.1 Asymmetric PVCs
PVCs are bi-directional circuits, and typically but not necessarily, these
parameters are configured to be the same information rates in both directions.
However, the business needs of Bell Atlantic may require that additional
bandwidth be allocated in one direction and not the other direction. Genuity's
ATM transport enables Bell Atlantic to provision and price PVCs, as two unique
asymmetric PVCs, with different information rates between its locations.
2.4.2 Performance and Reliability Requirements
2.4.2.1 Network Availability
The Genuity ATM transport is designed meet the availability requirements as
shown in Table 2.4.4-1. A connection is considered available if it is possible
to transmit bits through the connection.
For each Point of Presence to Point of Presence (POP-to-POP) connection,
availability values are from the ingress interface at the entry on-right of way
Genuity POP to the egress interface at the exit on-right of way Genuity POP, and
include any on-right of way back-haul between the points of Bell Atlantic/Bell
Atlantic End User interconnection and the Genuity's ingress/egress ATM switches
for each ATM network ordered by Bell Atlantic hereunder (i.e. Interconnection
point(s) to the Bell Atlantic network are considered as POP/POP equivalent(s)).
2
<PAGE>
For each End-to-End connection, availability values are from the network entry-
point, CSU/DSU, at the Bell Atlantic End User's premise to the network exit-
point, CSU/DSU, at the Bell Atlantic's End User premise. To provide this level
of transport, Customer Premise Equipment must be certified for compatibility on
the Genuity network. Customer premise equipment requiring certification
includes, but is not limited to, CSU/DSU equipment and routers. Genuity follows
the Lucent certified list of CPE vendors. These vendors include, but are not
limited to: Cisco, Nortel Networks, 3Com, Adtran, and Visual Networks (i.e. End-
to-Interconnection point(s) to the Bell Atlantic network are considered as End-
to-End-equivalent(s)).
As additional requirements are identified, Genuity will make commercially
reasonable efforts to augment the list of certified vendor equipment based on
market demand.
2.4.2.2 Cell Latency
Network latency or end-to-end delay is largely a function of circuit miles
traversed. The one-way network latency is measured from the ingress interface
at the entry Genuity POP to the egress interface at the exiting Genuity POP.
The Genuity ATM network is designed to meet the latency values shown in Table
2.4.4-1
2.4.2.3 Cell Loss
The cell loss ratio (CLR) for ATM transport is defined in the ATM Forum Traffic
Management Specification, Version 4.0 (af-tm-0056.000). Cell Loss Ratio is the
(total cells lost) divided by (total cells delivered). The Genuity ATM network
is designed to meet the cell loss ratio values shown in Table 2.4.4-1
Cell loss due to saturation of an oversubscribed/1/ egress port is not
considered a failure on Genuity's part to meet the CLR performance
characteristics.
2.4.2.4 Peak to Peak Cell Delay Variation
The Genuity ATM network is designed to meet the peak-to-peak CDV values shown in
Table 2.4.4-1
2.4.2.5 ATM Maximum Burst Size
The default values for VBR-rt and VBR-nrt maximum burst size is 100 cells. On
an individual case basis, requests for higher values will be reviewed for
feasibility.
2.4.2.6 ATM Over-subscription Parameters
Genuity ATM transport will allow port over-subscription values for VBR-rt and
VBR-nrt.
--------------------------------------
Transport Element Value
--------------------------------------
SCR 200%
--------------------------------------
PCR 500%
--------------------------------------
Note these numbers represent the total port bandwidth allocations, but that they
may not all be simultaneously active at the same time.
2.4.3 Fraud Control Requirements
The primary goal of the Genuity's network security architecture is to protect
Genuity resources and reputation by securing its infrastructure and operations.
Protection of end user's traffic and sites is not a Genuity responsibility;
rather it is an end user responsibility.
/1/ In this statement "Oversubscribed" is defined as when the aggregate
equivalent bandwidth for circuits requested on a port exceeds the port's
capacity to carry all such circuits simultaneously.
3
<PAGE>
2.4.4 Service Level Agreements:
Service Level Agreements (SLA) are set forth in the Table 2.4.4-1. Table
2.4.4-1 also contains references to metric definitions and SLA Remedies
described within this document.
Table 2.4.4-1 ATM Service Level Commitments
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Metric Metric SLA Commitment SLA Infraction Level SLA Remedy
Described in Described in
Section Section
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average Network 2.4.2.1 more than or equal to *% POP-to-POP less than *% POP-to-POP 2.4.4.4
Availability/2/ more than or equal to *% End-to-End less than *% End-to-End (SONET local
(SONET local facilities)/3/ facilities)
more than or equal to *% End-to-End less than*% End-to-End with
with Standard Local Facilities Standard Local Facilities
- ------------------------------------------------------------------------------------------------------------------------------------
Per PVC 2.4.2.1 more than or equal to *% POP-to-POP less than *% POP-to-POP 2.4.4.14
Availability/45/ more than or equal to *% End-to-End less than *% End-to-End (SONET local
(SONET local facilities)/6/ facilities)
more than or equal to *% End-to-End less than *% End-to-End with Standard
with Standard Local Facilities Local Facilities
- ------------------------------------------------------------------------------------------------------------------------------------
Average 2.4.2.2 CBR less than or equal to * msec CBR more than *msec 2.4.4.15
Network Cell VBR-rt less than or equal to * msec VBR-rt more than *msec
Latency (one-way) VBR-nrt less than or equal to * msec VBR-nrt more than *msec
UBR less than or equal to * msec UBR more than *msec
At or above the */th/ percentile At the */th/ percentile
of cells of cells
- ------------------------------------------------------------------------------------------------------------------------------------
Average 2.4.2.3 END-to-END and POP-to-POP. END-to-END and POP-to-POP. 2.4.4.4
Network Cell CBR less than or equal to * CBR more than *
Loss Ratio VBR-RT less than or equal to * VBR-RT more than *
(CLR) VBR-NRT less than or equal to * VBR-NRT more than *
(UBR circuits have No CLR SLA) UBR is Not Applicable
- -----------------------------------------------------------------------------------------------------------------------------------
Per PVC Cell 2.4.2.3 POP-to-POP POP-to-POP 2.4.4.13
Loss Ratio CBR less than or equal to * CBR more than *
(CLR) VBR-RT less than or equal to * VBR-RT more than *
VBR-NRT less than or equal to * VBR-NRT more than *
(UBR circuits have No CLR SLA) UBR is Not Applicable
- -----------------------------------------------------------------------------------------------------------------------------------
Peak to Peak 2.4.2.4 CBR less than or equal to * msec CBR more than *msec 2.4.4.16
Cell Delay VBR-rt less than or equal to * msec VBR-rt more than *msec
Variation VBR-nrt less than or equal to * msec VBR-nrt more than *msec
(one-way) UBR less than or equal to * msec UBR more than *msec
At or above the */th/ percentile At the */th/ percentile
of cells of cells
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
General ATM SLA terms and specific remedies are described in sections 2.4.4-1
through 2.4.4-18.
2.4.4.1 Measurement Period
SLAs are measured on a calendar month basis.
2.4.4.2 Commencement of SLA Credits
Circuits require a full calendar month of measurable activity. No credits will
be given for partial month activity.
2.4.4.3 Network/Circuits Covered by SLA
Service level agreements include all ATM circuits and ATM Networks ordered
hereunder for Bell Atlantic and Bell Atlantic's End User's. Network
calculations are measured as average network availability and average cell loss
rates. Calculations are made separately on each ATM network and each ATM circuit
ordered by Bell Atlantic.
2.4.4.4 Remedies for Average Network Availability and Average CLR SLA
Genuity's failure to meet the Average Network Availability and/or CLR SLAs will
result in a percentage credit on Bell Atlantic's ATM bill for the following
month for the affected ATM network. The SLA credit percentage is dependent on
the number of consecutive months of SLA failure and the degree of failure.
- -----------------------------
/2/ Bell Atlantic may select only one of the 3 (POP-to-POP or the End-to-End)
average network availability credits each month. GNI will compute proactive
credits each month based on the POP-to-POP availability.
/3/ The End-to-End with High Availability Tails Network Availability SLA
requires that a Bell Atlantic purchase SONET local loops. High availability
local loops are not available to all Bell Atlantic End User locations.
/4/ Customers may select only one of the 3 (POP-to-POP or the End-to-End) per
PVC network availability credits each month.
4
<PAGE>
The number of consecutive months creates the base credit percentage and the
degree of failure creates a multiplier. If the SLA failure is for one single
month or for two consecutive months, then the base credit percentage is two
percent (2%). If the consecutive SLA failure continues for a third or fourth-
consecutive month, then the base credit percentage is four percent (4%). If the
SLA failure continues for a fifth or greater consecutive month, then the base
credit percentage is six percent (6%).
The following sets forth the multipliers:
i) For the Average Network Availability SLA, the multiplier is the number of
tenths below the average network availability parameter set forth in Table
2.4.4-1; and
ii) For the CLR SLA, the multiplier is the number of power of tens (1 x 10/+1/)
above the SLA value for the class of service as specified in Table 2.4.4-1.
With the first power of ten increase in CBR and VBR-nrt representing a
failure to meet the SLA Infraction Level.
Table 2.4.4.4-2 PoP-to-PoP Average Availability SLA Credits
*
5
<PAGE>
Table 2.4.4.4-3 End-to-End Average Availability SLA Credits
*
Table 2.4.4.4-4 CLR SLA Credits
*
6
<PAGE>
2.4.4.5 SLA Credit Policies
The following SLAs on a POP to POP basis will be proactively credited, and are
based on the Monthly Network Throughput and Network Availability Threshold
Report Records: Average Network Availability and Average Cell Loss Ratio. All
other SLA remedies will be applied upon Bell Atlantic request and verification
by Genuity of SLA failure. Upon Bell Atlantic request, per Circuit credits will
be verified and applied in the amount by which the aggregate Per Circuit SLA
Credits exceed the Network level credit.
2.4.4.6 Verification of Non-Compliance
Genuity is responsible for verifying SLA non-compliance, not later than the
calendar month following the SLA failure, prior to crediting a customer's
account.
2.4.4.7 Time to Restore
Genuity will use commercially reasonable efforts to keep the Time to Restore
(TTR) under four hours (95% of the time) as measured over a one month period.
TTR is not a parameter that is directly measured for SLA crediting, however TTR
by its very nature is a factor in the computation of the overall Average Network
Availability
2.4.4.8 Exclusions from computation of SLA Failures
Each timeframe with data exclusion will be reflected as such in the Summary
Circuit Records. Oversubscribed circuits are eligible for Availability
Performance credits, however oversubscribed circuits are not eligible for Cell
Loss Violation credits. See the Section entitled "Service Level Agreements for
Services" in the Service Schedule for all other authorized exclusions in
addition to any other exclusions specifically identified.
2.4.4.9 CLR Allowance for Sample Period Errors
Computation of CLRs is based on reading and aggregating ingress and egress ATM
cell count statistics across each ATM network ordered by Bell Atlantic
hereunder. An allowance is made for cells in transit and cells not accounted for
due to the switches operating with timing set utilizing the Network Timing
Protocol (NTP) or equivalent level of accuracy.
2.4.4.10 Action Required of Genuity after 2 Months of Circuit Performance
Violations
If an ATM circuit fails to meet the Per PVC Availability SLA and/or Per PVC CLR
SLA for two (2) consecutive months, Genuity will use commercially reasonable
efforts to coordinate (with Bell Atlantic approval) an alternate connection
until such time as the original connection meets such SLA performance standards.
Prior to reaching this two month maximum period Genuity may at its sole
discretion exercise these same provisions. In the event Genuity performs
pursuant to this provision Genuity is relieved from its obligations set forth
below in 2.4.4.11.
2.4.4.11 Bell Atlantic Right to Terminate Networks
For Bell Atlantic End Users with ATM networks that operate for 3 consecutive
months or 5 months out of any 12 months with Average Network Availability and/or
Average Network CLR SLA failure violations, Bell Atlantic has the option to
terminate the affected End User ATM network without liability, except for
charges incurred prior to discontinuance. Should Bell Atlantic decide to
terminate such Service, Bell Atlantic must provide written notice to Genuity of
its intent to disconnect no later than 30 days following the conclusion of the
3/rd/ consecutive month or 5/th/ month out of any 12 month period of Service
with such SLA violations.
2.4.4.12 Bell Atlantic Right to Terminate Circuits
For Bell Atlantic End Users with circuits that operate for 3 consecutive months
or 5 months out of any 12 months with Per PVC Availability and/or Per PVC CLR
SLA failure violations, Bell Atlantic has the option to terminate the affected
circuits without liability, except for charges incurred prior to discontinuance.
Should Bell Atlantic decide to terminate such circuits, Bell Atlantic must
provide written notice to Genuity of its intent to disconnect no later than 30
days following the conclusion of the 3/rd/ consecutive month or 5/th/ month out
of any 12 month period of service with SLA violations. Circuit terminations due
to Cell Latency or Peak to Peak Cell Delay Variation SLA failure conditions are
described in sections 2.4.4.15 and 2.4.4.16.
2.4.4.13 Per Virtual Circuit CLR Remedies
Notwithstanding the provisions contained in 2.4.4.14, 2.4.4.15, 2.4.4.16;
credits for individual PVCs and PVPs that exceed the Per PVC Cell Loss Ratio SLA
failure shall be equivalent to 50% of the MRC for the impacted PVCs.
2.4.4.14 Per Virtual Circuit Availability Remedies
Credits for individual PVCs and PVPs that exceed the Per PVC Availability SLA
failure level shall be the percentage of MRC specified in the tables 2.4.4.14-1
through 2.4.4.14-3 below. Per Virtual Circuit credits
7
<PAGE>
are not additive, however Bell Atlantic may select the higher of the two credits
that apply to a circuit that has exceeded both a POP to POP and an End to End
SLA failure level.
Table 2.4.4.14-1 Virtual Circuit POP to POP Credits
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
% Availability Month in a row
-------------------------------------------------------------------------------------------------------
From To ## 1 2 3
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
* * 0% 0% 0%
-------------------------------------------------------------------------------------------------------
* * 25% 50% 100%
-------------------------------------------------------------------------------------------------------
* * 50% 75% 100%
-------------------------------------------------------------------------------------------------------
* * 75% 90% 100%
-------------------------------------------------------------------------------------------------------
* * 100% 100% 100%
-------------------------------------------------------------------------------------------------------
</TABLE>
## greater than or equal to
Table 2.4.4.14-2 Virtual Circuit End to End with No Local Survivability Credits
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
% Availability Month in a row
-----------------------------------------------------------------------------------------------------
From To ## 1 2 3
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
* * 0% 0% 0%
-----------------------------------------------------------------------------------------------------
* * 25% 50% 100%
-----------------------------------------------------------------------------------------------------
* * 50% 75% 100%
-----------------------------------------------------------------------------------------------------
* * 100% 100% 100%
-----------------------------------------------------------------------------------------------------
</TABLE>
## greater than or equal to
Table 2.4.4.14-3 Virtual Circuit End to End with High Availability Tail
Circuit Credits
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
% Availability Month in a row
-----------------------------------------------------------------------------------------------------
From To ## 1 2 3
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
* * 0% 0% 0%
-----------------------------------------------------------------------------------------------------
* * 25% 50% 100%
-----------------------------------------------------------------------------------------------------
* * 50% 75% 100%
-----------------------------------------------------------------------------------------------------
* * 75% 90% 100%
-----------------------------------------------------------------------------------------------------
* * 100% 100% 100%
-----------------------------------------------------------------------------------------------------
</TABLE>
## greater than or equal to
2.4.4.15 Cell Latency SLA Remedies
Genuity shall test Bell Atlantic's circuits from POP to POP or End to End to
verify Cell Latency performance upon request of Bell Atlantic. If the Cell
Latency is within SLA, the cost of the testing shall be assessed to Bell
Atlantic. In this event, Bell Atlantic shall reimburse Genuity commercially
reasonable costs of the testing, not to exceed $1000 plus travel costs for each
test performed. If the Cell Latency is not within SLA, Genuity shall have 30
days from the date of Bell Atlantic's trouble report to restore the Cell Latency
to comply with the SLA. If Genuity can not restore the Cell Latency, Bell
Atlantic shall have the right to terminate the affected circuit at no cost.
2.4.4.16 Peak to Peak Cell Delay Variation SLA Remedies
Genuity shall test Bell Atlantic's circuits from POP to POP to verify Peak to
Peak Cell Delay Variation performance upon request of Bell Atlantic. If the
Peak to Peak Cell Delay Variation is within SLA, the cost of the testing shall
be assessed to Bell Atlantic. In this event, Bell Atlantic shall reimburse
Genuity commercially reasonable costs of the testing, not to exceed $1000 plus
travel costs for each test perfomed. If the Peak to Peak Cell Delay Variation
is not within SLA, Genuity shall have 30 days from the date of Bell Atlantic's
trouble report to restore the Peak to Peak Cell Delay Variation to comply with
the SLA. If Genuity can not restore the Peak to Peak Cell Delay Variation, Bell
Atlantic shall have the right to terminate the affected circuit at no cost.
2.4.4.17 Installation Interval SLA Remedies
If actual installation date is more than 5 business days beyond the Projected
Delivery Date contained in the FOC, Genuity shall waive the access facility
installation NRCs, associated with the installation. In addition, if actual
installation date is more than 15 business days beyond the Projected Delivery
Date, Bell Atlantic has the option to cancel the Order with no cancellation
charges.
2.4.4.18 CLR Allowance for SONET Layer Defined Fault Protection Mechanism
8
<PAGE>
Since the computation of CLRs is based on reading and aggregating ingress and
egress ATM cell count statistics across the network, a dropped cell allowance is
made for cells in transit that are computed as lost cells due to Protection
Switchover (1 second of lost data per protection switch event).
9
<PAGE>
Section 3 Customer Support
3.1 Trouble Management
. 24 x 7 proactive end-to-end network monitoring (between Genuity POPs)
. 24 X 7customer support
. Network performance reports that provide end-user view of:
. Data delivery rates per PVC
. Network availability per PVC
. Cell latency at a network level
. Data delivery and availability reports are available via Email: Some Web
based reports shall be available in Y00
3.2 OSS Integration
. The Genuity ATM transport supports SNMP M4 NE View MIB in af-nm-0095.001,
ATM Technical Committee, July 1998.
3.3 Network Operation
. The Genuity ATM network supports transport of ATM Cells of type AAL1, AAL2,
AAL3, AAL4, and AAL5 compliant with ITU-T I.363 B-ISDN.
. The Genuity ATM network measures cell rate performance on a VCC and VPC
basis.
. The Genuity ATM network supports the ability to track, calculate, and
report on dropped ATM cells on a VCC and VPC basis.
. The Genuity ATM network supports the UPC function on all VCCs and VPCs to
ensure proper congestion control and traffic management.
. The Genuity ATM network support automatic re-routing of connections due to
network congestion and circuit loss based upon highest circuit priority.
Section 4 Terms and Conditions associated with the ATM Pricing
ATM transport is provided as a distance insensitive capability. PVCs and PVPs
are priced unidirectional. The Peak Cell Rate (PCR) of VBR PVCs and PVPs is
governed by the SCR ordered Bell Atlantic: in the flat rate PVC/PVP offering,
VBR-rt PCR is 1.4 multiplied by the SCR; and the VBR-nrt PCR is 2.0 SCR.
Request for PCRs with multipliers greater than those stated above shall be
supported at an increased cost. UBR transport is only available in conjunction
with the active use of another ATM transport category on the same port and is
limited to 40 Mbps. Maximum burst size (MBS) is limited to 100 cells. Request
for larger burst sizes shall be supported at an increased cost.
10
<PAGE>
Attachment A.3
GENERIC SERVICE LEVEL AGREEMENT
<TABLE>
<CAPTION>
Pre-Sales Support
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Standard Access DS-3 . DS-3 $2000 credit per occurrence
Quote * business days of . * or more business against the MRC with a
-- days maximum of $6,000 during a
receipt of request; . calendar month
OC-N . OC-N
---- . * or more business
* business days days
---
- ------------------------------------------------------------------------------------------------------------------
Facility Facilities . Facilities Availability: $2500 credit per occurrence
Availability Availability [PoP against the MRC with a
Inquiry to PoP & maximum of $7,500 during a
Access Hub to calendar month
Access Hub for
Approved . * or more business
Genuity Access days for # 10
providers]: locations/circuits
# * business days of
---
receipt of request; for
# 10 . * or more business
---- days for ### 10
locations/circuits locations/circuits.
# * business days of
receipt of request
for 10
locations/circuits
- ------------------------------------------------------------------------------------------------------------------
Custom Opportunity Genuity will respond . Genuity takes more $2000 credit per occurrence
Request Response to Bell Atlantic than * business days to against the MRC with a
within * business respond to the Custom maximum of $6,000 during a
days from receipt of Opportunity request calendar month
the Custom
Opportunity request
specifying whether
Genuity will
participate in the
Custom Opportunity
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
# less than or equal to.
## less than.
### greater than
<PAGE>
<TABLE>
Order Entry/Provisioning
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Firm Order #* business days of ##* business days of Operational escalation to
Confirmation Genuity's acceptance Genuity's acceptance of include detailed correction
(Except for the of Bell Atlantic Order Bell Atlantic Order for PoP plans-----
following: 1. for PoP to PoP Service to PoP Service
Reasonable outside #* business days of Bell Atlantic may cancel the
construction Genuity's acceptance ##* business days of affected Order with no
delays; and 2 of Bell Atlantic Order Genuity's acceptance of cancellation charges. For each
Delays caused by for DS-3 or lower Bell Atlantic Order for 24 hour period the FOC is
LEC/CAP/ALT/ IXC speed End to End DS-3 or lower speed End to overdue, Bell Atlantic will be
providers) Service End Service entitled to a 2% reduction in
#* business days of the first month's MRC.
Genuity's acceptance
of Bell Atlantic Order ##* business days of
for OC-N End to End Genuity's acceptance of
Service Bell Atlantic Order for
OC-N End to End Service
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
# less than or equal to.
## greater than
<PAGE>
Operations/Customer Service Support
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Telephone Response Time- ##90% of the time 90% of the time Operational escalation to
Percentage of Calls include detailed correction
answered at the plans.
telephone number
indicated in the After two consecutive months of
Trouble Reporting failure to meet the Committed
Attachment to the SLA a
Service Schedule $ 5000 credit off the MRC for
within 20 seconds Services.
- ------------------------------------------------------------------------------------------------------------------
Voicemail Message ##90% of time 90% of the time for Operational escalation to
Response Time - include detailed correction
Percentage of trouble plans
ticket calls
acknowledged by
Genuity within 30
minutes of a voicemail
left by Bell Atlantic
(ticket is deemed open
with Genuity at the
time the voicemail
message is made by
Bell Atlantic at the
telephone number
indicated in the
Trouble Reporting
Attachment to the
Service Schedule.)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Performance Reporting
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delivery of all Reports 100% 99%# or below (measured Operational escalation to
at the agreed upon cumulatively for all include detailed correction
time and frequency. reports) plans.
(#reports must be generated After two consecutive months of
for more than 3 consecutive failure to meet the Committed
months to be subject to SLA a credit of $ 2000 will be
this SLA) applied to the MRC for Services.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
## greater than
<PAGE>
ATTACHMENT B
PRICING
<PAGE>
GTE INTERNETWORKING
Private Line Pricing Table
SONET-Based Service:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
MRC (1) Minimum
PRODUCT DESCRIPTION Baseline Disc A Disc B Price NRC
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DS-3 (45 Mbps) - 1 Year Term $0.0185 $0.0167 $0.0157 $1,550 $1,500
- ---------------------------------------------------------------------------------------------------------------------
DS-3 (45 Mbps) - 2 Year Term $0.0163 $0.0147 $0.0139 $1,550 Waived
- ---------------------------------------------------------------------------------------------------------------------
DS-3 (45 Mbps) - 3 Year Term $0.0137 $0.0123 $0.0116 $1,550 Waived
- ---------------------------------------------------------------------------------------------------------------------
DS-3 (45 Mbps) - 5 Year Term $0.0115 $0.0104 $0.0098 $1,550 Waived
- ---------------------------------------------------------------------------------------------------------------------
OC-3 (155 Mbps) - 1 Year Term $0.0165 $0.0149 $0.0140 $4,250 $1,500
- ---------------------------------------------------------------------------------------------------------------------
OC-3 (155 Mbps) - 2 Year Term $0.0138 $0.0125 $0.0118 $4,250 Waived
- ---------------------------------------------------------------------------------------------------------------------
OC-3 (155 Mbps) - 3 Year Term $0.0111 $0.0100 $0.0095 $4,250 Waived
- ---------------------------------------------------------------------------------------------------------------------
OC-3 (155 Mbps) - 5 Year Term $0.0096 $0.0086 $0.0081 $4,250 Waived
- ---------------------------------------------------------------------------------------------------------------------
OC-12 (622 Mbps) - 1 Year Term $0.0138 $0.0125 $0.0118 $16,000 $1,500
- ---------------------------------------------------------------------------------------------------------------------
OC-12 (622 Mbps) - 2 Year Term $0.0122 $0.0110 $0.0104 $16,000 Waived
- ---------------------------------------------------------------------------------------------------------------------
OC-12 (622 Mbps) - 3 Year Term $0.0096 $0.0087 $0.0082 $16,000 Waived
- ---------------------------------------------------------------------------------------------------------------------
OC-12 (622 Mbps) - 5 Year Term $0.0086 $0.0078 $0.0073 $16,000 Waived
- ---------------------------------------------------------------------------------------------------------------------
OC-48 - 1 Year Term $0.0122 $0.0110 $0.0104 $55,000 $1,500
- ---------------------------------------------------------------------------------------------------------------------
OC-48 - 2 Year Term $0.0106 $0.0096 $0.0091 $55,000 Waived
- ---------------------------------------------------------------------------------------------------------------------
OC-48 - 3 Year Term $0.0086 $0.0077 $0.0073 $55,000 Waived
- ---------------------------------------------------------------------------------------------------------------------
OC-48 - 5 Year Term $0.0077 $0.0069 $0.0065 $55,000 Waived
- ---------------------------------------------------------------------------------------------------------------------
Sonet Revenues (MRC) Volume Requirements $0-$1M $1M-$2M $2M+
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) per DS-0 mile
Pricing is only valid for 2000. Pricing will be renegotiated annually.
Sonet based Private Line Services:
The GTEI Private Line Service is based on a 4-Fiber Bi-Directional Line Switched
Rings (BLSR) architecture, with self-healing rings and Automatic Protection
Switching (APS) capabilities, allowing maximum network availability and
reliability.
<PAGE>
GENUITY INC.
Wavelengths Pricing Table
Unprotected Wavelength Service:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
MRC (1) Minimum
PRODUCT DESCRIPTION Baseline Disc A Disc B Price NRC
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OC-3 (155 Mbps) - 1 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-3 (155 Mbps) - 2 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-3 (155 Mbps) - 3 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-3 (155 Mbps) - 5 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-12 (622 Mbps) - 1 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-12 (622 Mbps) - 2 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-12 (622 Mbps) - 3 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-12 (622 Mbps) - 5 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-48 - 1 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-48 - 2 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-48 - 3 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-48 - 5 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-192 - 1 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-192 - 2 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-192 - 3 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
OC-192 - 5 Year Term $* $* $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
Revenues (MRC) Volume Requirements $* $* $*
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) per DS-0 mile
Since Genuity currently does not offer an Unprotected Wavelength service,
these prices are preliminary estimates of what the price points will be
when Genuity takes the product to market. Per the Service Schedule, Genuity
will review and modify as needed.
<PAGE>
Unprotected Wavelength Services
The Genuity DWDM product will enable data transport at very high speeds directly
over wavelengths. This product does not offer the protection levels of a 4-fiber
BLSR based service offering.
<PAGE>
GENUITY INC.
Collocation Pricing Table
<TABLE>
<CAPTION>
MRC per Rack (approximately 17 sq. ft): Volume Discounts:
- ----------------------------------------------------------------------------------------------------------
Term Tier I Tier II Tier III # of Cabinets Discount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Yr $* $* $* 1 - 15 0%
- ----------------------------------------------------------------------------------------------------------
2 Yr $* $* $* 16 - 25 5%
- ----------------------------------------------------------------------------------------------------------
3 Yr $* $* $* 26 - 40 10%
- ----------------------------------------------------------------------------------------------------------
5 Yr $* $* $* 41+ 15%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Tier I Cities: Tier II Cities: Tier III Cities:
-------------- --------------- ----------------
NY Atlanta All others
SF Boston
Seattle Charlotte
Chicago Indianapolis
Portland Los Angeles
Phoenix
Sacramento
San Diego
San Jose
St.Louis
Tampa
Wash, DC
Durham
Notes:
Above Pricing is On-Net; Off-Net Pricing is ICB
Pricing is only valid for 2000. Pricing will be renegotiated annually
Includes 20 amps of power per rack - additional power not included
<PAGE>
GENUITY INC.
ATM Pricing Table
<TABLE>
<CAPTION>
----------------------------------------------------------
MRC
- -----------------------------------------------------------------------------------------------------------------------------------
Port Installation Baseline Disc A Disc B Disc C
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
UNI DS-3 Port $* $* $* $* $*
- -----------------------------------------------------------------------------------------------------------------------------------
UNI OC-3c Port $* $* $* $* $*
- -----------------------------------------------------------------------------------------------------------------------------------
UNI OC-12c Port $* $* $* $* $*
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Bandwidth MRC(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Flat Rate One Way PVC Installation Baseline Disc A Disc B Disc C
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CBR $* PCR=SCR $* $* $* $*
- -----------------------------------------------------------------------------------------------------------------------------------
VBR-rt $* PCR=1.4SCR $* $* $* $*
- -----------------------------------------------------------------------------------------------------------------------------------
VBR-nrt $* PCR=2.0SCR $* $* $* $*
- -----------------------------------------------------------------------------------------------------------------------------------
UBR (2) $* limit 40mbs $* $* $* $*
- -----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------
ATM Revenues (MRC) Volume Requirements $* $* $* $*
----------------------------------------------------------
Minimum Term 2yrs 5yrs 5yr 5yr
</TABLE>
Notes:
(1) Rates are for PVC in increments of 1mbs (MBS=100 Cells)
(2) The rate is for up to 40mbs and must be in conjunction with other network
traffic
(3) UBB pricing is preliminary, each port will have a monthly minimum
tied to Max bandwidth.
Pricing is only valid for 2000. Pricing will be renegotiated annually.
Installation charges are waived for more than 12 month terms.
<PAGE>
ATTACHMENT C
SERVICE AVAILABILITY REPORT
<PAGE>
Attachment C
(Formerly Network Availability Report)
*Please see Report Instructions File (located with this report on Kbank)
regarding change in Backbone reporting method (Note #6.)
<TABLE>
<CAPTION>
DIRECT BACKBONE-Most Popular
CONNECT City Pairs
- ------------------------------------------------------------------------------------------------------------------------------------
GNI POP ADDRESS CLLI NPA NXX INSIDE RING BACKBONE ROUTE
TO CITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Akron 844 Eastwood Ave, Akron, OH 44305 AKRNOHUE 330 247 TBD Northeast Chicago
-----------------
Cincinnati
-----------------
Cleveland
-----------------
Detroit
-----------------
Indianapolis
- ------------------------------------------------------------------------------------------------------------------------------------
Albany 11 N. Pearl St, 3rd Floor, Albany, NY 12207 ALBYNYPS 518 598 ICB New England Boston
-----------------
New York
-----------------
Washington
- ------------------------------------------------------------------------------------------------------------------------------------
Albuquerque 104 Gold Ave. SE, Albuquerque, NM 87102 ALBRNMJW 505 264 ICB Denver
-----------------
Los Angeles
-----------------
Phoenix
-----------------
Salt Lake City
- ------------------------------------------------------------------------------------------------------------------------------------
Altoona 20th. St. & Pine Avenue, Altoona, PA 16601 ALNAPADP 814 946 TBD Northeast Baltimore
-----------------
Chicago
-----------------
New York
-----------------
Washington
- ------------------------------------------------------------------------------------------------------------------------------------
Atlanta 56 Marietta, Ste. 900 & Ste. 1000, Atlanta, ATLNGAMQ 404 631 ICB East Boston
GA 30303
-----------------
Carrollton
-----------------
Charlotte
-----------------
Chatanooga
-----------------
Chicago
-----------------
Dallas
-----------------
Durham
-----------------
Houston
-----------------
Indianapolis
-----------------
Jacksonville
-----------------
Kansas City
-----------------
Los Angeles
-----------------
Louisville
-----------------
Miami
-----------------
Nashville
-----------------
New York
-----------------
Newark
-----------------
Oklahoma City
-----------------
Orlando
-----------------
Philadelphia
-----------------
Raleigh
-----------------
San Diego
-----------------
St. Louis
-----------------
Tampa
-----------------
Washington
- ------------------------------------------------------------------------------------------------------------------------------------
Austin 501 Waller, 1st Floor, Austin, TX 78702 AUSWTXBZ 512 202 ICB Southwest Carrollton
-----------------
Dallas
-----------------
Houston
-----------------
San Antonio
- ------------------------------------------------------------------------------------------------------------------------------------
Baltimore 1501 N. Charles S, 4th Floor, Baltimore, MD BLTMMD34 410 837 TBD East Buffalo
21201
-----------------
Harrisburg
-----------------
New York
-----------------
Washington
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
ACCESS
BACKBONE AVAILABILITY
----------------------------
ACCESS AVAILABILITY
- ------------------------------------------------------------------------------------------------------------------------------------
OC12 OC3 DS3 VENDOR ADDRESS CLLI NPA NXX OC12 OC3 DS3 COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
R R R Ameritech 115 Massillon Rd, Akron OH 44312 AKRNOH78 330 208 N/E G G
- --------------
Y G G
- --------------
Y G G
- --------------
Y G G
- --------------
Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
Y G G Bell Atlantic 158 State St, Albany, NY 12207 ALBYNYSS 518 259 G G G
- --------------
R R R
- --------------
Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
G G G USW 113 3rd Street, Albuquerque, NM 87102 ALBQNMMA 505 224 G G G
- --------------
G G G
- ------------------------------------------------------------------------------------------------------------------------------------
G G G ESPIRE 201 3rd Street, 4th Floor, Albuquerque, NM ALBQNMSH 505 944 N/E R G
87102
- --------------
Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
Y G G Bell Atlantic 1119 16th Street ALNAPAAL 814 940 G G G
- --------------
R R R
- --------------
R R R
- --------------
G G G
- ------------------------------------------------------------------------------------------------------------------------------------
R G G ATTLS 51 Peachtree ATLNGATL 404 348 PEND PEND PEND 04/01/2000
- --------------
R R G
- --------------
G G G
- --------------
R G G
- --------------
Y G G
- --------------
R R G
- --------------
G G G
- --------------
Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
G G G Bell South 70 Courtland Street, Altanta, GA 30303 ATLNGACS 404 215 R G G Additional
Capacity
5/15/00
- --------------
Y G G
- --------------
Y G G
- --------------
R R G
- --------------
R G G
- --------------
G G G
- --------------
G G G
- --------------
R R R
- --------------
R R R
- ------------------------------------------------------------------------------------------------------------------------------------
R G G MCI/WC 55 Park Place, Atlanta, GA 30303 ATLNGAPK 404 224 R G G Additional
Capacity
3/29/00
- --------------
R G G
- --------------
R R G
- --------------
G G G
- --------------
R R G
- --------------
R G G
- --------------
G G G
- --------------
G G G
- ------------------------------------------------------------------------------------------------------------------------------------
G G G MCI/WC 211 East 7th St, Austin, TX 78701 AUSWTX96 512 494 G G G Additional
Capacity
5/15/00
G G G
- --------------
G G G
- ------------------------------------------------------------------------------------------------------------------------------------
G G G SBC 909 Colorado St. Austin, TX 78701 AUSTTXGR 512 232 G G G
- ------------------------------------------------------------------------------------------------------------------------------------
Y G G Bell Atlantic 323 N. Charles St, Baltimore, MD 21201 BLTMMDCH 410 333 G G G
- --------------
Y G G
- --------------
R R R
- --------------
R R G
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===================================================
DIRECT BACKBONE - Meet ???
CONNECT City Pairs
==================================================================================================================================
BACKBONE ROUTE OC12 OC3 D33
GNI POP ADDRESS CLLI NPA NXX INSIDE RING TO CITY
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Battle Creek 133 Angell St., Battle Creek, BTCKMIIK 616 565 TBD
MI 49015
- ----------------------------------------------------------------------------------------------------------------------------------
Boston 800 Boylston St. (Prudential Cent.) BSTNMABL 617 536 NO New Carrollton R R G
Boston, MA 02199 England
--------------------------------
Chicago Y G G
--------------------------------
Detroit Y G G
--------------------------------
Houston R G G
--------------------------------
Indianapolis Y G G
--------------------------------
Los Angeles R R G
--------------------------------
Minneapolis Y G G
--------------------------------
New York G G G
--------------------------------
Philadelphia R G G
--------------------------------
Poughkeepsie G G G
--------------------------------
San Diego R R G
--------------------------------
St. Louis Y G G
--------------------------------
Syracuse Y G G
--------------------------------
Washington G G G
- ----------------------------------------------------------------------------------------------------------------------------------
Bryan 124 E. 26th Street, Bryan, BRYNTX05 409 823 ICB Southwest Carrollton G G G
TX 77803 --------------------------------
Houston G G G
- ----------------------------------------------------------------------------------------------------------------------------------
Buffalo 1090 Harlem Rd, Cheektowaga, BFLONYXC 716 821 ICB Northeast Chicago Y G G
NY 14227 --------------------------------
Cleveland R R G
--------------------------------
New York R R R
--------------------------------
Philadelphia G G G
--------------------------------
Washington R Y G
- ----------------------------------------------------------------------------------------------------------------------------------
Carrollton 2001 Westgate Drive, Suite #130, CRTNTXPH 972 242 ICB Southwest Chicago R R G
Valwood West Bldg E, Carrollton --------------------------------
TX 75006 Dallas G G G
--------------------------------
Denver G G G
--------------------------------
Detroit R R G
--------------------------------
El Paso G G G
--------------------------------
Everett R R R
--------------------------------
Fort Worth R G G
--------------------------------
Houston G G G
--------------------------------
Indianapolis R R G
--------------------------------
Kansas City G G G
--------------------------------
Los Angeles Y G G
--------------------------------
Minneapolis R G G
--------------------------------
New York R R R
--------------------------------
Oklahoma City R G G
--------------------------------
Philadelphia R R G
--------------------------------
Phoenix Y G G
--------------------------------
Sacramento R Y G
--------------------------------
Salt Lake City Y G G
--------------------------------
San Antonio G G G
--------------------------------
San Diego R G G
--------------------------------
San Jose Y G G
--------------------------------
St. Louis R G G
--------------------------------
Tampa R R G
--------------------------------
Topeka G G G
--------------------------------
Tulsa R G G
--------------------------------
Washington R R G
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
======================================================================================================
ACCESS
BACKBONE AVAILABILITY
--------------------------------
ACCESS AVAILABILITY
==================================================================================================================================
GNI POP VENDOR ADDRESS CLLI NPA NXX OC12 OC3 D83 COMMENTS
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Battle Creek AMTC 94 E. Michigan Ave. BTCKMIBC 616 565 N/E PEND PEND 4/21/00
- ----------------------------------------------------------------------------------------------------------------------------------
Boston MCI/WC 75 Federal St., 17th Floor, BSTNMAAG 617 531 G G Y Additional
Boston, MA 02110 Capacity
8/11/00
----------------------------------------------------------------------------------------------------------
Bell 185 Franklin St., Boston, BSTNMAFR 617 204 R R G Additional
Atlantic MA, 02110 Capacity
5/15/00
----------------------------------------------------------------------------------------------------------
ATTLS 230 Congress Street BSTNMACO 617 216 G G G
- ----------------------------------------------------------------------------------------------------------------------------------
Bryan GTENS 101 Regent St., Brazos County, BRYNTXXA 409 222 G G G
77803
- ----------------------------------------------------------------------------------------------------------------------------------
Buffalo Bell 548 Elmwood Ave., BFLONYEL 716 881 PEND PEND PEND 03/31/00
Atlantic Cheektowaga, NY 14222
- ----------------------------------------------------------------------------------------------------------------------------------
Carrollton GTENS 2101 Denton Dr, Carrollton, TX CRTNTXXA 972 242 G G G Additional
75006 Capacity
5/15/00
-------------------------------------------------------------------------------------------------------
MCI/WC 2001 Westgate, Suite 130 DLLSTX97 214 560 R R Y Additional
Capacity
3/17/00
--------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DIRECT BACKBONE Most Popular
CONNECT City Pairs
============================================================================================================================
BACKBONE ROUTE
GNI POP ADDRESS CLLI NPA NXX INSIDE RING TO CITY
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Chantilly Washington
- ----------------------------------------------------------------------------------------------------------------------------
Charlotte 113 N. Meyers, Charlotte, NC CHRNNCKT 704 376 TBD Durham
28202 ---------------
New York
---------------
Raleigh
---------------
Washington
- ----------------------------------------------------------------------------------------------------------------------------
Charlotte 401 South College St., 1st Floor, Charlotte, CHRLNCRU 704 375 ICB East Durham
(S. College) NC 28202 ----------------
New York
---------------
Raleigh
---------------
Washington
- ----------------------------------------------------------------------------------------------------------------------------
Chattanooga 745 East 17th St, Chattanooga, TN 37408 CHTGNOX 423 265 ICB East Indianapolis
---------------
Nashville
- ----------------------------------------------------------------------------------------------------------------------------
Chicago 130 E. Randolph, 1st Floor Suite 120, Chicago, CHCGILPB 312 565 ICB Michigan Cincinnati
IL 60601
---------------
Cleveland
---------------
Columbus
---------------
Dallas
---------------
Denver
---------------
Detroit
---------------
Everett
---------------
Harrisburg
---------------
Houston
---------------
Indianapolis
---------------
Kansas City
---------------
Los Angeles
---------------
Louisville
---------------
Milwaukee
---------------
Minneapolis
---------------
Nashville
---------------
New York
------------------------------ ---------------
130 E. Randolph, 1st Floor CL16, Chicago IL 60601 Newark
---------------
Orlando
---------------
Philadelphia
---------------
Pittsburgh
---------------
Sacramento
---------------
Salt Lake City
---------------
San Diego
---------------
San Francisco
---------------
San Jose
----------------
San Luis Obispo
---------------
Seattle
---------------
St. Louis
---------------
Tampa
---------------
Topeka
---------------
Washington
---------------
Cincinnati 607 Evans St,. Cincinnati, OH 45024 CNCOOHFF 513 397 ICB Michigan Cleveland
---------------
Columbus
---------------
Indianapolis
---------------
Louisville
---------------
Pittsburgh
----------------
<CAPTION>
===================================================================================================================================
ACCESS
BACKBONE AVAILABILITY
=============================
ACCESS AVAILABILITY
====================================================================================================================================
GNI POP OC12 OC3 D83 VENDOR ADDRESS CLLI NPA NXX OC12 OC3 DS3 COMMENTS
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Y G G Specific LOB Only
---
- -----------------------------------------------------------------------------------------------------------------------------------
Charlotte G G G Bell 208 N. Caldwell St., Charlotte, CHRLNCCA 704 316 PEND PEND PEND 5/15/00
South NC 28202
-------------
R R R
-------------
G G G
- -----------------------------------------------------------------------------------------------------------------------------------
Charlotte G G G Bell 208 N. Caldwell St., Charlotte, CHRLNCCA 704 316 G G G
(S. College) South NC 28202
------------- ---------------------------------------
R R R
------------- ---------------------------------------
G G G
------------- ---------------------------------------
G G G
- ------------------------------------------------------------------------------------------------------------------------------------
Chattanooga G G G Bell 300 Martin Luther King, Chattanooga, CHTGTNNS 423 634 G G G
South TN 37415
-------------
G G G
- -----------------------------------------------------------------------------------------------------------------------------------
Chicago Y G G MCI/WC 130 E. Randolph St., 2nd Floor Ste CHCGILPB 312 565 G Y Y Additional
200, Chicago, IL 60601-6208 Capacity
3/14/00
- -----------------------------------------------------------------------------------------------------------------------------------
Y G G
------------- ---------------------------------------
Y G G
------------- ---------------------------------------
R R G
------------- ---------------------------------------
Y G G
------------- ---------------------------------------
Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
R R R Ameritech 520 S. Federal St. CHCGILWB 312 353 G G G
------------- ----------
R R R
------------- ----------
R R R
------------- ----------
G G G
------------- ----------
G G G
------------- ----------
Y G G
------------- ----------
R R R
-------------- ----------
G G G
------------- ----------
G G G
------------- ----------
R R R
------------- ----------
Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
R R R AMTC 520 S. Federal St. CHCGILWB 312 353 PEND PEND PEND 3/14/00
-------------
R G G
-------------
R R R
- -----------------------------------------------------------------------------------------------------------------------------------
R R R ATTLS 600 S. Federal St. CHCGILCP 312 663 PEND PEND PEND 4/14/00
-------------
Y G G
-------------
Y G G
-------------
R R R
-------------
Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
R R R MCI/WC 130 E. Randolph St., 2nd Floor CHCGILPB 312 565 PEND PEND PEND 5/15/00
Ste 200, Chicago, IL 60601-6208
-------------
R R R
-------------
R R R
-------------
G G G
-------------
Y G G
-------------
R R R
-------------
Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
Cincinnati R G G CinBell 209 West 7th St, Cincinnati, CNCNOHWS 513 241 G G G
OH 45202
------------- --------------------------
G G G
-------------
G G G
-------------
Y G G
-------------
Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
BACKBONE-Most Popular
DIRECT
CONNECT City Pairs
- --------------------------------------------------------------------------------------------------------------------------------
GNI POP ADDRESS CLLI NPA NXX INSIDE RING BACKBONE ROUTE OC12 OC3 DS3
TO CITY
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cleveland 1255 Euclid Ave, 5th Floor, CLEVOHEK 216 623 ICB East
Cleveland, OH 44115 Columbus R G G
------------------------------------
Detroit R G G
------------------------------------
Indianapolis G G G
------------------------------------
New York R R R
------------------------------------
Pittsburgh Y G G
------------------------------------
Rochester R R G
------------------------------------
St. Louis R R G
------------------------------------
Washington G G G
- --------------------------------------------------------------------------------------------------------------------------------
Colorado Springs 335 Conejos St., Colorado CLSQCOAQ 719 633 ICB Southwest
Springs, CO 80903 Denver Y G G
------------------------------------
Salt Lake City Y G G
- --------------------------------------------------------------------------------------------------------------------------------
Columbus 376 W. Broad St, Bdlg. A, CLMDOHHY 614 224 ICB Michigan
Columbus, OH 43215 Detroit G G G
------------------------------------
Indianapolis G G G
------------------------------------
Pittsburgh R R G
------------------------------------
Washington Y G G
- --------------------------------------------------------------------------------------------------------------------------------
Dallas 2323 Bryan Street, Ste 220, DLLSTX37 214 969 NO Southwest
(Bryan) Dallas, TX 75201 (ACSI POP) Denver G G G
------------------------------------
Ft. Worth R G G
------------------------------------
Houston G G G
------------------------------------
Kansas City G G G
------------------------------------
Los Angeles Y G G
------------------------------------
Miami R R G
------------------------------------
New York R R G
------------------------------------
Salt Lake City Y G G
------------------------------------
San Antonio G G G
------------------------------------
San Diego R G G
------------------------------------
San Francisco R G G
------------------------------------
San Jose R Y G
------------------------------------
St. Louis R G G
------------------------------------
Washington R R G
- --------------------------------------------------------------------------------------------------------------------------------
Dallas 2020 Live Oak, (Annex), Dallas, DLLSTXAL 214 720 ICB Southwest
TX 75201 Denver G G G
------------------------------------
Ft. Worth R G G
------------------------------------
Houston G G G
------------------------------------
Kansas City G G G
------------------------------------
Los Angeles Y G G
------------------------------------
Miami R R G
------------------------------------
New York R R G
------------------------------------
Salt Lake City Y G G
------------------------------------
San Antonio G G G
------------------------------------
San Diego R G G
------------------------------------
San Francisco R G G
------------------------------------
San Jose R Y G
------------------------------------
St. Louis R G G
------------------------------------
Washington R R G
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
ACCESS
BACKBONE AVAILABILITY
-------------------------------------
ACCESS AVAILABILITY
- --------------------------------------------------------------------------------------------------------------------------------
GNI POP VENDOR ADDRESS CLLI NPA NXX OC12 OC3 DS3 COMMENTS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cleveland Ameritech 750 E. Huron Rd, Cleveland, CLEVOH62 216 222 G R G
OH 44115
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Colorado Springs US West 308 E. Pikes Peak Ave., CLSPCOMA 719 227 G G G
Colorado Springs, CO 80903
------------------------------------
------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Columbus Ameritech 111 N. 4th St., Columbus, OH, CLMBOH11 614 206 G G G Additional Capacity
43215 8/29/00
- --------------------------------------------------------------------------------------------------------------------------------
Dallas E-SPIRE 2323 Bryan St, Dallas, TX DLLSTX37 214 580 N/E G G
(Bryan) 75201
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Dallas MCI/WC 350 N St Paul St, 29th Floor DLLFTXBZ 214 571 G R G Additional Capacity
Ste 2950, Dallas, TX 75201 5/15/00
-------------------------------------------------------------------------------------------------------------
SBC 2400 Ross Avenue, Dallas, TX, DLLSTXRO 214 220 PEND PEND PEND 3/17/00
75201
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 4 of 12
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------
DIRECT BACKBONE Meet Popalar
CONNECT City Paris
====================================================================================================================================
GNI POP ADDRESS CLLI NPA NXX INSIDE RING BACKBONE ROUTE
TO CITY
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Denver 910 15th Street (Airfone Space) DNVRC026 303 573 ICB West/ El Paso
3rd Floor Ste 350 & #310, Denver Southwest
CO 80202
------------------
Everett
------------------
Indianapolis
------------------
Kansas City
------------------
Los Angeles
------------------
Milwaukee
------------------
Minneapolis
------------------
Sacramento
------------------
Salt Lake City
------------------
San Francisco
------------------
San Jose
------------------
Seattle
------------------
Topeka
------------------
Washington
- -----------------------------------------------------------------------------------------------------------------------------
Detroit 5664 Commercial, Detroit, MI 48209 DTRUMIZN 313 849 ICB Michigan Indianapolis
------------------
Los Angeles
------------------
New York
------------------
Philadelphia
------------------
Seattle
------------------
Washington
- -----------------------------------------------------------------------------------------------------------------------------
Durham 3632 Roxboro Road, 1st Floor, DRHMNCRR 919 470 ICB East Pittsburgh
Durham, NC 27704
------------------
Raleigh
------------------
Richmond
------------------
Tampa
------------------
Washington
- -----------------------------------------------------------------------------------------------------------------------------
El Paso 201 E. Main Dr, # 1410, El Paso, ELPSTX98 915 532 TBD Southwest Houston
TX 79910
<CAPTION>
====================================================================================================================================
ACCESS
BACKBONE AVAILABILITY
ACCESS AVAILABILITY
====================================================================================================================================
GNI POP OC12 DC3 S3 VENDOR ADDRESS CLLI NPA NXX OC12 OC3 DS3 COMMENTS
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Denver G G G MCI/WC 1660 Lincoln St., 2nd Floor, DNVRCO01 303 850 PEND G G Additional
Denver, CO 80202-3805 Capacity 5/9/00
----------- -----------------------------------
R R R
----------- -----------------------------------
R R G
-----------------------------------------------------------------------------------------------------------------
G G G ATTLS 910 15th St, Denver CO 80202 DNVRCO26 303 572 G G G
-----------
G G G
-----------
Y G G
-----------
Y G G
-----------
Y G G
-----------------------------------------------------------------------------------------------------------------
Y G G US west 931 14th St, Denver CO 80202 DNVRCOMA 303 260 G Y G Additional
-----------
Capacity TBD
G G G
----------- ----------------------------------
G G G
----------- ----------------------------------
R R R
----------- ----------------------------------
G G G
----------- ----------------------------------
R R G
- ------------------------------------------------------------------------------------------------------------------------------------
Detroit G G G Ameritech 444 Michigan Ave, Detroit, DTRTMIBH 313 221 R G R Additional
MI 48236 Capacity 3/17/00
-----------
R R G
-----------
R R R
-----------
R R G
-----------
R R R
-----------
Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
Durham G G G GTENS 104 Holloway St, Durham, NC DRHMNCXM 919 385 R G G Additional
Capacity 5/15/00
-----------
G G G
-----------
Y G G
-----------
G G G
G G G
- ------------------------------------------------------------------------------------------------------------------------------------
El Paso Y G G SBC 510 Texas St. ELPSTXMA 915 532 PEND PEND PEND 3/17/00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 5 of 12
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
BACKBONE
GNI POP ADDRESS CLLI NPA NXX INSIDE RING TO CITY OC12 OC3 DS3
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Everett 1121 S.W. Everett Mall Way, 2nd
Floor # 200, Everett, WA 98208 EVRTWABK 425 290 NO Northwest Los Angeles R R R
---------------------------------
Portland R R R
---------------------------------
Sacramento R R R
---------------------------------
Salinas R R R
---------------------------------
San Francisco R R R
---------------------------------
San Jose R R R
---------------------------------
San Luis Obispo R R R
---------------------------------
Seattle G G G
---------------------------------
St. Louis R R R
- -----------------------------------------------------------------------------------------------------------------------------------
Everett / Seattle 1121 S.W. Everett Mall Way,
Everett, WA 98208 EVRTWABK / STTLWAWB NO Northwest
- -----------------------------------------------------------------------------------------------------------------------------------
Fort Lauderdale 121 SW 17th Street, Fort FTLEFLWE 954 761 TBD Florida Miami G G G
Lauderdale, FL 33315
---------------------------------
Tampa G G G
- -----------------------------------------------------------------------------------------------------------------------------------
Fort Worth 1119 NE 23rd, Fort Worth,
TX 76016 FTWQTXDE 817 533 TBD Southwest Houston R G G
---------------------------------
Harrisburg 1979 N. 7th St, Harrisburg,
PA 17102 HRBGPAOG 717 260 TBD Northeast Philadelphia G G G
---------------------------------
Washington G G G
- -----------------------------------------------------------------------------------------------------------------------------------
Houston 2 Shell Plaza, 777 Walker Street,
# 2550, Houston, TX 77002 Suite HSTNTX89 713 225 NO Southwest Kansas City R G G
L120
---------------------------------
Los Angeles Y G G
---------------------------------
Minneapolis Y G G
---------------------------------
New York R R R
---------------------------------
Oklahoma City R G G
---------------------------------
Philadelphia R R G
---------------------------------
San Antonio G G G
---------------------------------
San Diego R G G
---------------------------------
St. Louis Y G G
---------------------------------
Tulsa R G G
---------------------------------
Washington G G G
- -----------------------------------------------------------------------------------------------------------------------------------
Indianapolis 550 Kentucky Ave., Indianapolis,
(Kentucky) IN 46225 IPLSIN74 317 637 TBD Michigan Louisville G G G
---------------------------------
Milwaukee Y G G
---------------------------------
Nashville G G G
---------------------------------
New York R R R
---------------------------------
Philadelphia G G G
---------------------------------
Sacramento R R G
---------------------------------
San Diego R R G
---------------------------------
San Francisco R R G
---------------------------------
St. Louis G G G
---------------------------------
Washington G G G
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
===================================================================================================================================
GNI POP VENDOR ADDRESS CLLI NPA NXX OC12 OC3 DS3 COMMENTS
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Everett GTENS 426 E. Casino Road, Everett, EVRTWAXA 425 210 G G Y Additional
WA 98208 Capacity
5/15/00
- -----------------------------------------------------------------------------------------------------------------------------------
Everett / Seattle GTENS & 2001 6th Street, Seattle, WA STTLWAWB N/A N/A R R R
ATTLS
- -----------------------------------------------------------------------------------------------------------------------------------
GTENS & 2001 6th Street, Seattle, WA STTLWAWB N/A N/A PEND PEND PEND 03/23/2000
MCI
- -----------------------------------------------------------------------------------------------------------------------------------
Fort Lauderdale Bell South 211 NE 2nd Street, Fort FTLDFLMR 954 525 G G G
Lauderdale, FL 33301
- -----------------------------------------------------------------------------------------------------------------------------------
Fort Worth SBC 2401 Chestnut St, Forth Worth, FTWOTXMA 817 624 N/E G G
TX, 76106
- -----------------------------------------------------------------------------------------------------------------------------------
Harrisburg Bell Atlantic 210 Pine St. Harrisburg, PA HRBGPAHA 717 213 G G G
- -----------------------------------------------------------------------------------------------------------------------------------
Houston ATTLS 500 Dallas St HSTXTX32 713 752 G G G
--------------
- -----------------------------------------------------------------------------------------------------------------------------------
MCI/WC 600 Travis St., 19th Floor # 195, HSTNTXGX 713 343 G G G Additional
Houston, TX 77002-3002 Capacity
5/30/00
--------------
- -----------------------------------------------------------------------------------------------------------------------------------
SBC 2 Shell Plaza (777 Walker) Houston, HSTNTX93 713 399 G Y G
TX 77002
- -----------------------------------------------------------------------------------------------------------------------------------
Indianapolis MCI/WC 550 Kentucky Ave., Indianapolis, IPLSIN74 317 829 G G Y
(Kentucky) IN 46225
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 6 of 12
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================
DIRECT BACKBONE - Most Popular
CONNECT City Pairs
==================
==============================================================================================================================
BACKBONE ROUTE
GNI POP ADDRESS CLLI NPA NXX INSIDE RING TO CITY OC12 OC3 DS3
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Indianapolis 175 College, (Telecom),
(College) Indianapolis, IN 46202 IPLSINDQ 317 822 TBD Michigan Louisville G G G
-------------------------------------
Milwaukee Y G G
-------------------------------------
Nashville G G G
-------------------------------------
New York R R R
-------------------------------------
Philadelphia G G G
-------------------------------------
Sacramento R R G
-------------------------------------
San Diego R R G
-------------------------------------
San Francisco R R G
-------------------------------------
St. Louis G G G
-------------------------------------
Washington G G G
- ------------------------------------------------------------------------------------------------------------------------------
Indianapolis 733 W. Henry St.,
(TI) Indianapolis, IN 46225 IPLVINEA 317 955 TBD Michigan Louisville G G G
-------------------------------------
Milwaukee Y G G
-------------------------------------
Nashville G G G
-------------------------------------
New York R R R
-------------------------------------
Philadelphia G G G
-------------------------------------
Sacramento R R G
-------------------------------------
San Diego R R G
-------------------------------------
San Francisco R R G
-------------------------------------
St. Louis G G G
-------------------------------------
Washington G G G
- ------------------------------------------------------------------------------------------------------------------------------
Jacksonville 95 Hanover St,. (Shelter Pop),
Jacksonville, FL 32204 JCVNFLIM 904 463 TBD Florida Miami G G G
-------------------------------------
New York R R R
-------------------------------------
Raleigh Y G G
-------------------------------------
St. Louis Y G G
-------------------------------------
Tampa Y G G
- ------------------------------------------------------------------------------------------------------------------------------
Kansas City 1301 West 25th Street, Kansas
City, MO 64108 KACAMOBZ 816 842 TBD Southwest Minneapolis Y G G
-------------------------------------
Okalahoma City R G G
-------------------------------------
San Francisco R Y G
-------------------------------------
St. Louis Y G G
-------------------------------------
Topeka G G G
-------------------------------------
Tulsa R G G
- ------------------------------------------------------------------------------------------------------------------------------
Kansas City 2401 Holly Street, Kansas City,
MO 64108 KSCAMOZN 816 471 TBD Southwest Minneapolis Y G G
-------------------------------------
Okalahoma City R G G
-------------------------------------
San Francisco R Y G
-------------------------------------
St. Louis Y G G
-------------------------------------
Topeka G G G
-------------------------------------
Tulsa R G G
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==================================================================================================================
ACCESS
BACKBONE AVAILABILITY
=============================
ACCESS AVAILABILITY
==================================================================================================================
GNI POP VENDOR ADDRESS CLLI NPA NXX OC12 OC3 DS3 COMMENTS
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Indianapolis MCI/WC 111 Monument Circle, 2nd Floor,
(College) Indianapolis, IN 46204 IPLSINLR 317 842 G N/E G
-----------------
-----------------
-----------------
-----------------
-----------------
-----------------
-----------------
-----------------
-----------------
-----------------
-----------------
-----------------
- ------------------------------------------------------------------------------------------------------------------
Indianapolis AMTC 240 N. Meredian St.,
(TI) Melrose Central Office IPLSIN01 317 221 PEND PEND PEND 04/27/00
- ------------------------------------------------------------------------------------------------------------------
ATTLS 711 W. Henry St. IPLSINMA 317 532 PEND PEND PEND 04/27/00
- ------------------------------------------------------------------------------------------------------------------
MCI/WC 111 Monument Circle,
Suite 200 IPLSINLR 317 842 PEND PEND PEND 04/27/00
- ------------------------------------------------------------------------------------------------------------------
Jacksonville Bell South 424 N. Pearl St., Jacksonville,
FL 32204 JCVLFLCL 904 308 G G G
- ------------------------------------------------------------------------------------------------------------------
Kansas City E-SPIRE 1100 Main St., # 1460, Kansas
City, MO 64105 KSCYMOMC 816 303 R G G
- ------------------------------------------------------------------------------------------------------------------
Kansas City SBC 1101 McGee Street KSCYMO55 816 218 PEND PEND PEND 04/27/00
- ------------------------------------------------------------------------------------------------------------------
E-SPIRE 1100 Main St., # 1460, Kansas
City, MO 64105 KACAMODU 816 303 PEND PEND PEND 04/14/00
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================
DIRECT BACKBONE - Most Popular
CONNECT City Pairs
==================
==============================================================================================================================
BACKBONE ROUTE
GNI POP ADDRESS CLLI NPA NXX INSIDE RING TO CITY OC12 OC3 DS3
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Los Angeles 624 S. Grand GNI fiber
to 611 Wilshire LSANCARC 213 489 ICB West Miami R R G
------------------------------ -----------------------------------
Minneapolis Y G G
------------------------------ -----------------------------------
New York R R G
------------------------------ -----------------------------------
Oakland G G G
------------------------------ -----------------------------------
Philadelphia R R G
------------------------------ -----------------------------------
Phoenix G G G
------------------------------ -----------------------------------
Portland R R G
------------------------------ -----------------------------------
Reno R Y G
------------------------------ -----------------------------------
------------------------------
2nd Floor Sacramento Y G G
------------------------------ -----------------------------------
Salinas G G G
------------------------------
611 Wilshire, 1st Floor, Suite # 102, Los Angeles, CA 90017
-----------------------------------
Salt Lake City R Y G
-----------------------------------
San Antonio G G G
-----------------------------------
San Diego R G G
-----------------------------------
San Francisco G G G
-----------------------------------
San Jose G G G
-----------------------------------
San Luis Obispo G G G
-----------------------------------
Santa Barbara Y G G
-----------------------------------
Seattle R R R
-----------------------------------
Washington R R G
- ------------------------------------------------------------------------------------------------------------------------------
Louisville 1358 S. 7th St, Louisville,
KY 40208 LSVMKYPL 502 634 ICB East Nashville G G G
- ------------------------------------------------------------------------------------------------------------------------------
Manassas
- ------------------------------------------------------------------------------------------------------------------------------
Miami 36 N.E. 2nd St., 6th Floor,
Miami, Florida 33132 MIASFLTT 305 381 ICB Florida New York R R R
-----------------------------------
Newark R R R
-----------------------------------
Orlando R G G
---
-----------------------------------
San Francisco R R G
-----------------------------------
Tampa G G G
-----------------------------------
Washington G G G
- ------------------------------------------------------------------------------------------------------------------------------
Milwaukee 500 S. Water St, Milwaukee,
WI 53204 MILAWIIR 414 807 TBD Northcentral Washington R R G
- ------------------------------------------------------------------------------------------------------------------------------
Minneapolis 422 N 3rd Street, Minneapolis,
MN, 55401 MPLTMN41 612 338 TBD Northcentral New York R R R
-----------------------------------
Seattle R R R
-----------------------------------
Washington R R G
- ------------------------------------------------------------------------------------------------------------------------------
Mountain View 364 Ferguson Dr., 1st Fl,
Mountain View, CA 94043 MTVWCAGC 650 966 TBD
- ----------------------------------------------------------------------------------------- -----------------
Nashville 1217 Litton Ave, Nashville,
TN 37204 NSVMTNNN 615 258 ICB East St. Louis Y G G
-----------------------------------
<CAPTION>
==================================================================================================================
ACCESS
BACKBONE AVAILABILITY
==============================================
ACCESS AVAILABILITY
===================================================================================================================================
GNI POP VENDOR ADDRESS CLLI NPA NXX OC12 OC3 DS3 COMMENTS
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Los Angeles MCI/WC 800 W. 6th, Los Angeles, LSANCAGJ 213 330 N/E N/E Y
CA 90017
------------------------------------------------------------------------------------------------------------------
GTENS 624 S. Grand 5th Fl,
Los Angeles, CA 90017 LSANCARC 213 316 R G G
------------------------------------------------------------------------------------------------------------------
GTENS PEND PEND PEND 5/30/00
------------------------------------------------------------------------------------------------------------------
PacBell PEND PEND PEND 6/01/00
------------------------------------------------------------------------------------------------------------------
ATTLS 624 S. Grand, 2nd Floor,
Los Angeles, CA 90017 LSANCARC 213 627 G G G
------------------------------------------------------------------------------------------------------------------
GTENS N/E N/E PEND 8/11/00
------------------------------------------------------------------------------------------------------------------
MCI/WC 800 W. 6th, Los Angeles,
CA 90017 LSANCAGJ 213 330 R Y G Additional Capacity 5/1/00
------------------------------------------------------------------------------------------------------------------
PacBell 420 S Grand, Los Angeles,
CA 90017 LSANCA03 213 217 G G G
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Louisville Bell South 526 Armory Place,
Louisville, KY 40202 LSVLKYAP 502 294 G G G
- -----------------------------------------------------------------------------------------------------------------------------------
Washington AOL Only
- -----------------------------------------------------------------------------------------------------------------------------------
