U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
Of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 1999
Commission File No. 0-25582
GRACE DEVELOPMENT, INC.
(Exact Name of Registrant as Specified in its Charter)
Colorado 84-1110469
- ------------------------------- ---------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
1690 Chantilly Road, Atlanta, Georgia 30324
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(Address of Principal Executive Offices)
(678) 222-3030
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(Registrant's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |_| No |X|
There were 73,846,895 shares of the Registrant's common stock, no par
value (the "Common Stock") outstanding as of September 30, 1999. For purposes of
this Report, the number of outstanding shares of the Registrant's Common Stock
assumes that all shares issuable in connection with the Merger (as hereinafter
defined), are outstanding. In addition, the number of outstanding shares
includes 410,000 shares of the Registrant's Common Stock that the Registrant
considers not to have been validly issued (the "Disputed Shares"). In January
1995, the Registrant issued 80,000 shares of the Disputed Shares to an
unaffiliated third party in exchange for the recipient's contractual obligation
to identify an acquisition candidate and
<PAGE>
consummate a merger between the Registrant and such candidate. No such merger
was consummated. In April, 1995, the Registrant issued 330,000 shares of the
Disputed Shares to an unaffiliated third party as a finders fee with respect to
two transactions which were never consummated. In May 1995, the Registrant
issued to its transfer agent a stop transfer order for all of the Disputed
Shares. Based upon the foregoing, the Registrant's auditors at that time, Dohan
and Company, CPA's, deemed 330,000 of the Disputed Shares to have been canceled
in the audited financial statements for the Company's fiscal year ended December
31, 1995 and thereafter, as reflected in the Registrant's annual and quarterly
reports on Forms 10-KSB and 10-QSB, filed on July 29, 1999. The Registrant is
seeking a judicial determination as to the validity of the Disputed Shares. The
Registrant is treating the Disputed Shares as outstanding in its financial
statements presented in this report, and will so treat the Disputed Shares in
all subsequent reports until a judicial determination as to the validity of the
Disputed Shares is made.
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
<PAGE>
GRACE DEVELOPMENT, INC.
FORM 10-QSB
INDEX
Page
----
Part I: Financial Information
Item 1. Consolidated Financial Statements
Balance Sheet (unaudited) at September 30, 1999 and
December 31, 1998
Statement of Operations (unaudited) for the Three and
Nine Months ended September 30, 1999
Statement fo Cash Flow (unaudited) for the Nine Months
Ended September 30, 1999
Statement of Shareholders Equity for the Nine Months
Ended September 30, 1999
Notes to Financial Statements for the Nine Months Ended
September 30, 1999
Item 2. Management's Discussion and Analysis or
Plan of Operation
Part II: Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
GRACE DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Predecessor
Company
SEPTEMBER 30, DECEMBER 31,
1999 1998
----------- ---------
( UNAUDITED ) ( AUDITED )
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 828,787 $ 3,719
Investment in certificates of deposit 2,650,000
Accounts receivable, net of $ 0 allowance 10,045
Prepaid expenses and other assets 200,000 820
Officer advances 17,420
----------- ---------
Total current assets 3,706,252 4,539
Property and equipment
Leasehold improvements 19,371
Furniture and fixtures 83,620
Equipment and software 2,833,320 13,117
Less: Accumulated depreciation and amortization (54,151) (506)
----------- ---------
2,882,160 12,611
Goodwill, net of amortization of $ 42,497 490,487
Idle Equipment 4,292,360
Other non-current assets 41,389
----------- ---------
Total assets $11,412,648 $ 17,150
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable 82,905 5,391
Deferred revenues 150,000
Accrued liabilities 290,829
Lines of credit 1,630,484
Current portion of obligations under capital lease 2,185,905
----------- ---------
Total current liabilities 4,340,123 5,391
Obligations under capital leases, net of current portion 4,645,905
----------- ---------
Total liabilities 8,986,028 5,391
----------- ---------
Stockholders' equity
Grace Common stock; no par value; 800,000,000 4,260,195
shares authorized; 73,846,895 issued and
outstanding as of September 30, 1999
NMM Common Stock, $1 par value; 1,000,000 32,500
shares authorized; 32,500 shares issued
and outstanding at December 31, 1998.
Subscriptions receivable (978,374)
Accumulated deficit (855,201) (20,741)
----------- ---------
Total stockholders' equity 2,426,620 11,759
----------- ---------
Total liabilities and stockholders' equity $11,412,648 $ 17,150
=========== =========
</TABLE>
See notes to consolidated financial statements
<PAGE>
GRACE DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1999
------------------ -----------------
( UNAUDITED ) ( UNAUDITED )
<S> <C> <C>
Revenues $ 307,515 $ 500,431
Cost of revenues (246,440) (293,388)
------------ ------------
Gross profit 61,075 207,043
------------ ------------
Operating expenses
Sales and marketing expenses 54,836 67,635
General and administrative expenses 363,952 676,947
Depreciation and Amortization 90,271 96,288
------------ ------------
Total operating expenses 509,059 840,870
------------ ------------
Loss from operations (447,984) (633,827)
------------ ------------
Other income (expense)
Interest income 4,737 5,078
Interest expense (201,558) (205,711)
------------ ------------
Total other income (expense) (196,821) (200,633)
Loss before income taxes (644,805) (834,460)
------------ ------------
Income tax expense -- --
------------ ------------
Net loss $ (644,805) $ (834,460)
============ ============
Basic and diluted net loss per common share $ (0.02) $ (0.02)
============ ============
Weighted average common shares outstanding 36,352,318 36,352,318
============ ============
</TABLE>
See notes to consolidated financial statements
<PAGE>
GRACE DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1999
-----------
<S> <C>
Cash flows from operating activities
Net loss $ (834,460)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization 96,288
Issuance of common stock for services 174,375
Changes in assets and liabilities from operations
Accounts receivable (9,845)
Prepaid expenses and other assets (199,180)
Officer advances (17,420)
Other non-current assets (33,772)
Accounts payable 7,116
Deferred revenues (24,812)
Accrued liabilities 290,829
-----------
Net cash used in operating activities (550,881)
-----------
Cash flows from investing activities
Acquisition of property and equipment (257,882)
Investments in Certificates of Deposits (2,650,000)
Acquisition of business unit (359,314)
-----------
Net cash used in investing activities (3,267,196)
Cash flows from financing activities
Net proceeds from lines of credit 1,630,484
Proceeds from note payable 450,000
Repayment of note payable (450,000)
Repayment on obligations under capital leases (18,263)
Net proceeds from issuance of common stock 3,030,924
-----------
Net cash provided by financing activities 4,643,145
-----------
Increase in cash and cash equivalents 825,068
Cash and cash equivalents at beginning of period 3,719
-----------
Cash and cash equivalents at end of period $ 828,787
===========
Supplemental disclosure of cash flow information
Cash paid for interest $ 16,936
===========
Supplemental activities of Non-Cash Transactions:
During the third quarter of 1999 the Company
acquired equipment under several capital
lease obligations totaling $ 6,850,073
Acquisition of business unit:
Goodwill $ 532,984
Assets acquired 115,561
Liabilities acquired (245,210)
Stock issued (44,021)
-----------
Net cash $ 359,314
===========
</TABLE>
See notes to consolidated financial statements
<PAGE>
GRACE DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Additional Stock
Common Stock Paid-in Accumulated Subscription
Shares Amount Capital Deficit Receiveble Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Predecessor balance at December 31, 1998 $ 32,500 $ (20,741) $ 11,759
Shares issued in repayment of
Shareholder debt 31,000 31,000
Shares issued as compensation
to New Millennuim shareholders (Note 10) 174,375 174,375
Shares issued for Avana acquisition (Note 2) 44,021 44,021
Private Placement of New
Millennium shares (Note 9) 777,600 777,600
Private Placement of New
Millennium shares (Note 9) 3,459,319 (978,374) 2,480,945
Warrants exercised (Note 11) 147,000 147,000
Warant cancellation fees (Note 11) (395,620) (395,620)
Assumed purchase of net assets of
Grace at Predecessor cost 66,246,933 4,270,195 (4,270,195) --
Reverse acquisition of Grace
by New Millennium (Note 2) 7,599,962 (10,000) (10,000)
Net loss for the nine months ended
September 30, 1999 (834,460) (834,460)
------------------------------------------------------------------------------------
Balance at September 30, 1999 73,846,895 $ 4,260,195 $ -- $ (855,201) $(978,374) $2,426,620
====================================================================================
</TABLE>
See notes to the Consolidated Financial Statements
<PAGE>
GRACE DEVELOPMENT, INC. And Subsidiaries
Notes to the Consolidated Financial Statements
(Unaudited)
For the Nine Months Ended September 30, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Description of the Company and Basis of Presentation:
Grace Development, Inc., is an Integrated Communications Provider offering
telecommunication and Internet services (ISP) to business and residential
customers. Telecommunication services currently offered are local and long
distance, frame relay, ATM, data private lines and calling cards.
The ISP operation focuses on serving individuals and small business. The
Company's service offerings include dial-up Internet access and business
services which are offered in various price and usage plans designed to
meet the need of our subscribers. Business services include web hosting,
which entails maintaining a customer's web site; high speed, dedicated
Internet access; web page design; domain name registration and customer
web server co-location.
Principles of consolidation and basis of financial reporting:
The consolidated financial statements include the accounts of Grace
Development, Inc. ("Grace") and its wholly owned subsidiaries
(collectively the "Company"). All significant intercompany accounts and
transactions have been eliminated.
The financial statements of the Predecessor are the accounts of New
Millenium Multimedia, Inc., a Georgia corporation ("NMM").
In the opinion of management, the accompanying financial statements
reflect all adjustments, consisting of normal, recurring adjustments,
necessary for a fair presentation of results of operations, financial
position, and cash flows. The results of operation of the interim periods
are not necessarily indicative of the results of operations, which might
be expected for the entire year. The condensed consolidated financial
statements should be read in conjunction with the Company's 1998 annual
report on Form 10-KSB, which was filed on July 29, 1999.
Cash and Cash Equivalents:
Cash and cash equivalents consist of cash and other highly liquid debt
instruments with an original maturity of three months or less.
Property and Equipment:
Property and equipment is carried at cost. Depreciation is computed using
the straight-line method based on estimated useful lives of the assets,
generally three to ten years. For income tax purposes, depreciation is
calculated using accelerated methods.
<PAGE>
Goodwill:
The Company amortizes goodwill and organizational costs on a straight-line
basis over a period of five years.
Revenue Recognition:
The Company recognizes revenues as they are earned. Some customers pay an
annual fee for Internet services and the revenues are recognized on a
straight-line basis over the service period. Deferred revenue represents
the portion of unearned Internet service fees.
Income Taxes:
Income taxes are based on the loss for financial reporting purposes and
reflect a current liability [asset] for the estimated taxes payable
[recoverable] in the current year tax return and changes in deferred
taxes. Deferred tax liabilities and assets are recognized for the
estimated tax effects of temporary differences between financial reporting
and taxable income [loss] for the loss carryforwards based on enacted tax
laws and rates. A valuation allowance is used to reduce deferred tax
assets to the amount that is more likely than not to be realized.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of certain assets,
liabilities, and disclosures including the allowance for doubtful
accounts, useful lives and recoverability of long-term assets. Actual
amounts could differ from those estimates. Any adjustments applied to
estimated amounts are recognized in the year in which such adjustments are
determined.
Advertising:
The Company expenses advertising as incurred. The advertising costs for
the three and nine months ended September 30, 1999 were approximately
$42,000 and $47,000, respectively.
2. MERGER AND REORGINAZATION:
Avana Merger:
On May 5, 1999, NMM completed its acquisition of Avana Communications
Corporation ("Avana"). The acquisition was accounted for as a purchase
pursuant to Accounting Principles Board Statement No. 16, "Business
Combinations" ("APB 16") and the result of Avana's operations were
included in the Company's 1999 consolidated statements of operation from
the date of acquisition. Total consideration included the issuance of
6,485,858 shares of Grace stock (97,824 shares of NMM stock later
converted to Grace stock at a 66.3013:1 ratio), and cash of $364,000. As a
result of the merger, the Company recorded goodwill of approximately
$533,000, which is being amortized, on a straight-line basis over five
years.
Additionally, NMM agreed to pay contingent consideration of up to $100,000
based upon Avana maintaining a certain percentage of the acquired customer
base. The Company will record a liability when the contingency is resolved
and consideration is issued or becomes issuable.
<PAGE>
New Millennium Multimedia, Inc.:
On September 28, 1999 a wholly-owned subsidiary of the Company merged with
NMM. The shareholders of NMM exchanged 100% of the outstanding stock of
NMM in exchange for shares of Grace stock. Each share of NMM common stock
was exchanged for 66.3013 shares of Grace common stock and a total of
66,246,933 shares of Grace common stock were issued to NMM stockholders.
The merger is intended to qualify as a tax-deferred reorganization under
Section 368(a) of the Internal Revenue Code.
The acquisition set out in the preceding paragraph was accounted for as
the reverse acquisition of Grace by an "accounting entity" consisting of
NMM and its wholly-owned subsidiary, Avana, because following the
transaction, the former shareholders of NMM are in control of the Company.
Accordingly, the financial statements of the Company are the financial
statements of the "accounting entity" adjusted for the assumed acquisition
of the net assets of Grace in exchange for the issuance of Grace common
stock outstanding before the transaction. The net assets of the
Predecessor are accounted for at their historical cost.
In accordance with purchase accounting principles under APB 16, the
Company accounted for the net assets of Grace, acquired at the fair value
of such net assets as of September 28, 1999. No goodwill was recorded as a
result of this transaction.
Pro forma Financial Statements:
For the Nine Months Ended September 30, 1999
--------------------------------------------
As Reported Adjustments Pro Forma
----------- ----------- ---------
Revenues 500,431 313,908 814,339
Net income (loss) (834,460) (77,781) (912,241)
Earnings per share (.02) (.00) (.03)
3. INVESTMENTS:
The Company accounts for its investments under Financial Accounting
Standards Board ("FASB") No. 115 "Accounting for Certain Investments in
Debt and Equity Securities" as of September 30, 1999 investments consisted
of the following:
Maturity Date Interest Rate Amount
------------- ------------- ------
Certificate of Deposit March 24, 2000 4.498% $2,000,000
Certificate of Deposit August 4, 2000 5.250% $ 650,000
Total $2,650,000
4. IDLE EQUIPMENT
The Company acquired equipment under several capital lease obligations.
Included in these lease obligations was $4,292,360 of equipment not placed
in service as of September 30, 1999. Management expects this equipment to
be returned to the vendor in exchange for equipment of equal value and
with technology that better addresses the needs of the Company.
Amortization has not been recorded on this equipment.
5. COMMITMENTS AND CONTINGENCIES:
<PAGE>
Concentrations of Credit Risk:
The Company does not have a security interest in their accounts
receivable; however, they do have legal recourse for defaulted amounts.
The Company maintains the majority of its cash deposits and investments at
three financial depository institutions. The amount of the accounting loss
due to credit risk the Company would incur if the financial depository
institutions failed would be the cash deposits in excess of the $100,000
amount per depositor that is federally insured. The amount at risk totaled
approximately $3,200,000 at September 30, 1999.
Operating Leases:
The Companies lease office space and equipment under several operating
lease agreements. Rent expense for the office space and equipment totaled
$42,000 and $44,000 for the three and nine months ended September 30,
1999, respectively.
At September 30 1999, future minimum lease payments under non-cancelable
leases having remaining terms in excess of one year are as follows:
September 30, Amount
------------ --------
2000 $167,790
2001 $155,658
2002 $160,326
2003 $165,138
2004 $126,621
--------
$775,533
--------
Obligations Under Capital Lease:
The Company leases equipment under capital lease obligations. $2,833,320
of the equipment is included in the property and equipment section and
$4,292,360 is included in the idle equipment section of the balance sheet.
Amortization was $38,248 and $38,248 for the three and nine months ended
September 30, 1999, respectively. The capitalized cost and accumulated
amortization at September 30, 1999 were as follows:
Total Equipment Placed in Service $ 2,833,320
Accumulated amortization $ (38,248)
-----------
Book Value $ 2,795,072
-----------
The future minimum lease payments under the capital leases at September
30, 1999:
9/30/2000 $ 2,914,383
9/30/2001 $ 2,992,477
9/30/2002 $ 2,193,453
-----------
$ 8,100,313
Less amount representing interest $(1,268,563)
-----------
$ 6,831,810
Less current portion $(2,185,905)
-----------
$ 4,645,905
Note Payable:
On April 26, 1999, the company signed a $600,000 promissory note with
Lucent Technologies,
<PAGE>
Inc. ("Lucent"). Lucent advanced the Company $450,000 and made available
an additional $150,000 based on the Company's customer list. The note bore
interest at a rate of 10% per annum, payable monthly. The note was secured
by fixed assets of the Company. The Company repaid the note in total on
September 29, 1999.
6. LINES OF CREDIT:
The Company has a line of credit with the Bank of Tennessee to provide
working capital of up to $650,000. The interest rate is 7.25% per annum
payable monthly. The balance on the line of credit was $575,900 on
September 30, 1999. The line of credit is secured by a CD and matures on
August 4, 2000.
The Company has a line of credit with Regions Bank to provide working
capital of up to $2,000,000. The interest rate is 5.998% per annum payable
monthly. The balance on the line of credit was $1,054,585 on September 30,
1999. The line of credit is secured by a CD and matures on March 24, 2000.
7. PREFERRED STOCK:
The Company is authorized to issue 10,000,000 shares of preferred stock
with no par value. The preferred stock may be issued by the Board of
Directors in one or more series. The Board of Directors shall determine
the distinguishing features of each series including preferences, rights
and restrictions, by resolution upon the establishment of such series. No
shares of preferred stock had been issued as of September 30, 1999.
8. INCOME TAXES:
The sources of temporary differences and their effect on the net deferred
taxes are as follows:
Deferred tax asset resulting from
net operating loss carryforwards $ 635,000
Less valuation allowances $(635,000)
---------
$ -0-
---------
The valuation allowance fully reserves the net deferred tax asset that
arose from the tax loss carryforwards generated.
At September 30, 1999, the Company had available for carryforward a net
operating loss of approximately $1,099,650. On September 28, 1999, the
Company had a significant change in ownership (note 2). As a result of the
ownership change, and in accordance with Section 382 of the Internal
Revenue Code, the Company's net operating loss is limited in total and
each year. The net operating loss available for the year ending December
31, 1999 is approximately $93,000. For each year thereafter, the net
operating loss will be limited to approximately $93,000 plus any unused
loss from the prior year (1999 and forward). In addition to the limitation
from Section 382 of the Internal Revenue Code, the losses are limited to a
fifteen-year carryforward, with losses from 1989 beginning to expire in
the year 2004.
9. SEGMENT REPORTING
The Company operates two business segments: telecommunications sales and
services; and Internet service including dial-up accounts, web-hosting and
web-design services.
Three Months Nine Months
Ended 9/30/99 Ended 9/30/99
------------- -------------
Revenues
Telecommunications 100,266 239,080
Internet 207,249 261,351
<PAGE>
---------- ----------
307,515 500,431
Gross Profit (Loss)
Telecommunications 87,746 226,561
Internet (26,671) (19,518)
---------- ----------
61,075 207,043
Profit (Loss)
Telecommunications (536,531) (706,156)
Internet (108,274) (128,304)
---------- ----------
(644,805) (834,460)
Depreciation and Amortization
Telecommunications 79,320 82,774
Internet 10,951 13,514
---------- ----------
90,271 96,288
Identifiable Assets
Telecommunications 11,342,573 11,342,573
Internet 70,075 70,075
---------- ----------
11,412,648 11,412,648
10. PRIVATE PLACEMENTS
During July 1999, NMM effected a private placement of shares of its common
stock. The shares were sold at $3.20 per share. For every three shares of
NMM common stock stock sold, warrants were issued to the purchaser, which
gives the purchaser the right to purchase two shares of Grace common stock
at $4.50 per share. In aggregate, 251,000 shares of NMM common stock and
167,292 warrants for Grace common stock were issued for net proceeds of
$777,600. All warrants expire July 29, 2001. The shares of NMM common
stock were converted to Grace common stock at a ratio of 66.3013:1.
During September 1999, NMM effected a private placement of shares of its
common stock. The shares were sold at $23.34 per share. In aggregate,
150,356 shares of NMM common stock were issued for net proceeds of
$3,459,319. The shares were converted to Grace stock at a ratio of
66.3013:1.
11. STOCK COMPENSATION:
NMM issued 387,500 shares of its common stock in consideration for
services rendered. The shares were valued at $174,375 and a non-cash
expense was recorded to the statement of operations. The shares were
converted to Grace common stock at a ratio of 66.3013:1.
12. Stock Warrants
On April 26, 1999, NMM entered into several capital lease agreements (note
4) and a secured note payable agreement (note 5) with Lucent. As part of
these financing agreements, NMM issued a warrant to purchase a maximum of
200,000 shares of NMM stock at a price of $3 per share. In September 1999,
Lucent exercised the warrant and purchased 49,000 shares of NMM stock
(later converted to 3,248,764 shares of Grace stock) for $147,000. The
warrants were valued at $0 based on the following assumptions:
Risk free interest rate 5.5%
Life 7 years
FMV of stock on date of grant $.45 per share
Volatility Not applicable
On September 27, 1999, NMM paid Lucent $395,620 to cancel the remaining
151,000 warrants issued.
13. SUBSEQUENT EVENTS:
<PAGE>
Acquisitions
On November 8, 1999 the Company acquired substantially all the business
assets of Rob Ballard and Sabrina Ballard d/b/a Northwest Georgia Internet
for $160,000 in cash and 25,000 shares of the Company's common stock. The
transaction will be accounted for as a purchase under APB 16. The fair
market value of the consideration and the resulting goodwill has not yet
been determined. If any goodwill is booked as a result of this transaction
it will be amortized over five years. Northwest Georgia Internet provides
Internet access, web hosting and web design to businesses and individuals
located in areas northwest of Atlanta, Georgia.
Letter of Intent:
On October 14, 1999, the Company executed a letter of intent to acquire
100% of the outstanding stock of The Telephone Company of Central Florida
("TCCF") from TCCF's parent company, Phoenix International Industries,
Incorporated ("Phoenix"). The terms of the agreement, including payment
terms, are still being negotiated. The Company advanced $100,000.00 to
TCCF, which advance is guaranteed by the Chief Executive Officer of
Phoenix.
Notes Receivable:
The Company loaned a corporation $250,000. The note is due on demand and
bears interest at a rate of 9% payable annually. The note is secured by
stock of the corporation.
<PAGE>
GRACE DEVELOPMENT, INC.
dba AVANA COMMUNICATIONS
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis provides information that management
believes is relevant to an assessment and understanding of the consolidated
results of operations and financial condition of Grace Development, Inc. and its
subsidiaries (collectively, the "Company"). The discussion should be read in
conjunction with the Company's consolidated financial statements for the quarter
and nine months ending September 30, 1999.
Certain statements included in this document are forward-looking, such as
statements relating to estimates of operating and capital expenditure
requirements, future revenue and operating income, and cash flow and liquidity.
Such forward-looking statements are based on the Company's current expectations,
estimates and projections about the Company's industry, management's beliefs and
certain assumptions made by the Company, and are subject to a number of risks
and uncertainties that could cause actual results in the future to differ
significantly from results expressed or implied in any such forward-looking
statements. These risks and uncertainties include, but are not limited to,
uncertainties relating to economic and business conditions, governmental and
regulatory policies, and the competitive environment in which the Company
operates. Words such as "anticipates," "expects," "intends," "plans,"
"believes," "may," "will" or similar expressions are intended to identify
forward-looking statements. In addition, any statements that refer to
expectations, projections or other characterizations of future events or
circumstances, including any underlying assumptions, are forward-looking
statements. Such statements are not guarantees of future performance and are
subject to the risks and uncertainties referred to above. Therefore, the
Company's actual results could differ materially and adversely from those
expressed in any forward-looking statements as a result of various factors. The
Company undertakes no obligation to revise or update publicly any
forward-looking statements for any reason. The information contained in this
document is not a complete description of the Company's business or the risks
associated with an investment in the Company's common stock. The Company urges
you to carefully review and consider the various disclosures made in this report
and in the Company's other reports filed with the Securities and Exchange
Commission.
<PAGE>
Overview
Grace Development, Inc. ("GDI") dba Avana Communications is seeking to become a
"bundled services" communications provider offering an array of communication
and related services including, but not limited to, local dial tone, intra and
inter-state access, long distance, enhanced services, Internet, data private
lines, frame relay, ATM (Asynchronous Transfer Mode), calling cards, wireless
and related communications services. As an integrated telecommunications
provider the Company intends to use a "one bill" approach with its customers.
This strategy will allow the Company to take advantage of cross selling
opportunities with current and future customers.
Currently the Company is operating in two areas, as an Internet Service Provider
("ISP") and as a provider of telecommunications solutions.
The Company's ISP operation focuses on serving individuals and small business.
The primary services offered by the Company are dial-up Internet access and
business services which are offered in various price and usage plans designed to
meet the needs of the Company's subscribers. Other business services include:
web hosting, which entails maintaining a customer's web site; high speed,
dedicated Internet access; web page design; domain name registration; and
customer web server co-location.
The Company's telecommunication operations focus on providing communications
solutions to business of all sizes and to residential customers. The Company
currently concentrates its sales efforts in the Atlanta, GA market. To date,
most revenues earned have been from sales commissions related to lines placed
with business, mainly for long distance, frame relay and other date related
communications. The Company is a master agent for Qwest Communications.
In July 1999, The Company began the licensing process for Competitive Local
Exchange Carrier ("CLEC") and Interexhange Carrier ("IXC") status. These
licenses will allow GDI to sell to, and maintain, local dial tone and
inter/intra state long-distance customers. GDI intends to have all nine
Southeastern states (Georgia, Florida, Louisiana, Mississippi, Alabama,
Kentucky, North Carolina, South Carolina and Tennessee) under license agreements
not later than the end of 1999.
In August 1999, The Company entered into an agreement with Lucent Technologies
to supply GDI with certain network infrastructure equipment necessary for
network expansion. As of September 30, 1999, GDI had Internet systems in four of
the nine southeastern states listed above. GDI intends to have systems in seven
of the nine states by March 2000, and in all nine states by June 30, 2000.
Existing facilities are based in Georgia, North Carolina, Alabama and Tennessee.
In September 1999, The Company entered into reseller agreements to offer certain
telecommunications services to residential and commercial customers. These
agreements are an essential part of GDI's plan to gain market share and revenues
while network infrastructure is under construction. Management believes that the
majority of the network will be operational on or before June 30, 2000.
<PAGE>
During the quarter ended September 30, 1999, the Company made progress in many
areas related to reaching its goals. Two private placements were completed by a
subsidiary of the Company prior to the recent merger of that subsidiary with
another wholly-owned subsidiary of the Company. Funding of these private
placements allowed the Company to repay in full its working capital loan from
Ascend Communications and provided liquidity for operations. The Company
renegotiated its largest equipment lease, allowing for more favorable terms and
the ability to capitalize the lease for accounting purposes. The Company entered
into an office lease and relocated its operations to a larger and better-suited
location under favorable terms. Consolidation of the Company's Internet
operations in the same building took place shortly after the end of the quarter.
Build out of the Internet network was nearly complete by quarter's end.
Co-location facilities in Charlotte, NC; Birmingham, AL; and Nashville, TN were
equipped, tested and are ready for operations.
The Company has completed deployment of hardware, circuits and configuration for
extending and replacing its prior infrastructure in Atlanta. This involved
moving the Company's data center into new premises with raised floor, commercial
grade HVAC and line interactive UPS facilities. The Company's previous server
configuration has been entirely replaced with rack-mounted Compaq servers that
have improved the Company's ability to service more clients efficiently.
The Company has implemented a tape library unit that automatically backs up all
servers every night, requiring manual intervention only once weekly. Back-up
time has been reduced to less than 40% of the prior requirement. The Company has
deployed over 50 new workstations and has standardized most configurations with
Windows NT software to ensure minimal support and maintenance efforts. All
systems are Y2K compliant.
The Company's telecommunications infrastructure has also been upgraded to
support scalable growth and enhanced performance. Thus, the Company's Atlanta
market now has over 1300 ports supporting V.90 service, its Birmingham market
has 644 ports supporting V.90 service, its Charlotte market has 644 ports
supporting V.90 service and its Nashville market has 644 ports supporting V.90
service.
<PAGE>
Results of Operations
Revenues: Revenues for the three months ended September 30, 1999 were derived
from telecommunications sales commissions and from providing Internet and web
hosting services. Telecommunications revenues were $100,266 while Internet and
web hosting revenues were $207,249. Revenues for the nine month period ended
September 30, 1999 totaled $500,431. Telecommunications sales accounted for
$239,080 of the total, while revenues from Internet and web hosting services
accounted for $261,351. The acquisition of Avana Communications Corporation was
completed on May 5, 1999. The acquisition was accounted for as a purchase and
the results of Avana's operations were included in the consolidated statement of
operations from the date of acquisition.
Cost of Revenues: Cost of revenues for providing Internet service includes
salaries and wages of those employed in customer service and sales and in the
technical areas needed to maintain and upgrade the system. Cost of revenues for
the quarter and nine months ending September 30, 1999 were $246,440 and $293,388
respectively.
Sales and Marketing Expenses: Sales and marketing expenses include advertising
costs for the Internet operations and development of the promotional campaign
for both telecommunications sales and corporate branding. For the quarter and
nine months ended September 30, 1999, Sales and Marketing expenses were $54,836
and $67,635 respectively. These expenses are expected to increase as the Company
pursues an aggressive sales effort.
General and Administrative Expenses: Included in General and Administrative
expenses are salaries and wages, professional fees, travel expenses, office
supplies and other general expenses. Expenses in these categories increased due
to growth in the number of employees, the closing if the merger and related
financing activities. For the quarter and nine months ended September 30, 1999,
General and Administrative expenses were $363,889 and $676,947 respectively.
Depreciation and Amortization: Depreciation expenses are computed using the
straight-line method based on estimated useful lives of the asset, generally
three to ten years. For the quarter and nine months ended September 30, 1999,
Depreciation expense was $18,378 and $23,127 respectively.
Amortization expenses for organization costs are Amortized over a 60-month
period. Goodwill related to the purchase of Avana is also being amortized over a
6-month period. For the quarter and nine months ended September 30, 1999,
Amortization expense was $71,893 and $73,161 respectively.
Interest Expense: The Company currently incurs interest expense on the lines of
credit and under capitalized leases. For the quarter and nine months ended
September 30, 1999, Interest Expense was $201,558 and $205,711 respectively.
<PAGE>
Interest Income: The Company currently earns interest income on cash and cash
equivalents, and investments. For the quarter and nine months ended September
30, 1999, Interest Income was $4,737 and $5,078 respectively.
<PAGE>
Liquidity and Capital Resources
The Company's operating activities required net cash of $550,881 more than the
cash generated from such activities for the nine months ended September 30,
1999, thereby producing a negative net cash flow in that amount for that period.
Working capital increased by $633,019 for the nine months ended September 30,
1999. Working capital was increased by proceeds from two private placements, as
described in footnote 9 of the financial statements, which increase was offset
by the current portion of leases capitalized during the nine month period and
draws against the lines of credit used for the same period. Changes in net cash
from operations resulted primarily from the loss for the period offset by
noncash items of depreciation, amortization and compensation paid in the form of
stock. The changes in net cash were also affected by an increase in accounts
receivable, prepaid expenses, other assets, advances to officers and deferred
revenue partially offset by an increase in accounts payable and accrued
liabilities.
Cash used for investing activities was $3,267,196 for the nine months ended
September 30, 1999. The cash was used primarily to fund investments in
certificates of deposits totaling $2,650,000. Expenditures of property and
equipment for acquisitions were made totaling $257,882 for the nine months ended
September 30, 1999. Expenditures for acquisitions of businesses were net
$359,314.
Cash provided by financing activities was $4,643,145 for the nine months ended
September 30, 1999. Cash provided consisted primarily of proceeds from private
placements of $3,030,924 and proceeds from line of credit borrowing of
$1,630,484. These amounts were partially offset by repayment on obligations
under capital leases of $18,263. A working capital loan in the amount of
$450,000 was funded and repaid during this nine-month period.
As of September 30, 1999, the Company had $848,787 in cash and cash equivalents.
The Company also had $2,650,000 in certificates of deposits less offsetting
related liabilities in the form of lines of credit of $1,630,484. The net
proceeds available from investments less the corresponding liability totaled
$1,019,516. Combined with $848,787 above, the Company has $1,848,303 to meet its
current obligations and fund its operations. Management believes this amount is
not sufficient to enable the Company to expand its business as currently
planned. The Company will therefore require additional capital to fund its
anticipated operating losses and planned capital expenditure requirements.
In order to fund these requirements, the Company anticipates that it will be
required to raise additional financing from public or private equity or debt
sources. Additionally, if the Company's plans or assumptions change (including
those with respect to the development of the network, the level of its
operations and its operating cash flow), if its assumptions prove inaccurate, if
it consummates additional investments or acquisitions, if it experiences
unexpected costs or competitive pressures, or if existing cash and any other
borrowings otherwise prove to be insufficient, the Company may be required to
seek additional capital sooner than expected. In the event that the Company is
unable to obtain such additional capital or is unable to obtain such additional
capital on acceptable terms, it may be required to reduce the scope of its
expansion, which could adversely affect its business prospects and its ability
to compete. There can be no assurance that the Company will be able to raise
equity capital, obtain capital lease or bank financing or incur other borrowings
on commercially reasonable terms, if at all, to fund any such expansion.
<PAGE>
To accelerate its growth rate and to finance the launch or build-out of
additional markets, the Company will consider obtaining financing from various
sources, including additional vendor financing provided by equipment suppliers,
project financing from commercial banks, bank lines of credit and the sale of
equity and debt securities. To the extent that the Company or any of its
subsidiaries issue debt, its leverage and debt service obligations will
increase.
As part of its business strategy, the Company intends to continue to evaluate
potential acquisitions, joint ventures and strategic alliances in companies that
own existing networks or companies that provide services that complement the
Company's existing businesses. The Company continues to consider potential
acquisitions from time to time. New sources of capital such as credit facilities
and other borrowings, and additional debt and equity investments in the Company
will be necessary to fund any material acquisitions and similar strategic
investments.
<PAGE>
Impact of Year 2000
The Year 2000 issue is the result of computer-controlled systems using two
digits rather than four to define the applicable year. This could result in
system failure or miscalculations causing disruptions in the Company's
operations including, among other things, temporary inability to process
transactions, send invoices or engage in similar normal business activities. To
ensure that its computer-based systems and applications will function properly
beyond 1999, the Company has implemented a Year 2000 program.
The Company's Year 2000 Program (the "Program") consists of the following
phases:
(i) Preliminary Assessment - During this phase the Company will
inventory all existing hardware and software and assess Year 2000
compliance. This assessment is based on documented representations
from vendors and Company personnel and third party consultants for
Company developed software. As of September 30, 1999, approximately
99% of this phase was completed.
