EXHIBIT 10.13
AGREEMENT FOR RESALE OF LOCAL WIRELINE TELECOMMUNICATIONS
SERVICES AND PROVISION OF ANCILLARY SERVICES
Between
Z-TEL COMMUNICATIONS, INC.
and
SPRINT COMMUNICATIONS COMPANY L. P.
dated as of
February 4, 2003
Materials contained in this exhibit have been omitted pursuant to a
request for confidential treatment submitted to the Securities and Exhchange
Commission. Those omitted materials have been filed separately. Omitted
materials are indicated by placing *** characters in
lieu at the omitted materials.
TABLE OF CONTENTS
PREAMBLE ........................................................................................... 1
AGREEMENT .......................................................................................... 1
DEFINITIONS ........................................................................................ 2
Section I. Scope of Services 16
1.1. Statement of Work .................................................................. 16
1.2. Agency and Resale Modes ............................................................ 16
1.2.1. Migration ............................................................... 17
1.2.2. Implementation .......................................................... 17
1.2.3. Modification ............................................................ 17
1.3. Geographic Scope of Services ....................................................... 17
1.3.1. Compliance with Regulations ............................................. 17
1.3.2. Service Area Additions ........................................................... 17
1.3.3. Service Area Limitations ................................................ 17
1.4. Local Wholesale Services ........................................................... 17
1.4.1. Termination of Long Distance Calls ...................................... 18
1.4.2. Access to Toll Free Services ............................................ 18
1.5. Z Node Services .................................................................... 18
1.5.1. Extension of Capabilities ............................................... 18
1.6. Long Distance Services ............................................................. 18
1.7. Travel Card Services ............................................................... 18
1.8. Inside Wire Services ............................................................... 18
1.9. OSS Services Supplied by Z-Tel ..................................................... 19
1.9.1. Inbound Sales ........................................................... 19
1.9.2. Third Party Verification ................................................ 19
1.9.3. Provisioning ............................................................ 20
1.9.4. Customer Care Escalations ........................................................ 20
1.9.5. Access Charges .......................................................... 20
1.9.6. End User Billing ........................................................ 20
1.9.7. Payment Posting ......................................................... 20
1.9.8. CDR Processing .......................................................... 20
1.9.9. Responding to Subpoenas ................................................. 21
1.9.10. Reports ................................................................ 21
1.9.11. LEC Relations .......................................................... 21
1.9.13. Repair ................................................................. 21
1.9.13. Collections ............................................................ 21
1.9.14. Training ............................................................... 21
1.9.15. Fraud Detection ........................................................ 21
1.9.16. Long Distance Services Exception ....................................... 21
1.10. OSS Functions Provided by Sprint .................................................. 21
1.10.1. Marketing .............................................................. 22
1.10.2. Customer Acquisition and TPV ........................................... 22
1.10.3. Order Entry ............................................................ 22
1.10.4. Customer Care (Customer Interface and Tier 1 Resolution)................ 22
1.10.5. Change Orders .......................................................... 22
1.10.6. Lockbox ................................................................ 22
1.10.7. Tax Reconciliation/Filings/Remittances ................................. 22
1.10.8. Transport (to Z-Node) .................................................. 22
1.10.9. Fulfillment ..................................................................... 23
1.10.10. Investigating Complaints .............................................. 23
1.10.11. Commission Program .................................................... 23
1.10.12. Additional Executive Reports .......................................... 23
1.10.13. Sprint Retained or Assumed Function ................................... 23
1.11. Ancillary Services ................................................................ 24
1.12. Upgrades, Updates and New Z-Tel Services or Functionalities ....................... 24
1.12.1. Upgrades and Updates ................................................... 24
1.12.2. New Services or Functionalities ........................................ 24
1.12.3. Timing of Availability ................................................. 25
1.12.4. Pricing ................................................................ 25
1.12.5. Proprietary Work Requested by Sprint ................................... 25
1.12.6. Similarly Situated ..................................................... 25
1.13. Promotional Programs Excluded ..................................................... 25
1.14. Maintenance ....................................................................... 26
1.15. Notice of Changes ................................................................. 26
1.16. Grandfathering .................................................................... 27
Section II. Term, Termination and Transition ....................................................... 27
2.1. Initial Term ....................................................................... 27
2.2. Renewal Term ....................................................................... 28
2.3. Termination ........................................................................ 28
2.3.1. Termination by Sprint ................................................... 28
2.3.2. Termination by Z-Tel .................................................... 30
2.4. Obligations upon Expiration or Termination ......................................... 30
2.4.1. Sprint's Obligations .................................................... 30
2.4.2. Z-Tel's Obligations ..................................................... 31
2.4.3. Removal of Property ..................................................... 32
2.5. Transition of Customers ............................................................ 32
2.5.1. Compliance with Law ..................................................... 33
2.5.2. Failure to Pay During Transition ........................................ 33
2.5.3. Assistance .............................................................. 33
2.5.4. New Orders .............................................................. 34
2.5.5. Transition Costs ........................................................ 34
2.5.6. Transition Period Duration .............................................. 36
2.6. Exit from Telecommunications Service by Sprint ..................................... 37
2.7. Lawful Purposes .................................................................... 37
Section III. Reserved .............................................................................. 38
Section IV. Fees and Charges ....................................................................... 38
4.1. Basis of Fees ...................................................................... 38
4.2. Interface Establishment Fee ........................................................ 38
4.2.1. Development of PCS Interfaces ........................................... 38
4.3. Service Fee Prepayment and Resulting Credit ........................................ 39
4.3.1. Use Stimulation ......................................................... 39
4.4. Excluded Activities ................................................................ 39
4.5. SLC and PICC Charges ............................................................... 39
4.6. Z-Tel OSS Support .................................................................. 39
4.6.1. Gross-Up of Expense ..................................................... 39
4.6.2. Allocation of Employee Expense .......................................... 42
4.6.3. Pre-approved ............................................................ 42
4.6.4. Adjustment to Headcount ................................................. 42
4.6.5. Escalation of Headcount Matters ......................................... 43
4.6.6. Level of Support ........................................................ 43
4.6.7. Cost of Living Adjustment ............................................... 43
4.6.8. Minimization of Expense ................................................. 44
4.7. Allocation of **** and Usage Fees .................................................. 44
4.7.1. Allocation of **** Fees ................................................. 44
4.7.2. Allocation of Usage Fees ................................................ 44
4.8. Slamming and Cramming Impact Expenses .............................................. 44
4.9. Changes in Fees and Direct Costs ................................................... 45
4.9.1. Adjustment Process for ***** Fees Not in *****........................... 45
4.9.2. Resolution of Fee Change Disputes ....................................... 45
4.9.3. ***** Fee Adjustments in *****........................................... 46
4.9.4. *****.................................................................... 46
4.10. Recovery of Taxes and Regulatory Fees ............................................. 46
4.11. Permitted Fees and Charges ........................................................ 46
Section V. Billing and Billing Disputes ............................................................ 47
5.1. Invoicing of Fees .................................................................. 47
5.1.1. Invoice Date ............................................................ 47
5.1.2. **** Recurring Fees ..................................................... 47
5.1.3. Z-Tel Dedicated Support Fees ............................................ 47
5.1.4. Receipt Credits ......................................................... 47
5.2. Back Billing ....................................................................... 47
5.3. Billing Disputes ................................................................... 47
5.3.1. No Withholding of ***** Fees ............................................ 48
5.3.2. Withholding of ***** Fees ............................................... 48
5.3.3. Notice of Billing Dispute ............................................... 48
5.3.4. Payment Will Not Prejudice .............................................. 48
5.3.5. Restitution ............................................................. 49
5.3.6. Resolution Period ....................................................... 49
5.3.7. Joint Effort Regarding Third-Party Disputes ............................. 49
Section VI. Payments ............................................................................... 49
6.1. Responsibility ..................................................................... 49
6.2. Payment Schedule ................................................................... 49
6.2.1. **** Recurring Fees ..................................................... 49
6.2.2. Other **** Fees ......................................................... 50
6.2.3. Z-Tel Dedicated Support Fees ............................................ 50
6.2.4. All Other Fees .......................................................... 50
6.3. Currency and Payment Method ........................................................ 50
6.4. Late Payment Fees .................................................................. 50
6.4.1. Undisputed Amounts ...................................................... 50
6.4.2. Disputed Amounts ........................................................ 50
6.5. Sprint Adjustments ................................................................. 50
Section VII. Relationship to End Users ............................................................. 51
7.1. Serving End Users .................................................................. 51
7.2. Points of Contact .................................................................. 51
7.3. End User Interfaces ................................................................ 51
Section VIII. Authorizations ....................................................................... 51
8.1. Listing Information ................................................................ 51
8.2. Authorization and Verification Requirements ........................................ 52
8.2.1. Z-Tel Verification and Retention ........................................ 52
8.2.2. Sprint Verification and Retention ....................................... 52
Section IX. Z-Tel Responsibilities and Warranties .................................................. 52
9.1. Z-Tel Cooperation .................................................................. 52
9.2. Good Standing ...................................................................... 52
9.3. Z-Tel Compliance with Laws ......................................................... 53
9.4. Prior Consent for Branding ......................................................... 53
9.5. Sprint End User Interaction ........................................................ 53
9.6. No Contravention ................................................................... 53
9.7. Sufficiency of Z-Tel Fundamental Technology ........................................ 53
9.8. Non-Discrimination ................................................................. 54
9.9. Toll-Free Access ................................................................... 54
9.10. Restricting Service ............................................................... 54
9.11. Tariffs ........................................................................... 55
9.12. Material Threat ................................................................... 55
9.13. Network Protection ................................................................ 55
9.14. Responding to Subpoenas ........................................................... 55
9.15. Insurance ......................................................................... 55
9.15.1. Certificates of Insurance .............................................. 56
9.15.2. No Limitation .......................................................... 57
9.16. Fee Increases ..................................................................... 57
9.17. Change of Control ................................................................. 57
Section X Sprint Responsibilities and Warranties ................................................... 57
10.1. Sprint Compliance with Laws ....................................................... 57
10.1.1. Authority in Place ..................................................... 57
10.1.2. Demonstrated Proof of Authority ........................................ 57
10.2. Subscriber Fees ................................................................... 57
10.3. No Contravention .................................................................. 57
10.4. Hazards, Interference, Etc ........................................................ 58
10.5. Security .......................................................................... 58
10.6. Subpoenas ......................................................................... 58
10.7. Sprint Compliance with Laws ....................................................... 58
10.8. Acceptable Use .................................................................... 58
10.9. Long Distance Choice .............................................................. 58
10.9.1. PIC Selection .......................................................... 58
10.9.2. Carrier Arrangements ................................................... 58
10.9.3. Proof of Authorization ................................................. 58
10.9.4. Responsibility for ANI Usage ........................................... 59
10.9.5. Manual Processing ...................................................... 59
10.10. Connectivity to Z-Node ........................................................... 59
10.11. Fraud ............................................................................ 59
10.12. Forecasts ........................................................................ 60
10.13. Compliance with Regulatory Rules ................................................. 60
10.14. Future Services .................................................................. 60
10.15. Use of Service ................................................................... 60
10.16. Insurance ........................................................................ 61
10.16.1. Coverage .............................................................. 61
10.16.2. Certificates of Insurance ............................................. 62
10.16.3. No Limitation ......................................................... 62
10.16.4. Self Insurance ........................................................ 62
10.17. Material Threat .................................................................. 62
10.18. Reverse Engineering .............................................................. 63
10.19. Interconnection Agreements ....................................................... 63
10.20. Z-Tel Vendors .................................................................... 63
Section XI. Service Level and Remedy ............................................................... 63
11.1. SLAs .............................................................................. 63
11.1.1. Performance Levels ..................................................... 63
11.1.2. Actions by ILECs and Regulatory Authorities ............................ 63
11.2. Force Majeure Application ......................................................... 63
Section XII. Disaster Recovery, Back-up System ..................................................... 64
12.1. On-Site Disaster Recovery Plan .................................................... 64
12.2. Back-Up Plan ...................................................................... 64
12.2.1. Plan Contents .......................................................... 64
12.2.2. Plan Development ....................................................... 65
12.2.3. Joint Disaster Planning Team ........................................... 65
12.3. Material Breach ................................................................... 65
12.4. Implementation of Back-Up Plan; Back-Up System .................................... 65
12.4.1. Timing of Implementation ............................................... 65
12.4.2. Location ............................................................... 66
12.4.3. Z-Tel's Assistance and Cooperation ..................................... 66
12.4.4. Back-up System Operations .............................................. 66
12.4.5. Operating Methods and Procedures ....................................... 66
12.4.6. Title .................................................................. 68
12.5. Testing of Back-Up System ......................................................... 68
12.5.1. Z-Tel Back-Up Materials ................................................ 68
12.5.2. Restrictions on Sprint's Access and Use of Z-Tel Back-Up Materials ..... 68
12.5.3. Z-Tel's Assistance ..................................................... 69
Section XIII. Third Party Agreements ............................................................... 69
13.1. Third-Party Agreements ............................................................ 69
Section XIV. Technology Delivery, Technology License and Escrow .................................... 69
14.1. Technology License Grant .......................................................... 69
14.2. Triggering Event .................................................................. 70
14.2.1. Exercise of Option ..................................................... 70
14.2.2. Royalty Payment ........................................................ 71
14.3. Technology Escrow ................................................................. 71
14.4. Technology Escrow Materials ....................................................... 71
14.4.1. Deposit ................................................................ 71
14.4.2. Upgrades and Updates of Technology Escrow Materials ............................. 72
14.5. Audit of Technology Escrow Materials .............................................. 73
14.6. Release of Technology Escrow Materials ............................................ 73
14.7. Bankruptcy ........................................................................ 73
14.8. Disputes Regarding Delivery or Release of Technology Escrow Materials ............. 73
14.9. Assignment of Technology License .................................................. 74
14.10. Remedies Limited ................................................................. 74
Section XV. Confidentiality ........................................................................ 74
15.1. Confidentiality ................................................................... 74
15.2. Return or Destruction of Confidential Information ................................. 75
15.3. Third Party Disclosure Requests ................................................... 75
15.4. Required Disclosures .............................................................. 75
15.5. Equitable Relief .................................................................. 75
15.6. Survival .......................................................................... 76
Section XVI. Property Rights; License; Trademarks .................................................. 76
16.1. Property Rights and Usage ......................................................... 76
16.2. Title to Equipment ................................................................ 76
16.3. Grant of Use License .............................................................. 76
16.3.1. Retail Limitation ...................................................... 77
16.3.2. Brand Limitation ....................................................... 77
16.3.3. Sales Agents ........................................................... 77
16.4. Trademarks ........................................................................ 77
16.4.1. Sprint Branding Exception .............................................. 77
16.4.2. Z-Tel Branding Exception ............................................... 77
Section XVII. Disclaimer of Warranties ............................................................. 77
17.1. Disclaimer of Warranties .......................................................... 77
Section XVIII. Limitations on Liability ............................................................ 78
18.1. Limitations ....................................................................... 78
18.2. Application ....................................................................... 78
Section XIX. Indemnification ....................................................................... 78
19.1. Indemnification ................................................................... 78
19.2. Damages ........................................................................... 79
19.3. Procedure ......................................................................... 79
Section XX. Audits ................................................................................. 80
20.1. Adequate Books and Records ........................................................ 80
20.2. Right to Audit .................................................................... 80
20.3. Verification of Third Party Charges ............................................... 81
20.4. Disclosure ........................................................................ 81
Section XXI. Miscellaneous ......................................................................... 81
21.1. Good Faith Performance ............................................................ 81
21.2. No Exclusivity .................................................................... 81
21.3. Taxes ............................................................................. 81
21.4. Noninterference ................................................................... 82
21.5. Dispute Resolution ................................................................ 82
21.5.1. Escalation Procedures .................................................. 82
21.5.2. Negotiations ........................................................... 82
21.5.3. Disputes Involving Billing ............................................. 82
21.5.4. Continued Performance .................................................. 82
21.6. Entire Agreement .................................................................. 82
21.7. Compliance with Ethical Business Practices ........................................ 83
21.8. Assignment ........................................................................ 83
21.9. Binding Agreement ................................................................. 83
21.10. Litigation Venue ................................................................. 83
21.11. Governing Law .................................................................... 83
21.12. Legal Fees ....................................................................... 83
21.13. Letter of Agency ................................................................. 83
21.14. Notices .......................................................................... 83
21.14.1. Deemed Delivery ....................................................... 83
12.14.2. Super Notice .......................................................... 84
21.14.3. Saturday, Sunday or Legal Holiday ..................................... 84
21.15. Waiver ........................................................................... 84
21.16. Relationship of the Parties ...................................................... 84
21.17. Third Party Beneficiaries ........................................................ 84
21.18. Construction ..................................................................... 84
21.19. Severability ..................................................................... 85
21.20. Survival ......................................................................... 85
21.21. Counterparts ..................................................................... 85
21.22. Law Enforcement Cooperation ...................................................... 85
21.23. Emergency Interfaces ............................................................. 85
21.24. Payphone Services Prohibited ..................................................... 86
21.25. Sprint Services .................................................................. 86
21.26. Waiver of Jury Trial ............................................................. 86
List of Schedules and Exhibits ..................................................................... 88
Schedule A Statement of Work ....................................................................... 89
Schedule B Service Level Agreement and Remedies .................................................... 89
Definitions ............................................................................. 90
1.0 SLA Generic Types ................................................................... 93
1.1 Stabilization Period SLAs ........................................................... 93
1.2 Operational SLAs .................................................................... 94
1.3 Triggering Event SLAs ............................................................... 96
2.0 Roles and Responsibilities .......................................................... 99
3.0 Reporting ........................................................................... 100
4.0 Exclusions .......................................................................... 101
5.0 Service Level Agreement Change Process .............................................. 103
Attachment A ..................................................................... 105
Attachment B ..................................................................... 108
Metric Definition ................................................................ 108
Schedule C Pricing Schedule ........................................................................ 109
Schedule D Z-Tel Fundamental Technology ............................................................ 111
Schedule E Existing Z-Tel Technology ...............................................................
Schedule 10.8 Acceptable Use Policy ................................................................ 113
Schedule 13.1 Conditions, Restrictions, Rules, Policies, Procedures, Limitations and Rights
Imposed or Granted under Z-Tel's Third Party Agreements and Licenses ................. 116
Designee Schedule Sprint and Z-Tel Contact Information ............................................. 117
Exhibit A Form Transition Escrow Agreement ......................................................... 120
Exhibit B Technology Escrow Agreement .............................................................. 130
Exhibit C Form of Text for Initial SEC Filing and Press Release .................................... 131
Exhibit D Form of Blanket Agency Agreement Letter for Local Service Providers ...................... 132
AGREEMENT FOR RESALE OF LOCAL WIRELINE
TELECOMMUNICATIONS SERVICES AND PROVISION OF ANCILLARY
SERVICES
THIS AGREEMENT, dated as of February 4, 2003, is between Z-TEL
COMMUNICATIONS, INC. ("Z-Tel") a Delaware corporation having its principal place
of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, on the one hand, and SPRINT COMMUNICATIONS COMPANY L.P. ("Sprint") a
Delaware limited partnership having its principal place of business at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, on the other. Z-Tel and Sprint are
sometimes referred to collectively in this Agreement as the "Parties" and
individually as a "Party."
PREAMBLE
Z-Tel and Sprint are both Competitive Local Exchange Carriers. Z-Tel
provides bundled packages of local, long-distance and enhanced
telecommunications services, primarily to residences and small businesses. Z-Tel
provides its Telephone Exchange Services using the unbundled network elements
("UNES") of Incumbent Local Exchange Carriers ("ILECS") under Interconnection
Agreements and tariffs on file with State Public Utility Commissions ("PUCS").
This Agreement sets forth the terms and conditions under which Z-Tel will
provide to Sprint:
(a) certain Z-Tel Telecommunications Services and Information
Services to be branded by Sprint for resale to Sprint's End Users,
(b) certain ancillary services and functions for Sprint's own
use and for use in providing Telecommunications Services and
Information Services to such Sprint End Users, and
(c) Operation Support Systems Services.
AGREEMENT
NOW THEREFORE, in reliance upon the foregoing Preamble, the mutual
covenants and agreements contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged by
each Party to the other, Z-Tel and Sprint agree to the following terms and
conditions.
1
DEFINITIONS
AFFILIATE means:
(a) any Person affiliated with, controlling, controlled by, under
common control with, or directly or indirectly operated by a party to
this Agreement,
(b) any Person in which a party to this Agreement has a direct
or indirect beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of fifty percent (50%) or
more of the voting stock of such Person or in which a party to this
Agreement has a controlling interest, and
(c) with respect to Sprint, any Person that is engaged in the sale of
Sprint-branded products.
The Persons described in paragraphs (a) and (b) are Owned Affiliates and the
Persons described in paragraph (c) are Contractual Affiliates.
ALTERNATIVELY BILLED SERVICES or ABS refers to (a) local and long distance calls
placed through an operator and billed to the called party (e.g., collect) or to
a third number, and (b) information provider per fee calls via dedicated NPA/NXX
codes such as 900 and 976.
ANCILLARY SERVICES means any facility or service that is requested by Sprint
that is not a Telecommunications Service or an Information Service that is
necessary or desirable to directly support delivery by Sprint of
Telecommunications Services and Information Services to its End Users and is not
identified as a function to be performed by Z-Tel in the SOW.
ANI or AUTOMATIC NUMBER IDENTIFICATION means the automatic identification of the
calling station used for routing and billing.
AUP or AUTHORIZED USE PLAN has the meaning set forth in Section 10.8.
BACK-UP PLAN has the meaning set forth in Section 12.2.
BACK-UP SYSTEM has the meaning set forth in Section 12.2.
BANKRUPTCY or BANKRUPT means the happening of any of the following events
concerning a Party:
(a) the filing of an application for, or a consent to, the appointment
of a trustee,
2
receiver or liquidator for all or any substantial portion of the
Party's assets;
(b) the filing of a voluntary petition in bankruptcy;
(c) the filing of a pleading in any court of record admitting inability
to pay debts as they come due;
(d) the making of an assignment for the benefit of creditors;
(e) the consenting to, or default in the answering of, a bankruptcy
petition filed;
(f) the entry of a judgment or decree in any bankruptcy or insolvency
proceeding adjudicating bankruptcy or insolvency;
(g) the entry of an order for any relief in any bankruptcy or
insolvency proceeding;
(h) when one hundred twenty (120) calendar days after the commencement
of any involuntary proceeding seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief
under any statute, law or regulation, the proceeding has not been
dismissed; and
(i) when ninety (90) calendar days after the appointment, without the
Party's consent or acquiescence, of a trustee, receiver or liquidator
of the Party or all or any substantial portion of the Party's assets,
the appointment has not been vacated or stayed or when ninety (90)
calendar days after the stay the appointment has not been vacated.
BILLING DATE means the date on which the ▇▇▇▇ is transmitted to the receiving
Party.
BILLING DISPUTE means any claim on any contractual basis that any dollar amount
in any ▇▇▇▇ issued for services performed under this Agreement is not rightly
due and payable.
BUSINESS DAY means any day that is not a Saturday, Sunday or legal holiday.
CHANGE OF CONTROL means the occurrence of any of the following events:
(a) Any "person" (as that term is defined in Sections 3(a)(9),
13(d), and 14(d) of the Securities Exchange Act of 1934 (the "EXCHANGE
ACT") and the rules under the Exchange Act, including Rule 13d-5(b))
acquires, directly or indirectly, "beneficial ownership" (as determined
under Rule 13d-3 under the Exchange Act) of securities entitled to vote
generally in the election of Z-Tel's directors ("VOTING SECURITIES") so
that, after the acquisition, the "person" holds, directly or
indirectly, shares of voting securities representing forty percent
(40%) or more of the combined voting power of Z-Tel's then outstanding
voting securities, other than an acquisition of voting securities:
3
(i) by a trustee or other fiduciary holding the
securities under any employee benefit plan (or related trust)
sponsored or maintained by Z-Tel or any person that Z-Tel
controls,
(ii) by any employee benefit plan (or related trust)
sponsored or maintained by Z-Tel or any person that Z-Tel
controls,
(iii) by Z-Tel,
(iv) by a corporation owned, directly or indirectly,
by Z-Tel's stockholders in substantially the same proportions
as their ownership of Z-Tel stock, or
(v) in a transaction that would not be a Change in
Control under clause (c) below.
Notwithstanding the foregoing, an event is not a "Change of
Control" under this subparagraph (a) unless:
(A) the "person" is one or more Change of
Control Companies or any of their respective
Affiliates or successors, or
(B) the "person" includes one or more Change
of Control Companies or any of their respective
Affiliates or successors, and any included Change of
Control Company, Affiliate or successor owns,
controls or otherwise holds (together with its
Affiliates and successors) voting securities
representing in aggregate ***** or more of the
combined voting power of the "person's" then
outstanding voting securities.
For purposes of this Agreement, the "CHANGE OF CONTROL
COMPANIES" are *****************************************************
********************************************************************
********************************************************************
For the avoidance of doubt, nothing in the proceeding will limit
the effectiveness of the exclusions set forth in clauses (i), (ii),
(iii), (iv), and (v) of this subparagraph (a).
(b) A change occurs in the composition of Z-Tel's
Board of Directors that causes less than a majority of Z-Tel's
directors to be directors that meet one or more of the following
descriptions:
(i) a director who:
(A) has been a director of Z-Tel for a continuous
period of at least the previous twelve (12) months, or
4
(B) was a director of Z-Tel as of the Effective Date
and has continued that role continuously without interruption
since the Effective Date,
(ii) a director whose election or nomination as
director was approved by a vote of at least two-thirds of the
then directors described in this clause (b) by prior
nomination or election, but excluding, for the purpose of this
subclause (b)(ii), any director whose initial assumption of
office occurred as a result of:
(A) an actual or threatened election contest
with respect to the election or removal of directors
or other actual or threatened solicitation of proxies
or consents by or on behalf of a person or group
other than Z-Tel's Board of Directors, or
(B) a tender offer, merger, sale of
substantially all of Z-Tel's assets, consolidation,
reorganization or business combination that would be
a Change in Control under clause (c) below, or
(iii) a director who was serving on Z-Tel's Board of
Directors as a result of the consummation of a transaction
that would not be a Change in Control under clause (c) below.
Notwithstanding the foregoing, an event is not a "Change of
Control" under this subparagraph (b) unless after the event a majority
of Z-Tel's directors are representing (through any arrangement,
agreement, or understanding), were designated by, or are employed by,
one or more of the Change of Control Companies or any of their
respective Affiliates or successors.
(c) Z-Tel consummates (whether directly involving Z-Tel or
indirectly involving Z-Tel through one or more intermediaries):
(i) a merger, consolidation, reorganization or
business combination,
(ii) a sale or other disposition of all or
substantially all of its assets, or
(iii) the acquisition of assets or stock of another
entity,
in each case, other than in a transaction:
(A) that results in Z-Tel's voting
securities outstanding immediately before the
transaction continuing to represent (either by
remaining outstanding or by being converted into
voting securities of Z-Tel or the person that, as a
result of the transaction,
5
controls, directly or indirectly, Z-Tel or owns,
directly or indirectly, all or substantially all of
Z-Tel's assets or otherwise succeeds to Z-Tel's
business (Z-Tel or such person, the "SUCCESSOR
ENTITY")) directly or indirectly, at least *****
*********** of the combined voting power of the
Successor Entity's outstanding voting securities
immediately after the transaction,
(B) after which more than **********
***** of the members of the Successor Entity's Board
of Directors were members of Z-Tel's Board of
Directors when Z-Tel's Board of Director's approved
the transaction (or whose election or nomination was
approved by a vote of at least two-thirds of the
members who were members of Z-Tel's Board of
Directors at that time), and
(C) after which no person or group
beneficially owns voting securities representing
********** or more of the combined voting
power of the Successor Entity (but no person or group
will be treated for purposes of this clause (C) as
beneficially owning ********** or more of
combined voting power of the Successor Entity solely
because of the voting power the person or group held
in Z-Tel before the consummation of the transaction.
Notwithstanding the foregoing, an event is not a "Change of
Control" under this subparagraph (c) unless it results, whether through
one transaction or a series of related transactions occurring during
any 365-day period, in the "ultimate parent entity" (as defined in the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated under such act, but using a *****
rather than a **********) of Z-Tel becoming any of the Change of
Control Companies or any of their respective Affiliates or successors.
(d) Z-Tel liquidates or dissolves.
CHANGE IN FEE NOTICE has the meaning set forth in Section 4.9.1.
CLAIM has the meaning set forth in Section 19.1.
CLLI means Common Language Location Identifier.
CLEC means a Competitive Local Exchange Carrier.
CLEC FEES mean fees and charges imposed upon Z-Tel by a CLEC other than Sprint
in connection with services that Z-Tel provides to Sprint under this Agreement.
COMMITTED FORECAST has the meaning set forth in Section 10.12.
6
COMPLEX TRANSITION has the meaning set forth in Section 2.5.5(b)(ii).
CONFIDENTIAL INFORMATION means and includes the following information:
(a) customer information, supplier information, distributor
information, material terms of any contracts (including this
Agreement), marketing philosophies, strategies, techniques and
objectives (including service roll-out dates and volume estimates),
legal and regulatory positions and strategies, advertising and
promotional copy, competitive advantages and disadvantages, performance
specifications, non-published financial data, network configurations,
product or service plans, attributes, designs, technical and functional
specifications, costs, prices and names, computer software (including
third party software), inventions, discoveries, technological
developments, "know how," business opportunities (including planned or
proposed financings, mergers, acquisitions, ventures and partnerships)
and methodologies and processes (including the look and feel of
computer screens and reports) for provisioning (whether in connection
with interexchange carriers or incumbent local exchange carriers),
customer assistance, order acceptance and tracking, repairs and
commissions; and
(b) information for which the disclosing Party has an obligation of
confidentiality if the disclosing party discloses the obligation to the
recipient Party in writing before or contemporaneously with the
disclosure.
Notwithstanding the foregoing, Z-Tel Fundamental Technology, Z-Tel Technology
and Z-Tel Technical Information constitute Confidential Information of Z-Tel.
"Confidential Information" excludes information that:
(i) is not designated in writing (at the time of
delivery or promptly thereafter) or conspicuously marked as
"confidential" or "proprietary" or likewise using words of
similar import or is not otherwise specifically identified in
this Agreement as Confidential Information;
(ii) is or becomes generally known or available by
publication, commercial use or otherwise through no fault of
the receiving Party;
(iii) is known and has been reduced to tangible form
by the receiving Party at the time of disclosure and is not
subject to restriction;
(iv) is independently developed by the receiving
Party without use of the disclosing Party's Confidential
Information;
(v) is lawfully obtained from a third party who has
the right to make such disclosure; or
(vi) is released in writing for publication by the
disclosing Party.
Notwithstanding the foregoing, any information disclosed to a Party by the other
Party
7
before the Effective Date in connection with the negotiation of this Agreement,
the SOW, the SLAs, the October Letter Agreement and the December Letter
Agreement, or disclosed in connection with an audit under Section 20.2 is
presumed to be Confidential Information of the disclosing Party, even if:
(A) it was not designated in writing (at the time of
delivery or promptly thereafter) or conspicuously
marked as "confidential" or "proprietary" or likewise
using words of similar import, or
(B) is not otherwise specifically identified in this
Agreement as Confidential Information, unless the
information falls within one or more of the
exclusions described in clauses (ii) through (vi)
above.
CRAMMING means the submission or inclusion of unauthorized, misleading or
deceptive charges for products or services on End User's bills.
CUSTOM SOFTWARE means software that Z-Tel owns or exclusively licenses (and
related documentation).
CUSTOMER BILLING means the process of maintaining customer usage information,
calculating taxes and fees (with the exception of fees determined by applicable
state and federal regulatory agencies, such fees will be determined in Sprint's
sole discretion), and preparing and delivering customer invoices and printing
additional invoices for past due accounts. Z-Tel's billing services are
described in greater detail in the SOW.
CUSTOMER DATA RECORDS or CDRS refers to information relating to the quantity,
location and amount of use pertaining to telephone exchange service or telephone
toll service not necessarily contained in a customer's ▇▇▇▇ but available from
carriers on an ANI or CLLI code basis.
CPNI or CUSTOMER PROPRIETARY NETWORK INFORMATION means:
(a) information that relates to the quantity, technical configuration,
type, destination, location, and amount of use of a Telecommunications
Service subscribed to by any customer of a telecommunications carrier,
and that is made available to the carrier by the customer solely by
virtue of the carrier-customer relationship; and
(b) information contained in the bills pertaining to telephone exchange
service or telephone toll service received by a customer of a carrier.
This term does not include subscriber list information.
DECEMBER LETTER AGREEMENT means the letter agreement dated December 10, 2002,
between Sprint (signed by ▇▇▇▇ ▇▇▇▇▇) and Z-Tel (signed by N. ▇▇▇▇▇ ▇▇▇▇▇▇▇).
DISCONNECT means the process by which dial tone is disabled by the serving
carrier in
8
association with an End User line.
DISPATCH and NO DISPATCH refers to whether or
not a telephone technician is required to undertake fieldwork or visit the End
User's premises in establishing or maintaining/repairing Telecommunications
Service.
EFFECTIVE DATE means the date first written above.
END USER means, with respect to any party, the party's retail customers
including business users. "Sprint's End Users" (and derivatives thereof)
includes any End User of Sprint's Affiliates who are purchasing Local Wholesale
Services.
ESCROW ACCOUNT has the meaning set forth in Section 2.5.5(c).
FCC means the Federal Communications Commission.
FORECAST has the meaning set forth in Section 2.5.5 (c)(ii)(A).
FORCE MAJEURE EVENT means any of the following events, if not the result of any
act or omission of the Party asserting its rights under Section 11.2:
(a) acts of God, such as fire, flood, earthquake or other
natural cause,
(b) terrorist events, riots, insurrections, explosions, war or
national emergency, vandalism,
(c) strikes, boycotts, lockouts or other labor difficulties,
(d) judicial, legal or other action of any governmental
authority, which action makes performance of this Agreement
impracticable, and
(e) utility curtailments, power failures, cable cuts, failure
caused by telecommunications provider(s) (including failures or delays
caused by ILECs in provisioning facilities or services or in providing
or maintaining those facilities or services).
ILEC or INCUMBENT LOCAL EXCHANGE CARRIER means with respect to an area, the
local exchange carrier that:
(a) on the date of enactment of the Telecommunications Act of 1996,
provided telephone exchange service in such area; and
(b) (i) on the date of enactment of the Telecommunications Act of 1996,
was deemed to be a member of the exchange carrier association pursuant
to Section 69.601(b) of the FCC's regulations (47 C.F.R. *69.601(b));
or (ii) is a person or entity that, on or after such date of enactment,
became a successor or assign of a member described in clause (i).
ILEC FEES means fees and charges that an ILEC imposes upon Z-Tel for
9
interconnection, provisioning, change orders and other operational support
services, unbundled access, network elements, ABS and any other services the
ILEC provides to Z-Tel under applicable tariffs, Interconnection Agreements, or
associated agreements, including any penalties or fees that the ILEC imposes for
Slamming or other infractions that result from actions of Sprint or its
employees, agents or contractors (other than Z-Tel or its third party vendors
acting outside the scope of this Agreement).
INDEMNIFYING PARTY has the meaning set forth in Section 19.1.
INDEMNITEES has the meaning set forth in Section 19.1.
IXC means Interexchange Carrier.
INFORMATION SERVICE(S) has the meaning set forth in Section 3(20) of the
Communications Act of 1934, as amended, 47 U.S.C. Section 153(20).
INITIAL SOW means the SOW executed by the Parties as of the Effective Date and
attached to this Agreement as Schedule A.
INITIAL TERM is defined in Section 2.1.
INTELLECTUAL PROPERTY RIGHTS means any patent, copyright, trade name, trademark,
service ▇▇▇▇, trade secret or any other intellectual property right, now or
hereafter owned, controlled or licensable by either party. Except as expressly
stated in this Agreement, neither Party may use any patent, copyrightable
materials, trademark, trade name, trade secret, or other intellectual property
right of the other Party except under a separate license agreement between the
Parties granting the rights.
INTERCONNECTION AGREEMENT means a contract (as it may be amended from time to
time) by and between Z-Tel and an ILEC or CLEC under which the ILEC or CLEC,
among other things, agrees to sell and provide to Z-Tel interconnection,
unbundled access and other services and functions for Z-Tel's use in providing
its Telecommunications Services.
INTERFACE ESTABLISHMENT FEE has the meaning set forth in Section 4.2.
JOINT DISASTER PLANNING TEAM has the meaning set forth in Section 12.2.3.
LAW means any code, law, ordinance, regulation, reporting or licensing
requirement, rule or statute (as amended from time to time) applicable to an
individual, entity or association or to an individual's, entity's or
association's assets, properties, liabilities or business, including:
(a) those that any Regulatory Authority promulgates, interprets or
enforces,
(b) any judicial or regulatory interpretation of any of the foregoing,
and
(c) the common law.
10
LIQUIDATION EVENT means:
(a) the filing of a voluntary petition in bankruptcy by Z-Tel under
Chapter 7 of the United States Bankruptcy Code;
(b) the conversion of an existing proceeding for reorganization of
Z-Tel into a proceeding for liquidation, dissolution, or similar relief
under Chapter 7 of the United States Bankruptcy Code;
(c) when one hundred twenty (120) calendar days after the commencement
of any involuntary proceeding seeking liquidation, dissolution, or
similar relief against Z-Tel under Chapter 7 of the United States
Bankruptcy Code, the proceeding has not been dismissed; or
(d) Z-Tel ceases ongoing business operations.
LOCAL NUMBER PORTABILITY or LNP means the mechanism by which an End User may
move service from one carrier's local switch to another carrier's local switch
without changing telephone numbers.
LOCAL WHOLESALE SERVICES means:
(a) Telephone Exchange Service that Z-Tel provides to other carriers
for resale to their End Users, and other associated services through
use of Z-Tel's OCN, such as basic and adjunct to basic vertical
services, and exchange access functionality, and
(b) Telephone Exchange Service that Z-Tel supports for sale by Sprint
to its End Users, and other associated services through use of Sprint's
OCN, such as basic and adjunct to basic vertical services and exchange
access functionality.
LONG DISTANCE SERVICES means communications between two (2) End Users that
crosses predetermined local exchange boundaries. For purposes of this Agreement,
Long Distance Services are considered to be a subset of Telecommunications
Services and may include IntraLATA and InterLATA toll services (e.g., 1+
origination) and Toll Free Services.
LW BASED CUSTOMERS has the meaning set forth in Section 2.6.
LW BASED SERVICES means Telecommunications Services and information access based
upon the Local Wholesale Services.
MARKS means any and all trademarks, service marks, trade names, logos,
insignias, copyrights or other similar intellectual property belonging or
licensed to a party.