Miami Bell South 45 NW 5th St, Miami,
FL 33128 MIAMFLGR 305 237 G G G Additional Capacity 6/1/00
- -----------------------------------------------------------------------------------------------------------------------------------
MCI/WC 8830 NW 18th Terrace MIANFLPV 305 639 G G G Additional Capacity 8/11/00
- -----------------------------------------------------------------------------------------------------------------------------------
Nextlink N/E N/E PEND 3/17/00
Can be equipped to
- -----------------------------------------------------------------------------------------------------------------------------------
Milwaukee Ameritech 6812 Aetna Ct. Milwaukee,
WI 53213 MILWWI12 414 256 G G G
- -----------------------------------------------------------------------------------------------------------------------------------
Minneapolis US West 200 S 5th St. Minneapolis,
MN 55402 MPLSMNDT 612 370 N/E G G
- -----------------------------------------------------------------------------------------------------------------------------------
KMC 730 Boone Ave. GLVYMN06 612 279 PEND PEND PEND 3/17/00
- -----------------------------------------------------------------------------------------------------------------------------------
Mountain View MCI/WC 55 South Market St. SNJSCAJN 408 975 PEND PEND PEND 5/30/00
- -----------------------------------------------------------------------------------------------------------------------------------
Pacbell 305 Hope St. MTVWCA11 650 210 PEND PEND PEND 5/30/00
- -----------------------------------------------------------------------------------------------------------------------------------
Nashville Bell South 1224 Gallatin Ave, Nashville,
TN 37206 NSVLTNIN 615 226 G G G Additional Capacity 7/18/00
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=======================================================
DIRECT BACKBONE - Most Popular
CONNECT City Pairs
==================
==============================================================================================================================
BACKBONE ROUTE
GNI POP ADDRESS CLLI NPA NXX INSIDE RING TO CITY OC12 OC3 DS3
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New York 8th Avenue, W 31st-W 33rd NYCPNYQP 212 629 NO New England Newark R R R
(Penn Station), -----------------------------------
New York City, NY 10018 Philadelphia G G G
-----------------------------------
Phoenix R R R
------------------------- -----------------------------------
Poughkeepsie R R R
-----------------------------------
Reston R R R
-----------------------------------
Richmond R R R
-----------------------------------
Penn Station to 60 Hudson to BA C.O., 3 Node Ring Rochester R R R
-----------------------------------
Sacramento R R R
-----------------------------------
San Diego R R R
-----------------------------------
San Francisco R R G
-----------------------------------
San Jose R R G
------------------------- -----------------------------------
Penn Station to 60 Hudson Seattle R R R
-----------------------------------
St. Louis R R R
-----------------------------------
Sterling R R R
-----------------------------------
Syracuse R R R
-----------------------------------
Washington G G G
-----------------------------------
White Plains R R R
- --------------------------------------------------------------------------------------------------------------------------------
New York 60 Hudson Mezzanine NYCMNYZR 212 791 ICB New England Newark R R R
--------------------- -----------------------------------
Philadelphia G G G
--------------------- -----------------------------------
Phoenix R R R
--------------------- -----------------------------------
Poughkeepsie R R R
--------------------- -----------------------------------
Reston R R R
------------------------------------------------ -----------------------------------
60 Hudson Street, NYCMNYZR 212 962 Richmond R R R
(18th floor), -----------------------------------
New York City, Rochester R R R
NY 10013 -----------------------------------
Sacramento R R R
-----------------------------------
San Diego R R R
-----------------------------------
San Francisco R R G
-----------------------------------
San Jose R R G
-----------------------------------
Seattle R R R
-----------------------------------
St. Louis R R R
-----------------------------------
Sterling R R R
-----------------------------------
Syracuse R R R
-----------------------------------
Washington G G G
-----------------------------------
White Plains R R R
- --------------------------------------------------------------------------------------------------------------------------------
Newark 1 Raymond Plaza West, NWRKNJFZ 201 345 NO New England Philadelphia R R R
Newark, NJ (AMTRAC Colo) -----------------------------------
07105 San Jose R R R
-----------------------------------
Washington R R R
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
================================================================================================================================
ACCESS
BACKBONE AVAILABILITY
==========================================
ACCESS AVAILABILITY
================================================================================================================================
GNI POP VENDOR ADDRESS CLLI NPA NXX OC12 OC3 DS3 COMMENTS
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New York MCI/WC 111 8th Avenue NYCMNY83 212 220 G G G
- --------------------------------------------------------------------------------------------------------------------------------
Bell Atlantic 1095 6th Avenue, NYCMNY42 212 205 N/E G Y
New York, NY 10036
- --------------------------------------------------------------------------------------------------------------------------------
Time Warner 2 Penn Plaza NYCMNYPZ 212 643 G N/E N/E
- --------------------------------------------------------------------------------------------------------------------------------
New York Time Warner 60 Hudson St., Suite 321, NYCMNYZR 212 732 G N/E N/E
New York City, NY 10013
- --------------------------------------------------------------------------------------------------------------------------------
MCI/WC 111 8th Avenue NYCMNY42 212 205 R G Y
- --------------------------------------------------------------------------------------------------------------------------------
ATTLS 67 Broad Street NYCMNYBX 212 276 PEND PEND PEND 5/12/00
- ------------------------------------------------------------------------------------------------------------------------------------
MCI/WC 111 8th Avenue NYCMNY83 212 220 R G Y Additional Capacity
3/24/00
- ------------------------------------------------------------------------------------------------------------------------------------
Bell Atlantic 1095 6th Avenue, NYCMNY42 212 205 G G G Additional Capacity
New York, NY 10036 8/11/00
-----
-----
- ------------------------------------------------------------------------------------------------------------------------------------
Nextlink 60 Hudson St., 13th Floor, NYCMNYZR 914 204 N/E G G Additional Capacity TBD
New York City, NY 10013
- ------------------------------------------------------------------------------------------------------------------------------------
Newark Bell Atlantic 654 Market St. Newark, NWRKNJIR 973 274 G G G Additional Capacity
NJ 07105 8/11/00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 9 of 12
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
DIRECT BACKBONE-Most Popular
CONNECT City Pairs
- -----------------------------------------------------------------------------------------------------------------------------------
GNI POP ADDRESS CLLI NPA NXX INSIDE RING BACKBONE ROUTE OC12 OC3 DS3
TO CITY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oakland 260 5th Avenue, Oakland, CA OKLDCA34 510 832 TBD Bay
(5th Avenue) 94606 Portland R R G
----------------------------------
Reno R Y G
----------------------------------
Sacramento G G G
----------------------------------
Salinas Y G G
----------------------------------
Salt Lake City R Y G
----------------------------------
San Diego R G G
----------------------------------
San Francisco G G G
----------------------------------
San Jose G G G
----------------------------------
Seattle R R R
- -----------------------------------------------------------------------------------------------------------------------------------
Oakland 344 20th Street, Kaiser Building, OKLDCAUN 510 839 TBD Bay
(20th Street) 3rd Floor, Oakland, CA 94612 Portland R R G
----------------------------------
Reno R Y G
----------------------------------
Sacramento G G G
----------------------------------
Salinas Y G G
----------------------------------
Salt Lake City R Y G
----------------------------------
San Diego R G G
----------------------------------
San Francisco G G G
----------------------------------
San Jose G G G
----------------------------------
Seattle R R R
- -----------------------------------------------------------------------------------------------------------------------------------
Oklahoma City 620 S. Santa Fe, Oklahoma City, OKCZOKZC 405 254 TBD Southwest
OK 73170
- -----------------------------------------------------------------------------------------------------------------------------------
Orlando 121 Weber St, (Shelter PoP), ORLFFLEP 407 558 TBD Florida Tampa R G G
Orlando, FL 32803
----------------------------------
Washington R G G
- -----------------------------------------------------------------------------------------------------------------------------------
Philadelphia 401 N. Broad St., Ste 330, PHLAPAFG 215 382 ICB New England Poughkeepsie R Y G
(N. Broad St.) Philadelphia, PA 19108
----------------------------------
San Diego R R G
----------------------------------
Syracuse G G G
----------------------------------
Washington G G G
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix 429 S. 6th Dr., Phoenix, AZ 85003 PHNAAZGY 602 524 ICB West San Diego R G G
- -----------------------------------------------------------------------------------------------------------------------------------
Phoenix 2120 N. Central Ave., Tower Bldg., PHNXAZUI 602 258 TBD West
(N. Central) Ste G40, Phoenix AZ 85004 San Diego R G G
- ------------------------------------------------------------------------------------------------------------------------------------
Pittsburgh 733 Gross St, Pittsburg, PA 15236 PITDPANF 412 762 TBD Northeast Washington G G G
----------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
ACCESS
BACKBONE AVAILABILITY
-----------------------------------
ACCESS AVAILABILITY
- ------------------------------------------------------------------------------------------------------------------------------------
GNI POP VENDOR ADDRESS CLLI NPA NXX OC12 OC3 DS3 COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oakland PacBell 1610 Franklin St. OKLDCA03 510 869 R G G
(5th Avenue)
- ------------------------------------------------------------------------------------------------------------------------------------
Oakland MCI/WC 1999 Harrison St. OKLDCA03 510 446 PEND PEND PEND TBD
(20th Street)
------------------------------------------------------------------------------------------------------------------
PacBell PEND PEND PEND 05/30/2000
- ------------------------------------------------------------------------------------------------------------------------------------
Oklahoma City SBC 121 Dean McGee, Oklahoma OKCYOKCE 405 216 N/E G G
City, OK 73102
- ------------------------------------------------------------------------------------------------------------------------------------
Orlando Bell South 45 N Magnolia Ave., Orlando, ORLDFLPC 407 240 G G G Additional Capacity
FL 32801 3/17/00
- ------------------------------------------------------------------------------------------------------------------------------------
Philadelphia MCI/WC 1601 Market St, 22nd Floor, 5 PHLAPASI 215 977 G G G Additional Capacity
(N. Broad St.) Penn Center, Philadelphia, PA 19103 8/11/00
------------------------------------------------------------------------------------------------------------------
ATTLS 2130 Arch, Philadelphia, PA 19103 PHLAPAAZ 215 273 G G G
------------------------------------------------------------------------------------------------------------------
Bell Atlantic 900 Race St., Philadelphia, PA PHLAPAMK 215 309 G G G Additional Capacity
19107 8/11/00
------------------------------------------------------------------------------------------------------------------
Nextlink 401 N. Broad St., 4th Fl. PHLAPAFG 215 733 PEND PEND PEND 03/31/2000
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix ELI 2600 N. Central #300 PHNXAZ28 602 277 R PEND PEND 03/17/2000
------------------------------------------------------------------------------------------------------------------
USW 211 W Monroe St., Phoenix, AZ PHNXAZMA 602 364 N/E R R
85003
- ------------------------------------------------------------------------------------------------------------------------------------
Phoenix MCI/WC 3838 N. Central Ave. PHNZAZGN 602 630 PEND PEND PEND 05/01/2000
(N. Central)
------------------------------------------------------------------------------------------------------------------
USW 211 W Monroe St., Phoenix, AZ PHNXAZMA 602 364 R PEND PEND 03/17/2000
85003
- ------------------------------------------------------------------------------------------------------------------------------------
Pittsburgh Bell Atlantic 416 7th Avenue, Pittsburgh, PA PITBPADT 412 261 G G G Additional Capacity
15219 8/11/00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 10 of 12
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------
DIRECT BACKBONE-Most Popular
CONNECT City Pairs -----------------
- ------------------------------------------------------------------------------------------------------------------------------------
GNI POP ADDRESS CLLI NPA NXX INSIDE RING BACKBONE ROUTE
TO CITY OC12 OC3 DS3
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portland 707 South Washington Street, Ste PTLDORWA 503 219 TBD Northwest R R G
400 4th Floor, Portland, OR 97205 Sacramento
-----------------------------------
Salinas R R G
-----------------------------------
San Francisco R R G
-----------------------------------
San Jose R Y G
-----------------------------------
Seattle R R R
- ------------------------------------------------------------------------------------------------------------------------------------
Poughkeepsie New Palz Toll Station, Exit 18 NY, NWPLNYJO 914 255 TBD New England Washington G G G
12561
- ------------------------------------------------------------------------------------------------------------------------------------
Raleigh 115 N. Harrington St., 3rd Floor, RLGINCHK 919 839 NO
Raleigh, NC 27603 Richmond Y G G
-----------------------------------
St. Louis Y G G
-----------------------------------
Tampa R G G
-----------------------------------
Washington G G G
- ------------------------------------------------------------------------------------------------------------------------------------
Reno 200 South Virginia, Suite # 630, RENONVMP 702 786 ICB West San Jose R Y G
Reno, NV 89501
- ------------------------------------------------------------------------------------------------------------------------------------
Reston Washington Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
Richmond 727 Hospital St, Ste.1805, RCMEVAPO 804 649 ICB East Washington R R G
Richmond, VA 23221
- ------------------------------------------------------------------------------------------------------------------------------------
Sacramento 770 L Street, 7th Floor, SCRMCAWC 916 235 TBD Northwest Salinas R R G
Sacramenton, CA 95814 ----
- ------------------------------------------------------------------------------------------------------------------------------------
Salt Lake City R Y
----
-----------------------------------
San Francisco G G
----
--------------------- 770 L Street, 11th Floor Suite 1120, Sacramento, CA 95814
-----------------------------------
San Jose G G
----
-----------------------------------
Seattle R R R
- ------------------------------------------------------------------------------------------------------------------------------------
Salinas 915 G and H Harkins Road, 1st SLNSCAMD 831 757 NO West San Francisco Y G G
Floor, Salinas, CA 93901 -----------------------------------
San Jose Y G G
-----------------------------------
San Luis Obispo G G G
-----------------------------------
Seattle R R R
- ------------------------------------------------------------------------------------------------------------------------------------
Salt Lake City 155 South Regent, Suite 1560, SLKDUTOH 801 532 ICB West San Francisco R Y G
Salt Lake City, UT 84111
-----------------------------------
San Jose R Y G
-----------------------------------
Seattle R R R
- ------------------------------------------------------------------------------------------------------------------------------------
San Antonio 231 Rotary Ave, San Antonio, TX SNANTX41 210 600 ICB Southwest San Diego R G G
78225
-----------------------------------
St. Louis Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
San Diego 3180 University Ave, 6th Floor, SNDGCAZX 619 563 ICB West San Luis Obispo R G G
San Diego, CA 92104 -----------------------------------
Santa Barbara R G G
-----------------------------------
St. Louis R G G
-----------------------------------
Washington R R G
- ------------------------------------------------------------------------------------------------------------------------------------
San Francisco 60 Federal Street, Suite # 306, SNFCCATU 415 546 TBD Bay San Jose G G G
-------
San Francisco, CA 94107 -----------------------------------
San Luis Obispo Y G G
-----------------------------------
Seattle R R R
-----------------------------------
St. Louis Y G G
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
ACCESS
BACKBONE AVAILABILITY
-----------------------------------------------------------
ACCESS AVAILABILITY
- ------------------------------------------------------------------------------------------------------------------------------------
GNI POP VENDOR ADDRESS CLU NPA NXX OC12 OC3 DS3 COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portland MCI/WC 851 SW 6th Ave., 4th Floor, PTLDORKZ 503 991 N/E R G
Suite 400
- ------------------------------------------------------------------------------------------------------------------------------------
ELI 400 SW 6th, # 500 Portland, PTLDORFJ 503 221 R G G Additional Capacity 4/3/00
OR 97204
- ------------------------------------------------------------------------------------------------------------------------------------
Poughkeepsie Bell Atlantic 20 S. Hamilton St. PGHKNYSH 914 431 PEND PEND PEND 3/24/00
Poughkeepsie, NY 12601
- ------------------------------------------------------------------------------------------------------------------------------------
Raleigh Bell South 121 W. Morgan St. RLGHNCMO 919 715 G G G Additional Capacity 7/24/00
- ------------------------------------------------------------------------------------------------------------------------------------
Reno MCI/WC 200 S Virginia St, Reno, NV RENONVMP 775 332 N/E G G
89501
- ------------------------------------------------------------------------------------------------------------------------------------
Reston AOL Only
- ------------------------------------------------------------------------------------------------------------------------------------
Richmond Bell Atlantic 703 E Grace St., Richmond, VA RCMDVAGR 804 235 G G G
- ------------------------------------------------------------------------------------------------------------------------------------
Sacramento MCI/WC 2991 Gold Canal Drive RCRDCAGJ 916 463 PEND PEND PEND 4/2/00
-----------------------
-----------------------
G
- ------------------------------------------------------------------------------------------------------------------------------------
PacBell 1407 J Street SCRMCA01 916 325 PEND PEND PEND 5/30/00
G
- ------------------------------------------------------------------------------------------------------------------------------------
MCI/WC 2820 Kovr Dr. WSCRCABY 916 569 G N/E Y
G
- ------------------------------------------------------------------------------------------------------------------------------------
PacBell 770 L Street, # 1120, SCRMCAWC 916 930 N/E G G
Sacramento, CA 95814
- ------------------------------------------------------------------------------------------------------------------------------------
Salinas PacBell 340 Pajaro Street, Salinas, SLNSCA01 831 422 N/E PEND PEND 3/17/00
CA 93901 ------------------------
------------------------
------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Salt Lake City ELI 4 Triad Center, Salt Lake City, SLKCUTEV 801 532 R G G Additional Capacity 3/17/00
UT 84180
- ------------------------------------------------------------------------------------------------------------------------------------
USW 700 South State St. SLKCUTMA 801 220 PEND PEND PEND 3/20/00
----------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
San Antonio MCI/WC 700 North Saint Mary's Street, SNAOTXIR 210 369 G G G
San Antonio, TX 78205
- ------------------------------------------------------------------------------------------------------------------------------------
SBC 105 Auditorium Circle, San SNANTXCA 210 206 N/E G G
Antonio, TX 78205
- ------------------------------------------------------------------------------------------------------------------------------------
MCI/WC 10065 Barnes Canyon Rd. SNDJCADJ 619 320 PEND PEND PEND 4/27/00
- ------------------------------------------------------------------------------------------------------------------------------------
San Diego PacBell 650 Robinson, San Diego, CA SNDGCA02 619 203 N/E G G Additional Capacity 5/30/00
92103
- ------------------------------------------------------------------------------------------------------------------------------------
Nextlink 5771 Copley Drive, San Diego, SNDJCA05 619 268 N/E PEND PEND 5/29/00
CA
- ------------------------------------------------------------------------------------------------------------------------------------
San Francisco MCI/WC 444 Market St, 13 Floor, San SNFCCALW 415 284 G G G Additional Capacity 5/1/00
Francisco, CA 94111-5325 ------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ATTLS 1 Bush St, San Francisco, CA SNFCCAFJ 415 268 G G G Additional Capacity 5/15/00
94111
- ------------------------------------------------------------------------------------------------------------------------------------
PacBell 611 Folsom, Suite 306, 94105 SNFCCA21 415 203 N/E Y G
------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================
DIRECT BACKBONE - Most Popular
CONNECT City Pairs
==================
====================================================================================================================================
BACKBONE ROUTE
GNI POP ADDRESS CLLI NPA NXX INSIDE RING TO CITY OC12 OC3 DS3
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
San Jose 55 Almaden, 3rd Floor, San Jose, SNJSCAMC 408 971 TBD Bay San Luis Obispo Y G G
CA 95113 -------
----------------------------------
Seattle R R R
- -----------------------------------------------------------------------------------------------------------------------------------
San Jose 300 South 2nd Street, San Jose, SNJPCAMJ 408 277 TBD Bay San Luis Obispo Y G G
(South 2nd) CA 95113 -------
----------------------------------
Seattle R R R
- -----------------------------------------------------------------------------------------------------------------------------------
San Luis Obispo 999 Lawrence Dr., San Luis SNLOCAGX 805 597 TBD West St. Louis Y G G
Obispo, CA 93401
- -----------------------------------------------------------------------------------------------------------------------------------
Santa Barbara 27 E. Cota St., 2nd Fl., Santa SNBBCAMC 805 819 TBD West
Barbara, CA 93101
- -----------------------------------------------------------------------------------------------------------------------------------
Seattle 2001 6th Avenue, 28th Floor Suite STTLWAWB 206 770 ICB Northwest Washington R R R
2802, Seattle, WA 98121 -------
- -----------------------------------------------------------------------------------------------------------------------------------
Sterling Washington Y G G
- -----------------------------------------------------------------------------------------------------------------------------------
St. Louis 20 Ferry St., St. Louis, MO 63147 STLUMOBN 314 547 TBD Northcentral Washington R R G
-------
- -----------------------------------------------------------------------------------------------------------------------------------
Syracuse 282.93 MP 282.93 Exit 36, SYRCNYSC 315 451 TBD Northeast Washington R Y G
Syracuse, NY 13211
- -----------------------------------------------------------------------------------------------------------------------------------
Tampa 400 N. Tampa, C15 7th Floor Suite TAMQFLTA 813 226 ICB Florida Titusville Y G G
# 700, Tampa, FL 33602
-----------------------------
Washington G G G
- -----------------------------------------------------------------------------------------------------------------------------------
Topeka 100 NW Jackson St. (Corner 1st St.) TPKAKSUH TBD
(Jackson)
- -----------------------------------------------------------------------------------------------------------------------------------
Topeka 301 NW Tyler Ave, Topeka, KS TPKAKSMS 785 350 TBD Southwest
(Tyler) 66603
- -----------------------------------------------------------------------------------------------------------------------------------
Tulsa 419 E. 1st St, Tulsa, OK 74120 TULTOKEB 918 329 TBD Southwest
- -----------------------------------------------------------------------------------------------------------------------------------
Vienna Washington Y G G
- -----------------------------------------------------------------------------------------------------------------------------------
Washington DC 50 Massachusetts Avenue, WASHDCAW 202 371 ICB New England White Plains G G G
(Mass) Washington, D.C 20001
- -----------------------------------------------------------------------------------------------------------------------------------
Washington DC 400/440 North Capitol St, Floor "G" WASHDCSC 202 737 ICB New England White Plains G G G
(Capitol) Ste 150, Washington, D.C 20200
- -----------------------------------------------------------------------------------------------------------------------------------
White Plains Old Jackson Ave & Jackson Ave, WHPLNYLS 914 693 TBD New England
White Plains, NY 10601
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==================================================================================================================
ACCESS
BACKBONE AVAILABILITY
===============================================
ACCESS AVAILABILITY
====================================================================================================================================
GNI POP VENDOR ADDRESS CLLI NPA NXX OC12 OC3 DS3 COMMENTS
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
San Jose MCI/WC 55 S Market St, 11th Floor SNJSCAJN 408 975 G Y G
#1180 San Jose, CA 95113 -------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
San Jose PacBell PEND PEND PEND TBD
(South 2nd)
- -----------------------------------------------------------------------------------------------------------------------------------
MCI/WC 55 South Market St. SNJSCA02 408 975 PEND PEND PEND TBD
- -----------------------------------------------------------------------------------------------------------------------------------
Nextlink 855 Mission Court (Fremont) FRMTCAED 510 280 PEND PEND PEND TBD
- -----------------------------------------------------------------------------------------------------------------------------------
PacBell 95 Almaden Ave. SNJSCA02 408 277 PEND PEND PEND TBD
- -----------------------------------------------------------------------------------------------------------------------------------
San Luis Obispo PacBell 872 Morrow St. SNLOCA01 805 593 N/E G G
- -----------------------------------------------------------------------------------------------------------------------------------
GTENS 101 W. Cannon Perdido St. SNBBCAXF 805 417 G G G
- -----------------------------------------------------------------------------------------------------------------------------------
Seattle MCI/WC 2201 6th Avenue, 12th Floor, STTLWAKI 206 441 N/E G G
Seattle WA 98121
- ------------------------------------------------------------------------------------------------------------------------------------
ATTLS 2001 6th Avenue STTLWAWB 206 320 G G G
- ------------------------------------------------------------------------------------------------------------------------------------
Sterling AOL Only
- -----------------------------------------------------------------------------------------------------------------------------------
St. Louis SBC 1010 Pine Street, St. Louis, MO STLSMO01 314 206 R G G
63101
- -----------------------------------------------------------------------------------------------------------------------------------
ATTLS 900 Walnut St. STLSM0ZC 314 204 G G G
- ------------------------------------------------------------------------------------------------------------------------------------
Syracuse Bell Atlantic 201 S. State St., Syracuse, SYRCNYSU 318 421 PEND PEND PEND 3/24/00
NY 13202
- ------------------------------------------------------------------------------------------------------------------------------------
Tampa MCI/WC 101 East Kennedy Blvd., 11th TAMPFL57 813 652 PEND Y G Additional Capacity 3/17/00
Floor, Suite 1150
- ------------------------------------------------------------------------------------------------------------------------------------
GTENS 610 Morgan St, Tampa, FL 33602 TAMPFLXA 813 440 R G Y Additional Capacity 5/15/00
- ------------------------------------------------------------------------------------------------------------------------------------
Topeka KMC 2444 SE Lakewood Blvd. TPKAKS25 785 290 PEND PEND PEND 4/28/00
(Jackson)
- ------------------------------------------------------------------------------------------------------------------------------------
Topeka SBC 812 NW Jackson St, Topeka, KS TPKAKSCA 785 836 N/E G G
(Tyler) 66612
- ------------------------------------------------------------------------------------------------------------------------------------
Tulsa MCI/WC 100 West 5th St., Tulsa, OK TULTOKEB 518 590 N/E G G
74103
- ------------------------------------------------------------------------------------------------------------------------------------
Specific LOB Only
- ------------------------------------------------------------------------------------------------------------------------------------
Vienna MCI/WC 60 Mass, Washington, D.C 20200 WASHDCMO 202 208 Y N/E G
- ------------------------------------------------------------------------------------------------------------------------------------
Washington DC MCI/WC 60 Mass, Washington, D.C 20200 WASHDCMO 202 208 R Y G Additional Capacity 4/27/00
(Mass)
- ------------------------------------------------------------------------------------------------------------------------------------
Washington DC ATTLS 1331 F Street NW WASHDCTT 202 756 G Y G
(Capitol)
- ------------------------------------------------------------------------------------------------------------------------------------
Bell Atlantic 30 E. St. SW, WA, DC WASHDCSW 202 205 G R G Additional Capacity 4/28/00
- ------------------------------------------------------------------------------------------------------------------------------------
White Plains Bell Atlantic 111 Main St., White Plains, WHPLNYWP 914 328 PEND PEND PEND TBD
NY 10601
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
---------------------------------------------------
KEY:
---------------------------------------------------
G = Available
Y = Limited Availability
R = Not Available
N/E= Not Equipped
PEND= Access on Order
No City Pair Forecasted
Ac
COS
--------------------------------------------------
Page 12 of 12
<PAGE>
ATTACHMENT D
ORDER PROCESS FLOW
<PAGE>
[DIAGRAM APPEARS HERE]
<PAGE>
[DIAGRAM APPEARS HERE]
<PAGE>
ATTACHMENT E
ORDER FORM
<PAGE>
THE PURPOSE OF THIS CHECKLIST IS TO ENSURE YOUR ORDERS DO NOT GET
REJECTED. PLEASE COMPLETE AFTER YOU HAVE COMPLETED OTHER SECTIONS OF
THIS DATA GATHERING FORM. SALES ENGINEERS PLEASE ENTER YOU NAME AFTER
YOU HAVE VERIFIED THE REQUESTED INFORMATION
----------------------------------------------------------------------
----------------------------------------------------------------------
CHECKLIST ITEM SALES ENGINEERS NAME
----------------------------------------------------------------------
I HAVE VERIFIED EACH LOCATIONS ON-SITE PHONE
NUMBER TO ENSURE IT APPEARS AT THE LOCATION
THE CIRCUIT IS BEING INSTALLED AT
----------------------------------------------------------------------
I HAVE VERIFIED THE LOCATION OF EACH DEMARC
FOR EVERY SITE AND HAVE MADE PROVISIONS
FOR ANY NECESSARY INSIDE WIRING.
----------------------------------------------------------------------
A VISIO DRAWING COMPLETE WITH LOCATIONS
NPA/NXX, MILEAGE, AND PRODUCT TYPE/SPEED
AND OPTIONAL FEATURES.
----------------------------------------------------------------------
--------------------------------------------
THE INFORMATION REGARDING THE PROVISIONING
OPTION WILL BE PROVIDED BY THE CUSTOM SALES
GROUP.
--------------------------------------------
----------------------------------------------------------------------
IS THIS DS3/OCN ORDER TO BE PROVISIONED THRU GNI?
----------------------------------------------------------------------
Page 1 of 16 Checklist
<PAGE>
- --------------------------------------------------------------------------------
Please complete the attached form to order Private Line Service. This Form will
populate GTECC's Special Access Provisioning Forms and provide the details
necessary for the provisioning of this request.
- --------------------------------------------------------------------------------
General Information: * (Yellow) Denotes Required Information
------------------------------------------
Blue = Requested Information
------------------------------------------
Salesperson Information: Green = completed by Custom Sales
--------------------------------------------------------------------------
. Salesperson Name
--------------------------------------------------------------------------
. Sales ID
--------------------------------------------------------------------------
. Branch
--------------------------------------------------------------------------
. Phone Number
--------------------------------------------------------------------------
. Fax Number
--------------------------------------------------------------------------
Pager Number
--------------------------------------------------------------------------
. E-mail Address
--------------------------------------------------------------------------
. Billing Platform LD/Bobco
--------------------------------------------------------------------------
. Market Segment Strategic Accounts
--------------------------------------------------------------------------
. Order Initiated Date
--------------------------------------------------------------------------
Sales Engineer Information:
--------------------------------------------------------------------------
. Sales Engineer Name
--------------------------------------------------------------------------
. Phone Number
--------------------------------------------------------------------------
. Fax Number
--------------------------------------------------------------------------
Pager Number
--------------------------------------------------------------------------
. E-mail Address
--------------------------------------------------------------------------
Operations/Sales Manager Information:
--------------------------------------------------------------------------
. Operations Manager Name
--------------------------------------------------------------------------
. Phone Number
--------------------------------------------------------------------------
. Fax Number
--------------------------------------------------------------------------
Pager Number
--------------------------------------------------------------------------
. E-mail Address
--------------------------------------------------------------------------
Customer Contact Information:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
. Customer Contact Name
--------------------------------------------------------------------------
. Phone Number
--------------------------------------------------------------------------
Fax Number
--------------------------------------------------------------------------
Pager Number
--------------------------------------------------------------------------
E-Mail Address
--------------------------------------------------------------------------
Customer Account Information:
--------------------------------------------------------------------------
. Legal Business Name
--------------------------------------------------------------------------
GTECC Customer Account #
--------------------------------------------------------------------------
Project Name/ID
--------------------------------------------------------------------------
ICB Tracking Number (Required)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
. Select Order Type New Order
--------------------------------------------------------------------------
For Cancellations, Disconnects,
Supplements and Changes Identify
--------------------------------------------------------------------------
attachment e Page 2 of 16 Customer Information
<PAGE>
<TABLE>
<S> <C>
GTECC DSOC Coordinator (e-mail)
----------------------------------------------------------------------------------------------
GTECC PON# (Customer Order #)
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
. Select Access Arrangement Full Service
----------------------------------------------------------------------------------------------
. Select Pricing Method ICB Pricing
----------------------------------------------------------------------------------------------
. Custom Sales Number (Required)
----------------------------------------------------------------------------------------------
. Select a Billing Option Option 1 - 1 Invoice/1 Billing Address
----------------------------------------------------------------------------------------------
Select a SIC Code 99 - Other
----------------------------------------------------------------------------------------------
. Select an Ownership Type: Corporation
----------------------------------------------------------------------------------------------
If Ownership Type is Corporation, answer the following:
----------------------------------------------------------------------------------------------
. Provide Corporate Tax ID
----------------------------------------------------------------------------------------------
Provide President's Name
----------------------------------------------------------------------------------------------
Identify State of Incorporation:
----------------------------------------------------------------------------------------------
If Ownership Type is Partnership or Sole Proprietor provide ownership information:
--------------------------------------------------------------------------------------------------
First Name Last Name Social Security Number
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
. Is Customer Tax Exempt? (Y=Yes, N=No)
----------------------------------------------------------------------------------------------
If "YES" fax a copy of the Federal, State and/or Local Tax exempt certificates to (972) 874-4097
Main Billing Address:
--------------------------------------------------------------------------------------------------
. Dept. or individual to receive bill -
----------------------------------------------------------------------------------------------
. Company Name -
----------------------------------------------------------------------------------------------
. Street Address -
----------------------------------------------------------------------------------------------
. Suite -
----------------------------------------------------------------------------------------------
. City -
----------------------------------------------------------------------------------------------
. County -
----------------------------------------------------------------------------------------------
. State -
----------------------------------------------------------------------------------------------
. Zip Code -
----------------------------------------------------------------------------------------------
Mail Code -
----------------------------------------------------------------------------------------------
Bill Contact Information:
----------------------------------------------------------------------------------------------
. Bill Contact Name -
----------------------------------------------------------------------------------------------
. Bill Contact Phone -
----------------------------------------------------------------------------------------------
Bill Contact E-Mail Address -
----------------------------------------------------------------------------------------------
Federal Universal Service Fund Information:
----------------------------------------------------------------------------------------------
. USF qualified discount? (Y/N) [_]Qualified for USF Discount
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Billing Remarks
----------------------------------------------------------------------------------------------
Provide any comments necessary to
order will be billed properly.
(You can type up to 75 characters per line)
----------------------------------------------------------------------------------------------
</TABLE>
attachment e Page 3 of 16 Customer Information
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Circu
Location Specific Information: Location A
-------------------------------------------------------------------------------------
<S> <C>
. NPA/NXX
-------------------------------------------------------------------------------------
. LATA
-------------------------------------------------------------------------------------
Local Access Provider, expected or current
-------------------------------------------------------------------------------------
Serving Wire Center CLLI
-------------------------------------------------------------------------------------
. ACTL CLLI
-------------------------------------------------------------------------------------
Baseline/Coordinated Service, provide CFA
-------------------------------------------------------------------------------------
. Demarc New or Existing?
-------------------------------------------------------------------------------------
List Carrier & Ckt ID, if existing
-------------------------------------------------------------------------------------
D1 Customer Profile #:
-------------------------------------------------------------------------------------
D1 Work Order Number
-------------------------------------------------------------------------------------
. Customer Requested Due Date
-------------------------------------------------------------------------------------
. Expedite Circuit Approved (Y/N)
-------------------------------------------------------------------------------------
Is Conversion Required? N/A
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Location Address:
-------------------------------------------------------------------------------------
. Local Business Name
-------------------------------------------------------------------------------------
. Street Address
-------------------------------------------------------------------------------------
. Building Name
-------------------------------------------------------------------------------------
. Room/Suite
-------------------------------------------------------------------------------------
. City
-------------------------------------------------------------------------------------
. State
-------------------------------------------------------------------------------------
. Postal ZIP Code
-------------------------------------------------------------------------------------
. Is inside wiring in place? (Y)es or (N)o
-------------------------------------------------------------------------------------
If No, who will complete inside wiring?
-------------------------------------------------------------------------------------
Completion Date for inside wiring.
-------------------------------------------------------------------------------------
Exact Location where circuit will be
terminated, if different from above:( Floor, ----------------------------------------
Suite, and Room)
-------------------------------------------------------------------------------------
Local Customer Contact Information
-------------------------------------------------------------------------------------
. Primary Local Contact Name
-------------------------------------------------------------------------------------
. Primary Local Contact Telephone #
-------------------------------------------------------------------------------------
. Is local contact on site? (Yes/No)
-------------------------------------------------------------------------------------
. On-Site Contact Name
-------------------------------------------------------------------------------------
. On-Site Contact Telephone #
-------------------------------------------------------------------------------------
. Technical Repair Contact Name
-------------------------------------------------------------------------------------
. Technical Repair Contact Telephone #
-------------------------------------------------------------------------------------
. Outage Contact Name
-------------------------------------------------------------------------------------
. Outage Contact Telephone #
-------------------------------------------------------------------------------------
. Outage Contact Pager #
-------------------------------------------------------------------------------------
. Outage Contact Fax #
-------------------------------------------------------------------------------------
Access Information:
-------------------------------------------------------------------------------------
. Access Hours (e.g. 8-5)
-------------------------------------------------------------------------------------
. Access Days (e.g. M-F)
-------------------------------------------------------------------------------------
. Customer Escort Required? (Yes/No)
-------------------------------------------------------------------------------------
Escort Name (If Required)
-------------------------------------------------------------------------------------
Escort Phone Number (If Required)
-------------------------------------------------------------------------------------
Equipment Information
-------------------------------------------------------------------------------------
. Was CPE sold by GTECC? (Y/N)
-------------------------------------------------------------------------------------
. CPE Equipment Type
-------------------------------------------------------------------------------------
CPE Contact Name/Telephone Number
-------------------------------------------------------------------------------------
CPE Manufacturer and Model Number
-------------------------------------------------------------------------------------
Software Release #
-------------------------------------------------------------------------------------
CPE Delivery Date
-------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Circu
Location Specific Information: Location A
--------------------------------------------------------------------------------------------------------------
<S> <C>
Maintenance Contract Information
--------------------------------------------------------------------------------------------------------------
. Customer has GTEC Maintenance Contract GTECC Maintained
--------------------------------------------------------------------------------------------------------------
Enter Contract Expiration Date
--------------------------------------------------------------------------------------------------------------
Enter Coverage Hours
--------------------------------------------------------------------------------------------------------------
Enter Contractual Agreements
--------------------------------------------------------------------------------------------------------------
Site Survey Information
--------------------------------------------------------------------------------------------------------------
. AC Power Available? - (Y-Yes, N-No)
--------------------------------------------------------------------------------------------------------------
. Conduit Available? - (Y-Yes, N-No)
--------------------------------------------------------------------------------------------------------------
. Backboard? - (Y-Yes, N-No)
--------------------------------------------------------------------------------------------------------------
Circuit Information
--------------------------------------------------------------------------------------------------------------
. Circuit Type DS3
--------------------------------------------------------------------------------------------------------------
. Circuit Speed
--------------------------------------------------------------------------------------------------------------
. Line Framing NA
--------------------------------------------------------------------------------------------------------------
. Line Coding B3zs
--------------------------------------------------------------------------------------------------------------
. Timing Source Carrier Provided
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
. Circuit Termination Type RJ48S
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
. DS3 Electrical or Optical Interface Optical
--------------------------------------------------------------------------------------------------------------
Optional Services
--------------------------------------------------------------------------------------------------------------
Co-Location Requested Not Applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Central Office Cross Connection Required Central Office Cross Connection Not Required
--------------------------------------------------------------------------------------------------------------
Central Office Bridging Requirements Central Office Bridging Not Required
--------------------------------------------------------------------------------------------------------------
Diverse Routing Diversity Not Required
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Secondary Channel Secondary Channel Not Required
--------------------------------------------------------------------------------------------------------------
Central Office Terminal Central Office Terminal Required
--------------------------------------------------------------------------------------------------------------
Automatic Protection Switch Automatic Protection Switch Not Required
--------------------------------------------------------------------------------------------------------------
Other Related Information (External)
--------------------------------------------------------------------------------------------------------------
Related Purchase Order Number (RPON)
--------------------------------------------------------------------------------------------------------------
Related Circuit Number
--------------------------------------------------------------------------------------------------------------
Specify Carrier or Provider
-------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------
Circuit #1 Circuit #2 Circuit #3
<S> <C> <C> <C>
"A" Location
-----------------------------------------------------------------------------------------------------
NPA/NXX
-----------------------------------------------------------------------------------------------------
Private Line Product DS3 DS3 DS3
-----------------------------------------------------------------------------------------------------
Circuit Speed
-----------------------------------------------------------------------------------------------------
Term 1 Year 1 Year 1 Year
-----------------------------------------------------------------------------------------------------
Monthly Recurring Charges
-----------------------------------------------------------------------------------------------------
Local Access
-----------------------------------------------------------------------------------------------------
COC
-----------------------------------------------------------------------------------------------------
ACF
-----------------------------------------------------------------------------------------------------
Co-Location
=====================================================================================================
Total Location A Monthly Recurring Charges
=====================================================================================================
-----------------------------------------------------------------------------------------------------
Installation Charges (NRC)
-----------------------------------------------------------------------------------------------------
Local Access
-----------------------------------------------------------------------------------------------------
COC
-----------------------------------------------------------------------------------------------------
ACF
-----------------------------------------------------------------------------------------------------
Co-Location
=====================================================================================================
Subtotal Location A Nonrecurring Charges
=====================================================================================================
"Z" Location
-----------------------------------------------------------------------------------------------------
NPA/NXX
-----------------------------------------------------------------------------------------------------
Private Line Product DS3 DS3 DS3
-----------------------------------------------------------------------------------------------------
Circuit Speed
-----------------------------------------------------------------------------------------------------
Term M-M M-M M-M
-----------------------------------------------------------------------------------------------------
Monthly Recurring Charges
-----------------------------------------------------------------------------------------------------
Local Access
-----------------------------------------------------------------------------------------------------
COC
-----------------------------------------------------------------------------------------------------
ACF
-----------------------------------------------------------------------------------------------------
Co-Location
=====================================================================================================
Total Location Z Monthly Recurring Charges
=====================================================================================================
-----------------------------------------------------------------------------------------------------
Installation Charges (NRC)
-----------------------------------------------------------------------------------------------------
Local Access
-----------------------------------------------------------------------------------------------------
COC
-----------------------------------------------------------------------------------------------------
ACF
-----------------------------------------------------------------------------------------------------
Co-Location
=====================================================================================================
Subtotal Locaton Z Nonrecurring Charges
=====================================================================================================
Inter-Office Channel
-----------------------------------------------------------------------------------------------------
Interoffice Channel Mileage
-----------------------------------------------------------------------------------------------------
Monthly Charges
-----------------------------------------------------------------------------------------------------
Flat
-----------------------------------------------------------------------------------------------------
Mileage
-----------------------------------------------------------------------------------------------------
=====================================================================================================
Subtotal Inter-Office Monthly Charges
=====================================================================================================
-----------------------------------------------------------------------------------------------------
Installation Charges
-----------------------------------------------------------------------------------------------------
IOC Installation
-----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------
Circuit #1 Circuit #2 Circuit #3
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
=====================================================================================================
Subtotal Inter-Office Installation Charges
=====================================================================================================
Optional Features
-----------------------------------------------------------------------------------------------------
Monthly Recurring Charges
-----------------------------------------------------------------------------------------------------
Central Office Terminal
-----------------------------------------------------------------------------------------------------
Cross-Connect
-----------------------------------------------------------------------------------------------------
Automatic Protection Switch
-----------------------------------------------------------------------------------------------------
Clear Channel
-----------------------------------------------------------------------------------------------------
Multiplexing
-----------------------------------------------------------------------------------------------------
Diversity
-----------------------------------------------------------------------------------------------------
=====================================================================================================
Subtotal Monthly Optional Features
=====================================================================================================
-----------------------------------------------------------------------------------------------------
Installation Charges
-----------------------------------------------------------------------------------------------------
Central Office Terminal
-----------------------------------------------------------------------------------------------------
Cross-Connect
-----------------------------------------------------------------------------------------------------
Automatic Protection Switch
-----------------------------------------------------------------------------------------------------
Clear Channel
-----------------------------------------------------------------------------------------------------
Multiplexing
-----------------------------------------------------------------------------------------------------
Diversity
-----------------------------------------------------------------------------------------------------
=====================================================================================================
Subtotal Optional Features Installation
=====================================================================================================
Miscellaneous
-----------------------------------------------------------------------------------------------------
Non-recurring Charges
-----------------------------------------------------------------------------------------------------
Service Connection
-----------------------------------------------------------------------------------------------------
Design Change
-----------------------------------------------------------------------------------------------------
Subsequent Order
-----------------------------------------------------------------------------------------------------
Service Order Initial
=====================================================================================================
Subtotal Misc Non-recurring Charges
=====================================================================================================
Circuit Totals
-----------------------------------------------------------------------------------------------------
Total Monthly Charges
-----------------------------------------------------------------------------------------------------
Total Installation/Non-recurring Charges
-----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------
Circuit #4 Circuit #5 Circuit #6
<S> <C> <C> <C>
"A" Location
-----------------------------------------------------------------------------------------------------------
NPA/NXX
-----------------------------------------------------------------------------------------------------------
Private Line Product DS3 DS3 DS3
-----------------------------------------------------------------------------------------------------------
Circuit Speed
-----------------------------------------------------------------------------------------------------------
Term 1 Year 1 Year 1 Year
-----------------------------------------------------------------------------------------------------------
Monthly Recurring Charges
-----------------------------------------------------------------------------------------------------------
Local Access
-----------------------------------------------------------------------------------------------------------
COC
-----------------------------------------------------------------------------------------------------------
ACF
-----------------------------------------------------------------------------------------------------------
Co-Location
===========================================================================================================
Total Location A Monthly Recurring Charges
===========================================================================================================
-----------------------------------------------------------------------------------------------------------
Installation Charges (NRC)
-----------------------------------------------------------------------------------------------------------
Local Access
-----------------------------------------------------------------------------------------------------------
COC
-----------------------------------------------------------------------------------------------------------
ACF
-----------------------------------------------------------------------------------------------------------
Co-Location
===========================================================================================================
Subtotal Location A Nonrecurring Charges
===========================================================================================================
"Z" Location
-----------------------------------------------------------------------------------------------------------
NPA/NXX
-----------------------------------------------------------------------------------------------------------
Private Line Product DS3 DS3 DS3
-----------------------------------------------------------------------------------------------------------
Circuit Speed
-----------------------------------------------------------------------------------------------------------
Term M-M M-M M-M
-----------------------------------------------------------------------------------------------------------
Monthly Recurring Charges
-----------------------------------------------------------------------------------------------------------
Local Access
-----------------------------------------------------------------------------------------------------------
COC
-----------------------------------------------------------------------------------------------------------
ACF
-----------------------------------------------------------------------------------------------------------
Co-Location
===========================================================================================================
Total Location Z Monthly Recurring
Charges
===========================================================================================================
-----------------------------------------------------------------------------------------------------------
Installation Charges (NRC)
-----------------------------------------------------------------------------------------------------------
Local Access
-----------------------------------------------------------------------------------------------------------
COC
-----------------------------------------------------------------------------------------------------------
ACF
-----------------------------------------------------------------------------------------------------------
Co-Location
===========================================================================================================
Subtotal Location Z Nonrecurring
Charges
===========================================================================================================
Inter-Office Channel
-----------------------------------------------------------------------------------------------------------
Interoffice Channel Mileage
-----------------------------------------------------------------------------------------------------------
Monthly Charges
-----------------------------------------------------------------------------------------------------------
Flat
-----------------------------------------------------------------------------------------------------------
Mileage
-----------------------------------------------------------------------------------------------------------
===========================================================================================================
Subtotal Inter-Office Monthly Charges
===========================================================================================================
-----------------------------------------------------------------------------------------------------------
Installation Charges
-----------------------------------------------------------------------------------------------------------
IOC Installation
-----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------
Circuit #4 Circuit #5 Circuit #6
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------
==============================================================================================
Subtotal Inter-Office Installation
Charges
==============================================================================================
Optional Features
----------------------------------------------------------------------------------------------
Monthly Recurring Charges
----------------------------------------------------------------------------------------------
Central Office Terminal
----------------------------------------------------------------------------------------------
Cross-Connect
----------------------------------------------------------------------------------------------
Automatic Protection Switch
----------------------------------------------------------------------------------------------
Clear Channel
----------------------------------------------------------------------------------------------
Multiplexing
----------------------------------------------------------------------------------------------
Diversity
----------------------------------------------------------------------------------------------
==============================================================================================
Subtotal Monthly Optional Features
==============================================================================================
----------------------------------------------------------------------------------------------
Installation Charges
----------------------------------------------------------------------------------------------
Central Office Terminal
----------------------------------------------------------------------------------------------
Cross-Connect
----------------------------------------------------------------------------------------------
Automatic Protection Switch
----------------------------------------------------------------------------------------------
Clear Channel
----------------------------------------------------------------------------------------------
Multiplexing
----------------------------------------------------------------------------------------------
Diversity
----------------------------------------------------------------------------------------------
==============================================================================================
Subtotal Optional Features Installation
==============================================================================================
Miscellaneous
----------------------------------------------------------------------------------------------
Non-recurring Charges
----------------------------------------------------------------------------------------------
Service Connection
----------------------------------------------------------------------------------------------
Design Change
----------------------------------------------------------------------------------------------
Subsequent Order
----------------------------------------------------------------------------------------------
Service Order Initial
==============================================================================================
Subtotal Misc Non-recurring Charges
==============================================================================================
Circuit Totals
----------------------------------------------------------------------------------------------
Total Monthly Charges
----------------------------------------------------------------------------------------------
Total Installation/Non-recurring Charges
----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
----------------
Circuit #7
"A" Location
----------------------------------------------------------------------------
<S> <C>
NPA/NXX
----------------------------------------------------------------------------
Private Line Product DS3
----------------------------------------------------------------------------
Circuit Speed
----------------------------------------------------------------------------
Term 1 Year
----------------------------------------------------------------------------
Monthly Recurring Charges
----------------------------------------------------------------------------
Local Access
----------------------------------------------------------------------------
COC
----------------------------------------------------------------------------
ACF
----------------------------------------------------------------------------
Co-Location
============================================================================
Total Location A Monthly Recurring Charges
============================================================================
----------------------------------------------------------------------------
Installation Charges (NRC)
----------------------------------------------------------------------------
Local Access
----------------------------------------------------------------------------
COC
----------------------------------------------------------------------------
ACF
----------------------------------------------------------------------------
Co-Location
============================================================================
Subtotal Location A Nonrecurring Charges
============================================================================
"Z" Location
----------------------------------------------------------------------------
NPA/NXX
----------------------------------------------------------------------------
Private Line Product DS3
----------------------------------------------------------------------------
Circuit Speed
----------------------------------------------------------------------------
Term M-M
----------------------------------------------------------------------------
Monthly Recurring Charges
----------------------------------------------------------------------------
Local Access
----------------------------------------------------------------------------
COC
----------------------------------------------------------------------------
ACF
----------------------------------------------------------------------------
Co-Location
----------------------------------------------------------------------------
Total Location Z Monthly Recurring Charges
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Installation Charges (NRC)
----------------------------------------------------------------------------
Local Access
----------------------------------------------------------------------------
COC
----------------------------------------------------------------------------
ACF
----------------------------------------------------------------------------
Co-Location
============================================================================
Subtotal Location Z Nonrecurring Charges
============================================================================
Inter-Office Channel
----------------------------------------------------------------------------
Interoffice Channel Mileage
----------------------------------------------------------------------------
Monthly Charges
----------------------------------------------------------------------------
Flat
----------------------------------------------------------------------------
Mileage
============================================================================
Subtotal Inter-Office Monthly Charges
============================================================================
----------------------------------------------------------------------------
Installation Charges
----------------------------------------------------------------------------
IOC Installation
----------------------------------------------------------------------------
</TABLE>
<PAGE>
----------------
Circuit #7
-------------------------------------------------------------------
===================================================================
Subtotal Inter-Office Installation Charges
===================================================================
Optional Features
-------------------------------------------------------------------
Monthly Recurring Charges
-------------------------------------------------------------------
Central Office Terminal
-------------------------------------------------------------------
Cross-Connect
-------------------------------------------------------------------
Automatic Protection Switch
-------------------------------------------------------------------
Clear Channel
-------------------------------------------------------------------
Multiplexing
-------------------------------------------------------------------
Diversity
-------------------------------------------------------------------
===================================================================
Subtotal Monthly Optional Features
===================================================================
-------------------------------------------------------------------
Installation Charges
-------------------------------------------------------------------
Central Office Terminal
-------------------------------------------------------------------
Cross-Connect
-------------------------------------------------------------------
Automatic Protection Switch
-------------------------------------------------------------------
Clear Channel
-------------------------------------------------------------------
Multiplexing
-------------------------------------------------------------------
Diversity
-------------------------------------------------------------------
-------------------------------------------------------------------
Subtotal Optional Features Installation
===================================================================
Miscellaneous
-------------------------------------------------------------------
Non-recurring Charges
-------------------------------------------------------------------
Service Connection
-------------------------------------------------------------------
Design Change
-------------------------------------------------------------------
Subsequent Order
-------------------------------------------------------------------
Service Order Initial
===================================================================
Subtotal Misc Non-recurring Charges
===================================================================
Circuit Totals
-------------------------------------------------------------------
Total Monthly Charges
-------------------------------------------------------------------
Total Installation/Non-recurring Charges
-------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------
Location Specific Information: Location 1
--------------------------------------------------------------------------------------------------
<S> <C>
. NPA/NXX
--------------------------------------------------------------------------------------------------
. LATA
--------------------------------------------------------------------------------------------------
Local Access Provider, expected or current
--------------------------------------------------------------------------------------------------
Serving Wire Center CLLI
--------------------------------------------------------------------------------------------------
. ACTL CLLI
--------------------------------------------------------------------------------------------------
Baseline/Coordinated Service, provide CFA
--------------------------------------------------------------------------------------------------
. Demarc New or Existing?