(ii) Action Definition - For items identified as requiring an upgrade,
replacement or other action to achieve Year 2000 compliance, a
detailed action plan, including estimated completion times and
corrective steps, is developed. As of September 30, 1999,
approximately 95% of this phase was completed.
(iii) Execution - During this phase the action steps as defined in phase
(ii) are performed. Any additional action items identified are
prioritized and added to the action plan. As of September 30, 1999,
approximately 95% of this phase was completed.
(iv) Operational Compliance - The Company anticipated completing phases
(i) through (iii) by October 31, 1999, prior to any anticipated
impact on its operating systems.
Given that the majority of the Company's telecommunications network
infrastructure and critical back office systems have been purchased since 1997,
Year 2000 compliance was substantially ensured at the time of purchase. The
Company does not anticipate total Year 2000 compliance costs to exceed $4000.
These estimated costs and the date the Company anticipates completion of all
Year 2000 modifications are based on management's estimates, which are derived
utilizing assumptions of future events, including the continued availability of
certain resources, third-party assistance and other factors. However, there can
be no guarantee that these estimates will be achieved and actual results could
differ from those anticipated.
While the Company is working to test its own mission-critical systems for Year
2000 compliance, the Company does not control the systems of its suppliers. The
Company is
<PAGE>
currently seeking assurances from its suppliers and strategic business partners
regarding the Year 2000 readiness of their systems. The Company is currently
planning interoperability tests to ensure that its suppliers' and business
partners' systems will accurately interact with the Company's systems into and
beyond the Year 2000. Notwithstanding these measures, there is some risk that
the interaction of the Company's systems and those of its suppliers or business
partners may be impacted by the Year 2000 date change. In addition, in light of
the vast interconnection and interoperability of telecommunications networks
worldwide, the ability of any telecommunications provider, including the
Company, to provide services to its customers (e.g., to complete calls and
transport data and to bill for such services) is dependent, to some extent, on
the networks and systems of other carriers. To the extent the networks and
systems of those carriers are adversely impacted by the Year 2000 problems, the
ability of the Company to service its customers may be adversely impacted as
well. Any such impact could have a material adverse effect on the Company's
operations.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial conditions. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of third-party suppliers and customers,
the Company is unable to determine at this time whether the consequences of Year
2000 failures will have a material impact on the Company's results of
operations, liquidity or financial condition. The Program is expected to
significantly reduce the Company's level of uncertainty about the Year 2000
problem. The Company believes that, with the completion of the Program as
scheduled, the possibility of significant interruptions of normal operations
should be reduced.
In a recent Securities and Exchange Commission release regarding Year 2000
disclosure, the SEC stated that public companies must disclose the most
reasonably likely worst-case Year 2000 scenario. Although it is not possible to
assess the likelihood of any of the following events, each must be included in a
consideration of worst-case scenarios: widespread failure of electrical, gas and
similar supplies serving the Company; widespread disruption of services provided
by common communications carriers; similar disruption to the means and modes of
transportation for the Company and its employees, contractors, suppliers and
customers; significant disruption to the Company's ability to gain access to,
and remain working in, office buildings and other facilities; the failure of
substantial numbers of the Company's critical computer hardware and software
systems, including both internal business systems and systems controlling
operational facilities such as electrical generation, transmission and
distribution systems; and the failure of outside entities' systems, including
systems related to banking and finance.
If the Company cannot operate effectively after December 31, 1999, the Company
could, among other things, face substantial claims by customers or loss of
revenue due to service interruptions, inability to fulfill contractual
obligations or to bill customers accurately and on a timely basis, and increased
expenses associated with litigation, stabilization of operations following
critical system failures, and the execution of
<PAGE>
contingency plans. The Company could also experience an inability by customers
and others to pay, on a timely basis or at all, obligations owed to the Company.
Under these circumstances, the adverse effects, although not quantifiable at
this time, would be material.
The Company believes that its critical systems should be Year 2000 compliant
before January 1, 2000. Having identified the mission-critical systems of the
Company and their key suppliers, and the associated risks of failure to ensure
that those systems are Year 2000 ready, the Company is in the process of
devising contingency plans which will be implemented in the event any such
systems are not Year 2000 compliant in a timely manner. Additionally, to the
extent the networks and systems of other carriers are adversely impacted by the
Year 2000 problem, the ability of the Company to service its customers may be
adversely impacted.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) As previously reported in the Registrant's Current Report on Form 8-K
dated September 28, 1999 , a change in control of the Registrant occurred on
September 28, 1999 (the "Effective Time") pursuant to the terms and conditions
of an Agreement and Plan of Merger (the "Merger Agreement") dated as of August
20, 1999 between the Registrant, New Millennium Multimedia, Inc., a Georgia
corporation ("NM"), Grace Newco, Inc., a Georgia corporation and wholly-owned
subsidiary of the Registrant ("Merger Sub") and Signal Compression, Inc., a
Nevada corporation ("Signal"). The Merger Agreement provided for the merger (the
"Merger) of Merger Sub with and into NM, with NM as the surviving corporation.
As a result of the Merger, NM became a wholly-owned subsidiary of the Registrant
and the former shareholders of NM received an aggregate of 66,246,933 or 89.70%
of the Registrant's Common Stock. The shares of Common Stock received by the
former shareholders of NM were not registered under the Securities Act of 1933,
as amended (the "Act"), in reliance on the exemption from registration provided
by Section 4(2) of the Act. Such shares are "restricted securities" (as defined
in Rule 144 promulgated under the Act) and accordingly, may not be sold or
transferred by the holders thereof unless such shares are registered under the
Act or are sold or transferred pursuant to an exemption therefrom.
On September 30, 1999, the Board of Directors of the Registrant approved
the issuance of certain warrants (the "Warrants") to purchase an aggregate of
167,292 shares of the Registrant's Common Stock. As part of a private placement
of securities made by NM to certain "accredited investors" (as defined in Rule
501 promulgated under the Act), NM agreed to issue the Warrants to such
investors as, if and when the Merger was completed. The Warrants were issued by
the Registrant in reliance upon the exemption from registration provided by
Section 4(2) of the Act. The terms of the Warrants provide that they may be
exercised at any time following issuance upon payment of the exercise price of
$4.50 per share of Common Stock. The Warrants expire on July 29, 2001.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
<PAGE>
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3(ii) Exhibit 3(ii) - Amendment to By-Laws. A complete copy of the
By-laws, as amended, is filed herewith.
10.1 Master Lease Agreement dated as of May 21, 1999 between New
Millennium Multimedia, Inc. and Ascend Credit Corporation.
10.2 Wholesale Services Agreement dated as of September 21, 1999
between New Millennium Multimedia, Inc. and Qwest
Communications Corportion.
10.3 ICG Authorized Distributor Agreement dated September 28, 1999
by and between ICG Telecom Group, Inc. and New Millennium
Multimedia, Inc.
27 Financial Data Schedule
(b) Reports on Form 8-K
Current Report on Form 8-K dated September 28, 1999 reporting a
change in control of the Registrant and the acquisition of assets.
Current Report on Form 8-K dated August 20, 1999 reporting execution
of the Merger Agreement and a related press release.
Current Report on Form 8-K dated July 10, 1999 reporting changes in
Registrant's certifying accounts, as amended on each of August 17
and September 2, 1999.
<PAGE>
EXHIBIT INDEX
Exhibit Method of Filing
- ------- ----------------
3(ii) Filed herewith electronically
10.1 Filed herewith electronically
10.2 Filed herewith electronically
10.3 Filed herewith electronically
27 Filed herewith electronically
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GRACE DEVELOPMENT, INC.
Date: November 22, 1999 /s/ Richard S. Granville, III
-----------------------------
Richard S. Granville
President and Chief
Operating Officer
Date: November 22, 1999 /s/ Ronald R. McCallum
-----------------------
Ronald R. McCallum
Chief Financial Officer
BYLAWS
OF
GRACE DEVELOPMENT, INC.
(effective as of December 1, 1997)
<PAGE>
TABLE OF CONTENTS
ARTICLE I OFFICES 1
1.1 Business Office 1
1.2 Registered Office. 1
ARTICLE 11 SHARES AND TRANSFER THEREOF 1
2.1 Regulation 1
2.2 Certificates of Shares 1
2.3 Cancellation of Certificates. 1
2.4. Lost, Stolen or Destroyed Certificates 2
2.5 Transfer of Shares 2
2.6 Transfer Agent 2
2.7 Close of Transfer Book and Record Date 2
ARTICLE III SHAREHOLDERS AND MEETINGS THEREOF 3
3.1 Shareholders of Record 3
3.2 Meetings 3
3.3 Annual Meeting 3
3.4 Special Meetings 3
3.5 Notice 4
3.6 Meeting of All Shareholders 4
3.7 Voting Record 4
3.8 Quorum 4
3.9 Manner of Acting 5
3.10 Proxies 5
3.11 Voting of Shares 5
3.12 Voting of Shares by Certain Holders 5
3.13 Voting by Ballot 6
3.14 Cumulative Voting 6
ii
<PAGE>
ARTICLE IV DIRECTORS, POWERS AND MEETINGS 6
4.1 Board of Directors 6
4.2 Regular Meetings 6
4.3 Special Meetings 6
4.4 Notice 6
4.5 Participation by Electronic Means 7
4.6 Quorum and Manner of Acting 7
4.7 Organization 7
4.8 Presumption of Assent 7
4.9 Informal Action By Directors 7
4.10 Vacancies 8
4.11 Compensation 8
4.12 Removal of Directors 8
4.13 Resignations 8
4.14 General Powers 8
ARTICLE V OFFICERS 8
5.1 Number and Term 8
5.2 Powers 9
5.3 Compensation 10
5.4 Delectation of Duties 10
5.5 Bonds 10
5.6 Removal 10
ARTICLE VI FINANCE 10
6.1 Reserve Fund 10
6.2 Banking 10
ARTICLE VII DIVIDENDS 10
ARTICLE VIII CONTRACTS, LOANS AND CHECKS 11
8.1 Execution of Contracts 11
8.2 Loans 11
8.3 Checks 11
iii
<PAGE>
8.4 Deposits 11
ARTICLE IX FISCAL YEAR 11
ARTICLE X CORPORATE SEAL 11
ARTICLE XI AMENDMENTS 12
ARTICLE X11 EXECUTIVE COMMITTEE 12
12.1 Appointment 12
12.2 Authority 12
12.3 Tenure and Qualifications 12
12.4 Meetings 12
12.5 Ouorum 13
12.6 Informal Action by Executive Committee 13
12.7 Vacancies 13
12.8 Resignations and Removal 13
12.9 Procedure 13
CERTIFICATE
iv
<PAGE>
ARTICLE I
OFFICES
1.1 Business Office. The principal office and place of business of the
corporation shall be established from time to time by the Board of Directors.
Other offices and places of business may be established from time to time by
resolution of the Board of Directors or as the business of the corporation may
require.
1.2 Registered Office. The registered office of the corporation is
currently its principal office, but need not be identical with the principal
office of the corporation, and the address of the registered office may be
changed from time to time by the Board of Directors.
ARTICLE 11
SHARES AND TRANSFER THEREOF
2.1 Regulation. The Board of Directors may make such rules and regulations
as it may deem appropriate concerning the issuance transfer and registration of
certificates for shares of the corporation, including the appointment of
transfer agents and registrars.
2.2 Certificates of Shares. Certificates representing shares of the
corporation shall be respectively numbered serially for each class of shares, or
series thereof, as they are issued, shall be impressed with the corporate seal
or a facsimile thereof and shall be signed by the Chairman or Vice Chairman of
the Board of Directors or by the President or a Vice-President and by the
Treasurer or an Assistant Treasurer or by the Secretary or an Assistant
Secretary; provided that any or all of the signatures may be facsimiles if the
certificate is countersigned by a transfer agent, or registered by a registrar,
other than the corporation itself or its employee. Each certificate shall state
the name of the corporation, the corporation's state of incorporation, the name
of the person to whom issued, the date of issue, the class (or series of any
class), the number of shares represented thereby and the par value of the shares
represented thereby or a statement that such shares are without par value. A
statement of the designations, preferences, qualifications, limitations,
restrictions and special or relative rights of the shares of each class shall be
set forth in full or summarized on the face or back of the certificates which
the corporation shall issue, or in lieu thereof, the certificate may set forth
that such a statement or summary will be furnished to any shareholder upon
request without charge. Each certificate shall be otherwise in such form as may
be prescribed by the Board of Directors and as shall conform to the rules of any
stock exchange on which the shares may be listed. The corporation shall not
issue certificates representing fractional shares and shall not be obligated to
make any transfers creating a fractional interest in a share of stock. The
corporation may issue scrip in lieu of any fractional shares, such scrip to have
terms and conditions specified by the Board of Directors.
2.3 Cancellation of Certificates. All Certificates surrendered to the
corporation for transfer shall be cancelled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of shares
shall have been surrendered and cancelled, except as herein provided with
respect to lost, stolen or destroyed certificates.
1
<PAGE>
2.4 Lost, Stolen or Destroyed Certificates Any shareholder claiming that
his certificate for shares is lost, stolen or destroyed may make an affidavit or
affirmation of the fact and lodge the same with the Secretary of the
corporation, accompanied by a signed application for a new certificate.
Thereupon, and upon the giving of a satisfactory bond of indemnity to the
corporation not exceeding an amount double the value of the shares as
represented by such certificate (the necessity for such bond and the amount
required to be determined by the President and Treasurer of the corporation), a
new certificate may be issued of the same tenor and representing the same
number, class and series as were represented by the certificate alleged to be
lost, stolen or destroyed.
2.5 Transfer of Shares Subject to the terms of any shareholder agreement
relating to the transfer of shares or other transfer restrictions contained in
the Certificate of Incorporation or authorized therein, shares of the
corporation shall be transferable on the books of the corporation by the holder
thereof in person or by his duly authorized attorney, upon the surrender and
cancellation of a certificate or certificates for a like number of shares. Upon
presentation and surrender of a certificate for shares properly endorsed and
payment of all taxes therefor, the transferee shall be entitled to a new
certificate or certificates in lieu thereof. As against the corporation, a
transfer of shares can be made only on the books of the corporation and in the
manner hereinabove provided, and the corporation shall be entitled to treat the
holder of record of any share as the owner thereof and shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have express or other notice
thereof, save as expressly provided by the statutes of the state of the
corporation's incorporation.
2.6 Transfer Agent. Unless otherwise specified by the Board of Directors
by resolution, the Secretary of the corporation shall act as transfer agent of
the certificates representing the shares of stock of the corporation. He shall
maintain a stock transfer book, the stubs in which shall set forth among other
things, the names and addresses of the holders of all issued shares of the
corporation, the number of shares held by each, the certificate numbers
representing such shares, the date of issue of the certificates representing
such shares, and whether or not such shares originate from original issue or
from transfer. Subject to Section 3.7, the names and addresses of the
shareholders as they appear on the stubs of the stock transfer book shall be
conclusive evidence as to who are the shareholders of record and as such
entitled to receive notice of the meetings of shareholders; to vote at such
meetings; to examine the list of the shareholders entitled to vote at meetings;
to receive dividends; and to own, enjoy and exercise any other property or
rights deriving from such shares against the corporation. Each shareholder shall
be responsible for notifying the Secretary in writing of any change in his name
or address and failure so to do will relieve the corporation, its directors,
officers and agents, from liability for failure to direct notices or other
documents, or pay over or transfer dividends or other property or rights, to a
name or address other than the name and address appearing on the stub of the
stock transfer book.
2.7 Close of Transfer Book and Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders, or
any
2
<PAGE>
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case, fifty days. If the stock transfer
books shall be closed for the purpose of determining shareholders entitled to
notice of, or to vote at a meeting of shareholders, such books shall be closed
for at least ten days immediately preceding such meeting. In lieu of closing the
stock transfer books, the Board of Directors may fix in advance a date as the
record date for any such determination of shareholders, such date in any case to
be not more than fifty days and, in case of a meeting of shareholders, not less
than ten days prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
ARTICLE III
SHAREHOLDERS AND MEETINGS THEREOF
3.1 Shareholders of Record. Only shareholders of record on the books of
the corporation shall be entitled to be treated by the corporation as holders in
fact of the shares standing in their respective names, and the corporation shall
not be bound to recognize any equitable or other claim to, or interest in, any
shares on the part of any other person, firm or corporation, whether or not it
shall have express or other notice thereof, except as expressly provided by the
laws of the state of the corporation's incorporation.
3.2 Meetings. Meetings of shareholders shall be held at the principal
office of the corporation, or at such other place as specified from time to time
by the Board of Directors. If the Board of Directors shall specify another
location such change in location shall be recorded on the notice calling such
meeting.
3.3 Annual Meeting. In absence of a resolution of the Board of Directors
providing otherwise, the annual meeting of shareholders of the corporation for
the election of directors, and for the transaction of such other business as may
properly come before the meeting, shall be held at such time as may be
determined by Board of Directors by resolution in conformance with the laws of
the state of the corporation's incorporation. If the election of Directors shall
not be held on the day so designated for any annual meeting of the shareholders,
the Board of Directors shall cause the election to be held at a special meeting
of the shareholders as soon thereafter as may be convenient.
3.4 Special Meetings. Special meetings of shareholders, for any purpose of
purposes, unless otherwise prescribed by statute, may be called by the
President, the Board of
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Directors, the holders of not less than one-tenth of all the shares entitled to
vote at the meeting, or legal counsel of the corporation as last designated by
resolution of the Board of Directors.
3.5 Notice. Written notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered unless otherwise prescribed by statute not less
than ten days nor more than sixty days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the Secretary,
or the officer or person calling the meeting to each shareholder of record
entitled to vote at such meeting. Any shareholder may waive notice of any
meeting. Notice to shareholders of record, if mailed, shall be deemed given as
to any shareholder of record, when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid, but if three successive
letters mailed to the last-known address of any shareholder of record are
returned as undeliverable, no further notices to such shareholder shall be
necessary, until another address for such shareholder is made known to the
corporation.
3.6 Meeting of All Shareholders. If all of the shareholders shall meet at
any time and place, and consent to the holding of a meeting at such time and
place, such meeting shall be valid without call or notice, and at such meeting
any corporate action may be taken.
3.7 Voting Record. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten days
before such meeting of shareholders, a complete record of the shareholders
entitled to vote at each meeting of shareholders or any adjournment thereof,
arranged in alphabetical order, with the address and the number of shares held
by each. The record, for a period of ten days prior to such meeting, shall be
kept on file either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held, whether within or
without the state of the corporation's incorporation, and shall be subject to
inspection by any shareholder for any purpose germane to the meeting at any time
during usual business hours. Such record shall be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
shareholder for any purpose germane to the meeting during the whole time of the
meeting for the purposes thereof. The original stock transfer books shall be
prima facie evidence as to who are the shareholders entitled to examine the
record or transfer books or to vote at any meeting of shareholders.
3.8 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person by proxy, shall constitute a quorum at
any meeting of shareholders, except as otherwise provided by the corporate laws
of the corporation's state of incorporation and its Certificate of
Incorporation. In the absence of a quorum at any such meeting, a majority of the
shares so represented may adjourn the meeting from time to time. When a meeting
is adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the corporation may transact any
business which might
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have been transacted at the original meeting. If the adjournment is for more
than thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
3.9 Manner of Acting. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders, unless the vote of a
greater proportion or number or voting by classes is otherwise required by
statute or by the Certificate of Incorporation or these Bylaws.
3.10 Proxies. At all meetings of shareholders, a shareholder may vote in
person or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
three years from the date of its execution, unless otherwise provided in the
proxy.
3.11 Voting of Shares. Unless otherwise provided by these Bylaws or the
Certificate of Incorporation, each outstanding share entitled to vote shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders, and each fractional share shall be entitled to a corresponding
fractional vote on each such matter.
3.12 Voting of Shares by Certain Holders. Shares standing in the name of
another corporation may be voted by such officer, agent or proxy as the bylaws
of such corporation may prescribe, or, in the absence of such provision, as the
Board of Directors of such other corporation may determine. Shares standing in
the name of a deceased person, a minor ward or an incompetent person, may be
voted by his administrator, executor, court appointed guardian or conservator,
either in person or by proxy without a transfer of such shares into the name of
such administrator, executor, court appointed guardian or conservator. Shares
held by a trustee may be voted by him, either in person or by proxy. Shares
standing in the name of a receiver may be voted by such receiver, and shares
held by or under the control of a receiver may be voted by such receiver without
the transfer thereof into his name if authority so to do be contained in an
appropriate order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither shares of its own stock belonging to this corporation, nor shares of its
own stock held by it in a fiduciary capacity, nor shares of its own stock held
by another corporation if the majority of shares entitled to vote for the
election of directors of such corporation is held by this corporation may be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time. Redeemable
shares which have been called for redemption shall not be entitled to vote on
any matter and shall not be deemed outstanding shares on and after the date on
which written notice of redemption has been mailed to
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shareholders and a sum sufficient to redeem such shares has been irrevocably
deposited or set aside to pay the redemption price to the holders of the shares
upon surrender of certificates therefor.
3.13 Voting by Ballot. Voting on any question or in any election may be by
voice vote unless the presiding officer shall order or any shareholder shall
demand that voting be by ballot.
3.14 Cumulative Voting. No shareholder shall be permitted to cumulate his
votes by giving one candidate as many votes as the number of such directors
multiplied by the number of his shares shall equal, or by distributing such
votes on the same principal among any number of candidates.
ARTICLE IV
DIRECTORS, POWERS AND MEETINGS
4.1 Board of Directors. The business and affairs of "the Corporation shall
be managed by a Board of Directors. The number of directors of the Corporation
shall not be less than one, as determined from time to time by resolution of the
Board of Directors or shareholders. Each director shall hold office until the
next annual meeting at which the directors are elected or until his earlier
death, resignation, or removal. Directors shall be natural persons of at least
18 years of age, but need not be residents of Colorado or shareholders of the
Corporation
4.2 Regular Meetings. A regular, annual meeting of the Board of Directors
shall be held at the same place as, and immediately after, the annual meeting of
shareholders, and no notice shall be required in connection therewith. The
annual meeting of the Board of Directors shall be for the purpose of electing
officers and the transaction of such other business as may come before the
meeting. The Board of Directors may provide, by resolution, the time and place,
either within or without the state of the corporation's incorporation, for the
holding of additional regular meetings without other notice than such
resolution.
4.3 Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the President or any two directors. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place whatsoever as the place for holding any special meeting of the Board
of Directors called by them.
4.4 Notice. Written notice of any special meeting of directors shall be
given as follows:
(a) By mail to each director at his business address at least three
days prior to the meeting; or
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(b) By personal delivery or telegram at least twenty-four hours
prior to the meeting to the business address of each director, or in the event
such notice is given on a Saturday, Sunday or holiday, to the residence address
of each director. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, so addressed, with postage thereon prepaid.
If notice be given by telegram, such notice shall be deemed to be delivered when
the telegram is delivered to the telegraph company. Any director may waiver
notice of any meeting. The attendance of a director at any meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because The meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice or waiver of notice of such
meeting.
4.5 Participation by Electronic Means Except as may be otherwise provided
by the Certificate of Incorporation or Bylaws, members of the Board of Directors
or any committee designated by such Board may participate in a meeting of the
Board or committee by means of conference telephone or similar communications
equipment by which all persons participating in the meeting can hear each other
at the same time. Such participation shall constitute presence in person at the
meeting.
4.6 Quorum and Manner of Acting. A quorum at all meetings of the Board of
Directors shall consist of a majority of the number of directors then holding
office, but a smaller number may adjourn from time to time without further
notice, until a quorum is secured. The act of the majority of the directors
present at the meeting at which a quorum is present shall be the act of the
Board of Directors, unless the act of a greater number is required by the laws
of the state of the corporation's incorporation or by the Certificate of
Incorporation or these Bylaws.
4.7 Organization. The Board of Directors shall elect a chairman to preside
at each meeting of the Board of Directors. The Board of Directors shall elect a
Secretary to record the discussions and resolutions of each meeting.
4.8 Presumption of Assent. A director of the corporation who is present at
a meeting of the Board of Directors at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
4.9 Informal Action By Directors. Any action required or permitted to be
taken by the Board of Directors, or a committee thereof, at a meeting may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all the directors or all the committee members
entitled to vote with respect to the subject matter thereof.
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4.10 Vacancies. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board of Directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office,
and shall hold such office until his successor is duly elected and shall
qualify. Any directorship to be filled by reason of an increase in the number of
directors shall be filled by the affirmative vote of a majority of the directors
then in office or by an election at an annual meeting, or at a special meeting
of shareholders called for that purpose. A director chosen to fill a position
resulting from an increase in the number of directors shall hold office only
until the next election of directors by the shareholders.
4.11 Compensation. By resolution of the Board of Directors and
irrespective of any personal interest of any of the members, each director may
be paid his expenses, if any, of attendance at each meeting of the Board of
Directors, and may be paid a stated salary as director or a fixed sum for
attendance at each meeting of the Board of Directors or both. No such payment
shall preclude any director from serving the corporation in any other capacity
and receiving compensation therefor.
4.12 Removal of Directors. Any director or directors of the corporation
may be removed at any time, with or without cause, in the manner provided by the
laws of the state of the corporation's incorporation.
4.13 Resignations. A director of the corporation may resign any time by
giving written notice to the Board of Directors, President or Secretary of the
corporation. The resignation shall take effect upon the date of receipt of such
notice, or at any later period of time specified therein. The acceptance of such
resignation shall not be necessary to make it effective, unless the resignation
requires it to be effective as such.
4.14 General Powers. The business and affairs of the corporation shall be
managed by the Board of Directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation or by these Bylaws directed or required to be
exercised or done by the shareholders. The director shall pass upon any and all
bills or claims of officers for salaries or other compensation and, if deemed
advisable, shall contract with officers, employees, directors, attorneys,
accountants, and other persons to render services to the corporation.
ARTICLE V
OFFICERS
5.1 Number and Term. The Corporation shall have at least one officer who
shall hold the office of president. The Corporation may have such other officers
as the Board of Directors shall determine, including a secretary, treasurer, one
or more vice presidents, or any other officer. Such officers shall be elected by
the Board of Directors. Unless removed in accordance with the procedures
established by the law in these Bylaws, said officers shall serve until the next
succeeding annual meeting of the Board of Directors. Any two or more offices may
be held by the same person. If there shall be only one officer, such officer
shall
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perform the duties of the treasurer and secretary. If there are two or more
officers, but no such officer holds the office of secretary or treasurer, the
Board of Directors or president shall designate which officer shall perform the
duties of secretary or treasurer. The officers of the Corporation shall be
natural persons at least 18 years of age or older.
5.2 Powers. The officers of the corporation shall exercise and perform the
respective powers, duties and functions as are stated below, and as may be
assigned to them by the Board of Directors.
a) The President shall be the chief executive officer of the
corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
corporation. He shall preside, when present, at all meeting of the shareholders
and of the Board of Directors unless a different chairman of such meetings is
elected by the Board of Directors.
(b) In the absence or disability of the President, the
Vice-President or Vice-Presidents, if any, in order of their rank as fixed by
the Board of Directors, and if not ranked, the Vice-Presidents in the order
designated by the Board of Directors, shall perform all the duties of the
President, and when so acting shall have all the powers of, and be subject to
all the restrictions on the President. Each Vice-President shall have such other
powers and perform such other duties as may from time to time be assigned to him
by the President or the Board of Directors.
(c) The Secretary shall keep accurate minutes of all meetings of the
shareholders and the Board of Directors unless a different Secretary of such
meetings is elected by the Board of Directors. He shall keep, or cause to be
kept a record of the shareholders of the corporation and shall be responsible
for the giving of notice of meetings of the shareholders or the Board of
Directors. The Secretary shall be custodian of the records and of the seal of
the corporation and shall attest to the affixing of the seal of the corporation
when so authorized. The Secretary or Assistant Secretary shall sign all stock
certificates. The Secretary shall perform all duties commonly incident to his
office and such other duties as may from time to time be assigned to him by the
President or the Board of Directors.
(d) An Assistant Secretary may, at the request of the Secretary, or
in the absence or disability of the Secretary, perform all of the duties of the
Secretary. He shall perform, such other duties as may be assigned to him by the
President or by the Secretary.
(e) The Treasurer, subject to the order of the Board of Directors,
shall have the care and custody of the money, funds, valuable papers and
documents of the corporation. He shall keep accurate books of account of the
corporation's transactions, which shall be the property of the corporation, and
shall render financial reports and statements of condition of the corporation
when so requested by the Board of Directors or President. The Treasurer shall
perform all duties commonly incident to his office and such other duties as may
from time to time be assigned to him by the President or the Board of Directors.
In the absence or
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disability of the President and Vice-President, or Vice-Presidents, the
Treasurer shall perform the duties of the President.
(f) An Assistant Treasurer may, at the request of the Treasurer, or
in the absence or disability of the Treasurer, perform all of the duties of the
Treasurer. He shall perform such other duties as may be assigned to him by the
President or by the Treasurer.
5.3 Compensation. All officers of the corporation may receive salaries or
other compensation if so ordered and fixed by the Board of Directors. The Board
of Directors shall have authority to fix salaries in advance for stated periods
or render the same retroactive as the Board may deem advisable.
5.4 Delectation of Duties. In the event of absence or inability of any
officer to act, the Board of Directors may delegate the powers or duties of such
officer to any other officers, director or person whom it may select.
5.5 Bonds. If the Board of Directors by resolution shall so require, any
officer or agent of the corporation shall give bond to the corporation in such
amount and with such surety as the Board of Directors may deem sufficient,
conditioned upon the faithful performance of their respective duties and
offices.
5.6 Removal. Any officer or agent may be removed by the Board of Directors
or by the executive committee, if any, whenever in its judgment the best
interest of the corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not, of itself, create
contract rights.
ARTICLE VI
FINANCE
6.1 Reserve Fund. The Board of Directors, in its uncontrolled discretion,
may set aside from time to time, out of the net profits or earned surplus of the
corporation, such sum or sums as it deems expedient as a reserve fund to meet
contingencies, for equalizing dividends, for maintaining any property of the
corporation, and for any other purpose.
6.2 Banking. The moneys of the corporation shall be deposited in the name
of the corporation in such bank or banks or trust company or trust companies, as
the Board of Directors shall designate, and may be drawn out only on checks
signed in the name of the corporation by such person or persons as the Board of
Directors, by appropriate resolution, may direct. Notes and commercial paper,
when authorized by the Board, shall be signed in the name of the corporation by
such officer or officers or agent or agents as shall thereunto be authorized
from time to time.
ARTICLE VII
DIVIDENDS
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Subject to the provisions of the Certificate of Incorporation and the laws
of the state of the corporation's incorporation, the Board of Directors may
declare dividends whenever, and in such amounts, as in the Board's opinion the
condition of the affairs of the corporation shall render such advisable.
ARTICLE VIII
CONTRACTS, LOANS AND CHECKS
8.1 Execution of Contracts. Except as otherwise provided by the statute or
by these Bylaws, the Board of Directors may authorize any officer or agent of
the corporation to enter into any contract, or execute and deliver any
instrument in the name of, and on behalf of the corporation. Such authority may
be general or confined to specific instances and, unless so authorized, no
officer, agent or employee shall have any power to bind the corporation for any
purpose, except as may be necessary to enable the corporation to carry on its
normal and ordinary course of business.
8.2 Loans. No loans shall be contracted on behalf of the corporation and
no negotiable paper shall be issued in its name unless authorized by the Board
of Directors. When so authorized, any officer or agent of the corporation may
effect loans and advances at any time for the corporation from any bank, trust
company or institution, firm, corporation or individual. An agent so authorized
may make and deliver promissory notes or other evidence of indebtedness of the
corporation and may mortgage and pledge, hypothecate or transfer any real or
personal property held by the corporation as security for the payment of such
loans. Such authority, in the Board of Directors' discretion, may be general or
confined to specific instances.
8.3 Checks. Checks, notes, drafts and demands for money or other evidence
of indebtedness issued in the name of the corporation shall he signed by such
person or persons as designated by the Board of Directors and in the manner the
Board of Directors prescribes.
8.4 Deposits. All funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall be the year adopted by resolution
of the Board of Directors.
ARTICLE X
CORPORATE SEAL
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The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words: "CORPORATE SEAL".
ARTICLE XI AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by a majority of the Directors present at any meeting of the Board of
Directors of the corporation at which a quorum is present.
ARTICLE X11
EXECUTIVE COMMITTEE
12.1 Appointment. The Board of Directors by resolution adopted by a
majority of the full Board, may designate two or more of its members to
constitute an executive committee. The designation of such committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
12.2 Authority. The executive committee, when the Board of Directors is
not in session shall have and may exercise all of the authority of the Board of
Directors except to the extent, if any, that such authority shall be limited by
the resolution appointing the executive committee and except also that the
executive committee shall not have the authority of the Board of Directors in
reference to amending the Certificate of Incorporation, adopting a plan of
merger or consolidation, recommending to the shareholders the sale, lease or
other disposition of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereof, or amending the Bylaws of the corporation.
12.3 Tenure and Qualifications. Each member of executive committee shall
hold office until the next regular annual meeting of the Board of Directors
following his designation.
12.4 Meetings. Regular meetings of the executive committee may be held
without notice at such time and places as the executive committee may fix from
time to time by resolution. Special meetings of the executive committee may be
called by any member thereof upon not less than one day's notice stating the
place, date and hour of the meeting, which notice may be written or oral and if
mailed, shall be deemed to be delivered when deposited in the United States mail
addressed to the member of the executive committee at his business address. Any
member of the executive committee may waive notice of any meeting and no notice
of any meeting need be give to any member thereof who attends in person. The
notice of a meeting of the executive committee need not state the business
proposed to be transacted at the meeting.
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12.5 Ouorum. A majority of the members of the executive committee shall
constitute a quorum for the transaction of business at any meeting thereof, and
action of the executive committee must be authorized by the affirmative vote of
a majority of the members present at a meeting at which a quorum is present.
12.6 Informal Action by Executive Committee. Any action required or
permitted to be taken by the executive committee at a meeting may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the members of the committee entitled to vote with
respect to the subject matter thereof.
12.7 Vacancies. Any vacancy in the executive committee may be filled by a
resolution adopted by a majority of the full Board of Directors.
12.8 Resignations and Removal. Any member of the executive committee may
be removed at any time with or without cause by resolution adopted by a majority
of the full Board of Directors. Any member of the Executive committee may resign
from the executive committee at any time by giving written notice to the
President or Secretary of the corporation, and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
12.9 Procedure. The executive committee shall elect a presiding officer
form its members and may fix its own rules of procedure which shall not be
inconsistent with these Bylaws. It shall keep regular minutes of its proceedings
and report the same to the Board of Directors for its information at the meeting
thereof held next after the proceedings shall have been taken.