OCTOBER LETTER AGREEMENT means the letter agreement dated October 17, 2002,
between Z-Tel (signed by N. ▇▇▇▇▇ ▇▇▇▇▇▇▇) and Sprint (signed by ▇▇▇▇▇
▇▇▇▇▇▇▇▇).
11
OCN means operating company number.
OSS SERVICES or OPERATIONS SUPPORT SYSTEM SERVICES means all functionalities (as
well as the hardware, software and documentation) that is reasonably necessary,
required or useful to directly or indirectly support delivery of LW Based
Services or Z-Tel Information Services to Sprint's End Users. Included within
OSS Services, without limitation, are the following functionalities: ordering,
provisioning, billing and collection, fulfillment, sales, preparing and handling
CDRs, and customer care. For the avoidance of doubt, "OSS Services" does not
include any Telecommunications Service, any Information Service or any
customization of Z-Tel Technology that is developed as an Ancillary Service.
PERSON means a natural person, sole proprietorship, corporation, limited
liability company, cooperative, partnership, trust, unincorporated association
or organization, body corporate or other entity with juridical personality, or
governmental authority or body, as well as a natural person acting in a Person's
capacity as trustee, executor, administrator or other legal representative.
Pronouns that refer to a Person have a similarly extended meaning.
PICC means Presubscribed Interexchange Carrier Charge as it relates to the FCC's
allowed recovery of interstate access costs through flat monthly charges imposed
on an End User's specified carrier of 1+ interstate interexchange traffic.
PRICING SCHEDULE has the meaning set forth in Section 4.1.
PROVISIONING SERVICES means the overall process and procedures by which Sprint
will be established as the primary local exchange and interexchange service
provider for Sprint's new End Users. A customer has been provisioned when the
customer's telephone line has a dial tone and can be used for both local
exchange and interexchange calling.
PUBLICITY has the meaning set forth in Section 15.3.
RECEIPT CREDITS has the meaning set forth in Section 5.1.4.
REGULATORY AUTHORITY means, as to any subject matter or Person, any of the
following entities having jurisdiction over the subject matter or Person:
(a) any court,
(b) any governmental, regulatory or administrative agency,
(c) any commission, authority or instrumentality, and
(d) any other public body, domestic or foreign.
REPAIR has the meaning set forth in Section 1.9.12.
RENEWAL TERM has the meaning set forth in Section 2.2.
12
SALES CHANNEL INTERFACE means the mechanized systems and interfaces by which
Z-Tel provides the Provisioning Services. The Sales Channel Interface involves
both Z-Tel proprietary and third party vendor proprietary components.
SERVICES means the Telecommunications Services, Information Services, Ancillary
Services, OSS Services, Provisioning Services, and any other services that Z-Tel
provides or is required to provide to Sprint under this Agreement.
SERVICE FEES means those fees charged by Z-Tel and required to be paid by Sprint
and identified in Schedule C as Z-Tel Support Service Recurring Fee and Z-Tel
Support Service Non-Recurring Fee.
SERVICE LEVEL AGREEMENTS or SLAS means specified levels of service that Z-Tel is
responsible to provide in relation to Local Wholesale Services, Z-Node Services
and OSS Services.
SHORT TERM DEFERRED REVENUE means revenues offset to future periods for revenue
recognition purposes that are included in current liabilities.
SLAMMING means a change of provider of Telecommunications Service without
obtaining a subscriber's authorization and verification under 47 C.F.R. Part 64.
SLC means Subscriber Line Charge as it relates to the FCC's allowed recovery of
interstate access costs through flat monthly charges on an End User's ▇▇▇▇.
SPRINT DESIGNATED PROVIDER has the meaning set forth in Section 2.5(b).
SPRINT MARKET means the area of initial deployment and implementation in the
geographic locations specified in the Initial SOW, and such other locations or
franchise areas that are identified in subsequent SOWs.
SPRINT MARKS means any and all Marks belonging or licensed to Sprint.
SPRINT RETAINED FUNCTION means any support service or OSS Service that Sprint
has undertaken to perform for itself under this Agreement or under the SOW.
SPRINT TRIGGERING EVENT has the meaning set forth in Section 2.3.2(a).
STATEMENT OF WORK or SOW means a written document, in the form of Schedule A,
that the Parties execute and that sets forth the additional terms and conditions
governing specific Services, together with all modifications and supplements
thereto, now existing or hereafter arising.
SUPER NOTICE has the meaning set forth in Section 21.14.2.
TECHNICAL INFORMATION means configuration, interface, system integration and
other related data, information and materials.
13
TECHNOLOGY ESCROW AGENT has the meaning set forth in Section 14.3.
TECHNOLOGY ESCROW AGREEMENT has the meaning set forth in Section 14.3.
TECHNOLOGY ESCROW MATERIALS has the meaning set forth in Section 14.4.1.
TECHNOLOGY LICENSE has the meaning set forth in Section 14.1.
TECHNOLOGY USE LICENSE has the meaning set forth in Section 16.3.
TELECOMMUNICATIONS means the transmission, between or among points specified by
the user, of information of the user's choosing, without change in the form or
content of the information as sent and received.
TELECOMMUNICATIONS SERVICES means the offering of telecommunications for a fee
directly to the public, or to such classes of users as to be effectively
available directly to the public, regardless of the facilities used.
TELEPHONE EXCHANGE SERVICE means:
(a) service within a telephone exchange, or within a connected system
of telephone exchanges within the same exchange area operated to
furnish to subscribers intercommunicating service of the character
ordinarily furnished by a single exchange, and which are covered by the
exchange service charge, or
(b) comparable service provided through a system of switches,
transmission equipment, or other facilities (or combination thereof) by
which a subscriber can originate and terminate a Telecommunications
Service.
Telephone Exchange Service involves the combination of loop, switch port and any
other necessary elements required to provide an unbroken signal of 350 + 440 Hz
reflecting that telephone service is currently provided and that the telephone
company is ready to receive dialed digits.
TERM means the Initial Term, all Renewal Terms and any transition period.
TIER 1 RESOLUTION means discussion/resolution at the first level of management.
For purposes of this Agreement, the Tier 1 Resolution will typically be at the
Manager or Supervisor job title.
TIER 2 RESOLUTION means discussion/resolution at the second level of management.
For purposes of this Agreement, the Tier 2 Resolution will typically be at the
Director job title.
TIER 3 RESOLUTION means discussion/resolution at the third level of management.
For purposes of this Agreement, the Tier 3 Resolution will typically be at the
Assistant Vice President or Vice President job title.
14
TOLL FREE SERVICE means a Long Distance Service whereby subscribers receive
calls from specified areas with no charge to the person who is calling. Instead,
all charges are billed to the called party.
TPV or THIRD PARTY VERIFICATION means corroboration, by an independent authority
in compliance with applicable law, of an End User's intent regarding selection
of local and interexchange carrier(s).
TRANSITION has the meaning set forth in Section 2.5.
TRANSITION DATE has the meaning set forth in Section 2.5.5(c).
TRANSITION ESCROW AGENT has the meaning set forth in Section 2.5.5(c).
TRANSITION ESCROW AGREEMENT has the meaning set forth in Section 2.5.5(c).
TRANSITION FEES has the meaning set forth in Section 2.5.5(c).
TRANSITION SERVICE has the meaning set forth in Section 2.5.
TRAVEL CARD SERVICES means services that allow End Users to make local and long
distance calls from a telephone number other than their subscribed location and
have those calls billed to their Z-Tel-provided LW Based Service account. Access
to Travel Card Services is typically provided through a customer dialed toll
free number where the customer is then asked to input both account and dialing
information.
TRUSTEE has the meaning set forth in Section 14.7.
USE STIMULATION CREDIT has the meaning set forth in Section 4.3.1.
USE STIMULATION PERIOD has the meaning set forth in Section 4.3.1.
Z-TEL BACK-UP MATERIALS has the meaning set forth in Section 12.5.1.
Z-TEL DEDICATED SUPPORT FEES has the meaning set forth in Section 4.6.
Z-LINE PLATFORM or Z-NODE means the facilities that Z-Tel owns or controls
through which Z-Tel provides Z-Node Services. The term excludes facilities that
Z-Tel leases from any ILEC, Internet service provider, interexchange carrier,
wireless provider or any other Telecommunications Service provider or
Information Service provider.
Z-NODE SERVICES means any proprietary Z-Tel Information Service or Z-Tel Adjunct
to Basic Service provided as a vertical feature through the Z-Line Platform.
Available Z-Node Services include Voice Mail, Family Mail Box, Find Me, On-Line
Account Maintenance, Notify Me, and Web Access. For the avoidance of doubt,
Z-Node Services will not include access to Z-Tel's Personal Voice Assistant
service ("PVA(tm) service").
Z-TEL FUNDAMENTAL TECHNOLOGY means, collectively:
15
(a) all Custom Software that Z-Tel uses in the performance of its
obligations under this Agreement, and
(b) all Technical Information that Z-Tel owns
(as itemized in Schedule E) in each case to the extent necessary to enable
Sprint (through the use of reasonably trained technicians, and when used in
combination with the third-party hardware, software, information, materials,
products and services that are identified on Schedule 9.7 of this Agreement) to
establish complete operational systems capable of generating and providing
products and services substantially the same as those Z-Tel provides to Sprint
under this Agreement.
Z-TEL MARKS means any and all Marks belonging to Z-Tel.
Z-TEL PERSONNEL means any and all Z-Tel employees, agents, and independent
contractors, and the employees, agents and independent contractors of these
agents and independent contractors, that Z-Tel directly or indirectly supplies
or otherwise uses to perform Services for Sprint under this Agreement.
Z-TEL TECHNOLOGY means, collectively, all Z-Tel Fundamental Technology and all
other software (including all related documentation), and all other
configuration, interface, system integration and other data, information and
material that Z-Tel owns that is necessary to enable Sprint (through the use of
reasonably trained technicians, and when used in combination with third-party
hardware, software, information, materials, products and services) to establish
operational systems capable of generating and providing products and services
substantially the same as those Z-Tel provides to Sprint under this Agreement
(as itemized in Schedule E).
Z-TEL TRIGGERING EVENT has the meaning set forth in Section 2.3.1(a).
SECTION I. - SCOPE OF SERVICES
1.1. STATEMENT OF WORK. The initial SOW attached to this Agreement as
Schedule A describes and defines the services and support that Z-Tel will
provide to Sprint to enable Sprint to provide Telecommunications and related
services. The initial SOW sets forth the respective responsibilities of the
Parties and includes the procedures for requesting the provisioning of Local
Wholesale Services and the other services described in this Agreement. The
Parties will work together to amend the Statement of Work to effect changes in
environment such as to facilitate ongoing Z-Tel Services for Sprint End Users on
a Sprint OCN.
1.2. AGENCY AND RESALE MODES. Z-Tel will perform its obligations under
this Agreement (and, in particular, under this Section I and under the SOW) for
the benefit of Sprint both * **************** *******
16
*******************************************************************************
************************ In the latter case, Z-Tel will serve as Sprint's
subcontractor to facilitate the furnishing of the Services to Sprint and the
Sprint End User.
1.2.1. MIGRATION. From time to time during the Term, Sprint
may, in its sole discretion, migrate Sprint End Users from Z-Tel's
******************* and thereafter utilize the Z-Tel Services in the
same or lesser manner as before, as Sprint determines and communicates
to Z-Tel in writing. Z-Tel will assist and cooperate with Sprint on all
Sprint End User migrations, including any necessary amendments to the
Statement of Work. The Parties will use their respective best efforts
to accomplish these migrations in an expeditious, economical manner,
minimizing any disruption of service to the Sprint End User. For any
Sprint End Users not migrated to ************* before August 2, 2003,
the migration escrow provisions under Sections 2.5.5(c) through
2.5.5(i) will apply.
1.2.2. IMPLEMENTATION. The Services that Z-Tel will provide
under this Agreement will be implemented in accordance with the
implementation schedule set forth in the SOW.
1.2.3. MODIFICATION. Z-Tel and Sprint will cooperate to amend
the SOW from time to time to alter the procedures or responsibilities
or to include any additional procedures or services. A SOW may be
amended only with the written consent of both Sprint and Z-Tel.
1.3. GEOGRAPHIC SCOPE OF SERVICES. Upon the schedule described in the
SOW, Z-Tel will provide Local Wholesale Services, associated Z-Node Services and
OSS Services to Sprint in every geographic area in which Z-Tel offers retail
services directly to End Users or wholesale services and that is also in a
service area covered by a Regional ▇▇▇▇ Operating Company (including former
G.T.E. territory).
1.3.1. COMPLIANCE WITH REGULATIONS. The geographic areas in
which Z-Tel is required to provide the Services under this Agreement
may be limited to the extent necessary to comply with regulations,
orders, or policies that are issued by the FCC or by state public
service commissions.
1.3.2. SERVICE AREA ADDITIONS. Upon the addition of a new
Z-Tel retail service area or upon Sprint's written request to add
additional service areas, Sprint and Z-Tel will work together to update
the SOW, allowing for reasonable timeframes for deployment and
implementation of the Service to Sprint within the new service area.
1.3.3. SERVICE AREA LIMITATIONS. Certain optional services
(such as Long Distance Service or Inside Wiring Service) may have a
more limited service area than Local Wholesale Services. Service area
limitations for Z-Tel's products will be described in the SOW.
1.4. LOCAL WHOLESALE SERVICES. Z-Tel will provide Local Wholesale
Services to
17
Sprint for Sprint's use solely in providing retail Telecommunications Services
to Sprint's End Users. Z-Tel will provide the Local Wholesale Services to Sprint
to substantially the same extent and in substantially the same manner that Z-Tel
makes retail and wholesale Telecommunications Services available under tariff or
in a general offering, on the Effective Date of the Agreement, incorporating all
features and functionality included in a general release and made available to
its customers but, to avoid doubt, excluding PVA(tm) service. Sprint may not
wholesale the Local Wholesale Service to any carrier providing
Telecommunications Services under alternative certification or tariff issued by
or filed with the FCC or any state public service commission without Z-Tel's
written consent. Notwithstanding the foregoing (or any other retail restriction
in this Agreement to the contrary), Sprint may wholesale Local Wholesale
Services to its Contractual Affiliates to the extent necessary to facilitate
their furnishing of the Services to their End Users who use Sprint-branded
products and services.
1.4.1. TERMINATION OF LONG DISTANCE CALLS. Local Wholesale
Service lines that Z-Tel provides as part of its basic service offering
allow basic termination of domestic and international toll traffic for
which the originating party pays.
1.4.2. ACCESS TO TOLL FREE SERVICES. Local Wholesale Service
lines that Z-Tel provides as part of its basic service offering allow
basic dialed access to Toll Free Services that other parties offer.
1.5. Z NODE SERVICES. Z-Tel will provide to Sprint, for Sprint's use
solely in conjunction with providing retail Telecommunications Services to
Sprint's End Users utilizing Local Wholesale Services, the Z-Node Services that
Z-Tel, as of the Effective Date, offers to Z-Tel's own retail customers.
1.5.1. EXTENSION OF CAPABILITIES. If Sprint desires to offer
Z-Node Services in a manner that does not utilize Z-Tel's Local
Wholesale Services, the Parties will negotiate in good faith on the
terms and conditions of such an offering and, when setting rates for
such an offering, the Parties will take into account aggregate Sprint
volumes across all points of service in setting volume discounts.
1.6. LONG DISTANCE SERVICES. End User billed Long Distance Services
(e.g., out dial toll via 1+ or 0+ dialing, toll free services) are not provided
under this Agreement. Z-Tel's provision and support of Toll Free services is
limited to domestic applications.
1.7. TRAVEL CARD SERVICES. Z-Node supported Travel Card Services are
not provided under this Agreement. Under the SOW, Z-Tel will ▇▇▇▇ Sprint Travel
Card usage in conjunction with Local Wholesale Services provisioned via this
Agreement.
1.8. INSIDE WIRE SERVICES. Subject to availability, Z-Tel will provide,
upon Sprint's written request, support for Sprint's End Users relative to
on-premise wiring (i.e., wiring on the customer side of the network interface
device) in selected markets through arrangements with third party vendors.
18
1.9. OSS SERVICES SUPPLIED BY Z-TEL. As and to the extent described in
the SOW, Z-Tel will provide to Sprint, and Sprint will utilize, the OSS Services
that are necessary to implement Section 1.2 of this Agreement. When providing
these OSS Services, Z-Tel:
(a) will utilize various internal and external OSS
Services,
(b) may provide Sprint with direct access to certain
of these OSS Services, and
(c) may utilize the products and services of the
approved vendors described in the SOW. The Parties may add or
delete vendors from this approved list by amending the SOW.
If Z-Tel procures one or more products or services from a different
vendor than the vendor providing the products or services as of the Effective
Date, Z-Tel will make reasonable efforts to obtain the products or services from
the new vendor on terms and conditions at least as favorable to Sprint as those
existing as of the Effective Date.
If Z-Tel's breach of its agreement with a vendor leads to the loss of
the vendor (except for a Z-Tel breach caused, in whole or in part, by Sprint's
act or omission), thereby necessitating a change to a new vendor, Z-Tel will
bear the difference, if any, by which the pricing terms that the new vendor
offers for the products or services exceed the pricing terms that Z-Tel and
Sprint previously enjoyed with the replaced vendor.
If Z-Tel desires to obtain any products or services from a vendor that
is not on the approved vendor list under the SOW, the Parties will negotiate in
good faith concerning the selection of the alternative vendor. If the Parties
are unable to select a mutually acceptable alternative vendor, Sprint will have
the right either:
(d) to designate a vendor for providing the product
or service in conjunction with LW Based Services, or
(e) to undertake, with Z-Tel's transition assistance, to
provide the product or service itself in conjunction with LW Based
Services through Sprint's own internal operations.
Specific functions that Z-Tel will perform in connection with Sprint's
rendering of Telecommunications and related services to Sprint's End Users
include the following functions, each of which is described more fully in the
SOW.
1.9.1. INBOUND SALES. Inbound sales is the process by which
customer orders are received and processed internally.
1.9.2. THIRD PARTY VERIFICATION. In conjunction with Sprint's
marketing associated with the Services Z-Tel provides under this
Agreement, Z-Tel will interface with independent third party(ies) who
will verify that Sprint's End User acquisition efforts fully comply
with all state and federal regulations related to
19
Slamming (but only to the extent that Sprint directs).
1.9.3. PROVISIONING. Through the provisioning process, Sprint
will be established as the local exchange and the primary interexchange
service provider for Sprint's new End Users.
1.9.4. CUSTOMER CARE ESCALATIONS. When customer inquiries,
change orders, repair orders and other customer-related matters cannot
be handled through normal operational interfaces, they are escalated to
higher levels of management. After the initial escalation at the
Manager level (which Sprint will handle), Z-Tel will seek satisfactory
resolution regarding the service problems by contacting higher levels
of management for the associated service provider or third party
vendor.
1.9.5. ACCESS CHARGES. Z-Tel will ▇▇▇▇, on its behalf and at
its rates, all access fees charged to interexchange carriers in
connection with interexchange calls made or received by Sprint End
Users provisioned through Z-Tel's *** under this Agreement. Sprint will
▇▇▇▇, either itself or through a third party, at Sprint's rates, all
access fees charged to interexchange carriers in connection with
interexchange carriers calls made or received by Sprint End Users
provisioned through Sprint's *** under this Agreement. Z-Tel will, if
asked by Sprint, direct data feeds from the ILECs to Sprint or its
third party provider at Z-Tel's cost.
1.9.6. END USER BILLING. The End User billing services that
Z-Tel will provide to Sprint under this Agreement will incorporate the
maintenance of customer usage information, inclusion of taxes and fees
in customer invoices, preparing and delivering customer invoices and
printing additional invoices for past due accounts. A prototype of a
Sprint End User ▇▇▇▇ is incorporated into the Initial SOW. Sprint may
determine, to the extent technically feasible and legally permissible:
(a) the look, feel, appearance and content of the End
User ▇▇▇▇ from commercially feasible options described in the
SOW,
(b) the types of charges, surcharges, taxes and other
fees appearing on the End User ▇▇▇▇, and the descriptions
thereof, and
(c) the form and content of any messages included on
or in the End User bills.
1.9.7. PAYMENT POSTING. Upon its receipt of payment
information (e.g., payment received, NSF payment, etc.) from Sprint or
Sprint's vendor in a manner and format described in the SOW, Z-Tel will
update customer account information within Z-Tel's support system.
1.9.8. CDR PROCESSING. Z-Tel will process ILEC call records in
a manner compatible with Sprint's and Z- Tel's billing requirements as
documented in the SOW.
20
1.9.9. RESPONDING TO SUBPOENAS. In response to subpoenas,
court orders and administrative agency orders to produce information,
including those calling for call detail records, when the targeted
telephone numbers belong to Sprint End Users using Z-Tel's OCN, Z-Tel
will produce information as required by Law. Sprint and Z-Tel will
cooperate in complying with these subpoenas, court orders and
administrative agency orders.
1.9.10. REPORTS. Z-Tel will provide Sprint with periodic and
real-time reports detailing the transaction activity for Sprint's End
Users who are receiving Services, in the format and frequency jointly
developed by Z-Tel and Sprint and incorporated into the SOW.
1.9.11. LEC RELATIONS. When Sprint is utilizing Z-Tel's
services through Z-Tel's *** for any Sprint End User, Z-Tel will act as
the primary interface for operational escalations, Interconnection
Agreement interpretation and all other matters involving local exchange
carriers associated with the furnishing of Z-Tel's Local Wholesale
Services to those Sprint End Users (except carrier to carrier Slamming
complaints under FCC rules). At Sprint's direction, Z-Tel may provide
additional LEC relations support in association with Sprint End Users
that Z-Tel provisions utilizing Sprint's ***.
1.9.12. REPAIR. Z-Tel will be the interface with the End User
for the report and resolution of service issues ("REPAIR"). Z-Tel will
provide Tier 1 Resolution, Tier 2 Resolution and Tier 3 Resolution of
service issues.
1.9.13. COLLECTIONS. Z-Tel will be responsible for all
collections and collection activities associated with Sprint customers
using LW Based Services except as otherwise expressly agreed to in
writing by Sprint and Z-Tel.
1.9.14. TRAINING. As more fully described in the SOW, Z-Tel
will provide reasonable training to Sprint's employees and
representatives in the use of the Z-Tel systems and interfaces
including the Sales Channel Interface.
1.9.15. FRAUD DETECTION. Z-Tel will initiate service orders
that block Sprint End User dial-around originating calls, calls to
information services providers, collect calls and other traffic that
poses a high potential risk of fraud unless otherwise instructed by
Sprint. Z-Tel will not be responsible for the failure of ILEC systems
to properly restrict End User calling through the mechanisms described
in the preceding sentence. Z-Tel's liability for fraud is set forth in
Section 10.11.
1.9.16. LONG DISTANCE SERVICES EXCEPTION. In accordance with
the SOW, Z-Tel will provide Long Distance Services to Sprint's End
Users in limited instances (e.g., Z-Node Find Me Service) through
Z-Tel's third-party providers.
1.10. OSS FUNCTIONS PROVIDED BY SPRINT. As more fully described in the
SOW,
21
Sprint will provide the following support services without Z-Tel's direct
involvement in connection with Sprint's rendering of Telecommunications and
related services to Sprint's End Users.
1.10.1. MARKETING. Sprint will be responsible for all
marketing, advertising and product development and management in
association with the services it seeks to sell to End Users.
1.10.2. CUSTOMER ACQUISITION AND TPV. Sprint will be
responsible for all activity associated with acquiring End User
commitments to purchase Sprint services. Sprint will also be
responsible for selecting, directing, managing and paying the Third
Party Verification vendor(s).
1.10.3. ORDER ENTRY. Sprint will initiate order entry for
Services through Z-Tel's Sales Channel Interface. For this purpose,
Z-Tel will provide to Sprint access to Z-Tel's Sales Channel Interface.
1.10.4. CUSTOMER CARE (CUSTOMER INTERFACE AND TIER 1
RESOLUTION). Sprint will be the primary interface with its End Users
for all customer care functions except Repair. Sprint-provided customer
care functions will include customer inquiries, change orders and
matters related to Sprint End User requests and inquiries. Sprint will
also escalate customer care problems that require unique handling to
the Manager level for the associated service provider or third party
vendor.
1.10.5. CHANGE ORDERS. Sprint will be the primary interface
with its End Users for requests for changes in Service deliverables.
Sprint will enter change orders through Z-Tel's Sales Channel
Interface. For this purpose, Z-Tel will provide to Sprint access to
Z-Tel's Sales Channel Interface.
1.10.6. LOCKBOX. Sprint will receive payments from its End
Users and reconcile the payments with billing invoices. Sprint will be
responsible for transmitting data necessary for Z-Tel's posting of the
payment information to back office systems.
1.10.7. TAX RECONCILIATION/FILINGS/REMITTANCES. Sprint will be
responsible for all remittances (including documentation) to taxing
authorities in connection with Z-Tel's furnishing of Services to Sprint
and Sprint's End Users, except for any taxes on Z-Tel's gross income,
Z-Tel's payroll taxes and withholdings, Z-Tel's real and personal
property taxes, and any other taxes for which the Law imposes the
remittance obligation on Z-Tel. For the avoidance of doubt, this
Section 1.10.7 does not alter the allocation of tax payment obligations
set forth in Section 4.10 of this Agreement.
1.10.8. TRANSPORT (TO Z-NODE). Sprint will separately
establish and pay for transport in association with connectivity to the
Z-Node (e.g., "00" transport and call forwarding associated with the
call forward/don't answer and call forward/busy central office
features).
22
1.10.9. FULFILLMENT. Fulfillment involves the delivery of new
account materials to Sprint's new End Users.
1.10.10. INVESTIGATING COMPLAINTS. Sprint will investigate and
resolve all Sprint End User and carrier to carrier complaints. Z-Tel
will support these efforts as Sprint requests from time to time as set
forth in the SOW. Each Party will support the other Party's complaint
investigation and resolution efforts upon the other Party's reasonable
request.
1.10.11. COMMISSION PROGRAM. Sprint will administer, as well
maintain any records necessary to administer, any commission program
associated with its agents and sales force.
1.10.12. ADDITIONAL EXECUTIVE REPORTS. Sprint may develop
service management reports in addition to those that Z-Tel provides
under this Agreement. For this purpose, Z-Tel will provide to Sprint
access to standardized data through its report portal and training in
the use of the report portal.
1.10.13. SPRINT RETAINED OR ASSUMED FUNCTION. Sprint may
assume responsibility for any OSS function that Z-Tel then provides:
(a) upon at least ninety (90) calendar days' prior
notice by Sprint and appropriate modification of the SOW,
(b) immediately upon the occurrence of any
Liquidation Event with concurrent Super Notice to Z-Tel, and
(c) upon the occurrence of any Z-Tel Triggering Event
that is not a Liquidation Event and at least thirty (30)
calendar days' prior Super Notice by Sprint and appropriate
modification of the SOW.
In the event of Sprint's assumption of a function under this
Section 1.10.13 when SOW modification(s) is required to effect Sprint's
take-over of an OSS function outside the provisions of release of the
Technology Escrow Materials (Section 14.6), Sprint:
(d) will not require Z-Tel's approval to the extent it
pertains to whether Sprint's assumption of the function
occurs, and
(e) will require Z-Tel's approval to the extent it pertains
to:
(i) the technical and logistical manner in
which the Parties accomplish the transfer of the
function, and
(ii) the Parties' resolution of any material
adverse technical effects that the Parties reasonably
expect Sprint's assumption of the function (or
Sprint's subsequent performance of the function) to
have on Z-Tel's continued furnishing of other
Services under this Agreement.
23
In the event of Sprint's assumption of an OSS function under
this Section 1.10.13, Z-Tel will provide the assistance described in
Sections 2.4.2(g) and 2.5.3 as they pertain to the OSS function.
1.11. ANCILLARY SERVICES. Z-Tel will have no obligation to perform for
Sprint any Ancillary Service that is a Sprint Retained Function or any service
that Z-Tel does not perform in the ordinary course of providing
Telecommunications Services to its own End Users.
1.12. UPGRADES, UPDATES AND NEW Z-TEL SERVICES OR FUNCTIONALITIES.
1.12.1. UPGRADES AND UPDATES. Z-Tel may deploy, upgrade,
migrate and maintain its network, services and operational support
systems at its discretion and modify its network, services and
operational support systems to the extent applicable Law permits,
whether through the incorporation of new equipment or software or
otherwise. Z-Tel will provide reasonable notification in writing of
changes to the Z-Tel network, services, and operational support systems
that will impact Sprint's operations or performance.
If Z-Tel develops an upgrade of, or update to, the Z-Line
Platform or the Z-Tel Fundamental Technology, then the Parties will
negotiate in good faith regarding the related service fee(s) that would
be payable to Z-Tel, if any, for the upgrade or update.
Unless initiated, or reasonably required, to maintain
interfaces with ILEC operational support systems, Z-Tel will not
implement the upgrade or update for the furnishing of the Services to
Sprint and Sprint's End Users without Sprint's consent (which Sprint
will not unreasonably withhold or delay) if it:
(a) would cause Sprint to incur more than *****
for internal changes that Sprint must reasonably make to
utilize the upgrade or update,
(b) would cause a material disruption in the
provision of services to Sprint's End Users, or
(c) would materially reduce the functionality or
quality of the Z-Tel Services to Sprint and Sprint's End
Users.
In accordance with the SLAs, Z-Tel will avoid service
disruption to Sprint and Sprint's End Users resulting from these
changes.
1.12.2. NEW SERVICES OR FUNCTIONALITIES. If Z-Tel desires to
deploy additional service functionality (e.g., DSL) on a general
release basis to its retail or wholesale users (whether because the
additional functionality is newly developed, newly acquired, newly
available or otherwise) and Sprint desires to
24
internally utilize the additional functionality or make it available to
Sprint's End Users, then the Parties will negotiate in good faith an
amendment of the scope of services under this Agreement and a
corresponding adjustment in Z-Tel Service Fees (if appropriate given
the circumstances) before Z-Tel makes these additional features and
functions available to Sprint and Sprint's End Users.
1.12.3. TIMING OF AVAILABILITY. Z-Tel will make additional
services and functionalities available for use by Sprint and Sprint's
End User on the timetable described in the appropriate SOW, but with
Z-Tel offered service availability no more than thirty (30) calendar
days after making the services and functionality available on a general
release basis or to similarly situated Z-Tel customers. Notwithstanding
the foregoing, when capacity constraints exist Z-Tel may phase in new
services and functionalities to Sprint End Users on a pro rata basis
with Z-Tel's other wholesale customers based upon parameters to be
negotiated between the Parties in conjunction with the adoption of a
SOW.
1.12.4. PRICING. Z-Tel will make additional services and
functionalities described in Section 1.12 available to Sprint on
pricing terms *********************************************************
*********************************************************************.
1.12.5. PROPRIETARY WORK REQUESTED BY SPRINT. If Sprint
requests that Z-Tel undertake product modifications or development of
new service functionalities, Z-Tel and Sprint will negotiate in good
faith an applicable Statement of Work concerning the terms and
conditions (including costs, timeframes and deliverables) on which
Z-Tel will develop, and make available to Sprint and Sprint's End
Users, the product modifications or service functionalities. If the
Parties do not agree on these terms and conditions, nothing in the
preceding sentence obligates Z-Tel to undertake the product
modifications or the development of new service functionalities. *****
stated otherwise in the SOW, ******************************************
***********************************************************************
***********************************************************************
************************************************************incorporate
pre-existing Z-Tel intellectual or proprietary property or rights,
Z-Tel will license, for the term of this Agreement, the pre-existing
intellectual or proprietary property or rights to Sprint for use in
connection with the works made for hire for the term of this Agreement.
1.12.6. ***************. For purposes of Section ****, a
customer that is "*****************" to Sprint is a customer purchasing
Services on ******* ***************************************************
**********************************************************************.
1.13. PROMOTIONAL PROGRAMS EXCLUDED. Sprint will not be entitled to
participate in any Z-Tel plan, program, discount or promotion under which Z-Tel
End Users or prospective Z-Tel customers may obtain products or services in
return for trying, subscribing to or using any Z-Tel Services, including any
Z-Tel Telecommunications Service or Information Access.
25
1.14. MAINTENANCE. Subject to the customer notification requirements,
under applicable Law, if any, Z-Tel may perform any routine or emergency
maintenance under the SOW that may limit or suspend the availability of the
Services despite Z-Tel's best efforts to avoid adverse effects on the Services.
The suspension of the availability of any of the Services under this Section
1.14 will not be deemed to be a violation by Z-Tel of any of its obligations
under this Agreement. Unless Sprint requests expedited treatment, Z-Tel will
give Sprint:
(a) at least ******* Business Days' prior written
notice of scheduled outages affecting Sprint's End Users for
maintenance purposes, and
(b) at least ******* Business Days' prior written
notice of scheduled maintenance work that is reasonably
expected to affect the OSS Systems.
1.15. NOTICE OF CHANGES. Z-Tel may discontinue or withdraw any Service
during the Term under the following terms:
(a) Z-Tel's action is subject to any notice
requirements under the Law.
(b) Z-Tel's action is subject to Sprint's compliance
with any requirement under the Law in any jurisdiction:
(i) that Sprint provide certain notice to
its End Users or others before effecting the exit or
withdrawal of the Service from the jurisdiction, or
(ii) that Sprint obtain regulatory approval
before exiting or withdrawing the Service from the
jurisdiction and accomplish any required steps toward
that end.
(c) Subject to Z-Tel's compliance with subsections
(a) and (b) above, Z-Tel must provide Sprint with at least
sixty (60) calendar days' written notice of the proposed
discontinuation or withdrawal of the Service except in the
case of:
(i) a discontinuation or withdrawal of a
Service that is required by applicable Law, for which
Z-Tel will give Sprint as much advance written notice
as reasonably possible;
(ii) a Service that Sprint is no longer
utilizing under this Agreement; or
(iii) termination of this Agreement by Z-Tel
under Section II of this Agreement.
26
Upon receipt of written notice from Z-Tel concerning Z-Tel's desire to
discontinue or withdraw any Service, Sprint will use commercially reasonable
efforts to expeditiously:
(d) provide any legally required notice to the
affected Sprint End Users,
(e) obtain any necessary regulatory approval relating
to the exit or withdrawal, and
(f) take any actions that are necessary or
appropriate in connection with the regulatory approval.
Except when Service termination is required by Law or in the event of a
Z-Tel termination under Section 2.3.2 or an expiration under Sections 2.1 and
2.2, Z-Tel will bear the cost of any required notification of Sprint End Users
associated with Z-Tel's discontinuance or withdrawal of any Service that Z-Tel
provides to Sprint under this Agreement.
1.16. GRANDFATHERING. To the extent permitted by applicable Law, Z-Tel
will provide grandfathered Services to Sprint's End Users under the same
conditions by which Z-Tel grandfathers Services to its own End Users. Among
these conditions are those that the Services:
(a) will be available only to Sprint End Users who
already have the service;
(b) may not be moved to another location;
(c) will be available only to the extent facilities
are available to provide the service, and
(d) will be available for a maximum period of two (2)
years following the end of:
(i) the Initial Term, or
(ii) if this Agreement is renewed for one or
more Renewal Terms, the last Renewal Term.
SECTION II. - TERM, TERMINATION AND TRANSITION
2.1. INITIAL TERM. This Agreement is effective and the Parties'
obligations commence upon the Effective Date and will expire at midnight on
January 31, 2006 ("INITIAL TERM"), unless this Agreement is terminated earlier
under its terms.
27
2.2. RENEWAL TERM. Upon expiration of the Initial Term, this Agreement
will renew automatically on a year-by-year basis (each year a "RENEWAL TERM")
until:
(a) either Party notifies the other in writing at
least one hundred eighty (180) calendar days before the end of
the then current term of its desire that this Agreement expire
at the end of that term (in which case this Agreement will
terminate then), or
(b) this Agreement is otherwise terminated under this
Section II.
2.3. TERMINATION.
2.3.1. TERMINATION BY SPRINT.
(a) Sprint may, by written Super Notice to Z-Tel
(including a description of the relevant event(s)), terminate
this Agreement immediately upon the occurrence of any of the
following events (each a "Z-TEL TRIGGERING EVENT"):
(i) Z-Tel materially breaches any provision
of this Agreement and fails to cure the breach within
thirty (30) calendar days after receiving written
notice from Sprint;
(ii) Z-Tel's performance under this
Agreement as measured by applicable SLAs for order
processing, billing, OSS availability, Repair, data
file transmission or Z-Node availability fails to
meet the triggering event criteria as established in
Schedule B and Z-Tel fails to cure this variance
within thirty (30) calendar days after receiving
written notice from Sprint;
(iii) there occurs a Disconnect of Z-Tel
ILEC UNE services affecting greater than
**************** of Sprint's End Users that Z-Tel is
then serving through any particular ILEC;
(iv) there is a material adverse change in
Z-Tel's regulatory environment, including any change
in applicable Laws that materially and adversely
affects Z-Tel's ability to perform its obligations
under this Agreement;
(v) there is a Change of Control;
(vi) there is a material adverse change in
Z-Tel's financial condition, evidenced by:
(A) simultaneously meeting three or
more of the following criteria:
(1) Z-Tel fails to hold cash and
cash equivalents of at least **********.
28
(2) Z-Tel fails to maintain
a ****************************************
****************************************
****************************************,
(3) Z-Tel fails to maintain
a ****************************************
****************************************
****************************************
(4) Z-Tel fails to maintain
****************************************
****************************************
****************************************
(5) *******************
****************************************
****************************************
****************************************
****************************************
(6) Z-Tel materially
breaches any agreement for borrowed
money (including any material
violation of a debt covenant); or
(B) Z-Tel receives a going concern
qualification from its auditors;
(vii) Z-Tel ceases ongoing business
operations; or
(viii) Z-Tel becomes Bankrupt, makes a
general assignment for benefit of creditors or has a
receiver appointed for its assets, or a court of
competent jurisdiction issues an order for Z-Tel's
winding up.
For purposes of this Section 2.3.1, cash and cash
equivalents exclude any restricted amounts.
(b) Within ***** calendar days after the end of
each month, Z-Tel will provide a certificate to Sprint by
Super Notice signed by Z-Tel's Chief Financial Officer,
providing:
(i) the current numerical value for each of
the criteria under Section 2.3.1(a)(vi)(A) with
supporting good faith financial statements, and
29
(ii) certifying that the information
contained in the certificate is accurate as of the
date of the certificate.
Z-Tel will provide Sprint with final financial
statements in supplement to the statements provided under
Section 2.3.1(b)(i) promptly when the final statements become
available.
(c) Sprint may terminate this Agreement under an
express termination right of Sprint provided in this
Agreement.