--------------------------------------------------------------------------------------------------
List Carrier & Ckt ID, if existing
--------------------------------------------------------------------------------------------------
D1 Customer Profile #:
--------------------------------------------------------------------------------------------------
D1 Work Order Number
--------------------------------------------------------------------------------------------------
. Customer Requested Due Date
--------------------------------------------------------------------------------------------------
. Expedite Circuit Approved (Y/N)
--------------------------------------------------------------------------------------------------
Is Conversion Required? N/A
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Location Address:
--------------------------------------------------------------------------------------------------
. Local Business Name
--------------------------------------------------------------------------------------------------
. Street Address
--------------------------------------------------------------------------------------------------
. Building Name
--------------------------------------------------------------------------------------------------
. Room/Suite
--------------------------------------------------------------------------------------------------
. City
--------------------------------------------------------------------------------------------------
. State
--------------------------------------------------------------------------------------------------
. Postal ZIP Code
--------------------------------------------------------------------------------------------------
. Is inside wiring in place? (Y)es or (N)o
--------------------------------------------------------------------------------------------------
If No, who will complete inside wiring?
--------------------------------------------------------------------------------------------------
Completion Date for inside wiring.
--------------------------------------------------------------------------------------------------
. Exact Location where circuit will be
terminated including Floor, Suite, and ----------------------------------------------------------
Room
--------------------------------------------------------------------------------------------------
Local Customer Contact Information
--------------------------------------------------------------------------------------------------
. Primary Local Contact Name
--------------------------------------------------------------------------------------------------
. Primary Local Contact Telephone #
--------------------------------------------------------------------------------------------------
. Is local contact on site? (Yes/No)
--------------------------------------------------------------------------------------------------
. On-Site Contact Name
--------------------------------------------------------------------------------------------------
. On-Site Contact Telephone #
--------------------------------------------------------------------------------------------------
. Technical / Repair Contact Name
--------------------------------------------------------------------------------------------------
. Technical / Repair Contact Telephone #
--------------------------------------------------------------------------------------------------
. Outage Contact Name
--------------------------------------------------------------------------------------------------
. Outage Contact Telephone #
--------------------------------------------------------------------------------------------------
. Outage Contact Pager #
--------------------------------------------------------------------------------------------------
. Outage Contact Fax #
--------------------------------------------------------------------------------------------------
Access Information:
--------------------------------------------------------------------------------------------------
. Access Hours (e.g. 8-5)
--------------------------------------------------------------------------------------------------
. Access Days (e.g. M-F)
--------------------------------------------------------------------------------------------------
. Customer Escort Required? (Yes/No)
--------------------------------------------------------------------------------------------------
. Escort Name (If Required)
--------------------------------------------------------------------------------------------------
. Escort Phone Number (If Required)
--------------------------------------------------------------------------------------------------
Equipment Information
--------------------------------------------------------------------------------------------------
. Was CPE sold by GTECC? (Y/N)
--------------------------------------------------------------------------------------------------
. CPE Equipment Type
--------------------------------------------------------------------------------------------------
CPE Contact Name/Telephone Number
--------------------------------------------------------------------------------------------------
CPE Manufacturer and Model Number
--------------------------------------------------------------------------------------------------
Software Release #
--------------------------------------------------------------------------------------------------
CPE Delivery Date
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------
Location Specific Information: Location 1
--------------------------------------------------------------------------------------------------
<S> <C>
Maintentance Contract Information
--------------------------------------------------------------------------------------------------
. Customer has GTEC Maintenance Contract GTECC Maintained
--------------------------------------------------------------------------------------------------
Enter Contract Expiration Date
--------------------------------------------------------------------------------------------------
Enter Coverage Hours
--------------------------------------------------------------------------------------------------
Enter Contractual Agreements
--------------------------------------------------------------------------------------------------
Site Survey Information
--------------------------------------------------------------------------------------------------
. AC Power Available? - (Y-Yes, N-No)
--------------------------------------------------------------------------------------------------
. Conduit Available? - (Y-Yes, N-No)
--------------------------------------------------------------------------------------------------
. Backboard? - (Y-Yes, N-No)
--------------------------------------------------------------------------------------------------
Circuit Information
--------------------------------------------------------------------------------------------------
. Line Framing NA
--------------------------------------------------------------------------------------------------
. Line Coding B3ZS
--------------------------------------------------------------------------------------------------
. Timing Source Carrier Provided
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
. Circuit Termination Type RJ48S
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Electrical or Optical Interface Optical
--------------------------------------------------------------------------------------------------
Optional Services
--------------------------------------------------------------------------------------------------
Multiplexing Requirements Not Applicable
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Central Office Cross Connection Required Central Office Cross Connection Not Required
--------------------------------------------------------------------------------------------------
Central Office Bridging Requirements Central Office Bridging Not Required
--------------------------------------------------------------------------------------------------
Diverse Routing Diversity Not Required
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
If OCN, is this SONET or Linear
--------------------------------------------------------------------------------------------------
Secondary Channel Secondary Channel Not Required
--------------------------------------------------------------------------------------------------
Central Office Terminal Central Office Terminal Required
--------------------------------------------------------------------------------------------------
Automatic Protection Switch Automatic Protection Switch Not Required
--------------------------------------------------------------------------------------------------
Other Related Information (External)
--------------------------------------------------------------------------------------------------
. Related Purchase Order Number (RPON)
--------------------------------------------------------------------------------------------------
. Related Circuit Number
--------------------------------------------------------------------------------------------------
. Specify Carrier or Provider
--------------------------------------------
SITE SPECIFIC REMARKS SITE SPECIFIC REMARKS
-------------------------------------------------------
</TABLE>
<PAGE>
--------
Port Discount (%)
--------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Loc # NPA/NXX Ckt ID (if existing) QTY Port MRC NRC Access MRC NRC Term Total MRC Total NRC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
2 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
3 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
4 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
7 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
8 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
9 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
11 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
12 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
13 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
14 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
15 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
16 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
17 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
18 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
19 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
20 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
21 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
22 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
23 1 N/A $ - $ - N/A $ - $ - M-M $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CONFIDENTIAL INFORMATION-SUBJECT TO PROTECTIVE ORDER
IN CC Docket No.98-184 before the Federal Communications Commission
COPYING PROHIBITED Ckt Design-ATM
<PAGE>
ATM - PVC Mapping and Configuration
================================================================================
*Note* -A key element to remember when requesting ATM-PVCs. With GNI each PVC is
uni-directional. If your customer requires a bi-directional PVC from one
location to another, you will need to enter an order for 2 PVCs; one for each
direction. When you enter the PVC # use a Number/Letter combination to relate
them (ex. 1A and 1B, 2A and 2B, 3A and 3B, etc.)
================================================================================
Sales Quote Number:
<TABLE>
<CAPTION>
---------
PVC Discount (%)
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Quality of
PVC # Charge From To Loc QTY PVC Type Service (PVC CIR (Speed Total MRC Total NRC
to Loc # Loc # From City,State # To City,State Scope Mbps
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
1 PVPC CBR $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
*Note for Provisioning* - If the PVC starts with the same number and has a
different letter following it, then this will indicate a bi-directional PVC is
being ordered ( ex 1A and 1B), you will select "Bi-Directional" option in the
Circuit Part field on NOMES Circuit Screen; Otherwise use "Uni-Directional".
- --------------------------------------------------------------------------------
PVC-ATM
<PAGE>
Miscellaneous Charges
<TABLE>
<CAPTION>
-------- ------------ --------- ------------
Location #: NPA/NXX Location #: NPA/NXX
- ------------------------------------------------- -------------------------------------------------
Charge QTY Total NRC Total MRC Charge QTY Total NRC Total MRC
- ------------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <S> <C> <C> <C>
Order Charge N/C N/C Order Charge N/C N/C
- ------------------------------------------------- -------------------------------------------------
Subsequent Activity Subsequent Activity
Charge N/C N/C Charge N/C N/C
- ------------------------------------------------- -------------------------------------------------
Cancellation Charge N/C N/C Cancellation Charge N/C N/C
- ------------------------------------------------- -------------------------------------------------
Expedite Charge N/C N/C Expedite Charge N/C N/C
- ------------------------------------------------- -------------------------------------------------
Design Change Charge N/C N/C Design Change Charge N/C N/C
- ------------------------------------------------- -------------------------------------------------
Delete Order Charge N/C N/C Delete Order Charge N/C N/C
- ------------------------------------------------- -------------------------------------------------
Transfer of Service Transfer of Service
Charge N/C N/C Charge N/C N/C
- ------------------------------------------------- -------------------------------------------------
-------- ----------- --------- ---------------
Location #: NPA/NXX Location #: NPA/NXX
- ------------------------------------------------- ---------------------------------------------------
Charge QTY Total NRC Total MRC Charge QTY Total NRC Total MRC
- ------------------------------------------------- ---------------------------------------------------
Order Charge N/C N/C Order Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
Subsequent Activity Subsequent Activity
Charge N/C N/C Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
Cancellation Charge N/C N/C Cancellation Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
Expedite Charge N/C N/C Expedite Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
Design Change Charge N/C N/C Design Change Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
Delete Order Charge N/C N/C Delete Order Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
Transfer of Service Transfer of Service
Charge N/C N/C Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
-------- ----------- ------- ------------
Location #: NPA/NXX Location #: NPA/NXX
- ------------------------------------------------- ---------------------------------------------------
Charge QTY Total NRC Total MRC Charge QTY Total NRC Total MRC
- ------------------------------------------------- ---------------------------------------------------
Order Charge N/C N/C Order Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
Subsequent Activity Subsequent Activity
Charge N/C N/C Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
Cancellation Charge N/C N/C Cancellation Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
Expedite Charge N/C N/C Expedite Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
Design Change Charge N/C N/C Design Change Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
Delete Order Charge N/C N/C Delete Order Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
Transfer of Service Transfer of Service
Charge N/C N/C Charge N/C N/C
- ------------------------------------------------- ---------------------------------------------------
</TABLE>
<PAGE>
ATTACHMENT F
EXPEDITE PROCESS
STEP 1: IF BELL ATLANTIC REQUIRES A SERVICE INTERVAL OF LESS THAN THE STANDARD
INTERVAL IN THE SERVICE SCHEDULE, BELL ATLANTIC SHALL COMPLETE THE ATTACHED
EXPEDITE REQUEST FORM (ERF) AS MAY BE MODIFIED BY GENUITY FROM TIME TO TIME AND
FORWARD IT TO THE GENUITY CHANNEL MANAGER. EXPEDITES WILL NOT BE ACCEPTED FOR
AN INTERVAL OF LESS THAN TEN (10) BUSINESS DAYS FOR NEW ORDERS, AND WILL NOT BE
ACCEPTED FOR AN INTERVAL OF LESS THAN FIVE (5) BUSINESS DAYS FOR CHANGE ORDERS.
Step 2: Genuity will convey the acceptance or rejection of the request to Bell
Atlantic within three (3) business days of Genuity's receipt of Bell Atlantic's
request. If the request is accepted, the response will include Genuity's
ability to meet the expedited due date or such other date as Genuity is able to
meet. If the request is rejected, Genuity shall provide the specific reason(s)
for the rejection.
Step 3: If Bell Atlantic accepts the Genuity expedite, Bell Atlantic will notify
Genuity within one (1) business day of such acceptance and the expedite fee will
apply as follows:
Expedite Fees:
Bandwidth New Orders Change Orders
DS3 $1,000 $ 500
OC3/OC3c $1,500 $ 750
OC12/OC12c $2,500 $1,250
OC48+ $4,500 $2,500
Step 4: Bell Atlantic will place the Order with the approved expedited due date.
NOTES:
1. GENUITY WILL FULLY WAIVE THE EXPEDITE FEE TO BELL ATLANTIC IF THE APPROVED
EXPEDITED DUE DATE IS MISSED.
2. Expedite requests on any pending Order will be accepted until the FOC is
issued. If Bell Atlantic decides to expedite a pending Order, the expedite
process will take effect, rendering the previous Order null and void.
<PAGE>
Expedite Request Form
Date:____________________ Response Due On:__________________
Customer Name:___________ Sales Engineer:________________________
Service Requested:________________________________________________________
Location A: Location Z: (If Applicable)
____________________ __________________________________
____________________
Customer Desired Due Date: Approx. __________________________________
- Time period:________
Additional Information:
___________________________________________________________________________
___________________________________________________________________________
( )Accept ( ) Reject ( )Accept ( ) Reject
________________________ ________________________
Director - Product Management Director - Channel Management Date:
Date:
( )Accept ( ) Reject ( )Accept ( ) Reject
________________________ ________________________
Director- Facility Design Director-Field Operations Date:
Date:
Response (explanation for rejection):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ATTACHMENT G
Trouble Reporting
When reporting a fault to the Genuity GNOC, Bell Atlantic shall supply as much
diagnostic information as it reasonably has available. Genuity will initiate
fault reporting directly when it is reasonably able to do so.
Genuity shall utilize industry-standard fault detection tools. When a fault is
detected, such fault will be logged by Genuity GNOC staff. Genuity shall also
utilize industry standard fault management tools, and will notify Bell Atlantic
from time to time of any modification to the tools it is deploying.
The Genuity GNOC shall be responsible for resolving the fault, and shall
maintain auditable records of all such resolutions. At all stages during the
fault resolution process, the Genuity GNOC shall remain the single point of
contact for Bell Atlantic. The Genuity GNOC will provide regular status updates,
according to accepted industry standards, as a reported fault progresses toward
resolution. Genuity shall categorize all faults in accordance with the severity
levels indicated in the Severity Level Matrix below. Upon identifying a fault or
a non-conforming condition, the Genuity GNOC will categorize the incident
according to its agreed severity in accordance with the Severity Level Matrix.
Where appropriate, Bell Atlantic will consult with the Genuity GNOC as to the
potential business impact and may verbally or electronically require a
modification to the severity level accordingly.
Fault tickets shall only be closed by Genuity when Bell Atlantic has confirmed
trouble resolution. Fault summaries and Fault status will be provided to Bell
Atlantic on a daily, weekly and monthly basis by the Genuity GNOC.
Severity Level Matrix
The severity matrix below indicates the level of urgency for an event:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Level Classified Nature Interval
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0 Emergency The problem is having a major adverse effect on Telephone call
Bell Atlantic or Bell Atlantic End User(s)' notification within 15
business, preventing users from accessing the minutes of the time the
network or their target application. ticket is opened; status
will be available every 15
minutes via an ongoing
conference call hosted by
Genuity until the trouble
is resolved; Genuity GNOC
will notify Bell Atlantic
within 15 minutes after
the ticket is closed.
- --------------------------------------------------------------------------------------------------------------------
1 Critical The problem is having an adverse effect on Bell Telephone call
Atlantic or Bell Atlantic End User's/s' business, notification will occur
causing users to operate at a seriously degraded within15 minutes of the
level of function or performance time the ticket is opened;
status will be available
every 15 minutes via an
ongoing conference call
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
hosted by Genuity until
the trouble is resolved;
Genuity GNOC will notify
Bell Atlantic within 15
minutes after the ticket
is closed.
- --------------------------------------------------------------------------------------------------------------------
2 Major The problem is having little or no effect on Bell Telephone call
Atlantic or Bell Atlantic End User's/s' business, notification will occur
causing intermittent or minor operational within 15 minutes of the
inconvenience time the ticket is opened;
every four hours the
ticket is open; 30 minutes
after the ticket is closed.
- --------------------------------------------------------------------------------------------------------------------
3 Minor "Monitor" - Potential to deteriorate to higher Telephone call
level; No impact on Bell Atlantic Services. notification will occur
within 15 minutes of the
time the ticket is opened;
every eight hours the
ticket is open; one hour
after the ticket is closed.
- --------------------------------------------------------------------------------------------------------------------
4 NSA The problem is creating no operational impact on Telephone call
Bell Atlantic or the End User. notification will occur
within one hour of the
time the ticket is opened;
every twenty-four hours
the ticket is open; two
hours after the ticket is
closed.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Within ninety (90) days of Effective Date of the Agreement, the Parties will
mutually agree upon a timetable for including e-mail notification as an adjunct
to all telephone notifications.
Severity Level 0
1. Bell Atlantic will report the event to the GNOC via a toll free number at
877-483-4831.
2. GNOC will respond to trouble reporting line immediately
3. GNOC will document Bell Atlantic contact, End-User customer name and call
back number in its trouble ticketing system.
4. Bell Atlantic will provide the circuit identification number, type of
service, location(s) and nature of event information to the GNOC.
5. GNOC will validate event information with Genuity network alarms.
6. GNOC will issue trouble ticket number.
7. GNOC will record Bell Atlantic-provided Trouble Ticket number in its trouble
ticket system.
8. GNOC will establish a conference bridge and relay the conference bridge
access instructions and number to Bell Atlantic to be used for near real
time event updates.
9. GNOC will continue to provide event updates to the bridge every 15 minutes
or as new information becomes available.
10. GNOC will follow the escalation / notification matrix for severity level 0
until the event is resolved.
Severity Level 1
1. Bell Atlantic will report events to the GNOC via a toll free number at 877-
483-4831.
2. GNOC will respond to trouble reporting line immediately.
3. Bell Atlantic will provide the circuit identification number, type of
service, location(s) and nature of event information to the GNOC.
<PAGE>
4. GNOC will validate the circuit and location information with Bell Atlantic.
5. Bell Atlantic will provide a call back number if different than normal Bell
Atlantic contact number.
6. GNOC will provide trouble ticket number.
7. GNOC will record Bell Atlantic-provided Trouble Ticket number in its trouble
ticket system.
8. GNOC will provide a status on the trouble ticket to Bell Atlantic within 15
minutes of initial trouble call with a phone call. This status will include
Genuity network alarm conditions, estimated time of field resources onsite
or estimated time of restoral.
9. GNOC will follow the escalation / notification matrix for severity level 1
until the event is resolved.
Severity Level 2
10. Bell Atlantic will report events to the GNOC via a toll free number at 877-
483-4831.
11. GNOC will respond to trouble reporting line immediately.
12. Bell Atlantic will provide the circuit identification number, type of
service, location(s) and nature of event information to the GNOC.
13. GNOC will validate the circuit and location information with Bell Atlantic.
14. Bell Atlantic will provide a call back number if different than normal Bell
Atlantic contact number.
15. GNOC will provide trouble ticket number.
16. GNOC will record Bell Atlantic-provided Trouble Ticket number in its
trouble ticket system.
17. GNOC will provide a status on the trouble ticket to Bell Atlantic within 15
minutes of initial trouble call with a phone call. This status will include
Genuity network alarm conditions, estimated time of field resources onsite
or estimated time of restoral.
18. GNOC will follow the escalation / notification matrix for severity level 2
until the event is resolved.
Severity Level 3
19. Bell Atlantic will report events to the GNOC via a toll free number at 877-
483-4831.
20. GNOC will respond to trouble reporting line immediately
21. Bell Atlantic will provide the circuit identification number, type of
service, location(s) and nature of event information to the GNOC.
22. GNOC will validate the circuit and location information with Bell Atlantic.
23. Bell Atlantic will provide a call back number if different than normal Bell
Atlantic contact number.
24. GNOC will provide trouble ticket number.
25. GNOC will record Bell Atlantic-provided Trouble Ticket number in its
trouble ticket system.
26. GNOC will provide a status on the trouble ticket to Bell Atlantic within 15
minutes of initial trouble call with a phone call. This status will include
Genuity network alarm conditions, estimated time of field resources onsite
or estimated time of restoral.
27. GNOC will follow the escalation / notification matrix for severity level 3
until the event is resolved.
Severity Level 4
28. Bell Atlantic will report events to the GNOC via a toll free number at 877-
483-4831.
29. GNOC will respond to trouble reporting line immediately.
30. Bell Atlantic will provide the circuit identification number, type of
service, location(s) and nature of event information to the GNOC.
31. GNOC will validate the circuit and location information with Bell Atlantic.
32. Bell Atlantic will provide a call back number if different than normal Bell
Atlantic contact number.
33. GNOC will provide trouble ticket number.
34. GNOC will record Bell Atlantic-provided Trouble Ticket number in its
trouble ticket system.
35. GNOC will provide a status on the trouble ticket to Bell Atlantic within
one hour of initial trouble call with a phone call. This status will
include Genuity network alarm conditions, estimated time of field resources
onsite or estimated time of restoral.
36. GNOC will follow the escalation / notification matrix for severity level 4
until the event is resolved.
<PAGE>
Escalation
Escalation / Notification Matrix
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Escalation Level Severity Level 0 Severity Level 1
Events Events
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notify Engage Notify Engage
- --------------------------------------------------------------------------------
First Immediate Immediate Immediate 30 mins
- --------------------------------------------------------------------------------
Second Immediate Immediate Immediate 2 hr
- --------------------------------------------------------------------------------
Third Immediate Immediate 1 hr 4 hrs
- --------------------------------------------------------------------------------
Fourth Immediate 1 hr 2 hrs 6 hrs
- --------------------------------------------------------------------------------
Fifth Immediate 2 hrs 4 hrs 8 hrs
- --------------------------------------------------------------------------------
Sixth Immediate 4 hrs 6 hrs 10 hrs
- --------------------------------------------------------------------------------
Seventh Immediate 8 hrs 8 hrs 12 hrs
- --------------------------------------------------------------------------------
Network Executive and 4 hrs 10 hrs 12 hrs 24 hrs
Sales / Account
Executive
- --------------------------------------------------------------------------------
</TABLE>
Time frames indicated for escalation are maximum time frame guidelines beginning
at time of event identification by front line. If the amount of time between
event occurrence and event identification is excessive, the escalation
procedures should be employed sooner than specified above. Use individual
discretion and reasonable judgment to initiate the earlier escalation.
Genuity Escalation List
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Level Name/ Title Phone Pager E-mail
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SPOC 877-483-4831
972-615-XXXX
- -----------------------------------------------------------------------------------------------
First Supervisor 972-615-8589
- -----------------------------------------------------------------------------------------------
Second Steve York 972-615-8205 888-724-3632 [email protected]
GNOC Manager pin # 30628 ------------------------------
- -----------------------------------------------------------------------------------------------
Third Adam Geminden 972-791-4867 800-GTE-GRAM [email protected]
Staff Engineer - or ------------------------------
GNOC Operations 972-944-3221
- -----------------------------------------------------------------------------------------------
Fourth Jeff Finch 972-791-4804 888-670-3531 [email protected]
Manager - GNOC ------------------------------
Operations
- -----------------------------------------------------------------------------------------------
Fifth Bob Reedy 972-791-4860 888-670-3591 [email protected]
Director - ------------------------------
Operations and
Service Assurance
- -----------------------------------------------------------------------------------------------
Sixth Ron Penny 972-791-4800 800-985-3741 [email protected]
AVP - Operations ------------------------------
and Service
Delivery
- -----------------------------------------------------------------------------------------------
Seventh Steve Blumenthal 781-262-3197 800-759-8888 [email protected]
VP Pin # 1201726 ------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ATTACHMENT H
REPAIR PROCESS FLOW
<PAGE>
[DIAGRAM APPEARS HERE]
<PAGE>
ATTACHMENT I
POINTS OF CONTACT AND ESCALATION LISTS
Both Parties agree to provide Point of Contact information for the following
functional areas:
1. Service Escalation
------------------
Genuity shall provide Bell Atlantic escalation procedures for, but not limited
to, back issues, i.e. ordering, order provisioning, test and turn up, billing,
bill inquiry. Genuity shall adhere to the following notification hierarchy for
events, which require escalation:
Level One:
Bell Atlantic - Manager, Supplier Management,
Genuity - Group Manager-Channel Management.
Level Two:
Bell Atlantic - Director, Supplier Management
Genuity - VP Channel Sales
Genuity - VP Sales and Marketing
Bell Atlantic Contacts
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TBD
- ---
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Genuity Contacts
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- ------
E-mail
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Joe Testa Channel Sales 972-791-4534 888-816-6785 [email protected]
972-465-4202
- ----------------------------------------------------------------------------------------------------------------------
Art Villasana Group Manager - 972-791-4516 800-GTE-GRAM [email protected]
Channel Sales
- ----------------------------------------------------------------------------------------------------------------------
Marvin Bond Director- Sales 972-791-4540 888-944-1423 [email protected]
- ----------------------------------------------------------------------------------------------------------------------
Ralph Jordan VP - Sales 781-262-5372 N/A [email protected]
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
2. Disaster Recovery
-----------------
Genuity shall provide Bell Atlantic disaster recovery procedures and
conduct periodic testing of the procedures at times to be mutually agreed
upon by the parties.
Bell Atlantic Contacts
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TBD
- ---
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Genuity Contacts
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- ------
E-mail
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bob Reedy Director - 972-791-4860 800-GTE-GRAM [email protected]
Operations Service
Assurance
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
3. Contract Administration
-----------------------
Bell Atlantic Contacts
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
TBD
- ---
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Genuity Contacts
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peter Scantalides Director
Contract 617-873-4186 N/A [email protected]
Management
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
4. Order Entry
-----------
Bell Atlantic Contacts
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- ---------- -----
E-mail
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TBD
- ---
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Genuity Contacts
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peggy Harris Group Manager - 972-791-7444 800-GTE-GRAM [email protected]
Scheduling/Access
Projects
- ---------------------------------------------------------------------------------------------------------------
Anthony Honore' Director - Network 972-791-4983 800-GTE-GRAM [email protected]
Facility
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Design/Access
Management
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
</TABLE>
5. Repairs
-------
<TABLE>
<CAPTION>
Bell Atlantic Contacts
-----------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TBD
---
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Genuity Contacts
-----------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
-----------------------------------------------------------------------------------------------------------------
Bob Reedy Director - 972-791-4860 800-GTE-GRAM [email protected]
Operations Service e.com
Assurance
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>
6. Billing
-------
<TABLE>
<CAPTION>
Bell Atlantic Contacts
-----------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TBD
---
-----------------------------------------------------------------------------------------------------------------
Genuity Contacts
-----------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
-----------------------------------------------------------------------------------------------------------------
Lynne Goetz Billing Operations 972-791-4829 800-GTE-GRAM Lynne.Goetz@gni.
Manager 888-424-0238 gte.com
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>
7. Channel Management/Vendor Management
------------------------------------
<TABLE>
<CAPTION>
Bell Atlantic Contacts
-----------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TBD
---
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Genuity Contacts
-----------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
-----------------------------------------------------------------------------------------------------------------
Art Villasana Group Manager - 972-791-4516 800-GTE-GRAM Arthur.Villasana@
Channel Sales gni.gte.com
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>
8. New Services/Enhancements
-------------------------
<PAGE>
Bell Atlantic Contacts
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TBD
---
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Genuity Contacts
-----------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
------------------------------------------------------------------------------------------------------------------
Jeff Sherman Group Manager - 972-791-4526 800-GTE-GRAM Jeff.Sherman@gni.
Product Marketing gte.com
Management
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
</TABLE>
9. Forecasts
---------
<TABLE>
<CAPTION>
Bell Atlantic Contacts
-----------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TBD
---
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Genuity Contacts
-----------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
-----------------------------------------------------------------------------------------------------------------
Art Villasana Group Manager - 972-791-4516 800-GTE-GRAM Arthur.Villasana@
Channel Sales gni.gte.com
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>
10. Presales Support
----------------
<TABLE>
<CAPTION>
Bell Atlantic Contacts
-----------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TBD
---
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Genuity Contacts
-----------------------------------------------------------------------------------------------------------------
Name Title Telephone Pager
----- --------- -----
E-mail
-----------------------------------------------------------------------------------------------------------------
Art Villasana Group Manager - 972-791-4516 800-GTE-GRAM Arthur.Villasana@
Channel Sales gni.gte.com
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ATTACHMENT J
NETWORK MANAGEMENT SYSTEM ATM REQUIREMENTS
<PAGE>
<TABLE>
<CAPTION>
GNI OSS Architecture Attachment J
ATM Network Management Requirements
Version 1.0 [LOGO]
Bell Atlantic Global Networks, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Service Information.
- ------------------------------------------------------------------------------------------------------------------------------------
. Service Order Information
. Service Availability
. MTTR
- ------------------------------------------------------------------------------------------------------------------------------------
Basic Configuration:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Switch Information
- ------------------ ----------------
Switch Name Physical Port
----------------
Switch Location Port Type
Bandwidth
Port Name
-----------------
Slot ID Logical Ports
Port ID (UNI, NNIs)
-----------------
Port Type
---------------------------------------------------------------------------
Port Speed PVCs
Port Name ---------------------------------------------------------------------------
PVC Name
VPI and VCI
QoS Category (deterministic or statistical)
Qos Class for Transmit and receive.
Service Category. (CBR, VBR...etc)
--------------------------------- -----------------------------------------
Receive Transmit
For Each VPC and VCC For Each VPC and VCC
--------------------------------- -----------------------------------------
Traffic Description Parameter
----------------------------------------------------------------------------
CBR VBR-rt VBR-nrt UBR ABR
---------------- ----------------- ------------- ------------ --------------
PCR PCR PCR PCR PCR
CDVT SCR SCR SCR CDVT
MBS MBS MBS MCR
CDVT CDVT CDVT
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1 of 3
<PAGE>
<TABLE>
<CAPTION>
GNI OSS Architecture Attachment J
ATM Network Management Requirements
Version 1.0 [LOGO]
Bell Atlantic Global Networks, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Performance information:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Switch
- ------ -------------
N/A Physical Port
-------------
ES
SES
-----------------------------------------------------
Logical Ports
(UNI, NNIs)
-----------------------------------------------------
. ReceivedCells
. DroppedReceivedCells
-------------------------------------------------------
. TransmittedCells PVCs
-------------------------------------------------------
. No of Cells in each direction. (for CLP=0+1) . No of Cells in each direction. (for CLP=0+1)
. No of CLP=0 cells in each direction . No of CLP=0 cells in each direction
. No of tagged cells in each direction. . No of tagged cells in each direction.
. No of cells discarded. . CER (Cell Error ratio)
. No of discarded cells due to buffer overflow. . CLR (Cell Loss ratio)
. No of OAM cells. . CTD (Cell transfer Delay)
. Link Utilization as percentage of the line speed. . CDV (Cell Delay Variation)
. Mean Cell Transfer delay. . PVC Utilization as percentage of the PCR.
. Time elapsed since the UNI/NNI last entered . MCTD (Mean Cell Transfer delay).
active state. . Time elapsed since the VC last entered active
. Usage Counts - Entire Channel state.
. Utilization and Throughput - Entire Channel . End-to-End PVC Burst Advisor
. Burst Advisor - Entire Channel . Single-Ended PVC Usage Counts
. Most Active Circuits - Entire Channel . End-to-End PVC Usage Counts
. Most Overutilized Access Channels (Tx) . End-to-End PVC Utilization and Throughput
. Most Overutilized Access Channels (Rx) . PVC Availability
. Most Underutilized Access Channels (Tx) . PVC Data Delivery Ratio
. Most Underutilized Access Channels (Rx) . PVC Round Trip Delay
. Most Overutilized PVCs
. Most Underutilized PVCs
- ------------------------------------------------------------------------------------------------------------------------------------
Fault Management information:
- ------------------------------------------------------------------------------------------------------------------------------------
Switch
- ------------------------------------- ---------------------------------------
. Up or Down change Status Physical Port
---------------------------------------
Notification . Operational status.
. Administrative Status.
. Up/Down change status notification.
--------------------------------------
Logical Ports
(UNI, NNIs)
--------------------------------------
</TABLE>
Page 2 of 3
<PAGE>
<TABLE>
<CAPTION>
GNI OSS Architecture Attachment J
ATM Network Management Requirements
Version 1.0 [LOGO]
Bell Atlantic Global Networks, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
-------------------------------------------
. Operation Status
----------------------------------------------
. Administrative status. PVCs
----------------------------------------------
. Up/Down change status notification . Operation Status
. Communication alarms . Administrative status.
. Congestion alarms . Up/Down change status notification
. Communication alarms
. Congestion alarms
- ------------------------------------------------------------------------------------------------------------------------------------
Information Interfaces:
- ------------------------------------------------------------------------------------------------------------------------------------
1. GNI systems will use Simple Network Management Protocol (SNMP), to access partner's network for service, configuration, fault
and performance information, on a near real time basis.
2. Statistical information must be available and refreshed in an agreed upon discrete interval (For example, every 15 minutes.
3. Fault information should be available in the form of a SNMP trap. The trap must be available within a minute of its occurrence.
4. Configuration information must be refreshed at least, once every twenty-four hours.
5. Partner must retain the statistics and fault history at least up to 5 days. It is also preferred if the information is
available via industry standard interfaces such as ODBC.
6. Bell Atlantic Global Networks, inc., recommends that partners deploy highly available systems architecture for information
access.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
page 3 of 3
<PAGE>
Attachment K
Acceptance Certificate
Program Executive
Bell Atlantic
Street Address
City, ST ZIP Code
ACCEPTANCE CERTIFICATE
- ----------------------
[Date]
Dear Sir or Madam,
Genuity (name of) Service
Genuity is pleased to confirm our successful completion of Network Verification
Tests for the following Premises site(s), in accordance with the Network
Verification Test Procedure detailed in the Service Schedule between Bell
Atlantic and Genuity , as described in the Agreement between us dated Date,
Month, Year.
The following record of results is provided.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Bell Atlantic Order Reference ABCDE
- ------------------------------------------------------------------------------
<S> <C>
Date Tested
- ------------------------------------------------------------------------------
Network Interconnect Street Address
- ------------------------------------------------------------------------------
B- end Site Address Street, City, ST
- ------------------------------------------------------------------------------
Circuit Speed Kbps or Mbps
- ------------------------------------------------------------------------------
End to End 24 hour BERT Test X
- ------------------------------------------------------------------------------
Route Circuit path detail and Circuit Reference
- ------------------------------------------------------------------------------
</TABLE>
Please indicate your confirmation of the Acceptance Tests outlined above by
signing below and returning a copy of this Acceptance Certificate by fax to me
at +1 xxx xxx xxxx or +1 8xx xxx xxxx
Yours sincerely,
CONFIRMED AND AGREED:
Genuity Inc. Bell Atlantic Corporation
By: ___________________________ By: _________________________
Name: _________________________ Name: _________________________
Title: ________________________ Title: _________________________
Date: _________________________ Date: _________________________
<PAGE>
PURCHASE, RESALE AND MARKETING AGREEMENT
SERVICE SCHEDULE
PURCHASE OF CAPACITY ON UNDERSEA CABLES
This Service Schedule is issued under the Purchase, Resale and Marketing
Agreement between Bell Atlantic Corporation ("Bell Atlantic") and Genuity Inc.
("Genuity") dated ____________ ("the Agreement"). As stated below, the terms and
conditions of the Agreement are incorporated herein by reference and made a part
hereof. In the event of a conflict between the terms of this Service Schedule
and the Agreement, the terms of this Service Schedule shall prevail. Capitalized
terms are defined in the Agreement. Pursuant to Section 1.1 of the Agreement,
Genuity designates GTE Intelligent Network Services Incorporated as the Service
Provider for provision of the undersea capacity Services under this Service
Schedule.
1. Capacity on ARCOS-1 Undersea Cable. Genuity will provide to a Bell Atlantic
----------------------------------
Authorized Affiliate capacity in the amount of an STM-1 on the Americas Region
Caribbean Ring System undersea cable ("ARCOS-1"), at Genuity's cost. Such cost
will reflect a pro rata share of the costs incurred by Genuity associated with
ARCOS-1, based on the percentage that the STM-1 constitutes of Genuity's total
number of STM-1s (or equivalent) on ARCOS-1. The costs will include, but are not
necessarily limited to, charges imposed under the ARCOS-1 Construction and
Maintenance Agreement and collocation at the cablehead. Within five (5) business
days of availability of undersea capacity Service on ARCOS-1, Genuity will
provide the Bell Atlantic Authorized Affiliate with additional details
concerning the costs and processes for provisioning such Services. The agreement
set forth in this Service Schedule is based on the fact that the Genuity
capacity commitment on ARCOS-1 was based in part on a commitment for the
specified STM-1 by a Bell Atlantic affiliate. Provision of the capacity under
this Agreement is intended to implement the parties' original understanding
concerning the ARCOS-1 cable.
2. Capacity on Americas III Undersea Cable. Genuity is currently participating
---------------------------------------
in the negotiations of the Americas III Cable Network Construction and
Maintenance Agreement (C&MA). Upon substantial completion of the C&MA, Genuity
and Bell Atlantic will discuss the options associated with obtaining capacity on
Americas III, including whether one will sell or assign Americas III capacity to
the other. Alternatively, each may sign the C&MA independently.
3. Provisions Applicable to Undersea Cable Capacity. Sections 2, 4, 6, 9, 10,
------------------------------------------------
13 and 14 of the Agreement apply to the Provision of such undersea capacity
Services as set out in this Service Schedule. The remaining provisions of the
Agreement are superseded by this Service Schedule and by the terms of the
applicable agreement governing the ARCOS-1 or Americas III cable. Payments for
such undersea capacity Services do not apply toward the Purchase Commitment as
described in Section 7.3 of the Agreement.
Bell Atlantic Corporation Genuity Inc.
____________________________________ ___________________________________
Signature Signature
____________________________________ ___________________________________
Name (print or type) Name (print or type)
____________________________________ ___________________________________
Title Title
____________________________________ ___________________________________
Date Date
<PAGE>
EXHIBIT 10.12
SOFTWARE LICENSE AGREEMENT
THIS SOFTWARE LICENSE AND MAINTENANCE AND SUPPORT AGREEMENT
("Agreement") is made between GTE Service Corporation, a New York corporation,
with offices for this Agreement at 1255 Corporate Drive, Irving, Texas 75038,
and its Affiliates ("GTE on the one hand, each only with respect to its
obligations hereunder, and Genuity Inc., a Delaware corporation, with offices
for this Agreement at 3 Van de Graaff Drive, Burlington, Massachusetts 01803
("GENUITY") on the other hand.
WHEREAS, GENUITY pursuant to this Agreement will be granted a limited,
non-exclusive license to use specified GTE-owned software (including any updates
provided to GENUITY pursuant to the IT Transition Services Agreement) for the
internal operations of GENUITY and its Affiliates, with the term of the
Agreement being one year, but renewable at the option of the parties and
terminable by GENUITY on thirty (30) days prior written notice.
In consideration of the mutual terms and conditions of this Agreement,
the parties agree as follows:
1. General.
GTE and GENUITY desire to establish a contractual mechanism pursuant to
which GENUITY and its subsidiary companies will obtain from GTE or an affiliate
company of GTE, and GTE or the affiliate will provide to GENUITY and its
subsidiary companies, licenses under certain GTE software and maintenance and
support services for certain GTE software in accordance with the terms and
conditions set forth in this Agreement.
2. Definitions.
For purposes of this Agreement, and in addition to certain terms defined
on first use herein and in any schedule attached hereto, the following terms
shall have the following meanings:
2.1. "Affiliate" shall mean an entity that controls, is under common
control with, or that is controlled by, the entity with which it is affiliated.
2.2. "Confidential Information" shall mean: (i) any information in
written, other tangible or electronic form which is labeled by GTE as
"confidential", "proprietary" or with a legend of similar import; and (ii)
Licensed Software in any form (including, without limitation, related
Documentation), whether or not labeled in accordance with the preceding. The
terms and conditions of this Agreement shall be deemed to be Confidential
Information.
2.3. "Designated Systems" shall mean the computer hardware and
operating systems specified in Schedule A, and all computer programs and
routines incorporated therein, including, without limitation, Third Party
Software.
1
<PAGE>
2.4. "Documentation" shall mean the user guides, operating manuals and
related technical materials, whether in print or electronic form, for the
Licensed Programs, including, without limitation, for each such guides, manuals
and materials, any and all Updates.
2.5. "GTE Products" shall mean Licensed Software, New Products,
Confidential Information and any other materials or rights provided hereunder by
GTE under this Agreement.
2.6. "Improvements" shall mean all improvements, modifications and
enhancements that pertain to the Licensed Software, including without
limitation, any and all Updates.
2.7. "Intellectual Property Rights" shall mean any and all worldwide
rights existing now or in the future under patent law, copyright law, industrial
rights design law, semiconductor chip and mask work protection law, moral rights
law, trade secret law, trademark law, unfair competition law, publicity rights
law, privacy rights law, and any and all similar proprietary rights, however
denominated, and any and all renewals, extensions and restorations thereof, now
or hereafter in force and effect.
2.8. "Licensed Programs" shall mean the computer programs, in Object
Code only, specified in Schedule A, including, without limitation, for each such
programs any and all Updates.
2.9. "Licensed Software" shall mean Licensed Programs and Documentation
specified in Schedule A, and any Updates thereof.
2.10. "License Term" shall have the meaning provided in Section 11.1.
2.11. "New Products" shall mean computer programs, in Object Code only,
that provide substantially new functions as compared to Licensed Programs, and
any related user guides, operating manuals and related technical materials,
whether in print or electronic form; provided, however, that "New Products"
shall not include Deliverables developed under a Statement of Work to the
Software Development and Technical Services Agreement between the parties or
their Affiliates of even date herewith
2.12. "Object Code" shall mean the machine-executable version of a
computer software program.
2.13. "Third Party Software" shall mean any version of any software
product, in Object Code only, and related documentation that is developed or
owned by a third party and is distributed or otherwise made available to GENUITY
by GTE pursuant to this Agreement or required by GENUITY for the Use of the
Licensed Software.
2.14. "Updates" shall mean: (i) corrections of Licensed Software
errors, and (ii) any other modifications or additions to the Licensed Software
that do not provide substantially new functions to that Licensed Software
provided pursuant to a certain IT Transition Services Agreement between the
parties of even date herewith (the "IT Transition Services Agreement"). Updates
shall not include New Products.
2
<PAGE>
2.15. "Use" means to load, execute, employ, use, store or display the
specified subject matter and, in the circumstances described in Section 3.1(c),
shall include maintenance.
3. Intellectual Property.
3.1. License Grant.
(a) On the terms and subject to the conditions set forth herein, GTE
hereby grants to GENUITY, during the License Term only, a nonexclusive,
nontransferable, worldwide license to Use the Licensed Program and the
Documentation only for GENUITY's own internal operations and only on the
Designated Systems. The foregoing license grant shall extend to GENUITY's
Affiliates; provided, however, that GENUITY shall ensure that each of its
Affiliates comply with the terms and conditions of this Agreement and shall be
liable for any breach of them by any of its Affiliate.
(b) The foregoing license grant shall include the right of GENUITY to
transfer a Licensed Program temporarily to a backup system if a Designated
System is inoperative, and to make a reasonable number of copies of the Licensed
Programs for testing, disaster recovery, nonproductive backup or archival
purposes; provided, however, that all titles, trademarks, copyright, patent and
other proprietary rights notices relating to Intellectual Property Rights shall
be reproduced in such copies and such copies are stored in a safe and secure
place. All such copies, in whole or in part, of any Licensed Program shall be
governed by the terms and conditions of this Agreement. The foregoing license
grant also shall include the right of GENUITY to make a reasonable number of
copies of the Documentation for use with the Licensed Programs; provided,
however, that all titles, trademarks, copyright, patent and other proprietary
rights notices relating to Intellectual Property Rights shall be reproduced in
such copies and such copies are stored in a safe and secure place. All such
copies, in whole or in part, of any Documentation shall be governed by the terms
and conditions of this Agreement.
(c) GTE and GENUITY shall enter into a Software Escrow Agreement,
substantially in the form attached hereto as Exhibit D, for the Licensed
Programs identified in Schedule A as requiring the escrow of source code, which
shall set forth the terms and conditions pursuant to which source code for the
identified Licensed Programs will be made available to GENUITY. In the event
that such source code is released to GENUITY pursuant to the Software Escrow
Agreement, GTE shall grant to GENUITY a limited, personal, nontransferable and
nonexclusive license to use such released source code solely for the purpose of
maintaining the Licensed Programs during the License Term. Said license shall
not be transferable or sublicensable, and shall not include the right to create
any new versions, enhancements or other modifications of the Licensed Programs.
The said license shall include the right to have the Licensed Software
maintained by a third party, upon GTE's prior written approval, which approval
shall not be unreasonably withheld.
3
<PAGE>
(d) The license provided by this Section 3.1 shall not be sublicensable
or transferable, in whole or in part, to any third party and is in addition to,
and shall not be construed as limiting or expanding in any way, any other
licenses that GTE has granted or will grant to GENUITY under GTE Intellectual
Property Rights.
3.2. Certain License Limitations.
(a) The license right granted in Section 3.1 shall not include any
right to: (i) copy or reproduce, modify, market, sublicense, transfer or
distribute the Licensed Software, or any portion thereof, in any manner
whatsoever (except as otherwise expressly provided in Section 3.1(b)), (ii) make
the Licensed Software, or any portion thereof, available to any other person or
entity, whether on a time-sharing basis or otherwise, (iii) Use or otherwise
exploit the Licensed Software for the benefit of any other person or entity, or
(iv) modify or create works derivative of the Licensed Software or any portion
thereof. Except and to the extent expressly set forth in Schedule A, such
license grant does not include any license, right, title or interest in or to
any Third Party Software or other technology of any third party, or any
Intellectual Property Rights therein, required for GENUITY to exercise its
rights hereunder. To the extent any Third Party Software is provided by GTE to
GENUITY pursuant to this Agreement, the Use of such Third Party Software shall
be pursuant to the terms and conditions of this Agreement, unless a Third Party
Software license agreement is included with such Third Party Software, in which
instance GTE shall use its best efforts to advise GENUITY of that fact, and such
Third Party Software license agreement shall govern the Use of such Third Party
Software.
(b) The license right granted in Section 3.1 is for Object Code only
and does not include a license or any other rights to the source code or other
mnemonic or high-level statement version of the Licensed Programs or any
documentation therefor. Without limiting the foregoing, GENUITY shall not
decompile, disassemble, reverse analyze or reverse engineer any Licensed
Software, or otherwise attempt to discover, generate, use or modify the
structural framework or source code of any Licensed Software, or permit or
authorize any person or entity to do so.
(c) Nothing herein shall be construed as granting GENUITY, by
implication, estoppel or otherwise, any license or other right under any
Intellectual Property Right of GTE, including without limitation, any such
license or right in or to the Licensed Software, except for the license
expressly granted in Section 3.1.
3.3. Ownership.
GENUITY acknowledges and agrees that (i) GTE is and shall remain the
sole and exclusive owner of GTE Products, and any and all Intellectual Property
Rights therein and (ii) the third party is and shall remain the sole and
exclusive owner of Third Party Software, and any and all Intellectual Property
Rights therein, and that GENUITY acquires no rights in or to any of the
foregoing, other than the license rights expressly granted herein (or in the
instance of Third Party Software, the rights granted by the third party).
GENUITY agrees neither to do nor to permit any act which may in any way
jeopardize or be detrimental to the validity of GTE's Intellectual Property
Rights in GTE Products of the third party's Intellectual Property Rights in the
Third Party Software.
4
<PAGE>
4. Payments
4.1. Payments. In consideration for the rights and licenses granted
herein by GTE for the Use of each Licensed Software and for the Maintenance and
Support Services for such Licensed Software provided by GTE hereunder, GENUITY
shall pay GTE the annual license fee specified for each Licensed Software set
forth in Schedule A hereto; said annual license fee specified in Schedule A
shall be applicable only to the first year of the License Term, with the annual
license fee thereafter being GTE's then applicable annual license fee (which
includes Maintenance and Support Services) charged to third parties who are not
Affiliates of GTE (or if there is no annual license fee (which includes
Maintenance and Support Services) for third party licensees of the Licensed
Software, the amount set forth on the applicable invoice to GENUITY). GTE shall
invoice GENUITY for such annual license fee on the Effective Date and on each
anniversary thereafter during the License Term, and payment shall be due from
GENUITY on or before the thirtieth (30th) day following receipt by GENUITY of
such invoice. All payments shall be made in United States currency, shall be
nonrefundable and paid fully net, without set-off, deduction or counterclaim
unless expressly provided otherwise hereunder, and shall be made by wire
transfer to such bank account(s) as GTE may specify in writing.
4.2. Late Payments. GENUITY shall pay interest on any late payments at
a rate equal to the lesser of (i) 18% per annum and (ii) the maximum rate of
interest allowable under applicable law.
4.3. Taxes. In addition to the charges payable for services and rights
and licenses provided hereunder by GTE, GENUITY shall pay GTE an amount equal to
any sales, use, privilege, gross revenue, excise or any other tax (except income
and franchise taxes), as well as any assessments or duties lawfully levied by a
duly constituted governmental authority and for which GTE is required or
permitted, by law, to collect from GENUITY with respect to the services,
materials and rights provided under this Agreement. In addition, GENUITY shall
be responsible for all real and personal property taxes imposed on Licensed
Software in GENUITY'S possession on January 1 of every year. If GENUITY
determines that any services, materials or rights obtained from GTE are exempt
from a tax, GENUITY must provide GTE a properly completed exemption certificate,
for all jurisdictions for which GENUITY is claiming an exemption, before GTE
will exclude the respective tax from amounts charged to GENUITY. GENUITY shall
not deduct any tax amount from remittances to GTE until a properly completed
exemption certificate, for all jurisdictions for which GENUITY is claiming an
exemption, has been provided to GTE.
5
<PAGE>
5. Delivery.
5.1. Delivery of Licensed Software. Unless otherwise already in the
possession of GENUITY, as soon as practicable after the Effective Date of this
Agreement, but in any event within thirty (30) days thereafter, GTE shall
deliver to GENUITY a number of copies of each item comprising the Documentation
and the Licensed Programs; provided, however, the number of copies of Licensed
Programs shall in no event not exceed the number of Designated Systems.
5.2. Updates. Any Updates to the Licensed Software shall be provided
pursuant to the IT Transition Services Agreement. Any Use or other exploitation
in any manner of any Updates shall be subject to all terms and conditions of
this Agreement.
5.3. New Products. Any New Products developed or made available by GTE,
during the License Term, for Use with or as a replacement for Licensed Software
shall be offered to GENUITY at GTE's then-current published license fees, terms
and conditions.
5.4. Maintenance and Support Services. Except as otherwise required for
GTE to satisfy its obligations contained in Section 8.3 hereof, GTE's sole
obligation to provide any maintenance and support services hereunder shall be
set forth in the IT Transition Services Agreement.
6. Indemnity for Infringement of Third Party Intellectual Property.
6.1. Indemnity. If Licensed Software becomes the subject of an
infringement claim, or in GTE's opinion is likely to become the subject of such
a claim, then, in addition to defending the claim and paying any damages and
attorneys' fees finally awarded by a court of final jurisdiction, GTE may, at
its option and in its sole discretion, and at its own cost and expense: (i)
replace or modify such Licensed Software to make it noninfringing or cure any
claimed misuse of any third party trade secret; (ii) procure for GENUITY the
right to continue Using such Licensed Software pursuant to this Agreement; or
(iii) require the return of such Licensed Software and terminate GENUITY's right
to Use the same and refund to GENUITY a pro-rata portion of the current annual
license fee actually paid to GTE by GENUITY for the Use of such Licensed
Software. Notwithstanding the foregoing, if GTE exercises its right to require
the return of such Licensed Software and terminates GENUITY's right to Use the
same, to the extent permitted by applicable law, GENUITY may retain and continue
to Use such Licensed Software to the extent GENUITY agrees in writing to defend
and indemnify GTE for any and all expenses, costs and liabilities associated
with such continued possession and Use of such Licensed Software.
6.2. Limitations. GTE shall not be liable to GENUITY for any claims of
inducement of infringement or contributory infringement or claims of
infringement resulting from the combination of the Licensed Software with the
products or services of third parties. Further, GTE shall have no liability to
GENUITY hereunder if (i) the claim of infringement is based upon the Use or
other exploitation of Licensed Software provided by GTE hereunder in connection
or in combination with equipment, devices, data or software not supplied by GTE,
and such infringement would not have occurred but for such Use; (ii) such
Licensed Software is Used outside of the scope of the rights and licenses
granted to GENUITY or in a manner for which the Licensed Software was not
designed; (iii) the Licensed Software or any portion thereof is modified by or
for GENUITY (even by GTE at GENUITY's direction or instructions), and such
infringement would not have occurred but for such modification; or (iv) GENUITY
Uses the Licensed Software as part of a patented process and there would be no
infringement in the Use of the Licensed Software alone. For all of the foregoing
exclusions, GENUITY shall defend and indemnify GTE for any infringement claims
to the extent set forth in Section 6.1.
6
<PAGE>
6.3. Procedure. The indemnification obligations set forth in this
Section 6 shall not apply unless GENUITY: (i) uses its best efforts to notify
GTE promptly in writing of any claims, charges of infringement or litigation in
order to allow GTE the opportunity to investigate and defend the matter;
provided, however, that the failure to so notify shall only relieve GTE of its
obligations under this Section 6 if and to the extent that GTE is prejudiced
thereby; and (ii) gives GTE full control of the response thereto and the defense
thereof, including, without limitation, any agreement relating to the settlement
thereof; provided, however, that GENUITY shall have the right to participate, on
a non-interfering basis, in any legal proceeding to contest and defend a claim
for infringement and to be represented by legal counsel of its choosing, all at
GENUITY's sole cost and expense. However, if GTE fails to promptly assume the
defense of the claim, GENUITY may assume the defense at GTE's cost and expense.
GTE shall not be responsible for any settlement or compromise made without its
prior written consent, unless GENUITY has tendered notice and GTE has then
refused to assume and defend the claim and it is later determined that GTE was
obligated to assume and defend the claim. GENUITY agrees to cooperate in good
faith with the GTE at the request and expense of GTE.
6.4. The foregoing sets forth GTE's sole and exclusive obligations, and
GENUITY's sole remedies, for infringement of any Intellectual Property Rights by
any GTE Products.
7. Other Obligations of GENUITY and GTE.
7.1. Third Party Software. GENUITY acknowledges that, in order to
exercise any rights granted by the license set forth in Section 3.1, including,
without limitation, Using the Licensed Software as expressly provided thereby,
GENUITY may need to license or otherwise obtain permission to Use Third Party
Software. Such licenses or other permissions shall be at GENUITY's sole cost and
expense and GENUITY shall be solely responsible for observing and complying with
the terms and conditions under which Third Party Software is licensed. GTE shall
use its best efforts to inform GENUITY of any Third Party Software that, to
GTE's knowledge, is required to Use the Licensed Software.
7
<PAGE>
7.2. Inspection of Facilities. GENUITY shall advise GTE in writing of
the location of all facilities at which it is carrying out activities subject to
license under this Agreement, including, without limitation, the location of any
Designated Systems. GTE may, from time to time, as it deems necessary, at its
sole risk and expense, enter such facilities, or any of them, and conduct such
inspection as is reasonably necessary to verify the nature of GENUITY's
activities and GENUITY's compliance with this Agreement. GENUITY shall provide
reasonable assistance to GTE for such inspection, GTE shall minimize the amount
of time that it is required to spend in GENUITY's facilities, and GTE shall
coordinate all such activities with GENUITY so as not to unreasonably interfere
with GENUITY's operations.
7.3. Interoperability. If the provisions of the Council of European
Communities Directive of May 14, 1991 on the Legal Protection of Computer
Programs (the "Software Directive") apply to GENUITY's Use of the Licensed
Programs, and GENUITY wishes to obtain the information necessary to achieve
interoperability of an independently created computer program with the Licensed
Programs as permitted under Article 6 of the Software Directive
("Interoperability Information"), then GENUITY shall notify GTE in writing,
specifying the nature of the Interoperability Information it needs and the
purpose for which it will be used. If GTE reasonably determines that GENUITY is
entitled to such Interoperability Information under said Article 6, GTE shall,
at its option, either (i) provide such Interoperability Information to GENUITY
or (ii) authorize GENUITY to reverse engineer the Licensed Programs, within the
time limits prescribed by said Article 6, solely to the extent indispensable to
obtain such Interoperability Information. If GTE elects clause (i), GENUITY
shall provide all information and assistance reasonably requested by GTE to
enable GTE to perform clause (i), and GTE may charge GENUITY a reasonable fee,
determined in GTE's discretion, for making available the requested
Interoperability Information, unless such a fee is prohibited under
said Article 6.
8. Warranties.
8.1. Allocation of Risk. An essential purpose of the exclusion of
warranties and limitation of liability provided in this Agreement is allocation
of risks between GTE and GENUITY, which allocation of risks is reflected in the
arrangements between GTE and GENUITY contained in this Agreement.
8.2. No Conflicts. GTE warrants that, to the best of its knowledge, it
owns, or otherwise has, the necessary Intellectual Property Rights to grant the
licenses, rights and permissions contained herein.
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8.3. Conformance Warranty. GTE warrants to GENUITY that (i) with normal
service and use, each of the Licensed Programs, including, without limitation,
Updates, shall, at the time of first delivery to GENUITY of the Licensed
Programs and for a period of thirty (30) days thereafter, conform substantially
on the Designated Systems to either the Documentation or the specifications
included in Schedule B, as applicable; provided, however, that such Licensed
Program has not been modified or altered by GENUITY or any other person or
entity, has not been abused or misapplied, has not been Used outside of the
scope of the rights and licenses granted pursuant to this Agreement, and has not
been Used in combination with hardware or software other than the Designated
Systems. The warranty set forth in this Section 8.3 shall be void if GENUITY
fails to submit timely a completed report to GTE describing the condition that
GENUITY believes constitutes a breach of said warranty, together with removable
machine-readable media on which GENUITY has made a copy of that portion of the
Licensed Program that GENUITY believes to contain such condition, within twenty
(20) days after GENUITY discovers such condition. GENUITY's sole and exclusive
remedy, and GTE's entire liability, for breach of the warranty set forth in this
Section 8.3 shall be, at GTE's option and sole expense: to attempt to correct
any nonconforming Licensed Programs; to replace any nonconforming Licensed
Programs with a corrected copy upon return to GTE of all of GENUITY's copies of
such nonconforming Licensed Program; or if GTE is unable to make any Licensed
Programs operate as warranted hereunder, to refund any payments on a pro-rata
basis actually made by GENUITY to GTE hereunder for such nonconforming Licensed
Program during the last year of the License Term.