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MASTER LEASE AGREEMENT
NO. A
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This Master Lease Agreement (the "MLA") is entered into by and between Ascend
Credit Corporation ("Lessor"), having its principal place of business at 1701
Harbor Bay Parkway, Alameda, CA 94502 and New Millenium Multimedia, Inc.
("Lessee"), having its principal place of business at 6131 Oakbrook Parkway,
Norcross, GA 30093.
1. LEASE AGREEMENT. Lessor agrees to lease to Lessee, and Lessee agrees to
lease from Lessor, the equipment (the "Equipment") referenced in each of the
Schedules (the "Schedule" or "Schedules") which incorporate this MLA therein
(the "Lease").
2. TERM. Each Lease shall be effective upon the execution of the MLA and
the related Schedule by the Lessor and the Lessee. The lease term (the "Lease
Term") of the Equipment referenced in each of the Schedules shall commence on
the rent commencement date specified in each Schedule (the "Rent Commencement
Date"). The Rent Commencement Date shall be the date 30 days from the date that
the Equipment is shipped by the supplier (the "Ship Date") as evidenced by a
shipping document provided by the supplier related to the Equipment (the
"Shipping Document"). Lessor will provide Lessee with a copy of the Shipping
Document evidencing the Ship Date.
3. RENT. The rent (the "Rent") for the Equipment referenced in any
Schedule shall be as stated in such Schedule and shall be payable according to
the provisions of such Schedule. If any amount payable under a Schedule is not
received by Lessor within 10 days of the due date, Lessee agrees to pay an
Overdue Charge, as defined herein, with respect to such amount.
4. SELECTION AND ASSIGNMENT. Lessee will select the type, quantity and
Supplier of each item of Equipment designated in a Schedule, and Lessee hereby
assigns to Lessor all of its right, title and interest in and to the related
equipment purchase agreement, a copy of which has been provided to Lessor by
Lessee (the "Agreement"). The Agreement may be amended with the consent of
Lessor. Any such assignment with respect to Equipment shall become binding upon
Lessor when Lessor and Lessee have entered into a Lease with respect to such
Equipment and as of the Rent Commencement Date referenced in such Lease. Upon
such an assignment becoming effective, Lessor shall be obligated to purchase the
Equipment from the Supplier in accordance with the provisions of the Agreement.
It is expressly agreed that Lessee shall at all times remain liable to Supplier
under the Agreement to perform all duties and obligations of Lessee thereunder,
except for the obligation to purchase the Equipment to the extent expressly
assumed by the Lessor hereunder, and that the Lessee shall be entitled to the
same rights of the purchaser of the Equipment under the Agreement, except such
right, title and interest in the Equipment retained exclusively by the Lessor as
Owner of the Equipment. Lessor shall have no liability for a Supplier's failure
to meet the terms and conditions of the Agreement.
5. DELIVERY AND INSTALLATION. Lessee shall be responsible for payment of
all transportation, packing, installation, testing and other charges associated
with the delivery, installation or use of any Equipment which are not included
in the Agreement with respect to such Equipment.
6. WARRANTIES. LESSOR MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE EQUIPMENT, ITS MERCHANTABILITY,
OR ITS FITNESS FOR A PARTICULAR PURPOSE. LESSOR SHALL NOT BE LIABLE TO LESSEE OR
ANY OTHER PERSON FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES ARISING FROM LESSEE'S USE OF THE EQUIPMENT, OR FOR DAMAGES BASED ON
STRICT OR ABSOLUTE TORT LIABILITY OR LESSOR'S PASSIVE NEGLIGENCE. LESSEE HEREBY
ACKNOWLEDGES THAT ANY MANUFACTURER'S OR SUPPLIER'S WARRANTIES WITH RESPECT TO
THE EQUIPMENT ARE FOR THE BENEFIT OF BOTH LESSOR AND LESSEE. NOTWITHSTANDING THE
FOREGOING, LESSEE'S OBLIGATIONS TO PAY EACH RENT PAYMENT DUE, OR OTHERWISE
PERFORM ITS OBLIGATIONS, UNDER THIS LEASE ARE ABSOLUTE AND UNCONDITIONAL.
7. TITLE TO AND LOCATION OF EQUIPMENT. Lessor shall retain title to each
item of Equipment. Lessee, at its expense, shall protect Lessor's title and keep
the Equipment free from all claims, liens, encumbrances and legal processes. The
Equipment is personal property and is not to be regarded as part of the real
estate on which it may be situated. If requested by Lessor, Lessee will, at
Lessee's expense, furnish a landlord or mortgagee waiver with respect to the
Equipment. The Equipment shall not be removed from the location specified in the
Schedule without the written consent of Lessor. Lessee shall, upon Lessor's
request, affix and maintain plates, tags or other identifying labels, showing
Lessor's ownership of the Equipment in a prominent position on the Equipment.
8. USE OF EQUIPMENT, INSPECTION AND REPORTS. The use of the Equipment by
Lessee shall conform with all applicable laws, insurance policies, and
warranties of the manufacturer or Supplier of the Equipment. Lessor shall have
the right to inspect the Equipment at the premises where the Equipment is
located. Lessee shall notify Lessor promptly of any claims, liens, encumbrances
or legal processes with respect to the Equipment.
9. FURTHER ASSURANCES. Lessee shall execute and deliver to Lessor such
instruments as Lessor deems necessary for the confirmation of this Lease and
Lessor's rights hereunder. Lessor is authorized to file financing statements
signed only by the Lessor in accordance with the Uniform Commercial Code, or
financing statements signed by Lessor as Lessee's attorney-in-fact. Any such
filing with respect to the Equipment leased pursuant to a true lease shall not
be deemed evidence of any intent to create a security interest under the Uniform
Commercial Code.
10. MAINTENANCE AND REPAIRS. Lessee shall, at its expense, maintain each
item of Equipment in good condition, normal wear and tear excepted. Lessee shall
not make any addition, alteration, or attachment to the Equipment without
Lessor's prior written consent. Lessee shall make no repair, addition,
alteration or attachment to the Equipment which interferes with the normal
operation or maintenance thereof, creates a safety hazard, or might result in
the creation of a mechanic's or materialman's lien.
11. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee fails to
perform any of its obligations under a Lease, Lessor may perform any act or make
any payment which Lessor deems necessary for the maintenance and preservation of
the Equipment subject thereto and Lessor's title thereto. All sums so paid by
Lessor (together with all related Overdue Charges), and reasonable attorneys'
fees incurred by Lessor in connection therewith, shall be additional rent
payable to Lessor on demand. The performance of any such act or the making of
any such payment by Lessor shall not be deemed a waiver or release of any
obligation or default on the part of Lessee.
12. INDEMNIFICATION. Lessee assumes liability for, and hereby agrees to
indemnify, protect and hold harmless, Lessor, and its agents, employees,
officers, directors, partners and successors and assigns, from and against all
liabilities, obligations, losses, damages, injuries, claims, demands, penalties,
actions, costs and expenses, including, without limitation, reasonable
attorneys' fees, of whatever kind and nature, in contract or in tort, arising
out of the use, condition, operation, ownership, selection, delivery, leasing or
return of any item of Equipment, regardless of when, how and by whom operated,
or any failure on the part of Lessee to perform or comply with any of its
obligations under a Lease, excluding, however, any of the foregoing which result
from the gross negligence or willful misconduct of Lessor. Such indemnities and
assumptions of liabilities and obligations shall continue in full force and
effect, notwithstanding the expiration or other termination of such Lease.
Nothing contained in any Lease shall authorize Lessee to operate the Equipment
subject thereto so as to incur or impose any liability on, or obligation for or
on behalf of, Lessor.
13. NO OFF-SET. All Rents shall be paid by Lessee irrespective of any
off-set, counterclaim, recoupment, defense or other right which Lessee may have
against Lessor, the manufacturer or Supplier of the Equipment or any other
party.
14. ASSIGNMENT BY LESSEE. Lessee shall not, without Lessor's prior written
consent, (a) sell, assign, transfer, pledge, hypothecate, or otherwise dispose
of, encumber or suffer to exist a lien upon or against any of the Equipment or
any Lease or any interest therein, by operation of law or otherwise, or (b)
sublease or lend any of the Equipment or permit any of the Equipment to be used
by anyone other than Lessee.
15. ASSIGNMENT BY LESSOR. Lessor may assign, sell or encumber its interest
in any of the Equipment and any Lease. Upon Lessor's written consent, Lessee
shall pay directly to the assignee of any such interest all Rent and other sums
due under an assigned Lease. THE RIGHTS OF ANY SUCH ASSIGNEE SHALL NOT BE
SUBJECT TO ANY ABATEMENT, DEDUCTION, OFF-SET, COUNTERCLAIM, RECOUPMENT, DEFENSE
OR OTHER RIGHT WHICH LESSEE MAY HAVE AGAINST LESSOR OR ANY OTHER PERSON OR
ENTITY. Notwithstanding the foregoing, any such assignment (a) shall be subject
to Lessee's right to possess and use the Equipment subject to a Lease so long as
Lessee is not in default thereunder, and (b) shall not release any of Lessor's
obligations hereunder.
16. RETURN OF EQUIPMENT. Unless Lessee has exercised its option, if any,
to renew a lease or purchase the Equipment subject thereto, upon expiration of
the then current Lease Term of such Lease, Lessee shall, at its expense, cause
such Equipment to be removed, disassembled, and placed in the same condition as
when delivered to Lessee (reasonable wear and tear excepted) and properly crate
such Equipment for shipment and deliver it to a common carrier designated by
Lessor. Lessee will ship such Equipment F.O.B. destination, to any address
specified in writing by Lessor within the continental United States. All
additions, attachments, alterations and repairs made or placed upon any of the
Equipment shall become part of such Equipment and shall be the property of
Lessor.
- --------------------------------------------------------------------------------
<PAGE>
17. EVENTS OF DEFAULT: The occurrence of any of the following shall be
deemed to constitute an Event of Default hereunder. (a) Lessee fails to pay
Rent, any other amount that it is obligated to pay under a Lease or any other
amount it is obligated to pay to Lessor and does not cure such failure within 10
days of such amount becoming due; (b) Lessee fails to perform or observe any
obligation or covenant to be performed or observed by Lessee hereunder or under
any Schedule, including, without limitation, supplying all requested
documentation, and does not cure such failure within 10 days of receiving
written notice thereof from Lessor; (c) any warranty, representation or
statement made or furnished to Lessor by or on behalf of Lessee is proven to
have been false in any material respect when made or furnished; (d) the
attempted sale or encumbrance by Lessee of the Equipment, or the making of any
levy, seizure or attachment thereof or thereon; or (e) the dissolution,
termination of existence, discontinuance of business, insolvency or appointment
of a receiver of any part of the property of Lessee, assignment by Lessee for
the benefit of creditors, the commencement of proceedings under any bankruptcy,
reorganization or arrangement laws by or against Lessee, or any other act of
bankruptcy on the part of Lessee.
18. REMEDIES OF LESSOR. At any time after the occurrence of any Event of
Default, Lessor may exercise one or more of the following remedies: (a) Lessor
may terminate any or all of the Leases with respect to any or all items of
Equipment subject thereto; (b) Lessor may recover form Lessee all Rent and other
amounts then due and to become due under any or all of the Leases; (c) Lessor
may take possession of any or all items of Equipment, wherever the same may be
located, without demand or notice, without any court order or other process of
law and without liability to Lessee for any damages occasioned by such taking of
possession, and any such taking possession shall not constitute a termination of
any Lease; (d) Lessor may demand that Lessee return any or all items of
Equipment to Lessor in accordance with Paragraph 16; and (e) Lessor may pursue
any other remedy available at law or in equity, including, without limitation,
seeking damages, specific performance or an injunction.
Upon repossession or return of any item of the Equipment, Lessor shall
sell, lease or otherwise dispose of such item in a commercially reasonable
manner, with or without notice and on public or private bid, and apply the net
proceeds thereof (after deducting the estimated fair market value of such item
at the expiration of the term of the applicable Lease, in the case of a sale, or
the rents due for any period beyond the scheduled expiration of such Lease, in
the case of any subsequent lease of such item, and all expenses, including,
without limitation, reasonable attorneys' fees, incurred in connection
therewith) towards the Rent and other amounts due under such Lease, with any
excess net proceeds to be retained by lessor.
Each of the remedies under this Lease shall be cumulative, and not
exclusive, and in addition to any other remedy referred to herein or otherwise
available to Lessor in law or in equity. Any repossession or subsequent sale or
lease by Lessor of any item of Equipment shall not bar an action for a
deficiency as herein provided, and the bringing of an action or the entry of
judgment against Lessee shall not bar Lessor's right to repossess any or all
items of Equipment.
19. CREDIT AND FINANCIAL INFORMATION. Within 90 days of the close of each
of Lessee's fiscal years, Lessee shall deliver to Lessor a copy of Lessee's
annual report, if any, and an audited balance sheet and profit and loss
statement with respect to such year. Within 30 days of the close of each month,
Lessee shall deliver to Lessor a copy of Lessee's balance sheet and profit and
loss statement with respect to such month, certified by an officer of Lessee.
20. INSURANCE. As of the date that the risk of loss for the Equipment
passes from the Superior to the Lessee under the terms of the Agreement, Lessee
shall obtain and maintain through the end of the Lease Term of each Lease (and
any renewal or extension thereof), at its own expense, property damage and
personal liability insurance and insurance against loss or damage to the
Equipment, including, without limitation, loss by fire (with extended coverage),
theft and such other risks of loss as are customarily insured against with
respect to the types of Equipment leased hereunder and by the types of
businesses in which such Equipment will be used by Lessee. Such insurance shall
be in such amounts, with such deductibles, in such form and with such insurers
as shall be satisfactory to Lessor, provided, however, that the amount of the
insurance against loss or damage to the Equipment shall not be less than the
greater of the replacement value of the Equipment, from time to time, or the
original purchase price of the Equipment. Each insurance policy shall name
Lessee as an insured and Lessor as an additional insured or loss payee, and
shall contain a clause requiring the insurer to give Lessor at least 30 days
prior written notice of any alteration in the terms of such policy or of the
cancellation thereof. Lessee shall furnish to Lessor a certificate of insurance
or other evidence satisfactory to Lessor that such insurance coverage is in
effect provided, however, that Lessor shall be under no duty either to ascertain
the existence of or to examine such insurance policy or to advise Lessee in the
event such insurance coverage shall not comply with the requirements hereof.
Lessee shall give Lessor prompt notice of any damage to, or loss of, any of the
Equipment or any part thereof, or any personal injury or property damage
occasioned by the use of any of the Equipment.
21. TAXES. Lessee hereby assumes liability for, and shall pay when due,
and, on a net after-tax basis, shall indemnify, protect and hold harmless Lessor
against all fees, taxes and governmental charges (including, without limitation,
interest and penalties) of any nature imposed on or in any way relating to
Lessor, Lessee, any item of Equipment or any Lease, except state and local taxes
on or measured by Lessor's net income (other than any such tax which is in
substitution for or relieves Lessee from the payment of taxes it would otherwise
be obligated to pay or reimburse to Lessor as herein provided) and federal taxes
on Lessor's net income. Lessee shall, at its expense, file when due with the
appropriate authorities any and all tax and similar returns, and reports
required to be filed with respect thereto, for which it has indemnified Lessor
hereunder or, if requested by Lessor, notify Lessor of all such requirements and
furnish Lessor with all information required for Lessor to effect such filings.
Any fees, taxes or other charges paid by Lessor upon failure of Lessee to make
such payments shall, at Lessor's option, become immediately due from Lessee to
Lessor and shall be subject to the Overdue Charge form the date paid by Lessor
until the date reimburse by Lessee.
22. SEVERABILITY. If any provision of any Lease is held to be invalid by
a court of competent jurisdiction, such invalidity shall not affect the other
provisions of such Lease or any provision of any other Lease.
23. NOTICES. All notices hereunder shall be in writing and shall be deemed
given when sent by certified mail, postage prepaid, return receipt requested,
addressed to the party to which it is being sent at its address set forth herein
or to such other address as such party may designate in writing to the other
party.
24. AMENDMENTS, WAIVERS AND EXTENSIONS. This MLA and each Schedule
constitute the entire agreement between Lessor and Lessee with respect to the
lease of the Equipment subject to such Schedule, and supersede all previous
communications, understandings, and agreements, whether oral or written, between
the parties with respect to such subject matter. No provision of any Lease may
be changed, waived, amended or terminated except by a written agreement,
specifying such change, waiver, amendment or termination, signed by both Lessee
and Lessor, except that Lessor may insert, on the appropriate schedule, the
serial number of Equipment, after delivery of such Equipment, and the Rent
Commencement Date for the Equipment. No waiver by lessor of any Event of Default
shall be construed as a waiver of any future Event of Default or any other Event
of Default. At the expiration of the Lease Term with respect to a Lease, upon
notice given by Lessee at least ninety (90) days prior hereto, (a) such Lease
shall be renewed or the Equipment subject thereto shall be purchased under the
terms and conditions set forth herein for a term and rent amount or purchase
price, as the case may be, to be agreed upon, or (b) if no such agreement is
reached prior to the expiration of such Lease Term or such notice specifies that
Lessee intends to return the Equipment, then Lessee shall return the Equipment
to Lessor in the manner prescribed on Paragraph 16 of this MLA. In the absence
of Lessor's timely receipt of the notice contemplated by the preceding
sentences, the Lease shall be automatically extended, on a month-to-month basis,
until terminated (upon notice by either party given at least ninety (90) days
prior to the end of the month on which the termination is to be effective) or
until renewed or the Equipment subject thereto is purchased by agreement of the
parties. Unless otherwise agreed, Lessee shall continue to pay Rent for each
month following such Lease Term until the Equipment subject to such lease is
returned pursuant to Paragraph 16 of this MLA.
25. CONSTRUCTION. This MLA shall be governed by and construed in
accordance with the internal laws, but not the choice of laws provisions, of the
State of California. The titles of the sections of this MLA are for convenience
only and shall not define or limit any of the terms or provisions hereof. Time
is of the essence in each of the provisions hereof.
26. PARTIES. This MLA shall be binding upon, and inure to the benefit of,
the permitted assigns, representatives and successors of the Lessor and Lessee.
If there is more than one Lessee named in this MLA, the liability of each shall
be joint and several.
27. COUNTERPARTS. Each Lease may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute but one and the same instrument
28. OVERDUE CHARGE. Overdue Charge shall mean an amount equal to 2% per
month of any payment under a Lease which is past due, including, without
limitation, any amounts not included in any payment of Rent hereunder, or the
highest charge permitted by law, whichever is lower.
The person executing this MLA on behalf of Lessee hereby certifies that he or
she has read, and is duly authorized to execute, this MLA.
Accepted by:
Ascend Credit Corporation LESSEE: New Millenium Multimedia, Inc.
------------------------------
By: /s/ Mark E. Alman By: /s/ RICHARD S. GRANVILLE III
--------------------------------- -----------------------------------
NAME: Mark E. Alman NAME: RICHARD S. GRANVILLE III
------------------------------- ---------------------------------
TITLE: Director of Corporate Finance TITLE: CHAIRMAN/CEO
------------------------------ --------------------------------
DATE: 5/21/99 DATE: 4/28/99
------------------------------- ---------------------------------
<PAGE>
LEASE SCHEDULE No. 2
This Schedule and its supplement incorporate by its reference the terms and
conditions of the Master Lease Agreement, Number A, between Ascend Credit
Corporation (Lessor) and New Millenium Multimedia, Inc. (Lessee).
1. SUPPLIER: ASCEND COMMUNICATIONS, INC.
2. LOCATION OF EQUIPMENT: SEE ATTACHED
3. EQUIPMENT VALUE: $ $2,427,350.73 (exclusive of sales and/or use taxes).
4. LEASE TERM: The Lease Term of the Equipment described in this Schedule
shall begin on the Rent Commencement Date referenced below in Paragraph 6
and its expiration date shall be 34 months after such Rent Commencement
Date.
5. RENT: $ 20,227.92 for the first month (exclusive of sales and/or use
taxes), followed by $91,414.03 for the next thirty-three months (exclusive
of sales and/or use taxes), due and payable at the Rent Commencement Date
and on the same date of each succeeding month of the Lease Term.
6. RENT COMMENCEMENT DATE: October 1, 1999.
7. PURCHASE OPTION: Lessee shall have the option to purchase the Equipment
for one dollar ($1.00), on the expiration of this Lease or any renewal
term, provided Lessee is not in default of any of its obligations under
this Lease on such expiration date. This purchase option may only be
exercised by Lessee's written notice to Lessor not earlier than 180 days,
nor later than 90 days, prior to the end of the Lease Term or any renewal
term. Lessee shall be responsible for all applicable sales and/or use
taxes on the Equipment. Upon exercise of this purchase option and payment
of the purchase price, Lessor shall execute and deliver to Lessee such
documents as Lessee may reasonably request in order to vest in Lessee all
right, title and interest in the Equipment.
8. RENEWAL OPTION: Lessee shall have the option to renew this Lease, on the
expiration date of this Lease or any renewal term, for the fair market
rental for the continued use of the Equipment ("FMR") and on such other
terms as may be agreed upon by Lessor and Lessee prior to such expiration
date, provided Lessee is not in default of any of its obligations under
this lease on such expiration date. This renewal option may only be
exercised by Lessee's written notice to Lessor not earlier than 180 days,
nor later than 90 days, prior to the end of the Lease Term or any renewal
term. FMR shall be equal to the value of the monthy rental of the
Equipment installed and in use, with consideration given to the age,
condition, utility and replacement costs for the Equipment, for the
renewal term.
9. TAX BENEFITS: Lessee understands that Lessor intends to claim the "Tax
Benefits", consisting of the maximum Modified Accelerated Cost Recovery
System deductions for the minimum useful life applicable to each item of
Equipment, as provided by Sections 168(b) and (c) of the Internal Revenue
Code of 1986, and analogous benefits under state law, with respect to the
Equipment. Lessee represents and warrants that: (i) Lessee has not been,
is not now, and during the term of this Lease will not become, and will
not allow the Equipment to be used by or leased to, a tax-exempt entity or
government agency; and (ii) Lessee is not now, and during the term of this
Lease will not become, a public utility. Without limitation by the
preceding sentence, Lessee agrees not to take any action, fail to take any
action, or misstate any fact which may result in any loss to Lessor of the
Tax Benefits.
Lessee agrees to pay promptly to Lessor an amount which will fully
compensate Lessor, on an after-tax basis, for any loss of the Tax
Benefits, plus interest, penalties and additions to tax, any loss in time
value of the Tax Benefits, and any taxes imposed on any such compensation
payment, resulting from Lessee's acts, omissions or misstatements,
including, without limitation, with respect to the representations and
warranties in the preceding paragraph. A loss of Tax Benefits occurs at
the earliest of: (i) the happening of any event causing the loss; (ii)
payment by Lessor of any additional tax resulting from the loss; or (iii)
any adjustment to the tax return of Lessor. Lessor's right to recovery of
a loss of Tax Benefits shall survive the expiration or termination of this
Lease.
10. DESCRIPTION OF EQUIPMENT: See Exhibit A which is attached hereto and made
a part hereof by this reference.
The person executing this Schedule on behalf of Lessee hereby certifies that he
or she has read, and is duly authorized to execute, this Schedule.
Accepted by:
Ascend Credit Corporation LESSEE: New Millenium Multimedia, Inc.
------------------------------
By: By:
--------------------------------- -----------------------------------
NAME: NAME:
------------------------------- ---------------------------------
Print Print
TITLE: TITLE:
------------------------------ --------------------------------
DATE: DATE: September 28, 1999
------------------------------- ---------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Portfolio (B) Schedule 3.10(e)
- --------------------------------------------------------------------------------
Obligor Name New Millenium Multimedia
- --------------------------------------------------------------------------------
Obligor Schedule Number 2
- --------------------------------------------------------------------------------
Aggregate Original Equipment Cost $2,427,350.73
- --------------------------------------------------------------------------------
Contractual End of Term 7/31/02
- --------------------------------------------------------------------------------
Purchase Option Terms $1 Purchase Option
- --------------------------------------------------------------------------------
Purchase Price $2,678,245.00
- --------------------------------------------------------------------------------
Residual $1.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1 10/01/99 $20,228.00
- --------------------------------------------------------------------------------
2 11/01/99 $91,414.00
- --------------------------------------------------------------------------------
3 12/01/99 $91,414.00
- --------------------------------------------------------------------------------
4 01/01/00 $91,414.00
- --------------------------------------------------------------------------------
5 02/01/00 $91,414.00
- --------------------------------------------------------------------------------
6 03/01/00 $91,414.00
- --------------------------------------------------------------------------------
7 04/01/00 $91,414.00
- --------------------------------------------------------------------------------
8 05/01/00 $91,414.00
- --------------------------------------------------------------------------------
9 06/01/00 $91,414.00
- --------------------------------------------------------------------------------
10 07/01/00 $91,414.00
- --------------------------------------------------------------------------------
11 08/01/00 $91,414.00
- --------------------------------------------------------------------------------
12 09/01/00 $91,414.00
- --------------------------------------------------------------------------------
13 10/01/00 $91,414.00
- --------------------------------------------------------------------------------
14 11/01/00 $91,414.00
- --------------------------------------------------------------------------------
15 12/01/00 $91,414.00
- --------------------------------------------------------------------------------
16 01/01/01 $91,414.00
- --------------------------------------------------------------------------------
17 02/01/01 $91,414.00
- --------------------------------------------------------------------------------
18 03/01/01 $91,414.00
- --------------------------------------------------------------------------------
19 04/01/01 $91,414.00
- --------------------------------------------------------------------------------
20 05/01/01 $91,414.00
- --------------------------------------------------------------------------------
21 06/01/01 $91,414.00
- --------------------------------------------------------------------------------
22 07/01/01 $91,414.00
- --------------------------------------------------------------------------------
23 08/01/01 $91,414.00
- --------------------------------------------------------------------------------
24 09/01/01 $91,414.00
- --------------------------------------------------------------------------------
25 10/01/01 $91,414.00
- --------------------------------------------------------------------------------
26 11/01/01 $91,414.00
- --------------------------------------------------------------------------------
27 12/01/01 $91,414.00
- --------------------------------------------------------------------------------
28 01/01/02 $91,414.00
- --------------------------------------------------------------------------------
29 02/01/02 $91,414.00
- --------------------------------------------------------------------------------
30 03/01/02 $91,414.00
- --------------------------------------------------------------------------------
31 04/01/02 $91,414.00
- --------------------------------------------------------------------------------
32 05/01/02 $91,414.00
- --------------------------------------------------------------------------------
33 06/01/02 $91,414.00
- --------------------------------------------------------------------------------
34 07/01/02 $91,414.00
- --------------------------------------------------------------------------------
35 08/01/02
- --------------------------------------------------------------------------------
36 09/01/02
- --------------------------------------------------------------------------------
37 10/01/02
- --------------------------------------------------------------------------------
38 11/01/02
- --------------------------------------------------------------------------------
39 12/01/02
- --------------------------------------------------------------------------------
40 01/01/03
- --------------------------------------------------------------------------------
41 02/01/03
- --------------------------------------------------------------------------------
42 03/01/03
- --------------------------------------------------------------------------------
43 04/01/03
- --------------------------------------------------------------------------------
44 05/01/03
- --------------------------------------------------------------------------------
45 06/01/03
- --------------------------------------------------------------------------------
46 07/01/03
- --------------------------------------------------------------------------------
47 08/01/03
- --------------------------------------------------------------------------------
48 09/01/03
- --------------------------------------------------------------------------------
49 10/01/03
- --------------------------------------------------------------------------------
50 11/01/03
- --------------------------------------------------------------------------------
51 12/01/03
- --------------------------------------------------------------------------------
52 01/01/04
- --------------------------------------------------------------------------------
53 02/01/04
- --------------------------------------------------------------------------------
54 03/01/04
- --------------------------------------------------------------------------------
55 04/01/04
- --------------------------------------------------------------------------------
56 05/01/04
- --------------------------------------------------------------------------------
57 06/01/04
- --------------------------------------------------------------------------------
58 07/01/04
- --------------------------------------------------------------------------------
59 08/01/04
- --------------------------------------------------------------------------------
60 09/01/04
- --------------------------------------------------------------------------------
61 10/01/04
- --------------------------------------------------------------------------------
62 11/01/04
- --------------------------------------------------------------------------------
63 12/01/04
- --------------------------------------------------------------------------------
Total $3,036,890.00
- --------------------------------------------------------------------------------
<PAGE>
Exhibit A
Schedule: A-2
Customer: New Millenium Multimedia Inc.
Location: Avana Communications
1155 Hammond Drive, Suite D-4080
Atlanta, GA 30328
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Invoice # PO# Ship Date Unit Total Prof Services Tax Freight Invoice Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
216309 9960212 06/24/1999 $26,000.00 $1,823.92 $56.00 $27,879.92
217776 9960211 06/30/1999 $532,210.00 $37,254.70 $569,464.70
219847 9960211 07/26/1999 $316,230.00 $22,136.10 $ -- $338,366.10
219998 9960213 07/27/1999 $1,402,525.00 $98,199.83 $329.73 $1,501,054.56
220505 9960211 07/30/1999 $150,000.00 $10,500.00 $160,500.00
-----------------------------------------------------------------------------------------------------
TOTAL $2,426,965.00 $0.00 $169,914.55 $385.73 $2,597,265.28
-----------------------------------------------------------------------------------------------------
TOTAL FINANCED: $2,426,965.00 $ -- $ -- $385.73 $2,427,350.73
LEASE RATE FACTOR 1: 0.00000000
MONTHLY PAYMENT: $ --
# MONTHS: 2
LEASE RATE FACTOR 2: 0.008333333
MONTHLY PAYMENT: $ 20,277.92
# MONTHS: 1
LEASE RATE FACTOR 3: 0.03766
MONTHLY PAYMENT: $ 91,414.03
# MONTHS: 33
</TABLE>
The invoices referenced herein are incorporated herein by such reference.
*** PORTIONS OF THIS EXHIBIT MARKED BY BRACKETS ("[***]") OR OTHERWISE
IDENTIFIED HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
THE OMITTED PORTIONS HAVE BEEN FILED SEPARETELY WITH THE SECURITIES AND
EXCHANGE COMMISSION ***
QWEST COMMUNICATIONS CORPORATION
WHOLESALE SERVICES AGREEMENT
THIS WHOLESALE SERVICES AGREEMENT (the "Agreement") is entered into by and
between Qwest Communications Corporation ("Qwest"), a Delaware corporation,
located at 555 17th Street, Denver, Colorado 80202, and New Millennium
Multimedia, Inc., a Georgia corporation and an authorized and certificated
common carrier subject to the Communications Act of 1934, as amended (the
"Customer"), located at 1690 Chantilly Drive, Atlanta, Georgia 30324, facsimile
number (404) 638-6057. Qwest and Customer are sometimes referred to in this
Agreement collectively as the Parties and singularly as a "Party."
TERMS AND CONDITIONS
1. Scope of Agreement
Upon the request of Customer, Qwest agrees to provide to Customer the Qwest
services for the prices and subject to the terms and conditions set forth herein
described in the exhibits attached hereto (the "Service(s)"). The Services shall
be provided in accordance with industry standards for such Services. Customer
recognizes that certain of the Services or components of the Services may be
provided by Affiliates (as hereinafter defined) of Qwest. To the extent certain
terms are not covered in this Agreement, the Services may be provided pursuant
to Qwest Tariff F.C.C. No. 2 and No. 3 and applicable state tariffs
(collectively, the "Tariff(s)"), which are on file with the U.S. Federal
Communications Commission ("FCC") and applicable state regulatory bodies, as
modified from time to time by Qwest. As applicable to the furnishing of Services
hereunder, the Tariff is hereby incorporated herein, except that the terms and
conditions of this Agreement shall supplement or, to the extent inconsistent,
supersede Tariff terms and conditions.
2. Monthly Minimum Commitment
(A) Any monthly minimum usage commitments agreed upon by Qwest and Customer
shall be set forth in the attached Services Descriptions and rate Exhibits,
which such exhibits are specified in Section 3 of this Agreement (the "Monthly
Commitment"). Customer acknowledges and agrees that certain rates and discounts
may be being provided to Customer hereunder in consideration of Customer's
agreement to meet or exceed the Monthly Commitment and that such rates and
discounts would not be offered to Customer without Customer's agreement to make
such commitments.
(B) With respect to Qwest Express switched services (the "Switched Services"),
following a one time ramp up period of the first three billing months after the
Effective Date (the "Ramp Up Period"), the minimum monthly usage required per
DS-l or equivalent thereof (the "Circuits") is 100,000 MOUs averaged among all
Qwest Circuits used by Customer under this Agreement (the "Minimum Facility
Utilization"). In the event Customer fails to meet or exceed the Minimum
Facility Utilization average, Qwest shall give Customer five (5) business days
notice that the Customer has not met or exceeded such utilization requirement.
Customer agrees, within such five (5) day period, either to (i) bring usage up
to such Minimum Facility Utilization average on such Circuits or (ii) release to
Qwest those Circuits which were under the 100,000 MOU level for such month. If
Customer does not comply with the above requirement, Customer will be assessed a
monthly underutilization fee of $2,500 (the "Underutilization Fee") for each
Circuit was under the 100,000 MOU level for such month in which Customer failed
to meet the average Minimum Facility Utilization.
(C) Qwest and Customer specifically agree that any underutilization fees,
deficiency charges or other relief, if any, provided for in this Agreement or
the Exhibits relating to any of the commitments in this Agreement or the
Exhibits represent mutual good faith estimates of, and bear reasonable
relationships to, the actual damages to Qwest in the event of Customer's failure
to meet such commitments or Customer's underutilization of such circuits, and
they do not represent a penalty of any kind. The Parties further agree that such
fees, charges and relief are obligations of Customer, subject to specific
performance.
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3. Service Rates and Terms
(A) Qwest Service descriptions and rates are shown and described in the
following Exhibits:
Exhibit Dl ReQwest Switchless Reseller Services Description
Exhibit D2 ReQwest Switchless Reseller Rate Schedule
Exhibit G Qwest Private Line Service Description and Rate Schedule
Exhibit J Qwest Frame Relay Service Description and Rate Schedule
Exhibit S Security and Payment Terms
Qwest reserves the right to eliminate any Service offerings and/or modify any
charges for Service offerings upon written notice to Customer as follows:
(1) Rate decreases and additional services offered, if any, in Qwest's
sole discretion, shall be effective immediately upon written notification
to the Customer or upon an effective date set forth by Qwest in such
notification.
(2) All rates, Services and agreements specified in Exhibits and
attachments are subject to change immediately, with no prior notice to
Customer, in the event there are mandated surcharges imposed by a federal,
state or governmental agency. Further, notwithstanding any statements to
the contrary contained in the Tariff, in the event that any regulatory
agency, legislative body or court of competent jurisdiction promulgates
regulations or modifies existing ones including, without limitation,
regulations regarding payphone compensation, access charges and/or
universal service (the "Regulatory Activity"), Qwest reserves the right,
at any time upon written notice, to: (i) pass through to Customer all, or
a portion of, any charges or surcharges directly or indirectly related to
such Regulatory Activity; or (ii) modify the rates, including any rate
guarantees, and/or other terms and conditions contained in this Agreement
and/or the Tariff to reflect the impact of such Regulatory Activity.