2.3.2. TERMINATION BY Z-TEL. Z-Tel may terminate this
Agreement under any of the following conditions:
(a) Z-Tel may, by written Super Notice to Sprint,
terminate this Agreement immediately upon the occurrence of
any of the following events (each a "SPRINT TRIGGERING
EVENT"):
(i) Sprint fails to fulfill any of its
payment obligations concerning undisputed amounts set
forth in this Agreement (to the extent any amounts
may be disputed under this Agreement) and fails to
cure the breach within ten (10) Business Days after
receiving written Super Notice from Z-Tel;
(ii) Sprint materially breaches any
provision of this Agreement and fails to cure the
breach within thirty (30) calendar days after
receiving written notice from Z-Tel; and
(iii) there is a material adverse change in
Sprint's regulatory environment, including any change
in applicable Laws that materially and adversely
affects Sprint's ability to perform its obligations
under this Agreement.
(b) Z-Tel may terminate this Agreement under an
express termination right of Z-Tel provided in this Agreement.
2.4. OBLIGATIONS UPON EXPIRATION OR TERMINATION.
2.4.1. SPRINT'S OBLIGATIONS. Upon the expiration of the Term
or the earlier termination of this Agreement under Section 2.3 or
Section 4.9.2, within thirty (30) calendar days after the end of the
Term, in addition to any other post-termination obligations that this
Agreement imposes on Sprint:
(a) Sprint will pay to Z-Tel when due all undisputed
charges owing to Z-Tel for the Services that Z-Tel renders
under this Agreement through the end of the Term (net of
amounts that Z-Tel owes to Sprint, such as Receipt Credits and
Use Stimulation Credits).
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(b) Sprint will pay Z-Tel, within thirty (30)
calendar days after the end of the Term, for any software or
hardware that Z-Tel acquired to support Sprint's Services that
are non-standard to the Z-Tel Services.
(c) Sprint will remove from Z-Tel's premises within
forty-five (45) calendar days after the end of the Term all
property that Sprint owns.
(d) Sprint will return to Z-Tel within forty-five
(45) calendar days after the end of the Term all software,
access keys and any other property that Z-Tel provides to
Sprint under this Agreement (other than items for which Sprint
already paid Z-Tel), subject, however, to Sprint's rights
under the Technology License described in Section 14.1.
(e) In connection with termination (except under
Sections 2.1 and 2.2), Sprint will pay to Z-Tel an amount
equal to ******** the remainder of the charges or
************** the early termination fees (whichever is less)
for any leased line(s) that Z-Tel purchased for Sprint if
these charges and fees are imposed upon Z-Tel by an underlying
service provider other than Sprint and Z-Tel does not utilize
these facilities in servicing other customers. However,
Sprint's obligations under this Section 2.4.1(e) as to any
leased line will not exceed ************ months of the
scheduled lease charges if the lessor is not Sprint or any of
its Owned Affiliates.
(f) In connection with termination (except under
Sections 2.1 and 2.2), Sprint will pay to Z-Tel an amount
equal to all of the remainder of the charges or all of the
early termination fees (whichever is less) for any leased
line(s) that Z-Tel purchased for Sprint if these charges and
fees are imposed upon Z-Tel by Sprint or a Sprint Owned
Affiliate as the underlying service provider and Z-Tel does
not utilize these facilities in servicing other customers.
2.4.2. Z-TEL'S OBLIGATIONS. Upon the expiration of the Term or
the earlier termination of this Agreement under Section 2.3 or Section
4.9.2, Z-Tel will, in addition to any other post-termination
obligations that this Agreement imposes on Z-Tel:
(a) pay to Sprint within ************** after the end
of the Term all Use Stimulation Credits and other charges
owing to Sprint in connection with the Services that Z-Tel
renders under this Agreement through the end of the Term,
(b) credit to Sprint via ▇▇▇▇ credits all collected
Receipt Credits within ten (10) calendar days after Z-Tel
collects the Receipt Credits,
(c) return to Sprint within forty-five (45) calendar
days after the end of the Term all equipment and other
property that Sprint provides to Z-Tel under this Agreement,
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(d) deliver to Sprint within forty-five (45) calendar
days after the end of the Term all of Z-Tel's right, title and
possession in and to the software or hardware that Z-Tel
acquired to support Sprint's Services that are non-standard to
the Z-Tel Services and for which Sprint has paid Z-Tel under
Section 2.4.1(b),
(e) perform all requested Services under this Agreement
during the notice or transition period except as provided
under the first paragraph of Section 2.5, and under Sections
2.5.2 and 2.5.4,
(f) provide Sprint technical assistance (at Sprint's expense)
and access to the Z-Node during the notice or transition
period except as provided under the first paragraph of Section
2.5, and under Sections 2.5.2 and 2.5.4, for the purpose of
developing and implementing a plan and interface to transfer
Sprint End User data to any system that Sprint designates, to
the extent feasible using Z-Tel's existing technology, and
otherwise cooperate with Sprint (at Sprint's request and
expense) with the transfer of all Sprint End Users from
Z-Tel's ************************** that Sprint otherwise
designates,
(g) for any Sprint End User, on Sprint's behalf and direction
submit any required orders to the appropriate ILEC to change
from Z-Tel's **** to any system that Sprint designates,
(h) for any Sprint End User, redirect Z-Node homing to any
system or location that Sprint designates, to the extent
feasible using Z-Tel's existing technology,
(i) mitigate the charges and fees otherwise payable to Sprint
under Section 2.4.1(e), and
(j) refund any amounts that Sprint pays under Section
2.4.1(e) with respect to lease charges paid, to the extent
Z-Tel utilizes leased line(s) originally purchased for Sprint.
2.4.3. REMOVAL OF PROPERTY. Any Party's property that the
Party does not remove from the other Party's premises within forty-five
(45) calendar days after the termination or expiration of the Term will
be considered abandoned property that the possessing Party may dispose
of without paying any compensation to the abandoning Party. Nothing in
this Section 2.4.3 affects the rights of any Party under Section XV
with respect to the return or destruction of Confidential Information.
2.5. TRANSITION OF CUSTOMERS. Upon the expiration, or a termination, of
this Agreement under Section II or Section 4.9.2 of this Agreement, or at any
other time upon Sprint's written request, and in each case only if Sprint has
paid all prior undisputed
32
balances involving charges set forth in this Agreement (net of amounts that
Z-Tel owes to Sprint, such as Receipt Credits and Use Stimulation Credits),
Sprint may cause a transition (a "TRANSITION") of LW Based Services and OSS
Services (the process of moving, the "TRANSITION SERVICE") from Z-Tel or a Z-Tel
third party service provider to:
(a) a Sprint Owned Affiliate,
(b) a third party service provider that Sprint selects (each of (a) and
(b), a "SPRINT DESIGNATED PROVIDER"), or
(c) directly to Sprint.
2.5.1. COMPLIANCE WITH LAW. Sprint and not Z-Tel will be
responsible for establishing a process for the Transition of each
Sprint End User in compliance with all relevant Law, including all Laws
regarding authorization and verification of changes in the selection of
a provider of Telecommunications Service.
2.5.2. FAILURE TO PAY DURING TRANSITION. During the
Transition, Z-Tel will be entitled to the continuing payment of all
undisputed fees and charges set forth in this Agreement relating to the
Services Z-Tel is still providing. Any failure by Sprint to make any
undisputed payment in a timely manner during a Transition will give
rise to Z-Tel's right to suspend providing Transition Services to
Sprint upon ten (10) Business Days' prior written Super Notice. If
Z-Tel suspends providing Transition Services to Sprint under this
Section 2.5.2, Z-Tel will reinstate providing Transition Services to
Sprint within 24 hours of receipt of payment in full by Sprint of all
undisputed payments then due and owing (net of amounts that Z-Tel owes
to Sprint, such as Receipt Credits and Use Stimulation Credits).
2.5.3. ASSISTANCE. During a Transition, Z-Tel will provide the
following assistance to Sprint, and Sprint and Z-Tel will use their
respective best efforts to accomplish the following:
(a) coordinate the Transition between Z-Tel or the
applicable Z-Tel third party service provider and the Sprint
Designated Provider or Sprint (as Sprint directs) through the
provision and use of applicable CLLI (Bellcore - Common
Language Location Identification) Codes, CIC (Carrier
Identification Code) Codes, OCN Codes, ACNA (Access Customer
Name Abbreviation) Codes, LRN (Local Routing Numbers) used for
LNP (Local Number Portability) or other necessary
telecommunication provider information to minimize service
interruptions during the Transition of the operation, service
and control of the Transition Service;
(b) ensure that users of the Transition Service will
continue to have access to the Service during the Transition;
33
(c) ensure that the Transition does not affect
either:
(i) other Z-Tel-provided services that are
not subject to the Transition, or
(ii) other Transition Services that have
already been transitioned;
(d) ensure that the Transition does not disrupt
Sprint's End Users use of any Transition Service; and
(e) settle all outstanding bills, invoices and
prepayments in a manner that is consistent with this
Agreement.
2.5.4. NEW ORDERS. After termination of this Agreement and
during any Transition period, Z-Tel will accept orders for new service
solely in its discretion.
2.5.5. TRANSITION COSTS.
(a) Following a notice of termination under Section
2.3 or Sprint's decision to migrate End Users, the Parties
will negotiate in good faith to determine what additional work
and services are reasonably appropriate or necessary in
connection with the Transition.
(b) On a monthly basis during the Transition Z-Tel
will provide Sprint detailed invoices describing services
rendered and the costs of performing those services. Sprint
will reimburse Z-Tel for all undisputed transition fees and
charges within thirty (30) calendar days after its receipt of
Z-Tel's invoice as follows:
(i) Sprint will pay to Z-Tel *************
per Transition line for its additional work and
services to effect the transition of Sprint's End
Users without service interruption to the extent the
Transition solely involves movement to Sprint's OCN
serviced via Telution and when the Transition solely
involves configuration, manipulation of account data
or both and Sprint utilizes Z-Tel to Transition
service under the contract as an Ancillary Service.
(ii) When the Transition involves more than
configuration, manipulation of account data or both,
or utilizes an account vendor other than Telution (a
"COMPLEX TRANSITION"), Z-Tel will make available to
Sprint or its contractor, documentation and data
necessary to effect self development of a Transition
procedure and will cooperate with Sprint in
implementation of any resultant Transition program.
(iii) If Z-Tel's subject matter experts are
required to spend time in support of development of a
Sprint Transition Plan or its
34
implementation, Z-Tel will ▇▇▇▇ Sprint for such
support on a time and material basis.
(iv) Sprint will also pay any fees and
charges that would apply from ILEC and Third Party
Vendors under Schedule C.
(c) Sprint will deliver to Commerce Bank, N.A. (the
"TRANSITION ESCROW AGENT") under the terms of an escrow
agreement in the form attached to this Agreement as Exhibit A
(the "TRANSITION ESCROW AGREEMENT") for deposit into an escrow
account (the "ESCROW ACCOUNT") certain funds for Z-Tel
Dedicated Support fees, Basic System Support fees,
**********************************************, and Third
Party unit based fees (the "TRANSITION FEES") for the Sprint
End Users that have not been Transitioned by either ninety
(90) calendar days after the notice of termination date or
August 2, 2003, whichever occurs first (the "TRANSITION
DATE").
(i) The purpose of the escrow is to secure
Sprint's payment obligations to Z-Tel. No amounts
will be escrowed if the Transition has not occurred
because Z-Tel has not completed the necessary work on
ILEC interfaces.
(ii) The specific amount that Sprint will escrow is
determined as follows:
(A) if the Transition has been
delayed beyond the Transition Date for two
(2) months or less, the amount to be
escrowed is one months Transition Fees
(based on the most current of the forecasts
described in Section 10.12, the "FORECAST")
for the Sprint End Users that have not yet
been Transitioned, and
(B) if the Transition has been
delayed beyond the Transition Date for more
than two (2) months, the amount to be
escrowed is two (2) months Transition Fees
(based on the Forecast) for the Sprint End
Users that have not yet been Transitioned.
(iii) Upon completion of the Transition of all
Sprint End Users off Z-Tel's OCN and payment of all
non-disputed due fees due Z-Tel for Transitioned
Sprint End Users for Services provided while served
by Z-Tel's OCN, Z-Tel will direct the Transition
Escrow Agent to return to Sprint all funds remaining
in the Escrow Account within ten (10) calendar days
after the Transition completion date.
(d) If the Transition has not occurred
because Z-Tel has not
35
completed the necessary work on ILEC interfaces, then for any
new Sprint End Users added to Z-Tel's OCN after the Transition
Date, Sprint will not be obligated to escrow any fees or pay
the **************** per transition line under Sections
2.5.5(b), (c) and (d).
(e) After establishment of the Escrow Account, Sprint
will continue to pay Z-Tel's invoices when due and Z-Tel is
not required to seek payment for its invoices from the
Transition Escrow Agent.
(f) Sprint and Z-Tel will true-up the Escrow Account
balance on a monthly basis until the termination of the
Transition Escrow Agreement as follows:
(i) Within a reasonable period after the end
of each month after the Transition Date, the
Transition Escrow Agent will provide to Sprint and
Z-Tel a statement reflecting the balance of funds in
the Escrow Account.
(ii) Within five (5) Business Days after
receiving the Transition Escrow Agent's statement,
Sprint will deposit in the Escrow Account the
additional funds that are necessary to cause the
balance of the Escrow Account to equal or exceed the
amount then required under Section 2.5.5(c)(ii).
(g) Sprint is entitled to disbursement from the
Escrow Account the amount by which the balance of the Escrow
Account reflected in the Transition Escrow Agent's statement
exceeds the amount then required under Section 2.5.5(c)(ii).
(h) Z-Tel is entitled to disbursements from the
Escrow Account from time to time during the term of the
Transition Escrow Agreement in amounts equal to any Transition
Fees payable by Sprint under this Agreement that Sprint does
not pay when due.
(i) The Transition Escrow Agent will disburse the
funds in the Escrow Account in accordance with the provisions
of the Transition Escrow Agreement.
(j) During any Transition period following
termination under this Agreement, so long as there are any
Sprint End Users utilizing Z-Tel's OSS Services, Sprint will
pay Z-Tel a monthly minimum Service Fee of **********.
2.5.6. TRANSITION PERIOD DURATION.
(a) For any termination under Section 4.9.2 of this
Agreement, Z-Tel's
36
obligation to assist Sprint in the Transition will cease
(subject to applicable Law) as of the later of:
(i) **************** calendar days
after the termination of this Agreement, and
(ii) the date on which Sprint or a Sprint
Designated Provider has obtained the consents and
approvals from ILECs or Regulatory Authorities that
are necessary or appropriate for processing
applicable service orders.
Sprint will diligently pursue the consents and approvals
required in this Section 2.5.6(a).
(b) For any termination, or expiration, under Section
2.1 and 2.2 of this Agreement, the duration of the Transition
period will not be limited.
(c) For termination due to a Z-Tel Triggering Event
or a Sprint Triggering Event, Z-Tel's obligation to assist
Sprint in the Transition will cease the later of (subject to
applicable Law):
(i) **************** calendar days
after termination of this Agreement, and
(ii) until Sprint or a Sprint Designated
Provider obtains the consents and approvals from such
ILECs or Regulatory Authorities that are necessary or
appropriate for processing applicable service orders.
Sprint or the applicable Sprint Designated Provider will
diligently pursue the consents and approvals required in this Section
2.5.6(c).
2.6. EXIT FROM TELECOMMUNICATIONS SERVICE BY SPRINT. Should Sprint
decide to cease providing LW Based Services to its End Users who receive those
services under this Agreement (collectively, the "LW BASED CUSTOMERS") or to
sell the LW Based Customers, then, to the extent allowed by Law, Sprint will
grant to Z-Tel, for the earlier of fifteen (15) Business Days or until Z-Tel
submits a bid, the right to bid on the purchase, in whole or in part, of the LW
Based Customers for future LW Based Services.
2.7. LAWFUL PURPOSES. Z-Tel will furnish the Local Wholesale Services
subject to the condition that Sprint uses them only for lawful purposes. Z-Tel
may suspend any Local Wholesale Services that Sprint uses in violation of Law if
Z-Tel provides at least fifteen (15) Business Days' prior written Super Notice
to Sprint before the suspension. Z-Tel may suspend any Local Wholesale Services
immediately and without prior notice to Sprint (but with contemporaneous written
Super Notice to Sprint) if any law enforcement agency advises Z-Tel that its
Local Wholesale Services are being used in violation of applicable Law. Any
suspension of Local Wholesale Services by Z-Tel under this Section 2.7 will be
limited to the extent necessary to eliminate the unlawful purpose or use.
37
SECTION III. - RESERVED
SECTION IV. - FEES AND CHARGES
4.1. BASIS OF FEES.
(a) Z-Tel will provide Local Wholesale Services, Z-Node Services, Long
Distance Services and Z-Tel's OSS Services to Sprint as specified in this
Agreement and the SOW in accordance with the charges and fees described on
Schedule C to this Agreement (the "PRICING SCHEDULE") and Section 4.6 below.
(b) Sprint and Z-Tel will negotiate fees and charges for new
functionality and services in accordance with Section 1.12.2 of this Agreement.
Fees and charges in association with the development of Ancillary Services will
be separately established within the applicable SOW for each project.
(c) With the exception of ******************************************
*********************************************************************
************************************************************s.
(d) The **********************************************************
**********************************************************************
********************************************************************.
4.2. INTERFACE ESTABLISHMENT FEE. For initialization of Z-Tel service
and support interfaces, Z-Tel will be entitled to an one-time payment of
*************** from Sprint, and Sprint will pay to Z-Tel such fee in full in
immediately available funds within five (5) calendar days after the Effective
Date ("INTERFACE ESTABLISHMENT FEE") less any amounts that Sprint pays to Z-Tel
under the October Letter Agreement or the December Letter Agreement. The
Interface Establishment Fee compensates Z-Tel for its costs associated with
configuration of Operations Support System Services and its costs associated
with the hiring of appropriate and necessary employees to process and support
the Services that Z-Tel will provide to Sprint. Z-Tel will provide operational
interfaces capable of supporting Sprint's End User orders in accordance with the
time schedule set forth in the Initial SOW
4.2.1 DEVELOPMENT OF PCS INTERFACES. The development of
interfaces by Z-Tel necessary to support a Sprint PCS offering is not
incorporated into the initial interface establishment project or the
Interface Establishment Fee. The Parties will jointly develop a
separate SOW with respect to these additional interfaces. The target
completion date for the additional SOW is February 15, 2003, and this
SOW will itemize separate charges, scheduled delivery dates and high
level project requirements. Upon completion of the additional SOW for
PCS
38
interface development, which the parties will expeditiously negotiate
in good faith, and payment of any up front fees and charges required
under that SOW, Z-Tel will develop interfaces necessary to support a
Sprint PCS offering.
4.3. SERVICE FEE PREPAYMENT AND RESULTING CREDIT. Within five (5)
Business Days after the Effective Date, Sprint will pay *************** to Z-Tel
as a prepayment towards Sprint's fees under Schedule C (net of any additional
amounts that Sprint pays to Z-Tel, beyond the Interface Establishment Fee, under
the October Letter Agreement or the December Letter Agreement (including the
$**************** Trial Payment (as defined in the December Letter) and
$*************** Extension Payment (as defined in the December Letter)).
4.3.1. USE STIMULATION. Beginning in the first month Sprint
has ********* active End Users utilizing Local Wholesale Services that
Z-Tel has provisioned (the "USE STIMULATION PERIOD"), Z-Tel will credit
Sprint at the rate of up to *********** monthly to be credited against
the Service Fee prepayment described in Section 4.3 ("USE STIMULATION
CREDIT"). ********************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
**********.
4.4. EXCLUDED ACTIVITIES. Indirect costs (such as general software or
processing enhancements, costs associated with increasing capacity generally and
costs supporting Z-Tel activities that Sprint has not pre-approved) will be
Z-Tel's responsibility. ****** **********..
4.5. SLC AND PICC CHARGES. Sprint will solely determine the amount of,
and be entitled to, any End User access charges (e.g., SLC and PICC charges)
associated with Sprint End Users provisioned under this Agreement. SLC and PICC
charges will not accrue to Z-Tel.
4.6. Z-TEL OSS SUPPORT. Z-Tel will be entitled to and, subject to
Section 5.3, Sprint will pay to Z-Tel when due, ****************************
***************** in support of Z-Tel's OSS Service offerings that Sprint and
Sprint's End Users utilize ("Z-TEL DEDICATED SUPPORT FEES").
4.6.1. GROSS-UP OF EXPENSE. In determining the
*********************************** who are engaged in the furnishing
of Z-Tel's OSS Services:
39
(a) ************************************************
**************************************************************
**************************************************************
***************
(b) the following maximum rates per paid hour by
function will apply:
FUNCTION PAID HOURLY RATE GROSSED UP RATE
-------- ---------------- ---------------
Reject (e.g., New Install, Migrate, Change ********* ************
Order, Suspend, Restore, Disconnect)
Support (Escalation) ******** ***********
******** *********
*********: *********
Support (Change Order) **********
**********
********* **********
Support (all other activities, such as Repair **********
Level II, TOS, Pending Order, Line Swap) ********** **********
**********
**********
**********
***********
***********
Repair Level I ***********: **********
*********** **********:
(c) Sprint will pay ****************************:
FUNCTION MAXIMUM WEEKS PAID
Reject: ******
Support:
Repair Level II: *******************************
TOS: ********************************
Escalation: ***********************************)
Pending Order: *************
Line SWAP: *********************
40
Repair Level 1: ******************
Sprint will not pay for any (and Z-Tel will be
responsible for all) expenses related to
*************************. Sprint will not pay
***************************************.
(d) Sprint and Z-Tel will negotiate in good faith to
determine the *******************************************
**************************************************.
(e) Z-Tel will meet the following productivity measures (AHT
and Utilization):
Trouble Tickets: ************
Repair Level 1 Tickets: *********
Support - Repair Level II Tickets: *********
Support - TOS Tickets: **************
Support - Escalation Tickets: ************
Support - Pending Order Changes: ********
Support - Line SWAP Request: *************
For purposes of the foregoing, "Utilization" means the time
spent working tickets divided by paid time. The agreed upon
Utilization rate will be **********************************
Sprint and Z-Tel will negotiate in good faith to
modify and true-up, as appropriate, the foregoing processes
and measures every six (6) months during the first year of the
Term and annually thereafter.
(f) Sprint unit costs as contained in this Section 4.6.1 will
not exceed ***** **********of the negotiated rate per function
unless Sprint pre-approves the exception in writing. Sprint's
Committed Forecast under Section 10.12 will include a unit
cost calculation for each function described in this Section
4.6. This calculation will take into consideration:
(i) ************************,
(ii) *****************************
(iii) *****************************
(iv) ******************************
(v) **********************************
(vi) *************************************
41
(vii) *********************************.
Notwithstanding any other provision of this Section
4.6 or Schedule C, Sprint's costs for headcount under this
Agreement in any particular month will not exceed
******************* of the aggregate unit cost calculations
under this Section 4.6.1(f) for that month except with
Sprint's written consent.
(g) Notwithstanding the above, charges associated
with Z-Tel personnel supporting the collection of past due
balances of Sprint End Users is separately incorporated in the
Pricing Schedule. For clarity purposes, the hourly fee
associated with collection activity, as stated in the Pricing
Schedule, is not subject to gross-up under subsection (a) of
this Section 4.6.1.
4.6.2. ALLOCATION OF EMPLOYEE EXPENSE. For employee expenses, Z-Tel
will:
(a) identify employees that are exclusively
performing services for Sprint, and
(b) with respect to employees that do not exclusively
perform services for Sprint, establish a project code within
its payroll system for tracking and allocating, pro rata, the
expense of these employees by reference to hours worked for
Sprint.
Sprint must approve the number of employees and the rate per employee
charge back for each allocated employee expense. The maximum grossed-up
cost per person per month for the following functions is:
CDR Processing: *********
Line Loss: *********
Payment Processing: *********
Payment / NSF Research: ********
Retail Billing: ********
Subscriber Management: ********
Applications: ********
Provisioning Support **********
4.6.3. PRE-APPROVED. Included in each Committed Forecast (as
defined in Section 10.12) that Sprint submits to Z-Tel under Section
10.12 will be an estimate of the Z-Tel headcount that is necessary to
support Sprint's forecasted volume of business during the period for
which the Committed Forecast applies. ****************** that Sprint
submits in the Committed Forecast will be considered pre-approved by
Sprint for purposes of Schedule C.
4.6.4. ADJUSTMENT TO ************. From the date of Z-Tel's
receipt of
42
Sprint's ******************, Z-Tel will have ********************** to
submit a written objection to Sprint regarding the volumes and
associated headcount reflected in Sprint's Committed Forecast. Z-Tel
will be deemed to have accepted Sprint's ************************ does
not provide this written objection in the specified time period. If
Z-Tel provides a timely written objection to the volumes reflected in
Sprint's Committed Forecast as they affect Z-Tel ********* (including
with the objection an alternative Z-Tel volume forecast and a
description of the disputed portion of the Committed Forecast), the
Parties will negotiate in good faith to adjust the forecast in such a
manner that:
(a) both parties are satisfied that the forecast
represents reasonable expectations of anticipated demand, and
(b) Z-Tel can perform the Services consistently with
the forecast and in compliance with its obligations under this
Agreement, including compliance with relevant SLAs.
4.6.5. ESCALATION OF ********* MATTERS. If the Parties cannot
reach agreement regarding the volume and ********* forecast, they may
utilize the dispute resolution process set forth in Section 21.5. If
resolution between Parties cannot be reached within ***********
calendar days after submission to the dispute resolution process, Z-Tel
will use the most recent Sprint Committed Forecast as the basis of
operations while the dispute resolution process proceeds. During the
pendency of the dispute resolution process, Z-Tel will be relieved of
all SLAs (other than SLAs concerning Utilization) that are affected or
impacted by the difference between:
(a) ********* under the Committed Forecast, and
(b) ********* under the alternative forecast that
Z-Tel submits under Section 4.6.4 above.
4.6.6. LEVEL OF SUPPORT. Z-Tel will endeavor in good faith to
fully perform the contracted-for Services to the extent practicable
without regard to forecast levels.
4.6.7. COST OF LIVING ADJUSTMENT. On each anniversary date of
the Effective Date during the Term, with ninety (90) calendar days
prior written notice, Z-Tel may adjust ******************** established
in this Section 4.6 to the extent it can reasonably document that
Z-Tel's paid ********************* have risen since the inception of
the Agreement or the last anniversary date (whichever is applicable).
In no instance may the ******************** rise:
43
(a) more in any year than the consumer price index
for prior year as announced by the United States federal
government, and
(b) more than six percent (6%) in the aggregate over
the Initial Term.
4.6.8. MINIMIZATION OF EXPENSE. If Z-Tel believes that the
actual headcount need (based on forecasted volumes) is less than the
forecasted headcount, it will use commercially reasonable efforts to
minimize the ******** ********* to Sprint.
4.7. ******** ************** FEES.
4.7.1. ************* *********FEES. In allocating *******
Fees, each LW Based services End User will be assigned a unique
purchase order number consisting of the customer's ANI number,
identifying the retail CLEC (that is, Z-Tel, Sprint or other Z-Tel
Local Wholesale Services customer) and the CLLI code for the ILEC end
office serving the End User. In those cases in which the ILEC reports
usage based upon ANIs, Z-Tel will allocate the Local Wholesale Service
*********************************************** customers based upon
ANIs. *************************************************
*****************************************:
(a****************************************** in the
area served by the end office times the aggregate number of
calendar days in the month that the customers were LW Based
Services customers,
(b) *****************************************
Wholesale Services customers have in the area served by the
end office ***********
******************************************* that the customers
were customers,
(c)
*************************************************. 4.7.2.
*******************. In cases in which *********** are
reported on an aggregate basis, Z-Tel will
********************************
**********************************************************.
4.8. ******************* EXPENSES.
(a) Sprint, including its Affiliates, will pay all
********** ************************************ ************
***************************
(i) Sprint's (or its Affiliates', employees' and
agents') failure to obtain a subscriber's
authorization and verification in accordance with the
procedures specified in 47 C.F.R. Part 64 to change a
provider or telecommunications service,
44
(ii) Sprint's (or its Affiliates', employees' and
agents') misrepresentation in the course of marketing
or obtaining or verifying consent to a change in
provider or telecommunications service, in connection
with this Agreement,
(iii) the failure of a Third Party Verification
provider if Sprint is providing its own Third Party
Verification Services from time to time under this
Agreement, or
(iv) Sprint's (or its Affiliates', employees' and
agents') acts or omissions
For purposes of clarification, Z-Tel will not be
deemed to be an agent to Sprint under this Section 4.8.
(b) Z-Tel will pay all fees, penalties, charges,
expenses and costs that any ILEC or Regulatory Authority
imposes on either Party to the extent they result from Z-Tel's
(or its Affiliates, employees and agents) actions or omissions
including the failure of a Third Party Verification provider
if Z-Tel is providing Third Party Verification Services from
time to time under this Agreement.
4.9. CHANGES IN FEES AND DIRECT COSTS. Except for ************ charges
modified in conformance with Section 4.6.7, ************************** that
Sprint must pay under this Agreement will ******************* during the Term,
except as more fully described in this Section 4.9.
4.9.1. ADJUSTMENT PROCESS FOR ****** FEES NOT IN EXCESS OF
MARKET RATE. Z-Tel will notify Sprint in writing (a "CHANGE IN FEE
NOTICE") of any increase or decrease in the ******* Fees because of an
****************************************************************** or
arbitration order. Z-Tel will use reasonable commercial efforts to
provide this notice to Sprint at least thirty (30) calendar days before
the effective date of the ******* Fee change. Z-Tel will notify Sprint
through a Change in Fee Notice of any other increase or decrease in the
******** Fees within fifteen (15) calendar days after Z-Tel becomes
aware of the increase or decrease (but, if the effective date of the
*******Fee change is less than fifteen (15) calendar days after Z-Tel
becomes aware of the change, Z-Tel will notify Sprint immediately upon
becoming aware of the change).
With any Change in Fee Notice, Z-Tel will submit to Sprint a
proposed revised Pricing Schedule (including the anticipated **** Fee
change effective date) along with a summary of the underlying action
necessitating the ***** Fee change. Subject to Section 4.9.2, absent a
written objection by Sprint in response to a Z-Tel Change in Fee
Notice, the changes in ****** Fees payable by Sprint under this
Agreement will become effective as of the specified effective date.
4.9.2. RESOLUTION OF FEE CHANGE DISPUTES. If Sprint objects in
writing to any proposed change in *****Fees, the Parties will negotiate
in good faith
45
concerning an appropriate modification in the ***** Fees payable under
this Agreement. If the Parties do not reach an agreement on the new
**** Fees within sixty (60) calendar days after the date of Z-Tel's
Change in Fee Notice, then this Agreement will automatically terminate
one hundred eighty (180) calendar days after the date of Z-Tel's Change
in Fee Notice. In the event of termination under this Section 4.9.2,
the **** Fee change will go into effect as of the specified effective
date and Sprint will pay Z-Tel at the new rate from that date through
the end of the Term.
4.9.3. **** FEE ADJUSTMENTS IN EXCESS OF MARKET RATE. Z-Tel
will not implement any **** fee changes that are above market rates
without Sprint's written consent.
4.9.4. CHANGE IN NON-ILEC FEES. Other than in accordance with
Section 4.6.7 and in association with postage, Z-Tel will not change
any ********** fees under this Agreement without Sprint's written
consent unless:
(a) the fee change is reasonably not avoidable by Z-Tel;
(b) Z-Tel had given Sprint advance notice of at least ninety
(90) calendar days of contract negotiations and consulted with
Sprint on service and pricing issues related to the proposed
increase from the date of notice until any implementation of
the proposed fee change; and
(c) Z-Tel has made a good faith effort to minimize
the economic effects of the fee increase on Sprint's business.
4.9.5. CHANGE IN POSTAGE. Z-Tel will automatically implement
and ▇▇▇▇ to Sprint any changes in rates of the United States Postal
Service in association with providing billing of Sprint End Users on
Sprint's behalf.
4.10. RECOVERY OF TAXES AND REGULATORY FEES. The Party upon which
applicable Law imposes the payment obligation will bear any federal, state or
local excise, sales or use taxes (excluding any taxes levied on income) or
regulatory fees (e.g., fees from local 911) resulting from performance of this
Agreement even if this Agreement or applicable Law places the obligation to
collect and remit the taxes upon the other Party. But Z-Tel will pass through to
Sprint, and Sprint will bear, any sales or use tax or any regulatory fee arising
from the Services that Z-Tel provides to Sprint or Sprint's End Users.
4.11. PERMITTED FEES AND CHARGES. Except as otherwise explicitly
described or contemplated under this Agreement (for avoidance of doubt,
including the SOW), the fees and charges set forth on Schedule C are the only
fees and charges that Z-Tel may ▇▇▇▇ to Sprint, and Sprint is obligated to pay
when due, for the Services that Z-Tel will provide under this Agreement to
Sprint and Sprint's End Users.
46
SECTION V. - BILLING AND BILLING DISPUTES
5.1. INVOICING OF FEES. Z-Tel will provide invoicing to Sprint in an
electronic format that is acceptable to Sprint.
5.1.1. INVOICE DATE. Z-Tel will invoice all fees and charges
payable by Sprint to Z-Tel under this Agreement, other than *********
Fees and Z-Tel Dedicated Support Fees, monthly in arrears. Z-Tel will
invoice Sprint no later than the 23rd day of each month. Each Z-Tel
invoice will also reflect prior Sprint payments, Receipt Credits, Use
Stimulation Credits and reconciliation.
5.1.2. ILEC RECURRING FEES. Each month, Z-Tel will calculate
the actual ************** Fees relating to Sprint End Users based upon
actual ****** billing. Z-Tel will then invoice Sprint for the following
month's estimated ******* Recurring Fees, basing the estimate on the
sales forecasts for the following month described in Section 10.12 and
the SOW. The monthly invoice that Z-Tel sends to Sprint for the
estimated *********** Fees will reflect:
(a) a true - up of the estimated ************ Fees
that Sprint previously paid for the prior month and the actual
************ Fees relating to Sprint's End Users for the prior
month, and
(b) any settlement amount due from Sprint to Z-Tel or
from Z-Tel to Sprint because of the true-up.
5.1.3. Z-TEL DEDICATED SUPPORT FEES. Bi-weekly, Z-Tel will
calculate the actual Z-Tel Dedicated Support Fees based upon
************** and Section 4.6. Z-Tel will then invoice Sprint for
************* as directed in Section 4.6.
5.1.4. RECEIPT CREDITS. Z-Tel will credit to Sprint, against
Sprint's balance of usage charges due to Z-Tel, Z-Tel's usage base cash
receipts (less direct costs, cost of collections and uncollected
amounts) in connection with the local Telecommunications Services
provided to Sprint through Z-Tel ("RECEIPT CREDITS"). Z-Tel will apply
this credit for any month no later than thirty (30) calendar days after
collection.
5.2. BACK BILLING. Notwithstanding anything to the contrary contained
in this Agreement (but subject to Section 5.3), Sprint will pay any invoices
without regard to whether this Agreement has expired or been terminated,
rescinded or cancelled, to the extent the fees are related to services provided
to Sprint by Z-Tel during the Term. Z-Tel will credit or remit to Sprint any
overpayment associated with the true-up of prior invoices without regard to
whether this Agreement has expired or been terminated, rescinded or cancelled.
5.3. BILLING DISPUTES. Notwithstanding any other provision of this
Agreement, disputes between the Parties concerning any invoice that Z-Tel
presents to Sprint for
47
payment will be resolved in accordance with this Section 5.3.
5.3.1. NO WITHHOLDING OF ****** FEES. Under no circumstances
will Sprint withhold payment of any Z-Tel ▇▇▇▇ for ******* Fees. If
Sprint withholds any ******* Fee invoiced by Z-Tel for a given month
for any reason, Z-Tel's duty to perform its obligations under this
Agreement will be suspended until one (1) Business Day after Z-Tel
receives the unpaid invoiced Sprint ***** Fees. Z-Tel's right to
suspend service under this Section 5.3.1 is in addition to and not in
lieu of any other remedies available to it under this Agreement and
under applicable Law. Sprint stipulates and agrees that:
(a) Sprint's withholding of ******* Fees will cause
irreparable harm to Z-Tel, and.
(b) Sprint will consent to the granting of emergency
relief by any court of competent jurisdiction, including
injunctive relief.
5.3.2. WITHHOLDING OF ********* FEES. In the event of any good
faith dispute about the amount due from Sprint to Z-Tel for *********
fees, Sprint may withhold up to a maximum of *************** of the
amount invoiced for non-ILEC fees for a given month. But if Z-Tel
incorrectly billed more than ****** ********* of any monthly ▇▇▇▇, then
Sprint may thereafter withhold up to *** ******************* of any
disputed amount.
If Sprint withholds any amount greater than this Section 5.3.2
permits of the amount invoiced by Z-Tel for *********** fees for a
given month for any reason, Sprint stipulates and agrees that:
(a) such withholding will cause irreparable harm to
Z-Tel, and
(b) it will consent to the granting of emergency
relief by any court of competent jurisdiction, including but
not limited to injunctive relief.
5.3.3. NOTICE OF BILLING DISPUTE. A Party wishing to raise a
Billing Dispute must notify the other party in writing of the dispute
within one hundred eighty (180) calendar days (but this deadline will
be tolled during any audit) after the Billing Date, describing the
billing discrepancies in reasonable detail together with supporting
documentation so the billing party can fully understand the nature of
the dispute. Except in situations involving Audits under this
Agreement, any party that does not notify the other of a Billing
Dispute in writing within one hundred eighty (180) calendar days after
the Billing Date thereby waives any claim it may otherwise have
regarding that ▇▇▇▇ or any part not disputed within one hundred eighty
(180) calendar days, regardless of when the claim was discovered. This
section will not limit either Party to pursue any remedies available by
law or equity against the other Party for fraudulent acts.
5.3.4. PAYMENT WILL NOT PREJUDICE. Payment will not prejudice
a Party's
48
right to dispute charges so long as they are disputed in the manner and
timeframe specified in this Agreement.
5.3.5. RESTITUTION. Disputed charges mutually agreed upon in
favor of one Party will be paid by the other Party within five (5)
Business Days of the resolution along with interest payments calculated
based upon the lesser of ten percent (10%) per annum or the maximum
allowed by law.
5.3.6. RESOLUTION PERIOD. The Parties will engage in good
faith negotiations and use reasonable efforts to resolve Billing
Disputes by the respective representatives of both Parties listed on
the Designee Schedule within the timeframes and escalation process set
forth below:
5.3.6.1. ESCALATION. If the Parties fail to resolve
the dispute within thirty (30) calendar days , the dispute
will be escalated to senior executives of each party for
resolution for a period of fifteen (15) calendar days.