8.4. Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 8 GTE
MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, WHETHER EXPRESS, IMPLIED, OR
ARISING BY CUSTOM OR TRADE USAGE, WITH RESPECT TO THE GTE PRODUCTS OR OTHERWISE
IN CONNECTION WITH THIS AGREEMENT. WITHOUT LIMITING THE FOREGOING, GTE EXPRESSLY
DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION (i) THAT ANY GTE
PRODUCTS OR ANY OF THEIR USE OR ANY ACTIVITIES OF GENUITY CONTEMPLATED BY THIS
AGREEMENT, SHALL BE FREE FROM INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS
OF ANY THIRD PARTY, (ii) AS TO THE QUALITY OR PERFORMANCE OF ANY GTE PRODUCTS OR
SERVICES, AND (iii) OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE EVEN
IF GTE HAS BEEN ADVISED OR SHOULD HAVE KNOWN OF SUCH PURPOSE. GENUITY SHALL BE
SOLELY RESPONSIBLE FOR ADEQUATE PROTECTION AND BACKUP OF GENUITY'S DATA AND
SOFTWARE USED IN CONNECTION WITH ITS USE OF GTE
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9. Limitation of Liabilities.
9.1. UNDER NO CIRCUMSTANCES SHALL GENUITY BE ENTITLED TO RECOVER FROM
GTE ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES
(INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS, LOSS OF PROFITS OR
LOSS OF USE), WHETHER BASED ON CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION,
NEGLIGENCE), OR ANY OTHER CAUSE OF ACTION RELATING TO GTE PRODUCTS, OR OTHERWISE
RELATING TO THIS AGREEMENT, EVEN IF GTE HAS BEEN INFORMED OR SHOULD HAVE KNOW OF
THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL THE LIABILITY OF GTE (WHETHER
BASED ON CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE) OR ANY OTHER
CAUSE OF ACTION) EXCEED THE AGGREGATE AMOUNT OF PAYMENTS ACTUALLY RECEIVED BY
GTE DURING THE LAST YEAR OF THE LICENSE TERM PURSUANT TO SECTION 4.1.
9.2. Third Party Claims. Without limiting the foregoing Section 9.1,
and except and to the extent expressly provided for in Section 6, GTE shall
under no circumstances be liable for any claim or demand by any third party
based on or related to GENUITY's Use of the Licensed Software, errors or alleged
errors in GENUITY's Use of the Licensed Software or any other GTE Products or
Services. GENUITY shall indemnify and hold GTE harmless from and against any
loss, cost or damages, including, without limitation, reasonable attorneys' and
professionals' fees, arising in connection or as a result of such claim or
demand.
10. Confidential Information.
10.1. Restrictions. GENUITY shall: (i) use Confidential Information
only in connection with fulfilling its obligations and exercising its rights
hereunder; (ii) hold Confidential Information in strict confidence and exercise
due care with respect to its handling and protection, consistent with GENUITY's
own policies concerning the protection of its own confidential information of
similar importance, but in no instance less than reasonable care; (iii) not
disclose, divulge or publish Confidential Information or any portion thereof,
except to such of its responsible employees who have a bona fide need-to-know to
the extent necessary to exercise GENUITY's rights and licenses under this
Agreement and are who are bound in writing to maintain the confidentiality of
such Confidential Information; (iv) instruct all such employees not to disclose
Confidential Information to third parties; (v) not remove any titles,
trademarks, copyright, patent and other proprietary rights notices set forth on
or contained within the Confidential Information or any portion thereof; or (vi)
not copy or otherwise duplicate any Confidential Information, in whole or in
part, including, without limitation, derivations, except and to the extent
expressly permitted hereunder and necessary to exercise its rights and licenses
hereunder.
10.2. Compliance with Governmental, Judicial Requirements.
Notwithstanding anything herein to the contrary, if GENUITY receives a request
to disclose any Confidential Information (whether pursuant to a valid and
effective subpoena, an order issued by a court or other governmental authority
of competent jurisdiction or otherwise) on advice of legal counsel that
disclosure is required under applicable law, GENUITY agrees that, prior to
disclosing any Confidential Information, it shall (i) notify GTE of the
existence and terms of such request or advice, (ii) cooperate with GTE in taking
legally available steps to resist or narrow any such request or to otherwise
eliminate the need for such disclosure at GTE's sole expense, if requested to do
so by GTE, and (iii) if disclosure is required, it shall be the obligation of
GTE to use its best efforts to obtain a protective order or other reliable
assurance that confidential treatment shall be afforded to such portion of the
Confidential Information of GTE as is required to be disclosed.
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10.3. Marking. Any copy of the Confidential Information authorized by
GTE to be made by GENUITY pursuant to this Agreement shall conspicuously display
markings or statements of GTE appearing on the originals of such Confidential
Information.
10.4. Survival. The obligations set forth in this Section 10 shall
survive any termination, cancellation or expiration of this Agreement or of any
licenses granted pursuant to this Agreement.
11. Term, Termination.
11.1. License Term. This Agreement shall be effective as of the
Effective Date and, unless otherwise terminated or cancelled as provided herein,
remain in effect for a period of one (1) year from the Effective Date (the
"License Term"). The License Term for each Licensed Software shall be
automatically renewed for successive one (1) year periods upon the payment of
the then current annual license fee for such Licensed Software.
11.2. Termination/Cancellation. Each party shall have the right to
terminate/cancel this Agreement, effective immediately, upon written notice to
the other party, if any of the following events occur:
(a) The other files a voluntary petition in bankruptcy (other
than as creditor);
(b) The other is adjudged bankrupt;
(c) A court assumes jurisdiction of the assets of the other
under a federal reorganization act;
(d) A trustee or receiver is appointed by a court for all or a
substantial portion of the assets of the other;
(e) The other becomes insolvent or suspends its business; or
(f) The other makes an assignment of its assets for the
benefit of its creditors except as required in the ordinary course of
business.
11.3. Material Breach. Either party may terminate or cancel this
Agreement or any license for Licensed Software, for a material breach or default
of any of the terms, conditions or covenants of this Agreement by the other;
provided, however, that such termination or cancellation may be made only
following the expiration of a thirty (30) day period during which the other
party has failed to cure such breach after having been given written notice
thereof.
11.4. Other Termination. GENUITY may terminate or cancel any license
for any Licensed Software upon thirty (30) days prior written notice to GTE and
the rights and licenses for such terminated or cancelled Licensed Software shall
immediately terminate at the end of such thirty (30) day period or such earlier
period as specified in the notice. Notwithstanding termination or cancellation
of any license for any Licensed Software, no refund or credits shall be due or
owing to GENUITY.
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11.5. Effect of Termination or Expiration.
(a) Upon any expiration, termination or cancellation of this Agreement,
either in its entirety or with respect to any licensed for Licensed Software,
all rights and licenses granted to GENUITY hereunder or related to such Licensed
Software, respectively, shall terminate.
(b) Within a reasonable time after expiration, termination or
cancellation of this Agreement or of any license for any Licensed Software, but
in no event later than thirty (30) days thereafter, GENUITY shall immediately
cease using the Licensed Software and Confidential Information (or in the
instance of termination, cancellation or expiration of specific Licensed
Software, then only such Licensed Software and related Confidential Information)
and shall return to GTE, or shall destroy in a manner satisfactory to GTE, all
forms in whatever medium of such Licensed Software and Confidential Information,
including, without limitation, any and all copies thereof. An officer of GENUITY
shall certify in writing to GTE that GENUITY has complied with the obligations
of this Section 11.5(b).
(c) No expiration, termination or cancellation of this Agreement, in
whole or in part, shall relieve GENUITY of any obligation to pay amounts due nor
affect any other rights or liabilities of the parties which may have accrued
prior to the date of expiration, termination or cancellation. Notwithstanding
anything herein to the contrary, upon any expiration or termination of this
Agreement, the provisions of Sections 2, 3.2, 3.3, 4, 6, 7.1, 8.4, 9, 10, 11, 12
and 13 shall survive such expiration, termination or cancellation and shall
continue in full force and effect.
(d) With respect to Third Party Software in which GTE acquires rights
after the Effective Date and includes in Updates to the Licensed Software, which
Third Party Software has been approved by GENUITY as provided in the IT
Transition Services Agreement, the parties acknowledge and agree that if GTE
amortizes costs associated with such Third Party Software, GENUITY shall pay the
balance of any unamortized costs in the event of any termination, cancellation
or non-renewal of the license for the Licensed Software prior to full
amortization of such costs, and upon such payment GENUITY will be entitled to
continue use of such Third Party Software pursuant to the applicable terms and
conditions.
12. Dispute Resolution.
12.1. General. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled first, by good faith
efforts of the parties to reach mutual agreement, and second, if mutual
agreement is not reached to resolve the dispute, by final, binding arbitration
as set out in paragraph 6(c) below.
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12.2. Initial Resolution. A party that wishes to initiate the dispute
resolution process shall send written notice to the other party with a summary
of the controversy and a request to initiate these dispute resolution
procedures. Each party shall appoint a knowledgeable, responsible representative
from the company who has the authority to settle the dispute, to meet and
negotiate in good faith to resolve the dispute. The discussions shall be left to
the discretion of the representatives, who may utilize other alternative dispute
resolution procedures such as mediation to assist in the negotiations.
Discussions and correspondence among the representatives for purposes of these
negotiations shall be treated as Confidential Information developed for purposes
of settlement, shall be exempt from discovery and production, and shall not be
admissible in the arbitration described above or in any lawsuit pursuant to Rule
408 of the Federal Rules of Evidence. Documents identified in or provided with
such communications, which are not prepared for purposes of the negotiations,
are not so exempted and may, if otherwise admissible, be admitted in evidence in
the arbitration or lawsuit. The parties agree to pursue resolution under this
subsection for a minimum of 60 days before requesting arbitration.
12.3. Arbitration. If the dispute is not resolved under the preceding
subsection within 60 days of the initial written notice, either party may demand
arbitration by sending written notice to the other party. The parties shall
promptly submit the dispute to the American Arbitration Association for
resolution by a single neutral arbitrator acceptable to both parties, as
selected under the rules of the American Arbitration Association. The dispute
shall then be administered according to the American Arbitration Association's
Commercial Arbitration Rules, with the following modifications: (i) the
arbitration shall be held in a location mutually acceptable to the parties, and
if the parties do not agree, the location shall be New York City; (ii) the
arbitrator shall be licensed to practice law; (iii) the arbitrator shall conduct
the arbitration as if it were a bench trial and shall use, apply and enforce the
Federal Rules of Evidence and Federal Rules of Civil Procedure; (iv) except for
breaches related to Confidential Information or intellectual property, the
arbitrator shall have no power or authority to make any award that provides for
consequential, punitive or exemplary damages; (v) the arbitrator shall control
the scheduling so that the hearing is completed no later than 60 days after the
date of the demand for arbitration; and (vi) the arbitrator's decision shall be
given within 5 days thereafter in summary form that states the award, without
written decision, which shall follow the plain meaning of this Agreement, the
relevant documents, and the intent of the parties. Judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction over
the parties. Each party to the dispute shall bear its own expenses arising out
of the arbitration, except that the expenses of the facilities to conduct the
arbitration and the fees of the arbitrator shall be shared equally by the
parties.
12.4. Injunctive Relief. The foregoing notwithstanding, each party
shall have the right to seek injunctive relief in an applicable court of law or
equity pending resolution of the dispute in accordance with the foregoing.
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13. General.
13.1. Notice. Any written notice either party may give the other
concerning the subject matter of this Agreement shall be in writing and given or
made by means that obtain a written acknowledgment of receipt. Notices shall be
sent to the parties at the following addresses, which may be changed by written
notice:
To GTE:
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To GENUITY:
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Notice shall be deemed to have been given or made when actually
received, as evidenced by written acknowledgment of receipt.
13.2. Compliance. GTE and GENUITY shall each comply with the provisions
of all applicable federal, state, and local laws, ordinances, regulations and
codes (including, without limitation, procurement of required permits or
certificates) in fulfillment of their obligations under this Agreement. GTE
Products are subject to U.S. export and foreign transactions control
regulations. GENUITY undertakes that it shall neither export, nor cause nor
permit to be exported, without GTE's prior written consent and without
compliance with applicable law and regulation, GTE Products or Services out of
the United States of America, nor shall GTE Products or Services be made
available, directly or indirectly, for use in any project associated with the
design, development, production, testing, stockpiling or use of: (i) nuclear
weapons or facilities to produce nuclear explosives, (ii) missiles, or (iii)
chemical or biological warfare agents. GENUITY agrees to comply with all
applicable laws and regulations relating to the exportation of technical
information, as they currently exist and as they may be amended from time to
time.
13.3. Assignment, Subcontracting. Neither this Agreement nor any rights
or obligations hereunder shall be assignable by either of the parties hereto;
provided, however, that GTE may assign this Agreement to any Affiliate.
13.4. Waiver of Terms and Conditions. Failure to enforce any of the
terms or conditions of this Agreement shall not constitute a waiver of any such
terms or conditions, or of any other terms or conditions.
13.5. Severability. Where any provision of this Agreement is declared
invalid, illegal, void or unenforceable, or any changes or modifications are
required by regulatory or judicial action, and any such invalid, illegal, void
or unenforceable provision, or such change or modification, substantially
affects any material obligation of a party hereto, the remaining provisions of
this Agreement shall remain in effect and the parties shall mutually agree upon
a course of action with respect to such invalid provision or such change or
modification to the end that the purposes of this Agreement are carried out.
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13.6. Governing Law. This Agreement, and the rights and obligations
contained in it, shall be governed by and construed in accordance with the laws
of the State of New York, without regard to any conflicts of law principles that
would require the application of the laws of any other jurisdiction.
13.7. No Unreasonable Delay or Withholding. Where agreement, approval,
acceptance, consent or similar action by GENUITY or GTE is required, such action
shall not be unreasonably delayed or withheld.
13.8. Force Majeure. If performance of any obligations by either party
under this Agreement (other than any obligation of either party to pay money
hereunder) is prevented, restricted or interfered with by reason of acts of God,
wars, revolution, civil commotion, acts of public enemy, embargo, acts of
government in its sovereign capacity, labor difficulties, including, without
limitation, strikes, slowdowns, picketing or boycotts, communication line
failures, power failures, or any other circumstances beyond the reasonable
control and not involving any fault or negligence of the party affected, the
party affected, upon giving prompt notice to the other party, shall be excused
from such performance on a day-to-day basis during the continuance of such
prevention, restriction or interference (and the other party shall likewise be
excused, on a day-to-day basis during the same period, from performance of its
obligations which are dependent upon or affected by such nonperformance);
provided, however, that the party so affected shall use its best reasonable
efforts to avoid or remove such causes of nonperformance and both parties shall
proceed immediately with the performance of their obligations under this
Agreement whenever such causes are removed or cease.
13.9. Entire Agreement. This Agreement represents the entire
understanding between the parties with the respect to its provisions and cancels
and supercedes all prior agreements or understandings, whether written or oral,
with respect to the subject matter. This Agreement may only be modified or
amended by an instrument in writing signed by duly authorized representatives of
the parties. This Agreement shall be deemed to include all Schedules issued
hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the ___ day of ___________, 2000 (the "Effective Date") through their authorized
representatives.
GTE SERVICE CORPORATION GENUITY INC.
By: By:
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Name: Name:
------------------------------ ------------------------------
Title: Title:
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Date: Date:
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SCHEDULE A
[Schedule: Documentation, Licensed Programs, Designated Systems]
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SCHEDULE B
SPECIFICATIONS FOR LICENSED PROGRAMS
[If necessary]
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EXHIBIT 10.13
SOFTWARE DEVELOPMENT AND TECHNICAL SERVICES AGREEMENT
THIS SOFTWARE DEVELOPMENT AND TECHNICAL SERVICES AGREEMENT
("Agreement") effective as of ___________, 2000 (the "Effective Date"), is made
between GTE Service Corporation, a New York corporation, with offices for this
Agreement at 1255 Corporate Drive, Irving, Texas 75038, and its Affiliates
("GTE") on the one hand, each only with respect to their respective obligations
hereunder, and Genuity Inc., a Delaware corporation, with offices for this
Agreement at 3 Van de Graaff Drive, Burlington, Massachusetts 01803 ("GENUITY")
on the other hand.
WHEREAS, GENUITY pursuant to this Agreement will be allowed to procure
software development and other technical services from GTE, with the services
defined in individual Statements of Work, and the ownership and rights in
intellectual property deliverables to GENUITY pursuant to the Statements of Work
being apportioned between the parties, with the term of the Agreement being one
year, or as otherwise set forth in a specific Statement of Work, but renewable
at the option of the parties and terminable by GENUITY.
Now, therefore, in mutual consideration of the promises and obligations set
forth below, the parties agree as follows:
1. General.
GTE and GENUITY desire to establish a contractual relationship pursuant
to which GENUITY and its subsidiary companies will obtain from GTE or an
Affiliate of GTE, and GTE or the Affiliate will provide to GENUITY and its
subsidiary companies, software development and other technical services in
accordance with the terms and conditions set forth in this Agreement.
2. Definitions.
For purposes of this Agreement, and in addition to certain terms
defined on first use herein and in any schedule attached hereto, the following
terms shall have the following meanings.
2.1. "Affiliate" shall mean an entity that controls, is under common
control with, or that is controlled by, the entity with which it is affiliated.
2.2. "Change Order" shall mean a change order signed by both parties as
provided in Section 3.7.
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2.3. "Deliverable" shall mean Software, Documentation or other
materials and information delivered or otherwise provided by GTE to GENUITY
under the terms of this Agreement and the applicable Statement of Work.
2.4. "Documentation" shall mean written documentation provided by GTE
to GENUITY in connection with a Technical Effort, as provided in the Statement
of Work for that Technical Effort.
2.5. "Exclusive Statement of Work" shall mean a Statement of Work under
which GTE agrees to provide Deliverables exclusively to GENUITY.
2.6. "Intellectual Property Rights" shall mean any and all worldwide
rights existing now or in the future under patent law, copyright law, industrial
rights design law, semiconductor chip and mask work protection law, moral rights
law, trade secret law, trademark law, unfair competition law, publicity rights
law, privacy rights law, and any and all similar proprietary rights, however
denominated, and any and all renewals, extensions and restorations thereof, now
or hereafter in force and effect.
2.7. Internal Business Purposes" shall mean the internal operation of a
licensee's business in the provision of goods and services by the licensee to
its customers and end users in the ordinary course of its business.
2.8. "Legacy System" shall mean existing computer software, hardware or
firmware owned or used by GENUITY which was developed, licensed or obtained
outside the scope of any Technical Effort.
2.9. A "Non-exclusive Statement of Work" shall mean a Statement of Work
that is not an Exclusive Statement of Work.
2.10. "Object Code" shall mean the machine-executable version of a
computer software program.
2.11. "Schedule" shall mean the timetable and milestones for completion
of a Technical Effort as set forth in its Statement of Work, as modified by any
Change Orders or otherwise as provided in this Agreement.
2.12. "Services" shall mean those services provided by GTE to GENUITY
under the terms of this Agreement and the applicable Statement of Work.
2.13. "Software" shall mean the computer software provided by GTE to
GENUITY in connection with a Technical Effort as provided in a Statement of Work
for the Technical Effort, provided that the foregoing shall exclude Third Party
Software.
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2.14. "Source Code" shall mean the fully commented human-readable
version of a computer software program, including, without limitation, all
documentation necessary or useful to understand such software program.
2.15. "Specifications" shall mean the functional and other
specifications for Software included in any Deliverables set forth in a
Statement of Work.
2.16. "Statement of Work" shall mean a written description of a
Technical Effort signed by both parties and attached to this Agreement, pursuant
to Section 3.1. The Statement of Work for each Technical Effort shall include
all Change Orders that have been agreed upon for that Technical Effort.
2.17. "Technical Effort" shall mean the technical services provided by
GTE pursuant to the terms and conditions of this Agreement and the applicable
Statement of Work.
2.18. "Third Party Software" shall mean any version of any software
product, in Object Code only, that is developed or owned by a third party and is
distributed or otherwise made available to one party to the other pursuant to
this Agreement or required for use of Software provided as a Deliverable under
this Agreement.
3. Technical Effort.
3.1. Technical Effort for Software Development. The parties may from
time to time agree upon a Technical Effort which calls for the development or
modification of computer programs. For each such development or modification of
computer programs, the Technical Effort shall be described in a Statement of
Work. Each Statement of Work shall contain a detailed description of the
Software to be developed or modified, including the Deliverables for the
Technical Effort, the Specifications, if any, for any Software or other
Deliverables to be developed, the Schedule, acceptance criteria, the amounts and
timing of payments to be made, any Services to be provided, and such other
information as may be required by this Agreement. Each Statement of Work will
expressly indicate if it is an Exclusive Statement of Work, and if it does not
so indicate it shall be deemed to be a Non-Exclusive Statement of Work. Each
Statement of Work shall be deemed a part of and shall be subject in all respects
to the terms and conditions of this Agreement, unless otherwise set forth in a
Statement of Work with specific reference to the terms or conditions of this
Agreement that are to be altered by such Statement of Work.
3.2. Technical Effort for Other Technical Services. The parties may
from time to time agree upon a Technical Effort for technical services which are
other than the development or modification of computer programs. Each such
Technical Effort shall be described in a Statement of Work. Each Statement of
Work shall contain a detailed description of the Technical Effort, including,
without limitation, the Deliverables for the Technical Effort, the requirements
for Deliverables to be provided, if any, the Schedule, acceptance criteria (if
any), the amounts and timing of payments to be made, any Services to be
provided, and such other information as may be required by this Agreement. Each
Statement of Work will expressly indicate if it is an Exclusive Statement of
Work, and if it does not so indicate it shall be deemed to be a Non-Exclusive
Statement of Work. Each Statement of Work shall be deemed a part of and shall be
subject in all respects to the terms and conditions of this Agreement, unless
otherwise set forth in a Statement of Work with specific reference to the terms
or conditions of this Agreement that are to be altered by such Statement of Work
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3.3. General Conduct of Technical Efforts. The parties acknowledge and
agree that the successful completion of each Technical Effort shall require the
cooperation of both parties. GTE shall endeavor to complete each Technical
Effort in accordance with the Schedule. GTE may, at its election, perform its
obligations under this Agreement either directly or through one or more
Affiliates, unless otherwise provided in a Statement of Work. GENUITY agrees to
provide such information and access to facilities, personnel and GENUITY Legacy
Systems, if applicable, as may be reasonably required or requested by GTE to
complete the Technical Effort. If GENUITY's acts or failures to act cause any
hindrance or delay in GTE's performance of the Technical Effort, the time for
GTE's performance under the Schedule shall be extended accordingly and GENUITY
shall pay GTE, at GTE's then current rates, for any additional time spent, and
reimburse GTE for any additional expenses incurred, as a result of such
hindrance or delay.
3.4. Technical Effort Coordinators and Technical Effort Teams.
(a) For each Technical Effort, each party shall specify one Technical
Effort Coordinator who shall be designated to act that party's contact person
relating to the over-all conduct of the Technical Effort.
(b) Each party shall assign to the Technical Effort such personnel (its
"Technical Effort Team") and other resources as may be reasonably necessary to
complete the Technical Effort.
(c) Either party shall be free to change the identity of the Technical
Effort Coordinator and Technical Effort Team members upon reasonable notice to
the other party.
(d) The GENUITY Technical Effort Coordinator and such other personnel
as are necessary shall be available during the term of the Technical Effort to
provide to GTE promptly on request all information regarding the Technical
Effort and the Specifications, if applicable, that is reasonably necessary for
GTE's completion of the Technical Effort.
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3.5. Progress Meetings. In the course of each Technical Effort, GTE and
GENUITY shall meet on a regular basis to review progress to date. The meetings
shall take place on or about the dates indicated in the Schedule, and in no
event less frequently than once each quarter-year. The meetings shall be
attended by each party's Technical Effort Coordinators and such other members of
their Technical Effort Teams as may be required adequately to assess the
progress of the Technical Effort, any technical or other difficulties that may
have been encountered, and to establish schedules and plans for its successful
completion
3.6. Access to Legacy Systems. Promptly following execution of each
Statement of Work related to Legacy Systems, GENUITY shall, without charge,
provide to GTE copies of the Object Code and (to the extent required to perform
the relevant Statement of Work) Source Code for all GENUITY Legacy Systems with
which the Software to be developed under the Statement of Work must interact,
communicate with or that is in any other way required for the completion of the
Technical Effort, together with all user manuals and other documentation
relating to the Legacy Systems, unless such Legacy Systems are owned by GTE and
are only licensed to GENUITY pursuant to a separate software license agreement.
GENUITY shall also provide to GTE, free of charge, access to all computer
hardware and networks on which or within which the Legacy Systems operate to the
extent reasonably required to complete each Technical Effort. During the term of
this Agreement, GENUITY shall provide to GTE all updates, new releases and new
versions of the GENUITY Legacy Systems in the same form in which such was
originally provided, unless such updates, new releases and new versions are
provided by GTE. During the term of each Technical Effort, GENUITY shall provide
GTE (or cause to be provided to GTE), without charge, with all maintenance and
support services with respect to the Legacy Systems which subscribers to
maintenance and support services for such products receive generally, unless
such maintenance and support services are provided by GTE. With respect to any
Source Code owned by GENUITY and provided to GTE under this Agreement, GTE shall
use the Source Code for the Legacy Systems solely for the purpose of performing
GTE's obligations under the Statement of Work or Statements of Work for which
such Source Code is necessary, and shall not disclose, without GENUITY's prior
consent, such Source Code to anyone other than GTE and its Affiliates who are
performing services with respect to such Statement of Work.
3.7. Inspection of Facilities. GTE shall advise GENUITY in writing of
the location of all facilities at which it is utilizing Source Code for the
GENUITY Legacy Systems. GENUITY may, from time to time, as it deems necessary,
at its sole risk and expense, enter such facilities, or any of them, and conduct
such inspection as is reasonably necessary to verify the nature of GTE's use of
such Source Code and GTE's compliance with its obligations with respect to the
confidentiality of such Source Code. GTE shall provide reasonable assistance to
GENUITY for such inspection, GENUITY shall minimize the amount of time that it
is required to spend in GTE's facilities, and GENUITY shall coordinate all such
activities with GTE so as not to unreasonably interfere with GTE's operations.
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3.8. Specifications and Change Orders.
(a) The Specifications for the Software to be developed during each
Technical Effort shall be as set forth in the Statement of Work for that
Technical Effort. No change in the Specifications shall be binding upon either
party unless it has been incorporated into a written Change Order signed by the
Technical Effort Coordinator for both parties.
(b) If GENUITY wishes to change the Specifications for any Software, it
shall give GTE written notice of such request. GTE shall respond to such request
within thirty (30) days, including in its response any change in the Schedule,
amounts to be paid, Technical Effort Teams or other matters that may be required
by the proposed change. The parties shall thereupon negotiate in good faith for
a Change Order incorporating the changes in the Statement of Work required by
the requested changes. Either party may, however, decline in its discretion to
enter into any proposed Change Order.
(c) In no event shall GENUITY or GTE be bound by any proposed change
unless and until it has signed a Change Order for such change, and the Statement
of Work for the Technical Effort shall remain in full force and effect, without
modification, until such Change Order has been agreed upon and signed.
4. Delivery and Acceptance Procedure.
4.1. Delivery Period. GTE shall provide each Deliverable to GENUITY in
accordance with the Schedule for the relevant Technical Effort. All
Deliverables, if any, shall be provided in the form of Object Code, unless
otherwise specified in the Statement of Work, except GTE shall also provide
Source Code and Documentation for Deliverables to be owned by GENUITY under an
Exclusive Statement of Work. GTE shall also deliver Documentation for the
Software as may be required by the Statement of Work.
4.2. Acceptance. The procedure for delivery and acceptance of
Deliverables by GENUITY, to the extent acceptance is contemplated by the
applicable Statement of Work and a procedure for such delivery and acceptance is
not otherwise provided therein, shall be in accordance with the following.
(a) The Statement of Work shall specify the procedure and criteria, if
any, that GTE must meet in order for the Deliverables described in a Statement
of Work to be accepted by GENUITY. The Statement of Work shall also specify a
test plan, such other information as GTE and GENUITY mutually deem appropriate
and the period of time that GENUITY shall have to provide notice of acceptance
or rejection to GTE. However, failure to accept or reject such Deliverable
within the specified period of time or the commercial use of such item by or for
the benefit of GENUITY shall be deemed to be acceptance.
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(b) If GENUITY rejects a Deliverable, it shall specify in reasonable
detail in writing the reasons for rejection and the requirements for revision.
If the notice of rejection is not sufficiently detailed to allow GTE to
determine why such Deliverable is unacceptable, GTE may request in writing that
GENUITY provide sufficient additional information, indicating the type of
additional information required by GTE. If GTE and GENUITY have joint
responsibility for the Deliverable and the Deliverable requires revision, GTE
shall assist GENUITY in making revisions necessary for the Deliverable to meet
the acceptance criteria within a period of time that is reasonable under the
circumstances. If GTE has sole responsibility for the Deliverable, then it shall
make the necessary revisions within a period of time that is reasonable under
the circumstances.
5. Payment.
5.1. Payment. GENUITY shall pay the amounts that are charged to
GENUITY, and GTE shall invoice GENUITY, in accordance with the Statement of
Work. Each invoice shall reference this Agreement and the applicable Statement
of Work. The invoices shall be itemized to show the details as to all billed
items. Payments shall be made within thirty (30) days from the date of each
invoice.
5.2. Taxes. In addition to any payments required by a Statement of
Work, GENUITY shall pay GTE an amount equal to any sales, use, privilege, gross
revenue, excise, or any other tax (except income and franchise taxes), as well
as any assessments or duties with respect to the Deliverables, Services and
other services, materials and rights provided by GTE hereunder lawfully levied
by a duly constituted governmental authority and for which GTE is required or
permitted, by law, to collect from GENUITY. In addition each party shall be
responsible for all real and personal property taxes imposed on software and
equipment owned by the respective parties on January 1 of every year; provided,
however, GENUITY shall be responsible for such real and personal property taxes
imposed upon any Deliverables provided to GENUITY. If GENUITY determines that
any Deliverables, Services and other services, materials and rights provided by
GTE hereunder are exempt from a tax, GENUITY must provide GTE a properly
completed exemption certificate, for each jurisdiction for which GENUITY is
claiming an exemption, before GTE will exclude the respective tax from amounts
charged to GENUITY. GENUITY shall not deduct any tax amount from remittances to
GTE until a properly completed exemption certificate, for all jurisdictions for
which GENUITY is claiming an exemption, has been provided to GTE.
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5.3. Expenses. GENUITY shall reimburse GTE for reasonable expenses for
travel, meals and lodging incurred by them in the performance of its obligations
under this Agreement. Any such charges shall be in compliance with such GTE's
employee expense policies. There shall be no mark-up of such expense charges.
GTE shall maintain documentation of expenses incurred, and shall provide copies
of invoices of $100 or more upon GENUITY's request. GTE shall bill GENUITY
monthly for expenses as they accrue. The parties shall specify any limitation on
the reimbursement of expenses in the applicable Statement of Work. It is
acknowledged and agreed that if GTE is required to incur expenses beyond such
limitation in order to perform its obligations under the applicable Statement of
Work or under this Agreement, then GTE is excused from performing such
obligations until said expense limitation is removed or changed as mutually
agreed; provided, however, that GTE promptly notifies GENUITY of the need to
exceed the limitation.
5.4. Records. GTE shall maintain complete and accurate records in a
form consistent with generally accepted accounting practices, to substantiate
any charges. GTE shall retain, and make available upon request, such records for
a period of three (3) years from the date of invoice for them. GENUITY and its
authorized agents, subject to obligations of confidentiality as set forth in
this Agreement, shall have access to such records upon prior written request
during normal business hours during the term of this Agreement and during the
respective periods in which GTE is required to maintain such records pursuant to
this Section 5.4. Access to the records shall be made at the location where such
records are normally maintained.
6. Intellectual Property.
6.1. Ownership.
(a) Subject to GENUITY'S payment in full and compliance with all other
terms and conditions of this Agreement, and except as may be otherwise set forth
in a Statement of Work, GTE agrees to (i) transfer to GENUITY all right, title
and interest in and all materials included in Deliverables that are first
created during the course of the performance of an Exclusive Statement of Work
(including, but not limited to, Software and Documentation), and any and all
Intellectual Property Rights therein; and (ii) grant to GENUITY a fully paid up,
royalty free license to use the portion of the Deliverables not covered by
subsection (i) immediately above, to the extent such portion is owned by GTE.
Without limiting the generality of the foregoing, GENUITY shall have the right,
without obligation to account to GTE, to market and distribute such
Deliverables.
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(b) GTE shall have sole and exclusive ownership of all right, title and
interest in and to all Deliverables (including, but not limited to, Software and
Documentation) (i) not included in Section 6.1(a)(i) above or (ii) described in
all Non-Exclusive Statements of Work, any and all Intellectual Property Rights
in the foregoing, and all other services, materials, information and
Intellectual Property Rights first created in the course of, pursuant to or as a
result of the performance of any Statement of Work. Without limiting the
generality of the foregoing, GTE shall have the sole and exclusive right,
without obligation to account to GENUITY, to such Deliverables and other
services, materials and Intellectual Property Rights, including, but not limited
to, the sole and exclusive right to market and distribute the Deliverables,
Intellectual Property Rights and other services, materials and information,
subject only to the licenses granted herein to GENUITY pursuant to Section 6.2.
6.2. Grant of Licenses by GTE for GTE-Owned Deliverables. Subject to
GENUITY's payment in full of all amounts owing pursuant to a Non-Exclusive
Statement of Work, GTE hereby grants to GENUITY a nonexclusive, fully paid up,
royalty free, non-sublicensable, nontransferrable license to use the GTE-owned
Deliverables described in all Non-Exclusive Statements of Work solely for
GENUITY's Internal Business Purposes. Except and to the extent expressly set
forth in the applicable Statement of Work to this Agreement, no maintenance and
support services will be provided pursuant to the Software License Agreement for
Software delivered and licensed pursuant to this Agreement. To the extent any
Third Party Software is provided by GTE to GENUITY pursuant to this Agreement,
the use and possession of such Third Party Software shall be pursuant to the
terms and conditions of this Agreement, unless a Third Party Software license
agreement is included with such Third Party Software, in which instance such
Third Party Software license agreement shall govern the use and possession of
such Third Party Software. The said license shall include the right to prepare
derivative works and shall also include the right, to the extent that GTE cannot
perform such services on a commercially reasonable basis, and subject to GTE's
prior written approval, which shall not be unreasonably withheld, to engage
third parties for the purpose of enhancing or supporting the Deliverables. The
license granted pursuant to this Section 6.2 shall extend to GENUITY's
Affiliates, provided that such Affiliates agree to be bound by the terms and
conditions of this Agreement, but shall not otherwise include any right to
sublicense. The license provided by this Section 6.2 is in addition to, and
shall not be construed as limiting or expanding in any way, any other licenses
that GTE has granted or will grant to GENUITY under GTE Intellectual Property
Rights.
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6.3. Grant of Licenses by GENUITY.
(a) Grant of Licenses by GENUITY for Deliverables under Exclusive
Statements of Work. Except as otherwise set forth in any Statement of Work,
GENUITY hereby grants to GTE a fully paid up, perpetual, royalty-free, worldwide
license, with no right to grant sublicenses, to use the Deliverables described
in all Exclusive Statements of Work, to the extent GENUITY owns such
Deliverables, for the Internal Business Purposes of GTE. The license granted
pursuant to this Section 6.3(a) shall extend to GTE's Affiliates, provided that
such Affiliates agree to be bound by the terms and conditions of this Agreement,
but shall not otherwise include any right to sublicense. The said license shall
include the right to prepare derivative works and shall also include the right
to engage third parties for the purpose of enhancing or supporting the
Deliverables.
(b) GENUITY hereby grants to GTE a fully paid up, royalty-free license
under any Intellectual Property Right of GENUITY solely to the extent that such
license is necessary to perform one or more Statements of Work under this
Agreement. This license shall terminate upon acceptance of each Deliverable as
to which this license is granted.
6.4. No Implied Licenses. Except and to the extent set forth in
Sections 6.2 and 6.3, nothing contained herein shall be construed as granting
any right or license is to any party, by implication, estoppel or otherwise,
under any Intellectual Property Rights of any other party.
6.5. Notice of Infringement Claims. Each party shall use its best
efforts to give the other party prompt written notice following receipt of any
claim that any Deliverable infringes the Intellectual Property right of any
third party.
6.6. Marking. Each party shall include the other's patent, copyright
and proprietary rights notices on any copies such party makes of the Software,
Documentation or related materials which belong to the other party.
7. Confidentiality.
7.1. Confidentiality. In the course of requesting and performing any
Statement of Work and other obligations hereunder, each party may receive or
acquire from the other information or data pertaining to specifications,
drawings, sketches, models, samples, computer programs, methods, concepts,
know-how, techniques, processes, and other technical or business information
that the other party desires to protect against unauthorized use or further
disclosure. Unless otherwise expressly set forth in a Statement of Work, for
purposes of this Agreement, "Confidential Information" shall mean: (i) any
information in written, other tangible or electronic form which is labeled by
the disclosing party as "confidential", "proprietary" or with a legend of
similar import; (ii) software in any form (including related documentation),
whether or not labeled in accordance with the preceding; (iii) Deliverables
provided pursuant to this Agreement, with the ownership of, proprietary interest
therein and Intellectual Property Rights therein being retained by the party
owning such Deliverables under the terms and conditions of this Agreement. Each
party shall remain the exclusive owner of its Confidential Information.
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7.2. Use of Confidential Information. The Confidential Information of
the disclosing party may be used by the receiving party only for the performance
or use of Deliverables and Services under this Agreement and may only be
disclosed to those employees, subcontractors or agents of the receiving party
who have a need to know in order to perform or use the Deliverables and Services
under this Agreement; provided, however, that neither party shall disclose any
Confidential Information of the other party to a person who is not an Affiliate
of the disclosing party without the prior approval of the other party, which
approval shall not be unreasonably withheld. Except and to the extent set forth
in Section 7.3, the receiving party may not disclose Confidential Information of
the other party to any other person, entity, or the public without the prior
written consent of the disclosing party; provided, however, that such
Confidential Information may be disclosed by the receiving party without the
necessity of prior written consent, to the receiving party's subcontractors,
employees or consultants who require access to such Confidential Information to
perform or use the Deliverables and Services under this Agreement, provided such
persons have entered into written agreements which contain obligations of
nondisclosure and nonuse no less restrictive than set forth in this Section 7.2.
It is agreed that such written agreements shall be enforceable by the disclosing
party.
7.3. Exceptions. The obligations in Section 7.2 shall not apply to that
portion of any information received from the disclosing party which is: lawfully
in the receiving party's possession, with no restriction on use or disclosure,
prior to its acquisition from the disclosing party; received in good faith by
the receiving party, with no restrictions on use or disclosure, from a third
party not subject to any confidential obligation to the disclosing party; now or
later becomes publicly known through no breach of confidential obligation by the
receiving party; released by the disclosing party to any other person, firm or
entity (including governmental agencies or bureaus) without restriction on use
or disclosure; or independently developed by or for the receiving party without
any reliance on or use of Confidential Information of the disclosing party. The
foregoing exceptions shall not apply to Software in any form.
7.4. Disclosure and Notification. If a receiving party receives a
request to disclose any Confidential Information of the disclosing party
(whether pursuant to a valid and effective subpoena, an order issued by a court
or other governmental authority of competent jurisdiction or otherwise) on
advice of legal counsel that disclosure is required under applicable law, the
receiving party agrees that, prior to disclosing any Confidential Information of
the disclosing party, it shall (i) notify the disclosing party of the existence
and terms of such request or advice, (ii) cooperate with the disclosing party in
taking legally available steps to resist or narrow any such request or to
otherwise eliminate the need for such disclosure at the disclosing party's sole
expense, if requested to do so by the disclosing party, and (iii) if disclosure
is required, it shall be the obligation of the disclosing party to use its best
efforts to obtain a protective order or other reliable assurance that
confidential treatment shall be afforded to such portion of the Confidential
Information of the disclosing party as is required to be disclosed.
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7.5. Continuing Obligation. The obligation of non-disclosure and
non-use with respect to Confidential Information of the disclosing party shall
survive termination of this Agreement and shall continue for a period of five
(5) years thereafter; provided, however, that the obligations of non-disclosure
and non-use shall continue in perpetuity for Software in any form.
8. Warranties and Warranty Disclaimer.
8.1. Express Representations and Warranties. GTE represents, warrants,
and covenants to GENUITY that:
(a) In performing the Services set forth in any Statement of
Work, GTE shall comply with all applicable laws, codes, ordinances,
orders, rules and regulations of local, state, and federal governments
and agencies and instrumentalities, including, but not limited to,
applicable wage and hour, safety and environmental laws, and all
standards and regulations of appropriate regulatory commissions and
similar agencies.
(b) All Services furnished by GTE in accordance with a
Statement of Work shall be performed by qualified personnel at a level
of professional performance standard within the industry in which the
Services are provided.
8.2. Disclaimer. THE WARRANTIES IN THIS SECTION 8 AND ANY WARRANTY IN A
STATEMENT OF WORK, BUT ONLY IF SPECIFICALLY IDENTIFIED AS AN EXPRESS WARRANTY IN
SUCH STATEMENT OF WORK, ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
OR WHETHER ARISING BY COURSE OF DEALING OR PERFORMANCE, CUSTOM, USAGE IN THE
TRADE OR PROFESSION OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR WARRANTIES
AGAINST INFRINGEMENT. GTE MAKES NO WARRANTIES REGARDING THE DELIVERABLES,
INCLUDING, WITHOUT LIMITATION, SOFTWARE, OR SERVICES TO BE PROVIDED HEREUNDER,
EXPRESS, IMPLIED OR ARISING BY CUSTOM OR TRADE USAGE, AND SPECIFICALLY DISCLAIMS
THE IMPLIED WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT AND FITNESS FOR A
PARTICULAR PURPOSE. Except for the warranties expressly set forth in this
Section 8 and any Statement of Work, GENUITY acknowledges and agrees that it has
relied on no other representations or warranties and that no other
representations or warranties have formed the basis of its bargain hereunder
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8.3. Survival. All representations, warranties and covenants of GTE
contained in this Section 8 shall continue for the term of this Agreement and
shall survive its termination.
9. Indemnification.
9.1. Indemnity for Infringement of Third Party Intellectual Property.
(a) Indemnity regarding Deliverables provided under Exclusive
Statements of Work. If a Deliverable under an Exclusive Statement of Work become
the subject of an infringement claim, or in GTE's opinion is likely to become
the subject of such a claim, then, in addition to defending the claim and paying
any damages and attorneys' fees finally awarded by a court of final
jurisdiction, GTE may, at its option and in its sole discretion, and at its own
cost and expense: (i) replace or modify such Deliverable to make it
noninfringing or cure any claimed misuse of any third party trade secret; (ii)
procure for GENUITY the right to continue using such Deliverable pursuant to
this Agreement; or (iii) require GENUITY to cease using and return such
Deliverable upon a Markman determination that the patent claims on which an
action has been brought are afforded a construction which outside counsel for
GTE reasonably believes reads on the Deliverable or a decision of infringement,
whichever is earlier, in which case GTE shall refund to GENUITY a pro-rata
portion of the amount actually paid to GTE by GENUITY for such Deliverable.
Notwithstanding the foregoing, if GTE exercises its right to require the return
of such Deliverable, to the extent permitted by applicable law, GENUITY may
retain and continue to use such Deliverable to the extent GENUITY agrees in
writing to defend and indemnify GTE for any and all expenses, costs and
liabilities associated with such continued possession and use of such
Deliverable.
(b) Indemnity regarding Deliverable provided under Non-Exclusive
Statements of Work. If a Deliverable under a Non-Exclusive Statement of Work
become the subject of an infringement claim, or in GTE's opinion is likely to
become the subject of such a claim, then, in addition to defending the claim and
paying any damages and attorneys' fees finally awarded by a court of final
jurisdiction, GTE may, at its option and in its sole discretion, and at its own
cost and expense: (i) replace or modify such Deliverable to make it
noninfringing or cure any claimed misuse of any third party trade secret; (ii)
procure for GENUITY the right to continue using such Deliverable pursuant to
this Agreement; or (iii) require the return of such Deliverable and terminate
GENUITY's right to use the same and refund to GENUITY a pro-rata portion of the
amount actually paid to GTE by GENUITY for such Deliverable. Notwithstanding the
foregoing, if GTE exercises its right to require the return of such Deliverable
and terminates GENUITY's right to use the same, to the extent permitted by
applicable law, GENUITY may retain and continue to use such Deliverable to the
extent GENUITY agrees in writing to defend and indemnify GTE for any and all
expenses, costs and liabilities associated with such continued possession and
use of such Deliverable.
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(c) Limitations. GTE shall not be liable to GENUITY for any claims of
inducement to infringe or contributory infringement or claims of infringement
resulting from the combination of the Deliverable with the products or services
of third parties. Further, GTE shall have no liability to GENUITY hereunder if
(i) the claim of infringement is based upon the use or other exploitation of
Deliverable provided by GTE hereunder in connection or in combination with
equipment, devices, data or software not supplied by GTE, and such infringement
would not have occurred but for such use; (ii) such Deliverable is used outside
of the scope of the rights and licenses granted to GENUITY or in a manner for
which the Deliverable was not designed; (iii) the Deliverable or any portion
thereof is modified by or for GENUITY (even by GTE at GENUITY's direction or
instructions), and such infringement would not have occurred but for such
modification; (iv) GENUITY uses the Deliverable as part of a patented process
and there would be no infringement in the use of the Deliverable alone; or (v)
the infringement is the necessary result of GTE's compliance with specifications
or written instructions provided by GENUITY to GTE, misuse of a third party's
Confidential Information provided by GENUITY to GTE or use of Legacy Systems
provided by GENUITY to GTE . For all of the foregoing exclusions, GENUITY shall
defend and indemnify GTE for any infringement claims to the extent set forth in
Section 9.1(a).
(d) The foregoing sets forth GTE's sole and exclusive obligations, and
GENUITY's sole remedies, for infringement of any Intellectual Property Rights by
any Deliverables under any Statement of Work.
9.2. General. GTE and GENUITY, to the fullest extent permitted by law,
each shall defend, indemnify and hold harmless the other and its Affiliates,
officers, agents and employees from any and all amounts payable under any
judgment, verdict, court order or settlement (and associated fees and
disbursements of counsel) arising from or related to any third-party claims for
injury, sickness, disease or death of any person or damage to any real or
tangible personal property or assets to the extent arising from the indemnitor's
(either directly or through its officers, agents, subcontractors or
representatives) negligence or willful misconduct in the performance of this
Agreement; provided, however, that if a claim is the result of the joint
negligence or joint willful misconduct of GTE and GENUITY, the amount of the
claim for which each party is entitled to indemnification shall be limited to
that portion of such claim that is attributable to the negligence or willful
misconduct of the indemnifying party. The parties agree that the payments
required by any Statement of Work provided under this Agreement includes
consideration for the obligation to indemnify as set out in this Section 9.
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9.3. Losses. GENUITY and GTE each shall be responsible for any and all
claims, actions, damages, liabilities, costs and expenses, including reasonable
attorneys' fees and expenses (collectively, "Losses"), to their respective
tangible personal or real property (whether owned or leased), and each party
agrees to look only to its own insuring arrangements (if any) with respect to
such Losses. Subject to the procedures set forth below, each party shall
indemnify, defend and hold the other party harmless from any and all Losses
arising out of, under or in connection with claims for which the indemnitor is
responsible under the preceding sentence.
9.4. Waivers. GENUITY and GTE waive all rights to recover against each
other for any Loss to their respective tangible personal property (whether owned
or leased) from any cause covered by insurance maintained by each of them,
including their respective deductibles or self-insured retentions. GENUITY and
GTE shall cause their respective insurers to issue appropriate waivers of
subrogation rights endorsements to all property insurance policies maintained by
each party. Each party shall give the other written notice if a waiver of
subrogation is unobtainable or obtainable only at additional expense. If the
party receiving such notice agrees to reimburse the other party for such
additional expense, the other party shall obtain such waiver of subrogation. If
a waiver is unobtainable or if a party elects not to pay the additional expense
of a waiver, then neither party nor their insurers shall waive such subrogation
rights.
9.5. Conditions. The indemnification obligations set forth in this
section shall not apply unless the party claiming indemnification: (i) uses its
best efforts to notify the other promptly in writing, of any matters in respect
of which the indemnity may apply and of which the notifying party has knowledge,
in order to allow the indemnitor the opportunity to investigate and defend the
matter; provided, however, that the failure to so notify shall only relieve the
indemnitor of its obligations under this Section 9 if and to the extent that the
indemnitor is prejudiced thereby; and (ii) gives the other party full control of
the response thereto and the defense thereof, including any agreement relating
to the settlement thereof; provided, however, that the indemnitee shall have the
right to participate, on a non-interfering basis, in any legal proceeding to
contest and defend a claim for indemnification involving a third party and to be
represented by legal counsel of its choosing, all at the indemnitee's sole cost
and expense. However, if the indemnitor fails to promptly assume the defense of
the claim, the party entitled to indemnification may assume the defense at the
indemnitor's cost and expense. The indemnitor shall not be responsible for any
settlement or compromise made without its prior written consent, unless the
indemnitee has tendered notice and the indemnitor has then refused to assume and
defend the claim and it is later determined that the indemnitor was obligated to
assume and defend the claim. The indemnitee agrees to cooperate in good faith
with the indemnitor at the request and expense of the indemnitor.
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10. Limitations on Liability.
10.1. General. A party's and its Affiliates' liability arising out of
or relating to a Statement of Work and this Agreement, including without
limitation on account of performance or nonperformance of obligations hereunder,
regardless of the form of the cause of action, whether in contract, tort
(including without limitation negligence), statute or otherwise, shall in no
event exceed the lesser of (i) the price to be paid to GTE for the completed
Statement of Work as set forth thereon; or (ii) the amount actually paid by
GENUITY to GTE for the particular Statement of Work from which the claim arises.
The limitation in the immediately preceding sentence does not apply to a party's
obligations under the section entitled Indemnification and Confidential
Information or other breaches related to Intellectual Property Rights.
10.2. Limitation. EXCEPT FOR BREACHES RELATED TO CONFIDENTIAL
INFORMATION OR INTELLECTUAL PROPERTY RIGHTS, NEITHER PARTY SHALL BE LIABLE TO
THE OTHER FOR ANY INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY, SPECIAL OR
CONSEQUENTIAL DAMAGE OR LOST PROFITS OF ANY KIND WHATSOEVER EVEN IF A PARTY OR
ITS AFFILIATES HAVE BEEN APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING.
11. Term.
11.1. Term. This Agreement is effective as of the Effective Date and
shall continue in effect for an initial term of one (1) year ("Initial Term") or
for such other term as may be set out in a Statement of Work for each Technical
Effort; provided, however, that any extension of the Term provided in any
Statement of Work shall apply solely to such Statement of Work and shall not
extend the Term of this Agreement generally. Following the completion of the
Initial Term, this Agreement may be renewed upon mutual agreement of the parties
for successive renewal terms ("Renewal Terms") of one (1) year. A party that
wishes to renew the Agreement shall notify the other no later than ninety (90)
days prior to the end of the then current term. If the parties do not reach
agreement on renewal at least sixty (60) days prior to the end of such term, the
Agreement shall terminate at the end of that term, provided that the term of any
Statement of Work shall continue until such term expires.
11.2. Termination Events. Either party may terminate or cancel this
Agreement or any Statement of Work, effective immediately, upon written notice
to the other party, if any of the following events occur:
(a) The other files a voluntary petition in bankruptcy (other
than as creditor).
(b) The other is adjudged bankrupt.
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(c) A court assumes jurisdiction of the assets of the other
under a federal reorganization act.
(d) A trustee or receiver is appointed by a court for all or a
substantial portion of the assets of the other.
(e) The other becomes insolvent or suspends its business.
(f) The other makes an assignment of its assets for the
benefit of its creditors except as required in the ordinary course of
business.
11.3. Termination for Breach. Either party may terminate or cancel this
Agreement or a Statement of Work, for a material breach or default of any of the
terms, conditions or covenants of this Agreement by the other, provided that
such termination or cancellation may be made only following the expiration of a
thirty (30) day period during which the other party has failed to cure such
breach after having been given written notice of such breach.
11.4. Termination for Convenience. GENUITY may terminate any Statement
of Work, or this Agreement in its entirety, at any time upon written notice to
GTE. In such event, GENUITY shall pay GTE for all work performed up to the date
of termination, and for all supplies and other resources, including third party
licenses, that GTE has obtained or committed to the completion of the relevant
Statement of Work and that cannot reasonably be re-assigned or otherwise
utilized by GTE on other matters.
11.5. Termination by Mutual Consent. The parties may at any time
terminate any Statement of Work, or this Agreement in its entirety, by mutual
consent. In such event, GENUITY shall pay GTE for all work performed up to the
date of termination, and for all supplies and other resources, including third
party licenses, that GTE has obtained or committed to the completion of the
relevant Statement of Work and that cannot reasonably be re-assigned or
otherwise utilized by GTE on other matters.
11.6. Effect of Termination.
(a) No expiration, termination or cancellation of this Agreement, in
whole or in part, shall relieve GENUITY of any obligation to pay amounts due nor
affect any other rights or liabilities of the parties which may have accrued
prior to the date of expiration, termination or cancellation.
(b) In no event shall any license granted to GENUITY hereunder (or any
license grant made by reference to the Software License Agreement) survive
expiration, termination or cancellation unless and until Internetworking has
paid in full for the Deliverables to which such license relates.
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(c) Notwithstanding anything herein to the contrary, and in addition to
any provisions of Statement of Work that expressly survive expiration,
termination or cancellation of this Agreement, upon any expiration or
termination of this Agreement, the provisions of Sections 5, 6, 7, 8.2, 8.3, 9,
10, 11.6 and 12 of this Agreement shall survive such expiration, termination or
cancellation and shall continue in full force and effect.
12. Dispute Resolution.
12.1. General. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled first, by good faith
efforts of the parties to reach mutual agreement, and second, if mutual
agreement is not reached to resolve the dispute, by final, binding arbitration
as set out in Section 12.3 below.
12.2. Initial Resolution. A party that wishes to initiate the dispute
resolution process shall send written notice to the other party with a summary
of the controversy and a request to initiate these dispute resolution
procedures. Each party shall appoint a knowledgeable, responsible representative
from the company who has the authority to settle the dispute, to meet and
negotiate in good faith to resolve the dispute. The discussions shall be left to
the discretion of the representatives, who may utilize other alternative dispute
resolution procedures such as mediation to assist in the negotiations.
Discussions and correspondence among the representatives for purposes of these
negotiations shall be treated as Confidential Information developed for purposes
of settlement, shall be exempt from discovery and production, and shall not be
admissible in the arbitration described above or in any lawsuit pursuant to Rule
408 of the Federal Rules of Evidence. Documents identified in or provided with
such communications, which are not prepared for purposes of the negotiations,
are not so exempted and may, if otherwise admissible, be admitted in evidence in
the arbitration or lawsuit. The parties agree to pursue resolution under this
subsection for a minimum of 60 days before requesting arbitration.
12.3. Arbitration. If the dispute is not resolved under the preceding
subsection within 60 days of the initial written notice, and the dispute does
not relate to Intellectual Property Rights, either party may demand arbitration
by sending written notice to the other party. The parties shall promptly submit
the dispute to the American Arbitration Association for resolution by a single
neutral arbitrator acceptable to both parties, as selected under the rules of
the American Arbitration Association. The dispute shall then be administered
according to the American Arbitration Association's Commercial Arbitration
Rules, with the following modifications: (i) the arbitration shall be held in a
location mutually acceptable to the parties, and if the parties do not agree,
the location shall be New York City; (ii) the arbitrator shall be licensed to
practice law; (iii) the arbitrator shall conduct the arbitration as if it were a
bench trial and shall use, apply and enforce the Federal Rules of Evidence and
Federal Rules of Civil Procedure; (iv) except for breaches related to
Confidential Information or intellectual property, the arbitrator shall have no
power or authority to make any award that provides for consequential, punitive
or exemplary damages; (v) the arbitrator shall control the scheduling so that
the hearing is completed no later than 60 days after the date of the demand for
arbitration; and (vi) the arbitrator's decision shall be given within 5 days
thereafter in summary form that states the award, without written decision,
which shall follow the plain meaning of this Agreement, the relevant documents,
and the intent of the parties. Judgment on the award rendered by the arbitrator
may be entered in any court having jurisdiction over the parties. Each party to
the dispute shall bear its own expenses arising out of the arbitration, except
that the expenses of the facilities to conduct the arbitration and the fees of
the arbitrator shall be shared equally by the parties.
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12.4. Injunctive Relief. The foregoing notwithstanding, each party
shall have the right to seek injunctive relief in an applicable court of law or
equity pending resolution of the dispute in accordance with the foregoing.
13. General.
13.1. Notice. Any written notice either party may give the other
concerning the subject matter of this Agreement shall be in writing and given or
made by means that obtain a written acknowledgment of receipt. Notices shall be
sent to the parties at the following addresses, which may be changed by written
notice:
To GTE:
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To GENUITY:
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Notice shall be deemed to have been given or made when actually
received, as evidenced by written acknowledgment of receipt.
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13.2. Compliance. GTE and GENUITY shall each comply with the provisions
of all applicable federal, state, and local laws, ordinances, regulations and
codes (including, without limitation, procurement of required permits or
certificates) in fulfillment of their obligations under this Agreement. GTE
Products and Services are subject to U.S. export and foreign transactions
control regulations. Each party undertakes that it shall neither export, nor
cause nor permit to be exported, without the other party's prior written consent
and without compliance with applicable law and regulation, the other party's
products or services out of the United States of America, nor shall such
products or services be made available, directly or indirectly, for use in any
project associated with the design, development, production, testing,
stockpiling or use of: (i) nuclear weapons or facilities to produce nuclear
explosives, (ii) missiles, or (iii) chemical or biological warfare agents. Each
party agrees to comply with all applicable laws and regulations relating to the
exportation of technical information, as they currently exist and as they may be
amended from time to time.