(3) International rates, Services and agreements specified in Exhibits and
attachments, including Canadian and Mexican services, are subject to
change upon five (5) calendar days written notice to Customer. All other
rates, Services and agreements specified in Exhibits and attachments,
excluding international, Canadian, and Mexican services, are subject to
change upon thirty (30) calendar days written notice to Customer.
4. System Maintenance
Subject to Sections 7 and 12 hereof, Qwest expects, but does not guarantee, that
system maintenance normally will not result in service interruptions. If system
maintenance should result in the interruption of Service, to the extent possible
it shall be accomplished only after prior notification to Customer and will be
completed within a reasonable time. Qwest shall use reasonable efforts to give
Customer such prior notice.
5. Customer Service
Customer acknowledges and agrees that it shall provide all billing, inquiry, and
customer service to Customer's end-users or customers (the "End-Users").
6. Representation
Each Party shall not use any trademark, service mark, brand name or any other
intellectual property of the other Party or its respective affiliate without
such Party's prior express written consent. Notwithstanding the foregoing,
Customer may disclose, during pre-sale activities, that Qwest is the underlying
carrier of its service. In no event shall Customer represent or state to End
Users or prospective End Users that it has any relationship with Qwest other
than an agreement to purchase Qwest's services. The Parties agree to promptly
and fully cooperate with the other
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Party to address and resolve all issues, problems, administrative procedures,
End User complaints, regulatory investigations or inquiries or any other
circumstances arising from Customer's use of Qwest Services.
7. Financial Responsibility. Payment and Security
(A) Except as (i) otherwise provided in this Agreement or an Exhibit or as (ii)
Customer has been otherwise notified by Qwest, all Qwest invoices (the
"Invoices") are due upon receipt. Any Invoice which is not paid in full by
Customer within thirty (30) calendar days from Invoice date via check or wire
transfer, or in another manner explicitly agreed to by Qwest for Customer, shall
be considered past due (the 31st day being the "Past Due Date"). All discounts
and promotions, if any, and taxes, will be included in the monthly invoice. Any
payment received by Qwest on or after the Past Due Date shall be subject to an
interest charge on delinquent amounts at the rate of 1.00% of the late payment
per month or the maximum lawful rate allowable under applicable state law,
whichever is lower. Such interest charge shall be applied on any late payments,
commencing upon the Past Due Date through the actual date of receipt of payment.
Any and all applicable national, federal, state and local taxes, including
without limitation, all use, sales, value-added, surcharges, excise, franchise,
property, commercial, gross receipts, license, privilege or other similar taxes,
levies, surcharges, duties, fees, or other tax-related surcharges whether
charged to or against Qwest or Customer, with respect to the Services or
underlying facilities provided by Qwest, as well as any other imposition by any
governmental authority which has the effect of increasing Qwest's cost of
providing the Services or the underlying facilities, shall be payable by
Customer in addition to the other charges set forth in this Agreement. If full
payment is not made when due, Qwest, in its sole discretion, shall have the
right, after Qwest has given written notice to Customer, to suspend all or any
part of the Services until such time as Customer has paid all unpaid balances
(including interest), or to terminate all or any part of the Service, except
where such non-payment which gives rise to the termination is based upon
applicable and valid tax exempt certificates already given to Qwest. During any
such suspension, and upon any such termination, no service interruption shall be
deemed to occur.
(B) Customer acknowledges that it may not withhold any sums invoiced by Qwest
for actual calls made by Customer including, without limitation, calls made by
Customer's End Users and/or unauthorized third Parties (e.g., fraudulent calls)
and charges to Customer's Qwest account(s). Customer will be responsible for
full payment of all charges as reflected on any Qwest billing statement.
Independent of Customer's payment obligations set forth in this section,
Customer must notify Qwest within sixty (60) calendar days of receipt of any
contested or disputed amount concerning charges as they appear on the Qwest
billing statement. Customer's notification of any contested or disputed amount
must be in writing and sent to: Credit & Collections Department, Qwest
Communications Corporation, 4650 Lakehurst Court, Dublin, Ohio 43017 or to (614)
798-6460. by facsimile with duplicate notification to follow via regular U.S.
Mail or overnight delivery. Written notification must be accompanied with a
detailed written support, for any service interruption credit or other credit to
which Customer believes itself entitled, and Qwest and Customer will promptly
address and attempt to resolve the claim. Qwest, in its sole discretion
exercised in good faith, may reject such documentation and/or explanation as
inadequate. If Qwest so rejects such documentation, Customer shall have an
additional ten (10) business days to provide additional supporting documentation
to Qwest. If Qwest rejects such additional documentation, Qwest shall so notify
Customer in which case the disputed portion of the bill shall be paid by
Customer within ten (10) business days of Customer's receipt of Qwest's final
notice of inadequacy. All Credits or adjustments for service outages will be
made pursuant to applicable provisions of the Tariffs. In consideration of the
discounts offered by Qwest pursuant to this Agreement, with respect to any
unpaid balance(s) owed by Customer to Qwest, Qwest shall have the right to
offset such unpaid balance(s) from any amounts that Qwest owes to Customer and
any of its Affiliates (as hereinafter defined) under any other agreements
between the Parties and their respective Affiliates.
(C) Customer acknowledges and agrees that Qwest may reasonably require
additional security and/or payment terms under this Agreement prior to the
commencement of Services hereunder or during the Term hereunder, and Customer
agrees to comply with such request. Customer agrees to provide and/or execute
any additional collateral security documents as may be reasonably required by
Qwest, if there is a material change in circumstances of Customer's actual or
anticipated usage hereunder or Customer's financial condition during any time
that Customer uses the Service. Qwest shall establish a credit limit for the
procurement of the Services by Customer and such credit limit may change from
time to time. Qwest will not automatically notify Customer of any such change
but will supply such information to Customer upon Customer's request.
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8. Term
The initial term of this Agreement (the "Initial Term") will begin on the first
day of the first billing cycle following the Effective Date (as hereinafter
defined) of this Agreement (the "Initial Service Date") and will continue for a
period of the longer of (i) twelve (12) calendar months from the Initial Service
Date, or (ii) as long as a term for a Service attached to this Agreement (the
"Service Term") is in effect. The "Effective Date" is defined as the date this
Agreement is signed by an authorized officer of Qwest after having been signed
by Customer. Applicable Service rates and discounts, if any, shall be effective
as of their respective effective date in the applicable Service rate or discount
schedule. Following the Initial Term, the Agreement shall continue on a monthly
basis (each a "Renewal Term") until either Party provides the other Party with
at least thirty (30) calendar days prior written notice of its intent to
terminate this Agreement and the intended date of such termination. The Initial
Term and Renewal Terms are sometimes collectively referred to herein as the
"Term."
9. Obligations Upon Expiration or Termination of Term
Upon expiration or termination of this Agreement, Customer shall pay all
outstanding balances hereunder in accordance with Section 7. Upon expiration or
termination of this Agreement, Customer shall be fully subject to all terms and
conditions set forth in the Qwest Tariff for Qwest services received by
Customer, if any, after such date, and shall receive standard Service rates as
provided in any Exhibit(s).
10. Early Termination
(A) Termination by Qwest: In addition to any other rights hereunder, Qwest may
terminate this Agreement and/or the Service without waiving any rights set forth
in this Agreement or the Tariff, if applicable, as follows:
(1) Qwest may terminate this Agreement or the Services immediately without
notice if: (1) Qwest is prohibited from furnishing such Services, or (2)
if any material Rate, Charge or term of such Services is substantially
changed by order of the highest court of competent jurisdiction to which
the matter is appealed, a legitimate regulatory body, or any other
foreign, federal, state or local government authority.
(2) Qwest may terminate this Agreement or the Services in accordance with
the terms of Qwest's Tariff, if applicable, and only with respect to the
Services affected by such Tariff. Customer acknowledges that such
discontinuance may result in termination of its own services to its own
End Users.
(3) Qwest may terminate this Agreement or the Services immediately,
without providing Customer with prior notice or an opportunity to cure,
under any of the following circumstances:
(i) Customer fails to pay any Invoice (as hereinafter defined) or
any portion thereof or any Charges to Qwest when due under and in
accordance with this Agreement and the relevant Service terms and
conditions, other than that otherwise specified within the relevant
sections relating to such payments.
(ii) Customer becomes or is declared insolvent or bankrupt, is the
subject of any proceedings related to its liquidation, insolvency or
for the appointment of a receiver or similar officer for it, makes
an assignment for the benefit of all or substantially all of its
creditors, or enters into an agreement for the composition,
extension, or readjustment of all or substantially all of its
obligations.
(iii) In the event of a Change of Control of Customer, unless such
change is otherwise permitted under the "Assignment" Section under
this Agreement. For the purposes of this Agreement, "Change of
Control" shall be deemed to have occurred with respect to Customer
if: (a) any entity having previously Controlled (as hereinafter
defined) by Customer, ceases to do so; (b) any entity acquires
Control of Customer (whether by reason of acquisition, merger,
reorganization, operation of law or otherwise); or (c) all, or
substantially all, of the assets of Customer or an entity
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that Controls Customer are acquired (whether by reason of
acquisition, merger, reorganization, operation of law or otherwise)
by, or combined by merger with, any other entity. For purposes of
this Agreement, "Control" (and "Controls," "Controlling,"
"Controlled by" and "under common Control with" shall be construed
accordingly) as applied to any party means the possession directly
or indirectly of the power to direct or cause the direction of the
management and policies of that party, whether through the ownership
of voting securities or by contract or otherwise. Where any two
parties together satisfy any of this definition, they shall be
deemed to have Control. For purposes of this definition, there shall
be attributed to any Party rights and powers of a nominee for it
(that is to say, any rights or powers that another Party possesses
on its behalf or may be required to exercise on its direction or
behalf).
(iv) If Customer fails to abide by any special payment and security
terms reasonably required by Qwest in accordance with the Agreement,
including, without limitation, Customer's failure or refusal to
provide additional security upon Qwest's request as permitted under
this Agreement.
(v) Upon the commission of any illegal acts on the part of Customer,
its officers, directors, employees, contractors, agents, or
servants, relating to the subject matter of this Agreement.
(4) Qwest may terminate this Agreement or Services if Customer breaches
any other material term of this Agreement, by providing Customer with
thirty (30) calendar days' notice if Customer does not cure such breach,
if curable, within such thirty (30) calendar day period.
(B) Termination by Customer. In addition to any other rights hereunder, Customer
may terminate this Agreement and/or the affected Service without early
termination fee or penalty, except for unpaid charges as of the effective date
of termination, as follows:
(1) As long as Customer has satisfied in full any minimum Revenue
Commitment as set forth and described in the applicable Exhibit(s),
Customer shall have the right to terminate this Agreement for convenience
during the Initial Term without early termination fee or penalty, except
for Customer's payment of unpaid Services usage charges accrued prior to
the date of termination, by providing written notice of such intent to
terminate and the intended date of termination given to Qwest not less
than thirty (30) calendar days prior to the date of termination set forth
in such notification.
(2) In the event of any material adverse: (i) increase in rates for
Services utilized by Customer, (ii) change in the Tariff, or (iii) change
in the Services, Customer may terminate this Agreement or the affected
Services without early termination fee or penalty, if such written notice
of termination is delivered to Qwest within thirty (30) calendar days of
the effective date of such material increase or change. If Customer does
not deliver such notice to Qwest within such thirty (30) calendar day
period, Customer will be deemed to have waived its right to terminate this
Agreement based upon such material increase or change.
(3) With respect to Switched Services, Customer may terminate this
Agreement or the Switched Services by giving Qwest thirty (30) calendar
days written notice prior to the date of such cancellation, if the
Switched Service provided under this Agreement is the subject of service
outages or interruptions accumulating one hundred twenty (120) hours or
more over any period of one hundred eighty (180) consecutive calendar
days.
(4) Customer may terminate this Agreement or Services if Qwest breaches
any other material term of this Agreement, by providing Qwest with thirty
(30) calendar days' notice if Qwest does not cure such breach, if curable,
within such thirty (30) calendar day period.
(C) Effect of Termination. Upon expiration or earlier termination of this
Agreement, Customer agrees to pay all unpaid balances due under and in
accordance with this Agreement to Qwest. Customer agrees that it shall be fully
subject to all standard or Tariff terms and conditions then in effect for
Services received by it after such date of expiration or termination. Upon the
expiration or termination of this Agreement for any reason, except as otherwise
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provided in this Agreement and to any rights and/or obligations that have
accrued prior to termination, neither Party shall have any further obligations
of a continuing nature.
11. Default
Without regard to any other provisions of this Agreement or rights hereunder,
the Parties agree that it shall be a material default under this Agreement if
Customer fails to pay Qwest in accordance with Section 7 of this Agreement. Upon
default under this Section 11, Qwest shall be entitled to all rights and
remedies under the Qwest Tariff and other applicable law.
12. Liability
EXCEPT AS PROVIDED OTHERWISE IN A SERVICE EXHIBIT, QWEST'S LIABILITY ARISING OUT
OF MISTAKES, ACCIDENTS, OMISSIONS, INTERRUPTIONS, ERRORS, DELAYS OR DEFECTS IN
THE ORDERING, PROCESSING, PROVISIONING, INSTALLATION OR TRANSMISSION OF ANY
SERVICES SHALL IN NO EVENT EXCEED THE AMOUNT OF THE APPLICABLE CREDITS IN
ACCORDANCE WITH ITS CREDIT POLICIES THEN IN EFFECT. WITHOUT LIMITING THE
FOREGOING, QWEST SHALL HAVE NO OBLIGATION TO PROVIDE ALTERNATIVE ROUTING WITH
RESPECT TO ANY SERVICE OR TRANSMISSION CAPACITY PROVIDED PURSUANT TO THIS
AGREEMENT. IN NO EVENT SHALL QWEST BE LIABLE TO CUSTOMER OR ANY OTHER PERSON,
FIRM OR ENTITY IN ANY OTHER RESPECT, FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL,
SPECIAL, INCIDENTAL, ACTUAL, OR PUNITIVE DAMAGES, OR FOR ANY LOST PROFITS OF ANY
KIND OR NATURE WHATSOEVER, EVEN IF FORESEEABLE, ARISING OUT OF ANY MISTAKE,
ACCIDENT, ERROR, OMISSION, INTERRUPTION, DELAY OR DEFECT IN THE ORDERING.
PROCESSING, PROVISIONING, INSTALLATION OR TRANSMISSION OF ANY SERVICES OR THE
OBLIGATIONS OF QWEST PURSUANT TO THIS AGREEMENT AND ANY EXHIBITS HERETO. QWEST
MAKES NO WARRANTY WHETHER EXPRESS, IMPLIED OR STATUTORY, AS TO THE DESCRIPTION,
QUALITY, MERCHANTABILITY, COMPLETENESS OR FITNESS FOR ANY PURPOSE OF THE SERVICE
OR LOCAL ACCESS OR AS TO ANY OTHER MATTER, ALL OF WHICH WARRANTIES BY QWEST ARE
HEREBY EXCLUDED AND DISCLAIMED. FOR THE PURPOSE OF THIS SECTION, THE TERM
"QWEST" AND "CUSTOMER" SHALL BE DEEMED TO INCLUDE QWEST, CUSTOMER, AND THEIR
RESPECTIVE AFFILIATES, EMPLOYEES, AGENTS, OFFICERS, DIRECTORS, AND AFFILIATES.
CUSTOMER HAS ACCEPTED THE LIMITATIONS OF LIABILITY AND DISCLAIMERS SET FORTH
HEREIN AS PART OF A BARGAIN TO LOWER THE PRICE OF QWEST'S SERVICES HEREUNDER AND
UNDERSTANDS THAT THE PRICES OF SAID SERVICES WOULD BE HIGHER IF QWEST WERE
REQUIRED TO ACCEPT GREATER LIABILITY AND/OR DAMAGE LIABILITY.
13. Relationship
Neither Party shall have the authority to bind the other by contract or
otherwise make any representations or guarantees on behalf of the other. Both
Parties acknowledge and agree that the relationship arising from this Agreement
is one of independent contractor, and does not constitute an agency, joint
venture, partnership, employee relationship or franchise.
14. Assignment or Sale
This Agreement shall be binding on Customer and its respective Affiliates,
successors, and assigns. Customer shall not assign, sell or transfer this
Agreement or the right to receive the Services provided hereunder, whether by
operation of law or otherwise, without the prior written consent of Qwest, such
consent shall not be unreasonably withheld by Qwest. Qwest may terminate this
Agreement in the event of an actual or purported assignment, sale or transfer of
this Agreement by Customer without Qwest's prior written consent.
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15. Reporting Requirements
Where reporting obligations or requirements are imposed upon Qwest by any third
party or regulatory agency, and which such obligations or requirements can only
be satisfied by obtaining information from Customer, Customer agrees to comply
with such obligations and requirements, as reasonably required by Qwest, and to
hold Qwest harmless for any failure of compliance with any such obligations or
requirements.
16. Governing Law, Certifications and Warranties
(A) Customer understands that Qwest, in conducting its business in the manner
set forth herein, is subject to the Communications Act of 1934, as amended, and
as interpreted and applied by the Federal Communications Commission. All terms
of this Agreement not subject to the Communications Act of 1934 as amended and
as interpreted and applied by the F.C.C. will be interpreted according to New
York state law, without regard to the choice of law provisions of such State.
(B) If service is provided solely within a single state in a manner which
subjects the Service to regulation by such state, then the terms and conditions
of such Service and of this Agreement shall be subject to such regulations and
to any addendum to this Agreement relating thereto which is delivered by Qwest
to Customer. Customer shall have the right to terminate this Agreement within
ten (10) business days of receipt of such addendum without further liability
hereunder.
(C) Customer certifies and warrants that it, and its business of resale of the
Services, is in compliance with and will continue to be in compliance, in all
material respects, with all international, federal, state and local laws and
regulations relating to its performance under this Agreement. Customer certifies
further that it is in good standing under the laws of the States in which it was
organized, is existing or is doing business. Customer is solely responsible for
obtaining all licenses, approvals, and regulatory authority for its operation
and the provision of services to its End Users. Any breach of the obligations of
a Party under this Section shall be a material breach of this Agreement. If
Customer does not comply with this Section, in addition to any remedies
available to it at law or in equity, Qwest, in its sole discretion, may elect to
decline to accept additional orders under this Agreement or it may immediately
terminate this Agreement without further liability or obligation to Customer.
17. Survival
All warranties, representations, indemnities, covenants and other agreements of
the Parties hereto shall survive the execution, delivery and termination of this
Agreement and shall, notwithstanding the execution, delivery and termination of
this Agreement, continue in full force and effect. The terms and conditions of
the Qwest Tariff along with Section 6, 7, 9, 11, 12, 13, 15, 18, 19, 24 and any
provision hereof, which, by its context is intended to survive the termination
or expiration hereof, shall also survive. Additionally, any obligation to hold
harmless and indemnify a Party hereunder shall survive the termination or
expiration of this Agreement.
18. Indemnification
Customer shall indemnify, defend and hold harmless Qwest from and against any
claims, actions, damages, liabilities, costs, judgments or expenses (including
attorney fees and an allocable portion of in-house counsel fees) arising out of
third Party claims resulting from the resale or reselling of the Service,
including but not limited to the provision or termination of, or failure to
provide, service by Customer to End Users.
19. Nondisclosure
Neither Party shall disclose to any third Party during the term of this
Agreement and during the one (1) year period immediately following termination
of this Agreement, any of the terms and conditions set forth in this Agreement
unless disclosure is required by any state or federal governmental agency, is
otherwise required to be disclosed by law, or is necessary in any proceeding
establishing rights or obligations under this Agreement. Each Party reserves the
right to terminate this Agreement, upon written notification, upon discovery of
any disclosure prohibited hereunder.
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20. Integration and Amendments
The Agreement, together with all Exhibits, represents the entire understanding
of the Parties with respect to the subject matter under this Agreement. Any and
all prior offers, contracts, agreements, representations and understandings made
to or with Customer by Qwest or any Affiliate or predecessors-in-interest with
respect to the subject matter under this Agreement, whether oral or written,
shall be superseded by this Agreement. All amendments to this Agreement shall be
in writing and signed by both Parties.
21. Waiver
The terms, covenants, representations and warranties of this Agreement may be
waived only by a written instrument executed by the Party waiving compliance.
The failure of either Party at any time to require performance of any provision
hereof shall, in no manner, affect the right at a later date to enforce the
same. No waiver by either Party of any breach of any term, covenant,
representation or warranty contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be construed as a
further or continuing waiver of any such breach or the breach of any other term,
covenant, representation or warranty of this Agreement.
22. Severability
In the event that any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement, but this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein. Further, in the event that any provision of this Agreement shall be held
to be invalid, illegal or unenforceable by virtue of its scope or period of
time, but may be made enforceable by a limitation thereof, such provision shall
be deemed to be amended to the minimum extent necessary to render it valid,
legal and enforceable or in the alternative both Parties shall negotiate in good
faith to substitute for such invalid, illegal, or unenforceable provision a
mutually acceptable provision that is consistent with the original intent of the
Parties.
23. Notice
Except when actual receipt is expressly required by the terms hereof, notice is
considered given either (i) when delivered by facsimile service to the phone
number listed below with duplicate notification sent via regular U.S. Mail or
overnight delivery or; (ii) when delivered in person to the recipient named
below; or (iii) after deposit in the United States mail in a sealed envelope or
container, either registered or certified mail, return receipt requested,
postage prepaid, or via overnight courier service, addressed by name and address
to the Party or person intended as follows:
To Customer: New Millennium Multimedia, Inc.
1690 Chantilly Drive
Atlanta, Georgia 30324
Facsimile #: (404) 638-6057
Attention: Richard Granville, Chairman and Chief
Executive Officer
To Qwest: Qwest Communications Corporation
555 l7th Street
Denver, Colorado 80202
Facsimile #: (303) 291-1724
Attention: General Counsel
Any Party may at any time change its address or facsimile number for
notification purposes by giving the other Party prior written notice as provided
in this Section by setting forth the new address and the date on which it will
become effective. Either Party may require, by prior written notice given at any
time or from time to time, subsequent notices to be given to another individual
person, whether a Party or an officer or representative, or to a different
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address, or both; provided, however, that a P.O. Box shall not be considered to
be an address for purposes of this Agreement.
24. Arbitration Of Disputes
(A) Any dispute arising out of this Agreement relating to Qwest invoices or
balances owed by Customer to Qwest for Services rendered, which cannot be
resolved between the Parties, shall be settled by binding arbitration at the
office of the American Arbitration Association ("AAA") located in Washington,
D.C. The arbitration shall be held in accordance with the commercial Arbitration
Rules of the American Arbitration Association ("AAA Rules"), as amended by this
Agreement.
(B) Either Qwest or the Customer may initiate arbitration by providing written
demand for arbitration, a copy of this Agreement and the administrative fee
required by the AAA Rules to the AAA its Washington, D.C. A copy of the notice
shall also be provided to the other Party. The remaining cost of the
arbitration, including the fees and expenses of the arbitrator, shall be shared
equally by the Parties unless the arbitration award provides otherwise. Each
Party shall bear the cost of preparing and presenting its case.
(C) One arbitrator shall be appointed in accordance with the AAA Rules within
sixty (60) days of the submission of the demand for arbitration, unless both
Parties otherwise agree in writing. The arbitrator shall designate the time and
place in the Washington, D.C. area, as applicable, for the hearing within thirty
(30) days of his or her appointment. Qwest and the Customer agree that the
Arbitrator's authority to grant relief shall be subject to the provisions of
this Agreement, the United States Arbitration Act, ("USAA"), the ABA-AAA Code of
Ethics for Arbitrators in Commercial Disputes, Qwest Tariffs, substantive law,
and the Communications Act of 1934, as amended. The Arbitrator shall not be able
to award, nor shall any Party be entitled to receive punitive, incidental,
consequential, exemplary, reliance or special damages, including damages for
lost profits. The Arbitrator's decision shall follow the plain meaning of the
relevant documents, and shall be final, binding, and enforceable in a court of
competent jurisdiction. The decision of the Arbitrator is appealable only for
perceived mistakes or misapplication of the law.
(D) Any dispute not outlined in Section 24 (A) and arising out of or related to
this Agreement regardless of the form of action whether in contract, indemnity,
warranty, strict liability, or tort, including negligence of any kind with
regard to Qwest Services or other conduct under this Agreement may be subject to
arbitration upon the written consent of both Parties.
25. Attachments and Exhibits
All Attachments and Exhibits annexed to this Agreement are expressly made a part
of this Agreement as fully as though completely set forth in it. All references
to this Agreement shall be deemed to refer to and include this Agreement and all
such Attachments and Exhibits.
26. Headings
The headings of sections and subsections used in this Agreement are for
convenience only and are not part of its operative language. They shall not be
used to affect the construction of any provisions hereof.
27. Third-Parties
The representations, warranties, covenants and agreements of the Parties set
forth in this Agreement are not intended for, nor shall they be for the benefit
of or enforceable by, any person not a party hereto, including, without
limitation, the End Users and Affiliates. For purposes of this Agreement,
"Affiliate" shall mean: (i) any individual, corporation, partnership, limited
liability company, limited liability partnership, practice, association, joint
stock company, trust, unincorporated organization or other venture or business
vehicle (each an "Entity") in which a Party owns a twenty percent (20%) or
greater equity interest; or (ii) any Entity which, directly or indirectly, is in
control of, is controlled by or is under common control with a Party, as
applicable, after applying the attribution rules of Section 318 of the Internal
Revenue Code. For the purpose of this definition, control of an Entity shall
include the power, directly or
9 August 31, 1999
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
QWEST COMMUNICATIONS CORPORATION
WHOLESALE SERVICES AGREEMENT
indirectly, whether or not exercised: (i) to vote fifty percent (50%) (or such
lesser percentage as is the maximum allowed to be owned by a foreign corporation
in a particular jurisdiction) or more of the securities or other interests
having ordinary voting power for the election of directors or other managing
Authority of such Entity; or (ii) to direct or cause the direction of the
management or policies of such Entity, whether through ownership of voting
securities, partnership interest or equity, by contract or otherwise.
28. Authorization
(A) Customer presents and warrants that the full legal name of the legal entity
intended to receive the benefits under this Agreement and intended to use the
Services is the name set forth in this Agreement and in the execution block.
Each Party represents to the other Party that the person executing this
Agreement on its behalf has been duly authorized by such Party to execute and
bind such Party to the terms and conditions contained in this Agreement. Each
Party, with full knowledge of all terms and conditions herein, does hereby
warrant and represent that the execution, delivery, and performance of this
Agreement are within such Party's corporate and/or partnership powers, have been
duly authorized, and are not in conflict with law or the terms of any charter or
bylaw or any agreement to which such Party is a party or by which it is bound or
affected.
(B) Qwest may act in reliance upon any instruction, instrument, or signature
reasonably believed by Qwest to be genuine. Qwest may assume that any employee
of a party to this Agreement who gives any written notice, request, or
instruction has the authority to do so.
IN WITNESS WHEREOF, an authorized representative of each Party has executed this
Agreement effective as of the date of execution by Qwest as set forth below.
QWEST COMMUNICATIONS CORPORATION
By: /s/ Stephen M. Wagner Date 9/21/99
---------------------------------- --------------------------
Name: Stephen M. Wagner
--------------------------------
Title: V.P.
-------------------------------
NEW MILLENNIUM MULTIMEDIA, INC.
By: /s/ Richard Granville Date 9/7/99
---------------------------------- --------------------------
Richard Granville
Chairman and Chief Executive Officer
10 August 31, 1999
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT Dl
REQWEST SWITCHLESS RESELLER SERVICE DESCRIPTION
WHOLESALE SERVICES AGREEMENT
GENERAL
Qwest agrees to provide the Services set forth in this Exhibit, in accordance
with the Agreement and subject to the terms and conditions set forth in this
Exhibit. All defined terms used herein shall have the meanings ascribed to them
in the Agreement or, if not defined, in the telecommunications industry, as
appropriate, unless otherwise noted herein.
Interstate rates are per State and are for state-wide calling. The applicable
continental U.S. Interstate rate is determined based upon the originating state
of an outbound call or based upon the terminating state of a toll-free inbound
call. Intrastate rates are per State and are for state-wide termination.
Domestic rates shown in the ReQwest Interstate and Intrastate rate schedules of
Exhibit D2 are shown in terms of full minutes and are billed in six (6) second
increments.
International rates are per country and are for country-code wide termination.
International rates shown in the ReQwest International rate schedules of Exhibit
D2, with the exception of Mexican rates, are shown in terms of a rate per minute
and are billed in six (6) second increments, with an initial thirty (30) second
increment. Mexican calls are billed in full minute (60 second) increments.
Directory Assistance calls are billed on a per-call basis.
Calling Card rate billing increments vary by originating and terminating points
of the call and are as set forth in the Calling Card rate schedule of Exhibit
D2.
Rates shown in the ReQwest rate Exhibit D2 are Base Rates. Discounts, if any,
will be applicable pursuant to the below Discounts Section and Discount
Schedule.
Qwest reserves the right to charge all short duration calls (i.e. calls under 6
seconds in length) a minimum of one-cent ($0.01) per answered call if Qwest
determines that Customer has excessive quantities (i.e. more than 10% of
Customer's total calls) of such short duration calls.
Qwest will provide reasonable amounts of training at Qwest's premises and at
times agreed to by Qwest for the Customer on the proper procedures and
documentation required for all Services provisioning necessary for the
Customer's use of the Services.
Customer's Usage Revenue (as defined herein) must equal or exceed the [***]
monthly product-based minimum associated with the ReQwest Switchless Reseller
Services (the "Product Minimum"). Customer acknowledges and agrees that if, by
the end of month twelve, the Customer's Usage Revenue does not equal or exceed
Product Minimum, Qwest may, at Qwest's sole determination, upon thirty (30)
calendar days written notice to Customer, terminate the Agreement without
further liability or obligation to Customer, except as may be otherwise set
forth in the Agreement.
"RBOC-ITC SURCHARGE"
The rates agreed to by Qwest under the Agreement are based upon the condition
that Customer will originate at least 85% of Customer's total Domestic usage of
the Service in a tandem owned and operated by a Regional Bell Operating Company
("RBOC") and subject to such RBOC's tariffed access charges. Qwest will apply a
surcharge of $0.04 per minute of use to the number of minutes by which
Customer's Non-RBOC originations exceed 15% of Customer's total usage of the
Services.
ROUNDING
Currently, the ReQwest Switchless Reseller Service utilizes "bulk rounding". For
the purposes of this Agreement, bulk rounding is defined as carrying over the
3rd and 4th place amounts of a call charge to the next call, and continuing to
do so until one full cent ($0.01) is accrued. When this has occurred, the cent
is applied to the next call. In addition, the ReQwest Switchless Reseller
Service employs whole call rounding, which means that all calls are rounded only
once, as opposed to once for each element (e.g. initial and incremental).
[***] Confidential treatment requested.
1 August 31, 1999
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT Dl
REQWEST SWITCHLESS RESELLER SERVICE DESCRIPTION
WHOLESALE SERVICES AGREEMENT
SWITCHED SERVICES PROVISIONING
If necessary to provision the Qwest Services to Customer, Qwest will install
properly provided orders of Customer into the Qwest billing system. Such
installation shall be within a reasonable time, in accordance with Qwest's
standard policies and procedures, and after receipt of such order in an accurate
manner by Qwest from Customer. Such installation may be by direct data transfer
from Customer into the Qwest system or may be by manual installation. In the
normal course of its business, Qwest will notify the Local Exchange Carrier
("LEC") of all ANI orders that have been installed into the Qwest billing
system. No orders may be added to Qwest's billing system without a PIC request
to the LEC. Qwest will assume no responsibility for the maintenance or tracking
of ANIs or requests that do not include a PIC request.
The customer understands and agrees that the successful activation of orders in
Qwest's billing and provisioning systems is contingent upon the completeness and
accuracy of the information provided to Qwest with these orders. If this
information is not complete or accurate, the order will be returned to Customer
for correction and resubmission to Qwest. If the records of the LEC and those
supplied to Qwest by Customer do not coincide in every respect, the LEC may
reject the order installation from Qwest. In such event, the request will be
returned to Qwest for correction and resubmission. If the End User has converted
to Qwest service by the LEC for another reason, the End User will be billed by
the LEC for any use of Qwest telecommunications services, the End User will
receive Qwest Services at Qwest standard Tariff or program rates, and Qwest will
receive all such revenue from any use of the Qwest Services.
As Customer performs its own End User order entry into Qwest's billing system
(the "Order Entry"), Customer acknowledges that Qwest may audit, at any time,
Customer's ANIs present in Qwest's billing system to verify the accurate billing
of Services provided to Customer based upon such Order Entry. Customer agrees
that it shall be responsible for all charges for Services usage that result from
Customer's Order Entry, even if not correctly entered. Customer further
acknowledges and agrees that Qwest is entitled to correct any incorrect billing
resulting from Customer's incorrect Order Entry and, notwithstanding anything to
the contrary in the Agreement limiting Qwest's right to backbill any amounts, to
bill Customer for any amounts that were not billed due to Customer's Order Entry
error ("Backbill"). Customer agrees to pay any such Backbill amounts. Customer
agrees that Qwest shall be entitled to correct any Customer Order Entry Qwest
has found to be incorrect and shall notify Customer of any such corrections.
If the LEC, for whatever reason, has not designated Qwest as each End User's
PIC, the End User will be billed in accordance with the records of the LEC. Each
Party will use reasonable efforts to notify the other Party of any rejection of
order installation by the LEC. Customer is responsible for determining the
correct information for reinstallation of the order. Customer understands that
Qwest shall have no liability for any acts or omissions of LECs, including the
making or failure to make PIC changes.
Orders for installation, change, block, and disconnection are to be transmitted
to Qwest via a file format, determined and managed by Qwest, or via Remote
Control's interactive order entry system or Qwest's then existing system. Qwest
makes no guarantee to Customer of the existence of any particular provisioning,
order or management system. If Customer elects to utilize certain interactive
order systems then available by Qwest, Customer may be required to execute other
agreements, including without limitation, software license agreements, related
to the use of such systems. Included in these orders must be all information
necessary to properly load the order into Qwest's billing system and to
provision the order with a third party, such as the LEC.
PIC AUTHORIZATIONS
(A) Customer shall obtain a signed or verbal PIC authorization with true third
party verification in accordance with then applicable and existing state
and FCC guidelines for each ANI ordered by Customer. Upon an oral or
written request by Qwest, Customer shall immediately produce a copy of the
written or verbal authorization. Qwest reserves the right not to process
or turn up ANIs until Customer has produced appropriate written or verbal
authorizations requested by Qwest. If Customer does not comply with the
request for PIC authorizations, Qwest reserves the right not to accept
additional ANIs until Customer complies. If Customer elects to provide
only direct dial (or so-called "1+") services, and Qwest will act as
2 August 31, 1999
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT Dl
REQWEST SWITCHLESS RESELLER SERVICE DESCRIPTION
WHOLESALE SERVICES AGREEMENT
the interexchange carrier ("IXC") for operator-assisted (or so-called
"0+") traffic generated by Customer's End Users, Customer acknowledges
that Qwest shall be the primary carrier for 0+ operator assisted intraLATA
and interLATA long distance services. Customer agrees to inform its End
Users of the foregoing.