5.3.6.2. FINAL RESOLUTION. If the Parties fail to
mutually resolve or settle the dispute within the aggregate
forty-five (45) calendar day period described in Section
5.3.6.1 (unless both Parties have agreed in writing to extend
such period), either Party may seek court resolution. Neither
Party may seek court resolution until expiration of the
resolution and escalation period.
5.3.7. JOINT EFFORT REGARDING THIRD-PARTY DISPUTES. Z-Tel and
Sprint will work together to resolve disputes with ILECs and third
parties arising from performance of the services described in this
Agreement. But, to the extent Sprint has not migrated Sprint End Users
to its own *** under Section 1.2, and notwithstanding any other
provision in this Agreement, Z-Tel will have sole authority to resolve
disputes with ILECs and third parties, and resolution of the disputes
will be final. To the extent Sprint has migrated Sprint End Users to
its own ***, Sprint will have sole authority to resolve disputes with
ILECs and third parties related to those Sprint End Users on Sprint's
***.
SECTION VI. - PAYMENTS
6.1. RESPONSIBILITY. Sprint will be responsible for and pay all
undisputed charges for the Services that Z-Tel provides to Sprint or Sprint's
End Users under this Agreement. Subject to Section 10.11, Sprint, and not Z-Tel,
will bear the risk of any failure by Sprint's End Users to pay charges to
Sprint.
6.2. PAYMENT SCHEDULE. Sprint will pay Z-Tel by wire transfer the
undisputed amounts for fees incurred under this Agreement as follows.
6.2.1. ************** FEES.
49
(a) For Sprint End Users on Z-Tel's ***, Sprint will
prepay each month an amount equal to one month's estimated
recurring **** Fees, based on monthly forecasts, as described
in Section 10.12 and the SOW.
(b) Sprint will pay to Z-Tel the recurring **** Fees
within ********************** after receiving the invoice from
Z-Tel.
6.2.2. ********** FEES. Sprint will pay all other **** Fees
within ********************** after receiving an invoice from Z-Tel.
6.2.3. Z-TEL DEDICATED SUPPORT FEES. Sprint will pay all Z-Tel
Dedicated Support Fees within ********************** after receiving an
invoice from Z-Tel.
6.2.4. ALL OTHER FEES. Sprint will pay all other fees for
Services under this Agreement within ************************* after
receiving the invoice from Z-Tel.
6.3. CURRENCY AND PAYMENT METHOD. All payments will be made via wire
transfer in US Dollars in immediately available funds.
6.4. LATE PAYMENT FEES.
6.4.1. UNDISPUTED AMOUNTS. If any undisputed payment or undisputed
portion of a payment is not received by Z-Tel when due, or if any
undisputed portion of the payment is not in immediately available
funds, then Sprint will pay a late fee to Z-Tel. The late fee will be
equal to the lesser of one and one half percent (1.5%) or the maximum
percentage allowed by Law multiplied by the undisputed portion of a
payment not received by the due date. An additional late fee of the
lesser of one and one half percent (1.5%) or the maximum percentage
allowed by law multiplied by the undisputed portion of a payment not
received by the due date will accrue each subsequent month during which
the undisputed payment or undisputed portion of a payment is not made.
Z-Tel will be entitled to these late payment fees in addition to and
not in lieu of all other remedies available to Z-Tel under this
Agreement or otherwise permitted by Law.
6.4.2. DISPUTED Amounts. If Sprint makes any payment to Z-Tel that it
previously disputed, whether the payment is made voluntarily or
pursuant to a settlement or order, it will pay a late fee to Z-Tel. The
late fee will be equal to the lesser of eighteen percent (18%) per
annum or the maximum percentage allowed by law multiplied by the
disputed amount and will be assessed from the initial due date until
the date of dispute resolution or order and Sprint will pay the amount
within five (5) Business Days. Z-Tel will be entitled to these
late-payment fees in addition to and not in lieu of all other remedies
available to Z-Tel under this Agreement or otherwise permitted by Law.
6.5. SPRINT ADJUSTMENTS. Sprint will have the right, in its sole
discretion, to
50
adjust, via credit, refund or otherwise, the invoices of Sprint
End Users. These Sprint adjustments will not reduce payments due from Sprint to
Z-Tel under this Agreement.
SECTION VII. - RELATIONSHIP TO END USERS
7.1. SERVING END USERS. Z-Tel may serve directly any End User and may
continue to market, sell and deliver its own Telecommunications Services and
other Services or otherwise establish independent relationships with any End
User. However, Z-Tel will not target Sprint End Users for switching to Z-Tel
retail services or use End User information gained from its performance of this
Agreement to market directly to Sprint End Users or for any other reason not
related to Z-Tel's performance of its obligations under this Agreement;
provided, however, that the foregoing prohibition does not prohibit Z-Tel from
advertising or offering services to any Sprint End User in connection with a
general advertising or sales effort made in geographic areas where there are
Sprint End Users.
7.2. POINTS OF CONTACT. Except when documented in the SOW, Sprint will
be Z-Tel's single point of contact for all Services purchased and provided under
this Agreement. Except as otherwise provided in this Agreement, as modified and
supplement by the SOW, Z-Tel will not be required to have any contact with
Sprint's End Users, and Sprint will act as the single point of contact for
Sprint's End Users' service needs, including sales, service, design, order
taking, provisioning, change orders, training, maintenance, post sale servicing,
billing, collection and inquiry. Sprint will inform its End Users that they are
customers of Sprint. Z-Tel will refer Sprint's End Users who inadvertently
contact Z-Tel with questions regarding Sprint's services to Sprint. Likewise,
Sprint will refer Z-Tel customers who inadvertently contact Sprint with
questions regarding Z-Tel services to Z-Tel. Nothing in this Agreement will
prohibit either Party from discussing its products or services with End Users of
the other Party who solicit this information.
7.3. END USER INTERFACES. From technically and commercially feasible
options documented in the SOW, Sprint will control the look, feel, appearance
and, as applicable, content of Z-Tel's presentation to and interaction with the
End User, including the following End User interfaces: Internet, fulfillment,
Third-Party Verification, system interfaces, voice mail, credit screening,
customer service, IVR and provisioning.
SECTION VIII. - AUTHORIZATIONS
8.1. LISTING INFORMATION. Sprint authorizes Z-Tel to release Sprint
listing information regarding its End Users to other carriers and their
publishers for the purposes of publishing directories and providing directory
assistance, except to the extent Sprint's End Users have specifically requested
that they not be listed in a directory (i.e., non-publish or non-list) and
Sprint or the Sprint End User has communicated this End User request to Z-Tel.
Z-Tel will not be liable for the content or accuracy of the listing information.
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8.2. AUTHORIZATION AND VERIFICATION REQUIREMENTS. Simultaneously with
the execution of this Agreement, Sprint will execute and deliver to Z-Tel a
letter of authorization in substantially the same form as Schedule D to this
Agreement.
8.2.1. Z-TEL VERIFICATION AND RETENTION. To the extent set
forth in the SOW, Z-Tel will obtain, in compliance with applicable
regulatory requirements, authorization and verification of the
selection of a provider of Telecommunications Service from Sprint's End
Users in connection with Sprint's use of the Local Wholesale Services.
When Z-Tel performs the services for Sprint, Z-Tel will:
(a) maintain records of those authorizations and
verifications in formats that meet ILEC and federal and state
regulatory requirements, as applicable, and
(b) deliver copies of any authorization or
verification records to Sprint, any ILEC or any Regulatory
Authority upon request, as soon as reasonably feasible, but in
no event more than seventy-two (72) hours after Z-Tel receives
Sprint's request.
8.2.2. SPRINT VERIFICATION AND RETENTION. Unless otherwise
specified in the SOW, Sprint will obtain authorization and verification
of the selection of a provider of Telecommunications Service from all
End Users from whom Sprint employees or agents take orders in
connection with Sprint's use of the Local Wholesale Services. In
conjunction with performing authorization and verification, Sprint
will:
(a) maintain records of those authorizations and
verifications in formats that meet ILEC and federal and state
regulatory requirements, as applicable; and
(b) deliver copies of any authorization or
verification records to Z-Tel, any ILEC or any Regulatory
Authority upon request, as soon as reasonably feasible, but in
no event more than seventy-two (72) hours after a regulatory
request is received.
SECTION IX. - Z-TEL RESPONSIBILITIES AND WARRANTIES
9.1. Z-TEL COOPERATION. Z-Tel will work reasonably and cooperatively
with Sprint to establish and modify the Telecommunications Services to be
offered by Sprint and, as modified by Sprint from time to time, utilizing the
Local Wholesale Services, Z-Node Services and other ancillary and support
services described in this Agreement.
9.2. GOOD STANDING. Z-Tel represents and warrants that Z-Tel is and
will remain, at all times during the Term, in good standing with each applicable
ILEC and CLEC and under each applicable Interconnection Agreement. Z-Tel will
maintain Interconnection Agreements with ILECs that do not prohibit it from
performing the services that it is
52
obligated to perform under this Agreement. Z-Tel will notify Sprint in writing
within ten (10) calendar days after the change if there is a change in any
Interconnection Agreement, and promptly after Z-Tel becomes aware of the change
if there is a change in any Law, in each case giving rise to a material change
in Z-Tel's delivery of Local Wholesale Services under this Agreement.
9.3. Z-TEL COMPLIANCE WITH LAWS. Z-Tel will be responsible for
obtaining and keeping in effect in all material respects all FCC, state
regulatory commission, franchise authority and other regulatory approvals that
are necessary in connection with the performance of its obligations under this
Agreement. Z-Tel will perform its obligations under this Agreement in compliance
in all material respects with all Laws. Z-Tel will reasonably cooperate with
Sprint in obtaining and keeping in effect the regulatory approvals for which
Sprint is responsible. Notwithstanding any other provision of the Agreement,
Z-Tel will have no obligation to perform under this Agreement in any state or
jurisdiction in which Sprint has not obtained authorization as required by Law
or Regulatory Authority for providing the Telecommunications Services or other
Services contemplated by this Agreement or for the conduct of business within
the state or jurisdiction.
9.4. PRIOR CONSENT FOR BRANDING. Except as set forth in the SOW, any
use by a Party of the other Party's Marks is subject to obtaining the other
Party's prior written consent.
9.5. SPRINT END USER INTERACTION. When Z-Tel Personnel must interact
with Sprint customers to perform Z-Tel's obligations under this Agreement, Z-Tel
Personnel will identify themselves as representing Sprint. Sprint consents to
Z-Tel's use of the necessary Sprint Marks solely for the foregoing purpose.
9.6. NO CONTRAVENTION. Z-Tel represents and warrants that the execution
and delivery of this Agreement, the performance by Z-Tel of its obligations
under this Agreement and the exercise by Z-Tel of the rights created by this
Agreement do not and will not:
(a) violate Z-Tel's Certificate of Incorporation or bylaws, or
(b) constitute a breach of or a default under any agreement or
instrument to which Z-Tel is a party to or by which it or its assets
are bound, which breach or default would have a material adverse effect
on Z-Tel's ability to perform its obligations under this Agreement.
9.7. SUFFICIENCY OF Z-TEL FUNDAMENTAL TECHNOLOGY. Z-Tel represents and
warrants that the Z-Tel Fundamental Technology is sufficient to enable Sprint,
through the use of reasonably trained technicians, and when used in combination
with the other hardware, software, information, materials, products and services
listed on Schedule 9.7 of this Agreement, to establish complete operational
systems capable of generating and providing products and services substantially
the same as those that Z-Tel provides to Sprint under this Agreement.
53
9.8. NON-DISCRIMINATION. Z-Tel will provide services to Sprint under
this Agreement that are equal or better in quality and provided within the same
time intervals as Z-Tel generally provides in the comparable metropolitan market
places the services to itself, its End Users and its wholesale customers with
similar or lesser volume than Sprint.
9.9. TOLL-FREE ACCESS. If Z-Tel uses toll-free numbers in connection
with providing services under this Agreement, Z-Tel will assign the toll-free
number and select Sprint as the interexchange carrier serving the toll-free
number.
9.10. RESTRICTING SERVICE. To the extent that applicable Law permits,
Z-Tel will, within one Business Day, submit to the relevant ILEC an order to cut
off or restrict service to any Sprint End User based upon Sprint's written
instructions to do so. If the ILEC order system is unavailable on the day that
Z-Tel receives Sprint's instructions to cut off or restrict service, Z-Tel will
submit the order as soon as practicable when the ILEC order system becomes
available. Further, if the ILEC rejects a Z-Tel order dealing with cut off or
restriction of service, then Z-Tel will work with Sprint to promptly correct the
order problems and resubmit the order. Subject to these conditions and Section
5.3, after Z-Tel receives Sprint's written instructions to cut off or restrict
service to a Sprint End User, Sprint will be liable for, and Z-Tel entitled to,
only those fees and costs in connection with the Sprint End User in question
that are:
(a) incurred through the third Business Day after Z-Tel's
receipt of Sprint's written instructions; except that Sprint will also
be liable for, and Z-Tel entitled to,
(i) fees and costs through the first Business Day
after Z-Tel resubmits an order to cut off or restrict service
that the ILEC rejected in processing, and
(ii) fees and costs through the second Business Day
after Z-Tel resubmits an order to cut off or restrict service
that was delayed because the ILEC order system was
unavailable, or
(b) incurred after that point for services that applicable Law
does not permit to be cut off or restricted.
In case of disagreement between the Parties as to whether applicable
Law permits the full implementation of any particular Sprint instruction to cut
off or restrict service that is being provided through Z-Tel's ***, Z-Tel will,
upon receiving a second written instruction from Sprint, fully implement the cut
off or restriction as Sprint instructs if Sprint executes, in a form that is
reasonably acceptable to Z-Tel, a written agreement to indemnify Z-Tel for any
damages, penalties, fine or expenses that Z-Tel may incur from the
implementation.
Z-Tel will, immediately upon Sprint's written request, implement any
cut off or restriction of service if the service is being provided through
Sprint's ***.
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9.11. TARIFFS. If Z-Tel is required to file any tariff in connection
with wholesale services governed by this Agreement, then it will take all steps
necessary to ensure that such tariff is consistent with this Agreement and
preserves for Sprint the full benefit of the rights provided by this AGREEMENT.
Z-Tel will provide Sprint with prior written notice of the filing of any
material tariff modification filed under this Section 9.11. Four (4) times
annually upon Sprint's request, Z-Tel will provide Sprint with copies of all
wholesale tariffs. However, in the event of a conflict between this Agreement
and any Z-Tel tariff, to the extent that applicable Law permits, the Agreement
will prevail. Under no circumstances will Z-Tel voluntarily file any tariff that
raises any prices under this Agreement without Sprint's consent.
9.12. MATERIAL THREAT. As soon as possible, but in any case within
fifteen (15) Business Days after Z-Tel learns in writing of the commencement of
any suit or administrative, arbitration or other proceeding against Z-Tel, any
of its Affiliates or their respective businesses, assets or properties, and in
each case only to the extent an adverse judgment in the suit or proceeding would
materially impact Z-Tel's ability to fulfill its obligations under this
Agreement, Z-Tel will provide to Sprint a reasonably detailed description of the
threat summarizing its potential impacts both operationally and financially.
9.13. NETWORK PROTECTION. Z-Tel may, without incurring any liability,
cancel or suspend service in whole or in part, immediately upon contemporaneous
verbal notice and subsequent prompt written notice to Sprint, as set forth in
the SOW, if Z-Tel reasonably determines that this action is necessary to protect
its personnel, agents, facilities, certifications or services or to prevent or
to protect it, Sprint and their respective Affiliates against fraud. If the
activity involves a suspected criminal offense, Z-Tel may notify law enforcement
authorities.
9.14. RESPONDING TO SUBPOENAS. In response to subpoenas, court orders
and administrative agency orders concerning the production of information,
including those calling for call detail records, when the targeted telephone
numbers belong to Sprint End Users using Sprint's OCN, Z-Tel will produce
information as the Law requires. Sprint and Z-Tel will cooperate in complying
with these subpoenas, court orders and administrative agency orders.
9.15. INSURANCE. Z-Tel will obtain and keep in force during the Term
not less than the following insurance:
(a) Commercial General Liability insurance,
including:
(i) bodily injury,
(ii) property damage,
(iii) personal and advertising injury
liability, and
(iv) contractual liability covering
operations, independent contractor and
products/completed operations hazards,
55
with limits of not less than $1,000,000 combined single limit
per occurrence and $2,000,000 annual aggregated, naming
Sprint, its Affiliates and their respective officers,
directors and employees as additional insureds;
(b) Workers' Compensation insurance, as provided for
in any jurisdiction in which Z-Tel personnel who perform
Services under this Agreement work, with an Employer's
Liability limit of not less that $500,000 for bodily injury by
accident or disease;
(c) Business Auto insurance covering:
(i) owned,
(ii) non-owned, and
(iii) hired autos,
with limits of not less than $1,000,000 combined single limit
per accident for bodily injury and property damage liability,
naming Sprint, its Affiliates and their respective officers,
directors and employees as additional insureds;
(d) Umbrella/Excess Liability with limits of not less
than $3,000,000 combined single limit in excess of the
above-references Commercial General Liability, Employer's
Liability and Business Auto Liability, naming Sprint, its
Affiliates and their respective officers, directors and
employees as additional insureds; and
(e) Professional Errors and Omissions Liability
Coverage with limits of not less than $1,000,000 per
occurrence and $3,000,000 annual aggregate, naming Sprint, its
Affiliates and their respective officers, directors and
employees as additional insureds.
9.15.1. CERTIFICATES OF INSURANCE.
(a) All required insurance policies will be issued by
insurers who are:
(i) financially reputable, and
(ii) licensed to do business in all
jurisdictions where Services are provided under this
Agreement.
(b) Z-Tel will provide Sprint with certificates of
insurance that:
(i) are industry standard in form and
content,
56
(ii) evidence that all the required
coverages are in force, and
(iii) have been endorsed to provide that no
policy will be canceled or materially altered without
first giving Sprint thirty (30) calendar days' prior
written notice.
9.15.2. NO LIMITATION. Nothing contained in this Section 9.15
limits Z-Tel's liability to Sprint to the limits of insurance certified
or carried.
9.16. FEE INCREASES. Z-Tel represents and warrants that no provisions in any
Z-Tel contract with Third Party Vendors contain any clause that will result in
an increase in the fees charged to Sprint upon the reduction of the volume of
services purchased by Z-Tel.
9.17. CHANGE OF CONTROL. Z-Tel will provide Super Notice to Sprint of any
Change of Control within five (5) Business Days after Z-Tel becomes aware of the
Change of Control occurrence.
SECTION X. - SPRINT RESPONSIBILITIES AND WARRANTIES
10.1. SPRINT COMPLIANCE WITH LAWS. Sprint will obtain and keep in
effect in all material respects all approvals and authorizations from the FCC,
state regulatory commissions, franchise authorities and other regulatory
approvals necessary in connection with its use of Local Wholesale Services and
other Services as contemplated in this Agreement. Sprint will reasonably
cooperate with Z-Tel in obtaining and keeping in effect in, all material
respects, the regulatory approvals for which Z-Tel is responsible.
10.1.1. AUTHORITY IN PLACE. Sprint will not place orders for
any Services under this Agreement (except for mutually agreeable
technical trial orders and orders with due dates after any expected
regulatory authorization or approval is due) unless all applicable
regulatory authorizations and approvals are in place.
10.1.2. DEMONSTRATED PROOF OF AUTHORITY. Sprint will provide
proof of any applicable regulatory authorization upon Z-Tel's written
request.
10.2. SUBSCRIBER FEES. Sprint will have sole and unilateral control of
the prices charged to Sprint End Users subscriber services.
10.3. NO CONTRAVENTION. Sprint represents and warrants that its
execution and delivery of this Agreement, its performance of its obligations
under this Agreement, and its exercise of its rights under this Agreement do not
and will not:
(a) violate Sprint's Certificate of Incorporation or
bylaws, or
(b) constitute a breach of or a default under any
agreement or instrument to which Sprint is a party to or by
which it or its assets are bound, which breach or default
would have a material adverse effect on
57
Sprint's ability to perform its obligations under this
Agreement.
10.4. HAZARDS, INTERFERENCE, ETC. Upon notice from Z-Tel, Sprint
promptly will eliminate any hazard, service obstruction or interference that any
Sprint hardware, software, use, content or action is causing or is likely to
cause to Z-Tel's technical operations to the extent that (i) Sprint's use of the
hardware, software or content, (ii) Sprint's action, or (iii) the hazard,
service obstruction or interference relates to or arises under this Agreement.
If Sprint requests that Z-Tel assist it in removing the hazard, service
obstruction or interference, Z-Tel may, but is not required to, assist in the
removal. Any such assistance Z-Tel may provide will be billed to and paid by
Sprint as a direct cost.
10.5. SECURITY. Sprint or Sprint's End Users will be solely responsible
for selection of security, and use of any code, password or other means
necessary to restrict access to their computers, servers or other equipment
through the Services.
10.6. SUBPOENAS. At Sprint's request and direction, Sprint authorizes
Z-Tel to comply with all subpoenas, court orders and administrative agency
orders to produce information, including those calling for detailed call
records, when the targeted telephone numbers belong to Sprint's End Users using
Sprint's OCN or Z-Tel's OCN. Sprint will cooperate with Z-Tel in complying with
these subpoenas, court orders and administrative agency orders.
10.7. SPRINT COMPLIANCE WITH LAWS. In its performance of this Agreement
and its use of the Services, Sprint will comply in all material respects with
all applicable Law.
10.8. ACCEPTABLE USE. When using the Services, Sprint will comply in
all material respects with Z-Tel's Acceptable Use Policy ("AUP"), a copy of
which is attached to this Agreement as Schedule 10.8. Notwithstanding the
foregoing provisions of this Section 10.8, to the extent that any term in
Schedule 10.8 is inconsistent with the terms of this Agreement (excluding
Schedule 10.8), the latter will prevail. The Parties do not intend that any
provision of Schedule 10.8 limit any right of Sprint under this Agreement.
10.9. LONG DISTANCE CHOICE. Sprint will be responsible for providing
Z-Tel with the Sprint End User's choice of pre-subscribed interexchange carrier.
10.9.1. PIC SELECTION. Unless Sprint otherwise directs on an
End User order, as part of the ILEC order, Z-Tel will PIC Sprint for
all inter and intra LATA Services.
10.9.2. CARRIER ARRANGEMENTS. When Sprint acts as its own Long
Distance Carrier or selects a carrier other than Z-Tel or Z-Tel's
designated third-party provider, Sprint will be fully responsible to
Sprint's End Users for the refusal of the long distance provider to
provide a Sprint End User's long distance services.
10.9.3. PROOF OF AUTHORIZATION. Sprint is responsible for
obtaining valid
58
authorization and verification to establish or change long-distance
providers and will provide copies of this authorization and
verification to Z-Tel upon Z-Tel's written request.
10.9.4. RESPONSIBILITY FOR ANI USAGE. Except as otherwise
provided in Section 10.11 regarding fraud, Sprint will be financially
responsible for long distance usage generated under this Agreement by
each End User ANI that Z-Tel activates on Sprint's behalf.
10.9.5. MANUAL PROCESSING. Z-Tel will manually process the
pre-subscribed interexchange carrier when a Sprint End User purchases
only local Telephone Exchange Service.
10.10. CONNECTIVITY TO Z-NODE. Unless otherwise stated in the SOW,
Sprint will be responsible for establishing, maintaining and paying for the
physical facilities utilized to provide Sprint End User access to the Z-Node.
10.11. FRAUD. Z-Tel and Sprint will work cooperatively and reasonably
with each other to develop systems for detecting, preventing and limiting fraud.
(a) Subject to Section 5.3, Sprint will be
responsible for paying Z-Tel for any costs, charges or fees
that Z-Tel incurs or are otherwise due to Z-Tel under this
Agreement that arise from consumer fraud involving Sprint End
Users (or Persons reasonably believed by Z-Tel to be Sprint
End Users because of order entry errors by Sprint, Sprint's
Affiliates or their respective contractors), except as set
forth in subparagraph (b) of this Section 10.11, and for
Sprint's internal fraud.
(b) *************************************************
**************************************************************
Annually, Z-Tel will be responsible for other fraud associated
with its ordinary negligence in the annual aggregate up to the
greater of:
(i) ******************
(ii) Two and one half percent (2.5%) of the
aggregate Z-Tel Service Fees that Sprint paid during
the immediately preceding twelve (12) month period.
(c) Sprint will limit its right to recover from Z-Tel
to the amount Z-Tel is able to recover from third parties,
concerning:
(i) fraudulent usage by a Sprint End User;
(ii) excessive billing of ILEC Fees
resulting in higher Local Wholesale Services to
Sprint; or
(iii) excessive billing of non-ILEC fees
resulting in higher
59
Local Wholesale Services fees or Ancillary Service
fees to Sprint.
(d) If Sprint has taken full financial responsibility
for fraud under subsection (a) of this Section 10.11, Z-Tel
will assign to Sprint, within ten (10) calendar days after
Sprint's request, any claim against the Sprint End User, the
ILEC or the third party that arises from that fraud, but in
each case only to the extent it applies to the Sprint End
User.
(e) Notwithstanding the foregoing, this Section 10.11
does not cover Slamming/Cramming, which is addressed in
Section 4.8.
10.12. FORECASTS. No later than the 20th calendar day of each month,
Sprint will provide Z-Tel with forecasts regarding the expected types, volumes
and locations of the Services that Sprint's End Users will purchase for each
month in the upcoming six (6) months during the Term, together with related
headcount forecasts. The forecast provided on or before the 20th calendar day of
any particular month will be a binding forecast, as further described in this
Section 10.12, for the second month during which the forecast is provided (this
forecast, for the second month, being the "COMMITTED FORECAST"). For example, a
forecast that Sprint provides on or before the 20th day of March will be binding
for the month of May. Sprint has no minimum purchase obligation; therefore, a
forecast may project zero purchase volume. Sprint will have no liability to
Z-Tel for the accuracy or inaccuracy of the forecasts except for headcount under
a Committed Forecast that has been accepted under Section 4.6.
10.13. COMPLIANCE WITH REGULATORY RULES. Sprint represents and warrants
to Z-Tel that it has and will continue to comply in all material respects with
all applicable rules and regulations relating to End User listing information,
including CPNI and other related rules and regulations. Sprint further
represents that it will comply in all material respects with applicable Law
governing billing and disconnecting an End User's Telecommunication Service
(including any applicable Law requiring notice to End Users of disconnection for
non-payment of service fees). Upon Z-Tel's written request, Sprint will provide
documentation, within five (5) calendar days or as necessary to meet regulatory
demands, related to specific Sprint End User accounts proving compliance in all
material respects with these disconnect rules and regulations that may exist in
a given regulatory jurisdiction.
10.14. FUTURE SERVICES. During the Term, Sprint will allow Z-Tel to bid
on future services and related Telecommunications Services that Sprint desires.
Sprint is not obligated to grant this opportunity to Z-Tel for the furnishing of
services clearly outside Z-Tel's areas of expertise.
10.15. USE OF SERVICE.
(a) RETAIL SERVICES. Sprint represents and warrants that it
will use Z-Tel-provided services solely to compete in and provide
retail services (or wholesale
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services to its Contractual Affiliates for use in selling
Sprint-branded services at retail).
(b) DATA ENTRY. Sprint will not knowingly enter into any Z-Tel
or third party system any data that is profane, threatening, indecent,
libelous, defamatory or unlawful, or that violates or infringes any
trademark, copyright or similar rights of others. Sprint will not
knowingly enter any data that is false or misleading. Z-Tel will
provide Sprint with reasonable notice and opportunity to cure any
misuse unless the misuse is deemed by Z-Tel to be fraudulent or likely
to result in irreparable harm to Z-Tel.
(c) NETWORK MISUSE. Sprint and its Affiliates and their
respective End Users may not, without authorization:
(i) conduct any intrusion into any part of Z-Tel's
system,
(ii) tamper with non-Sprint End User accounts
resident on Z-Tel's system,
(iii) use any of Z-Tel's machines, files, accounts or
networks to access any non-Sprint system,
(iv) utilize any part of Z-Tel's system to seek
intentionally information on, obtain copies of, or modify
files, passwords or other data belonging to non-Sprint End
Users,
(v) scan Z-Tel's network (or other networks through
Z-Tel's system) with intent to breach security, or
(vi) use Z-Tel access to OSS systems or ILEC systems
for purposes not contemplated by this Agreement.
Sprint has no obligation under this Section 10.15 concerning any
prohibited action described in this Section 10.15 by any Person other than
Sprint and Sprint's Owned Affiliates unless the Person accessed Z-Tel's systems
through a Sprint account under this Agreement.
10.16. INSURANCE.
10.16.1. COVERAGE. Sprint will obtain and keep in force during
the Term not less than the following insurance:
(a) Commercial General Liability insurance, including
bodily injury, property damage, personal and advertising
injury liability, and contractual liability covering
operations, independent contractor and products/completed
operations hazards, with limits of not less than $1,000,000
combined single limit per occurrence and $2,000,000 annual
aggregated,
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(b) Workers' Compensation insurance, as provided for
in any jurisdiction in which Sprint personnel who perform
Services under this Agreement work, with an employer's
liability limit of not less than $500,000 for bodily injury by
accident or disease,
(c) Business Auto insurance covering owned, non-owned
and hired autos, with limits of not less than $1,000,000
combined single limit per accident for bodily injury and
property damage liability, and
(d) Umbrella/Excess Liability insurance with limits
of not less than $3,000,000 combined single limit in excess of
the above-referenced Commercial General Liability, Employer's
Liability and Business Auto Liability.
10.16.2. CERTIFICATES OF INSURANCE.
(a) All required insurance polices will be issued by
insurers who are:
(i) financially reputable, and
(ii) licensed to do business in all
jurisdictions where Services are provided under this
Agreement.
(b) Sprint will provide certificates of insurance
that:
(i) are industry standard in form and
content,
(ii) evidence that all the required
coverages are in force, and
(iii) have been endorsed to provide that no
policy will be canceled or materially altered without
first giving Z-Tel at least thirty (30) calendar
days' prior written notice.
10.16.3. NO LIMITATION. Nothing contained in this Section
10.16 limits Sprint's liability to Z-Tel to the limits of insurance
certified or carried.
10.16.4. SELF INSURANCE. At its option, Sprint may self insure
all or part of the insurance requirements listed in this Section 10.16.
If Sprint elects to self insure, Sprint will provide written notice to
Z-Tel outlining its self insurance coverages. Notwithstanding its
election to self insure, Sprint will remain responsible to Z-Tel for
the occurrences listed in this Section 10.16 in the same manner as if
Sprint had elected to obtain this insurance coverage from a third party
insurer.
10.17. MATERIAL THREAT. Sprint will provide notice to Z-Tel as soon as
possible, but in any case within fifteen (15) Business Days after Sprint learns
in writing of the
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commencement of any suit or administrative, arbitration or other proceeding
against Sprint, any of its Owned Affiliates or their respective businesses,
assets or properties, in each case only to the extent an adverse judgment in the
suit or proceeding would materially impact Sprint's ability to fulfill its
obligations under this Agreement. Sprint will provide a reasonably detailed
description of the threat summarizing its potential impacts both operationally
and financially.
10.18. REVERSE ENGINEERING. Sprint will not copy (except for making
back-up copies and other uses expressly permitted in furtherance of this
Agreement), de-compile or reverse engineer Z-Tel Technology or create derivative
works from the Z-Tel Technology. Sprint acknowledges that a violation of this
Section 10.18 will cause immediate and irreparable harm to Z-Tel and that Z-Tel
would not have an adequate remedy at law for the violation and, therefore, in
the event of any violation or threatened violation, Z-Tel may seek an injunction
restraining the violation or further violation in this situation.
10.19. INTERCONNECTION AGREEMENTS. Sprint acknowledges that
Interconnection Agreements between Z-Tel and local exchange carriers are
available for review and copying at the applicable state public utility or
public service commissions.
10.20. Z-TEL VENDORS. Sprint will not enter into any agreement,
contract, arrangement or understanding with ********************* for purposes
of avoiding any Service Fees under this Agreement, or substituting any Service
contemplated to be provided by Z-Tel under this Agreement during the Term,
except solely in connection with the Back-Up Plan, Back-Up System or Technology
Escrow under Sections XII and XIV. Sprint acknowledges that violation or
threatened violation of this Section 10.20 will cause immediate and irreparable
harm to Z-Tel and, in this event, an injunction restraining the violation may be
entered.
SECTION XI. - SERVICE LEVEL AND REMEDY
11.1. SLAS. Z-Tel will provide the Services in accordance with the
applicable service level agreement ("SLA") attached to this Agreement as
Schedule B.
11.1.1. PERFORMANCE LEVELS. The SLAs will detail service
standards and available remedies when Z-Tel's Services do not meet
specified standards. Z-Tel's service levels will meet or exceed the
standard of service that the ILECs provide or that Z-Tel provides in
general release to its own retail and wholesale customers.
11.1.2. ACTIONS BY ILECS AND REGULATORY AUTHORITIES. Neither
Party will be liable for any delay or failure to the extent it results
from the requirements of Law or the acts, delays or failures to act of
any Regulatory Authority or any ILEC with which Z-Tel has an
Interconnection Agreement.
11.2. FORCE MAJEURE APPLICATION. If a Force Majeure Event interferes
with a Party's performance of its obligations under this Agreement, both Parties
are excused from their respective performance on a day-to-day basis to the
extent of the interference, but only if:
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(a) the Force Majeure Event is beyond the reasonable
control of the Party asserting its rights under this Section
11.2,
(b) the affected Party notifies the other Party as soon
as practicable concerning the nature and expected duration of
the asserted Force Majeure Event, and
(c) the affected Party uses all commercially reasonable
efforts to avoid or remove the causes of nonperformance and
resumes performance promptly after the causes have been
removed.
SECTION XII. - DISASTER RECOVERY, BACK-UP SYSTEM
12.1. ON-SITE DISASTER RECOVERY PLAN. Attached as Schedule 12.1 is a
Disaster Recovery Plan. During the Term, Z-Tel will materially comply with the
Disaster Recovery Plan.
12.2. BACK-UP PLAN. Z-Tel and Sprint will develop a written
implementation plan (the "BACK-UP PLAN") for a Back-Up System that will provide
in an emergency situation or upon a Z-Tel Triggering Event, when activated, an
alternative mechanism for providing access to OSS Services necessary to support
Sprint End Users' utilization of Local Wholesale Services (the "BACK-UP
SYSTEM"). The Back-Up Plan will describe the day-to-day maintenance and
operation of the Back-Up System.
12.2.1. PLAN CONTENTS. The Back-Up Plan will contain:
(a) key business objectives and associated
performance requirements,
(b) key assumptions,
(c) a high-level system strategic architecture,
(d) an itemization of the architecture elements to be
replicated,
(e) a bar chart showing an approximate timeframe for
assembling the strategic architecture,
(f) a detailed plan to cover the implementation
activity,
(g) a listing of equipment necessary to implement the
Back-Up Plan, along with projected ordering dates, prices (if
applicable), anticipated delivery dates and required
installation intervals,
64
(h) engineering drawings and specifications,
(i) a listing of connectivity requirements,
(j) an itemization regarding Z-Tel cost recovery,
(k) procedures and timetables for testing of the
Back-Up System's ability to takeover primary OSS functions
from Z-Tel's Tampa system, and
(l) procedures and expectations concerning amendments
and updates of the Back-Up Plan.
12.2.2. PLAN DEVELOPMENT. Z-Tel will deliver a preliminary
Back-Up Plan to Sprint on or before February 28, 2003. Z-Tel and Sprint
will negotiate in good faith to agree on a finalized Back-Up Plan on or
before March 31, 2003. When the Parties have agreed in writing upon the
Back-Up Plan, it will be incorporated into this Agreement by this
reference.
12.2.3. JOINT DISASTER PLANNING TEAM. The Parties will
establish a joint planning team, which will consist of at least one,
but no more than three, representatives from each Party (as designated
by each Party), for the purpose of developing and supporting
implementation of the Back-Up Plan (the "JOINT DISASTER PLANNING
Team"). The Parties' respective representatives on the Joint Disaster
Planning Team will be at a level that can make commitments for their
respective Party concerning the development of the Back-Up Plan. They
also will have appropriate qualifications and skills within the subject
matter. The Joint Disaster Planning Team will meet as appropriate or
necessary to meet the completion deadlines set forth above in this
Section 12.2.
12.3. MATERIAL BREACH. The Parties agree that time is of the essence in
developing the Back-Up Plan. Z-Tel's failure to meet the schedule for
development of the Back-Up Plan as set forth in Section 12.2 above will
constitute a material breach of this Agreement unless the failure was caused by
any delay attributable to Sprint.
12.4. IMPLEMENTATION OF BACK-UP PLAN; BACK-UP SYSTEM. At any time or
times during the Term, Sprint may build a Back-Up System that replicates the OSS
systems and OSS functions included in the Z-Tel Fundamental Technology (and
related Z-Tel Technology and third party interfaces) in accordance with the
Back-Up Plan. The Back-Up System will not be in active operation unless and
until (i) Z-Tel requests Sprint to make the Back-Up System operational in an
emergency situation or (ii) Sprint elects to make the Back-Up System operational
in conjunction with the Technology License following a Z-Tel Triggering Event.
12.4.1. TIMING OF IMPLEMENTATION. Sprint may deploy the
Back-Up System as it pertains to OSS systems and OSS functions (and
related third party
65
interfaces) at any time or times during the Term, other than during a
Transition period following the termination of this Agreement (and
whether in one or more phases), in its sole discretion. In this case,
Sprint will determine the timetable and manner in which the deployment
of the Back-Up System will occur, based upon the implementation plan
contained in the Back-Up Plan, except that:
(a) Sprint may delay or otherwise extend the
timetable for the deployment of the Back-Up System that is set
forth in the Back-Up Plan, in its sole discretion, but upon
reasonable notice to Z-Tel, and
(b) Sprint may accelerate the timetable for the
deployment of the Back-Up System that is set forth in the
Back-Up Plan with the written consent of Z-Tel which may not
be unreasonably withheld.
12.4.2. LOCATION. Sprint may construct the Back-Up System at
one location of its choosing, utilizing equipment, connectivity and
labor in compliance with the Back-Up Plan.
12.4.3. Z-TEL'S ASSISTANCE AND COOPERATION. Sprint may request
reasonable assistance from Z-Tel in implementing the Back-Up Plan
(including assistance concerning third party vendor and data
interfaces) and constructing the Back-Up System. Z-Tel will render
reasonable assistance as Sprint requests on a time and materials basis
(the details of which the Parties will agree upon in the Back-Up Plan),
but following Sprint's first request for implementation assistance,
Z-Tel may delay the commencement of its assistance for up to thirty
(30) calendar days with reasonable cause. Z-Tel must provide written
notice of its delay request, together with an explanation of the cause,
to Sprint via Super Notice.