13.3. Assignment, Subcontracting.
(a) Neither this Agreement nor any rights or obligations hereunder
shall be assignable by either of the parties hereto; provided, however, that GTE
may delegate all or any portion of its obligations under this Agreement to one
or more of its Affiliates or may assign this Agreement to any Affiliate.
(b) GTE may use subcontractors to perform its obligations under this
Agreement. GTE shall be responsible for the fulfillment of its obligations
hereunder, notwithstanding the performance of such obligations by its
subcontractors.
13.4. Waiver of Terms and Conditions. Failure to enforce any of the
terms or conditions of this Agreement shall not constitute a waiver of any such
terms or conditions, or of any other terms or conditions.
13.5. Severability. Where any provision of this Agreement is declared
invalid, illegal, void or unenforceable, or any changes or modifications are
required by regulatory or judicial action, and any such invalid, illegal, void
or unenforecable provision, or such change or modification, substantially
affects any material obligation of a party hereto, the remaining provisions of
this Agreement shall remain in effect and the parties shall mutually agree upon
a course of action with respect to such invalid provision or such change or
modification to the end that the purposes of this Agreement are carried out.
13.6. Governing Law. This Agreement, and the rights and obligations
contained in it, shall be governed by and construed in accordance with the laws
of the State of New York, without regard to any conflicts of law principles that
would require the application of the laws of any other jurisdiction.
13.7. No Unreasonable Delay or Withholding. Where agreement, approval,
acceptance, consent or similar action by GENUITY or GTE is required, such action
shall not be unreasonably delayed or withheld.
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13.8. Force Majeure. If performance of any obligations by either party
under this Agreement (other than any obligation of either party to pay money
hereunder) is prevented, restricted or interfered with by reason of acts of God,
wars, revolution, civil commotion, acts of public enemy, embargo, acts of
government in its sovereign capacity, labor difficulties, including, without
limitation, strikes, slowdowns, picketing or boycotts, communication line
failures, power failures, or any other circumstances beyond the reasonable
control and not involving any fault or negligence of the party affected, the
party affected, upon giving prompt notice to the other party, shall be excused
from such performance on a day-to-day basis during the continuance of such
prevention, restriction or interference (and the other party shall likewise be
excused, on a day-to-day basis during the same period, from performance of its
obligations which are dependent upon or affected by such nonperformance);
provided, however, that the party so affected shall use its best reasonable
efforts to avoid or remove such causes of nonperformance and both parties shall
proceed immediately with the performance of their obligations under this
Agreement whenever such causes are removed or cease.
13.9. Entire Agreement. This Agreement represents the entire
understanding between the parties with the respect to its provisions and cancels
and supercedes all prior agreements or understandings, whether written or oral,
with respect to the subject matter. This Agreement may only be modified or
amended by an instrument in writing signed by duly authorized representatives of
the parties. This Agreement shall be deemed to include all Schedules issued
hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the ___ day of ___________, 2000 (the "Effective Date") through their authorized
representatives.
GTE SERVICE CORPORATION GENUITY INC.
By: By:
------------------------------ ------------------------------
Name: Name:
------------------------------ ------------------------------
Title: Title:
------------------------------ ------------------------------
Date: Date:
------------------------------ ------------------------------
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EXHIBIT 10.14
INTELLECTUAL PROPERTY OWNERSHIP AND CROSS LICENSE AGREEMENT
THIS INTELLECTUAL PROPERTY OWNERSHIP AND CROSS LICENSE AGREEMENT
("Agreement") effective as of ___________, 2000 (the "Effective Date"), is made
between GTE Service Corporation, a New York corporation, with offices for this
Agreement at 1255 Corporate Drive, Irving, Texas 75038, and its Affiliates
("GTE") on the one hand, each only with respect to their respective obligations
hereunder, and Genuity Inc., a Delaware corporation, with offices for this
Agreement at 3 Van de Graaff Drive, Burlington, Massachusetts 01803 ("GENUITY")
on the other hand.
WHEREAS, GENUITY and GTE by this Agreement apportion between them the
ownership, by mutual agreement, of existing patents and patent applications,
agree to joint ownership of existing non-statutory intellectual property
(excluding previously licensed software) due to the inability to identify,
segregate and apportion such existing non-statutory intellectual property
between them, and grant each other a non-exclusive, royalty-free license under
existing patents and patent applications each party owns.
Now, therefore, in mutual consideration of the promises and obligations set
forth below, the parties agree as follows:
1. General.
GTE and GENUITY desire to establish a contractual relationship that will
(i) define the ownership of certain intellectual property rights as between
GENUITY and GTE, and (ii) grant GENUITY and GTE certain licenses and other
rights in and to intellectual property rights owned by the other party, all in
accordance with the terms and conditions set forth in this Agreement.
2. Definitions.
For purposes of this Agreement, and in addition to certain terms defined
on first use herein and in any schedule attached hereto, the following terms
shall have the following meanings.
2.1. "Affiliate" shall mean an entity that controls, is under common
control with, or that is controlled by, the entity with which it is affiliated.
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2.2. "Confidential Information" shall mean (i) all ideas and
information of any kind, including, without limitation, technology, know-how,
technical data, products, software, works of authorship, assets, operations,
contractual relationships, business plans or any other aspect of either party's
business, in written, other tangible or electronic form provided by one party
(the "disclosing party") to the other party ("the receiving party") which is
labeled by the disclosing party as "confidential", "proprietary" or with a
legend of similar import; (ii) software in any form (including, without
limitation, related documentation), whether or not labeled in accordance with
the preceding; (iii) Non-Statutory Intellectual Property obtained from the
disclosing party; and (iv) information orally disclosed and identified as
confidential at the time of such disclosure which is summarized in writing
within thirty (30) days of such disclosure. Confidential Information shall not,
however, include any information that (a) lawfully in the receiving party's
possession, with no restriction on use or disclosure, prior to its acquisition
from the disclosing party; (b) received in good faith by the receiving party,
with no restrictions on use or disclosure, from a third party not subject to any
confidential obligation to the disclosing party; (c) now or later becomes
publicly known through no breach of confidential obligation by the receiving
party; (d) released by the disclosing party to any other person, firm or entity
(including, without limitation, governmental agencies or bureaus) without
restriction on use or disclosure; or (e) independently developed by or for the
receiving party without any reliance on or use of Confidential Information of
the disclosing party. The foregoing exceptions shall not apply to software in
any form.
2.3. "Existing Patents", shall mean (i) the patents, patent
applications and Invention Disclosures (together with any patents issuing on the
foregoing patent applications and Invention Disclosures, divisions,
continuations or continuations-in-part thereof; patents, patent extensions,
certificates of invention, reissues, renewals and additions thereof) listed on
Schedule 2.3A to this Agreement; (ii) the patents, patent applications and
Invention Disclosures (together with any patents issuing on the foregoing patent
applications and Invention Disclosures, divisions, continuations or
continuations-in-part thereof; patents, patent extensions, certificates of
invention, reissues, renewals and additions thereof) listed on Schedule 2.3B to
this Agreement; and (iii) all other patents and patent applications (together
with any patents issuing on the foregoing patent applications, divisions,
continuations or continuations-in-part thereof; patents, patent extensions,
certificates of invention, reissues, renewals and additions thereof) existing as
of the Effective Date and owned by GTE or any Affiliate of GTE (including,
without limitation, GENUITY; but excluding, however, any Affiliate of GTE
resulting from a merger of GTE with a third party at any time after March 17,
2000.
2.4. "Intellectual Property Rights" shall mean Existing Patents and
Jointly Owned Non-Statutory Intellectual Property.
2.5. "Invention Disclosure" shall mean a disclosure, in written or
electronic form, of subject matter which is intended to be the subject of one or
more patent applications and was prepared in conformance with the internal
policies of a party hereto.
2.6. "Jointly-Owned Non-Statutory Intellectual Property" shall mean all
Non-Statutory Intellectual Property existing and owned by either or both parties
hereto or any of their Affiliates as of the Effective Date, but excluding any
Previously Licensed Non-Statutory Intellectual Property and also excluding all
Non-Statutory Intellectual Property owned by an Affiliate of GTE resulting from
the merger of GTE with a third party after March 17, 2000.
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2.7. "Non-Statutory Intellectual Property" shall mean all unpatented
inventions (whether or not patentable), trade secrets, know-how and proprietary
information, including but not limited to (in whatever form or medium),
discoveries, ideas, compositions, formulae, computer programs (including,
without limitation, source and object codes and documentation, but excluding
Software, Documentation and other intellectual property licensed by either party
hereto to the other pursuant to a Software License Agreement (as those
capitalized terms are defined therein)), databases, drawings, designs, plans,
proposals, specifications, photographs, samples, models, processes, procedures,
data, information, manuals, reports, financial, marketing and business data,
pricing and costing information, correspondence and notes to the extent owned by
either party hereto as of the Effective Date; provided, however, the foregoing
shall not include any Third Party Intellectual Property Rights or any
copyrights, trademarks, service marks, corporate names, domain names or
applications for any of the foregoing.
2.8. "Other Existing Intellectual Property" shall mean all copyrights,
trademarks, service marks, corporate names, domain names or applications for any
of the foregoing existing as of the Effective Date and owned as of the Effective
Date by a party hereto.
2.9. "Other Intellectual Property" shall mean all copyrights,
trademarks, service marks, corporate names, domain names or applications for any
of the foregoing developed, created or acquired from a third party after the
Effective Date which are owned by a party hereto.
2.10. "Previously Licensed Non-Statutory Intellectual Property" shall
mean that portion of Non-Statutory Intellectual Property which exists and is
owned by one party hereto (or its Affiliates) as of the Effective Date and is
licensed to the other party hereto (or its Affiliates) pursuant to a separate
written agreement, including, without limitation, the Software License Agreement
(as defined hereinbelow), effective on or before the Effective Date.
2.11. "Software License Agreement" shall mean that certain Software
License Agreement among the parties of even date herewith.
2.12. "Third Party Intellectual Property" shall mean any patents,
copyrights, software trade secrets, trademarks, service marks, proprietary
information and other intellectual property, in any form, that is owned by a
third party and is required or useful for the exercise of any rights or licenses
in Intellectual Property Rights conveyed or granted pursuant to this Agreement.
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3. Ownership.
3.1. Existing Patents. On the terms and subject to the conditions set
forth herein and subject to rights and licenses granted to third parties on or
before the Effective Date, the ownership of all right, title and interest in and
to the Existing Patents as of and after the Effective Date shall be apportioned
as follows and each party hereto agrees to execute such documents of assignment
and to take such other actions as may be required to effect the following:
(a) The Existing Patents listed on Schedule 2.3A hereto shall
be owned exclusively by GENUITY;
(b) The Existing Patents listed on Schedule 2.3B hereto shall
be jointly owned by GENUITY and GTE, with neither party being obligated
to account to the other therefor; and
(c) All other Existing Patents shall be owned exclusively
by GTE.
3.2. Jointly-Owned Non-Statutory Intellectual Property. On the terms
and subject to the conditions set forth herein and subject to the rights and
licenses granted to third parties on or before the Effective Date, GENUITY and
GTE shall jointly own, as of the Effective Date all right, title and interest in
and to any and all Jointly-Owned Non-Statutory Intellectual Property, with
neither party being required to account to the other therefor. Previously
Licensed Non-Statutory Intellectual Property shall continue to be owned solely
and exclusively by the owner thereof, and its use and other rights therein by
the other party defined by the terms and conditions of such separate agreements
between GTE and GENUITY or their respective Affiliates applicable to such
Previously Licensed Non-Statutory Intellectual Property.
3.3. Other Existing Intellectual Property. Other Existing Intellectual
Property shall continue to be owned after the Effective Date by the party owning
such Other Existing Intellectual Property on the Effective Date.
3.4. Other Intellectual Property.
(a) Except as other expressly provided in Sections 3.40 for certain
Other Intellectual Property, ownership by any party hereto of any and all right,
title and interest in and to Other Intellectual Property shall be determined in
accordance with applicable law and/or any agreements into which such party has
entered with its employees, subcontractors, agents or other third parties
(b) In certain circumstances, it may be possible to obtain Other
Intellectual Property in and to Jointly-Owned Non-Statutory Intellectual
Property. Notwithstanding joint ownership of Jointly-Owned Non-Statutory
Intellectual Property, the right to seek any Other Statutory Intellectual
Property on the Jointly-Owned Intellectual Property, and the ownership in and to
any right, title and interest of any such Other Intellectual Property that may
result, shall be determined in accordance with the following:
(i) for any and all Other Intellectual Property in and to works of
authorship and mask works that are Jointly-Owned Non-Statutory
Intellectual Property, the party or parties that employ at
least one author of such work (or in the case of a
work-for-hire, one contributor to such work) immediately after
the Effective Date shall have the right to seek such Other
Intellectual Property in and to such works and shall
exclusively own, as between the parties, all right, title and
interest in and to any Other Intellectual Property that result
therefrom;
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(ii) in the event of multiple authors and/or contributors, as the
case may be, at least one of which authors and/or contributors
is employed immediately after the Effective Date by each of
the parties hereto, all right, title and interest in and to
such Other Intellectual Property that results therefrom shall
be jointly owned by both parties, without the obligation of
either party to account to the other therefor; and
(iii) in the event that the author(s) or contributor(s), as the case
may be, is not employed by any of the parties hereto, all
right, title and interest in and to such Other Intellectual
Property that results therefrom shall be jointly owned by
GENUITY and GTE, with neither party having a duty to account
to the other for the exploitation thereof.
3.5. Preparation, Prosecution and Enforcement of Intellectual Property
Rights. Except as provided below for jointly-owned Intellectual Property Rights,
the owner of the Intellectual Property Rights, at its expense, shall control the
preparation, filing and prosecution of any patent applications directed to such
Intellectual Property Rights and to the maintenance and enforcement of any
patents that result therefrom, and the other party hereto shall cooperate with
the owner in such efforts at the owner's reasonable request and expense. For
purposes of Intellectual Property Rights which are jointly owned, GTE shall
control the preparation, filing and prosecution of such Intellectual Property
Rights and the cost thereof shall be borne equally by GTE and GENUITY; provided,
however, that (i) GTE will consult with GENUITY regarding the choice of foreign
jurisdictions in which to protect such Intellectual Property Rights; (ii) GTE
will provide copies of all documents filed with or received from the relevant
patent or other government offices in connection with the prosecution of such
Intellectual Property Rights; and (iii) the choice of prosecution counsel shall
be reasonably satisfactory to GENUITY. If GTE refuses to file a patent
application for protection of any such jointly owned Intellectual Property
Rights after GENUITY has requested that GTE do so, GENUITY may do so, with
counsel reasonably satisfactory to GTE, and the cost thereof shall be borne
equally by GTE and GENUITY.
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3.6. Limitations and Obligations of Ownership.
(a) Each party shall have the right, but not the obligation, to obtain,
maintain and enforce any Intellectual Property Rights solely owned by such party
in such manner as such party deems appropriate in its sole discretion.
(b) To the extent any party hereto has any right, title or interest in
or to any Intellectual Property Right that is to be owned jointly or exclusively
by the other party in accordance with the terms of this Section 0, such first
party shall assign, and hereby assigns, to such other party such portion or all
of the first party's right, title and interest in and to such Intellectual
Property Right as required hereunder. The first party shall execute and procure
such documents and take such other actions as may be reasonably requested from
time to time by the other party to obtain for its own benefit such Intellectual
Property Rights or otherwise to transfer or confirm its Intellectual Property
Rights.
(c) For any and all jointly owned Intellectual Property Rights, subject
to the obligations of Confidentiality set forth in Section 0 hereof:
(i) Each party shall have an undivided joint interest with the
other party in and to all such jointly owned Intellectual Property
Rights.
(ii) Each party shall have the right to license or sublicense
jointly owned Intellectual Property Rights without any duty to account
to the other party.
(iii) Each party shall have the right to exercise or otherwise
exploit jointly owned Intellectual Property Rights (including, without
limitation, the right to make, use, offer for sale, sell, and make
versions, adaptations and derivatives works), by any manner and means
now known or hereafter devised, in perpetuity, without any duty to
account to the other party.
(iv) Each party shall obtain waivers of any and all claims
against the other party that any employee, subcontractor or agent of
such party may now or hereafter have in any jurisdiction under "moral
rights" or rights of "droit moral" encompassed by any jointly owned
Intellectual Property Rights, and to the extent that such rights may
not be waived, each such party shall secure covenants and stipulations
of those individuals not to assert such rights against any of the other
parties hereto or their respective successors, assigns, licensees and
sublicensees.
(v) If either party becomes aware of any infringement, misuse
or misappropriation of any jointly owned Intellectual Property Right,
or any attempt to invalidate any jointly owned Intellectual Property
Right, such party shall promptly notify the other party, and the
parties shall thereafter confer in good faith regarding the steps, if
any, that should be taken to remedy any such infringement, misuse or
misappropriation or any such invalidity attempt. Either party shall
have the right, at its sole discretion and expense, to enforce any
jointly owned Intellectual Property Right against a third party. The
other party shall reasonably cooperate in any such proceeding;
provided, however, that the party bringing such proceeding shall
reimburse the other party for such other party's costs and reasonable
expenses, including reasonable attorneys fees, incurred in connection
with such cooperation; and provided, further, that the duty of
cooperation shall not interfere or diminish in any way with the right
of such other party to grant licenses hereunder, including licenses to
the accused infringer, and otherwise exploit all of such other party's
rights in the jointly owned Intellectual Property Right.
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(vi) Nothing contained in this Agreement, including, without
limitation, joint ownership of Jointly-Owned Non-Statutory Intellectual
Property, shall require either party or its Affiliates to disclose or
otherwise provide to the other party or its Affiliates any
Jointly-Owned Non-Statutory Intellectual Property.
(d) GTE acknowledges and agrees that, as between the parties and as of
the Effective Date, GENUITY exclusively owns any and all right, title and
interest in Existing Patents listed on Schedule 2.3A, and that under this
Agreement, GTE shall acquire no right, title, or interest in or to any of the
foregoing, other than any rights expressly granted hereunder.
(e) GENUITY acknowledges and agrees that, as between the parties and as
of the Effective Date, GTE exclusively owns any and all right, title and
interest in Existing Patents (other than Existing Patents listed on Schedules
2.3A and 2.3B), and that under this Agreement, GENUITY shall acquire no right,
title, or interest in or to any of the foregoing, other than any rights
expressly granted hereunder.
(f) Notwithstanding anything contained in this Agreement, each party
expressly reserves the right to enforce its agreements with current and former
employees relating to Intellectual Property Rights or relating to obligations of
confidentiality, nondisclosure and nonuse of proprietary or confidential
information.
4. License Grants.
4.1. GENUITY to GTE
(a) Existing Patents. On the terms and subject to the conditions set
forth herein and subject to rights and licenses granted to third parties on or
before the Effective Date, GENUITY hereby grants to GTE a worldwide,
nonexclusive, perpetual, royalty-free and irrevocable right and license to
exercise and otherwise exploit all of the Existing Patents listed on Schedule
2.3A (including, without limitation, the right to make, have made, use, offer
for sale, sell, lease and license and to practice any method in the exercise of
the foregoing), by any manner and means now known or hereafter devised. This
License shall include the right of GTE to sublicense GTE's Affiliates and
BCT.Telus Communications Inc. and their successors and assigns; provided,
however, that they agree to be bound by the terms and conditions of this
Agreement, but shall not otherwise include the right to sublicense.
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(b) Negation of Licenses in Other Intellectual Property. Except and to
the extent expressly set forth in a separate written agreement between GTE and
GENUITY, no right or licenses, express or implied, are hereby granted to GTE or
its Affiliates under any other intellectual property owned by GENUITY or its
Affiliates.
4.2. GTE to GENUITY
(a) Existing Patents. On the terms and subject to the conditions set
forth herein and subject to rights and licenses granted to third parties on or
before the Effective Date, GTE hereby grants to GENUITY a worldwide,
nonexclusive, perpetual, royalty-free and irrevocable right and license to
exercise and otherwise exploit all Existing Patents solely owned by GTE or its
Affiliates as of the Effective Date (i.e., Existing Patents other than those
listed on Schedules 2.3A and 2.3B), including, without limitation, the right to
make, have made, use, offer for sale, sell, lease and license and to practice
any method in the exercise of the foregoing, by any manner and means now known
or hereafter devised. This License shall include the right of GENUITY to
sublicense GENUITY's Affiliates; provided, however, that they agree to be bound
by the terms and conditions of this Agreement, but shall not otherwise include
the right to sublicense.
(b) Negation of Licenses in Other Intellectual Property. Except and to
the extent expressly set forth in a separate written agreement between GTE and
GENUITY, no right or licenses, express or implied, are hereby granted to GENUITY
or its Affiliates under any other intellectual property owned by GTE or its
Affiliates.
4.3. Limitations and Obligations of Licensees.
(a) Each party agrees neither to do nor to permit any act which may in
any way jeopardize or be detrimental to the validity of the other party's
Intellectual Property Rights licensed to such party hereunder.
(b) If a party becomes aware of any infringement, misuse or
misappropriation of any Intellectual Property Rights of the other party licensed
to the first party hereunder, the first party shall notify the other party with
a commercially reasonable period of time and shall cooperate reasonably with the
other party, at the other party's request and expense, to terminate or remedy
such infringement, misuse or misappropriation.
(c) Nothing contained herein shall be construed as obligating either
party to obtain, maintain or enforce Intellectual Property Rights licensed to
the other party hereunder.
(d) Nothing herein shall be construed as granting either party, by
implication, estoppel or otherwise, any license or other right under any
Intellectual Property Rights, except for those rights expressly granted
hereunder.
8
<PAGE>
5. Other Limitations on Ownership and Licenses.
5.1. Prior Obligations. All rights in or to Intellectual Property
Rights granted by either party hereunder by assignment, license or otherwise,
are subject to any rights granted to any third party in such Intellectual
Property Rights as of the Effective Date hereof.
5.2. Third Party Intellectual Property. Each party acknowledges that,
in order to exercise any rights granted hereunder, including but not limited to
Jointly-Owned Non-Statutory Intellectual Property, it may need to license or
otherwise obtain rights to use Third Party Intellectual Property. Such licenses
or other rights shall be at such party's sole cost and expense and the party
obtaining such licenses or other permissions shall be solely responsible for
observing and complying with the terms and conditions under which such Third
Party Intellectual Property is licensed or right is otherwise obtained from the
applicable third party.
6. Warranties.
6.1. Allocation of Risk. An essential purpose of the exclusion of
warranties and limitation of liability provided in this Agreement is allocation
of risks between GTE and GENUITY, which allocation of risks is reflected in the
arrangements between GTE and GENUITY in this Agreement.
6.2. No Conflicts. Each party warrants that, to the best of its
knowledge, it owns, or otherwise has the necessary rights in the Intellectual
Property Rights to assign ownership or to grant the rights and licenses conveyed
herein.
6.3. Disclaimer. THE WARRANTIES IN THIS SECTION 0 ARE IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, WHETHER ARISING BY COURSE OF DEALING OR
PERFORMANCE, CUSTOM, USAGE IN THE TRADE OR PROFESSION OR OTHERWISE, INCLUDING
BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE AND FITNESS FOR
A PARTICULAR PURPOSE OR WARRANTIES AGAINST INFRINGEMENT. WITHOUT LIMITING THE
FOREGOING, EACH PARTY EXPRESSLY DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY OR
REPRESENTATION (i) THAT THE EXERCISE OR OTHER EXPLOITATION OF ANY INTELLECTUAL
PROPERTY RIGHTS ASSIGNED OR LICENSED BY IT HEREUNDER SHALL BE FREE FROM
INFRINGEMENT OF ANY THIRD PARTY INTELLECTUAL PROPERTY, AND (ii) OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE EVEN IF EITHER PARTY HAS
BEEN ADVISED OR SHOULD HAVE KNOWN OF SUCH PURPOSE. Except for the warranties
expressly set forth in this Section 0, each of the parties acknowledges and
agrees that it has relied on no other representations or warranties and that no
other representations or warranties have formed the basis of its bargain
hereunder.
9
<PAGE>
7. Limitation of Liability
EXCEPT FOR BREACH BY THE LICENSEE OF THE LIMITATIONS AND RESTRICTIONS
ON THE RIGHTS GRANTED UNDER THE INTELLECTUAL PROPERTY RIGHTS OF THE LICENSOR,
NEITHER PARTY BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY INCIDENTAL,
CONSEQUENTIAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES (INCLUDING, WITHOUT
LIMITATION, DAMAGES FOR LOSS OF BUSINESS, LOSS OF PROFITS OR LOSS OF USE),
WHETHER BASED ON CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), OR
ANY OTHER CAUSE OF ACTION RELATING TO INTELLECTUAL PROPERTY RIGHTS ASSIGNED OR
LICENSED HEREUNDER OR CONFIDENTIAL INFORMATION, OR OTHERWISE RELATING TO THIS
AGREEMENT, EVEN IF THE OTHER PARTY HAS BEEN INFORMED OR SHOULD HAVE KNOWN OF THE
POSSIBILITY OF SUCH DAMAGES.
8. Confidential Information.
8.1. Restrictions. The Confidential Information of the disclosing party
may be used by the receiving party only for the performance of its obligations
and the exercise of its rights hereunder and may only be disclosed to those
employees, subcontractors or agents of the receiving party who have a need to
know in order so to perform or exercise. Except and to the extent set forth in
Section 0, the receiving party may not disclose Confidential Information of the
disclosing party to any other person, entity or the public without the prior
written consent of the disclosing party; provided, however, that such
Confidential Information may be disclosed by the receiving party without the
necessity of prior written consent to the receiving party's employees,
subcontractors or consultants who require access to such Confidential
Information to perform the receiving party's obligations or to exercise its
rights hereunder; provided, however, such persons have entered into written
agreements which contain obligations of nondisclosure and nonuse no less
restrictive than set forth in this Section 0, which agreements shall be
enforceable by the disclosing party.
8.2. Compliance with Governmental, Judicial Requirements. If a
receiving party receives a request to disclose any Confidential Information of
the disclosing party (whether pursuant to a valid and effective subpoena, an
order issued by a court or other governmental authority of competent
jurisdiction or otherwise) on advice of legal counsel that disclosure is
required under applicable law, the receiving party agrees that, prior to
disclosing any Confidential Information of the disclosing party, it shall (i)
notify the disclosing party of the existence and terms of such request or
advice, (ii) cooperate with the disclosing party in taking legally available
steps to resist or narrow any such request or to otherwise eliminate the need
for such disclosure at the disclosing party's sole expense, if requested to do
so by the disclosing party, and (iii) if disclosure is required, it shall be the
obligation of the disclosing party to use its best efforts to obtain a
protective order or other reliable assurance that confidential treatment shall
be afforded to such portion of the Confidential Information of the disclosing
party as is required to be disclosed.
10
<PAGE>
8.3. Continuing Obligation. The obligation of nondisclosure and nonuse
with respect to Confidential Information of the disclosing party shall survive
and continue for a period of five (5) years after the Effective Date; provided,
however, that the obligations of non-disclosure and non-use shall continue in
perpetuity for software in any form.
9. Dispute Resolution.
9.1. General. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled first, by good faith
efforts of the parties to reach mutual agreement as set forth below.
9.2. Initial Resolution. A party that wishes to initiate the dispute
resolution process shall send written notice to the other party with a summary
of the controversy and a request to initiate these dispute resolution
procedures. Each party shall appoint a knowledgeable, responsible representative
from the company who has the authority to settle the dispute, to meet and
negotiate in good faith to resolve the dispute. The discussions shall be left to
the discretion of the representatives, who may utilize other alternative dispute
resolution procedures such as mediation to assist in the negotiations.
Discussions and correspondence among the representatives for purposes of these
negotiations shall be treated as Confidential Information developed for purposes
of settlement, shall be exempt from discovery and production, and shall not be
admissible in the arbitration described above or in any lawsuit pursuant to Rule
408 of the Federal Rules of Evidence. Documents identified in or provided with
such communications, which are not prepared for purposes of the negotiations,
are not so exempted and may, if otherwise admissible, be admitted in evidence in
the arbitration or lawsuit. The parties agree to pursue resolution under this
subsection for a minimum of sixty (60) days before initiating an action in the
appropriate jurisdiction; provided, however, that each party reserves the right
to pursue and defend its rights in court after the said sixty (60) day period.
9.3. Injunctive Relief. The foregoing notwithstanding, each party shall
have the right to seek injunctive relief in an applicable court of law or equity
pending resolution of the dispute in accordance with the foregoing.
11
<PAGE>
10. General.
10.1. Notice. Any written notice either party may give the other
concerning the subject matter of this Agreement shall be in writing and given or
made by means that obtain a written acknowledgment of receipt. Notices shall be
sent to the parties at the following addresses, which may be changed by written
notice:
To GTE:
----------------------------------
----------------------------------
----------------------------------
----------------------------------
To GENUITY:
----------------------------------
----------------------------------
----------------------------------
----------------------------------
Notice shall be deemed to have been given or made when actually
received, as evidenced by written acknowledgment of receipt.
10.2. Compliance. GTE and GENUITY shall each comply with the provisions
of all applicable federal, state, and local laws, ordinances, regulations and
codes (including, without limitation, procurement of required permits or
certificates) in fulfillment of their obligations under this Agreement. All
Intellectual Property Rights Held by either party are subject to U.S. export and
foreign transactions control regulations. Each party undertakes that it shall
neither export, nor cause nor permit to be exported, without the other party's
prior written consent and without compliance with applicable law and regulation,
any such Intellectual Property Rights of the other party out of the United
States of America, nor shall such rights be made available by such party,
directly or indirectly, for use in any project associated with the design,
development, production, testing, stockpiling or use of: (i) nuclear weapons or
facilities to produce nuclear explosives, (ii) missiles, or (iii) chemical or
biological warfare agents. Each party agrees to comply with all applicable laws
and regulations relating to the exportation of technical information, as they
currently exist and as they may be amended from time to time.
10.3. Assignment, Subcontracting. Neither this Agreement nor any rights
or obligations hereunder shall be assignable by either of the parties without
the other party's prior written consent; provided, however, that each party may
assign this Agreement to any Affiliate or to any purchaser of any of such party
or of such party's business to which such license relates upon the sale of all
or substantially all of the assets of such business or upon a merger, stock swap
or other means by which a third party acquires that part of such party's
business to which such license relates. Any attempted or purported assignment in
violation of the foregoing shall be void. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the successors and
permitted assigns of each party hereto.
10.4. Waiver of Terms and Conditions. Failure to enforce any of the
terms or conditions of this Agreement shall not constitute a waiver of any such
terms or conditions, or of any other terms or conditions.
12
<PAGE>
10.5. Severability. Where any provision of this Agreement is declared
invalid, illegal, void or unenforceable, or any changes or modifications are
required by regulatory or judicial action, and any such invalid, illegal, void
or unenforceable provision, or such change or modification, substantially
affects any material obligation of a party hereto, the remaining provisions of
this Agreement shall remain in effect and the parties shall mutually agree upon
a course of action with respect to such invalid provision or such change or
modification to the end that the purposes of this Agreement are carried out.
10.6. Governing Law. This Agreement, and the rights and obligations
contained in it, shall be governed by and construed in accordance with the laws
of the State of New York, without regard to any conflicts of law principles that
would require the application of the laws of any other jurisdiction.
10.7. No Unreasonable Delay or Withholding. Where agreement, approval,
acceptance, consent or similar action by GENUITY or GTE is required, such action
shall not be unreasonably delayed or withheld.
10.8. Force Majeure. If performance of any obligations by either party
under this Agreement is prevented, restricted or interfered with by reason of
acts of God, wars, revolution, civil commotion, acts of public enemy, embargo,
acts of government in its sovereign capacity, labor difficulties, including,
without limitation, strikes, slowdowns, picketing or boycotts, communication
line failures, power failures, or any other circumstances beyond the reasonable
control and not involving any fault or negligence of the party affected, the
party affected, upon giving prompt notice to the other party, shall be excused
from such performance on a day-to-day basis during the continuance of such
prevention, restriction or interference (and the other party shall likewise be
excused, on a day-to-day basis during the same period, from performance of its
obligations which are dependent upon or affected by such nonperformance);
provided, however, that the party so affected shall use its best reasonable
efforts to avoid or remove such causes of nonperformance and both parties shall
proceed immediately with the performance of their obligations under this
Agreement whenever such causes are removed or cease.
10.9. Entire Agreement. This Agreement represents the entire
understanding between the parties with the respect to its provisions and cancels
and supercedes all prior agreements or understandings, whether written or oral,
with respect to the subject matter. This Agreement may only be modified or
amended by an instrument in writing signed by duly authorized representatives of
the parties. This Agreement shall be deemed to include all Schedules attached
hereto.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers to be effective as of
the Effective Date.
GTE SERVICE CORPORATION GENUITY INC.
By: By:
------------------------------ ------------------------------
Name: Name:
------------------------------ ------------------------------
Title: Title:
------------------------------ ------------------------------
Date: Date:
------------------------------ ------------------------------
14
<PAGE>
SCHEDULE 2.3A
SCHEDULE A
97-416
99-308PRO1
99-309PRO1
99-314
15
<PAGE>
SCHEDULE 2.3B
SCHEDULE B
97-415 JA
97-418
97-420
97-420PCT
97-420 EP
97-431
97-441CIP1
97-446
97-447 AU
97-447 CN
97-447 EP
97-452
97-452 CN
97-452 GW
97-452 SW
97-453
97-453PCT
97-453 EP
97-454
97-455
97-455PCT
97-455 EP
98-404
98-404 PCT
98-407
98-409
98-409PCT
98-409 EP
98-410
98-412
98-414
98-417
98-418
98-426
98-427
98-428
98-429
98-430
98-432
98-433
98-437
99-401
99-405
99-406
99-406PCT
99-407
99-408
99-409
99-410
99-426PRO
99-403
99-701
99-702
99-703
97-408
97-409
97-415
97-417
97-417 AU
97-417 CN
97-417 EP
97-417 JA
97-426
97-430
97-447
97-447 JA
97-457
97-457 AU
97-457 CN
97-457 FR
97-457 GB
97-457 GW
97-458
97-459
97-459 DK
97-459 EP
97-459 FR
97-459 GB
97-459 GW
97-459 IT
97-464
97-467
97-467 FR
97-467 GB
97-467 GW
97-467 JA
97-471
97-474
98-438
99-414
99-415
99-420
99-421
99-422
99-427
99-430
99-435
99-442
99-443
99-445
99-449
99-451
99-454
99-455
99-460
99-463PRO1
99-464PRO1
99-465
99-466
99-467
99-471
00-4008
00-4012
00-4013
00-4015
97-460 CPA
99-301
99-302
99-303
99-304
99-305
99-306
99-307
99-310
99-311
99-312
99-313
99-315
99-316
99-317
99-318
99-319
00-3001
00-3002
00-3003
00-3004
00-3005
00-3006
00-3007
00-3008
00-4019
00-4020
00-4025
00-4009
98-809
98-814
98-501
98-507
98-502
98-503
98-508
99-502
99-503
88-3-429
89-3-672
94-3-711 CN
94-3-711 EP
94-3-711 JA
94-3-726
96-3-507
96-3-511
96-3-511 CON 1
97-809
97-809 PCT
97-813
97-813 PCT
97-814
97-814 PCT
97-816
97-816 PCT
97-822
97-822 EP
97-822 PCT
98-801
98-801 PCT
98-802 C1 PCT
98-802 CIP 1
98-803
98-803 PCT
98-804
98-806
99-806
99-807
99-808
99-810
99-833
99-837
99-838
99-845
99-864
99-865
99-866
99-867
99-969
99-970
99-973
97-450CPA
97-450PCT
97-450AU
97-450CN
97-450EP
97-450JA
97-450NZ
99-313
16
<PAGE>
EXHIBIT 10.15
LEASE
This instrument is an indenture of lease (this "Lease") by and between
____________________________, a _____________________ ("Landlord") and
____________________________, a _____________________ ("Tenant").
The parties to this instrument hereby agree with each other as follows:
ARTICLE I
SUMMARY OF BASIC LEASE PROVISIONS
1.1 INTRODUCTION
As further supplemented in the balance of this instrument and its
Exhibits, the following sets forth the basic terms of this Lease, and, where
appropriate, constitutes definitions of certain terms used in this Lease.
1.2 BASIC DATA
Date:
--------------------------------------
Landlord:
--------------------------------------
Mailing Address
of Landlord:
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
Payment Address:
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
Tenant:
--------------------------------------
Mailing Address of
Tenant:
--------------------------------------
--------------------------------------
--------------------------------------
Premises: ______ square feet of rentable floor
area located on the ____ floor(s) of the
building (the "Building) located at
_____________________________, as shown
on a plan attached hereto as Exhibit A.
1
<PAGE>
Lease Term: The period of time from the Commencement
Date through the Expiration Date subject
to earlier termination as herein
provided.
Commencement Date:
--------------------------------------
Expiration Date
--------------------------------------
Base Rent: From the Commencement Date through
December 31, 2000, at the rate of
$________ per annum ($________ per
month). Thereafter, the Base Rent shall
be increased by 4% on and as of each
___________ during the Lease Term.
Permitted Use:
_______________________________________,
and for no other purpose or purposes.
Tenant's Proportionate
Share: ________________________ (_____%).
Tenant's Proportionate Share shall equal
a fraction, the numerator of which shall
be the square footage of rentable floor
area contained within the Premises, and
the denominator of which shall be the
square footage of rentable floor area
contained within the Building. Tenant's
Proportionate Share shall be adjusted in
the event of any increase or decrease in
the total square footage of rentable
floor area contained within the Premises
and/or the Building,
Additional Rent: Any and all charges which Tenant
is required to pay hereunder other than
Base Rent, together with all interest
and penalties that may accrue thereon
and on Base Rent.
1.3 ENUMERATION OF EXHIBITS
Exhibit A: Plan showing the Premises.
2
<PAGE>
ARTICLE II
DESCRIPTION OF PREMISES AND APPURTENANT
RIGHTS
2.1 LOCATION OF PREMISES
Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the premises (the "Premises").
2.2 APPURTENANT RIGHTS AND RESERVATIONS
Tenant shall have, as appurtenant to the Premises, rights to use in
common with others entitled thereto any common facilities included in the
Building or the land on which the Building is located (the "Lot"), including any
common walkways, parking areas, driveways, lobbies, hallways, ramps, and
stairways. Such rights shall always be subject to reasonable, non-discriminatory
rules and regulations from time to time established by Landlord by suitable
written notice.
Not included in the Premises are the roof or ceiling, the floor and all
perimeter walls of the space identified in Exhibit A, except the inner surfaces
thereof and the perimeter doors and windows.
ARTICLE III
TERM OF LEASE: CONDITION OF PREMISES
3.1 TERM OF LEASE
The term of this Lease shall be the period specified in Section 1.2
hereof as the "Lease Term."
3.2 CONDITION OF PREMISES AND LANDLORD'S WORK
The Premises shall be delivered to Tenant by Landlord in their "as is"
condition without any representation or warranty by Landlord with respect
thereto, or any obligation on the part of Landlord to prepare or construct the
Premises. Tenant shall be responsible, at its own cost and expense, for all work
necessary to outfit the Premises for its use including, without limitation, all
telephone, telecommunication and data line costs and installation expenses.
Tenant's work shall be performed in a good, workmanlike manner, using high
quality materials.
3
<PAGE>
ARTICLE IV
RENT
4.1 RENT PAYMENTS
The Base Rent (at the rates specified in Section 1.2 hereof) and
Additional Rent (sometimes referred to herein, collectively, as "Rent") shall be
payable by Tenant to Landlord at the Payment Address or such other place as
Landlord may from time to time designate by notice to Tenant without any demand
whatsoever except as otherwise specifically provided in this Lease.
(a) Beginning on the Commencement Date, Base Rent shall be payable in
advance on the first day of each and every calendar month during the Lease Term.
If the Commencement Date falls on a day other than the first day of a calendar
month, the first payment which Tenant shall make shall be made on the
Commencement Date and shall be equal to a proportionate part of such monthly
Base Rent for the partial month from the Commencement Date to the first day of
the succeeding calendar month.
(b) Base Rent for any partial month shall be paid by Tenant to Landlord
at the applicable rate on a pro rata basis. Any other charges, including
Additional Rent, payable by Tenant on a monthly basis, as hereinafter provided,
shall likewise be prorated.
(c) Rent not paid within five (5) days of receipt of notice from
Landlord that the same is delinquent shall bear interest at a rate (the "Lease
Interest Rate") equal to the lesser of (i) the so-called base rate of interest
charged from time to time by Fleet Bank, N.A., plus three percent (3%) per annum
or (ii) the maximum legally permissible rate, from the due date until paid.
ARTICLE V
USE OF PREMISES
5.1 PERMITTED USE
Tenant agrees that the Premises shall be used and occupied by Tenant
only for the purposes specified as the Permitted Use thereof in Section 1.2 of
this Lease, and for no other purpose or purposes without the Landlord's consent,
which consent shall not be unreasonably withheld, delayed or conditioned.
The Tenant shall comply and shall cause its employees, agents, and
invitees to comply with such reasonable rules and regulations as Landlord shall
from time to time establish for the proper regulation of the Building and the
Lot, provided that Landlord gives Tenant reasonable advance notice thereof and
that such additional rules and regulations shall be of general application to
all the tenants in the Building.
4
<PAGE>
5.2 COMPLIANCE WITH LAWS
Tenant agrees that no trade or occupation shall be conducted in the
Premises or use made thereof which will be unlawful, improper, or contrary to
any law, ordinance, by-law, code, rule, regulation or order applicable in the
municipality in which the Premises are located or which will disturb the quiet
enjoyment of any other tenants of the Building. Tenant shall obtain any and all
approvals, permits, licenses, variances and the like from governmental or
quasi-governmental authorities, including without limitation any Architectural
Access Board and Board of Fire Underwriters (collectively, "Approvals") which
are required for Tenant's particular use of the Premises, including, without
limitation, any which may be required for any construction work and
installations, alterations, or additions made by Tenant to, in, on, or about the
Premises. Tenant shall not be responsible for compliance with any such laws,
regulations, or the like requiring (i) structural repairs or modifications, or
(ii) repairs or modifications to the utility or building service equipment
located outside of or not exclusively serving the Premises, or (iii)
installation of new building service equipment, such as fire detection or
suppression equipment, unless such repairs, modifications, or installations are
required (a) due to Tenant's work, alterations, or repairs in the Premises or
Tenant's particular manner of use of the Premises (as opposed to office use,
generally), or (b) due to the negligence or willful misconduct of Tenant or any
agent, employee, or contractor of Tenant. Tenant shall not place a load upon any
floor in the Premises exceeding the lesser of (a) the floor load per square foot
of area which such floor was designed to carry as certified by Landlord's
architect and (b) the floor load per square foot of area which is allowed by
law. Landlord reserves the right to prescribe the weight and position of all
business machines and mechanical equipment, including safes, which shall be
placed so as to distribute the weight.
5.3 INSURANCE RISKS
Tenant shall not permit any use of the Premises which will make
voidable or, unless Tenant pays the extra insurance premium attributable thereto
as provided below, increase the premiums for any insurance on the Building or on
the contents of said property or which shall be contrary to any law or
regulation from time to time established by the applicable Fire Insurance Rating
Association or which shall require any alteration or addition to the Building.
Landlord acknowledges that the use of the Premises for the Permitted Uses shall
not result in any violation by Tenant of the terms of this paragraph.
5.4 ELECTRICAL EQUIPMENT
The Tenant shall not, without Landlord's written consent in each
instance, connect to the electrical distribution system any fixtures,
appliances, or equipment which will operate individually or collectively at a
wattage in excess of the capacity of the electrical system serving the Premises
indicated to Tenant by Landlord.
5
<PAGE>
5.5 TENANT'S OPERATIONAL COVENANTS
(a) Affirmative Covenants
In regard to the use and occupancy of the Premises, Tenant
will at its expense: (1) keep the inside and outside of all glass in the doors
and windows of the Premises reasonably clean; (2) replace promptly any cracked
or broken glass of the Premises with glass of like kind and quality; (3)
maintain the Premises in a reasonably clean, orderly and sanitary condition and
free of insects, rodents, vermin and other pests; (4) keep any garbage, trash,
rubbish or other refuse in vermin-proof containers within the interior of the
Premises until removed; (5) keep all mechanical apparatus reasonably free of
vibration and loud noise which may be transmitted beyond the Premises; and (6)
comply with and observe all uniformly-applied rules and regulations reasonably
established by Landlord from time to time.
(b) Negative Covenants
In regard to the use and occupancy of the Premises and any
common areas, Tenant will not: (1) place or maintain any trash, refuse or other
articles in any vestibule or entry of the Premises, on the sidewalks or
corridors adjacent thereto or elsewhere on the exterior of the Premises so as to
obstruct any corridor, stairway, sidewalk or common area; (2) permit undue
accumulations of or burn garbage, trash, rubbish or other refuse within or
without the Premises; (3) cause or permit objectionable odors to emanate or to
be dispelled from the Premises; (4) commit, or suffer to be committed, any waste
upon the Premises or any public or private nuisance or other act or thing which
may disturb the quiet enjoyment of any other tenant or occupant of the Building,
or use or permit the use of any portion of the Premises for any unlawful
purpose; or (5) park trucks or other vehicles in a manner that will block access
to the loading docks serving the Building, except when Tenant is actively using
such loading docks.
5.6 SIGNS
Except as expressly permitted in this Section 5.6, Tenant shall not
place any signs, placards, or the like on the Building or in the Premises that
will be visible from outside the Premises (including without limitation both
interior and exterior surfaces of windows) without the approval of Landlord.
Tenant shall have signage rights in any building directory as well as
appropriate floor and door signage. Subject to Tenant obtaining all necessary
approvals and permits therefor, Tenant shall have exterior signage rights
consistent with the exterior signage existing at the Premises as of the
Commencement Date. Plans and specifications, including, without limitation,
artwork, for such signage must be submitted to Landlord for its written approval
before installation, which approval shall not be unreasonably withheld. In any
event, the total area of Tenant's exterior signage shall not exceed that
proportion of the total area of exterior signage allowed on the Building under
applicable zoning regulations that the floor area of the Premises bears to the
total floor area of the Building. The Tenant shall comply at its own expense
with the requirements of all laws and regulations affecting the maintenance of
Tenant's signage. Tenant shall remove all signs upon termination of this Lease
and shall return the Premises and the Building to their condition prior to the
placement or erection of said signs.
6
<PAGE>
5.7 HAZARDOUS MATERIALS
The Tenant shall not use, handle, store or dispose of any oil,
hazardous or toxic substances, materials or wastes (collectively "Hazardous
Materials") in, under, on or about the Property except for (a) such storage and
use consented to by Landlord in advance which consent may be withheld in
Landlord's sole and absolute discretion, and (b) reasonable quantities of
cleaning fluids and substances associated with normal office uses, all of which
shall be used, stored, handled, and disposed of strictly in accordance with all
applicable laws, regulations, and orders of public authorities. Any Hazardous
Materials in the Premises, and all containers therefor, shall be used, kept,
stored and disposed of in conformity with all applicable laws, ordinances,
codes, rules, regulations and orders of governmental authorities. If the
transportation, storage, use or disposal of Hazardous Materials anywhere on the
Property by Tenant results in (1) contamination of the soil or surface or ground
water, or (2) loss or damage to person(s) or property, then Tenant agrees (i) to
notify Landlord immediately of any contamination, claim of contamination, loss
or damage, (ii) after consultation with and approval by Landlord, to clean up
all contamination in full compliance with all applicable statutes, regulations
and standards, and (iii) to indemnify, defend and hold Landlord harmless from
and against any claims, suits, causes of action, costs and fees, including,
without limitation, attorneys' fees, arising from or connected with any such
contamination, claim of contamination, loss or damage. This provision shall
survive the termination of this Lease. No consent or approval of Landlord shall
in any way be construed as imposing upon Landlord any liability for the means,
methods, or manner of removal, containment or other compliance with applicable
law for and with respect to the foregoing. The terms of this Section 5.7 shall
apply to any transportation, storage, use or disposal of Hazardous Materials
irrespective of whether Tenant has obtained Landlord's consent therefor but
nothing in this Lease shall limit or otherwise modify the requirement of
obtaining Landlord's prior consent as set forth in the first sentence of this
Section 5.7.
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ARTICLE VI
INSTALLATIONS, ALTERATIONS, AND ADDITIONS
6.1 INSTALLATIONS, ALTERATIONS, AND ADDITIONS
Tenant shall not make structural installations, alterations, or
additions to the Premises, but may make nonstructural installations, alterations
or additions provided the materials and workmanship are of equivalent (or
better) quality than the existing improvements and will not affect the utility
or building service systems or equipment. Any installations, alterations, or
additions made by Tenant shall be at Tenant's sole cost and expense and shall be
done in a good and workmanlike manner and in compliance with the requirements of
Section 5.2. Prior to Tenant's use of the Premises after the performance of any
such work, Tenant shall procure certificates of occupancy and any other required
certificates. Tenant shall not suffer or permit any mechanics' or similar liens
to be placed upon the Premises for labor or materials furnished to Tenant or
claimed to have been furnished to Tenant in connection with work of any
character performed or claimed to have been performed at the direction of
Tenant, and shall cause any such lien to be released of record without cost to
Landlord. At all times when any installation, alteration, or addition by Tenant
is in progress, there shall be maintained, at Tenant's cost and expense,
insurance meeting the requirements of Section 11.3 below and certificates of
insurance evidencing such coverage shall be furnished to Landlord prior to the
commencement of any such work. Any installations, alterations or additions made
by Tenant (and permanently attached) to the Premises other than movable personal
property of Tenant, trade fixtures and equipment (which shall remain the
property of Tenant) shall become the property of Landlord at the termination or
expiration of this Lease.
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ARTICLE VII
ASSIGNMENT AND SUBLETTING
7.1 PROHIBITION
Notwithstanding any other provision of this Lease, Tenant shall not,
directly or indirectly, assign, mortgage, pledge or otherwise transfer,
voluntarily or involuntarily, this Lease or any interest herein or sublet (which
term without limitation, shall include granting of concessions, licenses, and
the like) or allow any other person or entity to occupy the whole or any part of
the Premises, without, in each instance, having first received the express
consent of Landlord, which consent may be withheld in Landlord's sole
discretion. Any assignment of this Lease or subletting of the whole or any part
of the Premises (other than as permitted to a subsidiary or a controlling
corporation as set forth below) by Tenant without Landlord's express consent
shall be invalid, void and of no force or effect. This prohibition includes,
without limitation, any assignment, subletting, or other transfer which would
occur by operation of law, merger, consolidation, reorganization, acquisition,
transfer, or other change of Tenant's corporate or proprietary structure,
including a change in the partners of any partnership, and the sale, pledge, or
other transfer of any of the issued or outstanding capital stock of any
corporate Tenant (unless such stock is publicly traded on a recognized security
exchange or over-the-counter market).
The requirement of Landlord's prior consent shall not, however, be
applicable to an assignment of this Lease by Tenant to an entity controlling,
controlled by, or under common control with, Tenant provided (and it shall be a
condition of the validity of any such assignment) that such subsidiary or
controlling corporation agree directly with Landlord to be bound by all of the
obligations of Tenant hereunder, including, without limitation, the obligation
to pay the Rent and other amounts provided for under this Lease, the covenant to
use the Premises only for the purposes specifically permitted under this Lease
and the covenant against further assignment (except as otherwise permitted
hereby); but such assignment shall not relieve Tenant herein named of any of its
obligations hereunder, and Tenant shall remain fully liable therefor. Further,
Landlord's consent shall not be required for an assignment of this Lease in
connection with a transfer of substantially all operations of Tenant to another
entity by way of merger, consolidation or sale of substantially all of the stock
therein or assets thereof. The initial offering of stock in Tenant (or in
Tenant's parent) to the public or the subsequent sale of such stock on a
nationally recognized stock exchange shall not be deemed an assignment or
transfer under this Article VII.
7.2 ACCEPTANCE OF RENT FROM TRANSFEREE
The acceptance by Landlord of the payment of Rent, or other charges
following assignment, subletting, or other transfer prohibited by this Article
VII shall not be deemed to be a consent by Landlord to any such assignment,
subletting, or other transfer, nor shall the same constitute a waiver of any
right or remedy of Landlord.
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ARTICLE VIII
REPAIRS AND MAINTENANCE
8.1 TENANT OBLIGATIONS
From and after the date that possession of the Premises is delivered to
Tenant and until the end of the Lease Term, Tenant shall keep the interior,
non-structural portions of the Premises in good order, condition, and repair,
reasonable wear and tear and damage by casualty, as a result of condemnation, or
as a result of the negligence or willful misconduct of Landlord, its agents,
employees or contractors excepted; and shall return the Premises to Landlord at
the expiration or earlier termination of the Lease Term in such condition.
8.2 LANDLORD OBLIGATIONS
Except as may be provided in Articles XII and XIII, Landlord agrees to
keep in good order, condition, and repair the structural components (including
the exterior walls) of the Premises and the Building, and the roof of the
Building, any common utility and Building systems (including HVAC), any common
hallways, entrances, restrooms and elevators and the Lot (including all parking
areas and the prompt removal of ice and snow therefrom).
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ARTICLE IX
SERVICES TO BE FURNISHED BY LANDLORD;
UTILITIES
9.1 LANDLORD'S SERVICES
The Landlord shall provide all necessary utilities to the Building (to
the extent such service is provided to the Building as of the Commencement
Date). To the extent Tenant requires HVAC services after normal business hours
(as hereinafter defined), Landlord shall provide such services and Tenant shall
reimburse Landlord for the cost of such services at the prevailing market rate
as determined by Landlord from time to time in its reasonable discretion.
Business hours for the Building shall be _____ a.m. to ______ p.m., Monday
through Friday and _____ a.m. to _____ p.m. on Saturdays; provided, however,
Tenant shall have access to the Premises twenty-four (24) hours per day, seven
(7) days per week. Landlord shall provide hot and cold water, heating and
cooling and regular cleaning and maintenance of all common areas of the Building
and any parking and pedestrian areas outside the Building. Tenant shall be
responsible for providing janitorial services to the Premises at its sole cost
and expense.
9.2 FORCE MAJEURE
Neither Landlord nor Tenant shall be liable for its delay in performing
any of its respective obligations under this Lease (excluding any financial
obligations) to the extent such delay results from causes beyond its reasonable
control, including without limitation labor dispute, breakdown, accident, order
or regulation of or by any governmental authority, or failure of supply, or
inability by the exercise of reasonable diligence to obtain supplies, parts, or
employees necessary to furnish services required under this Lease, or because of
war or other emergency, or for any cause due to any act, neglect, or default of
the other party, and in no event shall either Landlord or Tenant ever be liable
to the other for any indirect, special or consequential damages under the
provisions of this Section 9.2 or any other provision of this Lease. If there is
an interruption of utility service or other building services to the Premises
due to the negligence or willful misconduct of Landlord or its agents,
employees, or contractors that renders all or any portion of the Premises
untenantable for the Permitted Use hereunder, and such interference shall
continue following notice to Landlord, the Rent shall proportionately abate
until such services are restored. The proportionate abatement of Rent set forth
in the immediately preceding sentence shall be Tenant's sole and exclusive
remedy and Landlord shall not be liable for any other loss or damage resulting
from an interruption of utility service or other building services unless such
interruption is due to the gross negligence or willful misconduct of Landlord.
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9.3 EXTRAORDINARY UTILITY USAGE
Tenant shall be responsible for and shall promptly and timely pay all
separately metered and directly billed utility costs and expenses pertaining to
extraordinary utility requirements of Tenant for portions of the Premises (e.g.,
a data room). To the extent any such extraordinary utility costs and expenses
cannot be separately metered, Tenant shall pay its reasonable allocable share of
such charges based upon the rentable square footage of that portion of the
Premises subject to such extraordinary usage (taking into account any
extraordinary usage by Landlord).
ARTICLE X
INDEMNITY
10.1 THE TENANT'S INDEMNITY
Tenant shall indemnify and save harmless Landlord, and the directors,
officers, agents and employees of Landlord, against and from all claims,
expenses or liabilities in connection with damage to property or injury to
person to the extent (a) arising directly or indirectly from any default or
breach by Tenant or Tenant's contractors, licensees, agents, servants, or
employees under any of the terms or covenants of this Lease; or (b) arising from
any accident, injury, or damage to any person or property, on or upon the
Premises; or (c) arising from any accident, injury, or damage to any person or
property occurring outside the Premises but within the Building or on the Lot,
where such accident, injury or damage results from any act, omission or
negligence on the part of Tenant or Tenant's contractors, licensees, agents,
servants or employees: provided, however, that in no event shall Tenant be
obligated under this Section 10.1 to indemnify Landlord, the directors,
officers, agents or employees of Landlord to the extent such claim, expense or
liability results from the negligence or willful misconduct of Landlord or the
officers, agents, contractors or employees of Landlord.
This indemnity and hold harmless agreement shall include, without
limitation, indemnity against all expenses, attorneys' fees and liabilities
incurred in connection with any such claim or proceeding brought thereon and the
defense thereof with counsel reasonably acceptable to Landlord. At the request
of Landlord, Tenant shall defend any such claim or proceeding directly on behalf
and for the benefit of Landlord.
10.2 THE LANDLORD'S INDEMNITY
Landlord shall indemnify and save harmless Tenant, and the directors,
officers, agents and employees of Tenant against and from all claims, expenses
or liabilities in connection with damage to property or injury to person to the
extent (a) arising directly or indirectly from any default or breach by Landlord
or Landlord's contractors, licensees, agents, servants or employees under any of
the terms or covenants of this Lease; or (b) arising from any accident, injury
or damage to any person or property, on or upon the Building or the Lot
(excluding the Premises); or (c) arising from any accident, injury or damage to
any person or property occurring within the Premises where such accident, injury
or damage results from any act, omission or negligence on the part of Landlord
or Landlord's contractors, licensees, agents, servants or employees; provided,
however, that in no event shall Landlord be obligated under this Section 10.2 to
indemnify Tenant, the directors, officers, agents or employees of Tenant to the
extent such claim, expense or liability results from the negligence or willful
misconduct of Tenant or the officers, agents, contractors or employees of
Tenant.
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This indemnity and hold harmless agreement shall include, without
limitation, indemnity against all expenses, attorneys' fees and liabilities
incurred in connection with any such claim or proceeding brought thereon and the
defense thereof with counsel reasonably acceptable to Tenant. At the request of
Tenant, Landlord shall defend any such claim or proceeding directly on behalf
and for the benefit of Tenant.
10.3 INJURY CAUSED BY THIRD PARTIES
Tenant agrees that Landlord shall not be responsible or liable to
Tenant, or to those claiming by, through, or under Tenant, for any loss or
damage resulting to Tenant or those claiming by, through, or under Tenant, or
its or their property, that may be occasioned by or through the acts or
omissions of persons other than Landlord, or for any loss or damage from the
breaking, bursting, crossing, stopping, or leaking of electric cables and wires,
and water, gas, sewer, or steam pipes, or like matters not resulting or arising
from the gross negligence or intentional acts of Landlord.