(B) In the event a LEC or any regulatory entity assesses Qwest any charge,
fine, forfeiture, or fee for improper or inadequate PIC authorizations
relating to Customer's service, Customer shall promptly reimburse Qwest
for all such charges plus a Qwest management fee of twenty-five dollars
($25.00) per ANI ordered by Customer that is reasonably deemed by Qwest to
lack proper service authorization or PIC verification (the "Improper PIC
Fee").
(C) Upon the request of Qwest, Customer shall promptly provide to Qwest or the
LEC, at Customer's expense, any documentation required by the LEC
regarding PIC selections or authorizations from Customer's End Users. In
addition, Customer shall promptly and in good faith cooperate with Qwest
and all LECs in investigating and attempting to resolve all PIC selection
and authorization disputes.
CANCELLATION, BLOCKING, AND DISCONNECTION OF SERVICE
Without affecting Customer's minimum usage, Revenue Commitment or other
obligations herein, Customer may cancel, disconnect, or terminate a portion of
the Service when Customer's End User has provided a new PIC authorization to
another carrier. Customer shall be financially responsible for Service provided
under this Agreement until such time that the new PIC change is implemented.
TOLL FREE SERVICES PORTABILITY
Qwest will provide toll free inbound services to End Users desiring to keep
their then current toll free number provided that the End User signs a Letter of
Agency designating Qwest as the Responsible Organization for the toll free
number.
PICC, PAYPHONE COMPENSATION, AND OTHER REGULATORY REFORM RELATED SURCHARGES
As a result of regulatory reform, certain government subsidies and other
government-imposed charges previously collected through local exchange access
usage rates are assessed directly upon interexchange carriers on a per-line or
per-call basis. The following flat rate charges may apply to Customer's total
charges as a result, and Customer agrees to be responsible for paying for such
fees. These charges will be itemized on the customer's bill and are in addition
to the rates for services described in Exhibit D2.
o Payphone Compensation Surcharge: [***] per payphone originated, completed
call will be assessed.
o PICC (Primary Interexchange Carrier Charge): A fee per line presubscribed
to Qwest/LCI that may vary as follows, depending upon line type. These
charges are subject to change.
o [***] for each Single Line Business and Primary Residential line
o [***] for each Subsequent Residential line
o [***] for each Multi-Line Business line
OTHER ANCILLARY FEES
Monthly Electronic Billing Call Detail Delivery per [***]
disk/tape/CD ROM
In your choice of media including Magnetic
Tape, CD ROM, or Diskette
PIC Processing Charge * [***]
Electronic Provisioning [***]
8XX SMS Number Storage Charge per active [***]
3 August 31, 1999
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT Dl
REQWEST SWITCHLESS RESELLER SERVICE DESCRIPTION
WHOLESALE SERVICES AGREEMENT
number
* Excluding the Improper PIC Fee
TOLL FREE DIRECTORY ASSISTANCE LISTING
At the Customer's written request, Qwest will provide a Toll Free Services
Directory Assistance listing in the national database. The Customer understands
that this Service is ultimately provided by a third party, and subject to the
policies and procedures set forth by this third party. The charges for this
service are as follows:
Normal Set-Up Fee: [***] Non-Recurring Charge
Three Day Expedite Set-Up Fee: [***] Non-Recurring Charge
Change or Cancel Fee: [***] Non-Recurring Charge
Monthly Recurring Charge: [***] Monthly-Recurring Charge
PROJECT ACCOUNT CODES (PAC)
Qwest will provide Project Account Codes for use with outbound and toll free
inbound services to Customer at the following rates:
o Outbound PAC (charges are per account):
Non-Verified PAC set up: [***]
Verified PAC set up: [***]
Non-Verified PAC Monthly Recurring Charges: [***]
Verified PAC Monthly Recurring Charges: [***]
o Toll Free PAC (charges are per toll free number):
Non-Verified PAC set up: [***]
Verified PAC set up: [***]
Non-Verified PAC Monthly Recurring Charges: [***]
Verified PAC Monthly Recurring Charges: [***]
Customer agrees to be responsible for such charges and that such charges shall
be due upon receipt in accordance with the payment terms and conditions under
the Agreement.
CALLING CARD SERVICES
Qwest Reseller Calling Card Service offers domestic-to-domestic,
domestic-to-international and international origination calling card service
from certain countries with the use of a fourteen digit authorization code,
consisting of 10 digits plus a 4 digit PIN. Customer shall request the
provision, and Qwest shall provide, the Reseller Calling Card Service, through
and in accordance with the completion and submission of Qwest's Calling Card
Order Form and order procedures in effect, as may be changed from time to time.
Qwest's Calling Card Service offers two options with respect to the branding of
the platform:
o Generic Calling Card Option, and
o Private-Labeled Calling Card Option.
The Generic Calling Card offers no branding on the platform or in the branding
of Operator Services calls. The Private Labeled version of Qwest's Calling Card
Service offers branding in the Customer's name for the greeting and closing
platform scripts; the request of a Toll Free access number to the platform;
branding of the Operator Services greeting in the Customer's name; and routing
of customer service calls to the Customer's own customer service center.
For both Calling Card Service options, the customer is responsible for all
calling card production, fulfillment, billing, collections, tariffing, and
fraudulent use.
4 August 31, 1999
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT Dl
REQWEST SWITCHLESS RESELLER SERVICE DESCRIPTION
WHOLESALE SERVICES AGREEMENT
CUSTOMIZED GREETING AND CLOSING MESSAGES WITH PRIVATE-LABELED CALLING CARD
SERVICES
With the Private-Labeled Calling Card, the Customer will provide to Qwest a
requested branded message for platform greeting and closing. These branded
messages must be sent to Qwest's Account Management group on a diskette
containing the two pre-recorded customized .wav files. The .wav files must meet
the following specifications:
o 22,500 Hz, 16-bit Mono
o greeting and closing message should be saved as two different files
o submitted to Qwest on a 3.5" diskette
o leading and trailing noise must be removed
o One (1) second of silence is required in front of the message and one (1)
second of silence after the message is required to allow for message
queuing on the 8XX recording.
Qwest reserves the right to approve or reject Customer greeting and closing
messages that are to be placed on the platform.
CUSTOMER SERVICE CALL ROUTING WITH PRIVATE-LABELED CALLING CARD SERVICES
With the Private-Labeled Calling Card, Qwest will provide customer service
routing to the Customer's customer service line for calls originating in the
continental United States. The customer will be required to provide Qwest with
the customer service routing number on the Calling Card Order Form. Three
consecutive mistakes in number dialing will cause calls to be forwarded to
Customer's Customer Service.
OPERATOR SERVICES BRANDING WITH PRIVATE-LABELED CALLING CARD SERVICES
With the Private-Labeled Calling Card, Customers may elect to customize its
operator services greeting for domestic-originated calling. Greeting content
should be provided by the customer by filling out the appropriate section in the
Private Label Travel Card Order Form. Qwest reserves the right to approve or
reject these greetings prior to submission or use. Dialing "0" or 15 seconds of
dialing unresponsiveness by the card user will cause a call to be forwarded to
Qwest Operator Services for the fees as described below in this Exhibit.
CALLING CARD SERVICE CHARGES
Calling Card Nonrecurring Charges
The Customer will pay a platform implementation fee of [***] per Access Number
associated with the Private Labeled Calling Card option to Qwest in accordance
with the agreed-upon payment terms and conditions set forth in the Agreement and
the Calling Card Order Form. This charge shall be credited to subsequent
Customer's Invoices from Qwest once Qwest collects Usage Revenue (as hereinafter
defined) payment of Customer's Travel Card Usage per Access Number billing which
exceeds [***].
Customer shall pay to Qwest a nonrefundable service fee of [***] for each
Customer-initiated scripting, greeting or routing change per Access Number after
Qwest's initial set-up of the Customer Calling Card platform.
Calling Card Operator Services Surcharge
A [***] per call surcharge will be applied to any call that is forwarded to
Qwest Operator Services from the calling card platform for all calls originating
in the continental United States. This charge will be assessed in addition to
metered usage charges incurred by the call.
INSTALLATION AND MONTHLY CHARGES FOR DEDICATED ACCESS SERVICES
Installation and monthly charges associated with dedicated access services will
be billed to Customer, and Customer agrees to pay such charges in accordance
with the payment terms and conditions under the Agreement. These charges include
those associated with local loops, CSU/DSU, channel card, T-1 centrex cards and
any other
5 August 31, 1999
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT Dl
REQWEST SWITCHLESS RESELLER SERVICE DESCRIPTION
WHOLESALE SERVICES AGREEMENT
equipment or services provided by Qwest in order to install, test and maintain
dedicated access lines. Monthly recurring charges will be those standard rates
unless otherwise negotiated by Qwest and Customer. Installation charges will be
on an individual case basis.
DISCOUNTS
The ReQwest Discount Schedule contains two options, as follows:
1) Standard Revenue Discounts: The Discounts set forth in the Standard Revenue
Discount Schedule will be applied to ReQwest Usage Revenue (as hereinafter
defined) as set forth in the Recipient Services Schedule and according to
Customer's actual usage of the contributing Services, as set forth in the
Contributing Services Schedule. The Customer need not commit to any Service
Revenue Commitment or Term Commitment (both as hereinafter defined), other than
those which otherwise may be set forth in the Switchless Reseller Services
Agreement. For purposes of this Agreement and the Exhibits, "Usage Revenue"
shall mean Customer's total monthly recurring and usage charges, after
applicable discounts are applied, for applicable Qwest Services based upon the
agreed-upon rates, exclusive of charges, fees and other amounts owing for,
related to or constituting taxes, surcharges, credits, chargebacks, unpaid
amounts, co-location, equipment, installation, local loops and other
nonrecurring charges.
2) Committed Revenue Discounts: If the Customer commits to a specified Usage
Revenue (the "Revenue Commitment") and term (the "Term Commitment"), the
Customer is eligible to receive the corresponding discount, as presented in the
Committed Revenue Discount Schedule, off the services listed in the Recipient
Services Schedule beginning with Customer's first usage of the Services. The
Revenue Commitment must be met by Customers usage of the Services listed in the
Contributing Services Schedule within the agreed-upon Term Commitment. If this
Revenue Commitment is not met by the end of the Term Commitment, the Customer
agrees that it will pay the shortfall charge as follows:
Revenue Commitment X Term Commitment (in months)
Less Customer's Actual Service Usage Revenue
------------------------------------------------
= "Deficiency" Charge Owed by Customer
In addition, Customer's Revenue Commitment will be evaluated on a periodic basis
by Qwest, depending upon the agreed-upon Term Commitment. The formula and
milestones used by Qwest to evaluate a Customer's Revenue Commitment progress
are described in the Term Commitment Ramp Schedule.
Customer acknowledges and agrees that if the Customer fails to meet any of the
above-specified milestones, Qwest may, at Qwest's sole determination, either:
o Upon thirty (30) calendar days written notice to Customer, collect the
Deficiency Charge consisting of the difference between the Revenue
Commitment owed to Qwest by the end of the particular measuring milestone
period and the aggregate Usage Revenue actually paid to and retained by
Qwest by such milestone, or
o Renegotiate the Agreement at rates and term mutually acceptable to Qwest
and Customer.
Customer acknowledges and agrees that certain rates and discounts would not be
offered to Customer without Customer's agreement to make the Revenue Commitment.
Customer and Qwest agree that any Deficiency Charge or relief provided hereunder
represents a mutual good faith estimate of, and bears a reasonable relationship
to actual damages to Qwest in the event of Customer failure to meet such Revenue
Commitment. Customer agrees that such Deficiency Charge does not represent a
penalty of any kind and that such charges shall be obligations of Customer
subject to specific performance.
The Customer may not meet the total Revenue Commitment (monthly Revenue
Commitment X (times) the number of months in the Term Commitment) in less time
than one-half of the Term Commitment.
6 August 31, 1999
QWEST CONFIDENTIAL AND PROPRIETARY2
<PAGE>
EXHIBIT Dl
REQWEST SWITCHLESS RESELLER SERVICE DESCRIPTION
WHOLESALE SERVICES AGREEMENT
Standard Revenue Discount Schedule
---------------------------------------------------------------
Monthly Revenue* Standard Discounts without
Revenue Commitment
===============================================================
$0-$24,999.999 [***]
---------------------------------------------------------------
$25,000.000-$99,999.99 [***]
---------------------------------------------------------------
$100,000.00 - $249,999.99 [***]
---------------------------------------------------------------
$250,000.00 - $499,999.99 [***]
---------------------------------------------------------------
$500,000.00 - $999,999.99 [***]
---------------------------------------------------------------
$1,000,000.00 - $1,999,999.99 [***]
---------------------------------------------------------------
$2,000,000 and above [***]
---------------------------------------------------------------
Committed Revenue Discount Schedule
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
One Year Commitment Two Year Commitment Three Year Commitment
- ----------------------------------------------------------------------------------------
Term Term Term
Commitment Discount Commitment Discount Commitment Discount
========================================================================================
<S> <C> <C> <C> <C> <C> <C>
$300,000 [***] $600,000 [***] $900,000 [***] [***]
- ----------------------------------------------------------------------------------------
$1,200,000 [***] $2,400,000 [***] $3,600,000 [***] [***]
- ----------------------------------------------------------------------------------------
$3,000,000 [***] $6,000,000 [***] $9,000,000 [***] [***]
- ----------------------------------------------------------------------------------------
$6,000,000 [***] $12,000,000 [***] $18,000,000 [***] [***]
- ----------------------------------------------------------------------------------------
$12,000,000 [***] $24,000,000 [***] $36,000,000 [***] [***]
- ----------------------------------------------------------------------------------------
$24,000,000 + [***] $48,000,000 + [***] $72,000,000 + [***] [***]
- ----------------------------------------------------------------------------------------
</TABLE>
Term Commitment Ramp Schedule
- --------------------------------------------------------------------------------
Milestone Minimum Usage Requirement
--------------------------------------------------------------
Ramp Milestone One Year Two Year Three Year
================================================================================
6th Month [***] of commitment N/A N/A
- --------------------------------------------------------------------------------
12th Month [***] of commitment [***] of commitment [***] of commitment
- --------------------------------------------------------------------------------
24th Month N/A [***] of commitment [***] of commitment
- --------------------------------------------------------------------------------
36th Month N/A N/A [***] of commitment
- --------------------------------------------------------------------------------
Contributing Services Schedule
- --------------------------------------------------------------------------------
Contributing Services*
- --------------------------------------------------------------------------------
All ReQwest Switchless Reseller Domestic Inbound and Outbound Services
- --------------------------------------------------------------------------------
All ReQwest Switchless Reseller International, Canadian, and Mexican Services
- --------------------------------------------------------------------------------
All ReQwest Switchless Reseller Calling Card Services
- --------------------------------------------------------------------------------
All ReQwest Switchless Reseller Directory Assistance Services
- --------------------------------------------------------------------------------
All Domestic Qwest Express Originating and Terminating Usage
- --------------------------------------------------------------------------------
All Qwest Express International Terminating Usage
- --------------------------------------------------------------------------------
All Qwest Express Directory Assistance Usage
- --------------------------------------------------------------------------------
All Qwest Express Canadian Termination Usage
- --------------------------------------------------------------------------------
All Qwest Express Mexican Termination Usage
- --------------------------------------------------------------------------------
All Dedicated Facilities Monthly Recurring Charges
- --------------------------------------------------------------------------------
7 August 31, 1999
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT Dl
REQWEST SWITCHLESS RESELLER SERVICE DESCRIPTION
WHOLESALE SERVICES AGREEMENT
* Charges, fees and other amounts owing for, related to or constituting taxes,
surcharges, credits, chargebacks, uncollectable Customer charges, pass-through
charges, equipment, installation charges and local loops shall not be included
as part of Usage Revenue or the Revenue Commitment or Contributing Services.
Recipient Services Schedule
- --------------------------------------------------------------------------------
Services Eligible to Receive ReQwest Discounts
- --------------------------------------------------------------------------------
ReQwest Switchless Reseller Domestic Inbound and Outbound Interstate Services
- --------------------------------------------------------------------------------
Customer selects and agrees with the following Discount Option (indicate
selected option, mark amounts, and initial as appropriate):
|X| Standard Revenue Discount Option at the Discounts per the above Discount
Chart
|_| Revenue Commitment Discount Option
|_| per month Revenue Commitment Volume, and
|_| year Term Commitment, with
|_| % discount.
8 August 31, 1999
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
ReQwest
SWITCHLESS RESELLER 1+ OUTBOUND
================================================================================
1+ (OUTBOUND) BASE RATES
SWITCHED DEDICATED
STATE INTERSTATE INTRASTATE INTERSTATE INTRASTATE
=============================================================
AL [***] [***] [***] [***]
-------------------------------------------------------------
AR [***] [***] [***] [***]
-------------------------------------------------------------
AZ [***] [***] [***] [***]
-------------------------------------------------------------
CA [***] [***] [***] [***]
-------------------------------------------------------------
CO [***] [***] [***] [***]
-------------------------------------------------------------
CT [***] [***] [***] [***]
-------------------------------------------------------------
DC [***] [***] [***] [***]
-------------------------------------------------------------
DE [***] [***] [***] [***]
-------------------------------------------------------------
FL [***] [***] [***] [***]
-------------------------------------------------------------
GA [***] [***] [***] [***]
-------------------------------------------------------------
IA [***] [***] [***] [***]
-------------------------------------------------------------
ID [***] [***] [***] [***]
-------------------------------------------------------------
IL [***] [***] [***] [***]
-------------------------------------------------------------
IN [***] [***] [***] [***]
-------------------------------------------------------------
KS [***] [***] [***] [***]
-------------------------------------------------------------
KY [***] [***] [***] [***]
-------------------------------------------------------------
LA [***] [***] [***] [***]
-------------------------------------------------------------
MA [***] [***] [***] [***]
-------------------------------------------------------------
MD [***] [***] [***] [***]
-------------------------------------------------------------
ME [***] [***] [***] [***]
-------------------------------------------------------------
MI [***] [***] [***] [***]
-------------------------------------------------------------
MN [***] [***] [***] [***]
-------------------------------------------------------------
MO [***] [***] [***] [***]
-------------------------------------------------------------
MS [***] [***] [***] [***]
-------------------------------------------------------------
MT [***] [***] [***] [***]
-------------------------------------------------------------
NC [***] [***] [***] [***]
-------------------------------------------------------------
ND [***] [***] [***] [***]
-------------------------------------------------------------
NE [***] [***] [***] [***]
-------------------------------------------------------------
NH [***] [***] [***] [***]
-------------------------------------------------------------
NJ [***] [***] [***] [***]
-------------------------------------------------------------
NM [***] [***] [***] [***]
-------------------------------------------------------------
NV [***] [***] [***] [***]
-------------------------------------------------------------
NY [***] [***] [***] [***]
-------------------------------------------------------------
OH [***] [***] [***] [***]
-------------------------------------------------------------
OK [***] [***] [***] [***]
-------------------------------------------------------------
OR [***] [***] [***] [***]
-------------------------------------------------------------
PA [***] [***] [***] [***]
-------------------------------------------------------------
RI [***] [***] [***] [***]
-------------------------------------------------------------
SC [***] [***] [***] [***]
-------------------------------------------------------------
SD [***] [***] [***] [***]
-------------------------------------------------------------
TN [***] [***] [***] [***]
-------------------------------------------------------------
TX [***] [***] [***] [***]
-------------------------------------------------------------
UT [***] [***] [***] [***]
-------------------------------------------------------------
VA [***] [***] [***] [***]
-------------------------------------------------------------
VT [***] [***] [***] [***]
-------------------------------------------------------------
Effective the first day of the
billing cycle AFTER the execution of the New Contract.
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER 1+ OUTBOUND
================================================================================
1+ (OUTBOUND) BASE RATES
SWITCHED DEDICATED
STATE INTERSTATE INTRASTATE INTERSTATE INTRASTATE
=============================================================
WA [***] [***] [***] [***]
-------------------------------------------------------------
WI [***] [***] [***] [***]
-------------------------------------------------------------
WV [***] [***] [***] [***]
-------------------------------------------------------------
WY [***] [***] [***] [***]
================================================================================
Off-Shore Pricing:
================================================================================
1+ (OUTBOUND) RATES*
SWITCHED DEDICATED
=============================================================
AK [***] [***]
-------------------------------------------------------------
HI [***] [***]
-------------------------------------------------------------
PR [***] [***]
-------------------------------------------------------------
USVI [***] [***]
================================================================================
* From continental US to AK/HI/PR/USVI
Interstate and Intrastate calls terminating within the continental US are billed
based upon originating state.
Calls terminating "Off-Shore" are billed based upon terminating State/Region.
Interstate and Intrastate billing increments: 6 seconds initial; 6 second
increments
All Directory Assistance Calls will be billed at $.55 per call.
Effective the first day of the
billing cycle AFTER the execution of the New Contract.
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER 800/8XX INBOUND
================================================================================
800/8XX (INBOUND) BASE RATES
SWITCHED DEDICATED
STATE INTERSTATE INTRASTATE INTERSTATE INTRASTATE
=============================================================
AL [***] [***] [***] [***]
-------------------------------------------------------------
AR [***] [***] [***] [***]
-------------------------------------------------------------
AZ [***] [***] [***] [***]
-------------------------------------------------------------
CA [***] [***] [***] [***]
-------------------------------------------------------------
CO [***] [***] [***] [***]
-------------------------------------------------------------
CT [***] [***] [***] [***]
-------------------------------------------------------------
DC [***] [***] [***] [***]
-------------------------------------------------------------
DE [***] [***] [***] [***]
-------------------------------------------------------------
FL [***] [***] [***] [***]
-------------------------------------------------------------
GA [***] [***] [***] [***]
-------------------------------------------------------------
IA [***] [***] [***] [***]
-------------------------------------------------------------
ID [***] [***] [***] [***]
-------------------------------------------------------------
IL [***] [***] [***] [***]
-------------------------------------------------------------
IN [***] [***] [***] [***]
-------------------------------------------------------------
KS [***] [***] [***] [***]
-------------------------------------------------------------
KY [***] [***] [***] [***]
-------------------------------------------------------------
LA [***] [***] [***] [***]
-------------------------------------------------------------
MA [***] [***] [***] [***]
-------------------------------------------------------------
MD [***] [***] [***] [***]
-------------------------------------------------------------
ME [***] [***] [***] [***]
-------------------------------------------------------------
MI [***] [***] [***] [***]
-------------------------------------------------------------
MN [***] [***] [***] [***]
-------------------------------------------------------------
MO [***] [***] [***] [***]
-------------------------------------------------------------
MS [***] [***] [***] [***]
-------------------------------------------------------------
MT [***] [***] [***] [***]
-------------------------------------------------------------
NC [***] [***] [***] [***]
-------------------------------------------------------------
ND [***] [***] [***] [***]
-------------------------------------------------------------
NE [***] [***] [***] [***]
-------------------------------------------------------------
NH [***] [***] [***] [***]
-------------------------------------------------------------
NJ [***] [***] [***] [***]
-------------------------------------------------------------
NM [***] [***] [***] [***]
-------------------------------------------------------------
NV [***] [***] [***] [***]
-------------------------------------------------------------
NY [***] [***] [***] [***]
-------------------------------------------------------------
OH [***] [***] [***] [***]
-------------------------------------------------------------
OK [***] [***] [***] [***]
-------------------------------------------------------------
OR [***] [***] [***] [***]
-------------------------------------------------------------
PA [***] [***] [***] [***]
-------------------------------------------------------------
RI [***] [***] [***] [***]
-------------------------------------------------------------
SC [***] [***] [***] [***]
-------------------------------------------------------------
SD [***] [***] [***] [***]
-------------------------------------------------------------
TN [***] [***] [***] [***]
-------------------------------------------------------------
TX [***] [***] [***] [***]
-------------------------------------------------------------
UT [***] [***] [***] [***]
-------------------------------------------------------------
VA [***] [***] [***] [***]
-------------------------------------------------------------
VT [***] [***] [***] [***]
-------------------------------------------------------------
Effective the first day of the
billing cycle AFTER the execution of the New Contract.
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER 800/8XX INBOUND
================================================================================
800/8XX (INBOUND) BASE RATES
SWITCHED DEDICATED
STATE INTERSTATE INTRASTATE INTERSTATE INTRASTATE
=============================================================
WA [***] [***] [***] [***]
-------------------------------------------------------------
WI [***] [***] [***] [***]
-------------------------------------------------------------
WV [***] [***] [***] [***]
-------------------------------------------------------------
WY [***] [***] [***] [***]
================================================================================
================================================================================
800/8XX (INBOUND) RATES*
SWITCHED DEDICATED
=============================================================
Canada [***] [***]
================================================================================
Off-Shore Pricing:
================================================================================
800/8XX (INBOUND) RATES*
SWITCHED DEDICATED
=============================================================
AK [***] [***]
HI [***] [***]
PR [***] [***]
USVI [***] [***]
================================================================================
* to the Continental US, Interstate Only
Interstate and Intrastate calls originating and terminating within the
continental US are billed based upon terminating state.
Calls originating "Off-Shore" are billed based upon originating State/Region.
Interstate and Intrastate billing increments: 6 seconds initial; 6 second
increments
Effective the first day of the
billing cycle AFTER the execution of the New Contract.
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER INTERNATIONAL
================================================================================
1+ (OUTBOUND) RATES
COUNTRY CODE SWITCHED DEDICATED
=============================
Afghanistan 93 [***] [***]
-----------------------------
Albania 355 [***] [***]
-----------------------------
Algeria 213 [***] [***]
-----------------------------
American Samoa 684 [***] [***]
-----------------------------
Andorra 376 [***] [***]
-----------------------------
Angola 244 [***] [***]
-----------------------------
Anguilla 809 [***] [***]
-----------------------------
Antarctica (Casey&Scott) 672 [***] [***]
-----------------------------
Antigua 809 [***] [***]
-----------------------------
Argentina 54 [***] [***]
-----------------------------
Armenia 374 [***] [***]
-----------------------------
Aruba 297 [***] [***]
-----------------------------
Ascension Island 247 [***] [***]
-----------------------------
Australia 61 [***] [***]
-----------------------------
Austria 43 [***] [***]
-----------------------------
Azerbaijan 994 [***] [***]
-----------------------------
Azores 992 [***] [***]
-----------------------------
Bahamas 809 [***] [***]
-----------------------------
Bahrain 973 [***] [***]
-----------------------------
Bangladesh, People's Republic of 880 [***] [***]
-----------------------------
Barbados 809 [***] [***]
-----------------------------
Belarus 375 [***] [***]
-----------------------------
Belgium 32 [***] [***]
-----------------------------
Belize 501 [***] [***]
-----------------------------
Benin, People's Republic of 229 [***] [***]
-----------------------------
Bermuda 809 [***] [***]
-----------------------------
Bhutan 975 [***] [***]
-----------------------------
Bolivia 591 [***] [***]
-----------------------------
Bosnia & Herzegovina, Republic of 387 [***] [***]
-----------------------------
Botswana 267 [***] [***]
-----------------------------
Brazil 55 [***] [***]
-----------------------------
British Virgin Islands 809 [***] [***]
-----------------------------
Brunei 673 [***] [***]
-----------------------------
Bulgaria 359 [***] [***]
-----------------------------
Burkina Faso 226 [***] [***]
-----------------------------
Burundi 257 [***] [***]
-----------------------------
Cambodia 855 [***] [***]
-----------------------------
Cameroon, United Republic of 237 [***] [***]
-----------------------------
Canada N/A [***] [***]
-----------------------------
Cape Verde Islands 238 [***] [***]
-----------------------------
Cayman Islands 809 [***] [***]
-----------------------------
Central African Republic 236 [***] [***]
-----------------------------
Chad 235 [***] [***]
-----------------------------
Chile 56 [***] [***]
-----------------------------
China, People's Republic of 86 [***] [***]
-----------------------------
Christmas & Cocos Islands 672 [***] [***]
-----------------------------
Colombia 57 [***] [***]
-----------------------------
Comoros, Fed. Islamic Rep. 269 [***] [***]
-----------------------------
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER INTERNATIONAL
================================================================================
1+ (OUTBOUND) RATES
COUNTRY CODE SWITCHED DEDICATED
=============================
Congo, Republic of 242 [***] [***]
-----------------------------
Cook Islands 682 [***] [***]
-----------------------------
Costa Rica 506 [***] [***]
-----------------------------
Croatia, Republic of 385 [***] [***]
-----------------------------
Cuba 53 [***] [***]
-----------------------------
Cyprus 357 [***] [***]
-----------------------------
Czech Republic 42 / 420 [***] [***]
-----------------------------
Denmark 45 [***] [***]
-----------------------------
Diego Garcia 246 [***] [***]
-----------------------------
Djibouti, Republic of 253 [***] [***]
-----------------------------
Dominica 809 [***] [***]
-----------------------------
Dominican Republic 809 [***] [***]
-----------------------------
Ecuador 593 [***] [***]
-----------------------------
Egypt, Arab Republic of 20 [***] [***]
-----------------------------
El Salvador 503 [***] [***]
-----------------------------
Equatorial Guinea, Republic of 240 [***] [***]
-----------------------------
Eritrea 291 [***] [***]
-----------------------------
Estonia 372 [***] [***]
-----------------------------
Ethiopia 251 [***] [***]
-----------------------------
Faeroe Islands 298 [***] [***]
-----------------------------
Falkland Islands 500 [***] [***]
-----------------------------
Fiji Islands 679 [***] [***]
-----------------------------
Finland 358 [***] [***]
-----------------------------
France 33 [***] [***]
-----------------------------
French Antilles (Martinique) 596 [***] [***]
-----------------------------
French Guiana 594 [***] [***]
-----------------------------
French Polynesia 689 [***] [***]
-----------------------------
Gabon Republic 241 [***] [***]
-----------------------------
Gambia 220 [***] [***]
-----------------------------
Georgia 995 [***] [***]
-----------------------------
Germany, Fed Republic of 49 [***] [***]
-----------------------------
Ghana 233 [***] [***]
-----------------------------
Gibraltar 350 [***] [***]
-----------------------------
Greece 30 [***] [***]
-----------------------------
Greenland 299 [***] [***]
-----------------------------
Grenada 809 [***] [***]
-----------------------------
Guadeloupe 590 [***] [***]
-----------------------------
Guam 671 [***] [***]
-----------------------------
Guantanamo Bay 5399 [***] [***]
-----------------------------
Guatemala 502 [***] [***]
-----------------------------
Guinea, Peoples Rev. Rep. 224 [***] [***]
-----------------------------
Guinea-Bissau 245 [***] [***]
-----------------------------
Guyana 592 [***] [***]
-----------------------------
Haiti 509 [***] [***]
-----------------------------
Honduras 504 [***] [***]
-----------------------------
Hong Kong 852 [***] [***]
-----------------------------
Hungary 36 [***] [***]
-----------------------------
Iceland 354 [***] [***]
-----------------------------
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER INTERNATIONAL
================================================================================
1+ (OUTBOUND) RATES
COUNTRY CODE SWITCHED DEDICATED
=============================
India 91 [***] [***]
-----------------------------
Indonesia 62 [***] [***]
-----------------------------
INMARSAT - Atlantic Ocean East 871 [***] [***]
-----------------------------
INMARSAT - Atlantic Ocean West 874 [***] [***]
-----------------------------
INMARSAT - Indian Ocean 873 [***] [***]
-----------------------------
INMARSAT - Pacific Ocean 872 [***] [***]
-----------------------------
Iran 98 [***] [***]
-----------------------------
Iraq 964 [***] [***]
-----------------------------
Ireland, Republic of 353 [***] [***]
-----------------------------
Iridium 881 [***] [***]
-----------------------------
Israel 972 [***] [***]
-----------------------------
Italy/Vatican City 39 [***] [***]
-----------------------------
Ivory Coast, Republic of 225 [***] [***]
-----------------------------
Jamaica 809 [***] [***]
-----------------------------
Japan 81 [***] [***]
-----------------------------
Jordan 962 [***] [***]
-----------------------------
Kazakhstan 7 [***] [***]
-----------------------------
Kenya, Republic of 254 [***] [***]
-----------------------------
Kiribati 686 [***] [***]
-----------------------------
Korea, Dem. People's Rep of (North) 850 [***] [***]
-----------------------------
Korea, Republic of (South) 82 [***] [***]
-----------------------------
Kuwait 965 [***] [***]
-----------------------------
Kyrgyzstan/ Krygyz Rep. 7 [***] [***]
-----------------------------
Laos 856 [***] [***]
-----------------------------
Latvia 371 [***] [***]
-----------------------------
Lebanon 961 [***] [***]
-----------------------------
Lesotho 266 [***] [***]
-----------------------------
Liberia 231 [***] [***]
-----------------------------
Libyan Arab Peoples Socialist
Jamahiriya 218 [***] [***]
-----------------------------
Liechtenstein 41 [***] [***]
-----------------------------
Lithuania 370 [***] [***]
-----------------------------
Luxembourg 352 [***] [***]
-----------------------------
Macau 853 [***] [***]
-----------------------------
Macedonia, The Former Yugoslav
Rep of 389 [***] [***]
-----------------------------
Madagascar, Dem. Rep. of 261 [***] [***]
-----------------------------
Malawi 265 [***] [***]
-----------------------------
Malaysia 60 [***] [***]
-----------------------------
Maldives, Republic of 960 [***] [***]
-----------------------------
Mali Republic 223 [***] [***]
-----------------------------
Malta 356 [***] [***]
-----------------------------
Marshall Islands 692 [***] [***]
-----------------------------
Mauritania, Islamic Republic of 222 [***] [***]
-----------------------------
Mauritius 230 [***] [***]
-----------------------------
Mayotte Island (Comoros) 269 [***] [***]
-----------------------------
Mexico Rate Step 1 [***] [***]
-----------------------------
Mexico Rate Step 2 [***] [***]
-----------------------------
Mexico Rate Step 3 [***] [***]
-----------------------------
Mexico Rate Step 4 [***] [***]
-----------------------------
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER INTERNATIONAL
================================================================================
1+ (OUTBOUND) RATES
COUNTRY CODE SWITCHED DEDICATED
=============================
Mexico Rate Step 5 [***] [***]
-----------------------------
Mexico Rate Step 6 [***] [***]
-----------------------------
Mexico Rate Step 7 [***] [***]
-----------------------------
Mexico Rate Step 8 [***] [***]
-----------------------------
Micronesia, Federal States of 691 [***] [***]
-----------------------------
Moldova 373 [***] [***]
-----------------------------
Monaco 377 [***] [***]
-----------------------------
Mongolian People's Republic 976 [***] [***]
-----------------------------
Montserrat 809 [***] [***]
-----------------------------
Morocco 212 [***] [***]
-----------------------------
Mozambique 258 [***] [***]
-----------------------------
Myanmar (Formerly Burma) 95 [***] [***]
-----------------------------
Namibia 264 [***] [***]
-----------------------------
Nauru 674 [***] [***]
-----------------------------
Nepal 977 [***] [***]
-----------------------------
Netherlands 31 [***] [***]
-----------------------------
Netherlands Antilles 599 [***] [***]
-----------------------------
Nevis 809 [***] [***]
-----------------------------
New Caledonia 687 [***] [***]
-----------------------------
New Zealand 64 [***] [***]
-----------------------------
Nicaragua 505 [***] [***]
-----------------------------
Niger Republic 227 [***] [***]
-----------------------------
Nigeria, Federal Republic of 234 [***] [***]
-----------------------------
Niue 683 [***] [***]
-----------------------------
Norfolk Island 672 [***] [***]
-----------------------------
Northern Mariana Islands
(including Saipa) 670 [***] [***]
-----------------------------
Norway 47 [***] [***]
-----------------------------
Oman 968 [***] [***]
-----------------------------
Pakistan 92 [***] [***]
-----------------------------
Palau, Republic of 680 [***] [***]
-----------------------------
Panama, Republic of 507 [***] [***]
-----------------------------
Papua New Guinea 675 [***] [***]
-----------------------------
Paraguay 595 [***] [***]
-----------------------------
Peru 51 [***] [***]
-----------------------------
Philippines 63 [***] [***]
-----------------------------
Poland, Republic of 48 [***] [***]
-----------------------------
Portugal 351 [***] [***]
-----------------------------
Qatar 974 [***] [***]
-----------------------------
Reunion Island 262 [***] [***]
-----------------------------
Romania, Socialist Republic of 40 [***] [***]
-----------------------------
Russian Federation 7 [***] [***]
-----------------------------
Rwanda 250 [***] [***]
-----------------------------
San Marino 378 [***] [***]
-----------------------------
Sao Tome 239 [***] [***]
-----------------------------
Saudi Arabia 966 [***] [***]
-----------------------------
Senegal Republic 221 [***] [***]
-----------------------------
Seychelles Islands 248 [***] [***]
-----------------------------
Sierra Leone 232 [***] [***]
-----------------------------
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER INTERNATIONAL
================================================================================
1+ (OUTBOUND) RATES
COUNTRY CODE SWITCHED DEDICATED
=============================
Singapore, Republic of 65 [***] [***]
-----------------------------
Slovakia 42 / 421 [***] [***]
-----------------------------
Slovenia, Republic of 386 [***] [***]
-----------------------------
Solomon Islands 677 [***] [***]
-----------------------------
Somalia 252 [***] [***]
-----------------------------
South Africa, Republic of 27 [***] [***]
-----------------------------
Spain 34 [***] [***]
-----------------------------
Sri Lanka, Democratic Socialist
Rep of 94 [***] [***]
-----------------------------
St. Helena 290 [***] [***]
-----------------------------
St. Kitts 809 [***] [***]
-----------------------------
St. Lucia 809 [***] [***]
-----------------------------
St. Pierre/Miquelon 508 [***] [***]
-----------------------------
St. Vincent/Grenadines 809 [***] [***]
-----------------------------
Sudan 249 [***] [***]
-----------------------------
Suriname, Republic of 597 [***] [***]
-----------------------------
Swaziland 268 [***] [***]
-----------------------------
Sweden 46 [***] [***]
-----------------------------
Switzerland 41 [***] [***]
-----------------------------
Syrian Arab Republic 963 [***] [***]
-----------------------------
Taiwan, Republic of China 886 [***] [***]
-----------------------------
Tajikistan 7 [***] [***]
-----------------------------
Tanzania 255 [***] [***]
-----------------------------
Thailand 66 [***] [***]
-----------------------------
Togo Republic of 228 [***] [***]
-----------------------------
Tokelau 690 [***] [***]
-----------------------------
Tonga Islands 676 [***] [***]
-----------------------------
Trinidad & Tobago, Democratic
Rep of 809 / 868 [***] [***]
-----------------------------
Tunisia 216 [***] [***]
-----------------------------
Turkey 90 [***] [***]
-----------------------------
Turkmenistan 7 [***] [***]
-----------------------------
Turks & Caicos 809 [***] [***]
-----------------------------
Tuvalu 688 [***] [***]
-----------------------------
Uganda 256 [***] [***]
-----------------------------
Ukraine 380 [***] [***]
-----------------------------
United Arab Emirates 971 [***] [***]
-----------------------------
United Kingdom 44 [***] [***]
-----------------------------
Uruguay 598 [***] [***]
-----------------------------
Uzbekistan 7 [***] [***]
-----------------------------
Vanuatu, Republic of 678 [***] [***]
-----------------------------
Venezuela 58 [***] [***]
-----------------------------
Vietnam 84 [***] [***]
-----------------------------
Wallis & Futuna Islands 681 [***] [***]
-----------------------------
Western Samoa 685 [***] [***]
-----------------------------
Yemen Arab Republic 967 [***] [***]
-----------------------------
Yemen Democratic Republic 969 [***] [***]
-----------------------------
Yugoslavia, Federal Republic
of (including 381 [***] [***]
-----------------------------
Zaire, Republic of 243 [***] [***]
-----------------------------
Zambia 260 [***] [***]
-----------------------------
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER INTERNATIONAL
================================================================================
1+ (OUTBOUND) RATES
COUNTRY CODE SWITCHED DEDICATED
=============================
Zimbabwe 263 [***] [***]
=============================
International (except for Mexico) billing increments: 30 seconds initial; 6
second increments
Mexico billing increments: 60 seconds initial; 60 second
increments
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER CALLING CARD
CALLING CARD RATES
================================================================================
FROM TO
C US A & H Can PR & USVI Mex IDDD
===================================================================
C US* [***] [***] [***] [***] (2) (3)
-------------------------------------------------------------------
A & H [***] [***] [***] [***] (2) (3)
-------------------------------------------------------------------
Can [***] [***] [***] [***] (2) (3)
-------------------------------------------------------------------
PR & USVI [***] [***] [***] [***] (2) (3)
-------------------------------------------------------------------
Mex (1) (1) (1) (1) (1) (1)
-------------------------------------------------------------------
IDDD (1) (1) (1) (1) (1) (1)
================================================================================
* a $1.00 surcharge will be applied per operator assisted call originating from
the Continental United States in addition to any applicable metered
charges for the call.
