PORTIONS OF THIS EXHIBIT HAVE BEEN DELETED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER RULE 406 OF THE SECURITIES ACT OF 1933 AND THE
FREEDOM OF INFORMATION ACT.
DIGITAL SERVICES AGREEMENT
This Digital Service Agreement (this "Agreement") is entered
into as of 25th Oct, 1994, by and between Communications
Transmission Group, Inc., a Nevada corporation ("Lessor"), and
Startec, Inc., a Maryland Corporation ("Lessee").
In consideration of the mutual promises set forth below and
for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. Definitions.
(a) "Available" shall mean, with respect to any
Circuit, that all necessary equipment with respect to such
Circuit has been installed, connected, tested and confirmed by
Lessor to be operating in accordance with the required
specifications.
(b) "Activation Date" shall mean, with respect to any
circuit, the date such circuit is first made Available to Lessee.
(c) "Circuit" shall mean a DS-1.
(d) "Circuit Lease Term" shall mean, with respect to
any Circuit, the term in months for which Lessee desires to
obtain Service on such Circuit from the Activation Date of such
Circuit, as specified in the Purchase Order pursuant to which
such Circuit is Ordered.
(e) "Circuit Mileage" shall mean, with respect to any
Circuit, the length of such Circuit in airline miles computed
according to industry standard V&H coordinates as specified in
the Purchase Order pursuant to which such Circuit is ordered.
(f) "City Pair" shall mean, with respect to any
Circuit, the two cities in which such Circuit terminates, as
specified in the Purchase Order pursuant to which such Circuit is
ordered.
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(g) "DS-0 Circuit Mile Rate" shall mean, with respect
to any Circuit, the rate, if any, so designated with respect to
such Circuit in the Purchase Order pursuant to which such Circuit
is ordered.
(h) "DS I" shall mean a circuit meeting the
specifications set forth in AT&T Technical Reference Pub. 62411,
December 1990 and ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇-▇▇▇▇▇▇, Issues 4, November
1991, Revision 1, April 1992.
(i) "Monthly Lease Rate" shall mean, with respect to
any Circuit, the amount designated in Exhibit D hereto, or if
different, in the Purchase Order accepted by Lessor pursuant to
which such Circuit is ordered.
(j) "On-net Service" shall be service between any of
the cities contained in Exhibit C attached hereto. "On-net City"
shall mean any such city. "On-net DS-1" shall mean a DS-1
between two On-Net Cities. Service to any city not contained in
Exhibit C shall be considered "Off-net Service".
(k) "Purchase Order" shall mean any written purchase
order in substantially the form attached hereto as Exhibit A made
hereunder by Lessee and accepted by Lessor.
(l) "Requested Service Commencement Date" shall mean,
with respect to any Circuit, the date Service on such Circuit is
requested by Lessee to commence as specified in the Purchase
Order pursuant to which such Circuit is ordered.
(m) "Service" shall mean the digital
telecommunications transmission service provided hereunder. Such
service shall be provided from a North American DSX standard
cross-connect panel located in Lessor's terminal location as
identified on the Purchase Order.
(n) "Take or Pay Commitment" shall mean, with respect
to a certain period and amount, that Lessee has the obligation to
pay for Service hereunder in such amount for each month during
such period, whether or not such service is used.
2. Scope and Lease Rates. Lessor shall provide Service to
Lessee upon the terms and conditions set forth below.
(a) Service shall be provided with respect to each
Circuit set forth in each Purchase Order between Lessor's
locations in each city of the City Pair specified in such
Purchase Order with respect to such Circuit.
(b) Lessor shall provide maintenance for all digital
transmission equipment used in connection herewith.
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(c) Lessor shall use its best efforts consistent with
its obligations to its other customers to provide Service on each
Circuit commencing on the Requested Service Commencement Date
specified with respect to such Circuit.
(d) Lessor shall provide Service on each Circuit
ordered hereunder from the Activation Date of such Circuit for
the Circuit Lease Term of such Circuit.