10.4 SECURITY
Tenant may, at its own expense, provide its own security to the
interior of the Premises, including its own locks to an area ("Secured Area")
within the Premises. Tenant need not furnish Landlord with a key but upon the
Termination Date, Tenant shall surrender all such keys to Landlord. If Landlord
must gain access to a Secured Area in a non-emergency situation, Landlord shall
contact Tenant and Landlord and Tenant shall arrange a mutually agreed upon time
for Landlord to do so. Landlord shall comply with all reasonable security
measures pertaining to the Secured Area. If Landlord determines in its sole
discretion that an emergency in the Building or the Premises, including, without
limitation, a suspected fire or flood, requires Landlord to gain access to the
Secured Area, Tenant hereby authorizes Landlord to forcibly enter the Secured
Area. In such event, Landlord shall have no liability whatsoever to Tenant, and
Tenant shall pay all reasonable expenses incurred by Landlord in repairing or
reconstructing any entrance, corridor, door or other portions of the Premises
damaged as a result of a forcible entry by Landlord. Landlord shall be
responsible for providing exterior security to the Building, and for maintaining
the card access system in and to the Building on the same basis as Landlord
provides these security services to its own premises in the immediate vicinity
of the Building; however, Landlord does not warrant security services against
intrusion, loss, property damage, vandalism or injury to employees, visitors or
contractors ("Damages"), and Landlord shall not be liable for any Damages based
on a claim of inadequate or ineffective security or breach of Landlord's
obligation to provide security services as set forth herein.
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ARTICLE XI
INSURANCE
11.1 PUBLIC LIABILITY INSURANCE
The Tenant agrees to maintain in full force from the date upon which
Tenant first enters the Premises for any reason, throughout the Lease Term, and
thereafter so long as Tenant is in occupancy of any part of the Premises, (a) a
policy of commercial general liability insurance, written on an occurrence basis
and including contractual liability coverage to cover any liabilities assumed
under this Lease, including products liability, and completed operations
liability, and (b) automobile liability insurance covering all owned vehicles,
hired vehicles, and all other non-owned vehicles. Each such policy shall
designate Tenant as a named insured and Landlord and any mortgagees (as may be
set forth in a notice given from time to time by Landlord) shall be named as
additional insureds, as their interests appear.
Each such policy shall expressly provide that it shall not expire or be
amended or canceled without at least thirty (30) days' prior written notice to
Landlord in each instance and that the interests of Landlord thereunder or
therein shall not be affected by any breach by Tenant of any policy provision,
and a duplicate original or certificate thereof shall be delivered to Landlord.
The minimum limits of liability of such insurance shall be bodily injury and
property damage combined single limit of $3,000,000 per occurrence.
Landlord shall carry liability insurance covering all common areas of
the Building and the Lot. The liability insurance shall include contractual
liability coverage so that Landlord's indemnity and other applicable obligations
will be passed on to the insurance company.
11.2 HAZARD INSURANCE
The Tenant agrees to maintain in full force from the date upon which
Tenant first enters the Premises for any reason, throughout the Lease Term, and
thereafter so long as Tenant is in occupancy of any part of the Premises, a
policy insuring any leasehold improvements paid for by Tenant and all fixtures,
equipment, and other personal property of Tenant against damage or destruction
by fire or other casualty in an amount equal to the full replacement cost of
such property. Any insurance policy required of the Tenant may be maintained by
means of a policy or policies of blanket insurance, covering additional items or
locations, and any such policy may provide for such commercially reasonable
deductible limits as Tenant deems appropriate.
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Notwithstanding the foregoing, Tenant shall be permitted to self-insure
its fixtures, equipment and other personal property from time to time located
in, on or about the Premises, and all leasehold improvements to the Premises
constructed or installed by Tenant, provided that at all times when Tenant so
self-insures the same or any portion thereof, Tenant's net worth shall be and
remain at least Fifty Million and 00/100 Dollars ($50,000,000.00). During all
periods in which Tenant so self-insures any of the same, the rights and
obligations of Landlord and Tenant shall remain the same as if Tenant shall have
purchased and kept in force thereon insurance from an independent, institutional
insurer of recognized responsibility, and, without limitation, the provisions of
Sections 10.2 and 11.5 of this Lease shall remain in full force and effect. The
Tenant represents, by so self-insuring, that Tenant then is financially able to
absorb any loss thereto without significant reduction of available capital or
any other material, adverse effect on Tenant or its business operations, and
that Tenant then is of at least such minimum net worth.
Landlord shall maintain in full force from the date upon which Tenant
first enters the Premises for any reason, throughout the Lease Term, and
thereafter so long as Tenant is in occupancy of any part of the Premises, a
policy of insurance upon the Building insuring against all risks of physical
loss or damage under an All Risk coverage endorsement in an amount at least
equal to the full replacement value of the property insured, with an Agreed
Amount endorsement to satisfy co-insurance requirements, as well as insurance
against breakdown of boilers and other machinery as customarily insured against.
Upon request of Tenant from time to time, a certificate of such insurance shall
be delivered to Tenant.
11.3 CONSTRUCTION PERIOD INSURANCE
At any time when demolition or construction work is being performed on
or about the Premises or Building by or on behalf of Tenant, the Tenant shall
keep in full force and effect the following insurance coverage:
(1) builder's risk completed value (non-reporting form) in such form
and affording such protections as required by Landlord, naming Landlord and its
mortgagees as additional insureds; and
(2) workers' compensation or similar insurance in form and amounts
required by law.
Tenant shall cause a certificate or certificates of such insurance to
be delivered to Landlord prior to the commencement of any work in or about the
Building or the Premises, in default of which Landlord shall have the right, but
not the obligation, to obtain any or all such insurance at the expense of
Tenant, in addition to any other right or remedy of Landlord. The provisions of
this Section 11.3 shall survive the expiration or earlier termination of this
Lease.
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11.4 WAIVER OF SUBROGATION
Insofar as, and to the extent, that the following provisions may be
effective without invalidating or making it impossible to secure insurance
coverage from responsible insurance companies doing business in the Commonwealth
of Massachusetts (even though extra premium may result therefrom): Landlord and
Tenant mutually agree that with respect to any loss which is covered by
insurance then being carried by them (or which is required to be carried
pursuant to this Lease), the one carrying or required to carry such insurance
and suffering said loss shall release the other of and from any and all claims
with respect to such loss; and they further mutually agree that their insurance
companies shall have no right of subrogation against the other on account
thereof. If, at the written request of one party, this release and
non-subrogation provision is waived, then the obligation of reimbursement shall
cease for such period of time as such waiver shall be effective, but nothing
contained in this Section 11.4 shall be deemed to modify or otherwise affect any
releases elsewhere contained in this Lease.
ARTICLE XII
CASUALTY
12.1 DEFINITION OF "SUBSTANTIAL DAMAGE" AND "PARTIAL DAMAGE"
The term "substantial damage," as used herein, shall refer to damage
which results in damage to at least thirty percent (30%) of the replacement cost
of the Building. Any damage which is not "substantial damage" is "partial
damage."
12.2 PARTIAL DAMAGE TO THE BUILDING
If during the Lease Term there shall be partial damage to the Building
by fire or other casualty, Landlord shall promptly proceed to restore the
Building to the condition in which it was immediately prior to the occurrence of
such damage.
12.3 SUBSTANTIAL DAMAGE TO THE BUILDING
If during the Lease Term there shall be substantial damage to the
Building by fire or other casualty, Landlord shall promptly restore the Building
to the extent reasonably necessary to enable Tenant's use of the Premises,
unless Landlord, within ninety (90) days after the occurrence of such damage,
shall give notice to Tenant of Landlord's election to terminate this Lease. If
Landlord shall give such notice, then this Lease shall terminate as of the date
of such notice with the same force and effect as if such date were the date
originally established as the expiration date hereof.
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12.4 ABATEMENT OF RENT
If during the Lease Term the Building or the Premises shall be damaged
by fire or casualty and if such damage shall materially interfere with Tenant's
use of the Premises as contemplated by this Lease, a just proportion of the Rent
payable by Tenant hereunder shall abate proportionately for the period in which,
by reason of such damage, there is such interference with Tenant's use of the
Premises, but such abatement or reduction shall end when Landlord shall have
substantially restored the Premises or so much thereof as shall have been
originally constructed by Landlord (exclusive of any of Tenant's fixtures,
furnishings, equipment and the like or work performed therein by Tenant) to the
condition in which the Premises were prior to such damage.
ARTICLE XIII
EMINENT DOMAIN
13.1 RIGHTS OF TERMINATION FOR TAKING
If the Premises, or such portion thereof as to render the balance (if
reconstructed to the maximum extent practicable in the circumstances) physically
unsuitable for Tenant's purposes, shall be taken (including a temporary taking
in excess of 180 days) by condemnation or right of eminent domain or sold in
lieu of condemnation, Landlord or Tenant may elect to terminate this Lease by
giving notice to the other of such election not later than thirty (30) days
after Tenant has been deprived of possession.
Further, if so much of the Building (which may include the Premises) or
the Lot shall be so taken, condemned or sold or shall receive any direct or
consequential damage by reason of anything done pursuant to public or
quasi-public authority such that continued operation of the same would, in
Landlord's opinion, be uneconomical, Landlord may elect to terminate this Lease
by giving notice to Tenant of such election not later than thirty (30) days
after the effective date of such taking. Landlord shall only have the right to
terminate this Lease if Landlord simultaneously terminates the leases of all
other tenants of the Building similarly affected by such condemnation or taking.
Should any part of the Premises be so taken or condemned or receive
such damage and should this Lease be not terminated in accordance with the
foregoing provisions, Landlord shall promptly restore the Premises to an
architectural unit that is reasonably suitable to the uses of Tenant permitted
hereunder.
13.2 PAYMENT OF AWARD
The Landlord shall have and hereby reserves and excepts, and Tenant
hereby grants and assigns to Landlord, all rights to recover for damages to the
Building and the Lot and the leasehold interest hereby created, and to
compensation accrued or hereafter to accrue by reason of such taking or damage,
as aforesaid. The Tenant covenants to deliver such further assignments and
assurances thereof as Landlord may from time to time request. Nothing contained
herein shall be construed to prevent Tenant from prosecuting in any condemnation
proceedings a claim for the value of any of Tenant's trade fixtures installed in
the Premises by Tenant at Tenant's expense and for relocation expenses.
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13.3 ABATEMENT OF RENT
In the event of any such taking of the Premises, the Rent or a fair and
just proportion thereof, according to the nature and extent of the damage
sustained, shall be suspended or abated, as appropriate and equitable in the
circumstances.
ARTICLE XIV
14.1 TENANT'S DEFAULT
(a) If at any time any one or more of the following events (herein
referred to as a "Default of Tenant") shall occur:
(i) Tenant shall fail to make payment of rent or any other
monetary amount due under this lease within ten (10) days after Landlord has
sent to Tenant notice of such default; or
(ii) Tenant shall fail to perform or observe any other
covenant or provision herein contained on Tenant's part to be performed or
observed and Tenant shall fail to remedy the same within thirty (30) days after
notice to Tenant specifying such neglect or failure, or, if such failure is of
such a nature that Tenant cannot reasonably remedy the same within such thirty
(30) day period, Tenant shall fail to commence promptly to remedy the same and
to prosecute such remedy to completion with diligence and continuity; or
(iii) except as otherwise provided by applicable law, if the
estate hereby created shall be taken on execution or by other process of law, or
if Tenant shall be judicially declared bankrupt or insolvent according to law,
or if any assignment shall be made of the property of Tenant for the benefit of
creditors, or if a receiver, guardian, conservator, trustee in involuntary
bankruptcy or other similar officer shall be appointed to take charge of all or
any substantial part of Tenant's property by a court of competent jurisdiction,
or if a petition shall be filed for the reorganization of Tenant under any
provisions of law now or hereafter enacted, and such proceeding is not dismissed
within sixty (60) days after it is begun, or if Tenant shall file a petition for
such reorganization, or for arrangements under any provisions of such laws
providing a plan for a debtor to settle, satisfy, or extend the time for the
payment of debts.
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(b) Tenant covenants and agrees, notwithstanding any termination of
this Lease by summary proceedings, to pay and be liable for, on the days
originally fixed herein for the payment thereof, amounts equal to the several
installments of Rent reserved as they would have become due under the terms of
this Lease if this Lease had not been terminated, and whether the Premises be
relet or remain vacant, in whole or in part, for the remainder of the Lease Term
or for a period less than the remainder of the Lease Term; but in the event the
Premises are relet by Landlord, Tenant shall be entitled to a credit in the net
amount of rent received by Landlord in reletting, after deduction of all
reasonable expenses incurred in reletting the Premises (including, without
limitation, remodeling costs, brokerage fees, attorneys' fees and the like) and
in collecting the rent in connection therewith. As an alternative, at the
election of Landlord, Tenant shall, upon such termination, pay to Landlord, as
damages, such a sum as at the time of such termination represents the present
value of the amount of the excess, if any, of the total Rent which would have
accrued to Landlord under this Lease for the remainder of the Lease Term had the
Lease not been so terminated over and above the then fair market rental value
(in advance) of the Premises for what would be the then unexpired Lease Term for
the remainder of the Lease Term had the Lease not been so terminated.
(c) In case of any Default of Tenant and expiration and dispossession
by summary proceedings, Landlord shall use reasonable efforts to mitigate its
damages. It is specifically understood and agreed that Landlord shall be
entitled to take into account in connection with any reletting of the Premises
all relevant factors which would be taken into account by a sophisticated
developer in securing a replacement tenant for the Premises, such as, but not
limited to, the quality of the Building and the financial responsibility of any
such replacement tenant.
(d) If there is at any time a guarantor or assignee of this Lease or
any interest of Tenant herein or any sublessee, franchisee, concessionee, or
licensee of all or any portion of the Premises, the happening of any of the
events described in paragraph (a)(iii) of this Section with respect to such
guarantor, assignee, sublessee, franchisee, concessionee, or licensee shall
constitute a Default of Tenant hereunder.
(e) All costs and expenses incurred by or on behalf of Landlord
(including, without limitation, attorneys' fees and expenses) in enforcing its
rights hereunder or occasioned by any Default of Tenant shall be paid by Tenant.
Nothing contained in this Lease shall limit or prejudice the
right of Landlord to prove for and obtain in proceedings for bankruptcy,
insolvency, or like proceedings by reason of the termination of this Lease, an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, the damages are to be
proved, whether or not the amount be greater than, equal to, or less than the
amount of the loss or damages referred to above.
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ARTICLE XV
THE LANDLORD'S ACCESS TO PREMISES
15.1 THE LANDLORD'S RIGHT OF ACCESS
The Landlord and its agents, contractors, and employees shall have the
right to enter the Premises at all reasonable hours upon reasonable advance
notice and accompanied by a representative of Tenant, except in case of
emergency, for the purpose of inspecting or of making repairs or alterations
permitted or required to be made by Landlord hereunder, and Landlord shall also
have the right to make access to the Premises available at all reasonable hours
to prospective or existing mortgagees or purchasers of any part of the Building.
Notwithstanding the foregoing, except in emergency situations as determined by
Landlord, Landlord shall exercise reasonable efforts to perform any entry into
the Premises in a manner that is reasonably designed to minimize interference
with the operation of Tenant's business in the Premises.
For a period commencing three (3) months prior to the expiration of the
Lease Term, Landlord may have reasonable access to the Premises at all
reasonable hours for the purpose of exhibiting the same to prospective tenants.
ARTICLE XVI
RIGHTS OF MORTGAGEES
16.1 SUBORDINATION AND ATTORNMENT
(a) If any holder of a mortgage or holder of a ground lease of property
which includes the Premises shall so elect, the interest of Tenant hereunder
shall be subordinate to the rights of such holder, provided that such holder
shall agree to recognize in writing the rights of Tenant under this Lease upon
the terms and conditions set forth herein, and the performance by Tenant of
Tenant's obligations hereunder (but without any assumption by such holder of
Landlord's obligations under this Lease); or
(b) If any holder of a mortgage or holder of a ground lease of property
which includes the Premises shall so elect, this Lease, and the rights of Tenant
hereunder, shall be superior in right to the rights of such holder, with the
same force and effect as if this Lease had been executed and delivered, and
recorded, or a statutory notice hereof recorded, prior to the execution,
delivery and recording of any such mortgage.
(c) Within thirty (30) days of the date of this Lease, Tenant and the
holder of any mortgage or deed of trust affecting the Premises, or the lessor
under any ground lease affecting the Premises, shall execute and deliver to each
other an attornment agreement providing that Tenant shall attorn to such holder
or lessor in the event of a foreclosure of such mortgage or deed of trust or
transfer in lieu thereof or a termination of such ground lease and incorporating
such other terms and conditions as such party may reasonably require, provided
that such agreement includes an agreement by such other party to recognize the
rights of Tenant under this Lease and not disturb Tenant's rights hereunder.
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The Landlord agrees to use reasonable efforts to have the holder of any
such mortgage or deed of trust that may become prior to this Lease, and any such
ground lessor, as the case may be, enter into its usual nondisturbance agreement
with the Tenant, or in lieu thereof provide the Tenant with an agreement by the
terms of which such holder or ground lessor agrees to recognize the rights of
the Tenant under this Lease in the event of foreclosure of such mortgage or deed
of trust or termination of such ground lease, respectively, so long as the
Tenant is not in default hereunder.
(d) Tenant agrees on request of Landlord to execute and deliver from
time to time any instrument that Landlord may reasonably deem necessary to
implement the provisions of this Section 16.1.
16.2 NOTICE TO MORTGAGEE AND GROUND LESSOR; OPPORTUNITY
TO CURE
After receiving notice from any person, firm, or other entity (or from
Landlord on behalf of any such person, etc.) that it holds a mortgage which
includes the Premises as part of the mortgaged premises, or that it is the
ground lessor under a lease with Landlord as ground lessee, which includes the
Premises as a part of the demised premises, no notice from Tenant to Landlord
shall be effective, against such holder or ground lessor unless and until a copy
of the same is given to such holder or ground lessor, and the curing of any of
Landlord's defaults by such holder or ground lessor shall be treated as
performance by Landlord. Accordingly, no act or failure to act on the part of
Landlord which would entitle Tenant under the terms of this Lease, or by law, to
be relieved of Tenant's obligations hereunder shall have such an effect unless
and until:
(a) Tenant shall have first given written notice to such holder or
ground lessor, if any, specifying the act or failure to act on the part of
Landlord which could or would give basis to Tenant's rights; and
(b) such holder or ground lessor, after receipt of such notice, has
failed or refused to correct or cure the condition complained of within the cure
periods provided Tenant hereunder, but nothing contained in this Section 16 or
elsewhere in this Lease shall be deemed to impose any obligation on any such
holder or ground lessor to correct or cure any such condition.
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16.3 ASSIGNMENT OF RENTS.
With reference to any assignment by Landlord of Landlord's interest in
this Lease, or the rents payable hereunder, conditional in nature or otherwise,
which assignment is made to the holder of a mortgage or ground lease on property
which includes the Premises, Tenant agrees:
(a) that the execution thereof by Landlord, and the acceptance thereof
by the holder of such mortgage, or the ground lessor, shall never
be treated as an assumption by such holder or ground lessor of any
of the obligations of Landlord hereunder, unless such holder or
ground lessor shall, by notice sent to Tenant, specifically
otherwise elect; and
(b) that, except as aforesaid, such holder or ground lessor shall be
treated as having assumed Landlord's obligations hereunder only
upon foreclosure of such holder's mortgage or the taking of
possession of the Premises, or in the case of a ground lessor, the
assumption of Landlord's position hereunder by such ground lessor.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 CAPTIONS
The captions throughout this Lease are for convenience or reference
only and shall in no way be held or deemed to define, limit, explain, describe,
modify, or add to the interpretation, construction, or meaning of any provision
of this Lease.
17.2 BIND AND INURE
Except as herein otherwise expressly provided, the obligations of this
Lease shall run with the land, and this Lease shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
Neither the assignment by Landlord of its interest in this Lease as security to
a lender holding a mortgage on the Building, nor the acceptance thereof by such
lender, nor the exercise by such lender of any of its rights pursuant to said
assignment shall be deemed in any way an assumption by such lender of any of the
obligations of Landlord hereunder unless such lender shall specifically
otherwise elect in writing or unless such lender shall have completed
foreclosure proceedings under said mortgage. Whenever the Premises are owned by
a trustee or trustees, the obligations of Landlord shall be binding upon
Landlord's trust estate, but not upon any trustee, beneficiary or shareholder of
the trust individually.
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17.3 NO WAIVER
The failure of Landlord or of Tenant to seek redress for violation of,
or to insist upon the strict performance of any covenant or condition of this
Lease shall not be deemed to be a waiver of such violation or to prevent a
subsequent act, which would originally have constituted a violation, from having
all the force and effect of an original violation. The receipt by Landlord of
Rent or additional rent with knowledge of the breach of any covenant of this
Lease shall not be deemed to be a waiver of such breach by Landlord unless such
waiver be in writing signed by Landlord. No consent or waiver, express or
implied, by Landlord or Tenant to or of any breach of any agreement or duty
shall be construed as a waiver or consent to or of any other breach of the same
or any other agreement or duty.
17.4 NO ACCORD AND SATISFACTION
No acceptance by Landlord of a lesser sum than the minimum and
additional rent then due shall be deemed to be other than on account of the
earliest installment of such rent due, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment as rent be deemed to
be an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such installment
or pursue any other remedy in this Lease or at law or in equity provided.
17.5 CUMULATIVE REMEDIES
The specific remedies to which Landlord or Tenant may resort under the
terms of this Lease are cumulative and not intended to be exclusive of any other
remedies or means of redress to which it may be lawfully entitled in case of any
breach or threatened breach by the other party of any provisions of this Lease.
In addition to the other remedies provided in this Lease, Landlord shall be
entitled to the restraint by injunction of the violation or attempted or
threatened violation of any of the covenants, conditions or provisions of this
Lease or to a decree compelling specific performance of any such covenants,
conditions or provisions. In the event of any litigation between the parties
hereto, the unsuccessful party as determined by a court of competent
jurisdiction shall reimburse the successful party for all reasonable costs and
expenses (including attorneys' fees) in connection therewith.
17.6 PARTIAL INVALIDITY
If any term or provision of this Lease or any portion thereof or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, then the remainder of this Lease and of such term or
provision and the application of this Lease and of such term and provision to
persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term of this Lease shall
be valid and enforceable to the fullest extent permitted by law.
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17.7 ESTOPPEL CERTIFICATES
Tenant agrees on the Commencement Date and from time to time
thereafter, within twenty (20) days' after written request by Landlord, to
execute, acknowledge and deliver to Landlord a statement in writing, certifying
that this Lease is unmodified and in full force and effect, that Tenant has no
defenses, offsets or counterclaims against its obligations to pay rent and other
charges required under this Lease and to perform its other covenants under this
Lease and that there are no uncured defaults of Landlord or Tenant under this
Lease (or, if there have been any modifications, that this Lease is in full
force and effect, as modified, and stating the modifications, and, if there are
any defenses, offsets, counterclaims or defaults, setting them forth in
reasonable detail), and the dates to which the Rent and other charges have been
paid.
17.8 BROKERAGE
Each party hereto warrants and represents that it has dealt with no
real estate broker or agent in connection with this transaction and agrees to
defend, indemnify and save the other party harmless from and against any and all
claims for commissions or fees arising out of this Lease which, as to the
respective parties, are inconsistent with such party's warranties and
representations.
17.9 ENTIRE AGREEMENT
All negotiations, considerations, representations, and understandings
between Landlord and Tenant are incorporated herein and this Lease expressly
supersedes any proposals or other written documents relating hereto. This Lease
may be modified or altered only by written agreement between Landlord and
Tenant.
17.10 HOLDOVER
If Tenant remains in possession of the Premises after the termination
of this Lease without the consent of Landlord, such holding over shall not be
deemed to create any tenancy, but Tenant shall be a tenant at sufferance only,
at a daily rate equal to one hundred fifty percent (150%) of the Rent applicable
immediately prior to such termination.
17.11 COUNTERPARTS
This Lease is executed in any number of counterparts, each copy of
which is identical, and any one of which shall be deemed to be complete in
itself and may be introduced in evidence or used for any purpose without the
production of the other copies.
17.12 CONSTRUCTION AND GRAMMATICAL USAGE
This Lease shall be governed, construed and interpreted in accordance
with the laws of the Commonwealth of Massachusetts, and Tenant agrees to submit
to the personal jurisdiction of any court (federal or state) in Massachusetts
for any dispute, claim or proceeding arising out of or relating to this Lease.
In construing this Lease, feminine or neuter pronouns shall be substituted for
those masculine in form and vice versa, and plural terms shall be substituted
for singular and singular for plural in any place in which the context so admits
or requires. If there be more than one party tenant, the covenants of Tenant
shall be the joint and several obligations of each such party and, if Tenant is
a general partnership, the covenants of Tenant shall be the joint and several
obligations of each of the partners and the obligations of the firm.
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17.13 WHEN LEASE BECOMES BINDING
The submission of this document for examination and negotiation does
not constitute an offer to lease, or a reservation of, or option for, the
Premises, and this document shall become effective and binding only upon the
execution and delivery hereof by both Landlord and Tenant.
17.14 COVENANT OF QUIET ENJOYMENT
Subject to the terms and provisions of this Lease and on payment of the
Rent due hereunder and compliance with all of the terms and provisions of this
Lease, Tenant shall lawfully, peaceably, and quietly have, hold, occupy, and
enjoy the Premises during the term hereof, without hindrance or ejection by any
party.
17.15 NO PERSONAL LIABILITY OF THE LANDLORD
The Tenant agrees to look solely to Landlord's interest (including the
rents, issues and profits therefrom) in the Building and the Lot at the time
owned, or in which Landlord holds an interest as ground lessee, for recovery of
any judgment from Landlord; it being specifically agreed that neither Landlord
(whether Landlord be an individual, partnership, firm, corporation, trustee, or
other fiduciary) nor any partner, policyholder, officer, manager, member,
shareholder or director of Landlord, nor any trust of which any person holding
Landlord's interest is trustee nor any successor in interest to any of the
foregoing shall ever be personally liable for any such judgment. The covenants
of Landlord contained in this Lease shall be binding upon Landlord and
Landlord's successors only with respect to breaches occurring during Landlord's
and Landlord's successors' respective periods of ownership of Landlord's
interest hereunder.
17.16 NOTICES
Whenever, by the terms of this Lease, notice shall or may be given
either to Landlord or to Tenant, such notice shall be in writing and shall be
delivered by hand or sent by registered or certified mail, postage prepaid or by
so-called "express" mail (such as Federal Express or U.S. Postal Service Express
Mail):
If intended for Landlord, addressed to Landlord at the address set
forth in Section 1.2 or to such other address or addresses as may from time to
time hereafter be designated by Landlord by like notice.
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If intended for Tenant, addressed to Tenant at the address set forth on
the first page of this Lease or to such other address or addresses as may from
time to time hereafter be designated by Tenant by like notice.
All such notices shall be effective upon delivery, attempted delivery,
or refusal, whichever occurs first, at the address or addresses of the intended
recipient, as set forth above.
17.17 SPECIAL TENANT RIGHT OF TERMINATION [only for certain properties]
Provided that Tenant is not in default beyond the expiration of any
applicable notice and/or cure periods. Tenant may elect to terminate this Lease
at any time by giving Landlord written notice (the "Termination Notice") of such
election at least sixty (60) days before the effective date of such termination
(the "Termination Date"), which Termination Date shall be specified in the
Termination Notice. Such termination, at Tenant's option, shall apply to either:
(i) all of the Premises without the requirement for approval by the Landlord, or
(ii) a portion of the Premises (the "Designated Portion"), provided that the
Landlord approves the location of the Designated Portion, as more particularly
set forth in the following paragraph.
If the Tenant desires to terminate the Lease with respect to a
Designated Portion only, the Termination Notice shall describe the Designated
Portion with reasonable particularity and shall include plans depicting the
proposed separation of the Designated Portion from the remainder of the
Premises. Landlord shall respond to the Termination Notice within five (5)
business days of receipt thereof, by stating that it either approves Tenant's
plans or requests modifications thereto. If Landlord requests modifications to
Tenant's plans, it shall specify such modifications with reasonable
particularity. Tenant shall submit any revised plans so requested by Landlord
within five (5) business days after receipt of Landlord's response. If, despite
their good faith efforts, the parties cannot agree on the area of the Designated
Portion as depicted on Tenant's plans (as the same have been modified), Tenant's
Termination Notice shall be void and of no further force or effect. Landlord
shall not unreasonably withhold or condition its approval of Tenant's plans
provided that the Designated Portion as depicted by Tenant is, without
extraordinary expense, separable from the remainder of the Premises and not
unmarketable.
Tenant shall continue to be liable for all Rent payable under this
Lease up to the Termination Date. If Tenant has effectively exercised its right
to terminate this Lease with respect to a Designated Portion only, the Rent
payable hereunder shall be adjusted as of the Termination Date as provided
below, and this Lease shall terminate on the Termination Date specified in the
Termination Notice with respect to the Designated Portion with the same force
and effect as if such date were the last day of the Lease Term. If Tenant
exercises its right to terminate this Lease with respect to all of the Premises,
this Lease shall terminate on the Termination Date with the same force and
effect as if said date were the last day of the Lease Term. The term "Premises",
as used herein, shall refer to the Premises less any Designated Portion as to
which Tenant has effectively exercised its right of termination. In the event
Tenant effectively elects to terminate this Lease with respect to a Designated
Portion, it is understood and agreed that the Designated Portion shall be
separately demisable by Landlord. In the event that Tenant exercises its
termination option with respect to a Designated Portion only, Landlord and
Tenant hereby agree that they will cooperate in connection with any
reconfiguration of any common areas and elements of the Premises that such
partial termination may necessitate.
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In the event that Tenant effectively exercises its termination
option with respect to a Designated Portion of the Premises, any demising walls,
alterations and improvements necessary to reconfigure the premises for occupancy
by Landlord or by another occupant or tenant shall be constructed by Landlord.
Tenant shall cooperate with Landlord as necessary in connection with the
construction of any such demising walls, alterations or improvements. Within
thirty (30) days of receipt by Tenant of a bill therefor (accompanied by
reasonably detailed supporting documentation), Tenant shall pay to Landlord the
actual, out-of-pocket costs incurred by Landlord in constructing demising walls
between the Designated Portion of the Premises surrendered by Tenant and the
remainder of the Premises (as such demising walls are depicted on the plans
agreed to by Landlord and Tenant, as provided above). Tenant shall not be liable
for any incremental costs incurred by Landlord in constructing any other
improvements, additions or alterations to such surrendered space.
If Tenant effectively exercises its termination right with respect to a
Designated Portion of the Premises, the Base Rent as set forth in Section 1.2
hereof will be reduced by an amount equal to the product of (a) the applicable
Base Rent immediately prior to the Termination Date, and (b) a fraction, the
numerator of which is the rentable square footage of the Designated Portion, and
the denominator of which is the total rentable square footage of the Premises
immediately prior to said Termination Date.
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IN WITNESS WHEREOF, the parties hereto have executed this instrument
under seal as of the date set forth in Section 1.2, above.
LANDLORD:
BY: _______________________________________
Its:
BY: _______________________________________
Its:
TENANT:
BY: _______________________________________
Its:
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EXHIBIT A
Plan Showing the Premises
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EXHIBIT 10.16
SUBLEASE
THIS SUBLEASE AGREEMENT (the "Sublease") is made and entered into to be
effective as of ________________, 2000 (the "Effective Date"), by and between
_____________, a _________________ ("Sublessor"), and ________________, a
________________ ("Sublessee").
R E C I T A L S:
A. Certain capitalized terms used in this Sublease shall have the
meanings set forth in Article I below. Other capitalized terms shall have the
meanings set forth elsewhere in this Sublease. Capitalized terms not defined in
this Sublease shall have the meaning set forth in the Office Lease.
B. Landlord and Sublessor have heretofore entered into the Office Lease
for the Office Premises. Sublessor represents and warrants that a true and
correct copy of the Office Lease together with all modifications and amendments
thereto has heretofore been delivered to Sublessee.
C. Sublessee has requested, and Sublessor has agreed, to sublease to
Sublessee the Subleased Premises. The Subleased Premises are depicted on Exhibit
A attached hereto and incorporated herein by this reference.
NOW, THEREFORE, for good and valuable consideration of the
mutual covenants, promises and agreements contained in this Sublease, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, Sublessor and Sublessee covenant and
agree as follows:
A G R E E M E N T S:
- - - - - - - - - -
ARTICLE I: DEFINITIONS
"Additional Expenses" shall include (i) the costs of insurance
Sublessor is required to carry under the Office Lease; (ii) the costs of
utilities and other services (such as security or outside trash removal) not
otherwise included in Operating Expenses; and (iii) _______________.
"Base Rent" shall be _____________ Dollars ($______) per square foot of
the Subleased Premises.
"Building" shall have the meaning set forth in the definition of
"Office Lease" in this Article I.
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"Excluded Provisions" shall refer to the following provisions of the
Office Lease:
Section ___ (_________________________)
Section ___ (_________________________)
"Expiration Date" shall be _________ __, 2001.
"Landlord" shall mean ___________________, a ___________________.
"Office Lease" shall mean that certain _____________ dated as of
_______________, as amended by ________________ , for the premises described as
_____________________ (collectively, the "Office Premises"), containing
approximately _____ square feet of rentable space in the property known as
_________________ (the "Building"), located at __________________
"Office Premises" shall have the meaning set forth in the definition of
"Office Lease" in this Article I.
"Operating Expenses" shall have the meaning set forth in Section ___ of
the Office Lease.
"Subleased Premises" shall mean that certain portion of the Office
Premises consisting of approximately _____ (_____) rentable square feet of
space. The Subleased Premises are more particularly depicted on Exhibit A
attached hereto and incorporated herein.
"Sublessee's Notice Address" is as follows:
To Sublessee:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
With a copy to:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
"Sublessor's Notice Address" is as follows:
To Sublessor:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
With a copy to:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
"Taxes" shall have the meaning set forth in Section ____ of the Office
Lease.
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ARTICLE II: SUBLEASE OF PREMISES
2.1. Incorporation of Recitals: This Sublease is made subject and
subordinate to all of the terms and conditions of the Office Lease to the extent
that they relate to the Subleased Premises, except such terms as are expressly
excluded herein. Insofar as the same relate to the Subleased Premises, each and
every provision of the Office Lease except for the Excluded Provisions shall be
deemed incorporated herein and made a part of this Sublease as between Sublessor
and Sublessee, except to the extent that such provisions are inconsistent with
the provisions of this Sublease (in which event the provisions of this Sublease
shall control). Insofar as the same relate to the Subleased Premises, all
references in the Office Lease to "Landlord" (or words of similar import) shall
be deemed to refer to Sublessor and all references to "Tenant" (or words of
similar import) shall be deemed to refer to Sublessee. Provided, however, in the
event of a conflict between any provision contained in the Office Lease and a
provision contained in this Sublease, the provision contained in this Sublease
shall control as between Sublessor and Sublessee.
2.2. Landlord's Consent or Approval. This Sublease is conditioned upon
the approval or consent of Landlord to this Sublease, to the extent and in the
form that such approval or consent is required under the Office Lease, which
approval Sublessor shall use its reasonable efforts to obtain. Sublessee agrees
to execute such documents and to take such actions as Sublessor may reasonably
request in connection with obtaining the Landlord's consent or approval to this
Sublease.
2.3. Sublease of Subleased Premises. Sublessor hereby subleases to
Sublessee for the Sublease Term (as defined below) (a) the Subleased Premises;
(b) the right (in common with the rights of all others entitled thereto) to use
all common areas and facilities which tenants or occupants of the Office
Premises are entitled to use pursuant to the Office Lease, subject to clause (d)
below, (c) the common pipes, ducts, conduits, wires and appurtenant equipment
serving the Subleased Premises; and (d) the right to use, on a first-come,
first-serve basis, an undesignated, pro-rata portion of the parking spaces
available to the tenants or occupants of the Office Premises pursuant to the
Office Lease in accordance with and subject to all applicable terms and
conditions set forth in the Office Lease. Said pro-rata portion of parking
spaces shall be determined based on the ratio of the rentable square footage of
the Subleased Premises to the total rentable square footage of the Office
Premises, as such ratio may change from time to time. Sublessee shall have no
rights to or interests in any other portion of the Office Premises, except as
otherwise provided herein. Sublessee acknowledges that it has reviewed, and
hereby accepts and agrees to be bound by, the terms and conditions of Office
Lease as it applies to the Subleased Premises, except for these terms and
conditions excluded herein.
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2.4. Sublease Subject to Office Lease. Sublessee acknowledges that this
Sublease is subject and subordinate in all respects to the Office Lease.
Therefore:
A. Each of Sublessor and Sublessee agrees that it will not take
any action which would constitute a default under the Office
Lease, as applicable to this Sublease, and further agrees to
indemnify, defend, and hold the other party harmless from and
against any and all liability, loss, cost, damage or expense,
including reasonable attorneys fees, arising out of or in
connection with any act or failure on the part of such party
which constitutes a default under this Sublease or under the
Office Lease.
B. Wherever Sublessor's consent is required under this Sublease,
the consent of the Landlord shall also be required (to the
extent set forth in the Office Lease). It is understood and
agreed that Sublessor shall not be deemed to be unreasonable
in withholding its consent if the Landlord has not granted its
consent.
C. Except as may be expressly stated to the contrary elsewhere
herein, Sublessee acknowledges and agrees that Sublessor shall
have no obligation to provide any services to the Subleased
Premises, to perform any maintenance of or repairs to the
Subleased Premises, or to perform any other obligation
required to be performed by the Landlord under the Office
Lease. Provided, however, Sublessor agrees that it will take
all commercially reasonable steps to enforce its (and
therefore Sublessee's) rights as Tenant under the Office Lease
with respect to all terms and provisions of the Office Lease,
all as if Sublessor had remained in occupancy of the Subleased
Premises.
D. Sublessee acknowledges and agrees that Sublessor shall have no
liability or obligation to Sublessee based upon any
representation or warranty made by the Landlord to Sublessor
under the Office Lease or based upon any act or omission of
the Landlord or the agents, employees or contractors of the
Landlord.
2.5. Sublessor's Representations and Warranties. Sublessor represents
and warrants to Sublessee as follows:
A. The Office Lease is in full force and effect; Sublessor is the
Tenant under the Office Lease; no default by Sublessor under
the Office Lease now exists; Sublessor has full right and
power to execute this Sublease and to lease the Subleased
Premises to Sublessee, subject only to the consent of the
Landlord under the Office Lease (to the extent required
therein); no agreement or understanding exists between the
Sublessor and the Landlord except as disclosed in this
Sublease; and the Office Lease has not been amended, modified,
supplemented or superseded in any manner except as disclosed
in this Sublease;
B. To the best of Sublessor's knowledge, there is no existing
default under the Office Lease on the part of the Landlord;
and
C. Sublessor agrees that, so long as Sublessee shall pay the rent
due under this Sublease and shall perform all other
obligations of Sublessee herein contained: (a) Sublessee shall
be entitled to the peaceful and quiet enjoyment of the
Subleased Premises from and against the claims of all persons
claiming under Sublessor, and Sublessor shall comply with its
obligations under this Sublease; and (b) Sublessor will not
amend, modify or supplement any of the terms and conditions of
the Office Lease in a manner that would adversely affect
Sublessee's use and occupancy of the Subleased Premises or
rights under this Sublease, without, in each instance,
obtaining Sublessee's prior written consent.
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2.6. Access. Sublessee shall have access to the Subleased Premises
twenty-four (24) hours per day, seven (7) days per week, subject to Sublessee's
compliance with Landlord's access and security policies and procedures in place
for the Office Premises, if any.
Sublessor may enter the Subleased Premises at reasonable times to
examine the Subleased Premises or to make any repairs or replacements Sublessor
may deem necessary to avert an emergency. Sublessor's entry to the Subleased
Premises shall be upon reasonable prior notice to Sublessee (except in cases of
emergency) and any work done in the Subleased Premises shall be performed in a
manner which minimizes interference with Sublessee's use and occupancy of the
Subleased Premises.
2.7. Use. Sublessee shall use the Subleased Premises for the uses
permitted by the terms and conditions of the Office Lease.
ARTICLE III: SUBLEASE TERM
3.1. Sublease Term. The term of this Sublease (the "Sublease Term")
shall commence as of the Effective Date and continue thereafter through and
including the Expiration Date, unless extended or sooner terminated by the terms
of this Sublease.
3.2. Sublessee's Termination Option. Subject to the consent or approval
of Landlord (if and to the extent required under the terms of the Office Lease),
Sublessee may elect to terminate this Sublease at any time as to all or any
portion of the Subleased Premises by giving Sublessor written notice of such
election at least sixty (60) days before the effective date of such termination,
which termination date shall be specified in such notice. Such notice shall also
specify that portion of the Subleased Premises as to which Sublessee is
terminating this Sublease. Sublessee shall continue to be liable for all Base
Rent and Additional Rent payable under this Sublease up to the effective date of
termination. If Sublessee has exercised its right to terminate this Sublease
only with respect to a portion of the Subleased Premises, the Base Rent shall be
adjusted as of the termination date as provided in Section 4.1 below. This
Sublease shall terminate on the termination date specified in such notice with
respect to that portion of the Subleased Premises specified in such notice with
the same force and effect as if such date were the last day of the Sublease
Term. The term "Subleased Premises", as used hereunder, shall refer to the
Subleased Premises less any portion of the Subleased Premises as to which
Sublessee has effectively exercised a right of termination. In the event
Sublessee elects to terminate this Sublease with respect to a portion of the
Subleased Premises only, it is understood and agreed that the portion of the
Subleased Premises so terminated shall be separately demisable by Sublessor. In
the event that Sublessee exercises its termination option with respect to a
portion only of the Subleased Premises, Sublessor and Sublessee hereby agree
that they will cooperate in connection with any reconfiguration of the common
areas and elements of the Subleased Premises that such partial termination may
necessitate (subject to Section 5.1 hereof).
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<PAGE>
3.3. Holdover. Sublessee covenants and agrees to vacate and surrender
the Subleased Premises (or any applicable portion thereof) to Sublessor, in
broom clean condition, free of personal property, furniture and fixtures, on or
before the expiration or the earlier termination of the term of this Sublease,
as the case may be. Any holdover by Sublessee following the expiration of the
term (or following the termination of this Sublease with respect to a portion of
the Subleased Premises as herein provided) shall, at Sublessor's option, be
treated as a tenancy at sufferance at a daily rate equal to one and one-half
times the Base Rent payable by Sublessee immediately preceding such holdover and
shall otherwise be on the terms and conditions of this Sublease so far as the
same may be applicable. Sublessee hereby agrees to indemnify and hold Sublessor
harmless from and against any loss, cost or expense incurred by Sublessor as the
result of any holdover by Sublessee.
ARTICLE IV: PAYMENT OF RENT
4.1. Rent. Commencing as of the Effective Date and continuing
thereafter through and including the Expiration Date (or the date this Sublease
is earlier terminated), Sublessee shall pay Sublessor, in advance on or before
the first (1st) day of each calendar month, without deduction, setoff or defense
except as otherwise provided herein or in the Office Lease, the Base Rent
payable for that month.
If Sublessee exercises its termination right with respect to a portion
of the Subleased Premises, the Base Rent as set forth above will be recalculated
as of the effective termination date based on (i) the rentable square footage of
the portion of the Subleased Premises as to which Sublessee is not terminating
this Sublease, and (ii) the total rentable square footage of the Subleased
Premises immediately prior to such termination.
4.2. Sublessee's Payment Increases Pro-Rata Share of Base Year
Expenses. Commencing as of (i) January 1, 2001, with respect to Operating
Expenses and Additional Expenses, and (ii) July 1, 2000, with respect to Taxes,
and continuing thereafter throughout the Sublease Term, Sublessee shall pay to
Sublessor Sublessee's Pro-Rata Share (as such term is hereinafter defined) of
all increases in the total amount of (a) Operating Expenses payable by Sublessor
to Landlord over the comparable charges payable by Sublessor for calendar year
2000, (b) Taxes payable by Sublessor to Landlord over the comparable charges
payable by Sublessor for fiscal year 2000 (i.e. July 1, 1999 to June 30, 2000),
and (c) Additional Expenses over the comparable costs payable by Sublessor with
respect to calendar year 2000. All payments made by Sublessee of Operating
Expenses, Taxes or Additional Expenses hereunder shall hereinafter sometimes be
referred to collectively as "Additional Rent".
Sublessee's Pro-Rata Share as set forth above shall equal the ratio of
the rentable square footage of the portion of the Subleased Premises that
Sublessee is occupying as of the Effective Date to the total rentable square
footage of the Office Premises. If Sublessee exercises its termination right
with respect to a portion of the Subleased Premises, Sublessee's Pro-Rata Share
shall be recalculated as of the effective termination date based upon (i) the
rentable square footage of the portion of the Subleased Premises as to which
Sublessee is not terminating this Sublease, and (ii) the total rentable square
footage of the Subleased Premises immediately prior to such termination.
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Such amounts shall be paid by Sublessee to Sublessor within fifteen
(15) days after notice from Sublessor that such amounts are due; provided,
however, Sublessee shall make monthly payments of such charges (as reasonably
estimated by Sublessor) if such monthly payments are required to be made by
Sublessor pursuant to the Office Lease.
Sublessee shall be entitled to Sublessee's Pro-Rata Share of any and
all refunds of overpayments of Operating Expenses, Additional Expenses and Taxes
paid or credited to Sublessor by Landlord to the extent that such refunded or
credited amounts relate to amounts paid by Sublessee to Sublessor hereunder.
Sublessor shall account to Sublessee at least annually as to Sublessor's actual
payments to Landlord for and with respect to Operating Expenses, Additional
Expenses and Taxes, and shall promptly reimburse or credit Sublessee for any
overpayment made by Sublessee of such amounts. Sublessor shall promptly pay such
amounts to Sublessee or credit such amounts against the next monthly installment
of Base Rent due from Sublessee to Sublessor under this Sublease. Sublessor
shall promptly supply to Sublessee copies of all notices, supporting
documentation and other materials received from Landlord which pertain to
Operating Expenses, Additional Expenses or Taxes, or to increases in such
charges.
4.3. Other Amounts. Sublessee shall be responsible for and shall
promptly and timely pay all separately metered and directly billed utility costs
and expenses pertaining to extraordinary utility requirements of Sublessee for
portions of the Subleased Premises (e.g., a data room). To the extent any such
extraordinary utility costs and expenses cannot be separately metered, Sublessee
shall pay its reasonable allocable share of such charges based upon the rentable
square footage of that portion of the Subleased Premises subject to such
extraordinary usage (taking into account any extraordinary usage by Sublessor).
Sublessee shall be responsible for and shall promptly and timely pay
all taxes and other assessments levied or assessed directly against it or its
personal property located at the Subleased Premises directly to the taxing
authority.
ARTICLE V: IMPROVEMENTS; REPAIR AND MAINTENANCE
5.1. Improvements to Office Premises. Sublessee hereby acknowledges and
warrants to Sublessor that it has had the opportunity to inspect and familiarize
itself with the Subleased Premises and has done so. Sublessee hereby accepts the
Subleased Premises in its current "AS IS, WHERE IS" condition, without any
obligation on the part of Sublessor to prepare or construct the Subleased
Premises for Sublessee's occupancy, except as otherwise provided herein.
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In the event that Sublessee exercises its termination option with
respect to a portion of the Subleased Premises, any demising walls, alterations
and improvements necessary to reconfigure the premises for occupancy by
Sublessor or by another occupant or tenant shall be constructed by Sublessor.
Sublessee shall cooperate with Sublessor as necessary in connection with the
construction of any such demising walls, alterations or improvements. Within
thirty (30) days of receipt by Sublessee of a bill therefor (accompanied by
reasonably detailed supporting documentation), Sublessee shall pay to Sublessor
the actual, out-of-pocket costs incurred by Sublessor in constructing demising
walls between that portion of the Subleased Premises surrendered by Sublessee
and the remainder of the Subleased Premises. Sublessee shall not be liable for
any incremental costs incurred by Sublessor in constructing any other
improvements, additions or alterations to such surrendered space. Sublessor
shall obtain the Landlord's consent or approval, to the extent that such consent
or approval is required under the Office Lease, to the construction of any such
demising walls, alterations or improvements.
Any work performed by either Sublessor or Sublessee pursuant to this
Sublease shall be done in a good and workmanlike manner and in compliance with
all applicable laws and all lawful ordinances, regulations and orders of
governmental authority and insurers of the Office Premises and the Building and
in accordance with all applicable requirements of the Office Lease.
Sublessee agrees to pay promptly when due the entire cost of any work
done at or on the Subleased Premises by Sublessee or its agents, employees or
contractors, and not to cause or permit any liens for labor or materials
performed or furnished in connection therewith to attach to the Office Premises
or the Building, and immediately to discharge any such liens which may so
attach.
5.2. Repair and Maintenance of the Subleased Premises. Sublessee shall
be responsible for the maintenance and repair of the interior, non-structural
elements of the Subleased Premises, including, without limitation, interior
doors, interior security and any subsystems installed by Sublessee for its use.
Sublessee shall submeter all data rooms.
It is understood that the Landlord has certain obligations to make
repairs to the Office Premises as set forth in the Office Lease. Sublessor shall
have no obligation or liability to Sublessee in the event that the Landlord does
not make such repairs except that Sublessor shall request that the Landlord make
any such repairs and shall use commercially reasonable efforts to enforce any
applicable provisions of the Office Lease with respect to such repairs.
Sublessee agrees that it will keep the Subleased Premises neat and clean and
maintain the Subleased Premises in good order, condition and repair excepting
only for ordinary wear and tear, those repairs for which the Landlord is
responsible under the terms of the Office Lease and damage by fire and other
casualty and as a consequence of the exercise of the power of eminent domain, or
where the need for the repairs is caused by any act or neglect of Sublessor or
any contractor of Sublessor; and Sublessee shall surrender the Subleased
Premises (or any applicable portion thereof) and all alterations, improvements,
and additions thereto at the end of the Sublease Term in such condition.
Sublessee shall not permit or commit any waste, and Sublessee shall be
responsible for the cost of repairs which may be necessary by reason of damages
to common areas in the Office Premises and the Building caused by Sublessee or
Sublessee's agents, employees and contractors.
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{THIS PARAGRAPH WILL BE REVISED TO ACCOUNT FOR PARTICULAR LEASES WHICH IMPOSE
SPECIFIC REPAIR AND MAINTENANCE OBLIGATIONS ON TENANT}
5.3. Signage. Subject to the written consent of Sublessor, which
consent shall not be unreasonably withheld, conditioned or delayed (and the
consent or approval of Landlord, if and to the extent required under the Office
Lease), Sublessee shall have the right to affix signs to the interior or
exterior of the Subleased Premises, provided that such signs comply with all
applicable requirements of the Office Lease.
ARTICLE VI: DEFAULT
6.1. Default. It is agreed that the relationship between, and the
rights of, Sublessor and Sublessee shall, with respect to enforcement of the
provisions of this Sublease and default hereunder and the termination hereof, be
governed by the applicable default and remedies provisions of the Office Lease
as if Sublessor and Sublessee were Landlord and Tenant, thereunder,
respectively, except as modified by the immediately succeeding sentence. The
parties acknowledge that an action required and not taken by Sublessee under
this Sublease may place Sublessor in default of its obligations under the Office
Lease. Therefore, the parties hereby agree that, as between Sublessor and
Sublessee, the period afforded Sublessor under the Office Lease to cure a
monetary default shall be reduced by three (3) days, and the cure period for
non-monetary defaults shall be reduced by five (5) days.
Furthermore, to the extent that the Office Lease requires notice to be
given by Landlord to Tenant, Sublessee agrees that Sublessor shall transmit such
notice to Sublessee as soon as such notice is received by Sublessor. Further,
whenever Tenant has an obligation to perform any act or to give any notice to
Landlord under the Office Lease and such obligation is assumed by Sublessee
under this Sublease, then Sublessee shall perform such act or give such notice
at least three (3) days before the due date.
6.2. Indemnity. Each of Sublessor and Sublessee agrees to indemnify,
defend and hold harmless the other party from and against any and all
liabilities, damages, losses, costs, assessments, penalties, fines, expenses and
fees, including reasonable attorney's fees, resulting from such party's breach
of any of its obligations under the Office Lease or under this Sublease.
6.3. Attorneys' Fees. In the event of any litigation between the
parties hereto with respect to the subject matter hereof, the unsuccessful party
or parties agree(s) to pay to the successful party or parties all reasonable
costs, expenses, expert witness fees and costs and reasonable attorneys' fees
incurred therein by the successful party or parties, which shall be included as
a part of any judgment or order rendered therein.
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ARTICLE VII: ASSIGNMENT AND SUBLETTING
7.1. Assignment and Subletting. Except as otherwise provided herein,
Sublessee may not assign this Sublease or sublease the Subleased Premises or any
part thereof without the prior written consent of Sublessor, which consent may
be granted or withheld in Sublessor's sole discretion (subject, in any event, to
any approval or consent of Landlord required under the Office Lease). No
permitted assignment or sublease shall release Sublessee of any liability under
this Sublease and the consent of Sublessor to any one assignment or subletting
shall not be deemed to be Sublessor's consent to any other or further assignment
or subletting.
Subject to any required consent or approval of the Landlord under the
Office Lease, the Sublessor agrees that the Sublessee shall have the right
(without the requirement of obtaining the Sublessor's consent or approval) to
assign its interest under this Sublease, sublease all or any portion of the
Subleased Premises, or permit the use of any portion of the Subleased Premises,
by any entity controlling, controlled by, or under common control with, the
Sublessee. Furthermore, Sublessee may, without the Sublessor's consent or
approval, transfer its interest in this Sublease to the surviving entity in the
event of merger, consolidation by or with Sublessee, or to the purchaser of all
or substantially all of the assets or stock of Sublessee (or its parent). In no
event shall the initial offering of stock to the public by Sublessee or its
parent (or the subsequent sale of such stock) be deemed an assignment or
transfer by Sublessee.
ARTICLE VIII: INSURANCE
8.1. Insurance. Sublessee shall obtain and maintain all insurance
required to be carried by Sublessor pursuant to the Office Lease to the extent
such requirements are applicable to the Subleased Premises. All liability
insurance policies so required to be carried by Sublessee shall name Landlord
and Sublessor as additional insureds thereunder. Sublessee shall provide
Sublessor with insurance certificates evidencing the required insurance coverage
upon the execution hereof and from time to time thereafter as reasonably
requested by Sublessor. Sublessor shall obtain and maintain all insurance it is
required to obtain and maintain under the Office Lease, and shall name Sublessee
as an additional insured on all liability policies so required to be carried by
it. Sublessor shall provide Sublessee with certificates evidencing such required
insurance coverage from time to time as reasonably requested by Sublessee.
Sublessee and Sublessor shall each also maintain workers' compensation insurance
as required by law.
{THIS PROVISION SHALL BE MODIFIED TO THE EXTENT THE OFFICE LEASE OBLIGATES
TENANT TO CARRY CASUALTY INSURANCE FOR THE BUILDING}
8.2. Waiver of Subrogation. Any insurance carried by either party with
respect to the Subleased Premises and property therein or occurrences thereon
shall include a clause or endorsement denying to the insurer rights of
subrogation against the other party to the extent rights have been waived by the
insured prior to occurrence of injury of loss. Each party, notwithstanding any
provisions of this Sublease to the contrary, hereby waives any rights of
recovery against the other for injury or loss to property due to hazards covered
by insurance or hazards required to be covered by insurance hereunder or under
the Office Lease.
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ARTICLE IX: MISCELLANEOUS
9.1. Termination of Office Lease. Except where Sublessee attorns to
Landlord, any termination of the Office Lease shall terminate this Sublease.
Sublessee acknowledges and agrees that: (i) Sublessee will, at Landlord's
election, in the event the Office Lease is terminated for any reason, attorn
directly to Landlord on the terms set forth in this Sublease, and (ii) Sublessee
shall, upon receipt of written notice from Landlord stating that an Event of
Default (as defined in the Office Lease) has occurred and requiring Sublessee to
pay the rent to Landlord, pay to Landlord the rent due and payable under this
Sublease so long as Sublessee's occupancy is not disturbed. If Landlord so
directs Sublessee, Sublessor hereby consents to the payment by Sublessee of the
rent due under this Sublease directly to Landlord, and Sublessor agrees that all
amounts so paid by Sublessee to Landlord shall be credited to amounts due under
this Sublease. Sublessor shall notify Sublessee of a default under the Office
Lease by Landlord (where a notice of default is given by Sublessor to Landlord)
or by Sublessor (where Landlord gives notice of such default to Sublessor).
9.2. Separation; Confidentiality. Each of the parties hereto
acknowledges that the employees and guests of the other party have the right to
use in common with the employees and guests of such party certain common areas
within the Office Premises and the Building, even though both parties expect to
maintain separate and private work places. Neither Sublessor nor Sublessee shall
have access to the other's private offices, secretarial work areas, file storage
areas or other areas where files or documents of each party are stored or
utilized, and each of Sublessor and Sublessee shall avoid viewing the files or
documents of the other party when using the common areas of the Subleased
Premises. Each party hereto agrees that in the event it obtains possession of or
becomes aware of any papers, documents, files or other information involving the
other party's business, employees, or clients, such party shall promptly return
any such papers, documents or files, shall keep all such information
confidential, and shall not disclose any of such information to any third
parties without the prior written consent of the other party.
9.3. Notice. Except as otherwise provided in this Sublease, notices
required or desired to be given hereunder shall be effective either upon
personal delivery or three (3) business days after deposit in the United States
mail, by certified mail, return receipt requested or one (1) business day after
deposit with a nationally recognized overnight courier service such as Federal
Express, addressed to the parties at their respective addresses set forth in
Article I of this Sublease as Sublessor's Notice Address and Sublessee's Notice
Address. Either party may change its address for notice by giving written notice
in the manner hereinabove provided.
9.4. Construction. This Sublease shall be construed in accordance with
the laws of the State in which the Building is located.
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9.5. General. This Sublease shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
subject at all times, to all agreements and restrictions contained in the Office
Lease (except such agreements and restrictions as are expressly excluded
herein).
No failure or delay by either of Sublessor or Sublessee to exercise any
right or power given to it or to insist upon strict compliance by the other
party with any obligation imposed on it hereunder, and no custom or practice of
either party hereto at variance with the terms hereof shall constitute a waiver
or modification of the terms hereof by such party or any right it has herein to
demand strict compliance with the terms hereof by the other party.
The agreements contained herein constitute the entire understanding
between the parties with respect to the subject hereof, and supersede all prior
agreements, written or oral, inconsistent herewith.