12.4.4. BACK-UP SYSTEM OPERATIONS. Except as set forth in a
mutually agreed upon SOW concerning Z-Tel's assistance with
installation and maintenance:
(a) Sprint will be solely responsible for the
installation and maintenance of the Back-Up System on an
ongoing basis,
(b) Sprint will be solely responsible for the
operation of the Back-Up System upon a Z-Tel Triggering Event
and the Technology License becoming effective, and
(c) Sprint and Z-Tel will share operational
responsibility as directed in the Back-Up Plan in association
with utilization of the Back-Up System upon the occurrence of
a Z-Tel request to activate the Back-Up System in aid response
to an emergency situation.
12.4.5. OPERATING METHODS AND PROCEDURES.
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(a) Upon Z-Tel's request for the Back-Up System to
become operational in an emergency situation, to the extent
technologically possible, operation of the Back-Up System will
be in material compliance with standard Z-Tel methods and
procedures for the duration of the emergency.
(b) Upon activation of the Back-Up System by Sprint
upon the occurrence of a Triggering Event and the Technology
License becoming effective, to the extent technologically
possible and consistent with Sprint's providing and
maintaining service to Sprint End Users, Sprint will operate
the Back-Up System in material compliance with standard Z-Tel
methods and procedures for a period of forty-five (45)
calendar days.
(c) Sprint's obligations under the foregoing
subparagraphs (a) and (b) are subject to the following
conditions precedent:
(i) that Z-Tel will furnish to Sprint a copy
of Z-Tel's standard methods and procedures upon
declaring an emergency threat or situation (whichever
is earlier) that may require activation of the
Back-Up System, and
(ii) that Z-Tel's operation of its systems
is in material compliance with these standard methods
and procedures both (A) immediately before the
occurrence of the emergency or the Triggering Event
and (B) during the periods designated in this Section
12.4.5.
(d) Sprint will return to Z-Tel all copies it
possesses of the methods and procedures it receives from Z-Tel
under Section 12.4.5(c)(i) upon the return to standard
operations after the cessation of the emergency.
(e) During the periods designated in this Section
12.4.5, Z-Tel and Sprint will work together to address any
Sprint concerns or problems that Sprint raises with Z-Tel
concerning Z-Tel's standard methods and procedures in
association with operating and maintaining the Back-Up System.
(f) Notwithstanding any provision of this Section
12.4, Sprint will have no obligation for the operation of the
Back-Up System in material compliance with Z-Tel's standard
methods and procedures during the ********* calendar day
period following Sprint's receipt of them from Z-Tel or the
Technology Escrow Agent. In the event of an emergency, during
this ********************** period Sprint will operate the
Back-Up System as Z-Tel directs, and Z-Tel will be solely
responsible for Sprint's operation of the Back-Up System in
material compliance with Z-Tel's directions.
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12.4.6. TITLE. Sprint will retain all title to the Back-Up
System equipment. Z-Tel will not take any action that would affect
Sprint's title to the Back-Up System equipment.
12.5. TESTING OF BACK-UP SYSTEM. Upon completing the Back-Up Plan
implementation, the Parties will cooperate in the initial testing of the Back-Up
System in accordance with the Back-Up Plan. Furthermore, the Parties will
cooperate in any subsequent testing of the Back-Up System under a schedule to be
adopted in the Back-Up Plan which will allow Sprint to request testing and
require Z-Tel to participate in testing (a) no more frequently than once every
six (6) months if Sprint has ************************************** this
Agreement during the month preceding a Sprint request, and (b) at least once a
year if Sprint has more than **************************************************
********** under this Agreement during the month preceding a Sprint request.
Notwithstanding the above the Parties may agree to conduct more frequent
testing. Testing will not involve live End Users
12.5.1. Z-TEL BACK-UP MATERIALS. In conjunction with the
testing of the Back-Up System, Z-Tel make available for use in the
testing the following, as they pertain to the OSS systems and OSS
functionality and as more specifically described in the Back-Up Plan
(the "Z-TEL BACK-UP MATERIALS"):
(a) necessary elements of the existing Z-Tel
Fundamental Technology,
(b) the Z-Tel Fundamental Technology that Z-Tel
subsequently utilizes on Sprint's behalf during the Term, and
(c) the operating systems and interfaces (as
designated within the existing Z-Tel Technology and to which
Z-Tel has the necessary license rights) necessary to operate
the Back-Up System.
12.5.2. RESTRICTIONS ON SPRINT'S ACCESS AND USE OF Z-TEL
BACK-UP MATERIALS. Except for the limited purpose of testing the
Back-Up System as described in this Section 12.5 with Z-Tel's
assistance or as provided under the Technology License (upon the
Technology License becoming effective), Sprint has no rights in or to
the Z-Tel Back-Up Materials and will not, and will not permit its
officers, Affiliates, employees or agents to:
(a) use the Back-Up Materials,
(b) use any source code for the Z-Tel Technology,
(c) modify, update, enhance or make derivative works
of the Z-Tel Technology, or
(d) translate, reverse engineer, decompile, recompile
or disassemble the object code version of any Z-Tel
Technology.
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12.5.3. Z-TEL'S ASSISTANCE. Z-Tel will assist Sprint with the
development and testing of the Back-Up system as provided in this
Section 12.5 and in the Back-Up Plan (including assistance concerning
third party vendor and ILEC cooperation and interfaces, and assistance
resolving any operational problems discovered in the testing) on a time
and materials basis (the details of which the Parties will agree upon
in the Back-Up Plan).
SECTION XIII. - THIRD PARTY AGREEMENTS
13.1. THIRD-PARTY AGREEMENTS.
(a) When the Services that Z-Tel is to render under this
Agreement require the use of third party services, software or
facilities (including those of ILECs), this Agreement and Z-Tel's
furnishing of Services under this Agreement will be subject to those
conditions, restrictions, rules, policies, procedures, limitations and
rights imposed or granted under the third party agreements or licenses,
including Interconnection Agreements, that are described in the
attached Schedule 13.1.
(b) Sprint will comply with the conditions, restrictions,
rules, policies, procedures, limitations and rights contained in
Schedule 13.1 of this Agreement with respect to third-party vendors
providing or licensing products or services to Z-Tel or Sprint in
connection with Z-Tel's furnishing of Services to Sprint. Z-Tel may
reasonably amend or supplement Schedule 13.1 from time to time during
the Term upon at least thirty (30) calendar days' written notice to
Sprint. Any new condition, restriction, rule, policy, procedure,
limitation or right that Z-Tel adds to Schedule 13.1 by amendment or
supplement under this Section 13.1(b) will be binding on Sprint upon
and after Sprint's receipt of Z-Tel's notice under this Section
13.1(b).
(c) Except when the Parties have otherwise agreed in writing,
Z-Tel will be responsible for securing all necessary rights, licenses
and permissions for Sprint concerning Sprint's use during the Term of
the third party services, software and facilities set forth in Schedule
13.1, including Sprint's use under the license granted in Section 16.3
of this Agreement.
SECTION XIV. -- TECHNOLOGY DELIVERY, TECHNOLOGY LICENSE AND ESCROW.
14.1. TECHNOLOGY LICENSE GRANT. Subject to Section 14.8, Z-Tel grants
to Sprint, effective upon the happening of a Z-Tel Triggering Event a worldwide,
perpetual, irrevocable, non-cancelable and non-terminable, non-exclusive,
non-assignable and non-sublicensable (except with respect to Sprint's Owned
Affiliates) right and license (the "TECHNOLOGY LICENSE"):
(a) to use:
(i) the Z-Tel Fundamental Technology,
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(ii) all pre-existing Z-Tel intellectual or
proprietary property or rights incorporated into the works for
hire belonging to Sprint that are described in Section 1.12.5,
and
(iii) any Z-Tel modifications of third party software
to the extent Z-Tel has a right to license the modified third
party software, and
(b) to exercise all rights in connection therewith (other than
the right to alienate the same or to take any action to put it in the
public domain), including the rights:
(i) to display, perform, execute, modify, develop and
otherwise create derivative works of the licensed technology,
(ii) to make copies of the licensed technology,
whether or not modified,
(iii) to use the licensed technology (including in
combination with any other information, data, materials or
intellectual property), and
(iv) to permit Sprint's independent contractors and
Sprint's Owned Affiliates to exercise any or all of the
foregoing rights solely for the benefit of Sprint and its
Affiliates and the Sprint End Users,
all solely to the extent reasonably necessary or useful to enable Sprint and its
Owned Affiliates to deploy, generate, test, develop, use for training, maintain
and support, market, sell and otherwise use and provide services comparable to
the Services under this Agreement, including as Sprint or any of its Owned
Affiliates may subsequently modify or develop them under this license.
The Technology License includes Z-Tel Technology that Z-Tel does not
own only to the extent that it is, or will be, capable of being sublicensed by
Z-Tel to Sprint, and is subject to any license agreements between Z-Tel and the
licensors of this Z-Tel Technology.
14.2. TRIGGERING EVENT.
14.2.1. EXERCISE OF OPTION. If a Z-Tel Triggering Event
occurs, then:
(a) the Z-Tel Fundamental Technology will be subject
to the Technology License set forth in Section 14.1, and
(b) Sprint may obtain the release from escrow of the
source code for the Z-Tel Fundamental Technology and the other
Technology Escrow Materials in accordance with the Technology
Escrow Agreement with contemporaneous written Super Notice to
Z-Tel, and
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(c) upon Sprint's request, Z-Tel will immediately:
(i) deliver to Sprint all of the
then-existing Z-Tel Fundamental Technology to the
extent that Z-Tel owns it or is capable of
sublicensing it under any applicable agreements
between Z-Tel and its licensors, and
(ii) take all actions that are commercially
reasonable to facilitate Sprint's procurement and use
of any Z-Tel Fundamental Technology that Z-Tel does
not deliver under Section 14.2.1(c)(i) because Z-Tel
does not own or is prohibited from sublicensing the
Z-Tel Fundamental Technology.
14.2.2. ROYALTY PAYMENT. To the extent Sprint is not otherwise
paying Service Fees under this Agreement for any individual Sprint ANI,
then:
(a) If Sprint exercises its option under Section
14.2.1 because of a Liquidation Event, or if Z-Tel
subsequently has a Liquidation Event after a Z-Tel Triggering
Event, then Sprint will have no royalty obligation to Z-Tel
for the Technology License at either time.
(b) If Sprint exercises its option under Section
14.2.1 because of a Z-Tel Triggering Event that is not a
Liquidation Event, then Sprint will pay to Z-Tel a royalty for
its use of the Technology License equal to ********* ***** per
month per line for adjunct to basic and enhanced services
provided to Sprint End Users using the Technology License.
Sprint will pay the royalty payment due for any month to Z-Tel
or Z-Tel's assignee by the end of the following month.
(c) For any month in which Sprint pays Z-Tel Service
Fees under this Agreement for any particular line, Z-Tel will
credit against those fees all applicable royalty payments that
Sprint pays under this Section 14.2.2 for that month for that
particular line.
14.3. TECHNOLOGY ESCROW. Contemporaneously with the execution of this
Agreement, the Parties will enter into a technology escrow agreement (the
"TECHNOLOGY ESCROW AGREEMENT") in substantially the form of the attached Exhibit
B with DSI Technology Escrow Services, Inc. (the "TECHNOLOGY ESCROW AGENT") to
secure Sprint's rights under this Section 14. This Technology Escrow will be
established and maintained at Sprint's expense for Sprint's sole benefit. If the
Technology Escrow Agreement terminates or otherwise expires for any reason
during the Term, Z-Tel will immediately enter into a new escrow arrangement with
the Technology Escrow Agent (or another independent escrow agent reasonably
acceptable to Sprint to serve as Technology Escrow Agent) substantially in the
form of Exhibit C and in accordance with this Section 14.3.
14.4. TECHNOLOGY ESCROW MATERIALS.
14.4.1. DEPOSIT. Within forty-five (45) calendar days after
the Effective
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Date, Z-Tel will deposit into escrow with the Technology Escrow Agent,
as provided for under the Technology Escrow Agreement, copies of all of
the then existing Z-Tel Fundamental Technology, including all source
code and:
(a) related documentation and materials (e.g.,
annotations, flow charts, schematics, statements of principles
of operations, operational methods and procedures, software
summaries, software design, program logic, program listings,
functional specifications, logical models and architecture
standards describing the data flows, data structures and
control logic):
(i) for the Z-Tel Fundamental Technology,
and
(ii) for all modifications and enhancements
that Z-Tel makes to third party software included in
the Z-Tel Technology (to the extent that Z-Tel has a
right to license them to Sprint),
(b) software development tools that Z-Tel (or any of
its Affiliates) uses to provide any Services under this
Agreement, and
(c) training materials related to the use of the
Z-Tel Fundamental Technology
(collectively, together with the Z-Tel Fundamental Technology, the
"TECHNOLOGY ESCROW MATERIALS").
Z-Tel acknowledges that the Z-Tel Technology contains embedded
third party software. Z-Tel will assist Sprint in determining the
identity of all third parties who have granted Z-Tel licenses to use
their software in the Z-Tel Technology. Subject to Section 10.20 of
this Agreement, Z-Tel grants Sprint the right to negotiate license
agreements with any third party that has granted Z-Tel a software
license that is embedded in the Z-Tel Technology.
14.4.2. UPGRADES AND UPDATES OF TECHNOLOGY ESCROW MATERIALS.
(a) If at anytime Z-Tel delivers a scheduled release
to any Z-Tel Fundamental Technology, Z-Tel will immediately
upgrade or update the Technology Escrow Materials. However, if
at anytime Z-Tel implements any upgrade, update, patch or
other change to the Z-Tel Fundamental Technology that is not a
scheduled release, Z-Tel will add these unscheduled release
materials to the Escrow Materials on a monthly basis.
(b) Not less frequently than on a monthly basis
during the Term, Z-Tel will either:
(i) deposit copies of the then-current
Technology Escrow Materials with the Technology
Escrow Agent, subject to the Technology Escrow
Agreement, or provide to Sprint a written
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statement, signed by Z-Tel's Chief Technology
Officer, Senior Vice President Enterprise Systems or
more senior officer, that there has been no change in
the Z-Tel Fundamental Technology as of the date of
the statement, and
(ii) provide to Sprint a written statement,
signed by Z-Tel's Chief Technology Officer, Senior
Vice President Enterprise Systems or more senior
officer, that the Technology Escrow Materials, as of
the date of the statement, are current and accurately
reflect the Z-Tel Fundamental Technology as of that
date.
These written statements will be part of the Technology Escrow
Materials.
14.5. AUDIT OF TECHNOLOGY ESCROW MATERIALS. The Parties will designate
a mutually acceptable neutral third party who, at Sprint's expense and request
from time to time, will audit the Technology Escrow Materials that Z-Tel
deposits with the Technology Escrow Agent for purposes of determining whether
Z-Tel has fulfilled its deposit obligations under this Section XIV. This auditor
will be bound by reasonable confidentiality restrictions that prohibit him from
directly or indirectly providing to Sprint or any third party any information,
data or knowledge pertaining to the Z-Tel Fundamental Technology, except as
necessary for the limited purpose of disclosing to Sprint the existence of any
deficiency determined in the audit. Z-Tel will promptly, upon written notice
from Sprint, correct any deficiency that the audit discloses.
14.6. RELEASE OF TECHNOLOGY ESCROW MATERIALS. Release of the Technology
Escrow Materials to Sprint will be on the terms and conditions (including
notice, redeposit and other provisions) set forth in the Technology Escrow
Agreement. Any release will, in any event, be granted to Sprint whenever Sprint
provides written notice to the Technology Escrow Agent, with a copy to Z-Tel,
stating that a Triggering Event has occurred and demanding release of the
Technology Escrow Materials to Sprint. Any Technology Escrow Materials released
to Sprint under this Section 14.6 will be subject to the Technology License.
14.7. BANKRUPTCY. Z-Tel's obligations and rights under this Section 14
extend:
(a) to any trustee in bankruptcy, receiver, administrator or
liquidator appointed for Z-Tel ("TRUSTEE"),
(b) to Z-Tel as debtor-in-possession, and
(c) to any other successor in interest to Z-Tel.
14.8. DISPUTES REGARDING DELIVERY OR RELEASE OF TECHNOLOGY ESCROW
MATERIALS. If a court of competent jurisdiction determines that any delivery of
Technology Escrow Materials under this Section XIV or any release of the
Technology Escrow Materials should not have occurred and the court issues an
order against Sprint to that effect, then:
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(a) Sprint will return the Technology Escrow
Materials and all copies and records thereof to the Technology
Escrow Agent; and
(b) The Technology License will be rescinded, and
(c) Sprint will pay to Z-Tel within ten (10) Business
Days the difference between the fees and charges paid to Z-Tel
under Section 14.2.2 and the full fees and charges due Z-Tel
under Schedule C for Services Z-Tel has, or would have,
provided from the time of the rescinded release or delivery of
the Technology Escrow Materials through the date of
rescission.
14.9. ASSIGNMENT OF TECHNOLOGY LICENSE. Sprint and its Owned Affiliates
may assign the Technology License, in whole or in part, at any time, only to a
successor in interest or to a purchaser of all or substantially all of Sprint's
assets or of the assets of that portion of Sprint's business (or any Affiliate's
business) to which the Technology License pertains.
14.10. REMEDIES LIMITED. Subject to Section 14.8, Z-Tel expressly
acknowledges and agrees that the Technology License granted under Section 14.1
is perpetual, irrevocable, non-cancelable, non-terminable and royalty free
(except to the extent otherwise set forth in this Section XIV) and that in the
event of any dispute over the payment of any monies (other than royalties due
under this Section XIV) that Z-Tel contends are due and owing by Sprint under
this Agreement, or any breach of this Agreement in regard to the Technology
License, Z-Tel's sole and exclusive remedy will be a suit for damages and not
revocation, termination, cancellation or limitation of the Technology License.
SECTION XV. - CONFIDENTIALITY
15.1. CONFIDENTIALITY. In connection with the performance of this
Agreement, either Party may gain access to or receive Confidential Information
of the other Party. Both Parties will hold the other Party's Confidential
Information in confidence and trust and strictly limit disclosure of it to their
employees and agents who have a need to know it for purposes of this Agreement.
Except with the other Party's prior written consent, neither Party will
disclose, use or permit (by Persons within their respective control) the use or
disclosure of the other Party's Confidential Information, except in satisfying
its obligations under this Agreement. Each Party will protect the other Party's
Confidential Information from inappropriate disclosure, whether inadvertent or
intentional, using at least the same degree of care they ordinarily use in
safeguarding and protecting their own proprietary information, but in no event
using less than reasonable care.
Notwithstanding the foregoing, either Party may disclose the other
Party's Confidential Information if:
(a) the disclosure is required by applicable Law,
rule or regulation, a court order or an order of a similar
judicial or administrative body or the rules of any stock
exchange, and
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(b) the disclosing Party notifies the other Party in
writing of the requirement and cooperates reasonably with that
Party in obtaining a protective or similar order concerning
the disclosure.
15.2. RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION. Confidential
Information, disclosed in connection with this Agreement will remain the
exclusive property of the disclosing Party, in that Party's sole discretion.
Each Party will promptly return to the other Party or destroy or erase all
Confidential Information of the other Party in its possession or control upon
the earlier of (i) the receipt of the other Party's written request for return
or destruction of Confidential Information, and (ii) the termination of this
Agreement.
15.3. THIRD PARTY DISCLOSURE REQUESTS. If either Party receives any
written or oral third party request, order, instruction or solicitation for the
disclosure of Confidential Information not in conformance with this Agreement or
becomes aware of any attempt by a third party to improperly gain access to
Confidential Information, the Party will immediately notify the other Party of
the request, order, instruction or solicitation, or of the attempt, and fully
disclose the details surrounding the request, order, instruction or solicitation
or attempt.
Notwithstanding the foregoing, publication of information relating to this
Agreement may occur through press releases, articles, interviews and speeches
("PUBLICITY") as described in this paragraph. Both Parties must approve the
content of any Publicity before its publication. Neither Party will, without the
other Party's prior written consent, make any news release, public announcement,
denial or confirmation of this Agreement, its value or its terms and conditions,
or in any other manner advertise or publish this Agreement, its value or its
terms and conditions. Nothing in this Agreement is intended to imply that either
Party will agree to any publicity whatsoever. Either Party may, in its sole
discretion, withhold its consent to any Publicity. The Parties will utilize the
text attached to this Agreement as Exhibit C for filing with the SEC in
association with a SEC Form 8-K report, if any, and its initial press release,
if any, pertaining to the execution of this Agreement. The Parties will use the
materials in Exhibit C and the statements set forth on Schedule 15.3 as the
basis of initial public verbal disclosures if any, regarding the execution of
this Agreement.
15.4. REQUIRED DISCLOSURES. Notwithstanding any other provision of this
Agreement with at least five (5) Business Days' prior written notice and
consultation with the other Party, a Party may disclose its business
relationship with the other Party and the existence of this Agreement in the
exercise of reasonable judgment:
(a) under a request or requirement of any Regulatory
Authority, or
(b) to the extent required under applicable Law or the rules
of any securities exchange or automated quotation system.
15.5. EQUITABLE RELIEF. Each Party acknowledges that a violation of
this Section XV will cause immediate and irreparable harm to the other Party.
Therefore, in such an
75
event the other Party may seek an injunction restraining the violation or
further violation.
15.6. SURVIVAL. The provisions of this Section XV will survive the
termination or expiration of the Term for five (5) years.
SECTION XVI. - PROPERTY RIGHTS; LICENSE; TRADEMARKS
16.1. PROPERTY RIGHTS AND USAGE. Sprint acknowledges:
(a) that ownership of and title to all of the
property and all other materials that Z-Tel or its suppliers
develop or provide in connection with this Agreement
(including any trade secrets, know-how, methodologies and
processes related to Z-Tel's Services, and including any
equipment, facilities, computer software (in object code and
source code form), script, programming code, data, information
or HTML script) will remain solely with and in Z-Tel or its
suppliers, as the case may be, and
(b) that Z-Tel or its suppliers, as the case may be,
retain all copyrights, trademarks, patents, trade secrets and
any other proprietary rights inherent in or appurtenant to the
property and other materials described in Section 16.1(a)
above, except as expressly provided under this Agreement.
Sprint may use this property and materials only as provided in
this Agreement or under the Technology License.
16.2. TITLE TO EQUIPMENT. Subject to Sections XIV, this Agreement does
not convey to Sprint title of any kind to any of the equipment or transmission
facilities that Z-Tel uses to provide the Services.
16.3. GRANT OF USE LICENSE. Z-Tel grants Sprint a limited, worldwide,
non-exclusive, non-transferable (except as provided in this Agreement), royalty
free (other than as provided in Schedule C), irrevocable license to access and
use, during the Term and exclusively in connection with fulfilling the terms and
conditions of this Agreement and marketing, selling and using the Services (the
"TECHNOLOGY USE LICENSE"):
(a) the Z-Tel Technology to the extent owned or
licensable by Z-Tel, the Sales Channel Interface, the Z-Line
Platform, the Z-Tel OSS Services, the Z-Node Services and all
other Services outlined in this Agreement, and
(b) all pre-existing Z-Tel intellectual or
proprietary property or rights incorporated into the works for
hire belonging to Sprint that are described in Section 1.12.5.
All rights concerning the Services, including intellectual property or similar
proprietary rights with respect thereto, belong solely and exclusively to Z-Tel,
whether or not they are embedded in any of the Services.
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16.3.1. RETAIL LIMITATION. This Technology Use License is only
for Sprint's use in connection with providing LW Based Services
directly (or indirectly through Sprint's Affiliates) to Sprint's End
Users. Notwithstanding any other provision of this Agreement, Sprint
will not be limited in its ability:
(a) to add features or functionality,
(b) to package, bundle, integrate, joint sell, or
(c) to engage in any other product, marketing or
other business approach (but Sprint will not offer Z-Node
Services on a stand-alone basis).
16.3.2. BRAND LIMITATION. Through this Technology Use License,
Sprint may sell the LW Based Services by way of the Sprint Marks listed
in the SOW.
16.3.3. SALES AGENTS. Nothing within this Section 16.3 will be
interpreted to restrict Sprint's ability to use sales agents to procure
retail End Users.
16.4. TRADEMARKS. Each Party will not use any ▇▇▇▇ of the other Party
in any manner whatsoever without the other Party's prior written approval,
except as expressly provided in this Agreement. Notwithstanding anything to the
contrary contained in this Agreement or in any approval or authorization
(existing now or in the future), a Party's Marks are and will remain solely and
exclusively the Party's property. Except as expressly provided in this Agreement
in this Section XVI, a Party will not, by virtue of this Agreement or any
activities under this Agreement, acquire any right, title, interest or license
in the other Party's Marks.
16.4.1. SPRINT BRANDING EXCEPTION. Z-Tel is authorized and
required to use the Sprint Marks in providing Local Wholesale Services
and related services to Sprint when Z-Tel is in direct contact with
Sprint's End Users and acting on Sprint's authority. Z-Tel's use of
Sprint Marks will comply with Sprint's brand usage guidelines (a copy
of which is attached as Schedule 16.4.1). Sprint may update, modify and
amend these guidelines at any time and from time to time during the
Term, in its sole discretion, and in this event Sprint will provide to
Z-Tel a copy of the update, modification or amendment through the
notice provisions of Section 21.14.
16.4.2. Z-TEL BRANDING EXCEPTION. Sprint is authorized to use
the Z-Tel Marks in referencing Sprint's underlying provider of network
and enhanced services.
SECTION XVII. - DISCLAIMER OF WARRANTIES
17.1. DISCLAIMER OF WARRANTIES. EXCEPT AS PROVIDED IN SECTION IX (Z-Tel
Responsibilities and Warranty), SECTION XI (Service Level and Remedy) AND THE
SLAs, Z-TEL PROVIDES THE SERVICES AND PRODUCTS "AS IS," WITHOUT WARRANTY OF ANY
KIND, WHETHER EXPRESS OR IMPLIED. Z-
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TEL DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Z-TEL DOES
NOT WARRANT THAT THE SERVICES WILL BE UNINTERRUPTED OR ERROR-FREE, OR THAT THE
SERVICES WILL MEET SPRINT'S REQUIREMENTS.
SECTION XVIII. - LIMITATIONS ON LIABILITY
18.1. LIMITATIONS. Except as provided in Section XI (Service Level and
Remedy) or the SLAs referenced in Section XI and as otherwise expressly provided
in this Agreement, no Party will be liable to the other Party for any loss,
defect or equipment failure caused by the conduct of the other Party, the other
Party's agents, servants or contractors, ILECs or others acting in aid or
concert with, or as vendors to, the other Party. With the exception of fines and
penalties that regulatory or taxing authorities impose, in no event will either
Party have any liability whatsoever to the other Party for any indirect,
special, consequential, incidental or punitive damages, including, but not
limited to loss of anticipated profits or revenue or other economic loss in
connection with or arising from anything said, omitted or done under this
Agreement, even if the other Party has been advised of the possibility of these
damages. For purposes of this Section 18.1, Z-Tel will be deemed to not be an
agent, servant, contractor or Person acting in aid or concert with, or as vendor
to, Sprint. For purposes of this Section 18.1, Sprint will be deemed to not be
an agent, servant, contractor or Person acting in aid or concert with, or as
vendor to, Z-Tel.
18.2. APPLICATION. The limitations of liability in this Agreement will
apply:
(a) whether the action in which recovery sought is
based on contract or non-intentional tort, or under a statute
or rule, and
(b) notwithstanding that a limited liability Party is
alleged to be jointly liable with one or more Parties or
otherwise.
SECTION XIX. - INDEMNIFICATION
19.1. INDEMNIFICATION. Each Party (the "INDEMNIFYING PARTY") will
indemnify and hold harmless the other Party and its permitted assigns, and its
partners, officers, directors, employees and agents, and each of their
representatives, and its successors and assigns (collectively, the
"INDEMNITEES") at all times from and after the Effective Date against and in
respect of any Damages (defined in Section 19.2) suffered by the Indemnitees as
a result of any claims, actions or demands (collectively, a "CLAIM") by a third
party to the extent caused by or arising out of:
(a) any material breach by the Indemnifying Party of
any of its representations, warranties or covenants contained
in this Agreement;
(b) any grossly negligent act or omission, or any
willful misconduct or omission, by the Indemnifying Party,
including any grossly negligent or willful failure to comply
with due care with regard use or
78
storage of CPNI, Slamming, Cramming or use or storage of
subscriber list information;
(c) subject to Sections 4.8 and 10.11, any fraud
associated with the Indemnifying Party's End Users or
accounts;
(d) the Indemnitee's use of the Indemnifying Party's
Marks in accordance with this Agreement;
(e) the Indemnifying Party's use of the Indemnitee's
Marks in violation of this Agreement; or
(f) any illegal acts by the Indemnifying Party or its
Affiliates, directors, officers, employees and agents.
For purposes of subparagraph (f), Z-Tel is not an agent of Sprint, and
Sprint is not an agent of Z-Tel.
19.2. DAMAGES. For the purposes of this Agreement and unless otherwise
specifically provided, the term "Damages" includes:
(a) all amounts finally awarded or charged against an
Indemnitee,
(b) any amounts paid in settlement as permitted by
this Section XIX, and
(c) all out-of-pocket expenses or costs incurred by
the Indemnitee(s), including reasonable professional and
attorneys' fees and expenses.
19.3. PROCEDURE. Promptly upon the Indemnitee's receipt of prompt
written Super Notice of any demand, assertion, claim, action or proceeding,
judicial or otherwise, with respect to any matter as to which an Indemnifying
Party has agreed to indemnify an Indemnitee under this Agreement, the Indemnitee
will give prompt written Super Notice to the Indemnifying Party, together with a
statement of any material information respecting the matter that the Indemnitee
then possesses. The Indemnifying Party may contest and defend the Claim with
respect to which it has been called upon to indemnify the Indemnitee under this
Agreement, except that:
(a) the Indemnifying Party will deliver written
notice of its intention to contest the Claim to the Indemnitee
within twenty (20) calendar days after the Indemnifying
Party's receipt of notice of the Claim;
(b) the Indemnifying Party will pay all costs and
expenses of the contest or defense, including all reasonable
attorneys' and accountants' fees, and the cost of any bond
required by Law to be posted in connection with the contest or
defense;
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(c) the Indemnifying Party will contest or defend the
Claim through attorneys it has employed for that purpose, at
its sole cost and expense, but the Indemnitee may participate
in the contest or defense of the Claim through attorneys of
its own choosing, at its cost and expense without the
Indemnifying Party's contribution or indemnification for these
costs or expenses;
(d) if, after such opportunity, the Indemnitee does
not elect to participate in the contest or defense of the
Claim, the Indemnitee (subject to paragraph (f) below) will be
bound by the results that the Indemnifying Party obtains,
including any out-of-court settlement or compromise;
(e) If the Indemnifying Party assumes the contest or
defense of the Claim, the Indemnitee will not settle, or
attempt to settle, the Claim without the Indemnifying Party's
prior written consent, which consent the Indemnifying Party
may withhold in its good faith discretion; and
(f) the Indemnifying Party will not settle any Claim
without the Indemnitee's prior written consent, which consent
the Indemnitee may withhold in its good faith discretion,
unless the settlement contains a complete and unconditional
release of the Indemnitee and does not involve the imposition
of any nonmonetary relief on the Indemnitee.
SECTION XX. - AUDITS
20.1. ADEQUATE BOOKS AND RECORDS. Each party will maintain, during the
Term and for at least three (3) years after the expiration or earlier
termination of the Term, the records pertaining to Services as are required to
be maintained under the SOW. Each Party represents and warrants to the other
Party that its records fairly and adequately substantiate the Services provided,
the fees due and the payments made and received under this Agreement.
20.2. RIGHT TO AUDIT. Sprint and its accountants, attorneys and agents
will have the right to audit Z-Tel's records relating to its performance under
this Agreement at reasonable times and places upon prior written notice for the
sole purposes of confirming that all charges and payments have been made, and
all SLAs have been satisfied, each in accordance with this Agreement. The right
to audit will include the right to verify that costs associated with the ILECs
and other third party vendors fairly represent the direct costs incurred by
Z-Tel.
The audits will in no event be more frequent than two (2) times per
year. Sprint will provide Z-Tel with at least twenty (20) calendar days' prior
notice of an audit, but Z-Tel may reasonably delay any audit if Z-Tel is
temporarily unable to assist Sprint and its auditors. In conjunction with the
audit notice, Sprint will give a written list of the materials requested for
review during the audit, but Sprint's auditors will not be limited by this list
if they discover that additional materials may be relevant or helpful to the
audit. Z-Tel will make the information that Sprint reasonably requires to
conduct the
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audit available on a timely basis during normal business hours and assist Sprint
and its internal or external auditors as reasonably necessary. Z-Tel may provide
to Sprint certain materials concerning Z-Tel operations not connected with the
furnishing of Services to Sprint only under a limited use release.
Sprint will provide to Z-Tel the results of the audit. Z-Tel will not
be responsible for Sprint's expenses incurred for an audit, unless the audit
discloses an over billing in excess of five percent (5%) during the period the
audit covers, in which case Z-Tel will pay for the entire cost of the audit.
Z-Tel will immediately, but in no event more than ten (10) calendar days after
discovery of an over billing, reimburse Sprint for the over billing disclosed by
the audit, together with simple interest for the period of time between the date
on which overpayment was made and the date on which Sprint is reimbursed, at a
rate of one percent (1%) per month. Notwithstanding the foregoing, if Z-Tel
disputes that it has over billed Sprint, the dispute will be treated as a
Billing Dispute under this Agreement. Sprint will immediately, but in no event
more than ten (10) calendar days after discovery of an under billing, reimburse
Z-Tel for the under billing disclosed by the audit. Notwithstanding the
foregoing, if Sprint disputes that Z-Tel under billed Sprint, the dispute will
be treated as a Billing Dispute under this Agreement.
20.3. VERIFICATION OF THIRD PARTY CHARGES. Upon Sprint's written
request, but no more than once annually, Z-Tel will provide a certificate signed
by Z-Tel's Chief Financial Officer (except in the case of certificates
concerning ILEC reconciliation, which will be signed by Z-Tel's Chief Technology
Officer) attesting that charges associated with third party services reflects
the fees contained in underlying Z-Tel vendor agreements and the charges that
Z-Tel has incurred on behalf of Sprint End Users.
20.4. DISCLOSURE. The documents and information reviewed in connection
with the audits under Section 20.2 will be subject to the confidentiality
provisions set forth in Section XV unless they fall within one or more of the
exclusions (ii), (iii), (iv) or (v) from what constitutes Confidential
Information, as set forth in the Definitions section of this Agreement. Nothing
in this Section XX requires the disclosure of any other contract or agreement if
the disclosure would breach an agreement with a third party.
SECTION XXI. - MISCELLANEOUS
21.1. GOOD FAITH PERFORMANCE. The Parties will act in good faith in the
performance of their obligations under this Agreement consistent with the
purposes of this Agreement. Except as otherwise specifically noted in this
Agreement, neither party will unreasonably delay, withhold or condition any
approval or consent that this Agreement requires or permits.
21.2. NO EXCLUSIVITY. Neither party is required to deal exclusively
with the other Party. Both Parties are free to enter into similar agreements
with other parties, including competitors of one another.
21.3. TAXES. The Party so obligated to pay taxes or regulatory fees may
contest the taxes or fees in good faith, at its own expense, and will be
entitled to the benefit of
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any refund or recovery, but the Party will not permit any lien to exist on any
asset of the other Party by reason of the contest.
21.4. NONINTERFERENCE. During the Term and for a period of twelve (12)
months thereafter, neither Party, nor any of its Affiliates or representatives,
will induce or attempt to induce any person who is an employee, vendor or
supplier of the other Party to terminate such relationship. Neither Party will
use any scheme, artifice or device to circumvent the purposes of this Section
21.4.
21.5. DISPUTE RESOLUTION.
21.5.1. ESCALATION PROCEDURES. The Parties will work in good
faith to resolve informally any disputes internally by escalating them
as necessary to progressively higher levels of management. The Parties
will exchange escalation lists setting forth responsible officers,
including names, departments, titles and telephone numbers.
21.5.2. NEGOTIATIONS. The Parties will attempt in good faith
to resolve any claim, controversy, or dispute between them, their
agents, employees, officers, directors or Affiliates through
negotiation. This provision will not be construed as a waiver of a
Party's rights to seek legal or regulatory intervention as provided by
Law.
21.5.3. DISPUTES INVOLVING BILLING. Except as described in
Section 21.5.4, this Section 21.5 does not apply to billing disputes.
Billing Disputes are addressed in Section 5.3 of this Agreement.
21.5.4. CONTINUED PERFORMANCE. Unless performance is otherwise
expressly excused under this Agreement, both Parties will continue to
perform during the Dispute Resolution process, including with respect
to Billing Disputes. Notwithstanding the foregoing, nothing in this
Section 21.5.4 will affect any right of either Party to terminate this
Agreement to the extent expressly permitted under Section II of this
Agreement.
21.6. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the Parties concerning the subject matter of this Agreement and supersedes all
prior agreements, understandings and arrangements, both oral and written,
between the Parties concerning the subject matter. Furthermore, this Agreement
has been negotiated and fully reviewed by counsel for both Parties.
Except as otherwise provided in this Agreement, this Agreement may not
be modified, amended, altered or rescinded in any manner, except by written
instrument signed by both of the Parties. All exhibits, schedules and other
attachments to this Agreement are incorporated by this reference as integral
parts of this Agreement. To the extent there is any conflict between this
Agreement and any schedule or exhibit to this Agreement, this Agreement
(excluding the schedule or exhibit in question) will govern.
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21.7. COMPLIANCE WITH ETHICAL BUSINESS PRACTICES. Each Party will
supervise and review all employees or agents engaged in marketing services to or
taking orders from End Users to prevent, to the maximum extent feasible, the
switching of any individual or entity's telephone service without that
individual or entity's permission.
21.8. ASSIGNMENT. Neither Party may assign this Agreement without the
written consent of the other Party, which will not be unreasonably withheld. Any
attempt to assign this Agreement in contravention of the preceding sentence is
void. Notwithstanding the foregoing, Sprint may assign its rights and
obligations under this Agreement to any of its Owned Affiliates, but upon the
assignment and assumption, Sprint will remain obligated under this Agreement for
such assigned obligations.
21.9. BINDING AGREEMENT. Subject to the preceding paragraph, this
Agreement will inure to the benefit of and be binding on the Parties and their
respective successors and permitted assigns.
21.10. LITIGATION VENUE. In the event of litigation, the Parties agree
that venue will not be in Kansas or Florida.