(e) Lessee may, subject to availability, order other
associated services listed in Exhibit B hereto offered by Lessor
under the terms and conditions of this Agreement.
(f) The rates for Service under this Agreement are as
set forth in Exhibit D hereto, unless otherwise specified in the
applicable Purchase Order accepted by Lessor. The rates set
forth in Exhibit D are valid for Purchase Orders accepted within
one year of the date hereof. After such one-year period, Lessor
may change such rates as it deems desirable for Purchase Orders
accepted thereafter; provided that no such rate change shall
effect any Circuit then in service.
(g) Lessee shall have (i) a Take or Pay Commitment of
[CT REQUESTED] per month commencing as of the first month Lessee
obtains Service hereunder.
3. Payments.
(a) Lessee agrees to pay in advance to Lessor each
month during the term of this Agreement (i) the Monthly Lease
Rate for each Circuit ordered by Lessee hereunder which has been
made Available to Lessee, and (ii) the applicable charges,
including installation charges, if any, for any associated
services listed in Exhibit B hereto delivered to Lessee.
(b) Lessor's invoices for amounts payable hereunder
shall be due upon receipt by Lessee. The first such invoice
shall be for the first two months' Service and each monthly
invoice thereafter shall be for the following month.
(c) In the event that a Circuit is made Available to
Lessee on any day other than the first day of the month, the
Monthly Lease Rate for that month shall be pro-rated according to
the number of days for which such Circuit was Available.
(d) In the event that any lease payment remains unpaid
after 30 days following the date of the first Lessor invoice for
such payment, such payment shall be subject to a late payment
charge equal to the lesser of (i) one and one-half percent of the
unpaid balance per month or (ii) the maximum rate allowed under
applicable state law. In the event that any lease payment is
unpaid 30 days following the date of the first Lessor invoice for
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such payment, in addition to any other remedies available, at law
or otherwise, to Lessor, Lessor may, without any liability to
Lessee, at its option: (A) suspend the Service or (B) it
immediately terminate the Service.
4. Term. The term of the Agreement shall commence on the
date hereof and continue for a period of [CT REQUESTED] from the
date hereof, and if longer, until the end of the Circuit Lease
Term of each Circuit ordered hereunder which is last to expire.
In the event the Lessor and Lessee agree, orally or in writing,
to continue to perform hereunder after the expiration or
termination hereof, unless otherwise specifically agreed to in
writing, this Agreement shall be extended on a month-to-month
basis with rates equal to [CT REQUESTED] of the rates hereunder
and shall be terminable by either party upon 30 days' written
notice thereof to the other party.
5. Termination.
(a) Lessee may terminate Service with respect to any
Circuit upon ninety (90) days prior written notice thereof to
Lessor and payment of all termination charges set forth below.
Such termination charges shall include:
(i) In the event such termination occurs prior
to the Activation Date specified with respect to such Circuit,
all nonrecoverable costs of the implementation of, and
expenditures or liabilities reasonably incurred and directly
connected with, the provision of Service, including but not be
limited to, all professional, consulting and other costs incurred
by Lessor in furtherance of implementing such Service; and
(ii) In the event such termination occurs at or
after the Activation Date specified with respect to such Circuit,
Lessee shall pay all charges hereunder for the period during
which Service is rendered on such Circuit. If Service on a
Circuit is terminated prior to the expiration of this Agreement,
Lessor shall make its best efforts to lease Service on such
Circuit at no less than the Monthly Lease Rate for such Circuit.
In the event Lessor cannot lease Service on such Circuit on the
same or substantially similar terms and conditions as set forth
herein, Lessee shall be liable to Lessor for payment (1) for the
rental amount due through the end of the term of this Agreement
with respect to such Circuit less (2) the total amount collected
by Lessor from any other lessee with respect to such Circuit.