BILLING INCREMENTS
<TABLE>
<CAPTION>
==================================================================================================================
FROM TO
C US A & H Can PR & USVI Mex IDDD
Initial/ Initial/ Initial/ Initial/ Initial/ Initial/
Incremental Incremental Incremental Incremental Incremental Incremental
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
C US* [***] [***] [***] [***] [***] [***]
-------------------------------------------------------------------------------------------------------
A & H [***] [***] [***] [***] [***] [***]
-------------------------------------------------------------------------------------------------------
Can [***] [***] [***] [***] [***] [***]
-------------------------------------------------------------------------------------------------------
PR & USVI [***] [***] [***] [***] [***] [***]
-------------------------------------------------------------------------------------------------------
IDDD (1) (1) (1) (1) (1) (1)
-------------------------------------------------------------------------------------------------------
Mex (1) (1) (1) (1) (1) (1)
-------------------------------------------------------------------------------------------------------
O/A (1) (1) (1) (1) (1) (1)
==================================================================================================================
</TABLE>
Terms: C US Continental United States
A & H Alaska and Hawaii
Can Canada
PR & USVI Puerto Rico and United States Virgin Islands
IDDD International other than otherwise noted
Mex Mexico
0/A Operator Assisted Calls
(1) All calls from and to these areas are priced as per Qwest/LCI retail
tariff.
(2) For rates for calls from the US to Mexico, refer to the Continental US to
Mexico Calling Card Rate Exhibit
(3) For rates for calls from the US to International destinations, refer to
the US to IDDD Rate Exhibit
US TO MEXICO CALLING CARD RATES
===============================
Rate Step Rate
============
1 [***]
2 [***]
3 [***]
4 [***]
5 [***]
6 [***]
7 [***]
8 [***]
===============================
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER CALLING CARD US TO INTERNATIONAL
================================================================================
CONTINENTAL US
TO INTERNATIONAL
COUNTRY CODE CALLING CARD RATE
====================
Afghanistan 93 [***]
--------------------
Albania 355 [***]
--------------------
Algeria 213 [***]
--------------------
American Samoa 684 [***]
--------------------
Andorra 376 [***]
--------------------
Angola 244 [***]
--------------------
Anguilla 809 [***]
--------------------
Antarctica (Casey & Scott) 672 [***]
--------------------
Antigua 809 [***]
--------------------
Argentina 54 [***]
--------------------
Armenia 374 [***]
--------------------
Aruba 297 [***]
--------------------
Ascension Island 247 [***]
--------------------
Australia 61 [***]
--------------------
Austria 43 [***]
--------------------
Azerbaijan 994 [***]
--------------------
Azores 992 [***]
--------------------
Bahamas 809 [***]
--------------------
Bahrain 973 [***]
--------------------
Bangladesh, People's Republic of 880 [***]
--------------------
Barbados 809 [***]
--------------------
Belarus 375 [***]
--------------------
Belgium 32 [***]
--------------------
Belize 501 [***]
--------------------
Benin, People's Republic of 229 [***]
--------------------
Bermuda 809 [***]
--------------------
Bhutan 975 [***]
--------------------
Bolivia 591 [***]
--------------------
Bosnia & Herzegovina, Republic of 387 [***]
--------------------
Botswana 267 [***]
--------------------
Brazil 55 [***]
--------------------
British Virgin Islands 809 [***]
--------------------
Brunei 673 [***]
--------------------
Bulgaria 359 [***]
--------------------
Burkina Faso 226 [***]
--------------------
Burundi 257 [***]
--------------------
Cambodia 855 [***]
--------------------
Cameroon, United Republic of 237 [***]
--------------------
Cape Verde Islands 238 [***]
--------------------
Cayman Islands 809 [***]
--------------------
Central African Republic 236 [***]
--------------------
Chad 235 [***]
--------------------
Chile 56 [***]
--------------------
China, People's Republic of 86 [***]
--------------------
Christmas & Cocos Islands 672 [***]
--------------------
Colombia 57 [***]
--------------------
Comoros, Federal Islamic Republic of 269 [***]
--------------------
Congo, Republic of 242 [***]
--------------------
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER CALLING CARD US TO INTERNATIONAL
================================================================================
CONTINENTAL US
TO INTERNATIONAL
COUNTRY CODE CALLING CARD RATE
====================
Cook Islands 682 [***]
--------------------
Costa Rica 506 [***]
--------------------
Croatia, Republic of 385 [***]
--------------------
Cuba 53 [***]
--------------------
Cyprus 357 [***]
--------------------
Czech Republic 42 / 420 [***]
--------------------
Denmark 45 [***]
--------------------
Diego Garcia 246 [***]
--------------------
Djibouti, Republic of 253 [***]
--------------------
Dominica 809 [***]
--------------------
Dominican Republic 809 [***]
--------------------
Ecuador 593 [***]
--------------------
Egypt, Arab Republic of 20 [***]
--------------------
El Salvador 503 [***]
--------------------
Equatorial Guinea, Republic of 240 [***]
--------------------
Eritrea 291 [***]
--------------------
Estonia 372 [***]
--------------------
Ethiopia 251 [***]
--------------------
Faeroe Islands 298 [***]
--------------------
Falkland Islands 500 [***]
--------------------
Fiji Islands 679 [***]
--------------------
Finland 358 [***]
--------------------
France 33 [***]
--------------------
French Antilles (includes Martinique) 596 [***]
--------------------
French Guiana 594 [***]
--------------------
French Polynesia 689 [***]
--------------------
Gabon Republic 241 [***]
--------------------
Gambia 220 [***]
--------------------
Georgia 995 [***]
--------------------
Germany, Fed Republic of 49 [***]
--------------------
Ghana 233 [***]
--------------------
Gibraltar 350 [***]
--------------------
Greece 30 [***]
--------------------
Greenland 299 [***]
--------------------
Grenada 809 [***]
--------------------
Guadeloupe 590 [***]
--------------------
Guam 671 [***]
--------------------
Guantanamo Bay 5399 [***]
--------------------
Guatemala 502 [***]
--------------------
Guinea, Peoples Rev. Rep. 224 [***]
--------------------
Guinea-Bissau 245 [***]
--------------------
Guyana 592 [***]
--------------------
Haiti 509 [***]
--------------------
Honduras 504 [***]
--------------------
Hong Kong 852 [***]
--------------------
Hungary 36 [***]
--------------------
Iceland 354 [***]
--------------------
India 91 [***]
--------------------
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER CALLING CARD US TO INTERNATIONAL
================================================================================
CONTINENTAL US
TO INTERNATIONAL
COUNTRY CODE CALLING CARD RATE
====================
Indonesia 62 [***]
--------------------
INMARSAT - Atlantic Ocean East 871 [***]
--------------------
INMARSAT - Atlantic Ocean West 874 [***]
--------------------
INMARSAT - Indian Ocean 873 [***]
--------------------
INMARSAT - Pacific Ocean 872 [***]
--------------------
Iran 98 [***]
--------------------
Iraq 964 [***]
--------------------
Ireland, Republic of 353 [***]
--------------------
Iridium 881 [***]
--------------------
Israel 972 [***]
--------------------
Italy 39 [***]
--------------------
Ivory Coast, Republic of 225 [***]
--------------------
Jamaica 809 [***]
--------------------
Japan 81 [***]
--------------------
Jordan 962 [***]
--------------------
Kazakhstan 7 [***]
--------------------
Kenya, Republic of 254 [***]
--------------------
Kiribati 686 [***]
--------------------
Korea, Dem. People's Rep of (North) 850 [***]
--------------------
Korea, Republic of (South) 82 [***]
--------------------
Kuwait 965 [***]
--------------------
Kyrgyzstan/ Krygyz Republic 7 [***]
--------------------
Laos 856 [***]
--------------------
Latvia 371 [***]
--------------------
Lebanon 961 [***]
--------------------
Lesotho 266 [***]
--------------------
Liberia 231 [***]
--------------------
Libyan Arab Peoples Socialist Jamahiriya 218 [***]
--------------------
Liechtenstein 41 [***]
--------------------
Lithuania 370 [***]
--------------------
Luxembourg 352 [***]
--------------------
Macau 853 [***]
--------------------
Macedonia, The Former Yugoslav Rep of 389 [***]
--------------------
Madagascar, Democratic Republic of 261 [***]
--------------------
Malawi 265 [***]
--------------------
Malaysia 60 [***]
--------------------
Maldives, Republic of 960 [***]
--------------------
Mali Republic 223 [***]
--------------------
Malta 356 [***]
--------------------
Marshall Islands 692 [***]
--------------------
Mauritania, Islamic Republic of 222 [***]
--------------------
Mauritius 230 [***]
--------------------
Mayotte Island (and Comoros) 269 [***]
--------------------
Micronesia, Federal States of 691 [***]
--------------------
Moldova 373 [***]
--------------------
Monaco 377 [***]
--------------------
Mongolian People's Republic 976 [***]
--------------------
Montserrat 809 [***]
--------------------
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER CALLING CARD US TO INTERNATIONAL
================================================================================
CONTINENTAL US
TO INTERNATIONAL
COUNTRY CODE CALLING CARD RATE
====================
Morocco 212 [***]
--------------------
Mozambique 258 [***]
--------------------
Myanmar (Formerly Burma) 95 [***]
--------------------
Namibia 264 [***]
--------------------
Nauru 674 [***]
--------------------
Nepal 977 [***]
--------------------
Netherlands 31 [***]
--------------------
Netherlands Antilles 599 [***]
--------------------
Nevis 809 [***]
--------------------
New Caledonia 687 [***]
--------------------
New Zealand 64 [***]
--------------------
Nicaragua 505 [***]
--------------------
Niger Republic 227 [***]
--------------------
Nigeria, Federal Republic of 234 [***]
--------------------
Niue 683 [***]
--------------------
Norfolk Island 672 [***]
--------------------
Northern Mariana Islands (including Saipa 670 [***]
--------------------
Norway 47 [***]
--------------------
Oman 968 [***]
--------------------
Pakistan 92 [***]
--------------------
Palau, Republic of 680 [***]
--------------------
Panama, Republic of 507 [***]
--------------------
Papua New Guinea 675 [***]
--------------------
Paraguay 595 [***]
--------------------
Peru 51 [***]
--------------------
Philippines 63 [***]
--------------------
Poland, Republic of 48 [***]
--------------------
Portugal 351 [***]
--------------------
Qatar 974 [***]
--------------------
Reunion Island 262 [***]
--------------------
Romania, Socialist Republic of 40 [***]
--------------------
Russian Federation 7 [***]
--------------------
Rwanda 250 [***]
--------------------
San Marino 378 [***]
--------------------
Sao Tome 239 [***]
--------------------
Saudi Arabia 966 [***]
--------------------
Senegal Republic 221 [***]
--------------------
Seychelles Islands 248 [***]
--------------------
Sierra Leone 232 [***]
--------------------
Singapore, Republic of 65 [***]
--------------------
Slovakia 42 / 421 [***]
--------------------
Slovenia, Republic of 386 [***]
--------------------
Solomon Islands 677 [***]
--------------------
Somalia 252 [***]
--------------------
South Africa, Republic of 27 [***]
--------------------
Spain 34 [***]
--------------------
Sri Lanka, Democratic Socialist Rep of 94 [***]
--------------------
St. Helena 290 [***]
--------------------
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER CALLING CARD US TO INTERNATIONAL
================================================================================
CONTINENTAL US
TO INTERNATIONAL
COUNTRY CODE CALLING CARD RATE
====================
St. Kitts 809 [***]
--------------------
St. Lucia 809 [***]
--------------------
St. Pierre/Miquelon 508 [***]
--------------------
St. Vincent/Grenadines 809 [***]
--------------------
Sudan 249 [***]
--------------------
Suriname, Republic of 597 [***]
--------------------
Swaziland 268 [***]
--------------------
Sweden 46 [***]
--------------------
Switzerland 41 [***]
--------------------
Syrian Arab Republic 963 [***]
--------------------
Taiwan, Republic of China 886 [***]
--------------------
Tajikistan 7 [***]
--------------------
Tanzania 255 [***]
--------------------
Thailand 66 [***]
--------------------
Togo, Republic of 228 [***]
--------------------
Tokelau 690 [***]
--------------------
Tonga Islands 676 [***]
--------------------
Trinidad & Tobago, Democratic Rep of 809 / 868 [***]
--------------------
Tunisia 216 [***]
--------------------
Turkey 90 [***]
--------------------
Turkmenistan 7 [***]
--------------------
Turks & Caicos 809 [***]
--------------------
Tuvalu 688 [***]
--------------------
Uganda 256 [***]
--------------------
Ukraine 380 [***]
--------------------
United Arab Emirates 971 [***]
--------------------
United Kingdom 44 [***]
--------------------
Uruguay 598 [***]
--------------------
Uzbekistan 7 [***]
--------------------
Vanuatu, Republic of 678 [***]
--------------------
Vatican City 39 [***]
--------------------
Venezuela 58 [***]
--------------------
Vietnam 84 [***]
--------------------
Wallis & Futuna Islands 681 [***]
--------------------
Western Samoa 685 [***]
--------------------
Yemen Arab Republic 967 [***]
--------------------
Yemen Democratic Republic 969 [***]
--------------------
Yugoslavia, Federal Republic of (including 381 [***]
--------------------
Zaire, Republic of 243 [***]
--------------------
Zambia 260 [***]
--------------------
Zimbabwe 263 [***]
================================================================================
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
ReQwest
SWITCHLESS RESELLER CALLING CARD US TO INTERNATIONAL
<TABLE>
<CAPTION>
=====================================================================================================================
<S> <C> <C>
Originating Features NRC MRC
1) Extended call Coverage Option 1 - Allows calls to come [***] [***]
from Alaska and Hawaii.
2) Extended Call Coverage Option 2 - Allows calls to come [***] [***]
from Puerto Rico and us Virgin Islands.
3) Canadian Origination - Allows calls to come from Canada [***] [***]
(choose any or all area codes).
4) Tailored Call Coverage - Allows the 800 service number to [***] [***]
block calls from any number of states or domestic area codes.
Blocking can be done by state or NPA. Limited to 29 exchanges for NPA-NXX
blocking.
=====================================================================================================================
Routing Features
1) Day of week Routing - Calls to a single 800 number can be [***] [***]
routed to different terminating locations based on the day (per Order) (per Arrangement)
of the week. Divides weeks into three groups of days for
routing: Monday - Friday, Saturday, Sunday.
2) Holiday Routing - Routes calls placed on an 800 number to [***] [***]
different terminating locations on any of the following (per Order) (per Arrangement)
holidays: New Years Day, Martin Luther King Day, Labor
Day, Ash Wednesday, Good Friday, Passover, Easter,
Memorial Day, Independence Day, Rosh Hashanah,
Columbus Day, Thanksgiving, day after Thanksgiving,
Hanukkah, Christmas, Christmas Eve, Yom Kippur.
3) Time of Day Routing - Routes calls placed on an 800 [***] [***]
number to different terminating locations based on any of (per Order) (per Arrangement)
the following time of day slots: 7:00 - 7:59 am, 8:00 - 8:59
am, 9:00 - 11:59 am, 12:00 - 3:59 pm, 4:00 - 4:59 pm, 5:00 -
5:59 pm, 6:00 - 11:50 pm, 12:00 midnight - 6:59 am.
4) Percentage Allocation Routing - Routes calls placed on an [***] [***]
800 number to up to 8 different terminating locations based (per Order) (per Arrangement)
on whole number percentages that add up to 100 percent.
=====================================================================================================================
Terminating Features
1) Direct Termination Overflow - Allows a dedicated access line [***] [***]
customer to control potential congestion of calls placed on (per Order) (per Arrangement)
an 800 number by sending overflow calls to another 800 trunk
group, WATS access line, dedicated access line, or business line.
2) Dialed Number Identification - Allows a dedicated access [***] [***]
customer to receive calls from multiple 800 numbers on the (per Order) (per Arrangement)
same terminating trunk group by sending special
identification digits along with the 800 call to the customer
site. Customer must have proper equipment to receive.
3) Real Time ANI - Allows a dedicated customer to receive the [***] [***]
ANI of the calling party if the call originates from an equal (per Trk Grp) (per Trk Grp)
access end office. Currently provided via in-band signalling.
Terminating equipment must accept FGD signalling.
=====================================================================================================================
</TABLE>
QWEST COMMUNICATIONS PRIVILEGED AND CONFIDENTIAL Exhibit D2
<PAGE>
EXHIBIT G
PRIVATE LINE SERVICE DESCRIPTION AND RATE SCHEDULE
SERVICES TO BE PROVIDED BY QWEST
Private Line Services and related telecommunications capacity, and related
ancillary services (the "Facility" or "Facilities") available from Qwest are
identified in the Service and Pricing Schedule attached hereto as "Schedule A",
which is incorporated by this reference (the "Service and Pricing Schedule").
Facilities requested by Customer shall be requested on Qwest's service order
forms in effect from time to time (hereafter, any such order is a "Service
Order(s)"). Each Service Order shall reference this Exhibit and shall become a
part of this Exhibit when executed by a duly authorized representative of Qwest.
Qwest reserves the right to reject any Service Order. Upon acceptance by Qwest
of a duly executed Service Order during the Term (as hereinafter defined) of
this Exhibit, Qwest shall provide to Customer those Facilities identified in the
Service Order. Customer acknowledges that Qwest has no ability to independently
test or maintain Facilities between two off net cities. Consequently, if Qwest
provides such Facilities, then notwithstanding anything in this Exhibit to the
contrary, Qwest's entire duty with respect to such Facilities shall be to use
its best efforts to test and maintain such Facilities in accordance with Qwest's
Specifications.
OBLIGATIONS OF CUSTOMER
Customer shall perform those duties outlined in the Service and Pricing Schedule
in addition to those described herein and in any Service Order(s). Customer
shall have sole responsibility for installation, testing and operation of the
Interconnection Facilities (as hereinafter defined in the Service and Pricing
Schedule), and any services and equipment other than those Facilities
specifically provided by Qwest under this Exhibit.
TERM
Notwithstanding anything to the contrary in this Section if the Facility Minimum
Service Term (as set forth in the Service and Pricing Schedule) for a Facility
or Facilities extends beyond the expiration of the Term of this Exhibit, then
this Exhibit shall continue in effect until the expiration or termination of the
applicable Facility Minimum Service Term, but only as to the Facility or
Facilities so affected, and subject to the termination rights of Qwest and
Customer under this Exhibit.
CHARGES AND PAYMENT
Charges for the Facilities shall be determined according to the Service and
Pricing Schedule except as is otherwise specifically provided in this Exhibit.
Recurring charges shall be invoiced by Qwest on a monthly basis in advance and
non-recurring charges shall be invoiced in arrears. If the Start of Service Date
(as defined in the Service and Pricing Schedule) for any Facility falls on other
than the first day of any month, the first invoice to Customer shall consist of:
(1) the pro-rata portion of the applicable monthly charge covering the period
from the Start of Service Date to the first day of the subsequent month, and (2)
the monthly charge for the following month.
1
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT G
PRIVATE LINE SERVICE DESCRIPTION AND RATE SCHEDULE
SCHEDULE A
TO
PRIVATE LINE SERVICE DESCRIPTION
SERVICE AND PRICING SCHEDULE
1. QWEST SERVICES:
1.1 During the Term of the Exhibit, Qwest will provide to Customer the Facility
or Facilities requested by Customer in a Service Order accepted by Qwest.
1.2 Upon acceptance of a Service Order, Qwest shall notify Customer of its
target date for the delivery of each Facility (the "Estimated Availability
Date"). Any Estimated Availability Date given by Qwest to Customer shall be
subject to Qwest's standard and expedited interval guidelines, as amended by
Qwest from time to time. Qwest shall use reasonable efforts to install each such
Facility on or before the Estimated Availability Date, but the inability of
Qwest to deliver a Facility by such date shall not be a Default under this
Exhibit. If Qwest fails to make any Facility available within ninety (90) days
after acceptance by Qwest of the Service Order with respect to such Facility (or
such greater time as is set forth in the interval guidelines), Customer's sole
remedy shall be to cancel the Service Order which pertains to such Facility by
ten (10) calendar days prior written notice to Qwest, as is set forth in Section
8.3 of the Exhibit.
1.3 At each end of the city pairs (the "City Pairs") on which Customer orders
Facilities, Qwest shall provide appropriate equipment in its terminal locations
necessary to connect the Facilities to Customer's Interconnection Facilities (as
defined in Section 1.4 of this Service and Pricing Schedule). If Customer
desires to install its own equipment in one or more of Qwest's terminals, and
Qwest, in its sole discretion, agrees to such installation, the parties shall
execute the Collocation Exhibit.
1.4 Customer agrees that Customer's Interconnection Facilities shall connect to
the Facilities provided by Qwest hereunder at the network interface points
located in the Qwest terminals and defined in the Specifications (as defined in
Section 2.1 of this Service and Pricing Schedule). As used herein, the term
"Interconnection Facilities" shall mean transmission capacity provided by
Customer or its third party supplier to extend the Facilities provided by Qwest
from a Qwest terminal to any other location (e.g., a local access telephone
service provided by a local telephone company).
1.5 For DS-3 Facilities and above, Qwest shall use reasonable efforts to order
Interconnection Facilities on behalf of Customer from Customer's designated
supplier, provided that Customer furnishes Qwest with an acceptable letter of
agency. Customer shall be billed directly by the supplier of such
Interconnection Facilities, and shall hold harmless and indemnify Qwest from any
loss or liability incurred by Qwest as a result of Qwest's ordering
Interconnection Facilities from any third party. Customer may, at its election,
but subject to Qwest's prior written approval, order its own Interconnection
Facilities. If any party other than Qwest provides Interconnection Facilities,
then unavailability, incompatibility, delay in installation, or other Impairment
of Interconnection Facilities shall not excuse Customer's obligation to pay
Qwest all Rates or charges applicable to the Facilities, whether or not such
Facilities are useable by Customer.
2. START OF SERVICES:
2.1 Start of service for each Facility (the "Start of Service Date") shall begin
on the date on which Customer accepts delivery of such Facility. If Customer
fails to give written notice that the Facility is in material non-compliance
with the applicable standard Qwest network specifications, as modified from time
to time by Qwest (the "Specifications") within five (5) business days after
notification to Customer by Qwest that the Facility is available, Customer shall
be deemed to have accepted such Facility, and the Start of Service Date shall
commence as of the fifth day following such notification by Qwest. Following
notice by Customer of material non-compliance as set forth above, Qwest shall
promptly take such reasonable action
2
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT G
PRIVATE LINE SERVICE DESCRIPTION AND RATE SCHEDULE
as is necessary to correct any such non-compliance in the Facility and shall,
upon correction, notify Customer of a new Start of Service Date.
2.2 Notwithstanding anything in Section 2.1 of this Service and Pricing Schedule
to the contrary, Customer may delay the Start of Service Date for any Facility
for up to thirty (30) days from Qwest's Estimated Availability Date by written
notice to Qwest at least three (3) business days prior to any applicable
Estimated Availability Date.
3. RATES:
3.1 Except as otherwise provided in a Special Rate Exhibit attached to the
Agreement, Qwest shall provide the Facilities at the rates (the "Rates ") set
forth in this Section 3 (exclusive of all sales, use, commercial or other taxes
or license fees) and as shown on the Circuit Listing attached as Schedule A-1 to
this Service and Pricing Schedule. The Rates for the Facilities apply- to the
Inter-Office Channel ("IOC") of the On-Net circuit specified from the nearest
originating Qwest owned Point of Presence ("POP") to the nearest terminating
Qwest owned POP. Customer shall be responsible for all interconnection costs
from the customer location indicated by the Originating NPA/NXX and the
Terminating NPA/NXX to the corresponding Qwest owned POP. A circuit shall be
considered "On-Net" when a dedicated leased line JOG circuit is provisioned (i)
entirely between two Qwest owned Domestic U.S. POPs lying on Qwest owned fiber
optic lines, and (ii) utilizes only Qwest owned fiber optic lines. The Rates
vary depending on whether the Facilities are DS-I or DS-3 or OC-n. The Rates,
Monthly Recurring Charges ("MRCs") and Non-Recurring Charges ("NRCs") for Qwest
On-Net Domestic US dedicated leased line service are as follows:
(a) DS-I Facilities Rates for IXC:
(i) Base IXC Rates: To be determined by Qwest on a case-by-case
basis, subject to availability from Qwest.
(ii) DS-1 Monthly Recurring Charges:
Minimum charge per DS-1 per month: [***]
(iii) DS-1 Non-Recurring Charges:
[***] installation charge per DS-1 for all services and
equipment.
(b) DS-3 Facilities Rates for IXC:
(i) Base IXC Rates: To be determined by Qwest on a case-by-case
basis, subject to availability from Qwest.
(ii) DS-3 Monthly Recurring Charges:
Minimum charges per DS-3 per month: [***]
(iii) DS-3 Non-Recurring Charges:
[***] installation charge per DS-3 for all services and
equipment.
(c) OC-n Facilities Rates for IXC:
(i) Base IXC Rates: To be determined by Qwest on a case-by-case
basis, subject to availability from Qwest.
3
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT G
PRIVATE LINE SERVICE DESCRIPTION AND RATE SCHEDULE
(ii) OC-n Monthly Recurring Charges:
Minimum charges per OC-n per month:
Facility Minimum MRC
-------- -----------
OC-3 [***]
OC-12 [***]
OC-48 To be determined by Qwest on a case-by-case basis,
subject to availability from Qwest.
(iii) OC-n Non-Recurring Charges:
Installation charge per OC-n for all services and equipment:
Facility Minimum NRC
-------- -----------
OC-3 [***]
OC-12 [***]
OC-48 To be determined by Qwest on a case-by-case basis,
subject to availability from Qwest.
(d) Other Charges:
In addition to the foregoing Facilities Rates for DS-1, DS-3 and
OC-n Facilities for IXC, Customer shall pay to Qwest the following additional
charges, as applicable, including any and all recurring charges imposed on Qwest
for the handling of calls under this agreement:
(i) Other Monthly Recurring Charges:
o Channel Bank each [***] per month
o DS-1 cross-connect charges: each [***] month plus any
pass-through charges.
o DS-3 cross-connect charges: each [***] Cross-connect
charges: to another CAPS provider
[***] each.
o LTR charges: charges incurred by LECs will be
passed through to Customer to be
paid by Customer.
(ii) Other Non-Recurring Charges:
o Expedited Order Charges: [***] each.
o DACs rearrangements: each [***] per DS-1
o Channel Bank each [***] installation
o DS-1 cross-connect charges: each [***] installation plus
any pass-through charges.
o Change of order cross-connect
charges: [***] each DS-3, [***] each
DS-1
o Pre-engineering cancellation
cross-connect: [***] each DS-3, [***] each
DS-1
o Post-engineering cancellation
of cross-connect: [***] each DS-3, [***] each
DS-1
3.2 Qwest reserves the right, upon thirty (30) days prior written notice to
Customer, to modify any of the Rates or charges described in this Service and
Pricing Schedule applicable to any Facility or Facilities. Upon receipt of
written notice of such election, Customer may terminate the portion of the
Service Order or Service Orders which pertain to such Facility or Facilities by
delivering written notice of termination to Qwest within ten (10) days of the
date of the written notice of increase. If written notice of termination
4
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT G
PRIVATE LINE SERVICE DESCRIPTION AND RATE SCHEDULE
from Customer is not received within such ten (10) day period, Customer will be
deemed to have consented to the increase.
4. FACILITY MINIMUM SERVICE TERM:
4.1 Customer acknowledges that the Rates and charges described in Section 3 of
this Service and Pricing Schedule are based on the commitment of Customer to
utilize the Facilities for a specified minimum period of time. Therefore,
notwithstanding anything in this Exhibit to the contrary, Customer shall be
liable for and shall pay to Qwest all Rates, fees and charges which accrue under
this Exhibit for each Facility for the entire Facility Minimum Service Term (as
defined in Section 4.2 of this Service and Pricing Schedule) applicable to each
such Facility, regardless of whether or not Customer utilizes all or any part of
such Facility during all or any part of the Facility Minimum Service Term
applicable to such Facility, except as is set forth in Section 4.3 of this
Service and Pricing Schedule.
4.2 The "Facility Minimum Service Term" for each Facility, is defined as
follows:
(a) Twelve (12) months from Start of Service Date for DS-1 Facilities.
(b) Twelve (12) months from Start of Service Date for DS-3 Facilities.
(c) Thirty-six (36) months from Start of Service Date for OC-3 and above
Facilities.