21.11. GOVERNING LAW. Provisions of this Agreement subject to the
jurisdiction of the FCC will be governed and interpreted in accordance with
applicable federal Laws. Provisions of this Agreement subject to the
jurisdiction of any state Regulatory Authority will be governed and interpreted
in accordance with applicable state Laws. In all other cases, this Agreement
will be governed and interpreted under the substantive Laws of Delaware, without
reference to its principles of conflicts or choice of law. The Parties
acknowledge that this Agreement will be performed in part in Delaware.
21.12. LEGAL FEES. Regarding any dispute under this Agreement, a
prevailing party, as determined by a court of competent jurisdiction, will be
entitled to payment of the entire court costs and reasonable attorneys' fees
incurred in investigating, preparing and conducting any litigation that might
arise under this Agreement.
21.13. LETTER OF AGENCY. Simultaneously with the execution of this
Agreement, Sprint will execute and deliver to Z-Tel a letter of authorization in
substantially the same form as Schedule D to this Agreement.
21.14. NOTICES.
21.14.1. DEEMED DELIVERY. Any notices or deliveries permitted
or required by this Agreement must be given by messenger or by
overnight delivery with Federal Express, United Parcel Service,
Airborne Express or a similarly nationally recognized overnight
delivery service. These notices or deliveries will be deemed to have
been given (i) upon delivery by messenger, if a receipt is obtained for
delivery, (ii) one (1) calendar day after timely deposit for overnight
delivery with Federal Express, United Parcel Service, Airborne Express
or similar nationally recognized overnight delivery service, if the
service obtains a confirmation of delivery, or (iii) three (3) Business
Days after mailing, if mailed via certified or registered U.S. mail,
return receipt requested; if the notice is
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delivered, deposited for delivery, mailed or sent to the Party's
address as set forth on the Designee Schedule:
21.14.2. SUPER NOTICE. For certain situations that under this
Agreement expressly require "Super Notice," Super Notice means that the
notice must be given both:
(a) as set forth in Section 21.14.1, and
(b) to the senior executives of the recipient listed
on the Designee Schedule, via electronic mail and overnight
delivery via Federal Express, United Parcel Service, Airborne
Express or a similarly nationally recognized overnight
delivery service, with delivery confirmation requested.
21.14.3. SATURDAY, SUNDAY OR LEGAL HOLIDAY. Notices deemed to
have been given or delivered as set forth above on a Saturday, Sunday
or legal holiday will instead be deemed to have been given or delivered
on the next succeeding day that is not a Saturday, Sunday or legal
holiday.
21.15. WAIVER. No failure or delay by either Party to this Agreement in
the exercise of any right, power or remedy it may have will operate as a waiver,
nor will any single or partial exercise of any right, power or remedy by either
Party preclude any other or further exercise by the Party of that right, power
or remedy or the exercise of any other right, power or remedy. No express waiver
or assent by any Party to any breach of or default in any term or condition of
this Agreement will constitute a waiver of or assent to any succeeding breach of
or default in the same or any other term or conditions of this Agreement.
21.16. RELATIONSHIP OF THE PARTIES. Nothing in this Agreement, or in
the course of dealing between the Parties under this Agreement, will be deemed
to create between the Parties (including their respective directors, officers,
employees and agents) a partnership, joint venture, association, employment
relationship or any other relationship, other than that of independent
contractors with respect to each other. Neither Party will have the authority to
commit or legally bind the other Party in any manner whatsoever, including, the
acceptance or making of any agreement, representation or warranty.
21.17. THIRD PARTY BENEFICIARIES. Except as expressly stated in Section
21.8, this Agreement inures to the benefit of Z-Tel and Sprint only and no third
party will have any rights under this Agreement.
21.18. CONSTRUCTION. This Agreement was negotiated at arms' length and
will not be construed more strongly against any Party regardless of which Party
was responsible for its preparation. Whenever from the context it appears
appropriate, each term stated in either the singular or the plural includes the
singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender include the other genders. The word "Agreement" and words of
similar import referring to this Agreement refer to this
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Agreement as a whole, including the Schedules and Exhibits attached to it, and
not to any particular provision of this Agreement. Whenever the word "include,"
"includes" or "including" is used in this Agreement, it is deemed to be followed
by the words "without limitation."
21.19. SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable, this Agreement will be constructively amended to the extent
necessary and possible to achieve the same objectives as the severed provision
was intended to achieve, and the remaining provisions of this Agreement will
continue in full force and effect.
21.20. SURVIVAL. The Parties' obligations under the following
provisions will survive the termination or expiration of this Agreement
(following the Term): 1.9.9, 2.4, 2.5, 4.3.1, 4.8, 4.10, 4.11, 5.2, 5.3, 9.14,
10.4 (first sentence only), 10.6, 10.11 (excluding the first sentence), 11.2,
12.5.2, 14.1, 14.2.2, 14.7, 14.8, 14.9, 14.10, XV, 16.1, 16.4 (but not 16.4.1 or
16.4.2), XVII, XVIII, XIX, 20.1, 21.1, 21.4, 21.6, 21.8, 21.9, 21.10, 21.11,
21.12, 21.14, 21.15, 21.18, 21.19, 21.20, 21.26, and, any other provisions of
this Agreement that, by their terms or by their nature are contemplated to
survive (or to be performed after) termination of this Agreement will, in each
case, survive cancellation, expiration or termination of this Agreement and
continue in full force and effect. Furthermore, Z-Tel and Sprint obligations
regarding the retention of records will survive this Agreement until expiration
of applicable regulatory requirements.
21.21. COUNTERPARTS. This Agreement may be executed in several
counterparts, all of which taken together will constitute one single agreement
between the Parties. Signed facsimile copies of this Agreement, addenda,
attachments, schedules and exhibits will legally bind the Parties to the same
extent as original documents.
21.22. LAW ENFORCEMENT COOPERATION. Each Party may cooperate with law
enforcement authorities and national security authorities to the full extent
required or permitted by applicable Law in matters related to services provided
by it under this Agreement, including, the production of records, the
establishment of new lines or the installation of new services on an existing
line to support law enforcement or national security operations, and the
installation of wiretaps, trap-and-trace facilities and equipment, and dialed
number recording facilities and equipment. A Party will not be obligated to
inform the other Party or the other Party's End Users of actions taken in
cooperating with law enforcement or national security authorities, except to the
extent required by applicable Law.
21.23. EMERGENCY INTERFACES. Z-Tel will use commercially reasonable
efforts to facilitate the prompt, robust, reliable and efficient interconnection
of Z-Tel systems to relevant 911/E-911 emergency platforms and systems. Z-Tel
and Sprint will comply with all applicable rules and regulations (including 911
taxes and surcharges as defined by local requirements) pertaining to the
provision of 911-E911 services. Each Party will be responsible for securing any
necessary certification from local public safety access points or county or
municipal coordinators required before that Party initiates service within a new
geographic area.
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21.24. PAYPHONE SERVICES PROHIBITED. Notwithstanding any other
provision of this Agreement, under no circumstances may Sprint use any facility
or service that Z-Tel provides under this Agreement in connection with public
pay telephone facilities or services.
21.25. SPRINT SERVICES. Z-Tel will give Sprint the opportunity to bid
on Z-Tel's transport and wireless services by giving Sprint a request for
proposal at least thirty (30) calendar days before the date that Z-Tel intends
to decide on its service provider for these product offerings. Transport and
wireless services include wireless voice, wireline and wireless long distance,
Internet connectivity, and teleconferencing.
If Sprint elects to submit a proposal to Z-Tel concerning Z-Tel's
desired services, the proposed prices will take into account Z-Tel's expected
volume. If Sprint's offer meets the service requirements that Z-Tel establishes
and matches or exceeds the most favorable terms and conditions among qualified
offers that Z-Tel receives from other vendors, then to the extent allowed under
Z-Tel's existing contracts, Z-Tel will select Sprint as its preferred service
provider for the services under bid and transfer those services to Sprint as its
current commitments expire and technical interfaces are established.
If Sprint's offer does not match or exceed the most favorable terms and
conditions among qualified offers that Z-Tel receives from other vendors or does
not meet the service requirements that Z-Tel established in the initial bid,
request than Z-Tel will:
(a) advise Sprint promptly concerning why Sprint's
offer was not competitive or not compliant, suggesting the
change or changes that are needed to make Sprint's offer
competitive and/or compliant, and
(b) allow Sprint the opportunity to resubmit its
offer.
Sprint will have no obligation to submit or resubmit any offer.
If any Sprint revised offer meets the service requirements that Z-Tel
established in its initial bid request and matches or exceeds the most favorable
terms and conditions among qualified offers that Z-Tel receives from other
vendors, then to the extent allowed under Z-Tel's existing contracts Z-Tel will
select Sprint as its preferred service provider for the services under bid and
transfer those services to Sprint as its current commitments expire and
technical interfaces are established.
In addition to the other requirements set forth in this Section 21.25,
Z-Tel will be required to select Sprint as its service provider only if Sprint
has paid to Z-Tel at least five-hundred-thousand dollars ($500,000) in Z-Tel
Service Fees in the month preceding Z-Tel's request for a proposal.
21.26. WAIVER OF JURY TRIAL. Z-Tel and Sprint knowingly, voluntarily
and intentionally waive any rights they may have to a trial by jury in respect
of any litigation arising in based on, or arising out of, under or in connection
with, this Agreement or any other course of conduct, course of dealing,
statements (whether verbal or written) or
86
actions of Z-Tel or Sprint. This provision is a material inducement for the
Parties to enter into this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
Z-TEL COMMUNICATIONS, INC. SPRINT COMMUNICATIONS COMPANY L.P.
By: By:
____________________________________ ______________________________________
Name: Name:
____________________________________ ______________________________________
Title: Title:
____________________________________ ______________________________________
Date: Date:
____________________________________ ______________________________________
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULE /
EXHIBIT DESCRIPTION
-------- -----------
Schedule A Initial Statement of Work
Schedule B Service Level Agreement
Schedule C Pricing Schedule
Schedule D Z-Tel Fundamental Technology
Schedule E Existing Z-Tel Technology
Schedule 10.8 Z-Tel's Acceptable Use Policy
Schedule 13.1 Conditions, Restrictions, Rules, Policies, Procedures,
Limitations and Rights Imposed or Granted under Z-Tel's
Third Party Agreements and Licenses
Designee Schedule Contact Information for Notices Sent To Sprint and
Z-Tel
Exhibit A Form of Transition Escrow Agreement
Exhibit B Form of Technology Escrow Agreement
Exhibit C Form of Text for Initial SEC Filing and Press Release
Exhibit D Form of Blanket Agency Agreement Letter for Local Service
Providers
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SCHEDULE A
INITIAL STATEMENT OF WORK
See Attached.
****
This entire schedule, consisting of 123 pages, has been omitted pursuant to a
request for confidentiality.
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SCHEDULE B
SERVICE LEVEL AGREEMENT AND REMEDIES
See Attached.SERVICE LEVEL AGREEMENT AND REMEDIES PREAMBLE
A. Service Level Agreements (SLAs) will be put into place to ensure
that both Z-Tel and SPRINT jointly provide quality service at
the lowest cost while maximizing revenue opportunities and
complying with regulatory requirements.
B. The Definitive Agreement (including the exhibits and schedules
attached to it) constitutes the entire agreement between the
Parties and supersedes all other agreements and
understandings, both written and oral, between the Parties,
with respect to the transactions between Sprint and Z-Tel
including this Schedule B. To the extent there is any conflict
between this Schedule B and the Definitive Agreement, the
Definitive Agreement (excluding Schedule B) will govern. All
capitalized terms used but not otherwise defined in this
Schedule B will have the meaning provided in the Definitive
Agreement.
C. SLAs will be defined where the service level is objectively
measurable and one Party has the clear ability to control it.
D. These service level agreements will be tied to the greatest extent
possible to one or more of the following key objectives
identified in the Statement of Work between the Parties:
quality, timeliness, cost and revenue.
E. Both Parties will use their best efforts to provide services
hereunder that are at least equal in quality and provided
within the same time intervals as each Party provides to
itself or to its own end user customers, but at a minimum at a
level appropriate for a national common carrier class service
provider.
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DEFINITIONS
ACTION PLAN
An Action Plan is a plan to correct or minimize deviation from expected
performance. Where appropriate, each Action Plan will include a defined
implementation schedule. For clarity purposes, the Action Plan
responding to any Significant Miss will include an implementation
schedule.
ATTACHMENT A
Attachment A to this Schedule B is a matrix listing all Stabilization,
Operational and Administrative SLAs.
ATTACHMENT B
Attachment B to this Schedule B are SLA Definition sheets identifying
for each SLA details regarding calculation of each specific metric.
▇▇▇▇ CREDITS
▇▇▇▇ Credits are credits that are given to SPRINT on a Z-Tel ▇▇▇▇. ▇▇▇▇
Credits may also be applied to an ILEC ▇▇▇▇.
CACS
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CACs means Computer Aided Collection System.
COMX
COMX is *************** application that supports the provisioning of
orders.
CURE AND SIGNIFICANT MISS CURE PERIOD
The Significant Miss Cure Period is the period of time to correct a
condition where performance does not meet expectations. Unless
otherwise stated in this document or the Definitive Agreement, the
Significant Miss Cure Period for any operational SLA will be thirty
(30) calendar days. For purposes of clarification, a Cure for any
Operational SLA will only be deemed to have been effected if there is
no reoccurrence of the Significant Miss during the following 30
calendar day period. A cure for a Triggering Event SLA and the cure
period for a Triggering Event SLA will be governed by the Definitive
Agreement.
DATA FEEDS
Data Feeds are the electronic delivery of predefined information.
DEFINITIVE AGREEMENT
Definitive Agreement means the AGREEMENT FOR RESALE OF LOCAL WIRELINE
TELECOMMUNICATIONS SERVICES AND PROVISION OF ANCILLARY SERVICES between
SPRINT and Z-Tel.
▇▇▇▇▇▇
▇▇▇▇▇▇ means the meet point or point of interface between the two
Parties.
DISCONNECT
Disconnect is the submission of a Local Service Order (LSR) to an ILEC
to terminate local telephone service.
EXPECTED SERVICE LEVEL
Level of performance within any particular SLA which if met or exceeded
will be deemed to be satisfactory by Z-Tel and Sprint.
ILEC
ILEC means Incumbent Local Exchange Carrier.
LOCKBOX
Lockbox is the process used to process payments.
LSR
LSR means Local Service Order.
LSR SUBMISSION
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LSR Submission is the process used to submit a Local Service Order to
an ILEC.
PROVISIONING
Provisioning is the process used to provide or set up service to a
customer.
REJECT
A Reject is an LSR sent back from the ILEC without having been
executed.
REPORTS
Reports are compilations of data prepared for management purposes.
RESPONSE TIME
Response Time is the time required for a system to reply to an inquiry
or complete a function.
ROOT CAUSE ANALYSIS
Root Cause Analysis is the analysis performed to determine the actual
cause of an event, condition or status.
SALES
Sales means the process used to enable customers to purchase a product.
SIGNIFICANT MISS
Performance below the Expected Service Level during any given month
which is not Cured during the subsequent thirty (30) calendar day
period.
SLA
SLA means Service Level Agreement.
SERVICE MANAGEMENT COMMITTEE
The Service Management Committee will consist of up to three
representatives from each Party as designated by the individual Party.
Designees will be at a level that can generally make commitments for
the Party relative to this SLA document, SLA Metrics, SLA Remedies, and
SLA Adjustments/Exclusions as described in Section 6 of this Schedule
B. The Service Management Committee will meet monthly or as required to
perform the functions designated in this document, including reviewing
performance levels and developing Action Plans as necessary to correct
any Significant Misses.
SNIP
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SNIP is the process of suspending a customer's telephone service
STABILIZATION PERIOD
The Stabilization Period is from the Effective Date through April 30,
2003.
STABILIZATION PERIOD SLAS
The Stabilization Period SLAs are the SLA measurements computed during
the period from the Effective Date through April 30, 2003.
STATEMENT OF WORK
The Statement of Work is the document attached to the Definitive
Agreement as Schedule A, that describes and defines, at a high level,
the Services and Software that Z-Tel will provide to SPRINT so that
SPRINT can provide its Local Wholesale (LW) Based Services to SPRINT
customers.
TRIGGERING EVENT PERFORMANCE LEVEL
Level of performance which if not maintained will impact commercial
viability of Sprint product offerings.
Z-NODE
The Z-Node is the combination of Z-Tel hardware and software that is
used to provide some of the enhanced telephone services to be provided
by Z-Tel under the Definitive Agreement.
1.0 SLA GENERIC TYPES
There will be three (3) generic types of SLAs:
1.1 STABILIZATION PERIOD SLAS
1.1.1 Stabilization Period SLAs will be utilized to measure
operational effectiveness and identify areas for
performance improvement.
1.1.2 Stabilization Period SLAs will be computed beginning
on the Effective Date of this Agreement (or as soon
as reasonably possible) through April 30, 2003.
1.1.3 Stabilization Period SLAs are identified in
Attachment A to this Agreement, which may be updated
from time to time pursuant to the process outlined in
Section 7.0 of this Agreement.
1.1.4 The Stabilization Period SLAs will be measured and
reviewed by the Service Management Committee.
1.1.5 Any SLA Significant Miss, as would be determined
under
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Section 21.2.3 below, if applicable, will require
Z-Tel to develop and implement a plan of action to
correct material deviations from the expected result
1.1.6 No financial penalties or remedies will apply to
missed Stabilization Period SLAs.
1.1.7 The Significant Miss Cure Period for any
Stabilization Period SLA performance problems as
determined by the Service Management Committee will
be negotiated between the Parties.
1.1.8 The Stabilization Period SLAs will become Operational
SLAs on May 1, 2003.
1.2 OPERATIONAL SLAS
1.2.1. Operational SLAs will be utilized to measure
effectiveness of methods, procedures, hardware,
configurations and resource alignment and identify
areas for performance improvement.
1.2.1.1 Operational SLAs performance will be
reported within **********************
after each calendar month by Z-Tel.
1.2.1.2 Operational SLAs will be computed and
applied only after April 30, 2003.
1.2.1.3 Operational SLAs are intended to provide
insight on all key areas of performance.
1.2.1.4 All of the Operational SLAs will be reviewed
at a monthly meeting of the Service
Management Committee which meeting is to be
held no later than **********************
after each calendar month.
1.2.2.1 For each SLA, the documentation in the SLA
Definition Pages (Attachment B) will
identify (as appropriate):
1.2.2. The operational SLAs subject to this agreement are as
identified in Attachment A and Attachment B to this
Service Level Agreement document, which may be
updated from time to time pursuant to the process
outlined in Section 7.0 of this Agreement.
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a. a definition
b. special exclusions and/or exceptions
c. performance standard(s)
d. methodology and data source
e. calculation including numerator, denominator and
applicable periods of time
1.2.2.2 For each SLA the documentation will establish
performance and/or availability standards.
1.2.2.2.1 Service level goals incorporated
into SLAs will be oriented to supporting a
standard that would sustain general
commercial operations at the level of
performance which Z-Tel provides to its
own retail customers, but at a minimum at
a level appropriate for a national common
carrier class service provider.
1.2.2.2.2 SLA documentation will establish
an Expected Service Level for each
Operational SLA, which is the level that
should be met by Z-Tel.
1.2.3. Operational SLA Remedies
1.2.3.1 For any Operational SLA, performance at or above the
Expected Service Level will be within expectations of
both parties and no remedy will apply.
1.2.3.2 Any performance below the Expected Service Level will
require an Action Plan (including Root Cause
Analysis) to be jointly developed by the Parties to
address and, wherever possible, correct material
deviations from the expected result.
1.2.3.2.1 The implementation period for any Action Plan will
be negotiated between the Parties based upon the
circumstances involved.
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1.2.3.3 A Significant Miss for an Operational SLA will result
in the imposition of a one percent (1%) liquidated
damage provision calculated against the Z-Tel Service
Fees of the month in which service did not meet the
necessary standard and applied to the monthly invoice
next issued by Z-Tel.
1.2.3.3.1 Liquidated damage provisions will be
implemented through ▇▇▇▇ credits.
1.2.3.3.2 ▇▇▇▇ credits issued in conjunction with
Section 1.2.3.3 may not be utilized to
offset ILEC Fees.
1.2.3.3.3 In no event, will the accumulated penalties
for SLA Significant Misses exceed ********
************ of the Z-Tel Service ******
collected by Z-Tel under the Definitive
Agreement for that month.
1.3 TRIGGERING EVENT SLAS
1.3.1 Triggering Event SLAs will define situations where
there is a severe impact on SPRINT's ability to meet
minimal customer service or operational requirements
such that Z-Tel's failure to meet such SLAs would
permit SPRINT to terminate the Definitive Agreement
with cause upon providing to Z-Tel the appropriate
notice and opportunity to cure.
1.3.2 These Triggering Event SLAs will not be in effect for
the Stabilization Period..
1.3.3 Z-Tel's uncured failure to meet any Triggering Event
SLA requirements, as stated in Section 1.3.4.1.1
below, with proper notice by Sprint as described in
the Definitive Agreement may be deemed and designated
as a "Z-Tel Triggering Event" under the terms of the
Definitive Agreement.
1.3.4 Triggering Event SLAs
1.3.4.1 Triggering Event SLAs will be a subset of
Operational SLAs as defined in Section
12.2.2 and the attached Attachment A.
1.3.4.1.1 Triggering Event SLAs and their
associated Triggering Event Failure
Levels are as follows:
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TRIGGERING
EVENT
ID ACTIVITY NAME DESCRIPTION MEASURE PERFORMANCE
---- -------- ---------- -------------- -------------- ---------------
P 1 ******** ****** ************** ****** ***************
********** ************** ************** ***************
************** ************** ***********
************** **************
************** **************
************** **************
**** **************
********
P.2 ******* ******** ************** ************** ***************
************** ************** ***************
************** ************** *********
************** **************
************** **************
************** **************
************** **************
*********** ****
P 3 ******* ****** ************** ************** ***************
********** ************** ************** ***************
************** ************** ***************
************** ************** ***************
************** ************** ***************
************** ************** ***************
**** ************** ************
****
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B 1A ******* ****** ************** ************** ***************
********** ************** ************** ***************
************** ************** ***************
************** ************** ***************
************** ************** ***************
************** ************** ***************
**** ************** ***************
**** ************
B 1B ******* ****** ************** ************** ***************
********** ************** ************** ***************
************** ************** *************
************** **************
************** **************
************** **************
**** **************
****
B 2 ******* ****** ************** ************** ***************
********** ************** ************** ***************
************** ************** ***********
************** **************
************** **************
************** **************
**** **************
****
S 1A ******* ****** ************** ************** ***************
********** ************** ************** ***************
************** ************** ***********
************** **************
************** **************
************** **************
**** **************
****
S 2 ******* ********** ************** ************** ***************
********** ************** ************** ***************
************** ************** ***********
************** **************
************** **************
************** **************
**** **************
****
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1.3.4.1.2 No Triggering Event will be
attributed where performance has
been at or exceeded the Triggering
Event Performance Level.
1.3.4.1.3 Where performance falls below the
Triggering Event Performance Level
after any Exclusions as defined in
Section 5.0 or in the SLA Detail
Sheets, Sprint may declare a
Triggering Event.
1.3.4.1.4 Z-Tel's failure to meet Triggering
Event SLA requirement(s) will not
be deemed a Triggering Event if
Z-Tel's failure is directly caused
by a decision between the Parties
not to agree to a specific
headcount support level, until the
dispute over the approval of the
headcount in question is resolved.
In order to invoke relief from
performance remedies under Section
4.6.5, Z-Tel must provide timely
Super Notice, in writing, that such
refusal by SPRINT to approve
specific headcount level presents a
substantial risk of causing Z-Tel
to fail to meet the critical terms
of such Triggering Event SLA.
1.3.4.1.5 For Triggering Event purposes, Reject
Handling will be suspended as a
Triggering Event Metric if percent
rejects for Sprint exceeds the
performance for Z-Tel's retail
operations by more than *****
1.3.4.1.6 Triggering Event SLA changes may be
initiated from time to time through the Service
Management Committee. However, changes to the
list of Triggering Event SLAs and/or the
associated Triggering Event Failure Levels will
require an amendment to this document, signed by
both Parties.
2.0 ROLES AND RESPONSIBILITIES
Roles and responsibilities in regard to SLAs are as stated below:
2.1 Z-Tel Will:
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2.1.1. On schedules mutually agreed upon by Z-Tel and
SPRINT, measure and report to SPRINT on Z-Tel's
performance as it relates to those SLA performance
categories identified in this Schedule B.
2.1.2. Use best efforts to promptly resolve all system and
service delivery matters as they pertain to the SLAs
identified in this Schedule B and applicable to the
services supported and managed by Z-Tel.
2.2 SPRINT Will:
2.2.1. Use Z-Tel Technology and equipment in accordance with
the feature and functionality descriptions.
2.2.2. Provide workstation and system security.
2.2.3. Provide any underlying data that is necessary in an
accurate timely fashion.
2.2.4. Not create any queries and/or executables that will
perform any functions targeted at blocking access to
or interfering with components provided to them by
Z-Tel.
2.2.5. Not create mechanisms to generate fictitious customer
service records (e.g., orders, trouble tickets,
SNIPS, billing errors, outages, etc.) as a method of
sampling Z-Tel compliance with SLAs except as agreed
to between the Parties.
3.0 Reporting.
Unless otherwise specifically provided herein:
3.1 During the Stabilization Period the Parties will further
define the details of how, when and the manner in which each
specific SLA will be measured, reported and tracked.
3.2 After completion of the Stabilization Period, as soon as
reasonably practical after each calendar month-end, but not to
exceed 5 Business days after the end of a calendar month, each
Party will report to the other Party the actual service levels
for the previous calendar month for all SLAs specified in this
Schedule B.
3.3 Reporting formats and media will be proposed by each Party and
agreed upon by the other Party during the Stabilization
Period.
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4.0 EXCLUSIONS
4.1 Notwithstanding exclusions contained in the normal calculation
of individual SLAs as described in Section 2.2.2.1 above,
Z-Tel may exclude from the determination of its actual
performance of any applicable Service Level the period of time
for which any of the conditions set forth below ("Exclusions")
adversely affect Z-Tel's ability to meet such Service Levels.
4.1.1 Outages for maintenance or the installation, upgrade
or replacement of equipment or software that are
scheduled and executed within the maintenance windows
agreed to by Z-Tel and SPRINT, and other times agreed
upon in advance by SPRINT. Z-Tel will schedule with
SPRINT, at least two (2) business days in advance
where possible, any additional scheduled maintenance
requiring system downtime for system software
upgrades.
4.1.2 As established in Section *** of the Definitive
Agreement ("Escalation of *********** Matters."),
Z-Tel's failure to meet the P1, P2, P3, or P4
Operational and Triggering Event SLA's will not be
deemed a Significant Miss if Z-Tel's failure is
directly caused by the decision between parties not
to agree to a specific *********** support levels,
until the dispute over the approval of the forecast
in question is resolved. In order to invoke Section
5.1.2, Z-Tel must provide timely Super Notice, in
writing, that such refusal by Sprint to approve
specific headcount level(s) presents a substantial
risk of causing Z-Tel to fail to meet the critical
terms of such Operational SLA. For purposes of
clarification, this provision will not have any
affect on any Operational and Triggering Event SLA's
other than P1, P2, P3, or P4.
4.1.3 During the period beginning on the Efffective Date
through July 2003, any Sprint forecast that
understates its actual demands for Z-Tel services in
the aggregate (i.e., all states combined for
residential and small business service) by more than
***** ************ for any Committed Forecast will
relieve Z-Tel of its duty to fully perform in
accordance with the applicable ▇▇, ▇▇, ▇▇, ▇▇, ▇▇ ▇▇▇
▇▇▇ Operational and Triggering Event SLAs for that
month provided that Z-Tel has made reasonable efforts
to respond to any updated forecast, taking into
consideration the time that the forecast was updated.
For purposes of clarification, this provision will
not have any affect on any Operational SLA's and
Triggering Event other than ▇▇, ▇▇, ▇▇, ▇▇, ▇▇, ▇▇▇
▇▇▇.
102
4.1.4 For the period beginning August 1, 2003 and
continuing through the Term of the Definitive
Agreement, any Sprint forecast that understates its
actual demands for Z-Tel services in the aggregate
(i.e., all states combined for residential and small
business service) by more than ******* *************
for any Committed Forecast will relieve Z-Tel of its
duty to fully perform in accordance with the
applicable ▇▇, ▇▇, ▇▇, ▇▇, ▇▇ ▇▇▇ ▇▇▇ Operational and
Triggering Event SLAs for that month provided that
Z-Tel has made reasonable efforts to respond to any
updated forecast, taking into consideration the time
that the forecast was updated. For purposes of
clarification, this provision will not have any
affect on any Operational and Triggering Event SLA's
other than ▇▇, ▇▇, ▇▇, ▇▇, ▇▇ ▇▇▇ ▇▇▇.
4.1.5 Outages for maintenance or installation, upgrade or
replacement of equipment or software that are
scheduled and executed by ******.
4.1.6 Any transactions excluded by mutual written agreement
of Z-Tel and SPRINT and as documented in this
document or the SLA Details sheet (Attachment B).
4.1.7 If an event described as a Force Majeure Event in the
Definitive Agreement the relevant period for the
event will be subtracted from the applicable SLA
measurements. Nonetheless, Z-Tel will notify SPRINT
in advance if Z-Tel knows of a situation where an
event or special request will cause the
unavailability of the application.
4.1.8 Problems adversely affecting the delivery of Services
and resulting from components (hardware, software,
systems, network, switch failures, switch tape
failures and other related failures), for which
SPRINT (or any third party engaged by or acting on
behalf of SPRINT) is operationally and
administratively responsible, will not be considered
in calculating the applicable SLA measurements.
Nonetheless, Z-Tel will notify SPRINT in advance if
Z-Tel knows of a situation where problems with
components for which SPRINT is responsible will cause
a stoppage or delays of Z-Tel Services.
ILEC and IXC problems adversely affecting the
delivery of Services and resulting from components
(hardware, software, systems, network, switch
failures, switch tape failures, signaling and other
related failures), which are outside the control of
Z-Tel, its affiliates and primary vendors (i.e.,
***************************************), will not be
considered in calculation of the applicable SLA
measurements. Nonetheless, Z-Tel shall notify SPRINT
in advance if Z-Tel knows of a situation where
problems with components
103
provided by third parties, other than its affiliates
and primary vendors, will cause a stoppage or delay
of Z-Tel Services.
4.1.10 Problems related to a prioritization or
reprioritization of tasks or incidents by SPRINT
where Z-Tel has apprised SPRINT with written warning
to the Service Management Committee within 72 hours
of Sprint's prioritization or reprioritization
request that such prioritization (or lack of
prioritization in the case of incidents) or
reprioritization may affect SLAs.
4.1.11 Delays due to non-receipt or late receipt of SPRINT
input, where the non-receipt or late receipt was
beyond the control of Z-Tel.
4.1.12 Temporary exclusions from Service Level Agreement
performance measurements requested by Z-Tel, and
approved in writing by SPRINT, to implement major
changes in applications, environments, conversions,
or systems software.
4.2.1 Both parties will work in good faith to resolve any
differences of opinion as they relate to the
appropriateness and accuracy of Exclusions as
described in Section 5.1 above.
4.2 Within 5 days of providing Reports under Section 4.0 of this
SLA Agreement, Z-Tel will provide written notice along with a
reasonable explanation of any Exclusions pertaining to monthly
data as described in Section 5.1 which have been incorporated
into that month's reports.
5.0 Service Level Agreement Change Process
5.1 New SLAs may be added or substituted or existing SLAs may be
modified or deleted, through the process set forth in this
Section.
5.1.1 It is the intent of the Parties to maintain a
fair, reasonable, attainable, accurate, meaningful,
and consistent
104
measurement of Z-Tel's performance of Services.
5.1.2 Relative to the above standard, all SLAs will
be reviewed at least annually.
5.1.3 Events or changes that materially affect
delivery of services by either Party could initiate
the need to delete or modify existing SLAs or add new
SLAs. Such events and changes may include: the
Parties' planning processes, changes in SPRINT's
business (e.g., business requirements, changes in
volumes), regulatory requirements, changes in ILEC
methods and procedures, vendor changes in methods and
procedures, and audit requirements.
5.2.1 Upon identifying the need to add, delete or
modify any SLA, Z-Tel or SPRINT will prepare a
written analysis that supports the SLA change (a
"Service Level Agreement Change Proposal") and submit
it to the other Party.
5.2.2 The Parties will then review the Service Level
Agreement Change Proposal and the receiving Party
will have sixty (60) calendar days to respond with an
assessment of the ramifications of the request (e.g.,
cost impacts, impact on business, etc.).
5.2.3 All Service Level Agreement Change Proposals
must be mutually agreed upon through the Service
Management Committee before any SLAs are added,
deleted or modified. If the Service Management
Committee is unable to reach consensus on any
proposed Service Level Agreement change, the Parties
will attempt to resolve the matter pursuant to the
escalation procedures in the Definitive Agreement.
5.2.4 Any new SLAs will not be enforced for ninety
days, unless otherwise agreed, after initial
publication of the metric as agreed to between the
Parties.
5.2.5 Additionally, by mutual written agreement,
which shall include accepted minutes of proceedings
of the Service Management Committee, major change
initiatives as determined by the Service Management
Committee may cause the suspension of one or more
SLAs for a period of one to three months after
implementation of the major change. During this
suspension period the involved service level(s) will
be pursued on a best efforts basis.
5.2 SLA Change Process. Changes to SLAs will only be effected
through the following SLA Change Process.
Agreed to by the Parties, as signified below:
SPRINT Communications Company LP Z-Tel Communications, Inc
BY:_____ BY:
Print Name Print Name
Title Title
Date Date
105
ATTACHMENT A
OPERATIONAL SLAS
ID TYPE SLA ACTIVITY NAME DESCRIPTION MEASURE TARGET Source
P 1 ****** ******* ******* ******* ******* ******** ******
****** ******* ******* ******* ******* ******** ******
** ******* ******* ******* ******* * ******
****** ******* ******* ******* ******* ******** ******
****** ******* ******* ******* ******* ******* **
** ***** ***** ***** *****
****** ******* ******* ******* *******
****** ******* ******* ******* *******
******
******
**
P 2 ****** ******* ******* ******* ******* ******** ******
****** ****** ***** ******* ******* ****** ******
****** ******* ******* ******* ******* ******** ******
****** ******* ******* ******* ******* ****** ******
****** ******* ******* ******** **
** ***** ***** ****
******* ******* ********
******* ******* ******
P 3 ****** ******* ******* ******* ******* ******** ******
****** ****** ***** ******* ******* ****** ******
****** ******* ******* ******* ******* ******** ******
****** ******* ******* ******* ******* ****** ******
****** ******* ******* ******** **
** ***** ***** ****
******* ******* ********
******* ******* ******
P 4 ****** ******* ******* ******* ******* ******** ******
****** ****** ***** ******* ******* ****** ******
****** ******* ******* ******* ******* ******** ******
****** ******* ******* ******* ******* ****** ******
****** ******* ******* ******** **
** ***** ***** ****
******* ******* ********
******* ******* ******
B 1A ****** ******* ******* ******* ******* ******** ******
****** ****** ***** ******* ******* ****** ******
****** ******* ******* ******* ******* ******** ******
****** ******* ******* ******* ******* ****** ******
** ******* ******* ******** **
***** ***** ****
******* ******* ********
******* ******* ******
106
B 1B ****** ******* ******* ******* ******* ******** ******
****** ****** ***** ******* ******* ****** ******
****** ******* ******* ******* ******* ******** ******
****** ******* ******* ******* ******* ****** ******
** ******* ******* ******** **
***** ***** ****
******* ******* ********
******* ******* ******
B 2 ****** ******* ******* ******* ******* ******** ******
****** ****** ***** ******* ******* ****** ******
****** ******* ******* ******* ******* ******** ******
****** ******* ******* ******* ******* ****** ******
** ******* ******* ******** **
***** ***** ****
******* ******* ********
******* ******* ******
S1A ****** ******* ******* ******* ******* ******** ******
****** ****** ***** ******* ******* ****** ******
****** ******* ******* ******* ******* ******** ******
****** ******* ******* ******* ******* ****** ******
** ******* ******* ******** **
***** ***** ****
******* ******* ********
******* ******* ******
S1B ****** ******* ******* ******* ******* ******** ******
****** ****** ***** ******* ******* ****** ******
****** ******* ******* ******* ******* ******** ******
****** ******* ******* ******* ******* ****** ******
** ******* ******* ******** **
***** ***** ****
******* ******* ********
******* ******* ******
S 2 ****** ******* ******* ******* ******* ******** ******
****** ****** ***** ******* ******* ****** ******
****** ******* ******* ******* ******* ******** ******
****** ******* ******* ******* ******* ****** ******
** ******* ******* ******** **
***** ***** ****
******* ******* ********
******* ******* ******
S 3 ****** ******* ******* ******* ******* ******** ******
****** ****** ***** ******* ******* ****** ******
****** ******* ******* ******* ******* ******** **
****** ******* ******* ******* ******* ****** ******
** ******* ******* ******
******* ******* **
***** *****
******* *******
107
S 4 ****** ******* ******* ******* ******* ******** ******
* ******* ******* ****** *
******* ******* ********
******* ******* ******
******* ******* ********
***** ***** ****
******* ******* ********
******* ******* ******
108
ATTACHMENT B
METRIC DEFINITION
****
This entire attachment, consisting of 17 pages, has been omitted pursuant to a
request for confidentiality treatment.
109
SCHEDULE C
PRICING SCHEDULE
****
This entire schedule, consisting of 11 pages, has been omitted pursuant to a
request for confidentiality treatment.
110
SCHEDULE D
Z-TEL FUNDAMENTAL TECHNOLOGY
****
This entire schedule, consisting of 3 pages, has been omitted pursuant to a
confidential treatment request.
111
SCHEDULE E
EXISTING Z-TEL TECHNOLOGY
****
This entire schedule, consisting of 15 pages, has been omitted pursuant to a
request for confidential treatment.
112
SCHEDULE 10.8
ACCEPTABLE USE POLICY
This Acceptable Use Policy ("AUP") establishes guidelines for acceptable use of
e-mail, internet, networking and operational support system services (the "AUP
SERVICES") provided by Z-Tel Communications, Inc. ("WE" or "Z-TEL") to Sprint,
Sprint's Affiliates Sprint's End Users (each, a "SPRINT CUSTOMER" and
collectively "SPRINT CUSTOMERS"). Sprint has no obligation under this Schedule
10.8 concerning any prohibited action described in this Schedule 10.8 by any
Sprint Customer other than Sprint and Sprint's Owned Affiliates unless the
Sprint Customer accessed Z-Tel's systems through a Sprint account or Sprint
interface under this Agreement.