If any provision of this Sublease or the application thereof to any
person or circumstance shall be invalid or unenforceable to any extent, the
remainder of the Sublease and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be enforced to
the fullest extent permitted by law.
The captions and headings contained herein are merely labels to aid in
locating sections and are not a substantive part of this Sublease nor shall they
be interpreted as such.
This Sublease may be amended only in writing, signed by all parties
hereto and consented to by Landlord (to the extent that such consent is required
under the Office Lease).
This Sublease may be executed in one or more counterparts and each
executed counterpart shall be considered an original.
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IN WITNESS WHEREOF, the following parties have executed this under seal
Sublease as of the date first written above.
SUBLESSOR:
--------------------------------------------
By:
----------------------------------------
Name Typed:
--------------------------------
Title:
-------------------------------------
SUBLESSEE:
--------------------------------------------
By:
----------------------------------------
Name Typed:
--------------------------------
Title:
-------------------------------------
13
<PAGE>
EXHIBIT A
PLAN FOR SUBLEASED PREMISES
14
<PAGE>
EXHIBIT 10.17
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (this "Assignment") is made as
of _______________________, 2000 (the "Effective Date"), by and between
_______________________, a _________________________ ("Assignor"), and,
a ____________________________ ("Assignee").
A. Assignor is the tenant under that certain lease set forth on Schedule 1
attached hereto (the "Lease").
B. Assignee is an affiliate of Assignor.
C. Assignor has agreed to assign to Assignee all of Assignor's right,
title, and interest in, to and under the Lease, and Assignee has agreed
to assume all of the Assignor's duties and obligations under the Lease
in accordance with the terms set forth herein.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing premises and the
respective agreements, covenants and conditions herein contained, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and agreed, as of the Effective Date Assignor and Assignee agree as
follows:
1. Assignment. Assignor does hereby assign, transfer, convey and
deliver to Assignee, all of Assignor's right, title and interest, in, to and
under the Lease.
2. Assumption. Assignee hereby accepts the foregoing assignment and
assumes and agrees to perform and discharge, as and when due, all of the
agreements, duties and obligations of Assignor under or in respect of the Lease
from and after the Effective Date, and Assignee agrees to be bound by all of the
terms and conditions of the Lease. Assignee shall succeed to the rights and
interests of Assignor under the Lease.
3. Indemnity. Assignee agrees to indemnify Assignor and save Assignor
harmless from any and all liability, loss, damage, costs and expenses (including
reasonable attorneys' fees) that may arise from events occurring after the
Effective Date with respect to the Lease. Assignor agrees to indemnify Assignee
and save Assignee harmless from any and all liability, loss, damage, costs and
expenses (including reasonable attorneys' fees) that may arise from events
occurring through the Effective Date with respect to the Lease.
4. Acceptance of Property. Assignee has inspected the property covered
by the Lease (the "Property") and accepts the Property "as is, where is" and
"with all faults". Assignor makes no representation or warranty, express or
implied, including without limitation any implied warranty of merchantability,
fitness for a particular purpose, or suitability for any intended commercial
use, with respect to such Property, and Assignee irrevocably waives and releases
Assignor from any such warranties. Without limiting the generality of Paragraph
2 above, Assignee hereby expressly assumes any and all obligations of the tenant
under the Lease to restore the Property or any part thereof at the expiration or
termination of the Lease.
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5. Limitation of Liability. Except for claims made by third parties
that are covered by the indemnification obligations under this Assignment,
neither party to this Assignment shall be liable to the other for any special,
punitive, indirect, consequential or incidental damages, including without
limitation damages for loss of use, revenues, goodwill or profits, whether
arising out of any alleged negligence, breach of warranty or contract, strict
liability or otherwise, and Assignor and Assignee each hereby irrevocably waive,
discharge and release the other from any and all such damages.
6. Consent by Landlord. The effectiveness of this Assignment is
conditioned upon the approval or consent of Landlord, to the extent and in the
form that such approval or consent is required under the Lease, which approval
Assignor shall use its reasonable efforts to obtain. Assignee agrees to execute
such documents and to take such actions as Assignor may reasonably request in
connection with obtaining the Landlord's consent or approval to this Assignment.
If any consent required by Landlord under the Lease is not received prior to the
Effective Date, the Effective Date of this Assignment shall be the date on which
such consent is received.
7. Successors and Assigns. The provisions of this Assignment shall be
binding upon, and shall inure to the benefit of, the successors and assigns of
the Assignor and the Assignee, respectively.
8. Cooperation. Assignor and Assignee each agree that at any time and
from time to time, upon the request of the other, Assignor and Assignee each
will execute and deliver any and all such further instruments and documents and
take such further action as the other may reasonably request in order to obtain
the benefits of this Assignment and of the rights and powers herein granted.
9. Counterparts; Facsimile Signature. This Assignment may be executed
in any number of counterparts, and all of said counterparts when taken together
shall constitute one and the same instrument. This Assignment may be delivered
via facsimile, and a signed Assignment delivered via facsimile shall be deemed
an original for all purposes.
IN WITNESS WHEREOF, Assignor and Assignee have caused their duly
authorized representatives to execute this Assignment as of the date first
written above.
ASSIGNOR: ASSIGNEE:
By: By:
----------------------------- -----------------------------
Name: Name:
----------------------------- -----------------------------
Its: Its:
----------------------------- -----------------------------
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ACKNOWLEDGMENTS
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF ) ______________, 2000
On this day, before me, personally appeared _________, who being by me
duly sworn, did say that he is the __________ of ____________, a
________________, and acknowledged said instrument to be his free act and deed
and the free act and deed of said _______.
-------------------------------
Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF ) ______________, 2000
On this day, before me, personally appeared _________, who being by me
duly sworn, did say that he is the __________ of ____________, a
________________, and acknowledged said instrument to be his free act and deed
and the free act and deed of said _______.
-------------------------------
Notary Public
My Commission Expires:
3
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SCHEDULE 1
LEASE
4
<PAGE>
EXHIBIT 10.18
[GTE CORPORATION LETTERHEAD]
[Date]
[Genuity Inc. Address]
Re: Financial Support Agreement Regarding Guaranty of Obligation for the
benefit of [___________________], dated__________
Ladies and Gentlemen:
In consideration of the agreement by GTE Corporation ("GTE") to issue or
continue to maintain the guaranty described above which is attached as Exhibit A
hereto (the "Guaranty") following the transfer of GTE's controlling interest in
Genuity Inc. ("Genuity") as contemplated by GTE and Bell Atlantic Corporation's
Supplemental Filing with the FCC on January 27, 2000 (the "Separation"), Genuity
agrees to pay GTE a fee pursuant to the following terms and conditions:
Guaranty Fee: Guaranty Fee shall be ____% per annum,
calculated monthly, charged on the month-end
outstanding balance of the Guaranty, as
evidenced by the amortization schedule
attached thereto or included therein, and
will be payable semi-annually on June 30 and
December 31 of each calendar year. If the
Guaranty is outstanding for less than a full
calendar month, Guaranty Fee shall be
computed based on the outstanding balance of
the Guaranty on each calendar day of such
month that the Guaranty shall remain in
effect.
Adjustment to Guaranty Fee: The Guaranty Fee set forth above was
determined based on the assumption that
Genuity's credit rating post-Separation
would be equivalent to the average of the
ratings of BBB/Baa2 and BBB-/Baa3. GTE shall
have a one-time right to increase, effective
prospectively, the Guaranty Fee (the
"Adjusted Guaranty Fee") if either one of
the following events occurs: (i) Standard &
Poor's issues a credit rating for Genuity of
BB+ or less or (ii) Moody's issues a credit
rating for Genuity of Ba1 or less. Such
right may be exercised at any time by
written notice to Genuity.
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If either of the events described in (i) or
(ii) above occurs, the Adjusted Guaranty Fee
shall be determined by GTE by averaging the
rates quoted to GTE by three nationally
recognized banking institutions for a credit
equivalent to the published credit ratings
of Genuity. The Adjusted Guaranty Fee shall
become the Guaranty Fee payable under this
letter from and after the date on which GTE
provides Genuity written notice of the
Adjusted Guaranty Fee.
Payment of Fee: Guaranty Fee is due not later than 5
business days following the end of each
semi-annual payment period and shall be
delivered by electronic funds transfer to
[wire transfer instructions] or such other
bank account as shall be provided to Genuity
by GTE in writing at least 5 business days
prior to the date of electronic funds
transfer.
In the event the Guaranty is terminated,
replaced by Genuity or expires prior to the
end of the semi-annual payment period,
Guaranty Fee will be due not later than 5
business days following the termination of
all obligations of GTE under the Guaranty.
Late Payment Fee: A Late Payment Fee in the amount of prime
rate plus 1.00% per annum, calculated daily,
commencing on the day immediately following
the due date and based upon the number of
days elapsed prior to payment of all amounts
due shall be included with any overdue
payment of Guaranty Fee.
Duty of Inquiry: GTE shall have no obligation to consult with
Genuity or make any independent
investigation prior to any decision to honor
or dishonor any payment request under the
Guaranty.
Immediate Repayment: If GTE makes any payment under the Guaranty,
GTE agrees to notify Genuity in writing, at
the address set forth at the end of this
letter or such other address as shall be
subsequently provided to GTE by Genuity in
writing, within three business days of the
amount of such payment, and Genuity agrees
to pay such amount to GTE within one
business day following the date of such
written notice. A Late Payment Fee shall be
applied to any amounts not received when
due.
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<PAGE>
Return of Documents: Genuity shall present the Guaranty to GTE
for cancellation at the address of GTE set
forth at the end hereof, or such other
address as shall be provided to Genuity by
GTE in writing, following the termination of
all obligations of GTE under the Guaranty.
Indemnification: Genuity will reimburse, indemnify and hold
harmless GTE from and against any and all
payments, losses, damages, costs and
expenses (including attorneys' fees and
court costs) paid or incurred by GTE, its
officers, directors, agents, and employees,
as a result of any claim made under this
letter or the Guaranty.
Notice: Any written notice or other information
required to be provided in writing hereunder
shall be made in writing by overnight
delivery service, facsimile transmission or
electronic mail, that provides for evidence
of receipt.
Waiver: No waiver hereunder shall be effective
unless evidenced in writing, and shall be
effective only under the circumstances
specifically described in such waiver.
Underlying Documents: Genuity agrees to provide GTE with an
executed copy of each document entered into
by Genuity as of the date first above
written and from time to time which creates
an obligation of Genuity that is guaranteed
by the Guaranty, at the address of GTE set
forth at the end hereof, or such other
address as shall be provided to Genuity by
GTE in writing.
Underlying Obligation: Nothing herein shall modify any term of the
Guaranty unless specifically provided
herein.
Governing Law: New York.
3
<PAGE>
Please evidence your acceptance of the terms of this letter by executing below,
and return a duplicate original of this letter, together with copies of all
underlying documents which create an obligation of Genuity that is guaranteed by
the Guaranty, to GTE at the address set forth below.
GTE Corporation
By: ____________________________
Title:____________________________
Notices to be delivered to: ___________________________
___________________________
___________________________
Accepted this ____ day of _________, 2000
Genuity Inc.
By: _____________________________
Title:____________________________
Notices to be delivered to: ___________________________
___________________________
___________________________
4
<PAGE>
EXHIBIT 10.19
[GTE CORPORATION LETTERHEAD]
[Date]
[Genuity Inc. Address]
Re: Request by Genuity Inc. ("Genuity") for
Continuation of Financial Support after Separation
GTE Corporation ("GTE") acknowledges your request for the continuation of
financial support by GTE Corporation after the transfer of GTE's controlling
interest in Genuity as contemplated by GTE and Bell Atlantic Corporation's
Supplemental Filing with the FCC on January 27, 2000 (the "Separation"). Genuity
will not have published credit ratings from any nationally recognized credit
rating services for some period of time after the Separation. Genuity has
maintained that, in order to continue its regular business operations, Genuity
may need some continuing financial support from GTE, in the form of new
guaranties related to financial obligations entered into post-Separation, until
Genuity has established such credit ratings.
GTE is willing to offer financial support to Genuity post-Separation, in the
form of GTE Corporation guaranties, on the following terms and conditions:
Terms of Financial Support: GTE shall issue guaranties in support of
real estate lease obligations of Genuity
(each, a "Guaranty") on the same basis and
on the same terms and conditions as GTE
issued such guaranties on behalf of Genuity
and other GTE affiliated companies prior to
Separation, EXCEPT as otherwise set forth in
this letter. GTE shall not be obligated to
issue any Guaranty upon terms or conditions
less favorable than GTE's standard form of
guaranty attached as Exhibit A.
Financial Support Agreement: As a condition to the issuance of any
Guaranty post-Separation, Genuity shall
execute the form of Financial Support
Agreement attached as Exhibit B to this
letter for each Guaranty requested by
Genuity and issued by GTE.
Term of Commitment: GTE shall continue to issue Guaranties until
the earlier of (i) the date that is six
months after the date of Separation or (ii)
the date on which both Standard & Poor's and
Moody's have published credit ratings for
Genuity.
1
<PAGE>
Guaranty Fee: The Guaranty Fee for each Guaranty so issued
shall be 1.0% per annum; provided, however,
that the Guaranty Fee may be increased to
the Market Rate (hereinafter defined) if the
Market Rate exceeds 1.0% per annum by 0.25%
or more at the time each Guaranty is issued.
The Market Rate shall be determined by GTE
by averaging the rates quoted to GTE by
three nationally recognized banking
institutions for a credit equivalent to the
credit of Genuity. For purposes of this
agreement, the credit of Genuity is assumed
to be equivalent to the average of the
ratings of BBB/Baa2 and BBB-/Baa3.
Negotiation of Guaranties: Genuity understands and acknowledges that
GTE shall be solely responsible for the
negotiation of the terms and conditions with
the lessor or lessor's representative,
including dollar and term limits, of each
Guaranty requested.
Genuity, as used in this letter, means and includes Genuity Inc. and its
wholly-owned subsidiaries, as well as the entity described and defined as DataCo
in the Supplemental FCC Filing mentioned hereinabove.
2
<PAGE>
Please evidence your acceptance of the terms of this letter by executing below,
and return a duplicate original of this letter to GTE at the address set forth
below.
GTE Corporation
By: ____________________________
Title:____________________________
Notices to be delivered to: ___________________________
___________________________
___________________________
Accepted this ____ day of _________, 2000
Genuity Inc.
By: _____________________________
Title:____________________________
Notices to be delivered to: ___________________________
___________________________
___________________________
3
<PAGE>
Exhibit 10.20
MASTER SERVICES AGREEMENT
FOR
MONITORING AND SERVICES
BETWEEN
GTE NETWORK SERVICES
AND
GTE GLOBAL NETWORKS CORPORATION
<PAGE>
MASTER SERVICES AGREEMENT
This Master Services Agreement ("Agreement"), is made effective as of
__________, 1999, by and between GTE Network Services consisting of the GTE
Telephone Operating Companies listed on Attachment A ("GTE") and GTE Global
Networks Corporation ("GNI").
1.0 SCOPE
GTE will provide, through its Network Operations Center ("NOC"), network
monitoring of network enabling devices and processes twenty four (24) hours a
day, seven (7) days a week, three hundred sixty-five (365) days a year to
detect, escalate, restore, and follow-up on anomalies occurring in the network.
In addition, GTE will provide technical support to GNI for problems that cannot
be resolved on-site; these support services include network element event
problem resolution, network element reliability analysis and network traffic
management. Exhibit A further explains the aforementioned services.
2.0 PROFESSIONAL SERVICES
GNI retains GTE to perform the services described in Exhibit A and the
Statement(s) of Work, attached hereto and made a part hereof ("Services"). The
Services shall be performed in accordance with the requirements set out in the
Statements of Work.
3.0 STATEMENTS OF WORK
During the Term (hereinafter defined), GNI and GTE (hereinafter referred to
collectively as "Parties" and individually as a "Party") may from time to time
enter into additional statements of work (a "Statement of Work" or "SOW")
defining additional services to be performed by GTE for GNI pursuant to this
Agreement. Each such Statement of Work shall be added hereto by means of a
written description of the Services shall contain terms and conditions
supplementing the terms and conditions of this Agreement to the extent the
Parties deem it necessary and defining (i) the Services to which it pertains,
(ii) all work product and other tangible embodiments or results of the
identified Services ("Deliverables"), (iii) delivery dates, (iv) specific
acceptance criteria for Deliverables, and (v) specific price and payment
provisions (if different from or additional to those established in Sections 5,
and 6 of this Agreement). The scope of the Services set out in Exhibit A and the
Statement(s) of Work may be modified by the authorized representatives of the
Parties. GTE shall perform no services outside the scope of any Statement of
Work except as otherwise agreed to in writing signed by the Parties. No oral
changes to the scope of any Statement of Work shall be permitted.
<PAGE>
4.0 TERM AND TERMINATION
4.1 This Agreement shall be effective upon the execution by both GNI and
GTE as of the date set forth above, and shall have full force and
effect for one year unless earlier terminated as provided herein.
Unless otherwise terminated in accordance with the terms herein, this
Agreement will automatically renew for an additional one-year period on
the anniversary of the effective date.
4.2 Notwithstanding anything to the contrary contained in this Agreement,
either Party may terminate this Agreement without cause upon providing
at least ninety (90) calendar days' prior written notice of termination
to the other Party.
4.3 Notwithstanding Section 4, Term of Agreement, the term of this
Agreement and the other conditions hereof, are subject to applicable
law and regulator approval. Accordingly, although the Agreement is
executed by both Parties, to the extent that any state statute, order,
rule or regulation or any state regulatory agency having competent
jurisdiction over one or both of Parties to this Agreement, shall
require that this Agreement be filed with or approved by such
regulatory agency before the Agreement may be effective, this Agreement
shall not be effective in such state until the first business day after
such approval or filing shall have occurred.
5.0 FEES
5.1 GNI will pay GTE fees for Services performed and accepted by GNI as set
forth in the applicable SOW.
5.2 Fees will be paid in accordance with the procedures set forth in
Section 6, Billing Procedure, below.
5.3 Notwithstanding anything to the contrary contained in this Agreement,
Fees are at all times subject to review and modification to conform
with any applicable regulatory requirement governing transactions
between GTE and its affiliates, including without limitation to FCC
Docket 96-150.
<PAGE>
6.0 BILLING PROCEDURE
6.1 GTE shall bill GNI each month for the previous month's usage. GTE shall
include with the monthly invoice such data GTE and GNI mutually agree
is necessary for GNI to verify the accuracy of the billing it receives.
Payment to GTE for bills rendered to GNI shall be due thirty (30)
calendar days after receipt of the invoice. Beginning the day after the
due date of the bill, interest charges of 0.000454 compounded daily or
the maximum allowed by law, whichever is less, shall be added to GNI's
bill. Payments shall be applied to the oldest outstanding amounts
first.
6.2 Price Changes. The rates and charges shall remain in effect and are
firm for a period of twelve (12) months from the effective date of this
Agreement, except with respect to any tariff pricing changes or
adjustments that may occur pursuant to this Agreement or any Statements
of Work hereto. Thereafter, GTE shall give GNI sixty (60) calendar
days' notice of any price change. If the new prices are not acceptable
to GNI, GNI may terminate this Agreement upon thirty (30) calendar
days' notice of any price change without penalties for either Party.
6.3 Right to Dispute. GNI shall have the right to dispute any amount so
invoiced and paid and must notify GTE in writing of any dispute within
sixty (60) calendar days of the receipt of such invoice or the dispute
shall be waived. GNI documentation supporting GNI's claim shall be
forwarded to GTE with the letter of dispute.
Adjustments.
6.4 Any adjustments relating to a disputed amount shall be reflected on the
next invoice issued after resolution. If the dispute is resolved in
favor of GNI, in whole or in part, GNI shall be entitled to interest of
0.000454 compounded daily or maximum allowed by law, whichever is less,
from GTE to the extent the claim is sustained.
6.5 Dispute Resolution. Disputes between GNI and GTE with respect to this
Agreement shall be settled in accordance with the provisions set forth
in Article 18, Dispute Resolution.
7.0 PERFORMANCE STANDARDS
GTE shall perform the Services with the degree of skill and care that is
required by applicable, generally accepted professional procedures, practices
and standards in the industry so as to ensure that the Services performed and
Deliverables provided meet the requirements of, and are correct and appropriate
for, the purposes contemplated in this Agreement and the applicable Statement of
Work.
<PAGE>
8.0 PERFORMANCE SCHEDULE
Performance shall begin upon execution of this Agreement. The Parties will
mutually agree upon any additional performance milestones, meetings or
conferences.
9.0 DIRECTION AND CONTROL
Unless otherwise specified in the applicable Statement of Work, GNI shall not
direct, control or supervise GTE as to the details or means by which the
Services are accomplished. GTE shall be free at all times to arrange the time
and manner of performance of Services and will not be expected to maintain a GNI
established schedule of duties or assignments except as needed to meet
milestones, deadlines or schedules established by the Parties.
10.0 INDEPENDENT CONTRACTOR
10.1 The Parties agree that each Party is engaged in a business which is
independent from that of the other Party, and each Party shall perform
its obligation as an independent contractor and not as an agent,
employee or servant of the other Party.
10.2 Neither Party nor any person furnished by such Party shall be deemed
employees, agents or servants of the other Party, or be entitled to any
benefits available under the plans for such other Party's employees.
10.3 Each Party retains the right to exercise full control and supervision
over its own performance of the obligations under this Agreement and
retains full control over the employment, direction, compensation and
discharge of all employees assisting in the performance of such
obligations; each Party will be solely responsible for all matter
relating to payment of such employees, including compliance with social
security taxes, withholding taxes and all other regulations governing
such matters; and each Party will be responsible for its own acts and
those of its own subordinates, employees, agents and subcontractors
during the performance of that Party's obligations.
11.0 TAXES
GNI shall be liable and shall reimburse GTE for payments of federal
manufacturers' and retailers' excise taxes and for payments of federal, state
and local sales, use or similar taxes, as applicable, with respect to
transactions under this Agreement, provided such taxes are separately stated in
<PAGE>
GTE's invoices; it being understood and agreed that GNI shall have no liability
for any taxes not separately invoiced to GNI. GNI shall not be liable for any
tax for which a valid exemption certificate acceptable to the applicable taxing
authorities is furnished by GNI to GTE. GTE shall be solely responsible for
arranging withholding and payment of all required taxes arising out of GTE's
activities in accordance with this Agreement, including without limitation,
federal and state income taxes, social security taxes, unemployment insurance
taxes, and any other taxes or business license fees related to GTE's business
and its directors, officers, employees, contractors, consultants, or agents. GTE
agrees to indemnify GNI for any and all sums that are due and owing for
withholding FICA and unemployment or other state and federal taxes.
12.0 ASSIGNMENT
Any assignment of any right, obligations or duty, in whole or in part, or of any
other interest by either Party under this Agreement made without the written
consent of the other Party shall be null and void, except that either Party may
assign this Agreement, in whole or in part, to an affiliate or to the parent
corporation of that Party without consent but upon prior written notice to the
other Party. Notwithstanding the foregoing, either party may assign this
Agreement without such consent to any affiliate or to any entity that is a
successor to that party by merger or consolidation or that acquires
substantially all of that party's business or assets.
13.0 CONFIDENTIAL AND PROPRIETARY INFORMATION
13.1 To the extent required to provide and receive services pursuant to this
Agreement, one Party ("the disclosing Party") may provide and the other
Party ("the receiving Party") may receive or have access to records and
information that the disclosing Party considers to be confidential or
proprietary, including technical information such as specifications,
drawings, guidelines, models, and other information. Such information
shall be marked by the disclosing Party as confidential or proprietary
and the receiving Party shall hold such confidential or proprietary
information in trust and confidence for the disclosing Party; shall use
it only for the purposes permitted hereunder except as may be otherwise
agreed to by the disclosing Party; and shall deliver to the disclosing
Party all such records and information upon termination or expiration
of this Agreement. Nothing in this Article shall be construed to limit
the use of or dissemination by the receiving Party of such information
which was previously known to the receiving Party or is or becomes
public information by means other than disclosure by the receiving
Party.
<PAGE>
13.2 The Parties acknowledge that this Agreement constitutes the Proprietary
information of both Parties and is subject to the terms of this
section; provided, however that the Parties further acknowledge that
this Agreement may be filed with any regulatory commission having
authority over the subject matter, and the Parties agree to seek
commercial confidential status for this Agreement with any such
regulatory commission, to the extent such a designation could be
secured.
14.0 TITLE
Except as may otherwise be provided in a SOW to this Agreement, title to the
software programs, database software, hardware, network monitoring or enabling
devices, Services and any products or equipment used in connection with the
Services ("Products"), used or created for GNI hereunder, shall at all times
remain with GTE. GNI has no property rights in such software programs, database
software, hardware, devises, Services or Products.
15.0 WARRANTIES
15.1 Contractor warrants that any Products, hardware or equipment provided
will be in working order on the day installed, will be certified by GTE
as ready for use, and will conform to the functional specifications set
out in the applicable SOW and to any applicable published Contractor
specifications. Thereafter, Contractor will make such adjustments,
repairs, and replacement as necessary to maintain such Products,
hardware or equipment in good working order pursuant to such
specifications.
15.2 In addition, GTE warrants that all Services provided to GNI will be
performed in a fully workmanlike manner and in accordance with the
prevailing professional standards of the industry.
15.3 THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTIBILITY AND FITNESS FOR A PARTICULAR PURPOSE.
15.4 The foregoing warranties shall survive inspection, testing,
acceptance, and payment.
<PAGE>
16.0 INDEMNIFICATION
Subject to the limitations contained in this Agreement and to the extent not
prohibited by law, each Party (Indemnifying Party) shall indemnify and hold
harmless the other Party (Indemnified Party) from and against any loss, cost,
claim, liability, damage, or expense (including reasonable attorneys fees) to
third parties for bodily injury, including death, and damage to property, to the
extent arising out of negligence or wanton or willful misconduct by the
Indemnifying Party, its employees, agents or contractors in the performance of
this Agreement. In addition, the Indemnifying Party shall, to the extent of its
negligence or wanton or willful misconduct, defend any action or suit brought by
a third party for bodily injury, including death, and damage or expense relating
to or arising out of negligence or wanton or willful misconduct by the
Indemnifying Party, its employees, agents, or contractors, in the performance of
this Agreement. The Indemnified Party shall notify the Indemnifying Party
promptly, in writing, of any written claims, lawsuits, or demands by third
parties for which the Indemnified Party alleges that the Indemnifying Party is
responsible under this paragraph and tender the defense of such claim, lawsuit
or demand to the Indemnifying Party. The Indemnified Party also shall cooperate
in every reasonable manner with the defense or settlement of such claim, demand
or lawsuit. The Indemnifying Party shall not be liable under this subparagraph
for settlements by the Indemnified Party of any claim, demand, or lawsuit unless
the Indemnifying Party has approved the settlement in advance or unless the
defense of the claim, demand or lawsuit has been tendered to the Indemnifying
Party, in writing, and Indemnified Party has failed promptly to undertake the
defense.
17.0 LIMITATION OF LIABILITY
NEITHER PARTY SHALL BE LIABLE FOR ANY LOSS OF REVENUE OR PROFIT BY ANY THIRD
PARTY OR FOR ANY LOSS OR DAMAGE IN CONNECTION WITH OR ENSUING FROM THE
ACTIVITIES CONTEMPLATED BY THIS AGREEMENT, WHICH IS SUFFERED BY ANY SUCH THIRD
PARTY, WHETHER ARISING IN CONTRACT, TORT (INCLUDING WITHOUT LIMITATION
NEGLIGENCE OR STRICT LIABILITY), OR OTHERWISE AND WHETHER OR NOT INFORMED OF THE
POSSIBILITY OF SUCH DAMAGES IN ADVANCE. WITH RESPECT TO CLAIMS ARISING OUT OF
THE PROVISION OF THE SERVICES UNDER THIS AGREEMENT, EITHER PARTY'S LIABILITY,
WHETHER IN CONTRACT, TORT, OR OTHERWISE, SHALL BE LIMITED TO DIRECT DAMAGES
WHICH SHALL NOT EXCEED THE TOTAL CHARGES FOR THE SERVICES PROVIDED. UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY BE RESPONSIBLE OR LIABLE FOR INDIRECT,
INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO,
DAMAGES ARISING FROM THE USE OR PERFORMANCE OF THE SERVICES, DELAY, FAILURE TO
PROCESS CALENDAR-RELATED DATA CORRECTLY OR TO REPRESENT DATES WITHOUT AMBIGUITY
<PAGE>
TO CENTURY, ERROR OR LOSS OF DATA, PROFITS OR GOODWILL. IN CONNECTION WITH THIS
LIMITATION OF LIABILITY, THE PARTIES RECOGNIZE THAT GTE MAY PROVIDE ADVICE, MAKE
RECOMMENDATIONS, OR SUPPLY OTHER ANALYSES RELATED TO THE PROVISION OF SERVICES
DESCRIBED IN THIS AGREEMENT. GNI ACKNOWLEDGES AND AGREES THAT THIS LIMITATION OF
LIABILITY SHALL APPLY TO SUCH ADVICE, RECOMMENDATIONS, AND ANALYSES. THE PARTIES
EXPRESSLY AGREE THESE LIMITATIONS WILL APPLY NOTWITHSTANDING THE FAILURE OF THE
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
18.0 DISPUTE RESOLUTION
18.1 In the event either Party fails to perform any material provision of
this Agreement, either Party may give notice to the other Party
pursuant to the notification procedure set forth in Section 21,
Notices/Performance Contact, of this Agreement.
18.2 If, after having provided such notice, the Parties fail to resolve any
nonperformance issues set forth in such notice, the Parties may
escalate their attempts at resolution by notifying the managerial
contacts, identified below of the outstanding issues:
GTE's Contact: GNI's Contact:
GTE Network Services
GNI -- Account Manager Vendor Manager - GTENS
600 Hidden Ridge
Irving, Texas 75015
19.0 DEFAULT
If either Party fails to perform any material obligation under this Agreement or
violates any material term or condition of this Agreement, and such failure or
violation is not cured within thirty (30) calendar days following receipt of a
default notice from the other Party, then the other Party shall have the right
to terminate this Agreement upon written notice to the defaulting Party.
20.0 FORCE MAJEURE
Neither Party shall be held liable for any delay or failure in performance of
any part of this Agreement from any cause beyond its control and without its
fault or negligence, including, but, not limited to, acts of civil or military
authority, government relations, embargoes, epidemics, war, terrorist acts,
<PAGE>
riots, insurrections, fires, explosions, nuclear accidents, strikes, extended
power blackouts, natural disasters such as earthquakes, floods, volcanic action,
unusually severe weather conditions or other major environmental disturbances,
inability to secure transportation or communications common carriers, or legal
and/or regulatory constraints affecting either of the Parties hereto in
performing their obligations hereunder. If such contingency occurs, the Party
delayed or unable to perform shall give reasonable notice to the other Party.
21.0 NOTICES/PERFORMANCE CONTACT
21.1 All notices or other communications required or permitted to be made or
given hereunder by one Party to the other Party shall be in writing and
shall be deemed to have been given: (i) when hand delivered, or (ii)
when sent by electronic facsimile (with confirmation of its receipt by
the other Party) when sent during recipient's normal hours of business
from Monday through Friday excluding holidays, otherwise on the next
business say of receipt, (iii) on the third (3rd) business day after
the day of deposit in the United States mail when sent by certified
mail, postage prepaid and return receipt requested, or (iv) on the next
business say excluding, excluding Saturdays, Sundays, and recipient's
holidays, when sent by national overnight package delivery service for
next day delivery with proof of delivery, and, in all cases, properly
addressed to such other Party as set forth in the applicable Statement
of Work or at such other address as may be specified by either Party by
written notice sent or delivered in accordance with the terms hereof.
21.2 The day-to-day management of the relationship between the Parties in
accordance with the terms and conditions of this Agreement shall be
conducted by those designees set forth in the Statement of Work and who
are not authorized to modify or amend this Agreement.
21.3 All invoices for Services under this Agreement shall be addressed to
GNI as follows:
GTE Global Networks Corporation
Attn: Vendor Cost management
22.0 PUBLICITY
Unless otherwise agreed upon, neither Party shall publish or use the other
Party's name, pictures, symbols, or trade secrets from which the other Party's
name may be inferred or implied in any advertising, promotion, or any other
publicity matter relating directly or indirectly to this Agreement. All
publicity regarding this Agreement is subject to the Parties' prior written
consent.
<PAGE>
23.0 ENTIRE AGREEMENT
23.1 This Agreement, including the Exhibits listed below, constitutes the
entire agreement and understanding between the Parties with respect to
the subject matter hereof and supersedes and replaces any prior or
contemporaneous undertakings, commitments or agreements, oral or
written, as to its subject matter:
Exhibit A - Services Description
Exhibit B - Statements of Work
23.2 This Agreement may be modified or amended only by written instrument,
designated as an amendment or other words of like import, and signed by
authorized representatives of the Parties on or after the date hereof.
24.0 PRECEDENCE OF DOCUMENTS
In case of conflict between provisions of this Agreement and provisions of any
invoice, order acknowledgement or other document submitted by GTE, the
provisions of this Agreement shall govern. In case of conflict between the
provisions of this Agreement and the provisions of any of its Exhibits, the
provisions of the Agreement shall govern.
25.0 APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas and of the United States.
26.0 REGULATORY ISSUES
This Agreement is subject at all times to any statute, order, rule, or
regulation, or any state of federal regulatory agency, having competent
jurisdiction over one or both of the Parties hereto, or the services provided
hereby as it pertains to affiliate relationships. In addition, this Agreement
shall at all times be subject to changes, modifications, orders and rulings by
any state public utilities regulatory agency to the extent the affiliate
relationship created by Agreement is or becomes subject to jurisdiction of such
agency. If the arrangement described in this Agreement is subject to advance
approval by the state public utilities regulatory agency, this Agreement shall
not become effective within that state until the business day after receipt by
GNI of written notice of such approval. GNI and GTENS agree to cooperate with
<PAGE>
each other and with any applicable regulatory agency so that any and all
necessary approvals may be obtained. During the term of this Agreement, the
Parties agree to continue to cooperate with each other in any review of this
Agreement by a regulatory agency so that the benefits of this Agreement may be
achieved. If such agency accepts this Agreement in part and rejects it in part,
or makes a material modification to the Agreement as a condition of its
approval, either Party may terminate the Agreement as pertains to the affected
state without penalty or liability.
27.0 BINDING EFFECT
This Agreement is intended to benefit and shall be binding on the Parties hereto
and their respective legal representative, successors and permitted assigns. It
is not intended to benefit or bind third parties and provides no remedy, claim,
liability, cause of action, or other right to any third party.
28.0 SEPARATE ENFORCEMENT OF PROVISIONS
If, for any reason, any provision of this Agreement shall be finally determined
to be invalid, void, or unenforceable by a court of regulatory body of competent
jurisdiction, the remaining provisions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated unless
removal of the provision in question results in frustration of the purpose of
this Agreement. If a regulatory agency makes a modification to this Agreement,
this Agreement shall remain in effect as modified unless the modification
results in a material change to this Agreement. In the event of a material
change, the Parties shall negotiate in good faith for lawful replacement
provisions. If replacement provisions cannot be agreed upon within a reasonable
period, either Party may terminate this Agreement without penalty or liability
upon written notice to the other Party.
29.0 HEADINGS
The headings in this Agreement are inserted for convenience and identification
only and are in no way intended to define or limit the scope, extent or intent
of this Agreement or any of the provisions hereof.
30.0 NO WAIVER
No failure or delay by either Party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or future exercise of any right,
power, or privilege.
<PAGE>
31.0 AUTHORITY
Each individual executing this Agreement for and on behalf of a Party represents
that he or she is fully authorized and empowered to do so for and on behalf of
his or her principle.
32.0 EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which together shall constitute but one
and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date or
dates indicated below to be effective as of the Effective Date specified in the
initial paragraph of this Agreement.
GTE GLOBAL NETWORKS GTE NETWORK SERVICES CONSISTING
CORPORATION OF THE GTE TELEPHONE OPERATING
COMPANIES LISTED ON ATTACHMENT A
BY: BY:
NAME: T. GEORGE HESS NAME: LARRY J. SPARROW
TITLE: VICE PRESIDENT TITLE: VICE PRESIDENT
DATE: ORIGINAL SIGNED 9/9/99 DATE: ORIGINAL SIGNED 9/14/99
BY:
NAME: ONDREA HIDLEY
TITLE: ASSISTANT SECRETARY
DATE: ORIGINAL SIGNED 9/10/99
<PAGE>
ATTACHMENT A
GTE TELEPHONE OPERATING COMPANIES
GTE Alaska Incorporated
GTE Arkansas Incorporated
GTE California Incorporated
GTE Florida Incorporated
GTE Hawaiian Telephone Company Incorporated
GTE Midwest Incorporated
GTE North Incorporated
GTE Northwest Incorporated,
GTE West Coast Incorporated
GTE South Incorporated
GTE Southwest Incorporated
Contel of Minnesota, Inc. d/b/a GTE Minnesota
Contel of the South, Inc. d/b/a GTE Systems of the South, d/b/a GTE Systems of
Indiana, d/b/a GTE Systems of Michigan
<PAGE>
EXHIBIT A
The Scope of this Agreement as listed in Section reads as follows:
GTE will provide, through its Network Operations Center ("NOC"), network
monitoring of network enabling devices and processes twenty four (24) hours a
day, seven (7) days a week, three hundred sixty-five (365) days a year to
detect, escalate, restore, and follow-up on anomalies occurring in the network.
In addition, GTE will provide technical support to GNI for problems that cannot
be resolved on-site; these support services include network element event
problem resolution, network element reliability analysis and network traffic
management.
The following definitions are provided to further define the scope and explain
the intended meanings to be associated with terms used.
The network enabling devices to be monitored include the hardware and software
products that allow voice, data, or video access to the public communications
network and/or a private communications network and includes, but is not limited
to, the monitoring of switches, routers, fiber, video, lightwave multiplexing
equipment, digital cross connections, servers and hubs.
Detection is the identification, via informational indicators, of changing
conditions in the above mentioned devices.
Escalation is the referral of problems within a hierarchy to facilitate
resolution.
Restore is to eliminate conditions that are detrimental to normal operating
conditions.
Follow-up is verifying that steps were taken in the proper manner concerning a
detrimental condition and that such condition has not recurred.
An anomaly is an irregularity in the network.
Technical support is expertise that can be offered either on site or by
telephone to assist others in performing their duties.
Network element event problem resolution. Once a problem is identified, it goes
through the necessary steps to be restored.
Network element reliability analysis. Analysis of information data pertaining to
the operation or condition of a network element.
Network traffic management. Management of the flow of traffic between network
elements or switches to prevent degradation of service. In the event
circumstances exist that may potentially cause a degradation of service, the NOC
will, at its sole discretion, reroute traffic in the network.
<PAGE>
EXHIBIT B
STATEMENTS OF WORK
THE FOLLOWING STATEMENTS OF WORK ARE ATTACHED TO THIS AGREEMENT:
Statement of Work 1 Technical Support for GTE Customer
Networks
<PAGE>
EXHIBIT B
STATEMENT OF WORK 1
GTE GLOBAL NETWORKS INCORPORATED NETWORK SUPPORT
This Statement of Work ("SOW"), to the Master Services Agreement ("Agreement")
effective June 30, 1998 between GTE Global Networks Incorporated ("GNI") and GTE
Network Services consisting of the GTE Telephone Operating Companies listed on
Attachment A ("GTE") defines the specific tasks required by GTE. GTE shall
perform in accordance with the requirements of the SOW and the Agreement.
1.0 DEFINITIONS
Capitalized terms and acronyms appear in this SOW. Unless otherwise indicated,
these terms are intended to have the meanings commonly accepted in the
telecommunications industry. The following less common terms shall have the
meaning described:
"ASCEND'S NAVISCORE ELEMENT MANAGEMENT PLATFORM" is GNI's proprietary management
platform for Ascend.
"DISPATCH" the passing of information to assign task(s) to a specific unit or
send someone on specific business.
"LEVEL 1 TECHNICAL SUPPORT" means support service performed by GTESW technicians
as they monitor the GNI network. This level of support includes detection,
isolation, and correction of network element events as well as the referral of
such events for dispatch to a party designated by GNI.
"LEVEL 2 TECHNICAL SUPPORT" means technical support performed by GTE Technicians
within the NOC's On - Line - Support groups. This level of support includes
network element event problem resolutions, network element reliability analysis,
and network traffic management.
"NOC" means GTE's Network Operations Center located at the Dallas-Fort Worth
International Airport with bunker locations in Coppell, Texas; Ft. Wayne,
Indiana; Everett, Washington; Long Beach, California; Tampa, Florida; and
Honolulu, Hawaii.
"OAM&P" means Operations, Administration, Maintenance, and Provisioning.
"REMEDY" is a medium that sends Trouble Tickets and reports to designated
locations.
"SUB OPERATIONS SYSTEM SUPPORT ("OSS") SYSTEMS" are all the systems that
contribute to and support the monitoring and control operations.
"SUPPLIER NOCS" GNI's customers who maintain their own Network Operations
Centers to provide service to their retail customers.
"TELEPHONE OPERATIONS NETWORK INTEGRATED CONTROL SYSTEM ("TONICS") is a Simple
Network Management Protocol ("SNMP") that is an integrated, centralized
management platform that works across simple network management protocols.
"TROUBLE TICKET" means the record of a call or calls from GNI or GNI's End User
advising of a service problem or interruption and a record of all GTESW NOC
activities relating to that problem or interruption.
1
<PAGE>
2.0 DESCRIPTION OF SERVICES
2.1 Subject to the terms and conditions contained in this SOW, GTE through
its Network Operations Center ("NOC") shall provide Monitoring and
Control services ("Services") to GNI. A completed profile for each site
which lists the network elements and equipment on which the NOC agrees
to provide Services will be provided to GTE by GNI.
2.2 The NOC will act as a member of the GNI Operations Problem Resolution
Team. This Team is composed of GNI Operations and other GNI Supplier
NOCs to support fault isolation and test activities for complex
problems spanning various technologies within the GNI network.
3.0 GTE RESPONSIBILITIES
3.1 The NOC will utilize TONICS SNMP and sub-OSS Systems in the tenant
sites.
3.2 NOC Support is responsible for the support of the hardware, software,
databases and other third-party products. The functions will be
performed for the equipment and devices contained in the GNI centers as
they become operational, are populated, and accepted. The equipment and
devices include but is not limited to those listed below.
. Cisco Routers with integrated communications server functions
. Nortel Sonnet Equipment and Digital Cross Connects
. Lightwave Multiplexing Equipment
. AIX Workstation
. Sun Workstation
. NT Workstation
. HP UX Servers
. Oracle
. Informix
3.3 The NOC shall provide GNI with hardware support.
3.3.1 The NOC will provide performance analysis and system tuning of
CPU usage, disk input/output usage, and end user usage.
3.3.2 The NOC shall provide Vendor coordination for hardware
maintenance as well as maintenance support, problem analysis
and resolution.
3.4 The NOC shall configure, maintain, and resolve issues within the NOC's
control surrounding the software applications.
3.5 The NOC shall maintain the databases of the GNI systems the NOC
supports.
3.5.1 The NOC shall manage database disk usage.
3.5.2 The NOC shall monitor database performance.
3.5.3 The NOC shall perform routine database maintenance and backup.
2
<PAGE>
3.6 The NOC personnel supporting GNI must be competent and have two (2)
years experience of monitoring and conducting problem management on
telecommunications data networks, and be knowledgeable of management
platform system fundamentals, ATM and frame relay configurations and
operations, and trouble shooting ATM and frame relay networks.
3.7 The NOC shall provide domestic off-network circuit coordination,
tracking and escalation to vendors.
3.8 The NOC shall provide limited support for Remedy implementation,
administration and coordination with other users.
3.9 The NOC shall coordinate all dispatches and requests between GNI and
other associated units. The NOC will provide technology specific
resolution to problems and alarms, perform internal escalations between
working units, and dispatch of the appropriate field personnel or
vendor(s) as necessary. If a problem cannot be solved with Level 1
Technical Support, it will be escalated to the appropriate Level 2
Technical Support organization. Personnel providing such support will
have pagers, cellular telephones, and remote access capabilities to
provide remote support, if required. The NOC will participate in bridge
calls as necessary.
3.10 The NOC shall coordinate planned downtime for installations, changes or
repairs with interfacing groups and systems. In the event an
installation or change is considered to be high risk, i.e., may cause a
degradation in service, the NOC must notify GNI seventy-two (72) hours
prior to such installation or change. In addition, the NOC will
coordinate and monitor all GNI Change Management activities.
3.11 The NOC shall participate in post mortem reviews, propose process
improvements and perform required process enhancements.
3.12 The NOC shall be supported by an uninterrupted power source and
generator backup. In addition, the NOC will provide an alternate
telephone communication system and an alternate facility in case of
network failure or in case of disaster.
4.0 GNI RESPONSIBILITIES
4.1 GNI shall provide the NOC with the required segment/site topology, site
profiles, and list of equipment with information and drawings to
facilitate connection, testing, and implementation of the Services.
4.2 GNI shall provide the NOC with the TONICS SNMP Platform and Ascend's
NavisCore System along with the necessary remote access to pertinent
surveillance systems.
4.3 GNI shall provide complete documentation on all systems and processes
for carrier escalations.
4.4 GNI shall fund initial training and/or certification requirements
necessary to perform NOC functions, that would be in addition to the
competencies outlined in Section 3.6.
4.5 GNI shall provide the NOC technicians with read and write capabilities
into Ascend's NavisCore System.
4.6 GNI shall provide the NOC secured network connectivity to GNI's OAMP.
3
<PAGE>
4.7 GNI shall provide the NOC access to GNI's Network Management and
Security Architecture.
4.8 GNI shall lead status call(s) between GNI, the NOC, and the Supplier
NOCs.
4.9 GNI shall lead the change management meetings, approve and categorize
the changes, publish the ensuing schedule, and perform the associated
maintenance tasks in the event GNI requests a maintenance or change
window.
5.0 MUTUAL RESPONSIBILITIES
5.1 Prior to initiation of Services, the NOC, the GNI Operations team, and
Ascend will conduct and review testing of the operations capability and
linkages to other GNI supplier NOCs and customer network operations
centers.
5.2 The NOC and GNI will jointly develop and administer detailed interface
processes for alarm patterning, assignment of severity levels,
notification, escalation and personnel contacts.
5.3 Changes to the personnel contacts shall be provided to the other Party
no less than seven (7) days prior to the change.
6.0 COMPENSATION
GTE agrees to provide the Services to GNI at the following rates.
<TABLE>
<CAPTION>
CATEGORY LABOR RELOCATION TOTAL
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
GNI NETWORK MANAGEMENT $2,330,632 $2,330,632
- --------------------------------------------------------------------------------
GNI SYSTEM SUPPORT $ 587,265 $ 587,265
- --------------------------------------------------------------------------------
GNI TECHNICAL SUPPORT $ 916,074 $70,705 $ 986,779
- --------------------------------------------------------------------------------
GNI CUSTOMER CONTACT $ 118,806 $ 118,806
- --------------------------------------------------------------------------------
TOTAL $3,952,777 $70,705 $4,023,402
================================================================================
CAPITAL $ 199,999
================================================================================
</TABLE>
The labor charges represent the year to year recurring term charges of this SOW
unless otherwise negotiated and agreed to by both parties. The Capital
requirement is nonrecurring. However, future capital may be required and will be
submitted once agreed to by both Parties.
4
<PAGE>
Notwithstanding anything to the contrary contained in this SOW, Section 6.0,
Compensation, is at all times subject to review and modification to conform with
any applicable regulatory requirement governing transactions between GTESW and
its affiliates, including without limitation FCC Docket 96-150.
7.0 TERM OF STATEMENT OF WORK
7.1 This SOW is effective as of the date specified in the introductory
paragraph and will remain in effect for one-1 year and will
automatically renew from year to year on the anniversary of the
effective date, subject to GTE's then applicable rates and charges. GTE
will provide written notice of price changes at least sixty (60)
calendar days prior to the renewal date. Should either party wish not
to renew this SOW, they may do so by providing written notice at least
thirty (30) days prior to the date of its renewal.
7.2 Notwithstanding Section 7.1, the term of the SOW and the other terms
and conditions hereof, are subject to applicable law and regulatory
approval. Accordingly, although this SOW is executed by both Parties,
to the extent that any state statute, order, rule or regulation or any
state regulatory agency having competent jurisdiction over one or both
parties to the SOW, shall require that this SOW be filed with or
approved by such regulatory agency before the SOW may be effective,
this SOW shall not be effective in such state until the first business
day after such approval or filing shall have occurred.
7.3 Modifications to this SOW may be requested by written notice from
either Party to the other Party. The Parties shall work together in
good faith to modify the SOW within thirty (30) business days of the
original notice.
8.0 TERMINATION
8.1 Notwithstanding any other provision of this SOW or the Agreement, this
SOW is terminable by either party on ninety (90) days written notice to
the other party.
8.2 Early termination shall be subject to the payment of compensation for
work in progress. In the event of a material default in the performance
of any of the material obligations of this SOW by GTE, GNI may give GTE
written notice of such default and a notice to cure pursuant to Section
9.0, Non-performance, Notification, and Resolution, below.
8.3 It is understood and agreed that early termination should not interfere
with GNI's continuing service to third parties. In the event of an
early termination, the Parties will cooperate with each other in
planning a transition of Services to GNI or a third party. In the event
that GTE incurs costs during any migration or transition period that
were reasonably required to be expended to avoid interfering with
service to third parties, GNI shall reimburse GTE for such costs and
expenses. Provided however, GTE shall not incur such costs or expenses
absent prior notification and approval of the same by GNI.
8.4 On expiration or termination of the MSA or SOW, each party will return
all equipment and materials belonging to the other party in as good
condition as when received, excepting for normal wear and tear.
5
<PAGE>
9.0 NON-PERFORMANCE, NOTIFICATION, AND RESOLUTION
In the event that either party fails to perform any material provision of this
SOW, either Party may give notice of said failure to the other Party. The
Parties agree to confer regarding the non-performance within five (5) business
days of notice. The non-performing party shall propose a resolution within ten
(10) business days after notice. If the non-performance is not cured within
thirty (30) days after notice, the Parties shall meet together to discuss a
mutually agreed remedy. In the event that the Parties fail to agree to a remedy
within sixty (60) days after notice, the matter shall be referred to the
Parties' senior management.
10.0 INTEGRATION.
10.1 This SOW constitutes the entire understanding of the Parties with
respect to the Services to be provided herein which are governed by the
Master Services Agreement between the Parties.
10.2 This SOW is subject at all times to any statute, order, rule or
regulation or any state or federal regulatory agency having competent
jurisdiction over one or both of the parties hereto for the services
provided hereby. GTE and GNI agree to cooperate with each other and
with any applicable regulatory agency so that any and all necessary
approvals may be obtained. During the term of this SOW, the Parties
agree to continue to cooperate with each other in any review of this
SOW by a regulatory agency so that the benefits of this SOW may be
achieved.
11.0 PROPRIETARY INFORMATION.
The Parties acknowledge that this SOW constitutes the Proprietary Information of
both Parties and is subject to the terms of this section; provided, however that
the Parties further acknowledge that this SOW may be filed with any regulatory
commission having authority over the subject matter, and the parties agree to
seek confidential treatment for this SOW with any such regulatory commission, to
the extent such confidential designation can be secured.
6
<PAGE>
IN WITNESS WHEREOF, each of the Parties have agreed and accepted the terms or
this Statement of Work and has caused this Statement of Work to be duly executed
effective as of the day and year last written below.
GTE GLOBAL NETWORK GTE Network Services consisting of the
GTE Telephone Operating Companies
listed on Attachment A
By: By:
_____________________________ _____________________________________
Name: T. George Hess By: Larry J. Sparrow
_____________________________ _____________________________________
Title: Vice President Title: Vice President - Wholesale Markets
_____________________________ _____________________________________
Date: Original signed 10/28/99 Date: Original signed 11/4/99
_____________________________ _____________________________________
By: By:
_____________________________ _____________________________________
Name: Ondrea Dae Hidley Name: Rosalynn Christian
_____________________________ _____________________________________
Title: Assistant Secretary Title: Assistant Secretary
_____________________________ _____________________________________
Date: Original signed 10/29/99 Date: Original signed 11/4/99
_____________________________ _____________________________________
7
<PAGE>
Attachment A
GTE TELEPHONE OPERATING COMPANIES 1/31/96
GTE Alaska Incorporated
GTE Arkansas Incorporated
GTE California Incorporated
GTE Florida Incorporated
GTE Hawaiian Telephone Company Incorporated
GTE Midwest Incorporated
GTE North Incorporated
GTE Northwest Incorporated
GTE South Incorporated
GTE Southwest Incorporated
GTE West Coast Incorporated
Contel of Minnesota, Inc. d/b/a GTE Minnesota
Contel of the South, Inc. d/b/a GTE Systems of the South, d/b/a GTE Systems of
Indiana, d/b/a GTE Systems of Michigan
8
<PAGE>
Exhibit 10.21
FIRST AMENDMENT TO
MASTER SERVICES AGREEMENT
BETWEEN
GTE NETWORK SERVICES
AND
GTE GLOBAL NETWORKS INCORPORATED
THIS FIRST AMENDMENT to the Master Services Agreement (the "Agreement")
is executed by and between GTE Network Services, consisting of the GTE telephone
operating companies listed in Attachment 1 ("GTE") and GTE Global Networks
Incorporated ("GNI"). (GTE and GNI being referred to collectively as the
"Parties".)
RECITALS
WHEREAS, the purpose of this Amendment is to modify the Agreement between the
parties finally executed on September 14, 1999 by modifying the termination
provision thereof and by revising Exhibit B thereto, the Statement of Work (SOW)
to (a) modify the termination provision, (b) include a table of metrics, and (c)
adjust pricing.
WHEREAS, the Parties now wish to adopt the terms set forth below as an amendment
to the Agreement.
NOW, THEREFORE, in consideration of the mutual promises, provisions and
covenants herein contained, the sufficiency of which is hereby acknowledged, the
Parties agree as follows:
1. Section 4.2 of the Agreement is deleted and replaced with the
following:
Notwithstanding anything to the contrary contained in this
Agreement, GTE may terminate this Agreement at the expiration
of the then current term by providing notice to GNI at least
ninety (90) calendar days prior to the expiration of such
term. GNI may terminate this Agreement at any time by
providing at least ninety (90) calendar days prior written
notice of termination to GTE. Termination of the Agreement
pursuant to this Section 4.2 shall not be effective as to work
under any particular Statement of Work until the earlier of
the expiration or termination of such Statement of Work
2. A new Section 3.13 is added to the SOW as follows:
"The NOC will use commercially reasonable efforts to adhere to
the performance metrics set forth in the table of metrics
attached hereto as Attachment C and incorporated herein by
this reference. These metrics will be used as a method to
build historical data. The parties recognize that attainment
or non-attainment may be largely subjective. The parties will
review and agree to the validity of data used to determine
attainment. These metrics are not an unqualified (absolute)
measurement or the sole measurement of performance. Attainment
or non-attainment of such metrics shall not affect
compensation due under this SOW."
Attachment 2 hereto, NOC Metrics, is added to the SOW as
Attachment C thereto.
3. Section 6.0 of the SOW is deleted and replaced with the
following:
"6.0 Compensation
1
<PAGE>
GTE agrees to provide the Services to GNI at the following
rates.
--------------------------------------------------------------
RECURRING COST TOTAL
--------------------------------------------------------------
GNI NETWORK SUPPORT $499,910 PER MONTH
--------------------------------------------------------------
The labor charges represent the year to year recurring term
charges of this SOW unless otherwise negotiated and agreed to
by both parties.
Notwithstanding anything to the contrary contained in this
SOW, Section 6.0, Compensation, is at all times subject to
review and modification to conform with any applicable
regulatory requirement."
4. Section 8.1 of the SOW is deleted and replaced with the
following:
"Notwithstanding any other provision of this SOW or the
Agreement, this SOW is terminable by GNI on ninety (90)
calendar days written notice to GTE."
5. Except as specifically modified by this First Amendment, the
Agreement shall remain in full force and effect.
6. If any provision in the Agreement conflicts with this First
Amendment, this First Amendment shall control.
THE REMAINDER OF THIS PAGE WAS NOT USED.
AMENDMENT CONTINUES ON THE SIGNATURE PAGE.
2
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this First Amendment to be
effective on the last date shown below.
GTE Network Services GTE Global Networks Incorporated
By: By:
____________________________________ ______________________________
Name: Larry J. Sparrow By:
____________________________________ ______________________________
Title: Vice President - Wholesale Markets Title:
____________________________________ ______________________________
Date: Date:
____________________________________ ______________________________
By: By:
__________________________________ ______________________________
Name: Rosalynn Christian Name: Ondrea Dae Hidley
__________________________________ ______________________________
Title: Assistant Secretary Title: Assistant Secretary
__________________________________ ______________________________
Date: Date:
__________________________________ ______________________________
3
<PAGE>
ATTACHMENT 1
GTE TELEPHONE OPERATING COMPANIES
GTE Alaska Incorporated
GTE Arkansas Incorporated
GTE California Incorporated
GTE Florida Incorporated
GTE Hawaiian Telephone Company Incorporated
GTE Midwest Incorporated
GTE North Incorporated
GTE Northwest Incorporated
GTE West Coast Incorporated
GTE South Incorporated
GTE Southwest Incorporated
Contel of Minnesota, Inc. d/b/a GTE Minnesota
Contel of the South, Inc. d/b/a GTE Systems of the South
4
<PAGE>
ATTACHMENT 2 TO AMENDMENT
ATTACHMENT C
- --------------------------------------------------------------------------------
NOC Metrics
Note: All agreed upon metrics will be calculated as monthly averages.
- --------------------------------------------------------------------------------
1. NOC will troubleshoot and initiate corrective action regarding critical
support system interruptions (those preventing performance of a function) within
two (2) hours.
Comments:
System interruptions may involve processes and work groups beyond NOC control.
NOC must have access to GNI Network.
- --------------------------------------------------------------------------------
2. NOC will acknowledge and respond to network events within ten (10) minutes
following event presentation from the network management system.
Comments:
Success in meeting this metric will be determined through a review of a
representative number of trouble tickets compared to the system log.
- --------------------------------------------------------------------------------
3. NOC will notify GNI management within fifteen (15) minutes of detecting a
service-affecting event. Notification will be to the specific page list as
defined by GNI according to severity.
Comments:
The NOC currently utilizes a GNI managed support system to deliver this service.
We will continue to utilize this process for notification.
- --------------------------------------------------------------------------------
4. NOC will update the Remedy event ticket on critical outages (affecting
customers and requiring immediate attention and dedicated effort to resolve) at
an interval no greater than thirty (30) minutes or upon receipt of information
essential to the event.