4.3 Notwithstanding anything in this Exhibit to the contrary, Customer's
obligation to pay all Rates, fees and charges, which accrue under this Exhibit
for each Facility for the entire Facility Minimum Service Term applicable to
each such Facility, as well as any applicable Monthly Revenue Commitment (as
defined herein), shall terminate, as each such Facility, if this Exhibit is
terminated during the Minimum Service Term which pertains to each such Facility:
(a) by Customer, pursuant to Section 10 (B) of the Agreement, following a
Default by Qwest or an material increase in prices; or (b) by Qwest, pursuant to
Section 10(a)(1) of the Agreement, if Qwest terminates this Exhibit because
Qwest loses any required permits, or if Qwest otherwise terminates the Facility
during Minimum Service Term for convenience and not due to a Default by
Customer. UPON TERMINATION OF THIS AGREEMENT FOR ANY OTHER REASON, THE TOTAL OF
ALL CHARGES REFERRED TO IN THIS SECTION 4 SHALL BE AT ONCE DUE AND PAYABLE,
REGARDLESS OF WHETHER OR NOT ALL OF THE FACILITIES MINIMUM SERVICE TERMS HAVE
EXPIRED, AND MAY BE COLLECTED BY QWEST FROM CUSTOMER AS A SINGLE AMOUNT.
5. OUTAGE CREDITS:
5.1 Customer acknowledges the possibility of an unscheduled, continuous and/or
interrupted period of time when a Facility or Facilities are "unavailable" (as
defined in the Specifications) (hereafter an "Outage"). In the event of an
Outage, Customer shall be entitled to a credit (the "Outage Credit") determined
according to the following formula:
Outage Credit = (Hours of Outage - 2 hours)/720 hours x Total Monthly Charge of
Affected Facility
5.2 The Outage Credit shall apply to the charges for the total mileage between
end terminals of any Facility affected by an Outage; provided, however, that if
any portion of the affected Facility remains beneficially used or useable by
Customer between any intermediate terminals (where Customer has installed drop
and insert capability) or end terminals, the Outage Credit shall not apply to
that pro-rata portion of the mileage. The length of each Outage shall be
calculated in hours and shall include fractional portions thereof. An Outage
shall be deemed to have commenced upon verifiable notification thereof by
Customer to Qwest, or, when indicated by network control information actually
known to Qwest network personnel, whichever is earlier. Each Outage shall be
deemed to terminate upon restoration of the affected Facility as evidenced by
5
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT G
PRIVATE LINE SERVICE DESCRIPTION AND RATE SCHEDULE
appropriate network tests by Qwest. Qwest shall give notice to Customer of any
scheduled outage as early as is practicable, and a scheduled outage shall under
no circumstance be viewed as an Outage hereunder.
5.3 Outage Credits shall not be granted if the malfunction of any end-to-end
circuit is due to an Outage or other Defect occurring in Customer's
Interconnection Facilities.
5.4 All Outage Credits shall be credited on the next monthly invoice for the
affected Facility after receipt of Customer's request for credit. The total of
all Outage Credits applicable to or accruing in any given month shall not exceed
the amount payable by Customer to Qwest for that same month for such Facility.
5.5 The Outage Credit described in this Section 5 of this Service and Pricing
Schedule shall be the sole and exclusive remedy of Customer in the event of any
Outage, and under no circumstance shall an outage be deemed a Default under this
Exhibit.
6
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT G
PRIVATE LINE SERVICE DESCRIPTION AND RATE SCHEDULE
Schedule A-1
Circuit Listing
(See Attached Schedule Report or Service Order)
(If the above is not present, waiting on Customer to send Service order.)
1
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT G
PRIVATE LINE SERVICE DESCRIPTION AND RATE SCHEDULE
Schedule A-2 to Schedule A
To
Qwest Communications Private Line Service Exhibit
TECHNICAL SPECIFICATIONS
1. Interconnect Specifications:
1.1 The customer interconnection point of DS-1 & DS-3 signals at the Qwest (SPT)
location will be at an industry standard (DSX-1) & (DSX-3) digital cross-connect
panels and will be referred to as Qwest Network Interface in this document.
1.2 The DS-1 & DS-3 signals terminating at the Qwest digital cross-connect
panels will meet the electrical specifications as defined in AT&T Compatibility
Bulletin (CB) No. 119, Issue 3, October, 1979.
1.3 The Qwest Digital Network will be compatible with the Bell System
hierarchical clock synchronization methods and stratum levels as described in
Bellcore Technical Advisory (GR436-Core).
1.4 Customer equipment must also meet the interconnect specifications listed
above and shall comply with jitter requirements of AT&T Technical Reference PUB
63411.
2. Performance Objectives:
2.1 DS1, D53, OC-3, OC-12, OC-48, OC-3c, OC-12c, and OC-48c circuit performance
will be measured using two parameters: Availability and Error-Free Seconds.
The following assumptions apply to the derived data:
o The circuits originate and terminate on the SONET OC-48 backbone
o High speed protection switching: 1 for N, where N=2
o MTTR for SONET equipment: 2 hours
o MTTR for fiber optic cable: 12 hours (Bellcore Standard)
o Cable cut rate: 4.39 /year/1,000 sheath miles (Bellcore Standard)
The system includes three (3) DCS in Los Angeles, Sacramento, and San Jose
(although not all circuits are routed through the DCS, they are included in all
the calculations)
2.2 Availability is a measure of the relative amount of time during which the
circuit is available for use. According to CCITT and ANSI definitions,
unavailability begins when the Bit Error Ratio (BER) in each second is worse
than 1.0 E-3 for a period of 10 consecutive seconds.
Inter Office Channel (IOC): An Inter Office Channel refers to the Qwest
Communications network between the points of presence (POP).
Optical Carrier level 1 (OC-1): The optical signal that results from an optical
conversion of an electrical STS-1 signal (51.840 Mb/s). This signal forms the
basis of the interface.
OC-3: Optical Carrier level 3 signal operating at 155.520 Mb/s.
OC-12: Optical Carrier level 12 signal transmitting at 622.080 Mb/s.
1
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT G
PRIVATE LINE SERVICE DESCRIPTION AND RATE SCHEDULE
OC-48: Optical Carrier level 48 signal transmitting at 2488.32 Mb/s.
Point of Presence (POP): A physical location where a long distance carrier
terminates lines before connecting to the local exchange carrier, another
carrier, or directly to a customer.
2.3 The availability objective for all circuits between Qwest Network Interface
points specified above is to provide performance levels over a 12 month period
as follows:
- ---------------------------------------------------
V&H Miles DS1, DS3, OC-3, OC-12, OC-48,
OC-3c, OC-12c, and OC-48c
- ---------------------------------------------------
0-2500 99.999%
- ---------------------------------------------------
2501-4000 99.998%
- ---------------------------------------------------
This excludes any customer provided access links to the Qwest
digital network.
2.4 Outages attributable to incidental damage to or severage of outside fiber
optic cable plant, or scheduled maintenance is excluded from the performance
objective stated above.
2.5 Error-Free Seconds (EFS) and Error Seconds (ES) are the primary measure of
error performance. An Error-Free Second is defined as any second in which no bit
errors are received. Conversely, an Error Second is any second in which one or
more bit errors are received.
3. SONET: Synchronous Optical Network is a family of optical transmission rates
and interface standards allowing internetworking of products from different
vendors. Base optical rate is 51.840 Mb/s. Higher rates are direct multiples.
SONET Transport: Facilities associated with carrying OC-1 or higher level
signals.
Synchronous Transport Signal level 1 (STS-1): The basic logical building block
electrical signal with a rate of 51.840 Mb/s.
Synchronous Transport Signal level N (STS-N): This electrical signal is
obtained by byte interleaving N STS-1 signals together. The rate of the STS-N is
N times 51.840 Mb/s.
Terminating Multiplex(TM): Provides the multiplex functions for multiplexing
and demultiplexing between the DS1 or higher signal level and the SONET OC-N
level.
4. Acceptance Criteria. The acceptance criteria for DS1, DS3, OC-3, OC-12,
OC-48, OC-3c, OC-12c, and OC-48c circuits between Qwest Network Interface points
is to provide the performance levels shown below during a 60 minute test period.
If no errors are observed during the first 15 minutes of the test, the facility
may be considered acceptable. Access connections to customer location will be
tested in accordance with Bell Publication 62508.
o The tables below are based on QCC owned fiber optic network only and on the
Bellcore Specifications of the SONET delivery of DS1, DS3, OC-3, OC-12, OC-48,
OC-3c, OC-12c, and OC-48c directly off the SONET Backbone.
o If the DS1, DS3, OC-3, OC-12, OC-48, OC-3c, OC-12c, and OC-48c service is
delivered at the STS1 level then the general performance objectives fall into
the industry standard.
DS1, DS3
2
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT G
PRIVATE LINE SERVICE DESCRIPTION AND RATE SCHEDULE
The table below defines the general performance objectives for DS1 service
operating at 1.544 Mb/s, and the general performance objectives for DS3 service
operating at 45 Mb/s.
-------------------------------------------------------------
V&H Miles EFS BER
-------------------------------------------------------------
0 - 250 99.988% 10-15
-------------------------------------------------------------
251 - 500 99.983% 10-15
-------------------------------------------------------------
501 - 1000 99.971% 10-15
-------------------------------------------------------------
1001 - 1500 99.959% 10-15
-------------------------------------------------------------
1501 - 2000 99.948% 10-15
-------------------------------------------------------------
2001 - 2500 99.936% 10-15
-------------------------------------------------------------
2501 - 3000 99.925% 10-15
-------------------------------------------------------------
3001 - 3500 99.913% 10-15
-------------------------------------------------------------
3501 - 4000 99.902% 10-15
-------------------------------------------------------------
OC-3, 12, 48; OC-3c, 12c, 48c
The table below defines the general performance objectives for OC-3, OC-12,
OC-48, OC-3c, OC-12c, and OC-48c.
-------------------------------------------------------------
V&H Miles EFS BER
-------------------------------------------------------------
0 - 250 99.989% 10-15
-------------------------------------------------------------
251 - 500 99.984% 10-15
-------------------------------------------------------------
501 - 1000 99.974% 10-15
-------------------------------------------------------------
1001 - 1500 99.964% 10-15
-------------------------------------------------------------
1501 - 2000 99.954% 10-15
-------------------------------------------------------------
2001 - 2500 99.944% 10-15
-------------------------------------------------------------
2501 - 3000 99.933% 10-15
-------------------------------------------------------------
3000 - 3500 99.923% 10-15
-------------------------------------------------------------
3
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT G
PRIVATE LINE SERVICE DESCRIPTION AND RATE SCHEDULE
-------------------------------------------------------------
V&H Miles EFS BER
-------------------------------------------------------------
3501-4000 99.913% 10-15
-------------------------------------------------------------
4
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT J1
ReQwest(SM) FRAME RELAY SERVICE DESCRIPTION EXHIBIT
WHOLESALE SERVICES AGREEMENT
Service Description: ReQwest(SM) Frame Relay service is a public, fast-packet
data network offering. It employs a form of packet switching analogous to a
streamlined version of X.25 networks. The packets are in the form of "frames,"
which are variable in length, with the payload being anywhere between 0 and
4,096 octets. ReQwest(SM) supports a variety of simultaneous data applications
over a single integrated facility (such as data, voice and video). Customer may
access ReQwest(SM) at Qwest's nearest available Domestic U. S. Point of Presence
(POPs). Within the POP, Qwest designs and installs Network Node (as hereinafter
defined) connections on the ReQwest(SM) network. A Network Node is comprised of
a Port Connection and Permanent Virtual Circuits (PVCs) that define the
connections between Customer's or End User's Ports. Qwest allocates capacity
across these logically assigned PVCs.
Ports: ReQwest(SM) service may be available in the Port Speeds listed
below. Provision of ReQwest(SM) service is subject to facilities
availability.
Committed Information Rate (CIR): A rate assigned to each PVC by a
ReQwest(SM) subscriber. CIRs represent the committed transmission rates
between two network ports. CIRs are available in 8 Kbps increments.
Customer may transmit or receive data over a PVC at speeds greater than
the selected CIR up to the speed of the Port ("burst"). Additionally,
burst traffic may be marked by Qwest as Discard Eligible (DE), and
subsequently discarded in the event of network congestion. Customer agrees
that Qwest shall not be liable for any such discard of traffic.
Qwest agrees to provide QWEST Domestic U.S. ReQwest(SM) Ports at the Monthly
Recurring Charges (MRCs) specified below.
------------------------------------------
Port Speed Increments MRC
(in Kbps) Per Port
------------------------------------------
56/64 [***]
------------------------------------------
112/128 [***]
------------------------------------------
168/192 [***]
------------------------------------------
224/256 [***]
------------------------------------------
280/320 [***]
------------------------------------------
336/384 [***]
------------------------------------------
392/448 [***]
------------------------------------------
448/512 [***]
------------------------------------------
504/576 [***]
------------------------------------------
560/640 [***]
------------------------------------------
616/704 [***]
------------------------------------------
672/768 [***]
------------------------------------------
728/832 [***]
------------------------------------------
784/896 [***]
------------------------------------------
840/960 [***]
------------------------------------------
896/1024 [***]
------------------------------------------
952/1088 [***]
------------------------------------------
1008/1152 [***]
------------------------------------------
1064/1216 [***]
------------------------------------------
1120/1280 [***]
------------------------------------------
1176/1344 [***]
------------------------------------------
1232/1408 [***]
------------------------------------------
1288/1472 [***]
------------------------------------------
1344/1536 [***]
------------------------------------------
1
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT J1
ReQwest(SM) FRAME RELAY SERVICE DESCRIPTION EXHIBIT
WHOLESALE SERVICES AGREEMENT
Qwest agrees to provide domestic U.S. ReQwest(SM) PVCs at the MRCs specified
below.
---------------------
PVC Charges
---------------------
MRC for CIR
Per 8kbps Simplex
---------------------
[***]
---------------------
Customer premises equipment and maintenance charges, if any, shall be subject to
a written amendment of this Agreement and shall be additional charges to the
Customer, varying by type of CPE and by region where the CPE is located.
Qwest shall invoice Customer on a monthly basis at Customer's designated site in
the U.S., in accordance with the following schedule: (i) one (1) month in
advance for all recurring, non-usage sensitive MRC charges due under this
Agreement, in addition to the retroactive billing for the first billing invoice;
and (ii) in the month succeeding the applicable usage for all usage-sensitive,
NRC and change fees and charges. Failure of Qwest to timely invoice Customer for
any amounts due hereunder shall not be deemed a waiver by Qwest of its rights to
payment for such charges.
Provided that Customer's Monthly Revenue is in excess of the Monthly Commitment,
Customer shall receive a discount as specified in the table below of Customer's
actual payment of the "Frame Charges" (as hereinafter defined) incurred by
Customer during such month ("Frame Discount"). The credit derived from
application of this discount shall be applied to Customer's interstate usage. As
used in Section, "Frame Charges" shall include only payments by Customer of the
following types of charges: (i) Customer's charges for Domestic U.S. ReQwest(SM)
Ports; (ii) Customer's charges for usage Domestic U.S. ReQwest(SM) PVCs.
Excluded Charges (as hereinafter defined) shall not be eligible for the Frame
Discount. "Excluded Charges" shall consist of the following: (i) dedicated
access/egress (or related) charges imposed by third parties (such as local
exchange carriers); (ii) equipment and maintenance charges, if any, (iii)
charges for services other than Domestic U.S. ReQwest(SM) port and PVC MRCs;
(iv) all non-recurring and pass-through charges ("NRCs"); (v) credits and
discounts, (vi) taxes; (vii) installation charges and (vii) and surcharges.
---------------------------------------------------------------
Current Month's Revenue from Discount to be Applied
Contributing Service Components to Frame Charges
$0-$100,000 [***]
$100,001 -$300,000 [***]
$300,001 - $500,000 [***]
$500,001 -$750,000 [***]
$750,001 - $1,000,000 [***]
$1,000,001 and above [***]
---------------------------------------------------------------
2
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT J1
ReQwest(SM) FRAME RELAY SERVICE DESCRIPTION EXHIBIT
WHOLESALE SERVICES AGREEMENT
Contributing Services Schedule
Contributing Services*
---------------------------------------------------------------------------
All Qwest Express Domestic All ReQwest(SM) Switchless Reseller
Carrier Originating and Domestic Inbound and Outbound
Terminating Service Usage Service Usage
---------------------------------------------------------------------------
All Qwest Express International, All ReQwest(SM) Switchless Reseller
Canadian, and Mexican Carrier International, Canadian and
Terminating Service Usage Mexican Service Usage
---------------------------------------------------------------------------
All Qwest Express Directory All ReQwest(SM) Switchless Reseller
Assistance Carrier Service Usage Calling Card Service Usage
---------------------------------------------------------------------------
All Domestic Dedicated All ReQwest(SM) Switchless Reseller
Facilities, Ports & PVC Monthly Directory Assistance Service
Recurring Charges* Usage
---------------------------------------------------------------------------
*Charges, fees and other amounts owing for, related to or constituting taxes,
surcharges, credits, uncollectable Customer charges, pass-through charges,
installation charges and local loops shall not be included as part of Revenue
Commitment or Contributing Services.
Pass-Through Charges. Qwest shall be entitled to immediately pass through to
Customer, and Customer shall be obligated to pay for, any charges, fees, taxes
and terms and conditions of service imposed by access suppliers, including
without limitation, increases or decreases in tariffs, communications charges
and access charges that are imposed or enacted by access suppliers to Qwest
after the Effective Date, and early termination charges applicable when local
access is terminated prior to the term selected on a Customer Order Form.
Effect of Tariffing. If at any time during the Term Qwest tariffs the service
hereunder ("Newly Tariffed Service"), Customer and Qwest agree to promptly
execute appropriate additional agreements and amendments to the Agreement the
effect of which shall be to eliminate the Newly Tariffed Service from this
Agreement and to incorporate such Newly Tariffed Service into an agreement for
Qwest tariffed services. Customer acknowledges and agrees that Qwest shall have
no obligation to include any equipment provided under this Agreement or any
charges payable for such equipment in any such agreement for tariffed services.
Service Restrictions. Notwithstanding anything in the Tariff or this Agreement
to the contrary, the following services and/or guarantees or are not available
to Customer or End-Users of Customer: (1) Frame relay Port speeds above DS-l
level, (2) ReQwest(SM) service for Customer or End-user locations outside of the
Domestic U.S., (3) Switched Virtual Circuits (SVCs) capabilities, (4) access to
Qwest's Customer Network Management Systems (CNMS), (5) any service level
guarantees and, (6) any service interruption, and/or outage pr performance
guarantee(s) and/or credit(s) set forth in the Tariff.
3
QWEST CONFIDENTIAL AND PROPRIETARY
<PAGE>
EXHIBIT S
SECURITY AND PAYMENT TERMS
GENERAL
Qwest and the Customer hereby agree that Qwest shall establish specific terms
and conditions of security for payment of the Services acceptable to Qwest, in
its sole determination, prior to the commencement of Services hereunder.
Customer acknowledges and agrees that if Customer does not comply with such
additional terms and requirements of security for payment, that Qwest shall be
entitled to refuse to fulfill any orders for Services and to terminate this
Agreement without penalty. Customer also agrees to the following basic terms and
conditions as security for payment of services rendered by Qwest to Customer.
If, in Qwest's sole determination, Customer's financial condition used to
establish the initial security under this Agreement changes or Customer's actual
monthly usage of the Services hereunder exceeds the estimated monthly usage used
to establish the initial security under this Agreement, or in the event Qwest
ceases using Customer's services under other agreements, Qwest shall notify
Customer and the parties hereto shall have two (2) business days to negotiate
additional appropriate security for the Services. If the parties cannot agree on
such additional security within the designated time period, Qwest in its sole
determination and without limiting any other remedy available at law or in
equity, may terminate all and/or any part of the Services hereunder or refuse to
accept any orders for additional Services with or without notice. In the event
any Services are terminated under the Agreement or this Exhibit S, Customer
waives all claims or causes of action, regardless of the form of action whether
in contract or tort including negligence of any kind, arising from any
post-termination communication with or solicitation of Customer's End Users by
Qwest.
IRREVOCABLE STANDBY LETTER OF CREDIT OR CASH DEPOSIT
A. Within seven (7) calendar days after customer's execution of this Agreement,
Customer agrees to provide Qwest with either an irrevocable standby letter of
credit ("Letter of Credit") or a cash deposit ("Cash Deposit") in the Stated
Amount. If selected by Customer, the Letter of Credit shall be established
according to the following terms and in accordance with other instructions to be
provided by Qwest.
B Customer shall for a period of fourteen (14) months from the Effective Date
maintain in favor of Qwest a Letter of Credit available from a financial
institution approved by and in form and substance acceptable to Qwest. The
Letter of Credit shall be in the amount as stated above and will provide for
payment of Qwest's drafts on sight in a full or partial drawing if accompanied
by Qwest's signed and dated statement containing one of the following
representations:
1. "The undersigned, an authorized officer of Qwest Communications
Corporation hereby certifies that (name of Customer) has not paid
invoice(s) for Qwest telecommunications services; that written notice has
been given to (name of Customer); that payment has not been received from
(name of Customer) or other source, and subject payment is now 15
(fifteen) or more calendar days past the due date"; or
2. "The undersigned, an authorized officer of Qwest Communications
Corporation, hereby certifies that, although all or a portion of (name of
Customer) indebtedness has been paid, the payment, or a portion thereof,
was paid within ninety (90) days of a petition filed by or against (name
of Customer) under the Bankruptcy Code or a general assignment for the
benefit of (name of Customer) creditors."
C. Failure to provide the Letter of Credit or Cash Deposit as set forth above
will be considered a breach of this Agreement, and in Qwest's sole discretion,
may result in immediate termination of Service and/or refusal by Qwest to accept
any orders for additional Services.
1
QWEST CONFIDENTIAL AND PROPRIETARY
*** (PORTIONS OF THIS EXHIBIT) MARKED BY BRACKETS ("[***]") OR OTHERWISE
IDENTIFIED HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***
ICG AUTHORIZED DISTRIBUTOR AGREEMENT
THIS AGREEMENT is entered into this 28 day of Sept. 1999 ("Effective
Date"), by and between ICG Telecom Group, Inc., a Colorado corporation whose
address is 161 Inverness Drive West, Englewood, Colorado 80112 ("hereinafter
ICG") and New Millennium Multimedia, Inc. [Full Legal Name of Distributor], a
Georgia corporation [State of Incorporation] whose address is 1690 Chantilly Dr.
NE, Atlanta, GA 30324 [Business Address] (hereinafter "Distributor").
Distributor's Employer Identification Number is 582424363.
WHEREAS, ICG is engaged in providing telecommunications services,
including network services.
WHEREAS, Distributor has agreed to market and sell certain of ICG's
telecommunications Services.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, ICG and Distributor agree as follows:
1. Definitions
A. "Agreement" shall mean this agreement together with the following
exhibits:
Exhibit A - List of Offered Services
Exhibit B - Commission Schedule
Exhibit C - Service Ordering Procedure
B. "Equipment" means any piece of equipment provided by ICG to a customer.
C. "Information" shall mean written policies, practices, brochures, ICG
advertisements, ICG provided brochures via authorization from an ICG supplier,
tariffs and communications (whether oral or written) between ICG and Distributor
or ICG and the public.
D. "Initial Training" shall mean training by ICG for all Distributors and
may include a detailed explanation of all services, sales presentations and
information relating to end-users. ICG may conduct additional periodic training
at its discretion.
E. "Marks" means all ICG or other trademarks, service marks and trade
names which the Distributor is authorized to use to market ICG's Services.
F. "Order" shall mean the appropriate ICG document or documents received
and accepted by ICG from the Distributor.
G. "Prices" are ICG's then current prices for Services offered for sale
under this Agreement. Prices for Services are found in ICG's tariffs and other
documents.
Page 1 of 26
<PAGE>
H. "Sale" means any Order and other required supporting documents accepted
by ICG.
I. "Service" or "Services" shall mean ICG's then existing network and
other Services which shall be marketed and offered for sale by Distributor, as
listed in Exhibit A.
J. "Slamming" shall mean the practice of switching a telephone customer's
supplier without obtaining written permission from the customer.
K. "Term" shall mean the initial term of this Agreement and any renewal
period.
L. Any terms not in Section 1 have the meanings commonly used in the
telecommunications industry.
2. Term of Agreement
This Agreement shall become effective upon the Effective Date and shall
remain in effect unless otherwise terminated in accordance herewith.
3. Appointment of Distributor
A. ICG hereby grants to Distributor the non-exclusive right to market and
sell the Services as specified herein, under the terms and conditions
hereinafter contained. During the Term of this Agreement, and thereafter, ICG
reserves the right, without obligation or liability to Distributor, to market
ICG Services, whether through ICG's own representatives, other distributors or
by any other means.
B. Distributor shall market and sell those Services as set forth in
Exhibit A, a copy of which is attached hereto and is incorporated herein by
reference. ICG may, from time to time modify Exhibit A upon notice to
Distributor but without the consent of Distributor.
C. Distributor is not authorized to market or sell any Services in any
other territories other than those identified in designated territories which
will be provided to Distributor on a periodic basis. ICG may add and delete
territories as ICG deems necessary upon notice to Distributor. ICG may, on a
periodic basis, also identify certain restricted accounts to which Distributor
may not market or sell Services. Sales or marketing of ICG's Services outside
the territories or to restricted accounts may be cause for ICG to terminate this
Agreement.
4. ICG's Responsibilities to Distributor
A. Provide post-sale activities including, but not limited to,
facilitating installation and Order processing, and documentation coordinating
due dates between end-users and ICG, coordinating and developing an
implementation plan, addressing customer service and repair issues, and, where
applicable, moving, adding and changing services.
Page 2 of 26
<PAGE>
B. Provide customer assistance to the end user for products that require
an interface with other vendors.
C. Pay Distributor's commissions in a timely manner. ICG will not pay
commissions directly to Distributor's employees, agents or subcontractors.
D. Bill the end user in a timely manner to be able to facilitate payment
of earned commissions.
E. Use its best efforts to collect amounts due on all end user accounts.
F. After installation, conversion or cutover, ICG is responsible for
customer service. Distributor, however, agrees to use its best efforts to handle
customer problems or concerns prior to referring customers to ICG.
G. Provide specifications to Distributor for Distributor's advertising and
promotional materials. See Section 11.B., below.
H. Permit Distributor to identify himself/herself as affiliated with ICG
through use of a business card or other promotional materials. The business card
or other promotional material shall, however, state that the Distributor is an
"Authorized Distributor"; Distributor's company or business logo shall be larger
than ICG's company or business logo. A copy of the Distributor's business card
or other promotional material that the Distributor will currently use to market
or sell Services with ICG's logo, shall be provided to ICG to be kept with the
Distributor's file. See Section 15 below.
I. Provide an Organizational Help Chart for purposes of identifying the
appropriate ICG person to receive notice or for escalation purposes.
5. Distributor's Responsibilities to ICG
A. Distributor represents and warrants that it is: (1) qualified through
knowledge and experience in the telecommunications industry through selling
services and products to market and sell ICG's communications Services; and (2)
has sufficient knowledge of ICG's Services to do so.
B. Marketing of ICG Services shall be consistent with, and subject to, the
terms and conditions set forth in any applicable ICG rate sheets and tariffs,
which may be amended from time to time, at ICG's sole discretion, or by the
order of any regulatory body. In the event that the ICG Services have been
de-tariffed, are not subject to tariffs under state or federal law, or are
offered pursuant to tariffs that permit flexible pricing, Distributor shall use
ICG's current standard prices, or Distributor shall request a specific price for
the customized Services. In the event that Services are offered under contract,
Distributor shall offer such Services subject to the applicable terms and
conditions contained in a contract supplied by ICG. Distributor shall not
Page 3 of 26
<PAGE>
offer any terms or conditions on ICG's behalf that conflict with ICG's relevant
tariffs, prices, policies or contracts.
C. ICG acknowledges that Distributor may sell services competitive with
the Services being offered pursuant to this Agreement. Distributor shall not
disparage ICG in any respect and shall not initiate moving, or attempt to
initiate moving, customers from Services provided by ICG to those provided by
another supplier of similar Services, during the term of this Agreement,
subsequent renewal terms, or for six months after termination or cancellation of
this Agreement. Such action, at ICG's discretion, may result in the immediate
termination of this Agreement by ICG and the withholding of all current and
future commissions from Distributor in addition to any other legal or equitable
remedies available to ICG.
D. Distributor agrees to discontinue any sales or marketing efforts with
regard to a potential customer, upon learning or discovering that the potential
customer is an existing ICG customer.
E. It is expressly understood and agreed that customers who purchase ICG
Services from or through Distributor are ICG customers for those Services, and
that Distributor shall have no claim on ownership for those customers whatsoever
for the Services provided by ICG.
F. Distributor shall not utilize or allow its employees or agents thereof
to offer ICG Services or otherwise assist in the performance of this Agreement
without ICG's prior written approval. ICG reserves the right to direct
Distributor to bar any of its employees or agents thereof from selling ICG
Services if, in ICG's sole opinion, any one of the sales persons working for
such employee or agent thereof is not selling in compliance with ICG sales
guidelines, as defined in sales manual, sales training and the terms of this
Agreement.
G. Distributor shall be jointly and severally liable for any breach of
this Agreement by it or any of its employees or agents thereof. ICG shall not be
liable to pay commissions under this Agreement or otherwise for revenue
generated by any unauthorized distributor or agents thereof. Distributor's
employees and agents thereof shall not have any claim against ICG for
commissions, salaries, or other items of expense. Distributor expressly agrees
that all of its employees and agents thereof shall be subordinate to all
provisions of this Agreement that are applicable to Distributor. Breach of this
section by Distributor shall be deemed to be an improper marketing activity.
H. Distributor agrees to only use ICG pre-approved form contracts as
provided in the ICG Sales Manual, ICG standard proposals, and ICG standard
pricing. Distributor agrees it will not make any changes to any contract without
prior written approval of ICG legal department nor represent any pricing on
applications for pricing inconsistent with ICG policies, without the prior
written approval of an ICG senior Sales Manager. Failure to comply with this
provision shall constitute a breach and shall be grounds for immediate
termination of this Agreement and any other legal or equitable remedy that may
be available to ICG. Distributor shall be personally liable to the Customer for
any misrepresentation, regarding pricing or product offering.
Page 4 of 26
<PAGE>
I. Distributor represents and warrants that providing services pursuant to
this Agreement will not constitute or cause Distributor to be in breach or
default of any obligation(s) Distributor has, or may have in the future, to any
to third party, including, but not limited to, other sellers of
telecommunications services.
6. Compensation
A. Compensation for the services performed by Distributor hereunder shall
be as specified in Exhibit B, a copy of which is attached hereto and
incorporated herein by reference. ICG may, from time to time, modify Exhibit B
by providing Distributor with thirty (30) days prior written notice. All
commissions for sales after the effective date of modification shall be subject
to the new Exhibit B. In the event that the commission structure is reduced by
ICG, Distributor shall have the right to terminate this Agreement upon ten (10)
days written notice to ICG.
B. ICG reserves the right to reject any order if the end-user customer is
an existing customer of ICG and there has been order activity with an authorized
ICG representative during the 120 day period prior to Distributor's contact with
the customer. ICG reserves the right to publish a list of national accounts as
an Exhibit to this Agreement, and provide a copy of such list to Distributor.
National accounts shall not be solicited by the Distributor.
C. ICG shall have no liability to Distributor for commissions from usage
of ICG Services by a customer solicited by Distributor if Distributor is or was
aware or should have been aware the customer uses the ICG Services to send any
message which is illegal, obscene, indecent, threatening or harassing, including
but not limited to, the transmission of unsolicited messages which infringe any
third party's proprietary right.
D. ICG's commission obligations to Distributor shall terminate in
accordance with Section 7.
7. Termination
A. This Agreement shall be terminable by either party at the end of the
initial term or during a renewal term upon written thirty (30) days' prior
written notice.
B. ICG may terminate this Agreement with cause: (1) for breach by
Distributor of any provision of this Agreement provided that written notice of
breach has been given to Distributor and such breach has not been cured within
thirty (30) days after delivery of such notice; (2) immediately upon notice and
without cure period by ICG in the event ICG discovers any improper marketing
activity by Distributor, including, but not limited to, disparaging or
slandering the Services of ICG, solicitation or marketing of Services to
customers outside the Distributor's Territory, moving or attempting to move ICG
customers to providers of services similar to the Services covered hereunder, or
Slamming; (3) immediately upon notice and without cure period for unethical
conduct by Distributor including, but not limited to, offering or providing to
any ICG sales distributor or employee any financial or other incentive for the
Page 5 of 26
<PAGE>
purpose of obtaining customer leads or other information which is deemed to be
beneficial to the Distributor; (4) immediately upon notice and without cure
period if use of the ICG Services by Distributor is for any purpose which is
illegal or if Distributor uses the ICG Services to send any message which is
illegal, obscene, indecent, threatening or harassing, including but not limited
to, the transmission of unsolicited messages, or message which infringe any
third party's proprietary right; or (5) immediately upon notice and without cure
period in the event, in ICG's sole discretion, Distributor commits repeated
breaches of this Agreement or otherwise demonstrates a pattern of deviating from
professional standards with regard to the marketing and sale of ICG Services.
C. Either party may terminate this Agreement upon three (3) business days'
written notice in the event that the other party: (1) becomes insolvent, makes
an assignment for the benefit of creditors or files a petition for
reorganization; (2) has filed against it a petition in bankruptcy; (3) is in
breach of this Agreement or is otherwise in default and has not cured said
default within thirty (30) days of receiving written notice of said default; (4)
intentionally makes (or is discovered to have made) any material false
representations, reports, or claims in connection with the business relationship
of the parties; or (5) engages in (or is discovered to have engaged in) fraud,
criminal or negligent conduct in connection with the business relationship of
the parties.
D. Either party may terminate this Agreement at any time without cause
upon forty-five (45) days' written notice to the other party.
E. Except as provided for in Section 7.F. below, ICG's commission
obligations to Distributor shall cease upon the termination of this Agreement.
In the event ICG terminates this Agreement pursuant to section 7.B. or 7.C.
(hereinafter "Termination for Cause"), Distributor waives all claims for any
commissions or profits or for any investments, expenditures or commitments made
in connection with this Agreement.
F. In the event ICG terminates this Agreement pursuant to Section 7.A. or
7.D. (hereinafter "Termination without Cause"), ICG shall pay Distributor earned
commissions for the duration of its customers' contracts, or for two (2) years
after the date of termination of this Agreement, whichever period is less. If
the Distributor terminates this Agreement for any reason, the Distributor shall
not be entitled to any commission payments or fees, after the date of
termination.
G. In the event that any regulatory, judicial, or legislative body having
jurisdiction over the way in which the ICG Services referenced herein are
provided; or changes in the manner in which the ICG Services are permitted to be
provided, ICG may then terminate this Agreement in its sole discretion
immediately upon notice and without further liability for commissions, fees or
otherwise. In the event a Customer terminates its relationship with its
Distributor, ICG's commission obligations to Distributor with regard to that
Customer shall cease on the date of Customer's termination of Distributor.