I. SYSTEM AND NETWORK SECURITY.
Z-Tel reserves the right to take action against the unauthorized use or
attempted unauthorized use of Z-Tel's AUP Services or systems. Unauthorized use
or attempted unauthorized use includes, but is not limited to, password
cracking, defrauding others into releasing their passwords, denial-of-service
attacks, sending packets with an illegal packet size, UDP flooding,
ping-flooding, half-open TCP connection flooding, etc. A Sprint Customer may not
use Z-Tel's systems, programs, scripts and commands, nor send messages, with the
intent to interfere with any End User's terminal session.
A Sprint Customer may not use the AUP Services in a manner that
encumbers Z-Tel's disk space, processors or other system resources beyond those
allowed by the specific type of account. A Sprint Customer may not make any
attempts to interfere with an AUP Service, overload an AUP Service or attempt to
disable a Z-Tel host. A Sprint Customer may not use any of the AUP Services or
Z-Tel's systems to transmit computer viruses, trojan horses, cancelbots, or
other destructive programming code. Non-authorized relays through any third
party systems are strictly prohibited.
Each Sprint Customer must respect the privacy of others. Each Sprint
Customer will not represent itself as another person unless explicitly
authorized to do so by that person.
Z-Tel may take actions reasonably necessary to protect its network, systems,
and relationships with third parties when a Sprint Customer's activity is
causing critical performance problems for Z-Tel. When any Sprint Customer's
service is compromised due to Z-Tel action under this policy, Z-Tel will provide
concurrent Super Notice to Sprint as described on the Designee Schedule.
When a Sprint Customer is apparently violating this policy but the
activity is not causing significant performance problems for Z-Tel, Z-Tel will
provide notice of its intent to impair the service of the Sprint Customer at
least three Business Days before such action is taken. Z-Tel will work with
Sprint to avoid impairment to the service of a Sprint Customer by identifying
potential concerns with individual Sprint Customers and notifying Sprint so that
Sprint may work with the Sprint Customer to change its behavior before it
becomes a significant problem.
113
II. E-MAIL
Each Sprint Customer will not continue to send e-mail through Z-Tel's
systems to a recipient if that recipient has requested that the Sprint Customer
discontinue the communication. Each Sprint Customer will not, through Z-Tel's
systems, flood/spam newsgroups with commercial or non-commercial postings. The
Sprint Customers will not use Z-Tel's AUP Services to send unsolicited
advertising messages to non-Sprint End Users.
Other activities that Sprint Customers are prohibited from engaging in
through Z-Tel's systems under this Agreement include:
(i) transmission of e-mail or newsgroup postings that are
harassing, libelous, defamatory, legally obscene or
pornographic, threatening, abusive, or hateful to
non-consenting recipients;
(ii) forwarding or propagation of chain letters of any
type (including charity requests or petitions for
signatures);
(iii) "Mail bombing" or "Syn flood" attacks that overburden
a recipient computer system by sending a high volume
of spurious data which effectively impedes
functionality, or totally disables recipient
system(s), and any other methods of denial of
service;
(iv) forging header information on e-mail or any other
material transmitted through our servers;
(v) impersonating any person or entity including, but not
limited to, any Z-Tel employee or officer;
(vi) forging headers or otherwise manipulate identifiers
in order to disguise the origin of any Content (as
defined in Section III below);
(vii) stalking or otherwise harassing another;
(viii) collecting or storing proprietary information about
non-Sprint End Users; and
(ix) using the Sprint Customer's account, or network
connection, to collect replies of messages sent from
any another provider that violates the rules of this
AUP.
III. CONTENT
All information, data, text, sound, messages or other materials that
are publicly posted on a website or privately transmitted by a party (other than
Z-Tel) ("CONTENT") using Z-Tel's systems are the sole responsibility of the
person that originated the Content.
114
Z-Tel exercises no control whatsoever over the Content created on or passing
through its network and, therefore, does not guarantee the accuracy, integrity
or quality of the Content. Each Sprint Customer, and not Z-Tel, is entirely
responsible for all Content that it uploads, posts, emails or otherwise
transmits via the AUP Services. Under no circumstances will Z-Tel be liable in
any way for any Content, including, but not limited to, for any errors or
omissions in any Content, or for any loss or damage of any kind incurred as a
result of the use of any Content posted, emailed or otherwise transmitted by the
AUP Services. The inclusion of a link on any site managed by Z-Tel does not
imply an endorsement of the linked site by Z-Tel.
IV. COMPLIANCE WITH LAW; COPYRIGHT AND OTHER INTELLECTUAL PROPERTY
INFRINGEMENT.
The Sprint Customers may not use any AUP Service to initiate a
transmission of or store any information, data, or material in a manner that
would intentionally or unintentionally violate any applicable local, state,
national or international treaties, laws, rules or regulations, including, but
not limited to:
(i) any applicable patent, trademark or copyright law,
(ii) any regulations promulgated by the U.S. Securities and
Exchange Commission, or
(iii) any rules of any national or other securities exchange,
including, without limitation, the New York Stock Exchange, the
American Stock Exchange and any NASDAQ market.
Z-Tel reserves the right to remove any and all materials from its
systems that it reasonably believes infringe on another's copyright or other
intellectual property rights. Z-Tel may remove these materials at any time upon
receiving a complaint or notice of alleged infringement. If Sprint has a good
faith belief that a user of Z-Tel's AUP Services is infringing on a copyright,
please notify us:
Legal Counsel
Z-Tel Communications, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any such notification should include the identity and location of the alleged
infringing material.
The Sprint Customers cannot ▇▇▇ or recover any damages whatsoever from
Z-Tel as a result of Z-Tel's decision to remove offending material from Z-Tel's
server.
VII. INTERNATIONAL USE
Z-Tel makes no representation that materials on its site are
appropriate or available for use in locations outside the United States, and
accessing them from territories where their contents are illegal is prohibited.
Sprint Customers who choose to access Z-Tel's network or Web site from other
locations do so on their own initiative and are responsible for compliance with
local laws.
VIII. GENERAL
Use of other organizations' networks or computing resources is subject to their
respective permission and usage policies.
115
SCHEDULE 13.1
CONDITIONS, RESTRICTIONS, RULES, POLICIES, PROCEDURES, LIMITATIONS AND RIGHTS
IMPOSED OR GRANTED UNDER Z-TEL'S THIRD PARTY AGREEMENTS AND LICENSES
To the extent Sprint or any Sprint Affiliate, or any of their
respective employees, gain, under this Agreement, access to or use of any
software, hardware, technology, technical information, documentation, or other
intellectual property ("THIRD-PARTY TECHNOLOGY") provided to Z-Tel by any
third-party vendor ("Z-TEL THIRD-PARTY VENDOR"), Sprint will comply with the
following obligations and ensure that the Sprint Affiliate or employee also
complies with the following obligations, but in each case only to the extent
that Z-Tel is obligated to do so.
To the extent that any agent (including marketing agents) or other
independent contractor of any tier of Sprint or any Sprint Owned Affiliate, or
any Sprint End User, gains, under this Agreement through Sprint, access to or
use of any Third Party Technology provided to Z-Tel by any Z-Tel Third-Party
Vendor, Sprint will ensure that the agent, independent contractor or Sprint End
User complies with the obligations set forth below (but only to the extent Z-Tel
is obligated to do so).
1. Sprint may use Third-Party Technology only in furtherance of this
Agreement and only on the terms and conditions of this Agreement. Sprint will
not copy, distribute, or disseminate any Third-Party Technology or any part
thereof, except as expressly permitted by and subject to the limits of Sprint's
license rights under this Agreement.
2. Sprint will:
(a) hold Confidential Information of Z-Tel Third-Party Vendors
in strict confidence;
116
(b) limit disclosure of Z-Tel Third-Party Vendor
Confidential Information to Sprint's own employees
and others having a need to know the Confidential
Information;
(c) notify Z-Tel promptly of any unauthorized use or
disclosure of Z-Tel Third-Party Vendor Confidential
Information; and
(d) cooperate with and assist Z-Tel to stop or minimize
any such unauthorized use or disclosure.
Sprint will protect the confidentiality of the Third-Party Technology,
using the same degree of care used to protect its own intellectual property of
like importance, but in any case using no less than a reasonable degree of care.
117
DESIGNEE SCHEDULE SPRINT AND Z-TEL CONTACT INFORMATION
A. In accordance with Section 5.3.6 of the Agreement the following persons will
be contacted in the event of a billing dispute:
Sprint (Name/Title) Z-Tel (Name/Title)
------------------- ------------------
Within ** calendar days ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Manager, Decision Support Accounts Receivable
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Manager
Mailstop KSOPHE0406 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Blvd.
▇▇▇▇.▇.▇▇▇▇@▇▇▇▇.▇▇▇▇▇▇.▇▇▇ ▇▇▇▇▇ ▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇@▇-▇▇▇.▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Within ** calendar days ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Director, Decision Support Director of Finance &
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Accounting
Mailstop KSOPHE0406 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Blvd.
▇▇▇▇.▇.▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇▇▇▇.▇▇▇ ▇▇▇▇▇ ▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇@▇-▇▇▇.▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
118
Within ** calendar days ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Vice President Vice President
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 601 South Harbour Island
Mailstop ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Suite 220
▇▇▇.▇.▇▇▇▇▇@▇▇▇▇.▇▇▇▇▇▇.▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇▇@▇-▇▇▇.▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
B. In accordance with Section 21.14.1, all notices under the Agreement will be
sent:
To Z-Tel:
Z-Tel Communications, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
To Sprint:
Sprint Communications Company L.P.
Mailstop: KSOPHE 0410-4B177
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
and, if the notice is to Z-Tel, a copy, which will not constitute
notice, is delivered, deposited for delivery, mailed or sent in the
same manner to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esquire
Z-Tel Communications, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and, if the notice is to Sprint, a copy, which will not constitute
notice, is delivered, deposited for delivery, mailed or sent in the
same manner to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esquire
Sprint Communications Company L.P.
Mailstop: KSOPHN 0304-3B653
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
119
Any Party may change the address to which notices are to be delivered by giving
notice of the change of address in the manner set forth above
C. In accordance with Section 21.14.2 of the Agreement, Super Notice will be
sent:
If to Z-Tel:
Z-Tel Communications, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇-▇▇▇.▇▇▇
If to Sprint:
Sprint Communications Company L.P.
Mailstop: KSOPHE0402
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇
Email: ▇▇▇.▇.▇▇▇▇▇@▇▇▇▇.▇▇▇▇▇▇.▇▇▇
and if to Sprint under Schedule 10.8, also to:
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▇▇▇▇▇▇ A
Mailstop: KSOPHE0402-4C450
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EXHIBIT A
TRANSITION ESCROW AGREEMENT
This Transition Escrow Agreement (the "Agreement") is dated as of ________,
2003, by and among COMMERCE BANK, NATIONAL ASSOCIATION, Kansas City, Missouri, a
national banking association duly organized and existing under the laws of the
United States (the "Escrow Agent"), SPRINT COMMUNICATIONS COMPANY L.P., a
Delaware limited partnership ("Sprint"), and Z-TEL COMMUNICATIONS, INC., a
Delaware corporation ("Z-Tel")(each a "Party" and collectively the "Parties").
Sprint and Z-Tel are parties to a Services Agreement (as defined in Section 1).
Under the terms of the Services Agreement, Sprint has agreed to deposit, as
security for payment, a portion of projected fees for Z-Tel services into escrow
with Escrow Agent upon execution of this Agreement.
In consideration of the mutual covenants set forth in this Agreement, the
Parties agree as follows:
1. DEFINITIONS.
"AUTHORIZED INVESTMENTS" means those investments acceptable to Sprint
as communicated by Sprint to Escrow Agent from time to time, which
investments will be in AAA rated, short-term, investment grade
instruments that can be sold in a secondary market.
"AUTHORIZED REPRESENTATIVE" means, as to Sprint, _______________; and as to
Z-Tel, ___________________.
"ESCROW ACCOUNT" means the escrow account created under Section 2 of
this Agreement and maintained by Escrow Agent under this Agreement.
"ESCROW AGENT" means Commerce Bank, National Association, Kansas City,
Missouri, or its successor under this Agreement.
"ESCROW ASSETS" means the assets deposited into the Escrow Account
under Section 3 and any substitutions, replacements, investments or
reinvestments of the assets under this Agreement.
"EXCESS BALANCE DISBURSEMENT REQUEST" has the meaning set
forth in Section 6(a).
"INVESTMENT INCOME" means earnings accrued from the investment of the
Escrow Assets.
"SERVICES AGREEMENT" means the Agreement for Resale of Local Wireline
Telecommunications Services and Provision of Ancillary Services dated
as of February __, 2003, between Sprint and Z-Tel.
"UNPAID FEES DISBURSEMENT REQUEST" has the meaning set forth in
Section 6(b).
All capitalized terms used, but not defined in this Agreement have the
meaning set forth in the Services Agreement (which meanings are incorporated
into this Agreement by this reference).
2. CREATION OF THE ESCROW ACCOUNT. Contemporaneously with the execution
and delivery of this Agreement, Escrow Agent will create and establish an escrow
account for the purpose of receiving and holding the Escrow Assets in trust
under this
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Agreement (the "ESCROW ACCOUNT").
3. OWNERSHIP AND REGISTRATION OF THE ESCROW ASSETS. The Escrow Assets
will be the property of Sprint until disbursed under this Agreement. Escrow
Agent will hold the Escrow Assets in bearer form (if not cash) or, if
registered, registered in the name of Escrow Agent or its nominee.
4. INITIAL DEPOSIT TO THE ESCROW ACCOUNT.
(a) Under the Services Agreement, Sprint agreed to deliver to
Escrow Agent for deposit into the Escrow Account certain funds for
Basic System Support fees, ILEC Recurring fees, ILEC Non-Recurring
fees, ILEC Usage fees, Z-Tel Dedicated Support fees and Third Party
unit-based fees (collectively, the "TRANSITION FEES") for the Sprint
End Users that have not been Transitioned. The purpose of the escrow is
to secure Sprint's payment obligations to Z-Tel. No amounts would be
escrowed if the Transition has not occurred because Z-Tel has not
completed the necessary work on the ILEC interfaces.
(b) The specific amount that Sprint agreed to escrow is
determined as follows:
(i) if the Transition has been delayed beyond the
Transition Date (as defined in Section 2.5.5(c) of the
Services Agreement) for two (2) months or less, the amount to
be escrowed is one month's Transition Fees (as estimated
reasonably and in good faith and based on the most current
Committed Forecast described in Section 10.12 of the Services
Agreement, the "TRANSITION FEE FORECAST") for the Sprint End
Users that have not yet been Transitioned, and
(ii) if the Transition has been delayed beyond the Transition
Date for more than two (2) months, the amount to be escrowed
is two (2) months' Transition Fees (based on the Transition
Fee Forecast) for the Sprint End Users that have not yet been
Transitioned.
(iii) however, after the initial deposit, the Escrow Account
balance will not fall below an amount equal to at least fifty
(50) percent of the Escrow Account balance from the previous
month, without the prior consent of Z-Tel unless a final
disbursement of the Escrow Funds has occurred.
(c) Upon execution of this Agreement Sprint will deposit into the
Escrow Account the amount described in Section 4(b)(i). Sprint and
Z-Tel agree that this amount is $____________.
(d) Escrow Agent is not responsible for the sufficiency of the amount of
the Escrow Assets. Escrow Agent will hold the Escrow Assets in trust
and disburse them only as set forth in this Agreement.
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5. TRUE-UP OF ESCROW ASSET BALANCE. Sprint and Z-Tel will true-up the
Escrow Account Balance on a monthly basis until the termination of this
Agreement as follows:
(a) Within a reasonable period after the end of each month after the
Transition Date, Escrow Agent will provide to Sprint and Z-Tel a statement
reflecting the balance of the Escrow Assets.
(b) Within five (5) Business Days after receiving Escrow Agent's
statement, Sprint will deposit in the escrow the additional funds that are
necessary to cause the balance of the Escrow Assets to equal or exceed the
amount then required under
Section 4.
6. DISBURSEMENTS.
(a) Sprint is entitled to disbursement from the escrow of the
amount by which the balance of the Escrow Assets reflected in Escrow
Agent's statement exceeds the amount then required under Section 4.
Sprint may request this disbursement solely by sending to Z-Tel a
written request for escrow disbursement. Z-Tel will within five (5)
Business Days request disbursement from the escrow, of the amount by
which the balance of the Escrow Assess reflected in the Escrow Agent's
statement exceeds the amount then required under Section 4, by sending
to the Escrow Agent a request for disbursement in the form attached to
this Agreement as Attachment A (an "EXCESS BALANCE DISBURSEMENT
REQUEST"), with a contemporaneous copy to Sprint.
(b) Z-Tel is entitled to disbursements from the escrow from time to time
during the term of this Agreement in amounts equal to any Transition
Fees payable by Sprint under the Services Agreement that Sprint does
not pay when due. Z-Tel may request this disbursement solely by sending
to Escrow Agent a request for disbursement in the form attached to this
Agreement as Attachment B (an "UNPAID FEES DISBURSEMENT REQUEST"), with
a contemporaneous copy to Sprint.
(c) Escrow Agent will disburse the Escrow Assets in accordance with the
following provisions:
(i) If Escrow Agent receives an Excess Balance Disbursement
Request from Z-Tel requesting that all or any portion of the
Escrow Assets be disbursed to Sprint, Escrow Agent will
disburse the requested Escrow Assets to Sprint in accordance
with the instructions contained in the Excess Balance
Disbursement Request within ten (10) Business Days after
receiving the Excess Balance Disbursement Request.
(ii) If Escrow Agent receives a Unpaid Fees Disbursement
Request from Z-Tel (with Z-Tel's certification of its delivery
of the request to Sprint and
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Z-Tel's certification that the Escrow Assets requested to be
disbursed to Z-Tel are for Transition Fees payable by Sprint
under the Services Agreement that Sprint has not paid when
due) requesting that all or any portion of the Escrow Assets
be disbursed to Z-Tel, Escrow Agent will disburse the
requested Escrow Assets to Z-Tel in accordance with the
instructions contained in the Unpaid Fees Disbursement Request
within ten (10) Business Days after receiving the Unpaid Fees
Disbursement Request without regard to any objection from
Sprint concerning the Unpaid Fees Disbursement Request.
(d) The Parties agree and acknowledge that (i) only Z-Tel may
seek disbursement from the Escrow Agent, (ii) Z-Tel will be irreparably
harmed by any delay in disbursement by the Escrow Agent relative to any
Unpaid Fees Disbursement Request, and (iii) Sprint may not threaten to
take or take any action to delay (other than obtaining a stay from a
court of competent jurisdiction) the payment by the Escrow Agent.
7. INCOME ON ESCROW ASSETS.
(a) All Investment Income, if any, is solely Sprint's property.
(b) At the time of the final disbursement of the Escrow Assets, Escrow
Agent will immediately disburse to Sprint all Investment Income in the
manner Sprint instructs except to the extent such Investment Income is
disbursed to Z-Tel because the balance of the Escrow Assets falls short
of the amount then required under Section 4.
8. INVESTMENT OF ESCROW ASSETS. Escrow Agent will invest and reinvest
the Escrow Assets in Authorized Investments as Sprint directs in writing from
time to time. Escrow Agent will initially invest the Escrow Assets in the
Financial Square Treasury Obligation Fund.
9. TERMINATION. This Agreement will continue in effect until Escrow
Agent has disbursed all of the Escrow Assets under this Agreement, at which time
this Agreement will terminate. The provisions of Sections 1, 4 through 8 and 10
through 23 will survive the termination of this Agreement.
10. FEES AND EXPENSES. Escrow Agent will be entitled to the fees and
expenses set forth on Attachment B for performing its duties under this
Agreement. Sprint and Z-Tel will each pay for one-half (1/2) of all fees or
expenses payable to Escrow Agent under this Agreement.
11. DUTIES OF ESCROW AGENT.
(a) Escrow Agent is liable as a depository only, with its duties being
only those specifically provided in this Agreement, which are
ministerial in nature and not
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discretionary. Escrow Agent is not responsible for any mistake of fact
or error in judgment, or for any acts or failure to act of any kind it
takes in good faith and believes to be authorized or within the rights
or powers conferred under this Agreement, unless there is shown willful
misconduct or gross negligence.
(b) Escrow Agent is not responsible for the sufficiency or accuracy of
the form, execution or validity of the documents delivered or Escrow
Assets deposited under this Agreement, nor for any description of
property or other matter noted in the documents. Escrow Agent is not
responsible for any default by Sprint or Z-Tel. Escrow Agent has no
obligation to seek Sprint's and Z-Tel's performance of their respective
obligations under this Agreement. Escrow Agent is not responsible for
the lapsing of any rights under any statutes of limitation concerning
the Escrow Assets. Escrow Agent is not liable for collection of items
until it receives the cash proceeds of the items. Escrow Agent is not
liable for interest on any deposit of money.
(c) Escrow Agent is not responsible for the identity,
authority or rights of persons executing or delivering, or purporting
to execute or deliver any document or item under this Agreement and
when performing its duties under this Agreement it may rely absolutely
and be fully protected in acting upon any item, document or other
writing it believes to be authentic. Escrow Agent may, as a condition
to the disbursement of money or property, require from the payee or
recipient a receipt for the disbursement and, upon final payment or
distribution, require a release from any liability arising out of its
execution or performance of its obligations under this Agreement.
(d) Sprint and Z-Tel will jointly indemnify and hold harmless
Escrow Agent from and against all costs, damages, liabilities and
expenses Escrow Agent incurs in connection with or arising out of this
Agreement that Escrow Agent incurs as a result of claims or actions by
third parties. Escrow Agent may consult with and engage the services of
legal counsel of its choice with respect to any matter pertaining to
this Agreement. Sprint and Z-Tel will jointly and severally reimburse
Escrow Agent for the reasonable costs and expenses of the legal
counsel.
(e) Escrow Agent retains the right to resign upon giving at
least thirty (30) calendar days' prior written notice to Sprint and
Z-Tel.
12. GOOD FAITH PERFORMANCE. The parties to this Agreement will act in good
faith in the performance of their obligations under this Agreement consistent
with the purposes of this Agreement. Except as otherwise specifically noted in
this Agreement, neither party will unreasonably delay, withhold or condition any
approval or consent that this Agreement requires or permits.
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13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the Parties concerning the subject matter of this Agreement and supersedes all
prior agreements, understandings and arrangements, both oral and written,
between the Parties concerning the subject matter. Furthermore, this Agreement
has been negotiated and fully reviewed by counsel for all Parties. Except as
otherwise provided in this Agreement, this Agreement may not be modified,
amended, altered or rescinded in any manner, except by written instrument signed
by both of the Parties. All attachments, schedules and other attachments to this
Agreement are incorporated by this reference as integral parts of this
Agreement.
14. ASSIGNMENT. No Party may assign this Agreement without the written consent
of the other Parties, which will not be unreasonably withheld. Any attempt to
assign this Agreement in contravention of the preceding sentence is void.
Notwithstanding the foregoing, Sprint may assign its rights and obligations
under this Agreement to any of its Owned Affiliates, but upon the assignment and
assumption, Sprint will remain obligated under this Agreement for such assigned
obligations.
15. BINDING AGREEMENT. Subject to the preceding paragraph, this Agreement will
inure to the benefit of and be binding on the Parties and their respective
successors and permitted assigns.
16. LITIGATION VENUE. In the event of litigation arising from any dispute under
this Agreement, the Parties agree that venue will not be in Kansas or Florida.
17. GOVERNING LAW. This Agreement will be governed and interpreted under the
substantive laws of Missouri, without reference to its principles of conflicts
or choice of law. The Parties acknowledge that this Agreement will be performed
in part in Missouri.
18. LEGAL FEES. Regarding any dispute under this Agreement, a prevailing party,
as determined by a court of competent jurisdiction, will be entitled to payment
of the entire court costs and reasonable attorneys' fees incurred in
investigating, preparing and conducting any litigation that might arise under
this Agreement.
19. NOTICES.
(a) Any notices or deliveries permitted or required by this Agreement
must be given by messenger or by overnight delivery with Federal
Express, United Parcel Service, Airborne Express or a similarly
nationally recognized overnight delivery service. These notices or
deliveries will be deemed to have been given (i) upon delivery by
messenger, if a receipt is obtained for delivery, (ii) one (1) calendar
day after timely deposit for overnight delivery with Federal Express,
United Parcel Service, Airborne Express or similar nationally
recognized overnight delivery service, if the service obtains a
confirmation of delivery, or (iii) three (3) Business Days after
mailing, if mailed via certified or registered U.S. mail, return
receipt requested; if the notice is delivered, deposited for delivery,
mailed or sent to the Party's address as set forth below:
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To Commerce:
Commerce Bank, N.A.
Corporate Trust Department, TBMZ-5
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To Commerce via messenger or overnight delivery:
Commerce Bank, N.A.
Attn: Corporate Trust Department
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To Z-Tel:
Z-Tel Communications, Inc.
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Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
To Sprint:
Sprint Communications Company L.P.
Mailstop: KSOPHE 0410-4B177
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▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
and, if the notice is to Z-Tel, a copy, which will not constitute
notice, is delivered, deposited for delivery, mailed or sent in the
same manner to
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esquire
Z-Tel Communications, Inc.
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and, if the notice is to Sprint, a copy, which will not constitute
notice, is delivered, deposited for delivery, mailed or sent in the
same manner to:
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esquire
Sprint Communications Company L.P.
Mailstop: KSOPHN 0304-3B653
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▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Any Party may change the address to which notices are to be delivered
by giving notice of the change of address in the manner set forth
above.
(b) Notices deemed to have been given or delivered as set forth above
on a Saturday, Sunday or legal holiday will instead be deemed to have
been given or delivered on the next succeeding day that is not a
Saturday, Sunday or legal holiday.
20. WAIVER. No failure or delay by any Party to this Agreement in the exercise
of any right, power or remedy it may have will operate as a waiver, nor will any
single or partial exercise of any right, power or remedy by either Party
preclude any other or further exercise by the Party of that right, power or
remedy or the exercise of any other right, power or remedy. No express waiver or
assent by any Party to any breach of or default in any term or condition of this
Agreement will constitute a waiver of or assent to any succeeding breach of or
default in the same or any other term or conditions of this Agreement.
21. CONSTRUCTION. This Agreement was negotiated at arms' length and will not be
construed more strongly against any Party regardless of which Party was
responsible for its preparation. Whenever from the context it appears
appropriate, each term stated in either the singular or the plural includes the
singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender include the other genders. The word "Agreement" and words of
similar import referring to this Agreement refer to this Agreement as a whole,
including the Schedules and Attachments attached to it, and not to any
particular provision of this Agreement. Whenever the word "include," "includes"
or "including" is used in this Agreement, it is deemed to be followed by the
words "without limitation."
22. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable, this Agreement will be constructively amended to the extent
necessary and possible to achieve the same objectives as the severed provision
was intended to achieve, and the remaining provisions of this Agreement will
continue in full force and effect.
23. COUNTERPARTS. This Agreement may be executed in several counterparts, all
of which taken together will constitute one single agreement between the
Parties. Signed facsimile copies of this Agreement, addenda, attachments,
schedules and attachments will legally bind the Parties to the same extent as
original documents.
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24. WAIVER OF JURY TRIAL. Z-Tel, Commerce, and Sprint knowingly, voluntarily
and intentionally waive any rights they may have to a trial by jury in respect
of any litigation arising in based on, or arising out of, under or in connection
with, this Agreement. This provision is a material inducement for the Parties to
enter into this Agreement.
This Agreement is executed as of the date first above written.
SPRINT COMMUNICATIONS Z-TEL COMMUNICATIONS, INC.
COMPANY L.P.
By________________________ By
Name______________________ Name ______________________
Title ____________________ Title _______________________
COMMERCE BANK, N.A.
By _________________________
Name _______________________
Title ______________________
ATTACHMENT A
FORM OF EXCESS BALANCE DISBURSEMENT REQUEST
This disbursement request (the "EXCESS BALANCE DISBURSEMENT REQUEST") is made as
of __________, by Z-Tel Communications, Inc., a Delaware corporation
("Z-TEL").
Z-Tel, Sprint Communications Company L.P, a Delaware limited partnership
("SPRINT"), and Commerce Bank, N.A., Kansas City, Missouri, a national banking
association duly organized and existing under the laws of the United States (the
"ESCROW AGENT"), are each parties to that certain Transition Escrow Agreement
dated ___________ (the "ESCROW AGREEMENT").
In accordance with Section 5 of the Escrow Agreement, Z-Tel requests that Escrow
Agent distribute [$___________ from] the Escrow Assets to Sprint pursuant to the
wire transfer instructions attached as Schedule I.
Z-Tel has caused this Excess Balance Disbursement Request to be executed by its
respective duly authorized officers on the date first written above.
Z-TEL COMMUNICATIONS, INC.
By: ____________________________
Name: __________________________
Title: _________________________
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ATTACHMENT B
FORM OF UNPAID FEES DISBURSEMENT REQUEST
This disbursement request (the "UNPAID FEES DISBURSEMENT REQUEST") is made as
of __________, by Z-Tel Communications, Inc., a Delaware corporation ("Z-TEL").
Z-Tel, Sprint Communications Company L.P., a Delaware limited partnership
("SPRINT"), and Commerce Bank, N.A., Kansas City, Missouri, a national banking
association duly organized and existing under the laws of the United States (the
"ESCROW AGENT"), are each parties to that certain Transition Escrow Agreement
dated ___________ (the "ESCROW AGREEMENT").
In accordance with Section 5 of the Escrow Agreement, Z-Tel requests that Escrow
Agent distribute [$_________ from] the Escrow Assets to Z-Tel pursuant to the
wire transfer instructions attached as Schedule I.
Z-Tel certifies that it has delivered a copy of this Unpaid Fees
Disbursement Request to Sprint pursuant to the requirements of Section 19 of the
Escrow Agreement.
Z-Tel certifies that the Escrow Assets requested to be disbursed to
Z-Tel are for Transition Fees payable by Sprint under the Services Agreement
that Sprint has not paid when due.
Z-Tel has caused this Unpaid Fees Disbursement Request to be executed by its
respective duly authorized officers on the date first written above.
Z-TEL COMMUNICATIONS, INC.
By: _______________________
Name: _____________________
Title: ____________________
SCHEDULE I
WIRE TRANSFER INSTRUCTIONS
Bank:
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Exhibit B
TECHNOLOGY ESCROW AGREEMENT
Account Number ______________________
This Technology Escrow Agreement ("Agreement") is effective February 4,
2003, among DSI TECHNOLOGY ESCROW SERVICES, INC. ("DSI"), Z-Tel Communications,
Inc., a Delaware corporation ("Company"), and SPRINT COMMUNICATIONS COMPANY L.P.
a Delaware limited partnership ("Sprint") (collectively the "PARTIES.")
A. Company and Sprint have entered into an Agreement for Resale of Local
Wireline Telecommunications Services and Provision of Ancillary Services dated
as of February 4, 2003, pertaining in part to Sprint's use of certain
fundamental technology of Company (the "SERVICES AGREEMENT").
B. Company desires to conceal its fundamental technology except under
certain limited circumstances.
C. The availability of the fundamental technology of Company is critical
to Sprint in the conduct of its business and, therefore, Sprint needs access to
such fundamental technology under certain circumstances.
D. Company and Sprint desire to establish an escrow with DSI to provide
for the retention, administration and controlled access of and to such
fundamental technology materials of Company.
E. The parties desire this Agreement to be supplementary to the Services
Agreement under the United States Bankruptcy Code, specifically 11 USC Section
365(n).
ARTICLE 1 -- DEPOSITS
1.1 OBLIGATION TO MAKE DEPOSIT. On or before March 21, 2003, Company will
deliver to DSI the fundamental technology and other materials required to be
deposited by the Services Agreement ("DEPOSIT MATERIALS"); the materials to be
delivered initially to DSI are identified on Attachment A. Attachment A has been
prepared and signed by Company and Sprint. DSI has and will have no obligation
with respect to the preparation, signing or delivery of Attachment A.
1.2 IDENTIFICATION OF TANGIBLE MEDIA. Before each delivery of the Deposit
Materials to DSI, Company will conspicuously label for identification each
document, magnetic tape, disk or other tangible media upon which the Deposit
Materials are written or stored. Additionally, Company will complete a
Description of Deposit Materials in the form of Attachment B to this Agreement
by listing each such tangible media by the item label description, the type of
media and the quantity. Each Attachment B will be signed by Company and
delivered to DSI with the Deposit Materials. DSI will have no
obligation with respect to this Agreement, except the obligation to notify the
Parties regarding the status of the account as required in Section 2.2 below,
unless and until Company makes the initial deposit with DSI.
1.3 DEPOSIT INSPECTION. When DSI receives Deposit Materials and the
applicable Attachment B, DSI will conduct a deposit inspection by visually
matching the labeling of the tangible media containing the Deposit Materials to
the item descriptions and quantity listed on Attachment B. In addition to the
deposit inspection, Sprint may elect to cause a verification of the Deposit
Materials in accordance with Section 1.6 below.
1.4 ACCEPTANCE OF DEPOSIT. At completion of each deposit inspection, if
DSI determines that the labeling of the tangible media matches the item
descriptions and quantity on the applicable Attachment B, DSI will date and sign
such Attachment B and mail a copy of it to Company and Sprint. If DSI determines
that the labeling does not match the item descriptions or quantity on such
Attachment B, DSI will:
(a) note the discrepancies in writing on such Attachment B;
(b) date and sign such Attachment B with the exceptions noted; and
(c) mail a copy of such Attachment B to Company and Sprint. DSI's
acceptance of the deposit occurs upon the signing of the applicable
Attachment B by DSI.
Delivery of the signed Attachment B to Sprint is Sprint's notice that the
Deposit Materials have been received and accepted by DSI.
1.5 COMPANY'S REPRESENTATIONS. Company represents as follows:
(a) Company lawfully possesses all of the Deposit Materials
deposited with DSI;
(b) With respect to all of the Deposit Materials, Company has the
right and authority to grant to DSI and Sprint the rights as provided in
this Agreement;
(c) The Deposit Materials are not subject to any lien or other
encumbrance;
(d) The Deposit Materials consist of the fundamental technology and
other materials identified in the Services Agreement and Attachment A; and
(e) The Deposit Materials are readable and useable in their current
form or, if any portion of the Deposit Materials is encrypted, the
decryption tools and decryption keys have also been deposited.
-2-
1.6 VERIFICATION. Sprint will have the right, at Sprint's expense, to
cause a verification of any Deposit Materials by DSI or another neutral party
that is acceptable to Z-Tel. Sprint will notify Company and DSI of Sprint's
request for verification. Company will have the right to be present at the
verification. Verification determines, in different levels of detail, the
accuracy, completeness, sufficiency and quality of the Deposit Materials. In the
event that DSI provides a verification for Sprint pursuant to this Section, DSI
will provide Sprint only information resulting from a Level One Verification as
a Level One Verification is described on Schedule 2.1 to this Agreement.
1.7 DEPOSIT UPDATES. If at any time Company undergoes a scheduled release
to any Deposit Materials, Company will, pursuant to Section 14.4.2 of the
Services Agreement, immediately upgrade or update the Deposit Materials. If at
any time Company implements any upgrade, update patch or other change for any
Deposit Materials that is not a scheduled release, Company will, pursuant to
Section 14.4.2 of the Services Agreement, add these unscheduled release
materials to the Deposit Materials on a monthly basis. Not less frequently than
on a monthly basis during the Term, pursuant to Section 14.4.2 of the Services
Agreement, Company will either:
(a) deposit copies of the then-current Deposit Materials with DSI or
provide to Sprint and to DSI a written statement, signed by Company's
Chief Technology Officer, Senior Vice President Enterprise Systems or more
senior officer, that there has been no change in the Deposit Materials as
of the date of the statement, or
(b) provide to Sprint and to DSI a written statement, signed by
Company's Chief Technology Officer, Senior Vice President Enterprise
Systems or more senior officer, that the Deposit Materials, as of the date
of the statement, are current and accurately reflect the Deposit Materials
as of that date. These written statements will be part of the Deposit
Materials.
All deposit updates will be listed on a new Attachment B and Company will
sign the new Attachment B. Each Attachment B will be held and maintained
separately within the escrow account. An independent record will be created that
will document the activity for each Attachment B. The processing of all deposit
updates will be in accordance with Sections 1.2 through 1.6 above. All
references in this Agreement to the Deposit Materials will include the initial
Deposit Materials and any and all updates.
1.8 REMOVAL OF DEPOSIT MATERIALS. The Deposit Materials may be removed
and/or exchanged only on written instructions signed by Company and Sprint or as
otherwise provided in this Agreement.
ARTICLE 2 -- CONFIDENTIALITY AND RECORD KEEPING
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2.1 CONFIDENTIALITY. DSI will maintain the Deposit Materials in a secure,
environmentally safe, locked facility that is accessible only to authorized
representatives of DSI. DSI will have the obligation to reasonably protect the
confidentiality of the Deposit Materials. Except as provided in this Agreement,
DSI will not disclose, transfer, make available or use the Deposit Materials.
DSI will not disclose the content of this Agreement to any third party. If DSI
receives a subpoena or any other order from a court or other judicial tribunal
pertaining to the disclosure or release of the Deposit Materials, DSI will
immediately notify the parties to this Agreement unless prohibited by law. It
will not be the responsibility of DSI to challenge any such order; provided,
however, that DSI does not waive its rights to present its position with respect
to any such order. DSI will not be required to disobey any order from a court or
other judicial tribunal. (See Section 7.5 below for notices of requested
orders.) In the event that DSI provides a verification for Sprint pursuant to
Section 1.6 of this Agreement, DSI will provide Sprint only information
resulting from a Level One Verification as a Level One Verification is described
on Schedule 2.1 to this Agreement.
2.2 STATUS REPORTS. DSI will issue to Company and Sprint a report
profiling the account history at least semi-annually. DSI may provide copies of
the account history pertaining to this Agreement upon the request of any party
to this Agreement.
2.3 AUDIT OF DSI RECORDS. During the term of this Agreement, Company and
Sprint will each have the right to inspect the written records of DSI pertaining
to this Agreement. Any inspection will be held during normal business hours and
following reasonable prior notice.
ARTICLE 3 -- GRANT OF RIGHTS TO DSI
3.1 TITLE TO MEDIA. Upon delivery of media to DSI, Company transfers to
DSI the title to the media upon which the Deposit Materials are written or
stored. However, this transfer does not include ownership of the proprietary and
third party technology and materials contained on the media, such as any
copyright, trade secret, patent or other intellectual property rights.
3.2 RIGHT TO MAKE COPIES. DSI will have the right to make copies of the
Deposit Materials as reasonably necessary to perform its duties under this
Agreement. DSI will copy all copyright, nondisclosure, and other proprietary
notices and titles contained on the Deposit Materials onto any copies made by
DSI. With all Deposit Materials submitted to DSI, Company will provide any and
all instructions as may be necessary to duplicate the Deposit Materials
including but not limited to the hardware and/or software needed.