Comments:
The current GNI process calls for updating trouble tickets based on the severity
of the event and availability of essential information. We will continue this
practice.
- --------------------------------------------------------------------------------
5. NOC will escalate to 2nd level technical support no longer than thirty (30)
minutes following receipt of a critical network event.
Comments:
The current GNI process calls for escalation into 2nd level support based on the
severity of the event. We will continue this practice.
- --------------------------------------------------------------------------------
6. NOC will identify customers impacted by a network event notify them within
thirty (30) minutes.
Comments:
Source data will be resident in GNI's Remedy database.
- --------------------------------------------------------------------------------
7. NOC will dispatch field personnel within thirty (30) minutes of detecting an
event or receiving another indication of a network event.
Comments:
This timeframe is to allow for 1st and 2nd level support evaluation to determine
need for dispatch.
- --------------------------------------------------------------------------------
8. NOC will establish and staff a conference bridge within fifteen (15) minutes
of detecting a service-affecting event (an event affecting network performance
but not customers).
Comments:
Success in meeting this metric will be determined through a review of a sampling
of trouble tickets.
- --------------------------------------------------------------------------------
9. NOC will provide initial incident detail within forty eight (48) hours of the
event for input to the GNI led Root Cause Analysis process.
- --------------------------------------------------------------------------------
5
<PAGE>
Exhibit 10.22
SECOND AMENDMENT TO
MASTER SERVICES AGREEMENT
BETWEEN
GTE NETWORK SERVICES
AND
GTE GLOBAL NETWORKS INCORPORATED
THIS SECOND AMENDMENT to the Master Services Agreement (the
"Agreement") effective March 31, 2000 is executed by and between GTE Network
Services, consisting of the GTE telephone operating companies listed in
Attachment 1 ("GTE") and GTE Global Networks Incorporated ("GNI"). (GTE and GNI
being referred to collectively as the "Parties".)
RECITALS
WHEREAS, the purpose of this Amendment is to modify the Agreement between the
parties finally executed on September 14, 1999 by adding a Statement of Work
(SOW) to perform certain services on behalf of GTE Telecom Incorporated,
("Telecom") an affiliate of GNI.
WHEREAS, the Parties now wish to adopt the Statement of Work as an amendment to
the Agreement.
NOW, THEREFORE, in consideration of the mutual promises, provisions and
covenants herein contained, the sufficiency of which is hereby acknowledged, the
Parties agree as follows:
1. A new Statement of Work is added as Attachment 2.
2. Except as specifically modified by this Second Amendment or
prior amendments, the Agreement shall remain in full force and
effect.
3. If any provision in the Agreement conflicts with this Second
Amendment, this Second Amendment shall control.
THE REMAINDER OF THIS PAGE WAS NOT USED.
AMENDMENT CONTINUES ON THE SIGNATURE PAGE.
1
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Second Amendment to be
effective as of the date stated in the preamble.
GTE Network Services GTE Global Networks Incorporated
By: By:
____________________________________ ______________________________
Name: Larry J. Sparrow By:
____________________________________ ______________________________
Title: Vice President - Wholesale Markets Title:
____________________________________ ______________________________
Date: Date:
____________________________________ ______________________________
By: By:
__________________________________ ______________________________
Name: Rosalynn Christian Name: Ondrea Dae Hidley
__________________________________ ______________________________
Title: Assistant Secretary Title: Assistant Secretary
__________________________________ ______________________________
Date: Date:
__________________________________ ______________________________
2
<PAGE>
ATTACHMENT 1
GTE TELEPHONE OPERATING COMPANIES
GTE Alaska Incorporated
GTE Arkansas Incorporated
GTE California Incorporated
GTE Florida Incorporated
GTE Hawaiian Telephone Company Incorporated
GTE Midwest Incorporated
GTE North Incorporated
GTE Northwest Incorporated
GTE West Coast Incorporated
GTE South Incorporated
GTE Southwest Incorporated
Contel of Minnesota, Inc. d/b/a GTE Minnesota
Contel of the South, Inc. d/b/a GTE Systems of the South
3
<PAGE>
ATTACHMENT 2
GTE TELECOM STATEMENT OF WORK
This Statement of Work ("SOW") is issued pursuant to the Master Services
Agreement ("MSA") to reflect services to be performed by GTE on behalf of GNI's
affiliate, GTE Telecom Incorporated ("Telecom.")
WHEREAS, GTE and GNI entered into the MSA in order to facilitate the provision
of certain general, administrative, and operational services by GTE; and
WHEREAS, pursuant to that MSA, GNI desires that GTE provides certain Services as
described herein in the support of Telecom's Lease Based Network and Telecom's
Facilities Based Fiber Network (herein collectively referred to as "Telecom's
Network.")
NOW, THEREFORE, GTE and GNI agree as follows:
SECTION 1. - DEFINITIONS.
Many capitalized terms and acronyms appear in this SOW. Unless otherwise
indicated, these terms are understood as having the meanings commonly understood
in the telecommunications industry and in the above referenced Master Services
Agreement. The following less common terms shall have the meanings described:
"DISPATCH" the passing of information to assign task(s) to a specific unit or
send someone on specific business.
"FACILITIES BASED FIBER NETWORK" means the transport mechanism including
elements such as Multiplexers (MUXs"), and Digital Access and Cross-connecting
Systems ("DACs") administrative and management components located in Arkansas,
Illinois, Indiana, and Missouri.
"LEASED BASED NETWORK" means the transport mechanism including elements such as
MUXs, and DACs administrative management components.
"GTE NOC" is the GTE Network Operations Center located at GTE Place at Dallas -
Fort Worth International Airport.
"ON LINE SUPPORT" ("OLS") means call-in or escalated phone support.
4
<PAGE>
"MONITORING AND CONTROL" means twenty four hours a day, seven days a week, three
hundred sixty five days a year ("24 x 7 x 365") near real time fault
surveillance to detect, restore, escalate, and follow-up on anomalies.
"LEVEL 1 TECHNICAL SUPPORT" means work performed by individuals on-site as they
diagnose, isolate, and resolve problems.
"LEVEL 2 TECHNICAL SUPPORT" means support performed by technical experts within
the GTE NOC's On Line Support group. This Service provides phone in assistance
as well as analysis for problems that cannot be resolved at the first level.
"TROUBLE TICKET" means the record of a call or calls from Telecom advising GTE
of a service problem or interruption and a record of all GTE activities relating
to that problem or interruption.
SECTION 2. - MONITORING AND CONTROL TELECOM'S FIBER NETWORK.
GTE NOC will provide 7 x 24 x 365 monitoring and control for the Telecom Network
and its elements including, but not limited to, MUXs, Light Wave Multiplexing
Devices and DACs.
Subject to the terms and conditions contained in this SOW, GTE through its
Network Operations Center ("NOC") will provide Monitoring and Control functions
to include coordination activities related to vendors, customers and field
personnel, Monitoring, Control, and Dispatch of environmental alarms and
Telecom's Network elements including but not limited to MUXs, Light Wave
Multiplexing Devices, and DACs. GTE NOC will also provide trouble isolation,
trouble shooting and Dispatch for the aforementioned functions. A completed
profile for each site listing the network elements and equipment on which the
GTE NOC agrees to provide Service will be provided by Telecom. The functions
will be performed for the equipment and devices contained in centers or
shelters.
SECTION 2.1 - GTE RESPONSIBILITIES.
2.1.1 The NOC will utilize TONICS SNMP and sub-OSS, Systems such as
Intelligent Alarm Mediator ("IAM") systems to perform Monitoring and
Control and support functions for Telecom's DAC's, Light Wave
Multiplexing Equipment, and environmental conditions associated with the
equipment in Telecom's Network.
2.1.2 The NOC will support the Management Platforms and sub-OSS Systems
utilized by the NOC to perform monitoring and control functions.
2.1.3 The NOC and Telecom will communicate using a mutually agreed to medium
regarding change management, outage notification, trouble tickets and
post mortem issues.
5
<PAGE>
2.1.4 The NOC will provide limited support for Remedy implementation,
administration and coordination with its other users.
2.1.5 The NOC will coordinate all Dispatches and requests for Telecom and
other associated units. The NOC will provide technology specific
resolution to problems and alarms and perform internal escalations to
include coordination between working units and Dispatch of the
appropriate field personnel or vendor as necessary. If a problem cannot
be solved at Level 1, it will be escalated to the appropriate Level 2
support organization; any personnel providing such support will have
pagers, cell phones, and remote access capabilities to provide remote
support. The GTE NOC will participate in and manage bridge calls as
necessary.
2.1.6 The NOC will provide Telecom with real time access to Trouble Ticket
System reports for Telecom's Network.
2.1.7 The NOC will propose process improvements and perform required process
enhancements as the need dictates.
2.1.8 The NOC will coordinate all emergency change management activities as
requested by Telecom or its authorized representative.
2.1.9 The NOC will participate in post mortem reviews and perform required
process enhancements.
SECTION 2.2 - GNI RESPONSIBILITIES. Actions to be performed by Telecom shall be
considered responsibilities of GNI for purposes of this SOW.
2.2.1 Telecom will provide the NOC with the required segment/site topology,
site profiles and equipment lists with all information and drawings to
facilitate connection, testing and implementation of Monitoring and
Control processes.
2.2.2 Telecom will ensure proper physical and software maintenance, including
database records, repair and/or replacement, of the network elements to
assure proper operation.
2.2.3 Telecom will provide the NOC with the IAM System along with the
necessary remote access to pertinent surveillance systems.
2.2.4 Telecom will provide complete documentation on all systems and processes
for carrier escalations.
6
<PAGE>
2.2.5 Upon Telecom's prior approval, Telecom will reasonably fund initial
training and/or certification requirements necessary to perform NOC
functions.
2.2.6 Telecom will provide the NOC technicians with read and write
capabilities into Telecom's network.
2.2.7 Telecom will provide the NOC network connectivity to Telecom's Network.
2.2.8 Once approved by GNI Security, Telecom will provide the NOC access to
the Network Management and Security Architecture.
2.2.9 Telecom or its authorized representative will lead the change management
meetings, approve and categorize the changes, publish the ensuing
schedule, and perform the associated maintenance tasks in the event
Telecom requests a maintenance or change window.
2.2.10 In the event Telecom becomes aware of a problem with the Telecom
Network, Telecom will notify the NOC.
SECTION 2.3 - MUTUAL RESPONSIBILITIES.
2.3.1 Prior to initiation of service, the NOC and Telecom Operations will
conduct and review testing of the operations capability and linkages to
other Telecom supplier NOCs and Telecom's customer NOCs.
2.3.2 The NOC and Telecom will jointly develop and administer detailed
interface processes for alarm patterning, assignment of severity levels,
notification, escalation and personnel contacts.
2.3.3 Changes to the personnel to be contacted shall be provided to the other
Party no less than seven days prior to the change.
2.3.4 The NOC and Telecom will jointly develop, administer and track Service
Level objectives as defined in the First Amendment, Attachment 2, to the
MSA.
SECTION 3. - COMPENSATION.
3.1 Subject to the MSA between the Parties, GTE shall be compensated for the
Services provided herein as determined by applicable regulatory
requirements, including requirements regarding affiliate transactions.
3.2 Notwithstanding anything to the contrary contained in this SOW,
compensation is at all times subject to review and modification to
conform with any applicable regulatory requirement governing
transactions between GTE and its affiliates, including without
limitation FCC docket 96-150.
7
<PAGE>
TABLE 1: TELECOM FIBER NETWORK
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CATEGORY ANNUAL MONTHLY
- --------------------------------------------------------------------------------
<S> <C> <C>
LABOR $345,102 $28,759
- --------------------------------------------------------------------------------
TOTAL $345,102 $28,759
- --------------------------------------------------------------------------------
</TABLE>
SECTION 4. TERM.
4.1 This SOW will become effective upon execution of the Second Amendment to
the MSA by both Parties and will remain in effect for one (1) year (the
"Initial Term") and will automatically renew from year to year on the
anniversary of the execution date ("Renewal Term"), subject to GTE's
then applicable rates and charges. GTE will provide written notice of
price changes not less than ninety (90) calendar days prior to the
renewal date. Either Party may terminate this SOW, effective on
expiration of the then current term, upon ninety (90) days written
notice prior to the automatic renewal date.
4.2 Notwithstanding Section 4.1, the term of this SOW and the other terms
and conditions hereof, are subject to applicable law and regulatory
approval. Accordingly, although the Second Amendment to the MSA is
executed by both Parties, to the extent that any state statute, order,
rule or regulation or any state regulatory agency having competent
jurisdiction over one or both parties to this SOW or the Second
Amendment, shall require that this SOW or the Second Amendment be filed
with or approved by such regulatory agency before the SOW or Second
Amendment may be effective, this SOW and/or the Second Amendment shall
not be effective in such state until the first business day after such
approval or filing shall have occurred.
SECTION 5. TERMINATION.
5.1 Notwithstanding any other provision of this SOW or the MSA, this SOW is
terminable by GNI on ninety (90) days written notice to GTE.
5.2 Early termination by GNI shall be subject to the payment of compensation
for work in progress. In the event of a material default in the
performance of any of the material obligations of this SOW by either
Party, the other Party may give the defaulting Party a written notice of
default and a notice to cure pursuant to Section 19 of the MSA.
5.3 On expiration or termination of the MSA and or this SOW, each Party will
return all equipment and materials belonging to the other Party in as
good condition as when received, excepting for normal wear and tear.
8
<PAGE>
SECTION 6. NOTIFICATION AND ESCALATION
In the event either Party fails to perform any materials provision of this SOW,
either Party may give notice to the other Party pursuant to the notice and
escalation provisions set forth in the MSA in Sections 18 and 21 respectively.
Notices to GNI shall be sent to:
GTE GNI
5221 North O'Connor Blvd.
East Tower, 14th Floor
Irving, TX 75039
Attn: Assistant Vice President-Operations
With copies to:
GTE Telecom Incorporated
201 North Franklin, Suite 2400
Tampa, FL 33602
Attn: Manager - Contracts
Fax: 813/209-9620
Escalation points for GNI, via Telecom, are:
Supervisor, Customer Satisfaction Center
Manager, Customer Satisfaction Center
Director, Customer Satisfaction Center
GNI Assistant Vice President- Operations
SECTION 7. REGULATORY COMPLIANCE.
This SOW is subject at all times to any statute, order, rule, or regulation or
any state or federal regulatory agency having competent jurisdiction over one or
both of the parties hereto or the services provided hereby. GTE and GNI agree to
cooperate with each other and with any applicable regulatory agency so that any
and all necessary approvals may be obtained. During the term of this SOW, the
Parties agree to continue to cooperate with each other in any review of this SOW
by a regulatory agency so that the benefits of this SOW may be achieved.
9
<PAGE>
SECTION 8. PROPRIETARY INFORMATION.
The Parties acknowledge that this SOW constitutes the Proprietary Information of
both Parties and is subject to the terms of the MSA; provided, however that the
Parties further acknowledge that this SOW may be filed with any regulatory
commission having authority over the subject matter, and the parties agree to
seek commercial confidential status for this SOW with any such regulatory
commission, to the extent such a designation can be secured.
End of Statement of Work
10
<PAGE>
EXHIBIT 10.23
================================================================================
GENUITY INC.
EXECUTIVE DEFERRAL PLAN
_____________
Effective May 22, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Article I. INTRODUCTION.............................................. 1
1.01. Name of Plan......................................... 1
1.02. Purposes of Plan..................................... 1
1.03. Effective Date....................................... 1
Article II. DEFINITIONS AND USE...................................... 2
2.01. Definitions.......................................... 2
2.02. Gender and Number.................................... 4
Article III. ELIGIBILITY AND ELECTION TO DEFER....................... 5
3.01. Eligibility.......................................... 5
3.02. Deferral Amounts..................................... 5
3.03. Election to Defer.................................... 5
3.04. Designation of Beneficiaries......................... 8
Article IV. ACCOUNTS AND INTEREST.................................... 9
4.01. Accounts............................................. 9
4.02. Hypothetical Investment Performance.................. 9
4.03. Matching Contributions............................... 11
4.04. Hypothetical Nature of Accounts and Investments...... 12
Article V. PAYMENTS.................................................. 13
5.01. Exclusive Entitlement to Payment..................... 13
5.02. Method of Payment.................................... 13
5.03. Payment Commencement................................. 14
5.04. Accelerated Distributions............................ 15
5.05. Limitations on Rights to Payment..................... 15
Article VI. MISCELLANEOUS............................................ 17
6.01. Plan Administration.................................. 17
6.02. Appeals Procedure.................................... 17
6.03. Rights Not Assignable................................ 18
6.04. Inability to Locate Participants and Beneficiaries... 18
6.05. Withholding Taxes.................................... 18
6.06. Certain Rights Reserved.............................. 18
6.07. Severability......................................... 18
6.08. Titles and Headings Not to Control................... 19
6.09. Governing Law........................................ 19
</TABLE>
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Genuity Inc. Executive Deferral Plan Table of Contents
<PAGE>
IGHT)
ARTICLE I. INTRODUCTION
1.01. Name of Plan.
This Plan shall be known as the Genuity Inc. Executive Deferral Plan.
1.02. Purposes of Plan.
The purposes of the Plan are to provide certain employees of the Company
the opportunity to defer certain compensation and awards and to enable certain
employees to receive the benefit of additional deferred compensation that is
comparable to certain matching contributions that the terms of the Genuity Inc.
Savings Plan and the Code prevent such employees from receiving under the
Genuity Inc. Savings Plan.
1.03. Effective Date.
The Plan became effective as of May 22, 2000.
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Genuity Inc. Executive Deferral Plan Page 1
<PAGE>
ARTICLE II. DEFINITIONS AND USE
2.01. Definitions.
Unless the context clearly indicates otherwise, the following terms, when
used in the Plan, shall have the meanings set forth below.
"Annual Deferral" shall mean the deferral with respect to a Plan Year
elected by a Participant in accordance with Section 3.03.
"Article" shall mean an article of the Plan.
"Award" shall mean any Award under the Long-Term Plan and/or the EIP (as
defined in the Long-Term Plan and the EIP, respectively) other than a Stock
Option Gain.
"Base Amount" shall mean annual base salary in the amount of $170,000, as
adjusted from time to time pursuant to section 401(a)(17) of the Code; provided
that if a Participant is not eligible to participate in the Genuity Inc. Savings
Plan during a Plan Year, the "Base Amount" for that Participant in that Plan
Year shall be zero.
"Board" shall mean the Board of Directors of Genuity Inc.
"Bonus" shall mean any cash compensation received by an employee of the
Company in addition to the employee's annual base salary that is not an Award.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" shall mean the Executive Compensation Committee of the Board,
or any successor thereto.
"Company" shall mean Genuity Inc.
"Disability" shall mean a disability that results in a "disability
retirement" as that term is defined in the Genuity Inc. Savings Plan, as amended
from time to time.
"EIP" means the Genuity Inc. Executive Incentive Plan, as amended from time
to time.
"Eligible Salary" shall mean that part of an Eligible Employee's annual
base salary from the Company in excess of the Base Amount.
"Eligible Employee" shall mean a key employee designated as an Eligible
Employee by the Plan Administrator.
"Genuity Common Stock" shall mean the Class A common stock of Genuity Inc.
- --------------------------------------------------------------------------------
Genuity Inc. Executive Deferral Plan Page 2
<PAGE>
"Long-Term Plan" means the Genuity Inc. Long-Term Stock Incentive Plan, as
amended from time to time.
"Matching Percentage" shall mean the rate at which Eligible Salary shall be
matched by the Company under the terms of the Plan. With respect to each Plan
Year, the Matching Percentage shall equal the rate at which the Company makes
basic Matching Contributions (as defined in the Genuity Inc. Savings Plan) under
the Genuity Inc. Savings Plan with respect to that Plan Year.
"Moody's Rate" shall mean the "Corporate Average" yield of long-term, high-
grade corporate bonds as reported by Moody's Investors Service, or such other
substantially similar yield designated by the Plan Administrator as the
applicable interest rate.
"Participant" shall mean each Eligible Employee who makes an election
pursuant to Section 3.03 and whose accounts hereunder have a positive balance.
"Person" shall mean any individual, firm, corporation, partnership, joint
venture, association, trust, or other entity.
"Plan" shall mean this Genuity Inc. Executive Deferral Plan, on the date of
adoption hereof and as it may be amended from time to time.
"Plan Administrator" shall mean the Senior Vice President of Human
Resources of Genuity Inc. or any other Person designated by the Committee to
serve as Plan Administrator.
"Plan Year" shall mean the calendar year, except that the first Plan Year
shall begin on the date determined by the Plan Administrator and shall end on
December 31, 2000.
"Related Entity" shall mean a corporation, partnership, joint venture or
other entity in which the Company has an ownership or other proprietary interest
of at least ten percent.
"Retirement" shall mean the voluntary resignation of an Eligible Employee
after 15 or more years of service with Genuity Inc. which may include up to a
maximum of 11 years of service with any predecessor or formerly affiliated
companies of Genuity Inc.
"Section" shall mean a section of the Plan.
"Stock Option Gain" shall mean any incremental shares of Genuity Common
Stock that a Participant is entitled to receive as a result of the Participant's
paying the exercise price of a stock option under the Long-Term Plan with shares
of Genuity Common Stock.
"Termination" shall mean a separation from service with the Company for any
reason other than Termination for Cause, Disability, or death.
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Genuity Inc. Executive Deferral Plan Page 3
<PAGE>
expense, or (2) engagement (except by reason of incapacity due to illness or
injury) in a material violation of his responsibilities to the Company that
results in a material injury to the Company. A Participant's voluntary
termination of employment with the Company with the intent to avert a
Termination for Cause shall for purposes of the Plan be deemed a Termination for
Cause.
"Voting Power" shall mean the voting power of all securities of the Company
then outstanding generally entitled to vote for the election of directors of the
Company.
2.02. Gender and Number.
Masculine pronouns shall refer to both males and females. The singular
form shall include the plural, where appropriate.
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Genuity Inc. Executive Deferral Plan Page 4
<PAGE>
ARTICLE III. ELIGIBILITY AND ELECTION TO DEFER
3.01. Eligibility.
Each Eligible Employee shall be eligible to participate in the Plan as of
the date designated by the Committee.
3.02. Deferral Amounts.
(a) Each Participant shall be eligible to defer up to 100% (or such lesser
percentage as the Plan Administrator may determine in its sole discretion)
of his Eligible Salary, Bonus, and/or Award for the Plan Year (or the
period thereof during which the election is in effect); provided that any
such deferral must be made in integral multiples of 1% of the Eligible
Salary, Bonus, or Award; and provided further that the Committee may in its
sole discretion at any time or from time to time reduce or increase the
portion of an Eligible Employee's annual base salary that shall constitute
the Eligible Salary.
(b) If the Committee so permits, each Participant shall be eligible to defer
his Stock Option Gains up to such percentage and on such terms as may be
established by the Committee in its sole discretion.
3.03. Election to Defer.
(a) A Participant who wishes to defer part of the Eligible Salary, Bonus, or
Award that he will earn during a Plan Year shall submit an election to the
Plan Administrator that satisfies each of the requirements set forth in
paragraphs (1) through (7), below.
(1) Deadline for Submitting Election. An election with respect to a Plan
Year shall be submitted on or before such date established by the Plan
Administrator in its sole discretion. An election described in the
preceding sentence shall remain in effect until the beginning of the
next succeeding Plan Year and shall be deemed to be renewed
automatically for such next succeeding Plan Year unless revoked by the
Participant by making a new election pursuant to this Section 3.03. An
election to defer receipt of part of the Eligible Salary shall apply
only to compensation earned after the date the Participant's election
is filed with the Plan Administrator.
(2) Form of Election. The election shall be in writing and in a form
acceptable to the Plan Administrator.
(3) Amount of Deferral. The election shall specify the percentage of his
Eligible Salary, Bonus, and/or Award that the Participant wishes to
defer in accordance with Section 3.02.
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Genuity Inc. Executive Deferral Plan Page 5
<PAGE>
(4) Treatment of Deferral. If a Participant does not specify that the
Annual Deferral should be treated as if held entirely in cash,
entirely in Genuity Common Stock, partly in cash and partly in Genuity
Common Stock (and if so the percentage allocation between cash and
Genuity Common Stock in integral multiples of 1%), or in such other
investment vehicles as the Committee may allow, the Annual Deferral
shall be treated as if held entirely in cash.
(5) Payment Commencement. The election shall specify the year or events,
selected by the Participant in accordance with Section 5.03, as of
which payments with respect to the Annual Deferral are to commence
under the Plan.
(6) Method of Payment. In the case of the election of a fixed commencement
year pursuant to Sections 3.03(a)(5) and 5.03(a), the election shall
specify the method, selected by the Participant in accordance with
Section 5.02, in which payments with respect to the Annual Deferral
are to be made under the Plan.
(7) Election Irrevocable. Except as otherwise specifically provided in the
Plan, the amount of deferral, the treatment of the deferral, the
payment commencement date, and the method of payment elected by a
Participant with respect to an Annual Deferral in accordance with
paragraphs (3) through (6), above, shall not be revocable or subject
to modification at any time.
(b) If the Plan Administrator determines, in its sole discretion, that a
Participant has incurred unusual, extraordinary expenses or hardship caused
by events beyond the Participant's control, such as accident or illness,
the Plan Administrator may grant a Participant's request to reduce the
amount of his Annual Deferral at any time, provided that the amount of the
reduction must be limited to the amount reasonably necessary to relieve the
hardship or financial emergency upon which the request is based. A
reduction in the deferral percentage effected pursuant to this subsection
shall not otherwise alter the terms of the Participant's participation in
the Plan. The Plan Administrator may require a Participant who requests a
reduction in an Annual Deferral under this subsection (b) to submit such
evidence as the Plan Administrator, in its sole discretion, deems necessary
or appropriate to substantiate the circumstances upon which the request is
based.
(c) A Participant may, within one year prior to normal retirement elect that
all or part of such portion of his account that is treated as being held in
Genuity Common Stock thereafter be treated as being held in cash or that
all or part of such portion of his account that is treated as if held in
cash thereafter be treated as if held in Genuity
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Genuity Inc. Executive Deferral Plan Page 6
<PAGE>
Common Stock; provided that only one such election may be made in any Plan
Year. The effective date of such a change in hypothetical investment shall
be the date of the election.
(d) A Participant may submit a request at any time to the Plan Administrator to
modify the payment commencement date, the method of payment, or both, with
respect to the Annual Deferral; provided that only one such request may be
made in any Plan Year; and provided further that the request must be
submitted before any payment is made to the Participant with respect to the
Annual Deferral pursuant to ARTICLE V (other than an interim payment
pursuant to Section 5.04). If the modification has the effect of
accelerating all or part of any payment otherwise due the Participant under
ARTICLE V, the request shall be subject to the approval of the Plan
Administrator, which approval the Plan Administrator may grant or deny in
its sole discretion. If the modification has the effect of deferring until
a later calendar year all or part of any payment otherwise due the
Participant under ARTICLE V, the request shall be granted, provided that
the request is submitted at least 60 days before the last day of the
calendar year immediately preceding the calendar year in which the payment
otherwise would have been made to the Participant under ARTICLE V. In no
event shall the modification have the effect of accelerating the first day
of the payment commencement year to less than one year from the date the
modification is submitted to the Plan Administrator.
(e) If a Participant becomes subject to a prohibition against continuing to
have all or part of an Annual Deferral being treated as held in Genuity
Common Stock because of an actual or potential conflict of interest, he
shall be permitted a one-time election on the occurrence of the prohibition
to have that portion of such Annual Deferral that is treated as if held in
Genuity Common Stock thereafter treated as if held in cash; provided that
the Plan Administrator may approve or disapprove such an election in its
sole discretion. The effective date of such an election shall be the first
day of the month next following the month in which the election is received
(or, if later, approved) by the Plan Administrator. Within a reasonable
amount of time from the removal of the prohibition referred to in the first
sentence of this subsection (e), the Participant shall be afforded an
election to treat as if held in Genuity Common Stock that portion of his
account that was treated as if held in cash pursuant to the first sentence
of this subsection (e); provided that the Plan Administrator may approve or
disapprove such an election in its sole discretion. The effective date of
the election referred to in the preceding sentence shall be the first day
of the calendar quarter next following the calendar quarter in which such
election is received (or, if later, approved) by the Plan Administrator.
The dollar value of the hypothetical shares of Genuity Common Stock with
respect to which the elections described in this subsection (e) are made
shall be calculated in accordance with Section 4.02(b).
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Genuity Inc. Executive Deferral Plan Page 7
<PAGE>
3.04. Designation of Beneficiaries.
A Participant who makes a deferral election pursuant to Section 3.03 may
designate one or more beneficiaries under the Plan. Notwithstanding Section
3.03(a)(7), a Participant may, at any time, revoke a prior designation and make
a new designation pursuant to this Section 3.04. Any such designation or
revocation shall be in writing and shall be submitted to the Plan Administrator
prior to the Participant's death in such form and in such manner as is
acceptable to the Plan Administrator.
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Genuity Inc. Executive Deferral Plan Page 8
<PAGE>
ARTICLE IV. ACCOUNTS AND INTEREST
4.01. Accounts.
(a) Establishment of Accounts. A separate bookkeeping account shall be
maintained for each Participant. Such account shall be (1) credited with
the amounts deferred by the Participant pursuant to Section 3.03, (2)
credited (or charged, as the case may be) with the hypothetical investment
results determined pursuant to Section 4.02, and (3) charged with the
amounts paid by the Plan to or on behalf of the Participant pursuant to
ARTICLE V.
(b) Subaccounts. Within each Participant's account, separate subaccounts shall
be maintained to the extent necessary for the administration of the Plan.
For example, it may be necessary to maintain separate subaccounts where the
Participant has specified different payment commencement dates or different
methods of payment with respect to his Annual Deferrals for different Plan
Years.
4.02. Hypothetical Investment Performance.
(a) Deemed Investment in Cash. If an Annual Deferral is treated as if held in
cash, the balance in a Participant's account that is so treated shall be
determined in accordance with the following rules:
(1) Cash Credits. Any amount that would have been paid to a Participant
during a calendar quarter but for his deferral election pursuant to
Section 3.03 shall be credited to his account.
(2) Interest. Interest shall be credited to the account as follows: any
cash credits during the calendar quarter shall earn interest from the
day they are credited to the Participant's account, and any payments
made from the account shall cease to earn interest on the day they are
subtracted from the account. Cash balances under the account as of the
end of the immediately preceding calendar quarter that were not
withdrawn during the calendar quarter shall earn interest for the
entire calendar quarter. The rate at which interest shall be credited
for purposes of this section shall be the equivalent of an annualized
rate equal to the Moody's Rate as of the day immediately preceding the
beginning of the applicable calendar quarter.
(b) Deemed Investment in Genuity Common Stock. If an Annual Deferral is
treated as if held in Genuity Common Stock, the balance in a Participant's
account that is so treated shall be determined in accordance with the
following rules:
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Genuity Inc. Executive Deferral Plan Page 9
<PAGE>
(1) Conversion into Genuity Common Stock. Any amount that would have been
paid to a Participant during a calendar quarter but for his deferral
election pursuant to Section 3.03 and any matching contributions
pursuant to Section 4.03 shall be converted into an equivalent number
of hypothetical shares of Genuity Common Stock (including hypothetical
fractional shares) by dividing the amount deferred for that calendar
quarter by the average closing price of Genuity Common Stock on Nasdaq
(or any other reporting system or market selected by the Committee)
for the last 20 trading days of the immediately preceding calendar
quarter.
(2) Deemed Reinvestment of Dividends. The number of hypothetical shares of
Genuity Common Stock credited to a Participant's account pursuant to
paragraph (1), above, shall be increased on each date that a dividend
is paid on Genuity Common Stock. The number of additional hypothetical
shares of Genuity Common Stock credited to a Participant's account as
a result of such increase shall be determined, first, by multiplying
the total number of hypothetical shares of Genuity Common Stock
credited to the Participant's account on the dividend record date by
the amount of the dividend declared per share of Genuity Common Stock
on the dividend declaration date, and, then, by dividing the product
so determined by the closing price of Genuity Common Stock on Nasdaq
(or any other reporting system or market selected by the Committee) on
the dividend declaration date (or if there was no reported sale of
Genuity Common Stock on such date, on the next preceding day on which
there was such a reported sale).
(3) Conversion Out of Genuity Common Stock. The dollar value of the
hypothetical shares of Genuity Common Stock paid to or withdrawn from
a Participant's account on any date shall be determined by multiplying
the number of hypothetical shares of Genuity Common Stock paid to or
withdrawn from the Participant's account on that date by the closing
price of Genuity Common Stock on Nasdaq (or any other reporting system
or market selected by the Committee) on that date.
(4) Effect of Recapitalization. In the event of a transaction or event
described in this paragraph (4), the number of hypothetical shares of
Genuity Common Stock credited to a Participant's account shall be
adjusted in such manner as the Plan Administrator, in its sole
discretion, deems equitable. A transaction or event is described in
this paragraph (4) if and only if (A) it is a dividend or other
distribution (whether in the form of cash, shares, other securities,
or other property), extraordinary cash dividend, recapitalization,
stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or
exchange of shares or other securities, the issuance of warrants or
other rights to purchase
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Genuity Inc. Executive Deferral Plan Page 10
<PAGE>
shares or other securities, or other similar corporate transaction or
event, and (B) the Plan Administrator determines that such transaction
or event affects the shares of Genuity Common Stock, such that an
adjustment pursuant to this paragraph (4) is appropriate to prevent
dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan.
(c) Deemed Investment in Other Investment Vehicles. An Annual Deferral may be
treated as if held in such other investment vehicles as the Committee in
its discretion may permit. If an Annual Deferral is treated as if held in
such other investment vehicle, the balance in a Participant's account that
is so treated shall be determined in accordance with such rules as the
Committee in its discretion may provide.
4.03. Matching Contributions.
(a) The Company shall credit to each Participant's account a number of
hypothetical shares of Genuity Common Stock equal in value to the Matching
Percentage of the percentage of the Participant's Eligible Salary that the
Participant defers for each Plan Year; provided that the percentage of the
Participant's Eligible Salary that shall be taken into account for this
purpose shall not exceed the percentage of the Participant's compensation
that is eligible for a matching contribution under the Genuity Inc. Savings
Plan; and provided further that such hypothetical shares shall be credited
only if the Participant is a participant in the Genuity Inc. Savings Plan
and is eligible for a basic Matching Contribution under the Genuity Inc.
Savings Plan for that Plan Year and has made Pre-Tax Contributions under
the Genuity Inc. Savings Plan for that Plan Year that (i) in the aggregate
equal 6% of the Base Amount and (ii) satisfy any other requirements
established in the Genuity Inc. Savings Plan.
(b) The Plan Administrator may credit to a Participant's account, for equitable
reasons and good cause shown, an additional number of hypothetical shares
(including fractional shares) of Genuity Common Stock equal in value to any
Matching Contribution not credited to the Participant's account under the
Genuity Inc. Savings Plan because of limits placed on such Matching
Contributions under the terms of the Code or the Genuity Inc. Savings Plan;
provided that, to the extent that the amount of such credit depends on the
extent to which the Participant makes or does not make elective deferrals
under the qualified cash or deferred arrangement under the Genuity Inc.
Savings Plan, the credit shall not be made unless, for the pertinent Plan
Year, the Participant has made the maximum elective deferral permissible
under section 402(g) of the Code or the maximum elective deferral permitted
under the terms of the Genuity Inc. Savings Plan.
- --------------------------------------------------------------------------------
Genuity Inc. Executive Deferral Plan Page 11
<PAGE>
(c) If the Participant is not eligible to participate in the Genuity Inc.
Savings Plan, the Company shall credit to the Partcipant's account a number
of hypothetical shares of Genuity Common Stock equal in value to the
Matching Percentage of the percentage of the Participant's Eligible Salary
that the Participant defers for each Plan Year; provided that the
percentage of the Participant's Eligible Salary that shall be taken into
account for this purpose shall not exceed the percentage of the
Participant's compensation that is eligible for a matching contribution
under the Genuity Inc. Savings Plan; and provided further that such
hypothetical shares shall be credited only if the Plan Administrator
determines that the Participant would have been eligible for a basic
Matching Contribution under the Genuity Inc. Savings Plan for that Plan
Year had the Participant been eligible to participate in the Genuity Inc.
Savings Plan for that Plan Year and that the Participant has satisfied any
other requirements that the Plan Administrator imposes in its discretion.
(d) For purposes of subsections (a), (b), and (c) above, the value of a
hypothetical share of Genuity Common Stock shall be calculated in the same
manner as basic Matching Contributions under the Genuity Inc. Savings Plan
are calculated. Hypothetical shares credited to a Participant's account
pursuant to this Section 4.03 shall be credited as of the same date as of
which basic Matching Contributionss are made under the Genuity Inc. Savings
Plan and shall be treated in accordance with Section 4.02(b).
4.04. Hypothetical Nature of Accounts and Investments.
Each account and investment established under this ARTICLE IV shall be
hypothetical in nature and shall be maintained for bookkeeping purposes only.
Neither the Plan nor any of the accounts established hereunder shall hold any
actual funds or assets. The right of any person to receive one or more payments
under the Plan shall be an unsecured claim against the general assets of the
Company. Any liability of the Company to any Participant, former Participant,
or beneficiary with respect to a right to payment shall be based solely upon
contractual obligations created by the Plan. Neither the Company, the Board,
nor any other Person shall be deemed to be a trustee of any amounts to be paid
under the Plan. Nothing contained in the Plan, and no action taken pursuant to
its provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Company and a Participant or any other
Person.
- --------------------------------------------------------------------------------
Genuity Inc. Executive Deferral Plan Page 12
<PAGE>
ARTICLE V. PAYMENTS
5.01. Exclusive Entitlement to Payment.
A Participant's deferral election pursuant to Section 3.03 shall constitute
a waiver of his right to receive the amount deferred and an agreement to receive
in lieu thereof the amounts payable to him at the times and in the amounts
specified in this ARTICLE V. No other amounts shall be due under the Plan or
otherwise as a result of a Participant's deferral election pursuant to Section
3.03.
5.02. Method of Payment.
The payments to a Participant with respect to an Annual Deferral shall be
made solely in cash pursuant to the method provided for in either paragraph (a)
or (b), below, that is selected by the Participant in accordance with Section
3.03(a)(6), unless paragraph (c), below, is applicable. A Participant may
select different methods of payment with respect to his Annual Deferrals for
different Plan Years.
(a) Lump Sum. A Participant may elect to receive payment with respect to an
Annual Deferral in a lump sum. The lump sum shall be payable to the
Participant in cash as of the first business day of the payment
commencement year. The lump sum shall equal the portion of the balance in
the Participant's account attributable to the Annual Deferral, determined
as of the date of payment.
(b) Installments. A Participant may elect to receive the payments with respect
to an Annual Deferral either in annual, semi-annual, quarterly or monthly
installments for a period of not less than two or more than 20 years;
provided that the number of years elected shall not extend the period of
payment beyond the life expectancy of the Participant as determined under
Table V of Treas. Reg. (S) 1.72-9 (as amended from time to time),
determined on the basis of his age on the date as of which payments would
commence. If the number of years elected by a Participant would otherwise
exceed the limits imposed by the preceding provisions of this Section
5.02(b), he shall be deemed to have elected the maximum number of years
permitted under such preceding provision. Installments shall be payable to
the Participant:
(1) if the Participant elects payment commencement in accordance with
Section 5.03(a), beginning as of the first business day of the year
selected as the payment commencement year; or
(2) if the Participant elects payment commencement in accordance with
Section 5.03(b), beginning as of the date specified in that Section.
Each installment shall equal the portion of the balance in the
Participant's account attributable to the Annual Deferral, determined as of
the date the
- --------------------------------------------------------------------------------
Genuity Inc. Executive Deferral Plan Page 13
<PAGE>
installment is payable, multiplied by a fraction the numerator of which is
one, and the denominator of which is the excess of the total number of
installments elected by the Participant over the number of installment
payments previously made under the schedule. For example, the respective
fractions under a five-year schedule of annual installments are 1/5 for the
first installment, 1/4 for the second installment, 1/3 for the third
installment, 1/2 for the fourth installment, and 1/1 for the fifth and
final installment.
(c) Automatic Cash-Out. A Participant who separates from service with the
Company and whose entire account balance is equal to or less than $10,000
shall receive payment in the form of a lump sum. The lump sum shall be
payable to the Participant in cash as soon as is reasonably practicable
after the Participant's separation from service.
5.03. Payment Commencement.
Unless otherwise specifically provided in the Plan (including but not
limited to Section 5.05), the payments to a Participant with respect to an
Annual Deferral shall commence in accordance with paragraph (a), (b), or (c),
below, as selected by the Participant in accordance with Section 3.03(a)(5).
(a) Fixed Commencement Year. A Participant may select a specific year for the
commencement of payments; provided that, if any of the events described in
paragraph (b), below, occur before the payment commencement date selected
pursuant to this paragraph (a), payment shall commence in accordance with
paragraph (b). A Participant may select different payment commencement
years with respect to his Annual Deferrals for different Plan Years.
(b) Termination, Disability, or Death. A Participant may select as the payment
commencement date the date of his Termination, Disability, or death.
(1) Termination. A Participant who incurs a Termination shall be paid any
amounts deferred in annual installments over a period of 10 years or
the payment schedule requested, in accordance with Section 5.02, at
the time of Termination, whichever is shorter; provided that the Plan
Administrator, in its sole discretion, may approve or deny any payment
schedule requested at the time of Termination; provided further that
no payment shall be made until the first business day more than 30
days after the date of Termination; and provided further that, if at
the time of Termination payments have commenced pursuant to paragraph
(a), above, such payments shall continue according to the schedule on
which they were then being paid.
- --------------------------------------------------------------------------------
Genuity Inc. Executive Deferral Plan Page 14
<PAGE>
(2) Disability. A Participant who incurs a Disability shall be paid any
amounts deferred in annual installments over a period of 10 years;
provided that a Participant at the time of onset of Disability may
request a fewer number of installments; provided further that the Plan
Administrator, in its sole discretion, may approve or disapprove any
payment schedule requested at the time of onset of Disability;
provided further that no payment shall be made until the first
business day of the first calendar quarter that begins after the date
of Disability; and provided further that, if at the time of the onset
of the Disability payment has commenced pursuant to paragraph (a),
above, or the preceding provisions of this paragraph (b), such
payments shall continue according to the schedule on which they were
then being paid.
(3) Death. If a Participant dies before receiving any or all of the
balance in the Participant's account, the entire balance in the
Participant's account shall be paid as soon as practicable after the
Participant's death in a lump sum to the beneficiary designated by the
Participant in accordance with Section 3.04, or, if there is no such
beneficiary, to the Participant's estate.
5.04. Accelerated Distributions.
(a) Hardship. Upon request, the Plan Administrator may permit the payment of
all or part of a Participant's account if the Plan Administrator, in its
sole discretion, determines that the Participant has incurred unusual,
extraordinary expenses or hardship caused by events beyond the
Participant's control, such as accident or illness. The amount that may be
withdrawn shall be limited to the amount reasonably necessary to relieve
the hardship or financial emergency upon which the request is based. The
Plan Administrator may require a Participant who requests a payment under
this subsection (a) to submit such evidence as the Plan Administrator, in
its sole discretion, deems necessary or appropriate to substantiate the
circumstances upon which the request is based.
(b) Other. At any time, a Participant may elect that 94% of all (or a
designated portion of) his account balance shall be paid to him 61 days
following the filing of such an election; provided that the Plan
Administrator may approve or disapprove such election in its sole
discretion. If a Participant receives a payment pursuant to this
subsection (b), the remaining 6% of the Participant's entire account
balance (or the designated portion thereof) shall be permanently forfeited
and shall not be paid to, or in respect of, the Participant.
5.05. Forfeiture of Rights.
A Participant who is terminated as a result of conviction of a felony, who
misuses or misappropriates Company assets or confidential information of the
Company, or violates other forfeiture provisions as determined by the Plan
Administrator either while employed by the
- --------------------------------------------------------------------------------
Genuity Inc. Executive Deferral Plan Page 15
<PAGE>
Company or following a separation from service with the Company, may in the
discretion of the Plan Administrator forfeit all rights to any payments under
the Plan that would otherwise be payable to the Participant or his beneficiaries
on or after the initial date of such action by the Participant. A Participant
shall not be deemed to have incurred a Termination for Cause or to have misused
Company assets or confidential information of the Company within the meaning of
this subsection (a) unless and until there shall have been delivered to him a
notice from the Plan Administrator (after reasonable notice to the Participant
and an opportunity for the Participant, together with counsel, to be heard
before the Plan Administrator), finding that the Participant has misused Company
assets or confidential information of the Company or engaged in the conduct set
forth in the definition of Termination for Cause and specifying the particulars
thereof in detail.
Genuity Inc. Executive Deferral Plan Page 16
<PAGE>
ARTICLE VI. MISCELLANEOUS
6.01. Plan Administration.
(a) In General. Except to the extent the Plan specifically provides otherwise:
(i) the Plan Administrator shall have the discretionary authority to
interpret the Plan and to decide any and all matters arising under the
Plan, including without limitation the right to determine eligibility for
participation, benefits, and other rights under the Plan; the right to
determine whether any election or notice requirement or other
administrative procedure under the Plan has been adequately observed; the
right to determine the proper recipient of any distribution under the Plan;
the right to remedy possible ambiguities, inconsistencies, or omissions by
general rule or particular decision; the right to make factual findings
under the Plan; and the right otherwise to interpret the Plan in accordance
with its terms; and (ii) the Plan Administrator's determination on any and
all questions arising out of the interpretation or administration of the
Plan shall be final, conclusive, and binding on all parties.
(b) Plan Amendment and Termination. The Board may amend, suspend, or terminate
the Plan at any time. Upon termination of the Plan, all amounts deferred
before the date of termination, and any rights to payment with respect to
such deferred amounts, shall continue to be governed by the provisions of
the Plan.
(c) The Company reserves the right to charge fees to Participants for set-up
and/or maintenance of deferral accounts.
6.02. Appeals Procedure.
A claimant who has been denied a claim for benefits, in whole or in part,
may, within a period of 60 days following his receipt of the denial, request a
review of such denial before the Plan Administrator by filing a written notice
with the Plan Administrator. In connection with an appeal, the claimant (or his
authorized representative) may review pertinent documents and may submit
evidence and arguments in writing to the Plan Administrator. The Plan
Administrator may decide the questions presented by the appeal and shall issue
to the claimant a written notice setting forth: (1) the specific reasons for the
decision and (2) specific reference to the pertinent Plan provisions on which
the decision is based. The notice shall be issued within a period of time not
exceeding 60 days after receipt of the request for review; provided that, if
special circumstances should require, such period of time may be extended for an
additional 60 days commencing at the end of the initial 60-day period. Written
notice of any such extension shall be provided to the claimant prior to the
expiration of the initial 60-day period. The decision of the Plan Administrator
shall be final and conclusive.
- --------------------------------------------------------------------------------
Genuity Inc. Executive Deferral Plan Page 17
<PAGE>
6.03. Rights Not Assignable.
A Participant's rights and interest under the plan may not be assigned or
transferred. In the case of any former Participant's death, payment, if any,
under the Plan shall be made to the Participant's surviving spouse or designated
beneficiary in accordance with the provisions of the Plan. However, the
immediately preceding sentences shall not apply with respect to an order which
satisfies the requirements for a qualified domestic relations order set forth in
Section 206(d)(3)(B)(i) of the Employee Retirement Income Security Act of 1974,
as amended, which is issued with respect to a Participant's right or interest
under the Plan, and benefits shall be payable to the alternate payee designated
in the order in accordance with the terms and conditions thereof.
6.04. Inability to Locate Participants and Beneficiaries.
Each Participant or beneficiary entitled to receive payment under the Plan
shall keep the Plan Administrator advised of his current address. If the Plan
Administrator is unable for a period of 36 months to locate a Participant or
beneficiary to whom a payment is due under the Plan, commencing with the first
day of the month as of which such payment first comes due, the total amount
payable to such Participant or beneficiary shall be forfeited. Should such a
Participant or beneficiary contact the Plan Administrator requesting payment
thereafter, the Plan Administrator shall, upon satisfaction of its requests for
any corroborating documentation, restore and pay the forfeited payment in a lump
sum, the value of which shall not be adjusted to reflect any interest or other
type of investment earnings or gains for the period of forfeiture.
6.05. Withholding Taxes.
The Plan Administrator may make any appropriate arrangements to deduct from
all Annual Deferrals and payments hereunder any taxes that the Plan
Administrator reasonably determines to be required by law to be withheld from
such Annual Deferrals and payments.
6.06. Certain Rights Reserved.
Nothing in the Plan shall confer upon any employee of the Company or other
Person the right: (1) to continue in the employment or service of the Company or
affect any right that the Company may have to terminate the employment or
service of (or to demote or to exclude from future participation in the Plan)
any such employee or other Person at any time for any reason; (2) to participate
in the Plan; or (3) to receive an annual base salary of any particular amount.
6.07. Severability.
If any provision of the Plan is held unlawful or otherwise invalid or
unenforceable in whole or in part, such unlawfulness, invalidity, or
unenforceability shall not affect any other provision of the Plan or part
thereof, each of which shall remain in full force and effect. If the making of
any payment or the provision of any other benefit required
- --------------------------------------------------------------------------------
Genuity Inc. Executive Deferral Plan Page 18
<PAGE>
under the Plan is held unlawful or otherwise invalid or unenforceable, such
unlawfulness, invalidity, or unenforceability shall not prevent any other
payment or benefit from being made or provided under the Plan, and, if the
making of any payment in full or the provision of any other benefit required
under the Plan in full would be unlawful or otherwise invalid or unenforceable,
then such unlawfulness, invalidity, or unenforceability shall not prevent such
payment or benefit from being made or provided in part, to the extent that it
would not be unlawful, invalid, or unenforceable, and the maximum payment or
benefit that would not be unlawful, invalid, or unenforceable shall be made or
provided under the Plan.
6.08. Titles and Headings Not to Control.
The titles to Articles and the headings of Sections, subsections,
paragraphs, and subparagraphs in the Plan are placed herein for convenience of
reference only and, as such, shall have no force or effect in the interpretation
of the Plan.
6.09. Governing Law.
To the extent not preempted by federal law, the provisions of the Plan will
be construed and enforced in accordance with the laws of the Commonwealth of
Massachusetts, excluding any conflicts or choice of law rule or principle that
might otherwise refer construction or interpretation of this provision to the
substantive law of another jurisdiction.
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Genuity Inc. Executive Deferral Plan Page 19
<PAGE>
Exhibit 10.24
================================================================================
GENUITY INC.
2000 EXECUTIVE INCENTIVE PLAN
___________
Effective May 22, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
1. PURPOSE.......................................................... 1
2. EFFECTIVE DATE AND TERM OF THE PLAN.............................. 1
3. DEFINITIONS...................................................... 1
4. PARTICIPATION.................................................... 2
5. ADMINISTRATION................................................... 2
6. AWARDS........................................................... 2
7. LIMITATIONS ON AWARDS............................................ 3
8. PAYMENT OF AWARDS................................................ 3
9. AMENDMENT OR TERMINATION OF THE PLAN............................. 3
10. NO REQUIRED SEGREGATION OF ASSETS................................ 4
11. RIGHT OF DISCHARGE RESERVED...................................... 4
12. NATURE OF PAYMENTS............................................... 4
13. SEVERABILITY..................................................... 4
14. GOVERNING LAW.................................................... 4
- --------------------------------------------------------------------------------
Genuity Inc. 2000 Executive Incentive Plan Table of Contents
<PAGE>
1. PURPOSE
The primary purpose of the Plan is to facilitate the Company's ability to
achieve its short-term financial and operating goals by offering key
Employees annual incentives. Under the Plan, Awards are made based on
Participants' achievement of key goals at the corporate, business unit,
and/or individual level.
2. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan became effective on May 22, 2000. Unless the Plan is terminated
earlier in accordance with Section 9 hereof, the Plan shall remain in full
force and effect until the close of business on the date of the Company's
annual meeting of shareholders in the year 2010, at which time the right to
grant Awards under the Plan shall terminate automatically unless the
shareholders of the Company approve an extension or renewal of the Plan.
3. DEFINITIONS
Except where otherwise indicated, the following terms shall have the
definitions set forth below for purposes of the Plan:
"AWARD" means any award described in Section 6 hereof.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.
"COMMITTEE" means the Executive Compensation Committee of the Board.
"COMPANY" means Genuity Inc.
"EMPLOYEE" means an individual who is employed by the Company or a Related
Entity.
"PARTICIPANT" means an Employee who has been granted an Award pursuant to
the Plan.
"PLAN" means the Genuity Inc. 2000 Executive Incentive Plan, on the date of
adoption hereof and as it may be amended from time to time.
"PLAN YEAR" means the calendar year, except that the first Plan Year shall
begin on the effective date of the Plan and end on December 31, 2000.
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Genuity Inc. 2000 Executive Incentive Plan Page 1
<PAGE>
"RELATED ENTITY" means a corporation, partnership, joint venture or other
entity in which the Company has an ownership or other proprietary interest
of at least ten percent.
4. PARTICIPATION
Only those Employees designated from time to time by the Committee shall
participate in the Plan and receive Awards hereunder.
5. ADMINISTRATION
(a) The Plan and all Awards granted pursuant thereto shall be administered
by the Committee. The Committee shall periodically determine, in its
sole discretion, the Employees who shall participate in the Plan and
the terms of the Awards to be granted to Participants. All questions
of interpretation and administration with respect to the Plan and
Awards shall be determined by the Committee in its sole and absolute
discretion, and its determinations shall be final and binding upon all
parties.
(b) The Committee may delegate its authority under subsection (a), above,
to persons other than its members to the extent it deems such action
advisable. Any person to whom the Committee has delegated authority
under subsection (a), above, may receive Awards only if the Awards are
granted directly by the Committee without delegation.
(c) The Committee may, in its sole discretion, promulgate general
regulations and guidelines governing the administration of the Plan
and the Awards granted hereunder. The Committee also may establish
regulations governing the deferred payment of Awards and may determine
that deferred payments shall accrue interest at a rate or rates
determined by the Committee and/or that deferred payments shall be
deemed to be invested in hypothetical investments.
6. AWARDS
(a) All Awards under the Plan shall be granted upon terms approved by the
Committee. However, no Award shall be inconsistent with the terms of
the Plan or fail to satisfy the requirements of applicable law.
(b) Each Award shall relate to a designated Plan Year.
(c) No Award shall relate to more than one Plan Year.
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Genuity Inc. 2000 Executive Incentive Plan Page 2
<PAGE>
(d) The maximum Award per Participant for a Plan Year shall not exceed two
million dollars ($2,000,000). The Committee may reduce, but may not
increase, the maximum Award for any Participant.
7. LIMITATIONS ON AWARDS
(a) Unless otherwise determined by the Committee, in its sole discretion,
a Participant who is not an Employee of the Company or a Related
Entity at all times during the Plan Year and as of the payment date
set by the Committee pursuant to Section 8(a) hereof shall have no
right to receive an Award for that Plan Year.
(b) The Committee may, in its discretion, authorize payment to a
Participant of less than the Participant's maximum Award and may
provide that a Participant will not receive any payment with respect
to an Award. In exercising its discretion, the Committee shall
consider such factors as it considers appropriate. The Committee's
decision shall be final and binding upon any person claiming a right
to a payment under the Plan.
(c) No Award shall be assignable or transferable other than by will or by
the laws of descent and distribution. During the Participant's
lifetime, an Award may be received only by the Participant or by the
Participant's guardian or legal representative.
8. PAYMENT OF AWARDS
(a) All payments of Awards shall be made on a date prescribed by the
Committee unless the Participant is eligible and has elected to defer
payment in accordance with the Genuity Inc. Executive Deferral Plan.
(b) Awards shall be paid only in cash.
9. AMENDMENT OR TERMINATION OF THE PLAN
The Board may, from time to time, alter, amend, suspend or terminate the
Plan as it shall deem advisable, subject to any requirement for shareholder
approval imposed by applicable law. The termination of the Plan shall not
cause any previously granted Awards to terminate. After the termination of
the Plan, any previously granted Awards shall remain in effect and shall
continue to be governed by the terms of the Plan and the Awards. This
Section applies regardless of whether the termination of the Plan occurs
pursuant to Section 2 hereof or pursuant to this Section 9.
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Genuity Inc. 2000 Executive Incentive Plan Page 3
<PAGE>
10. NO REQUIRED SEGREGATION OF ASSETS
Neither the Company nor any Related Entity shall be required to segregate
any assets that may at any time be represented by Awards pursuant to the
Plan.
11. RIGHT OF DISCHARGE RESERVED
Neither the Plan nor any Award shall guarantee any Employee continued
employment with the Company or a Related Entity or guarantee the grant of
future Awards. Either the Company or the Employee may terminate the
employment relationship at any time and for any reason.
12. NATURE OF PAYMENTS
All Awards made pursuant to the Plan are in consideration of services for
the Company or the Related Entities. Any gain realized pursuant to Awards
under the Plan constitutes a special incentive payment to the Participant
and shall not be taken into account as compensation for purposes of any of
the employee benefit plans of the Company or any Related Entity except as
may be determined by the Board or by the board of directors of the
applicable Related Entity.
13. SEVERABILITY
If any provision of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part, the unlawfulness, invalidity, or
unenforceability shall not affect any other provision of the Plan or part
thereof, each of which shall remain in full force and effect.
14. GOVERNING LAW
To the extent not preempted by federal law, the provisions of the Plan will
be construed and enforced in accordance with the laws of the Commonwealth
of Massachusetts, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of this
provision to the substantive law of another jurisdiction.
- --------------------------------------------------------------------------------
Genuity Inc. 2000 Executive Incentive Plan Page 4
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
Registration Statement.
/s/ Arthur Andersen LLP
Boston, Massachusetts
May 20, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 DEC-31-1999
<CASH> 17,118 6,044
<SECURITIES> 0 0
<RECEIVABLES> 189,583 199,528
<ALLOWANCES> 4,476 5,550
<INVENTORY> 0 0
<CURRENT-ASSETS> 265,019 254,111
<PP&E> 1,959,544 1,812,586
<DEPRECIATION> (330,153) 291,652
<TOTAL-ASSETS> 2,461,854 2,343,132
<CURRENT-LIABILITIES> 445,503 541,473
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 1,945,767 1,668,106
<TOTAL-LIABILITY-AND-EQUITY> 2,461,854 2,343,132
<SALES> 247,852 706,466
<TOTAL-REVENUES> 247,852 706,466
<CGS> 283,928 767,498
<TOTAL-COSTS> 446,050 1,351,648
<OTHER-EXPENSES> (8,067) (32)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (2,973) (183)
<INCOME-PRETAX> (209,238) (645,397)
<INCOME-TAX> 588 1,649
<INCOME-CONTINUING> (209,826) (647,046)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (209,826) (647,046)
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