Page 6 of 26
<PAGE>
H. Upon termination or non-renewal of this Agreement, Distributor shall
immediately:
1. Cease holding itself out, in any manner, as an Distributor of the
ICG Services;
2. Discontinue any and all use of ICG's Marks (except to identify
the Services) including without limitation, the use of ICG's Marks in
advertising or business material of Distributor;
3. Return to ICG all sales, product, pricing, advertising and
technical materials and other proprietary information delivered to
Distributor by ICG;
4. Remove and return to ICG, or obliterate, at ICG's request, any
and all signs, stationery or other material supplied without charge by
ICG;
5. Notify and arrange for all publishers and others who may
identify, list or publish Distributor's name as an Distributor of ICG and
ICG's Services, without limitation, publishers of telephone directories,
yellow pages and other business directories, to discontinue such listings;
and
6. Complete all orders in process, including the transmittal of
orders to ICG.
8. Service Ordering Procedure
A. Distributor agrees to comply with service ordering procedures contained
in Exhibit C. All orders for Services shall be further subject to approval and
acceptance by ICG in its sole discretion. ICG reserves the right to modify the
service ordering intervals and any other section of Exhibit C upon written
notice. ICG reserves the right to reject any Service order in its sole
discretion.
B. ICG will use its best efforts to install and maintain the Services sold
by Distributor pursuant to this Agreement, but shall have no responsibility for,
or liability in connection with, any non-ICG services or products sold by
Distributor.
C. ICG shall have the right to independently verify all orders submitted
by Distributor and shall have the right to reject any orders which cannot be
verified as accurate or complete. No commissions may be earned or will be paid
on rejected orders.
D. ICG reserves the right to verify through an independent third party or
other verification methods, or require Distributor to verify, all orders
submitted. The costs of verification by a third party or other verification
methods shall be paid for in a manner agreed upon by the parties.
Page 7 of 26
<PAGE>
E. ICG may from time to time, in its discretion, submit leads of potential
customers to Distributor. The submission of any lead is not, and shall not, be
deemed to be ICG's approval of the lead as a customer, and Distributor shall be
responsible for ensuring that the lead is a proper business customer prior to
submitting any order, though Distributor shall be under no obligation to solicit
the leads submitted by ICG. ICG may, as set forth in this Agreement, refuse any
offer for service submitted by Distributor from leads referred to Distributor by
ICG.
9. Reporting and Payment
A. ICG shall provide the Distributor with a monthly commission report. The
commission report shall itemize the Services of each customer solicited by
Distributor for which commissions are earned under this Agreement.
B. ICG shall have no liability to pay commission on any sale that is not
made in accordance with the terms of this Agreement. Distributor agrees that ICG
may offset against any amounts due Distributor, amounts which Distributor may
owe ICG or its affiliates under this Agreement.
10. Relationship of Parties
A. It is expressly understood and agreed that the relationship created
herein is that of independent contractor and that Distributor shall have only
those rights and responsibilities specifically described in this Agreement. No
agency rights or responsibilities shall arise by operation of law. Distributor
is not a legal representative of ICG for any purpose other than as expressly set
forth in this Agreement and is not granted, by the terms or execution of this
Agreement, or otherwise, any right or authority to assume or create any
responsibility on behalf of, or in the name of, ICG, or to bind ICG in any
manner whatsoever.
B. Distributor shall have no authority to bind ICG by contract or
otherwise or to make representations as to the policies and procedures of ICG
other than as specifically authorized by this Agreement. ICG and Distributor
acknowledge and agree that the relationship arising from this Agreement does not
constitute or create a general agency, joint venture, partnership, employee
relationship or franchise between them, and that Distributor is an independent
contractor with respect to the services provided by Distributor under this
Agreement.
C. Distributor shall identify itself as an authorized representative of
ICG only with respect to the services covered by this Agreement and shall
otherwise identify itself as an independent business. Neither ICG nor
Distributor shall make any express or implied agreements, guarantees or
representations, or incur any debt, in the name of or on behalf of the other.
D. Distributor or Distributor's employees shall not be or be deemed to be
ICG employees or joint employees. Distributor assumes full responsibility for
the acts of its employees and for their supervision, daily direction and
control. ICG shall not be responsible for
Page 8 of 26
<PAGE>
worker's compensation, disability benefits, unemployment insurance, withholding
taxes, social security or any other taxes or benefits for Distributor,
Distributor's sub-distributors or Distributor's employees.
E. Distributor shall make no warranties relating to the services described
herein except as set forth in the ICG approved written contracts.
F. This agreement is not intended to and does not create any third party
beneficiaries to the rights and obligations set forth herein, nor shall any
third party beneficiaries be inferred by operation of law or otherwise.
11. Marketing
A. Distributor shall use reasonable commercial efforts and technically
qualified people to market, promote, maintain and increase the sale of Services
in the Territory by all usual means, including advertising and personal
solicitation of customers, processing of orders, customer complaints, and
identification of Distributor as a source of Services in business listings,
trade publications, directories, stationery and advertisements and through
distribution of technical literature, catalogues, brochures and advertising
matter issued by ICG. Such marketing and promotions shall be consistent with and
subject to this Agreement and ICG's tariffs, and as stated in the ICG policies
and practices for the sale of the Services.
B. Distributor shall provide for ICG's review, all promotional materials
not provided by ICG related to the ICG Services including, but not limited to,
print ads, radio scripts, television commercials, sales brochures, publicity and
press releases and user's manuals. Distributor may not use any such promotional
materials without ICG's prior written approval. All such materials shall be sent
to the ICG contact. Non-response by ICG shall not constitute approval of such
materials by ICG. In addition, all presentations and representations shall be
consistent with, and shall not misrepresent, ICG's product offerings as may be
in effect from time to time. Failure to obtain prior written ICG approval for
promotional materials shall be deemed an improper marketing activity.
C. Distributor shall not convey to customers or prospective customers that
the ICG Services are available only from the Distributor or only in conjunction
with any other product or service of Distributor. Breach of this paragraph 11.C.
shall be grounds for immediate termination of this Sales Agency Agreement.
12. Sales Aids
ICG will provide Distributor information including sales literature, sales
aids, and order forms to be used by Distributor.
13. Standards of Conduct.
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Distributor shall use commercially reasonable efforts at all times to give
prompt, courteous and efficient service to customers; shall be governed in all
dealings with such customers by the highest standards of honesty, integrity and
fair dealing, including without limitation, compliance with all applicable laws,
ordinances and regulations; and shall do nothing which would tend to discredit,
dishonor, reflect adversely upon or in any manner injure the reputation of ICG
or the ICG Services provided pursuant to this Agreement, and the quality image
associated with the ICG Services and ICG.
14. Expenses
Distributor shall be responsible for all traveling, advertising, and any
other expenses which may be incurred by Distributor in connection with
Distributor's responsibilities under this Agreement.
15. Trade Names and Trademarks
A. During the Term of this Agreement, unless otherwise prohibited by ICG,
and pursuant to any applicable provision herein, Distributor may refer to itself
as ICG's "Authorized Distributor" solely in conjunction with the sale of
authorized ICG Services to be sold by Distributor hereunder, and solely in
Distributor's territories.
B. Notwithstanding the foregoing, in no case shall Distributor refer to
itself as an "Authorized Distributor", or use any ICG Marks, in advertising or
other promotional material or activity without first obtaining, for each
proposed use, ICG's prior express written permission. No approval is required
for use of promotional material supplied by ICG. Distributor shall, at
Distributor's sole cost and expense, and prior to the use of any ICG Marks, make
any and all changes, corrections or alterations to any such proposed material or
activity which ICG, in its sole discretion, deems necessary or advisable.
Nothing in this Agreement shall be construed as waiving Distributor's obligation
to obtain prior written permission before use of any ICG Marks except in
material supplied by ICG.
C. Distributor acknowledges the value of ICG Marks, and the goodwill
associated therewith, and acknowledges that such goodwill is a property right
belonging to ICG and that ICG is the owner of all trademark, service mark, trade
name and other rights in ICG Marks. Distributor recognizes that nothing
contained in this Agreement is intended as an assignment or grant to Distributor
of any right, title or interest in or to ICG Marks and that this Agreement does
not confer any right or license to grant sub-licenses, or permission to third
parties to use any ICG Mark. Distributor will do nothing inconsistent with ICG's
ownership of ICG Marks, and all rights, if any, that may be acquired by use of
ICG Marks by Distributor shall inure to the benefit of and be on behalf of ICG.
Distributor will not adopt, use, other than as authorized herein, register or
seek to register any mark anywhere in the world which is identical to ICG Marks,
or which is so similar thereto as to constitute a deceptive colorable imitation
thereof, or to suggest or imply some association, sponsorship or endorsement by
ICG. ICG makes no warranties regarding its ownership of any rights in, or the
validity of, any ICG Mark.
Page 10 of 26
<PAGE>
D. Distributor agrees to promptly notify ICG of any unauthorized use of
ICG Marks by other parties when such use becomes known to Distributor. ICG shall
have the sole right to engage in infringement or unfair competition proceedings
involving ICG Marks against Distributor or other third party.
E. Upon termination of this Agreement, any permission or right to use ICG
Marks granted hereunder shall cease to exist, and Distributor shall immediately
cease any use of ICG Marks and immediately cease referring to itself as an ICG
Authorized Distributor. Distributor shall also promptly return to ICG all
materials in its possession or control displaying any ICG Marks or referring to
Distributor as an ICG Authorized Distributor. Upon prior written approval,
Distributor agrees to the use by ICG of Distributor's marks ("Distributor's
Marks") in any jointly or cooperatively sponsored advertisement or promotional
material.
16. Confidential Information
A. The parties understand and agree that the terms and conditions of this
Agreement, all documents referenced herein, communications between the parties
regarding this Agreement or the Service described herein (including price quotes
by ICG for any service proposal to be provided or actually provided to a
customer), customer information and information relevant to any other agreement
between the parties, and the names of ICG customers, addresses of ICG customers
or ICG services purchased by ICG customers are confidential as between
Distributor and ICG (hereinafter "Confidential Information").
B. Distributor may receive, or have access to, records and information,
whether written or oral, which ICG considers to be confidential and proprietary,
including, without limitation, technical information such as specifications,
drawings, guidelines, models and information which relates to ICG's present and
future development of business activities ("Confidential Information"). The
Confidential Information shall be designated by ICG as "Confidential" and/or
"Proprietary," and Distributor shall hold the Confidential Information in trust
and in confidence for ICG; shall use the Confidential Information only for the
purposes permitted hereunder; and shall deliver to ICG all such records and
information, in written or graphic form, upon expiration or termination of this
Agreement. Nothing in this section shall be construed to limit the use of, or
dissemination by Distributor of, such information as is previously known to
Distributor, or is publicly disclosed by ICG either prior to or subsequent to
Distributor's receipt of such information from ICG.
C. The receiving party shall use the disclosing party's Confidential
Information solely for the purposes set forth in this Agreement unless another
use is allowed by written permission of the disclosing party. In handling the
Confidential Information, each party shall: (1) not copy such Confidential
Information of the other unless specifically authorized; (2) not make disclosure
of any such Confidential Information to anyone except officers, directors,
employees, contractors and distributors of such party to whom disclosure is
necessary for the purposes set forth in this Agreement; (3) appropriately notify
such officers, directors, employees, contractors and Distributors that the
disclosure is made in confidence in accordance with the provisions hereof; and
(4) make requests for Confidential Information of the other party only if
necessary to
Page 11 of 26
<PAGE>
accomplish the purposes set forth in this Agreement. ICG and Distributor shall
be responsible for ensuring compliance with the terms of this Section 16 by
their respective directors, officers, employees, contractors and Distributors.
D. Within ten (10) days of termination or expiration of this Agreement for
any reason, or upon request of the disclosing party, all Confidential
Information, together with any copies thereof, shall be returned to the
disclosing party or certified destroyed by the receiving party.
E. The obligations imposed in this provision shall not apply to any
information that is (a) already in the possession of, is known to, or is
independently developed by the receiving party, (b) is or becomes publicly
available through no fault of the receiving party, or (c) obtained by the
receiving party from a third person without breach of such third person of an
obligation of confidence with respect to the Confidential Information disclosed.
F. ICG and Distributor acknowledge that in the event of breach or
threatened breach of the provisions of this Section 16, remedies at law will be
inadequate and that either party shall be entitled to an injunction or other
specific performance to enforce this provision, provided, however, that nothing
herein shall be construed as precluding the injured party from pursuing further
remedies.
G. The obligations of confidentiality and non-use shall survive the
termination or expiration of this Agreement.
17. Indemnification
A. Distributor agrees to indemnify, hold harmless and defend ICG from any
and all claims, actions, damages, expenses and other liabilities, including
reasonable attorney's fees and costs of litigation, resulting from Distributor's
negligent acts, omissions or willful misconduct, including, without limitation,
Distributor making a commitment beyond that specified in the original written
proposal which did not have prior ICG approval, or unauthorized execution of a
sales order, regardless of the form of action.
B. ICG agrees to indemnify, hold harmless and defend Distributor from any
and all claims, actions, damages, expenses and other liabilities, including
reasonable attorney's fees and costs of litigation, resulting from ICG's
negligent acts, omissions or willful misconduct.
C. ICG shall not be liable for any misrepresentations by Distributor,
Distributor's sub-distributors or employees, whether intentional or
unintentional, with regard to ICG or ICG's products or Services. Distributor
agrees to indemnify and hold ICG harmless for any such misrepresentations.
D. ICG shall not be liable for service or maintenance calls made by
Distributor, its employees or Distributors to customers.
Page l2 of 26
<PAGE>
E. Except as otherwise expressly provided in this Agreement, neither party
shall be liable to the other party for compensation, damages, loss of
prospective profits or anticipated sales, expenditures, investments, loss of
business commitments, or good will of either party, or otherwise, except for
compensation owed by ICG to Distributor for any orders signed by ICG which are
in process at the time of termination or expiration.
F. In addition to the disclaimers of liability expressed herein, ICG shall
not have any liability of any kind under this Agreement unless Distributor gives
ICG written notice of its claim within thirty (30) days after the date
Distributor knows, or should know, of its claim, and files suit against ICG
within one (1) year after such date.
G. Distributor agrees to defend, indemnify, and hold ICG harmless from and
against any and all claims, liabilities, demands, actions, damages, suits,
actions or other expenses (including reasonable attorney's fees and costs of
litigation) resulting from any Slamming by Distributor as defined in this Sales
Agency Agreement, or any other intentional misrepresentation by Distributor,
whether such actions are directly against ICG or against Distributor and ICG.
18. Limitation of Liability
In no event shall either party be liable to the other for any incidental,
punitive, special or consequential damages of any nature whatsoever, including
without limitation lost profits or revenues, regardless of the foreseeability
thereof, arising out of a party's actions or inactions or otherwise occasioned
by a party's inability to perform its obligations hereunder.
19. Insurance
Distributor shall, at its own costs and expense, furnish and maintain the
following insurance during the term of this Agreement. Distributor shall not be
entitled to commence work or be entitled to any compensation until it has
submitted certificates of insurance evidencing such coverage. ICG shall have at
least forty-five (45) days' prior written notice of cancellation, non-renewal,
or material modification. All insurance policies shall be written by companies
with an A.M. Best Company's rating of A VIII or better and be licensed in the
State in which the work is done.
A. Workers' Compensation insurance (including Employer's Liability
insurance) in accordance with statutory requirements of the state in which the
work is being performed;
B. Commercial General Liability insurance providing coverage against
liability for advertising injury, bodily injury, death and property damage in an
amount of not less than $1,000,000.
C. Comprehensive Automobile Liability insurance in an amount of not less
than $1,000,000 for bodily injury and property damage arising from a single
occurrence.
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20. Remedies for Breach of Contract
In addition to any of the remedies at law or in equity ICG or Distributor
may have available to it under the terms of this Agreement, ICG or Distributor
shall be entitled to stop the other party, by means of injunction, from
violating any part of this Agreement, and to recover, by means of an accounting,
any profits the other party may have obtained in violation of this Agreement.
21. Assignment
Distributor may not assign this Agreement without the prior written
consent of ICG. ICG may assign this Agreement without Distributor's consent to a
subsidiary, affiliate or parent company; any firm, corporation, or entity which
the Company controls, is controlled by, or is under common control with; any
partnership in which it has a majority interest; or to any entity which succeeds
to all or substantially all of its assets whether by merger, sale or otherwise.
Distributor may refer prospective successor Distributors to ICG who may apply
for Distributor status; granting of such status shall be subject to ICG's sole
discretion.
22. Modifications
Unless otherwise provided, this Agreement may be modified only by a
written amendment, duly signed by persons authorized to sign agreements on
behalf of Distributor and ICG, and shall not be modified or supplemented by oral
agreement or by any course of dealing or trade usage.
23. Notices
Any notice required or allowed hereunder shall be in writing and shall be
deemed given when sent by the United States Mail, registered or certified mail,
return receipt requested, postage prepaid, or by a nationally recognized
courier, addressed as follows:
ICG: Senior V.P. Sales Assistant General Counsel
ICG Telecom Group, Inc. Contract Administration
161 Inverness Drive West ICG Communications, Inc
Englewood, CO 80112 161 Inverness Drive West
Englewood, CO 80112
Page 14 of 26
<PAGE>
DISTRIBUTOR: New Millennium Multimedia, Inc.
-------------------------------------
[Full Legal Name of Distributor]
1690 Chantilly Drive
-------------------------------------
[Street Address]
Atlanta, GA. 30324
-------------------------------------
[City, State, Zip Code]
Attention: Scott Barber
or as such addressee or address is changed by written notice to the other party.
24. Compliance With Laws
A. Distributor shall comply with all applicable federal, state and local
laws and regulations which may be applicable to Distributor as an employer of
labor. Distributor and ICG shall comply with all applicable federal, state,
county and local laws, ordinances, regulations and codes in the performance of
this Agreement, including, without limitation, the procurement of permits,
licenses and certificates where needed, excluding those licensing and other
requirements which are the obligation of ICG in reference to the ICG Services
offered hereunder. Each party shall bear its own costs associated with
compliance with the laws, including, without limitation, procurement of permits,
licenses and certificates. Distributor and ICG agree to indemnify and hold each
other harmless for any loss, damage, liability, claim or demand, or any
penalties, including, without limitation, costs, expenses and reasonable
attorney's fees assessed against the other that may be sustained by the other's
failure to comply with such requirements.
B. This Agreement is subject to applicable laws and executive orders
relating to equal employment and non-discrimination in employment. The parties
hereto shall not discriminate in their employment practices against any person
by reason of race, religion, color, sex, age or national origin, and agree to
comply with the provisions of those laws and orders as well as all laws and
orders relating to the employment of the handicapped, the employment of veterans
and the use of minority business enterprises, to the extent any such laws and
orders are applicable to the performance of this Agreement. For this purpose,
the provisions of such laws and orders and pertinent regulations issued
hereunder, as now in force or hereafter amended, shall be deemed an integral
part of this Agreement.
25. Severability
In the event that any one or more of the provisions of this Agreement
shall for any reason be held to be invalid or unenforceable, the remaining
provisions of this Agreement shall be unimpaired, and shall remain in effect and
be binding upon the parties.
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26. Force Majeure
With the exception of payment obligations under this Agreement, a party
shall be excused from performance if its performance is prevented by any acts or
events beyond the party's reasonable control, including, without limitation:
severe weather and storms; earthquakes or other natural occurrences; strikes or
other labor unrest; power failures; computer failures; nuclear or other civil or
military emergencies; or acts of legislative, judicial, executive or
administrative authorities.
27. Waiver
The failure of either party to enforce at any time, or for a period of
time, any of the provisions of this Agreement, shall not be construed as a
waiver of such provision or of the right of such party thereafter to enforce
such provision.
28. Credit Checks
Distributor agrees to execute any commercially reasonable documents to
allow ICG to perform credit and/or background checks on Distributor.
29. Choice of Law/Jurisdiction
The validity, performance and construction of the terms and conditions of
this Agreement shall be construed in accordance with and governed by the laws of
the State of Colorado, and any suit to enforce or construe any provision of this
Agreement shall be brought in a Court of competent jurisdiction in Denver
County, Colorado. The prevailing party shall be entitled to recover its
attorney's fees and expenses in any successful action to enforce this Agreement.
30. Paragraph Headings
Paragraph headings, as contained herein, are provided for convenience and
reference only. They in no way restrict or limit the contents or terms of this
Agreement.
31. Successors and Assigns
Except as otherwise expressly provided for herein, the provisions of this
Agreement are for the benefit of the parties hereto and not for any other person
and shall be binding on all successors and assigns.
32. Authority to Execute
Each party represents and warrants that it has full power and authority to
enter into and perform under this Agreement and that the person signing this
Agreement has been properly authorized to do so. Each party further acknowledges
that it has read and understands this Agreement and agrees to be bound by all of
its terms, conditions and provisions.
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<PAGE>
33. Entire Agreement
This Agreement, together with its appendices attached hereto, sets forth
the entire understanding of the parties and supersedes and terminates any prior
agreements, understandings, or representations between the parties, whether
written or oral, with respect to the subject matter contained herein. No
representative of either party shall have the authority to waive or change any
provision of this Agreement unless such waiver or change is made in writing and
signed by an authorized representative of both parties. This Agreement shall
only be effective upon the execution by Distributor and the acceptance and
execution by an authorized officer of ICG.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives on the day and year first above
written.
ICG TELECOM GROUP, INC. New Millennium Multimedia, Inc.
-----------------------------------------
(Distributor Name)
By: By: /s/ Scott H. Barber
---------------------------- -------------------------------------
Name: Name: SCOTT H. BARBER
---------------------------- -------------------------------------
Title: Title: CHIEF INFORMATION OFFICER
---------------------------- -------------------------------------
Date: Date: 9/28/99
---------------------------- -------------------------------------
DISTRIBUTOR HEREBY SELECTS OPTION __.
Page 17 of 26
<PAGE>
[LOGO](TM) ICG
TELECOM GROUP, INC.
ICG TELECOM GROUP, INC. DISTRIBUTOR AGREEMENT
EXHIBIT A
Distributor is authorized to sell ICG Services at the rates shown in the pricing
section of the Distributor Manual. Distributor acknowledges that sales at prices
other than those defined in the Distributor Manual must be approved in writing
by ICG Telecom Croup, Inc. prior to providing a proposal to the Customer.
Dialtone services are available for sale as described in Table 1 below.
Commissions will not be paid to Distributor for non-standard product
configurations.
PRODUCT LIST
Table 1
Custom Calling Features
Analog Trunks
Business Lines (SBL, SBLP, Connect/Connect Plus)
Calling Cards
Digital Trunks
Long Distance (1+, Toll Free)
PRI (DAS/EOS)
Special Access (EDS, DTS)
Voice Mail
Co-Location
DSL
Frame Relay
IPLD
RAS
IAS
Table 2
IAS for ISPs
Page 18 of 26
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Table 3
PRI/RAS for ISPs
The above products may not be available in each geographic location within a
territory.
Page 19 of 26
<PAGE>
EXHIBIT B
Commission Schedule and Policies
I. COMMISSIONS
1. To earn commission for a new customer, order must be: (1) for a minimum
of 10 digital standard business lines or 10 analog business lines (unless a
greater number of lines is required by the particular region in which the
service is installed; (2) for on-switch or on-net services; and (3) accepted and
approved by ICG through ICG's internal order tracking system. A Distributor will
be paid a one-time, non-recurring earned commission in accordance with the first
number in the following Monthly Line Volume Commitment Schedule and the
recurring commission will be paid on Dial Tone, Long Distance and Voice-Mail as
set forth below in the second number and in accordance with the Commission Pay
Date Schedule set forth below. Commission will be paid only for the products
listed in Table I, page 18.
- --------------------------------------------------------------------------------
Line Volume Commitment Schedule
Contract Term 1-24 lines 25-100 lines 101+ lines
- --------------------------------------------------------------------------------
Option 1 12 months [***] [***] [***]
24 months or greater [***] [***] [***]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Option 2 l2 months [***] [***] [***]
24 months or greater [***] [***] [***]
- --------------------------------------------------------------------------------
For all new Distributors, there will be no commitments required for their
first quarter. Thereafter, each Distributor has a quota of [***] or greater
lines per month, [***] or greater lines per quarter.
Distributors must select either Option I or Option 2 by indicating their
selection in writing on page 17 of the Agreement.
Commissions will be paid on the products listed in Table 2, page
18, as follows:
- --------------------------------------------------------------------------------
Table 2
- --------------------------------------------------------------------------------
IAS Earned according to the Volume Commitment selected by the
(Integrated Access Distributor on p. 17 of this Agreement. IAS sold to an ISP
Service) by a Distributor will be paid a one-time, non-recurring
commission of [***] per line. Only Dial Tone and Dedicated
LD will count toward volume attainment for commission
purposes.
- --------------------------------------------------------------------------------
[***] Confidential treatment requested
Page 20 of 26
<PAGE>
Commissions will be paid on the products listed in Table 3, page 19, as follows:
- --------------------------------------------------------------------------------
Table 3
- --------------------------------------------------------------------------------
ISP PRI/RAS sold to an ISP by a Distributor will be paid a one time,
non-recurring commission of [***] per line. Such sales will not
count toward line volume attainment for commission purposes.
- --------------------------------------------------------------------------------
2. Special Access
Recurring commissions may be earned for Special Access based on the actual
monthly billed revenue of the customer. Sales of Special Access products
consisting of OC1, OC3, OC12, OC48 and 0C192 will be treated on a case-by-case
basis. A commission is deemed "earned" after the order is installed, accepted
into ICG's internal order tracking system and billed. Earned recurring
commissions will be paid on a monthly basis in accordance with the following
schedule:
- --------------------------------------------------------------------------------
Hybrid On Net
- --------------------------------------------------------------------------------
[***] of monthly billed revenue [***] of monthly billed revenue
- --------------------------------------------------------------------------------
3. Installation Commission
A Distributor may earn a one-time commission of [***] of the billed
installation revenue per order. No commissions will be paid if installation
charges are waived.
1999 Non-Recurring Earned Commission Anticipated Pay Date Schedule
Month order is Dates Pay
accepted Included Date
- --------------------------------------------------------------------------------
February February 1 -- 28 April 2, 1999
- --------------------------------------------------------------------------------
March March 1 -- 31 April 30, 1999
- --------------------------------------------------------------------------------
April April 1 -- 30 June 11, 1999
- --------------------------------------------------------------------------------
May May 1 -- 31 July 9, 1999
- --------------------------------------------------------------------------------
June June 1 -- 30 August 6,1999
- --------------------------------------------------------------------------------
July July 1 -- 31 September 3, 1999
- --------------------------------------------------------------------------------
August August 1 -- 31 October 1, 1999
- --------------------------------------------------------------------------------
September September 1 -- 30 November 12, 1999
- --------------------------------------------------------------------------------
October October 1 -- 31 December 10, 1999
- --------------------------------------------------------------------------------
November November 1 -- 30 January 7, 2000
- --------------------------------------------------------------------------------
December December 1 -- 31 February 4, 2000
- --------------------------------------------------------------------------------
[***] Confidential treatment requested
Page 21 of 26
<PAGE>
CHARGEBACKS
1. If a customer cancels its agreement with ICG prior to installation,
100% of any paid non-recurring commission will be charged back to the
Distributor.
2. If a customer cancels ICG service within six (6) months following
installation, 100% of the paid non-recurring commission will be charged back to
the Distributor.
3. BY SIGNING THIS AGREEMENT DISTRIBUTOR SPECIFICALLY AGREES THAT ANY OR
ALL CHARGEBACK AMOUNTS MAY BE WITHHELD FROM ANY FUTURE COMMISSIONS OR
COMPENSATION OTHERWISE DUE OR PAYABLE TO THE DISTRIBUTOR.
III. ADDITIONAL LINES
When lines are added to a customer order, the monthly recurring
commissions will increase based on actual billed revenue. A one-time,
non-recurring commission will be paid for additional line only on orders of 10
lines or more.
IV. RESALE OF LOCAL SERVICES
Please consult with your ICG sales representative before placing a resale
order. If ICG accepts a resale order, the monthly recurring commission will be
as follows based on the actual billed revenue of the Customer:
- --------------------------------------------------------------------------------
Flat Rate Recurring Percentage Earned Per Month
Length of Contract for Standard Business Lines Only
- --------------------------------------------------------------------------------
Any [***]
- --------------------------------------------------------------------------------
ICG reserves the right to accept or reject any resale order.
V. SERVICE RENEWAL
Distributor's contracted services will automatically renew on a
month-to-month basis at the end of initial Term of the Service Agreement with
ICG unless ICG is notified in writing of cancellation in accordance with the
terms of this Agreement. Distributor will continue to receive monthly residual
based on actual billed revenue until the customer cancels the service with ICG.
[***] Confidential treatment requested.
Page 22 of 26
<PAGE>
Pay-out Examples
1. EXAMPLE 1- OPTION 1
Susan has been designated as a Distributor for XYZ Communications. She has
just signed a customer for 30 standard business lines at [***] per line. For the
first three months of the contract, the customer bills $2,000, $2,000, and
$3,750, respectively. Contract term is 36 months. Susan will be paid a monthly
recurring commission of [***].
--------------------------------------------------------------------------
Non-Recurring Commission Payment 30 lines X [***] = [***]
--------------------------------------------------------------------------
January Commission $2,000 X [***] = [***]
--------------------------------------------------------------------------
February Commission $2,000 X [***] = [***]
--------------------------------------------------------------------------
March Commission $3,750 X [***] = [***]
--------------------------------------------------------------------------
2. EXAMPLE 2- OPTION 1
Bill has been designated as a Distributor for ZYX Telecommunications. He
has just signed a customer for 150 standard business lines at [***] per line.
For the first three months of the contract, the customer bills $25,000, $25,000,
and $46,875 respectively. Contract term is 36 months. Bill will be paid a
monthly recurring commission of [***].
--------------------------------------------------------------------------
Non-Recurring Commission Payment 150 lines X [***] = [***]
--------------------------------------------------------------------------
January Commission $25,000 X [***] = [***]
--------------------------------------------------------------------------
February Commission $25,000 X [***] = [***]
--------------------------------------------------------------------------
March Commission $46,875 X [***] = [***]
--------------------------------------------------------------------------
[***] Confidential treatment requested.
Page 23 of 26
<PAGE>
3. EXAMPLE 3- OPTION 2
Susan has been designated as a Distributor for XYZ Communications. She has
just signed a customer for 20 standard business lines at [***] per line. For the
first three months of the contract, the customer bills $2,000, $2,000, and
$3,750, respectively. Contract term is 12 months. Susan will be paid a monthly
recurring commission of [***].
--------------------------------------------------------------------------
Non-Recurring Commission Payment 20 lines X [***] = [***]
--------------------------------------------------------------------------
January Commission $2,000 X [***] = [***]
--------------------------------------------------------------------------
February Commission $2,000 X [***] = [***]
--------------------------------------------------------------------------
March Commission $3,750 X [***] = [***]
--------------------------------------------------------------------------
4. EXAMPLE 4 - OPTION 2
Bill has been designated as a Distributor for ZYX Telecommunications. He
has just signed a customer for 150 standard business lines at [***] per line.
For the first three months of the contract, the customer bills $25,000, $25,000,
and $46,875 respectively. Contract term is 36 months. Bill will be paid a
monthly recurring commission of [***].
--------------------------------------------------------------------------
Non-Recurring Commission Payment 150 lines X [***] = [***]
--------------------------------------------------------------------------
January Commission $25,000 X [***] = [***]
--------------------------------------------------------------------------
February Commission $25,000 X [***] = [***]
--------------------------------------------------------------------------
March Commission $46,875 X [***] = [***]
--------------------------------------------------------------------------
[***] Confidential treatment requested.
Page 24 of 26
<PAGE>
EXHIBIT C
Service Ordering Requirements
1. Sales Package
The Distributor Representative is responsible for the Sales Package which
includes the following documents:
o Dialtone Checklist
The Dialtone Checklist begins with the Sales Package and
remains with the order throughout.
o Inquiry LOA (Letter of Agency for Presale)
The full LOA authorizes the Distributor to request a Customer
Service Record (CSR) directly from the Local Exchange Carrier
(LEC).
o Master Telecommunications Services Agreement
The Agreement is used for establishing customer information,
terms and conditions, services and customer authorization of a
review of Customer's credit rating.
o Inquiry LOA (Letter of Agency for Presale)
The full LOA authorizes the Distributor to request a Customer
Service Record (CSR) directly from the Local Exchange Carrier
(LEC).
o Local Exchange Service Agreement -- Attachment A
The Local Exchange Service Agreement determines the local
products requested, their options, term and provides ICG with
Letter of Authorization.
o Voice Mail Service Agreement -- Attachment B
The Voice Mail Service Agreement determines type of voice mail
ordered and term.
o Long Distance Service and/or Calling Card Service Agreement --
Attachment C
The Long Distance Service and/or Calling Card Service
Agreement determines long distance service and term for
Customer as well as order placement for Calling Cards.
Page 25 of 26
<PAGE>
o Toll Free Number Reassignment Terms
The Toll Free Number Reassignment Terms outlines Customer
acknowledgement that the Toll Free Number that the Customer is
requesting has not been inactive for the period of time
normally required by ICG prior to reassignment.
o Letter of Agency for Toll Free Service
The Letter of Agency for Toll Free Service authorizes ICG to
act on Customer's behalf for specified Toll Free Numbers.
o Letter of Agency to Change Interexchange Service Provider
The Letter of Agency to Change Interexchange Service Provider
authorizes ICG to act as Customer's agent for interexchange
services for specified BTNs and WTNs.
2. Forward to Distributor Sales Manager
The Sales Package is forwarded to the respective Distributor Sales Manager who
is responsible for validating the completeness of the package. If the package is
incomplete, it will be returned to the Distributor with notification on the
Dialtone Checklist indicating what is missing. The process will not progress
while waiting for completion of the package.
If the package is complete, the Distributor Sales Manager forwards the order to
the Sales Operations Coordinator (SOC) for internal processing for delivery of
services to the end user customer.
Page 26 of 26
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
CONSOLIDATED STATEMENT OF OPERATIONS
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 829
<SECURITIES> 2,650
<RECEIVABLES> 10
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,706
<PP&E> 3,147
<DEPRECIATION> 24
<TOTAL-ASSETS> 7,361
<CURRENT-LIABILITIES> 2,789
<BONDS> 0
0
0
<COMMON> 4,260
<OTHER-SE> 643
<TOTAL-LIABILITY-AND-EQUITY> 7,361
<SALES> 0
<TOTAL-REVENUES> 500
<CGS> 293
<TOTAL-COSTS> 810
<OTHER-EXPENSES> 19
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24
<INCOME-PRETAX> (622)
<INCOME-TAX> 0
<INCOME-CONTINUING> (622)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (622)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