3.3 RIGHT TO TRANSFER UPON RELEASE. Company grants to DSI the right to
transfer a copy of the Deposit Materials media to Sprint upon any release of the
Deposit Materials for use by Sprint in accordance with Article 4 below. Except
upon such a
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release or as otherwise provided in this Agreement, DSI will not transfer the
Deposit Materials.
ARTICLE 4 -- RELEASE OF DEPOSIT
4.1 RELEASE CONDITIONS. As used in this Agreement, "RELEASE CONDITION" means any
of the Company Triggering Events as described in the Services Agreement (which
descriptions are incorporated into this Agreement by this reference) including
each of the following Release Conditions:
(i) Z-Tel materially breaches any provision of the Services
Agreement and fails to cure the breach within thirty (30) calendar days
after receiving written notice from Sprint;
(ii) Z-Tel's performance under the Services Agreement as measured by
applicable SLAs for order processing, billing, OSS availability, Repair,
data file transmission or Z-Node availability fails to meet the triggering
event criteria as established in Schedule B of the Services Agreement and
Z-Tel fails to cure this variance within thirty (30) calendar days after
receiving written notice from Sprint;
(iii) there occurs a Disconnect of Z-Tel ILEC UNE services affecting
greater than five percent (5%) of Sprint's End Users that Z-Tel is then
serving through any particular ILEC;
(iv) there is a material adverse change in Z-Tel's regulatory
environment, including any change in applicable Laws that materially and
adversely affects Z-Tel's ability to perform its obligations under this
Agreement;
(v) there is a Change of Control;
(vi) there is a material adverse change in Z-Tel's financial
condition, evidenced by:
(A) simultaneously meeting three or more of the following
criteria:
(1) Z-Tel fails to hold cash and cash equivalents of at
least $6.5 million,
(2) Z-Tel fails to maintain a current ratio (current
assets/(current liabilities less Short Term Deferred Revenue))
greater than point six (0.6),
(3) Z-Tel fails to maintain a cash ratio ((cash and
marketable securities)/(current liabilities less Short Term
Deferred
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Revenue)) greater than point one-five (0.15),
(4) Z-Tel fails to maintain working capital (current
assets minus current liabilities (less Short Term Deferred
Revenue)) greater than negative twenty million dollars (-$20
million),
(5) Z-Tel fails to maintain a ratio of working capital
(current assets minus current liabilities (less Short Term
Deferred Revenue)) divided by total assets greater than
negative point two-three (-0.23), and
(6) Z-Tel materially breaches any agreement for borrowed
money (including any material violation of a debt covenant);
or
(B) Z-Tel receives a going concern qualification from its
auditors;
(vii) Z-Tel ceases ongoing business operations; or
(viii) Z-Tel becomes Bankrupt, makes a general assignment for
benefit of creditors or has a receiver appointed for its assets, or
a court of competent jurisdiction issues an order for Z-Tel's
winding up.
For purposes of this Section cash and cash equivalents exclude any
restricted amounts.
Capitalized terms used in this Section, but not defined in this Section
have the meanings set forth on Attachment E.
4.2 FILING FOR RELEASE. If Sprint believes in good faith that a Release
Condition has occurred, Sprint may provide to DSI written notice of the
occurrence of the Release Condition and a request for the release of the Deposit
Materials by delivering a Notice to DSI and to Company in the form of Attachment
D to this Agreement executed by an officer of Sprint (a "RELEASE INSTRUCTION").
Upon receipt of such notice, DSI will provide a copy of the notice to Company by
commercial express mail.
4.3 RELEASE OF DEPOSIT. Upon receipt of the Release Instruction from
Sprint, DSI has no obligation to determine independently whether a Release
Condition has occurred and no right to refuse to release the Deposit Materials
to Sprint. If Company disputes DSI's release of the Deposit Materials, Company
and Sprint will resolve the dispute as provided in the Services Agreement.
Regardless of whether Company disputes DSI's release of the Deposit Materials,
DSI is authorized and directed by Company and Sprint to release the Deposit
Materials to Sprint upon receipt of the Release Instruction. Any copying expense
in excess of $100 will be chargeable to Sprint. However, DSI is entitled to
receive any fees due DSI before making the release.
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4.4 RETURN OF DEPOSIT. During the term of this Agreement, upon the
resolution of any dispute pursuant to the Services Agreement requiring that the
Deposit Materials be returned to DSI, Sprint will deliver the Deposit Materials,
and all copies of these materials, in accordance with the order issued as a
result of dispute resolution and will certify in writing to Company that Sprint
has no copies of the Deposit Materials in Sprint's possession. Sprint will
conspicuously label for identification each document, magnetic tape, disk or
other tangible media upon which the Deposit Materials are written or stored.
Additionally, Sprint will complete a Description of Deposit Materials in the
form of Attachment B to this Agreement by listing each such tangible media by
the item label description, the type of media and the quantity. The Description
of Deposit Materials will be signed by Sprint and delivered to DSI with the
returned Deposit Materials. Upon receipt of the Deposit Materials DSI will
create a new Attachment B and hold and maintain that Attachment B separately
within the escrow account. DSI will create an independent record that will
document the activity for each above mentioned Attachment B.
4.5 RETENTION BY DSI OF COPY OF DEPOSIT MATERIALS. Following release of
the Deposit Materials, DSI will retain a copy of the Deposit Materials for the
longer of (a) forty-five (45) calendar days and (b) the final resolution of any
dispute pursuant to the Services Agreement seeking the return of the Deposit
Materials to DSI (including the expiration of the time in which Sprint or
Company may seek judicial review of any order issued as a result of the dispute
resolution). DSI will then transfer to Company all copies of the Deposit
Materials then in its possession (including transferring to Company the title to
the media upon which the Deposit Materials are written or stored) and this
Agreement will terminate.
4.6 VERIFICATION OF RETURNED DEPOSIT MATERIALS. If Sprint returns the
Deposit Materials to DSI as contemplated by Section 4.4 of this Agreement, DSI
will, upon written request from Z-Tel, compare file sizes and file names between
the returned Deposit Materials and the previously released Deposit Materials,
and take such other reasonable measures as are appropriate for purposes of
attempting to determine whether the returned Deposit Materials are different
from the previously released Deposit Materials. Sprint maintains the
responsibility to ensure the returned Deposit Materials are identical to those
that were released to Sprint pursuant to Section 4.3. The fees for DSI's
verification described in this Section 4.6 will be paid by Sprint.
ARTICLE 5 -- TERM AND TERMINATION
5.1 TERM OF AGREEMENT. The initial term of this Agreement is for a period
of one year (the "INITIAL TERM"). After the Initial Term has expired, this
Agreement will automatically renew from year-to-year unless (a) Company and
Sprint jointly instruct DSI in writing that the Agreement is terminated; or (b)
DSI instructs Company and Sprint in writing that the Agreement is terminated for
nonpayment in accordance with Section 5.2 or by resignation in accordance with
Section 5.3. If the Deposit Materials are subject to another escrow agreement
with DSI, DSI reserves the right, after the Initial Term, to
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adjust the anniversary date of this Agreement to match the then prevailing
anniversary date of the other applicable escrow arrangements.
5.2 TERMINATION FOR NONPAYMENT. In the event of the nonpayment of fees
owed to DSI, DSI will provide written notice of delinquency to Sprint and
Company. Either Sprint or Company will have the right to make the payment to DSI
to cure the default. If the past due payment is not received in full by DSI
within sixty (60) calendar days after the date of the notice, then DSI will have
the right to terminate this Agreement at any time thereafter by sending written
notice of termination to all parties. DSI will have no obligation to take any
action under this Agreement so long as any payment due to DSI remains unpaid.
5.3 TERMINATION BY RESIGNATION. DSI reserves the right to terminate this
Agreement, for any reason, by providing Company and Sprint with ninety (90)
calendar days' written notice of its intent to terminate this Agreement. Within
the ninety (90) day period, Company and Sprint may provide DSI with joint
written instructions authorizing DSI to forward the Deposit Materials to another
escrow company and/or agent or other designated recipient. If DSI does not
receive said joint written instructions within ninety (90) calendar days after
the date of DSI's written termination notice, then DSI will return or otherwise
deliver the Deposit Materials in accordance with Section 5.4.
5.4 DISPOSITION OF DEPOSIT MATERIALS UPON TERMINATION. Subject to the
foregoing termination provisions, and upon termination of this Agreement, DSI
will return or otherwise deliver the Deposit Materials in accordance with
Company's instructions. If there are no instructions, DSI will return the
Deposit Materials to Company. DSI will have no obligation to return the Deposit
Materials if the Deposit Materials are subject to another escrow agreement with
DSI or have been released to Sprint in accordance with Section 4.3.
5.5 SURVIVAL OF TERMS FOLLOWING TERMINATION. Upon termination of this
Agreement, the following provisions of this Agreement will survive:
(a) Company's Representations (Section 1.5);
(b) The obligations of DSI in Section 2.1 regarding confidentiality
with respect to the Deposit Materials;
(c) The rights granted in the sections entitled Right to Transfer
Upon Release (Section 3.3), if a release of the Deposit Materials to
Sprint has occurred before termination;
(d) The obligation to pay DSI any fees and expenses due;
(e) The provisions of Article 7; and
(f) Any other provisions in this Agreement that specifically state
they survive the termination of this Agreement.
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ARTICLE 6 -- DSI'S FEES
6.1 FEE SCHEDULE. Sprint will pay DSI its standard fees and expenses
applicable to the services provided. DSI will notify Sprint of DSI's fees at
least sixty (60) calendar days before any increase in fees. For any service not
listed on DSI's standard fee schedule, DSI will provide a quote before rendering
the service. Sprint will pay any fees charged by DSI for performing the services
described in Section 4.5 and Section 4.6 of this Agreement.
6.2 PAYMENT TERMS. DSI will not be required to perform any service unless the
payment for that service and any outstanding balances owed to DSI are paid in
full. Initial fees are due upon receipt of a signed contract or receipt of the
Deposit Materials, whichever is earliest. If invoiced fees are not paid within
sixty (60) calendar days after the date of invoice, DSI may terminate this
Agreement in accordance with Section 5.2.
ARTICLE 7 -- LIABILITY AND DISPUTES
7.1 RIGHT TO RELY ON INSTRUCTIONS. DSI may act in reliance upon any
instruction, instrument, or signature from Sprint or Company authorized
representative that DSI believes to be genuine. DSI will not be required to
inquire into the truth or evaluate the merit of any statement or representation
contained in any notice or document. DSI will not be responsible for failure to
act as a result of causes beyond the reasonable control of DSI.
7.2 INDEMNIFICATION. Company and Sprint each agree to indemnify, defend
and hold harmless DSI from any and all claims, actions, damages, arbitration
fees and expenses, costs, attorney's fees and other liabilities ("LIABILITIES")
incurred by DSI relating in any way to this escrow arrangement unless such
Liabilities were caused solely by the negligence or willful misconduct of DSI.
7.3 DISPUTE RESOLUTION. In the event of a dispute between Company and
Sprint pursuant to a release of Deposit Materials under Article 4, Company and
Sprint will resolve such dispute in accordance with the Services Agreement. In
the event of any other dispute relating to or arising from this Agreement, DSI
may submit the matter to any court of competent jurisdiction in an interpleader
or similar action. Any and all costs incurred by DSI in connection with such
action, including reasonable attorneys' fees and costs, will be borne 50% by
each of Company and Sprint. DSI will perform any acts ordered by any court of
competent jurisdiction, without any liability or obligation to any party under
the order by reason of the act.
7.4 CONTROLLING LAW. This Agreement will be governed and construed in
accordance with the laws of the State of Delaware, without regard to its
conflict of law provisions.
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7.5 NOTICE OF REQUESTED ORDER. If any party intends to obtain an order
from any arbitrator or any court of competent jurisdiction that may direct DSI
to take or refrain from taking any action, that party will:
(a) Give DSI at least two (2) Business Days' prior notice of the
hearing;
(b) Include in any such order that, as a precondition to DSI's
obligation, DSI be paid in full for any past due fees and be paid for the
reasonable value of the services to be rendered under such order; and
(c) Ensure that DSI not be required to deliver the original (as
opposed to a copy) of the Deposit Materials if DSI may need to retain the
original in its possession to fulfill any of its other duties.
7.6 LIMITATION OF LIABILITY. In no event will DSI be liable for any
incidental, indirect, special, exemplary, punitive or consequential damages,
including, but not limited to, damages (including loss of data, revenue, and/or
profits) costs or expenses (including legal fees and expenses), whether
foreseeable or unforeseeable, that may arise out of or in connection with this
Agreement; and in no event shall the collective liability of DSI exceed ten
times the fees paid under this Agreement. The foregoing limitation of liability
does not apply with respect to any acts of gross negligence, personal injury
claims, property damage claims (excluding the Deposit), or intellectual property
infringement. The foregoing limitation of liability does not apply to any
unauthorized release of the Deposit Materials by DSI (whether intentionally or
negligently or otherwise), and DSI's liability is limited to adjudged, actual
damages (for the avoidance of doubt, actual damages includes incidental,
indirect, special, or consequential damages, but actual damages excludes
exemplary or punitive damages).
ARTICLE 8 -- GENERAL PROVISIONS
8.1 ENTIRE AGREEMENT. This Agreement, which includes Attachments described
in this Agreement, embodies the entire understanding among the parties with
respect to its subject matter and supersedes all previous communications,
representations or understandings, either oral or written. DSI is not a party to
the Services Agreement between Company and Sprint. DSI's only obligations to
Company or Sprint are as set forth in this Agreement. No amendment or
modification of this Agreement will be valid or binding unless signed by all the
parties to this Agreement, except that Attachment A need not be signed by DSI,
Attachment B need not be signed by Sprint and Attachment C need not be signed.
8.2 NOTICES. All notices, invoices, payments, deposits and other documents
and communications will be given to the parties at the addresses specified in
the attached Attachment C. It will be the responsibility of the parties to
notify each other as provided
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in this Section in the event of a change of address. The parties will have the
right to rely on the last known address of the other parties. Unless otherwise
provided in this Agreement, all documents and communications may be delivered by
first class mail.
8.3 SEVERABILITY. In the event any provision of this Agreement is found to
be invalid, voidable or unenforceable, the parties agree that unless it
materially affects the entire intent and purpose of this Agreement, such
invalidity, voidability or unenforceability will affect neither the validity of
this Agreement nor the remaining provisions in this Agreement, and the provision
in question will be deemed to be replaced with a valid and enforceable provision
most closely reflecting the intent and purpose of the original provision.
8.4 SUCCESSORS. This Agreement will be binding upon and will inure to the
benefit of the successors and assigns of the parties. However, DSI will have no
obligation in performing this Agreement to recognize any successor or assign of
Company or Sprint unless DSI receives clear, authoritative and conclusive
written evidence of the change of parties.
8.5 REGULATIONS. Company and Sprint are responsible for and warrant
compliance with all applicable laws, rules and regulations, including but not
limited to customs laws, import, export, and re-export laws and government
regulations of any country from or to which the Deposit Materials may be
delivered in accordance with the provisions of this Agreement.
Z-TEL COMMUNICATIONS, INC. SPRINT COMMUNICATIONS COMPANY L.P.
By: _________________________________ By: _________________________________
Name:________________________________ Name:________________________________
Title:_______________________________ Title:_______________________________
Date:________________________________ Date:________________________________
DSI TECHNOLOGY ESCROW SERVICES, INC.
By:_______________________________________
Name:_____________________________________
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SCHEDULE 2.1
LEVEL 1 - INVENTORY
This series of tests provides insight into whether the necessary information
required to recreate the Depositor's development environment has been properly
stored in escrow. These tests detect errors that often inhibit effective use of
the escrow deposit.
Steps include: Analyzing deposit media readability, virus scanning, developing
file classification tables, identifying the presence/absence of build
instructions; and identifying materials required to recreate the
Depositor's software development environment. At completion of testing,
DSI will distribute a report to Preferred Beneficiary detailing DSI's
investigation which will include attachments of any build instructions,
file classification tables and listings, and listings of required software
development materials, including without limitation, required source code
languages and compilers, third-party software, libraries, operating
systems, and hardware, as well as DSI's analysis of the deposit (when
identifying materials required to recreate Depositor's software
development environment, DSI will rely on (1) information provided in
Depositor's completed questionnaire, this can be obtained via a DSI
verification representative, and/or (2) DSI's testing experience).
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ATTACHMENT A
MATERIALS TO BE DEPOSITED
Account Number ______________________
Z-Tel represents to Sprint that Deposit Materials delivered to DSI will consist
of the following:
Z-Node OA&M Software
Z-Node Service Software and Configuration Specifications to support:
Voice Mail
Family Mailbox
Find Me
Notify Me
On-Line Account Maintenance
Web Access to Features
Telution Configuration Specifications
Z-Tel Custom Software
Local Calling Area Lookup
Local Calling Cap Viewer
Pre-Processor for CDR (Mediation and Rating)
▇▇▇▇ Processing Scripts
Post-Process Validation
Customer Care Interface (CCI) Software
Agent Desktop Phone (ADP) Software
Call Center IVR Scripts
Report Hierarchy & Menus
ILEC Gateway Software
RTS Provisioning Gateway
RTS middleware
For each item above Z-Tel will provide the applicable source code (where
applicable), related documentation, software development tools and training
materials.
_____________________________________ _____________________________________
Z-Tel Communications, Inc. Sprint Communications Company L.P.
By: _________________________________ By: _________________________________
Name:________________________________ Name:________________________________
Title:_______________________________ Title:_______________________________
Date:________________________________ Date:________________________________
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ATTACHMENT B
DESCRIPTION OF DEPOSIT MATERIALS
Z-Tel Communications, Inc. ___________________________________________________
Account Number _______________________________________________________________
F. Product Name Version
(Product Name will appear as the Attachment B Name on Account History report)
DEPOSIT MATERIAL DESCRIPTION:
Quantity Media Type & Size Label Description of Each Separate Item
______ Disk 3.5" or ____
______ DAT tape ____mm
______ CD-ROM
______ Data cartridge tape ____
______ TK 70 or ____ tape
______ Magnetic tape ____
______ Documentation
______ Other ______________________
PRODUCT DESCRIPTION:
Environment___________________________________________________________________
DEPOSIT MATERIAL INFORMATION:
Is the media or are any of the files encrypted? Yes / No If yes, please include
any passwords and the decryption tools.
Encryption tool name____________________________________ Version______________
Hardware required_____________________________________________________________
Software required_____________________________________________________________
Other required information____________________________________________
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I certify for Z-TEL that the above described___________________________DSI has
inspected and accepted the above Deposit Materials have been transmitted to
DSI:________________________materials (any exceptions are noted above):
Signature________________________ Signature___________________________
Print Name_______________________ Print Name__________________________
Date_____________________________ Date Accepted_______________________
Attachment B#_______________________
Send materials to: DSI, ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
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ATTACHMENT C
DESIGNATED CONTACT
Account Number ______________________
Notices, deposit material returns and Invoices to Z-Tel should be
communications to Z-Tel addressed to:
should be addressed to:
____________________________________
____________________________________
Company Name:_______ ____________________________________
Address:_______ ____________________________________
Designated Contact:_______ Contact:_______
Telephone:_______ ____________________________________
Facsimile:_______ P.O.#, if required:_________________
E-mail: _________________________
Verification Contact: ___________ (a) E-mail:
_________________________________
Notices and communications to Invoices to Sprint
Sprint should be addressed to: should be addressed to:
Company Name:_______ ____________________________________
____________________________________
Address:_______ ____________________________________
Designated Contact:_______ Contact:_______
Telephone:_______
Facsimile:_______ P.O.#, if required:_________________
E-mail: ________________________ (b) E-mail:
_________________________________
Requests from Z-Tel or Sprint to change the designated contact should be given
in writing by the designated contact or an authorized employee of Z-Tel or
Sprint.
Contracts, Deposit Materials and Invoice inquiries and fee remittances
notices to to DSI should be addressed to:
DSI should be addressed to:
DSI Technology Escrow Services, Inc. DSI Technology Escrow Services, Inc.
Contract Administration PO Box 45156
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
Date:_________________________________
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ATTACHMENT D
TECHNOLOGY ESCROW RELEASE INSTRUCTION
To: DSI Technology Escrow Services, Inc.
From: Sprint Communications Company L.P
Re: Z-Tel/Sprint Technology Escrow
The undersigned Officer certifies, on behalf of Sprint Communications Company
L.P, that a Z-Tel Triggering Event has occurred within the meaning of the
Agreement for Wholesale Telephone Exchange Services, Z-Node Services, Ancillary
Services and Technology License dated February ____, 2003 between Z-Tel
Communications, Inc. and Sprint Communications Company L.P. That event is
_________________________________________________________
____________________________________________________________________________
OR
The undersigned Officer certifies, on behalf of Sprint Communications Company
L.P, that a Z-Tel Liquidation Proceeding has occurred within the meaning of the
Agreement for Wholesale Telephone Exchange Services, Z-Node Services, Ancillary
Services and Technology License dated February _____, 2003 between Z-Tel
Communications, Inc. and Sprint Communications Company L.P. That event is
_________________________________________________________
____________________________________________________________________________
The undersigned Officer also certifies, on behalf of Sprint Communications
Company L.P., that Sprint has tendered to Z-Tel in immediately available funds
all non-disputed fees and charges currently due Z-Tel.
The undersigned Officer demands, on behalf of Sprint Communications Company
L.P., the immediate release of the Technology Escrow Materials to Sprint.
SPRINT COMMUNICATIONS COMPANY L.P.
BY:__________________________
TITLE:_______________________
DATE:________________________
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ATTACHMENT E
DEFINITIONS
ANCILLARY SERVICES means any facility or service that is requested by Sprint
that is not a Telecommunications Service or an Information Service that is
necessary or desirable to directly support delivery by Sprint of
Telecommunications Services and Information Services to its End Users and is not
identified as a function to be performed by Z-Tel in the SOW.
BANKRUPTCY OR BANKRUPT means the happening of any of the following events:
(a) the filing of an application for, or a consent to, the appointment of
a trustee, receiver or liquidator for all or any substantial portion of the
party's assets;
(b) the filing of a voluntary petition in bankruptcy;
(c) the filing of a pleading in any court of record admitting inability to
pay debts as they come due;
(d) the making of an assignment for the benefit of creditors;
(e) the consenting to, or default in the answering of, a bankruptcy
petition filed;
(f) the entry of a judgment or decree in any bankruptcy or insolvency
proceeding adjudicating bankruptcy or insolvency;
(g) the entry of an order for any relief in any bankruptcy or insolvency
proceeding;
(h) when one hundred twenty (120) calendar days after the commencement of
any involuntary proceeding seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any statute, law
or regulation, the proceeding has not been dismissed; and
(i) when ninety (90) calendar days after the appointment, without the
party's consent or acquiescence, of a trustee, receiver or liquidator of the
Party or all or any substantial portion of the party's assets, the appointment
has not been vacated or stayed or when ninety (90) calendar days after the stay
the appointment has not been vacated.
CHANGE OF CONTROL means the occurrence of any of the following events:
(a) Any "person" (as that term is defined in Sections 3(a)(9), 13(d), and
14(d) of the Securities Exchange Act of 1934 (the "EXCHANGE ACT") and the rules
under the Exchange Act, including Rule 13d-5(b)) acquires, directly or
indirectly, "beneficial ownership" (as determined under Rule 13d-3 under the
Exchange Act) of securities
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entitled to vote generally in the election of Z-Tel's directors ("VOTING
SECURITIES") so that, after the acquisition, the "person" holds, directly or
indirectly, shares of voting securities representing forty percent (40%) or more
of the combined voting power of Z-Tel's then outstanding voting securities,
other than an acquisition of voting securities:
(i) by a trustee or other fiduciary holding the securities under any
employee benefit plan (or related trust) sponsored or maintained by Z-Tel or any
person that Z-Tel controls,
(ii) by any employee benefit plan (or related trust) sponsored or
maintained by Z-Tel or any person that Z-Tel controls,
(iii) by Z-Tel,
(iv) by a corporation owned, directly or indirectly, by Z-Tel's
stockholders in substantially the same proportions as their ownership of Z-Tel
stock, or
(v) in a transaction that would not be a Change in Control under clause
(c) below.
Notwithstanding the foregoing, an event is not a "Change of Control" under
this subparagraph (a) unless:
(A) the "person" is one or more Change of Control Companies or any of
their respective Affiliates or successors, or
(B) the "person" includes one or more Change of Control Companies or any
of their respective Affiliates or successors, and any included Change of Control
Company, Affiliate or successor owns, controls or otherwise holds (together with
its Affiliates and successors) voting securities representing in aggregate
************************* or more of the combined voting power of the "person's"
then outstanding voting securities.
For purposes of this Agreement, the "CHANGE OF CONTROL COMPANIES" are
*****************************************************************************
**************************************************************************. For
the avoidance of doubt, nothing in the proceeding will limit the effectiveness
of the exclusions set forth in clauses (i), (ii), (iii), (iv), and (v) of this
subparagraph (a).
(b) A change occurs in the composition of Z-Tel's Board of Directors that
causes less than a majority of Z-Tel's directors to be directors that meet one
or more of the following descriptions:
(i) a director who:
(A) has been a director of Z-Tel for a continuous period of at least
the previous twelve (12) months, or
(B) was a director of Z-Tel as of the Effective Date and has
continued that role continuously without interruption since the Effective Date,
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(ii) a director whose election or nomination as director was approved by a
vote of at least two-thirds of the then directors described in this clause (b)
by prior nomination or election, but excluding, for the purpose of this
subclause (b)(ii), any director whose initial assumption of office occurred as a
result of:
(A) an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person or group other than Z-Tel's Board of
Directors, or
(B) a tender offer, merger, sale of substantially all of Z-Tel's assets,
consolidation, reorganization or business combination that would be a Change in
Control under clause (c) below, or
(iii) a director who was serving on Z-Tel's Board of Directors as a result
of the consummation of a transaction that would not be a Change in Control under
clause (c) below.
Notwithstanding the foregoing, an event is not a "Change of Control" under
this subparagraph (b) unless after the event a majority of Z-Tel's directors are
representing (through any arrangement, agreement, or understanding), were
designated by, or are employed by, one or more of the Change of Control
Companies or any of their respective Affiliates or successors.
(c) Z-Tel consummates (whether directly involving Z-Tel or indirectly
involving Z-Tel through one or more intermediaries):
(i) a merger, consolidation, reorganization or business combination,
(ii) a sale or other disposition of all or substantially all of its
assets, or
(iii) the acquisition of assets or stock of another entity,
in each case, other than in a transaction:
(A) that results in Z-Tel's voting securities outstanding immediately
before the transaction continuing to represent (either by remaining outstanding
or by being converted into voting securities of Z-Tel or the person that, as a
result of the transaction, controls, directly or indirectly, Z-Tel or owns,
directly or indirectly, all or substantially all of Z-Tel's assets or otherwise
succeeds to Z-Tel's business (Z-Tel or such person, the "SUCCESSOR ENTITY"))
directly or indirectly, at least ******************* of the combined voting
power of the Successor Entity's outstanding voting securities immediately after
the transaction,
(B) after which more than ******************* of the members of the
Successor Entity's Board of Directors were members of Z-Tel's Board of Directors
when Z-Tel's Board of Director's approved the transaction (or whose election or
nomination was approved by a vote of at least two-thirds of the members who were
members of Z-Tel's Board of Directors at that time), and
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(C) after which no person or group beneficially owns voting securities
representing ******************* or more of the combined voting power of the
Successor Entity (but no person or group will be treated for purposes of this
clause (C) as beneficially owning ******************* or more of combined voting
power of the Successor Entity solely because of the voting power the person or
group held in Z-Tel before the consummation of the transaction.
Notwithstanding the foregoing, an event is not a "Change of Control" under
this subparagraph (c) unless it results, whether through one transaction or a
series of related transactions occurring during any 365-day period, in the
"ultimate parent entity" (as defined in the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
under such act, but using a ******** rather than a ********* of Z-Tel becoming
any of the Change of Control Companies or any of their respective Affiliates or
successors.
Z-Tel liquidates or dissolves.
DISCONNECT means the process by which dial tone is disabled by the serving
carrier in association with an End User line.
END USER means, with respect to any party, the party's retail customers
including business users. "Sprint's End Users" (and derivatives thereof)
includes any End User of Sprint's Affiliates who are purchasing Local Wholesale
Services.
ILEC or INCUMBENT LOCAL EXCHANGE CARRIER means with respect to an area,
the local exchange carrier that:
(a) on the date of enactment of the Telecommunications Act of 1996,
provided telephone exchange service in such area; and
(b) (i) on the date of enactment of the Telecommunications Act of
1996, was deemed to be a member of the exchange carrier association pursuant to
Section 69.601(b) of the FCC's regulations (47 C.F.R. Section 69.601(b)); or
(ii) is a person or entity that, on or after such date of enactment, became a
successor or assign of a member described in clause (i)
INFORMATION SERVICE(S) has the meaning set forth in Section 3(20) of the
Communications Act of 1934, as amended, 47 U.S.C. Section 153(20).
LOCAL WHOLESALE SERVICES means:
(a) Telephone Exchange Service that Z-Tel provides to other carriers for
resale to their End Users, and other associated services through use of Z-Tel's
OCN, such as basic and adjunct to basic vertical services, and exchange access
functionality, and
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(b) Telephone Exchange Service that Z-Tel supports for sale by Sprint to
its End Users, and other associated services through use of Sprint's OCN, such
as basic and adjunct to basic vertical services and exchange access
functionality.
OCN means operating company number.
OSS SERVICES or OPERATIONS SUPPORT SYSTEM SERVICES means all
functionalities (as well as the hardware, software and documentation) that is
reasonably necessary, required or useful to directly or indirectly support
delivery of LW Based Services or Z-Tel Information Services to Sprint's End
Users. Included within OSS Services, without limitation, are the following
functionalities: ordering, provisioning, billing and collection, fulfillment,
sales, preparing and handling CDRs, and customer care. For the avoidance of
doubt, "OSS Services" does not include any Telecommunications Service, any
Information Service or any customization of Z-Tel Technology that is developed
as an Ancillary Service.
REPAIR means the report and resolution of service issues
SERVICE LEVEL AGREEMENTS or SLAS means specified levels of service that
Z-Tel is responsible to provide in relation to Local Wholesale Services, Z-Node
Services and OSS Services.
SHORT TERM DEFERRED REVENUE means revenues offset to future periods for
revenue recognition purposes that are included in current liabilities.
TELECOMMUNICATIONS SERVICES means the offering of telecommunications for a
fee directly to the public, or to such classes of users as to be effectively
available directly to the public, regardless of the facilities used.
TELEPHONE EXCHANGE SERVICE means:
(a) service within a telephone exchange, or within a connected system of
telephone exchanges within the same exchange area operated to furnish to
subscribers intercommunicating service of the character ordinarily furnished by
a single exchange, and which are covered by the exchange service charge, or
(b) comparable service provided through a system of switches, transmission
equipment, or other facilities (or combination thereof) by which a subscriber
can originate and terminate a Telecommunications Service.
Telephone Exchange Service involves the combination of loop, switch port and any
other necessary elements required to provide an unbroken signal of 350 + 440 Hz
reflecting that telephone service is currently provided and that the telephone
company is ready to receive dialed digits.
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Z-NODE SERVICES means any proprietary Z-Tel Information Service or Z-Tel
Adjunct to Basic Service provided as a vertical feature through the Z-Line
Platform. Available Z-Node Services include Voice Mail, Family Mail Box, Find
Me, On-Line Account Maintenance, Notify Me, and Web Access. For the avoidance of
doubt, Z-Node Services will not include access to Z-Tel's Personal Voice
Assistant service ("PVA(TM) service")
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ABA #:
Account #:
Account Holder:
Amount Disbursed:
ATTACHMENT B
ESCROW FEES
ACCEPTANCE AND SET-UP FEE: $1,500
(payable upon funding the escrow)
ANNUAL ADMINISTRATION FEE: $1,500
(for services for one year or any
part thereof, payable in advance)
INVESTMENT FEES: Included in the annual administration fee, except for the point
two five percent (0.25%) money management fee charged by the money market funds,
which fee will be in addition to the annual administration fee.
OUT-OF-POCKET EXPENSES: Any out-of-pocket expenses, including fees and charges
for legal counsel or other professional advisors, will be charged as incurred.
EXHIBIT B
TECHNOLOGY ESCROW AGREEMENT
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EXHIBIT C
FORM OF TEXT FOR INITIAL SEC FILING AND PRESS RELEASE
Z-TEL AND SPRINT SIGN AGREEMENT FOR WHOLESALE SERVICES
MEDIA CONTACTS:
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Z-Tel Technologies, Inc. PR Results (PR(2))(TM)
▇▇▇-▇▇▇-▇▇▇▇ 630.783.1024
▇▇▇▇▇▇@▇-▇▇▇.▇▇▇ ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
TAMPA, Fla. (February 4, 2003) - Z-Tel Technologies, Inc. (NASDAQ: ZTEL), a
leading provider of local, long distance and enhanced telecommunications
services, today announced it has signed a non-exclusive, wholesale services
agreement with the Sprint Corporation (NYSE: FON, PCS). The agreement gives
Sprint access to Z-Tel's Web-integrated enhanced communications platform and
operational support systems related to providing local residential telephone
service. Specific financial terms of the agreement were not disclosed.
Z-Tel's Web-integrated enhanced services include Internet-accessible voicemail,
multiple-number call forwarding and message notification by email, cell phone or
pager. The agreement offers Sprint a cost-effective avenue to meet consumers'
increasing demand for bundled telecommunications services outside of Sprint's
existing local markets.
▇▇▇▇▇ ▇▇▇▇▇, president and chief executive officer for Z-Tel, commented, "Our
wholesale business model gives companies access to our state-of-the-art enhanced
services and an efficient way to enter the local services market. We're proud to
offer these benefits to Sprint."
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, president of Sprint's Mass Markets Organization, stated, "Z-Tel
offers valuable functionality for Sprint to conduct market tests to explore
providing a coast-to-coast local telephone service offering."
▇▇▇▇▇ concluded, "With our demonstrated operational expertise and proprietary,
Web-integrated calling and messaging suite, we're in a unique position to
quickly and seamlessly help companies establish or expand their presence in the
local telecommunications services market."
ABOUT Z-TEL
Z-Tel was founded in the wake of the Telecommunications Act of 1996. With the
establishment of the Unbundled Network Element-Platform (UNE-P), competitive
telecommunications companies became able to provide telephone service to
end-users over the incumbent local
telephone providers' network. Z-Tel was formed around UNE-P with the vision of
developing technology that would imbue the telephone with "Intelligent Dial
Tone," wherein telephone service can be personalized to meet consumers' and
businesses' diverse communications needs in an intelligent, intuitive way. Z-Tel
offers residential and business customers in 46 states value-added bundled local
and long distance phone service with proprietary Internet-accessible calling and
messaging features. Z-Tel also makes these services available on a wholesale
basis. For more information about Z-Tel's innovative services or about Z-Tel,
please visit the Company's Web site at ▇▇▇.▇▇▇▇.▇▇▇.
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ABOUT SPRINT
Sprint is a global communications company serving more than 26 million business
and residential customers in over 70 countries. With approximately 72,000
employees worldwide and more than $26 billion in annual revenues, Sprint is
widely recognized for developing, engineering and deploying state-of-the-art
network technologies, including the United States' first nationwide all-digital,
fiber-optic network and Sprint's award-winning Tier 1 Internet backbone. Sprint
provides local voice and data services in 18 states and operates the largest
100-percent digital, nationwide PCS wireless network in the United States.
This press release contains forward-looking statements. These forward-looking
statements are based on the belief of our management, as well as assumptions
made by and information currently available to our management. You can identify
forward-looking statements by the fact that they do not relate strictly to
historical or current facts. The words "believe," "anticipate," "intend,"
"expect," "estimate," "project" and similar expressions are intended to identify
forward-looking statements. Forward-looking statements describe our expectations
today of what we believe is most likely to occur or may be reasonably achievable
in the future, but they do not predict or assure any future occurrence and may
turn out to be wrong. Forward-looking statements are subject to both known and
unknown risks and uncertainties and can be affected by inaccurate assumptions we
might make. Consequently, no forward-looking statement can be guaranteed. Actual
future results may vary materially. We do not undertake any obligation to
publicly update any forward-looking statements to reflect new information or
future events or occurrences. These statements reflect our current views with
respect to future events and are subject to risks and uncertainties about us,
including risk factors that are described in detail in Z-Tel's 2001 Annual
Report on Form 10-K filed on March 29, 2002; and in Z-Tel's other filings with
the Securities and Exchange Commission.
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EXHIBIT D
Z-TEL BLANKET AGENCY AGREEMENT LETTER FOR LOCAL SERVICE PROVIDERS
I am an official of Sprint Communications Company L.P. ("SPRINT") and
am authorized to commit my company to the conditions stated in this Agreement:
1. Sprint will not knowingly submit any inquiries, requests or orders for
service to Z-Tel without legally adequate authorization and
verification of the customer to which such inquiries, requests or
orders are connected.
2. The agreement between Sprint and the End User provides that the Sprint
is solely responsible for representing the End User in all requests
relating to local service. The agreement between Sprint and the End
User holds the End User responsible to Sprint for all charges incurred
on the End User's behalf for local service.
3. Z-Tel may provide ordering and management services to Sprint including
sending
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Sprint orders for local service using the Sprint OCN through Z-Tel
systems and interfaces. Z-Tel may also resell UNE-based services to
Sprint that have been ordered using Z-Tel's OCN. When Z-Tel's OCN is
used, Sprint is responsible to Z-Tel for all charges that are incurred
in connection with service requests for Sprint's End Users regardless
of whether the End User meets payment responsibilities to Sprint. When
Sprint's OCN is used, Sprint is directly responsible to the ILEC for
all charges that are incurred in connection with service requests for
Sprint's End Users.
4. To the extent required, Sprint grants Z-Tel the authorization to act in
its behalf concerning the placement of local service orders for Sprint
End Users with any ILEC including both those submitted using the Z-Tel
OCN and those using a Sprint OCN. Unless agreed to in writing by both
parties, the Sprint End Users will deal directly with Sprint on all
inquiries concerning their Local Service. This may include, but is not
limited to, billing, repair, directory listings, and number
portability.
5. Z-Tel is authorized to release all information regarding the Sprint End
User's local service to Sprint.
6. This Agreement will continue in effect unless canceled by prior written
notice by Z-Tel or Sprint at least thirty (30) calendar days before the
effective date of cancellation. Cancellation will not release or limit
any matters occurring before the cancellation of this Blanket Agency
Agreement.
_________________________________________
Signature of Officer
_________________________________________
Title of Officer
_________________________________________
Company Name
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