(b) Lessee shall give written notice to Lessor of any
material breach in performance hereunder. Lessor shall have 45
days after such notice to cure such breach. If after such 45-day
period, Lessor fails to cure such breach, including but not
limited to, compliance with the material technical and
operational specifications applicable to a Circuit, Lessee may
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terminate Service on the such affected Circuit. In the event of
such termination, Lessee's liability with respect to such
Circuits shall be limited to the Monthly Lease Rate for the
affected Service which was properly rendered prior to the
effective date of such termination.
(c) In the event Lessor fails to provide the Service
within six months of the Requested Service Commencement Date for
such Circuit, then Lessee, at its option, may terminate that
Service on the affected Circuit without any liability whatsoever.
Such right to terminate shall be Lessee's sole remedy for such
failure to provide Service.
(d) Notwithstanding anything herein to the contrary,
no termination shall effect or reduce Lessee's obligation to make
the [CT REQUESTED] per month "Take or Pay Commitment" payments
required by Section 2.
6. Force Majeure. Lessor shall not be liable for any
interruptions of Service which are solely attributable to causes
outside its control, including fires, floods, national
emergencies, insurrections, riots, civil disorders, wars, or acts
of God so long as it uses its best efforts to restore Service as
promptly as possible after the interruption. No credits shall be
allowed for any outage periods caused by such conditions.
7. Allowance for Service Outage Periods.
(a) A Circuit shall be deemed to be in an outage
condition under this Agreement if, while Lessee is using or
attempting to use such Circuit, such Circuit loses continuity and
fails to comply with the applicable specifications for such
Circuit. An outage period begins when a report is received by
Lessor's Network Control Center from Lessee by telephone that
Service has been interrupted and that such Circuit is released
for repair. An outage period ends when Lessor notifies Lessee by
telephone that Service has been restored.
(b) A credit for each outage period shall be allowed
and calculated as follows:
(i) No credit shall be allowed for an outage
period of seventy-two (72) hours or less in the case of a
Catastrophic Outage (as defined below, or of one (1) hours or
less in the case of a Non-Catastrophic Outage (as defined below).
Lessee shall be credited for an outage period to the extent such
outage period exceeds seventy-two (72) hours or one(1) hour, as
the case may be, at the rate of [CT REQUESTED] of the monthly
rate or charge applicable to the Circuits which are subject to
the outage period for each half-hour or major fraction thereof
that an outage period continues beyond seventy-two (72) hours or
one (1) hour as the case may be. For purposes of the foregoing,
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"Catastrophic Outage" includes outages caused by a cable cut or
radio failure, an equipment enclosure fire, an explosion, or any
other circumstance of an extraordinary and catastrophic nature
and "Non-Catastrophic Outage" includes all other outages.
(ii) No credit shall be allowed with respect to
any period during which Lessee fails to afford access to any
facilities provided by Lessor for the purpose of investigating
and correcting an interruption to Service.
(iii) The Monthly Lease Rates used to determine
any credit hereunder shall be the then current Monthly Lease
Rates being assessed.
(iv) The seventy-two (72) hour and one (1) hour
periods set forth above shall be extended by the period during
which Lessor is unable to restore Service due to an event or
circumstance described in Paragraph 6.
(v) In no event shall any credit be allowed
hereunder (1) in excess of the then current Monthly Lease Rate
for the applicable Circuit or (2) with respect to any Circuit for
which Lessee (i) fails to make or (ii) is excused from making any
payment because of operation of law or any other reason.
(c) Calculations of credits shall be based upon
Lessor's Customer Service Group Log maintained in Lessor's
Network Status Center.
(d) No credit allowance will be made for outage
periods:
(i) caused by Lessee;
(ii) caused by the failure of equipment or
systems provided by Lessee or persons other than Lessor,
including any provider of local access service to Lessor;
(iii) occurring with respect to a Circuit released
by Lessee to Lessor to perform maintenance, to make
rearrangements, or to implement an order for a change in the
Circuit; or
(iv) occurring with respect to a Circuit which
Lessee elects not to release for testing or repair and continues
to use on an impaired basis.
(e) The credit provided for hereunder shall be
Lessor's sole liability and Lessee's sole remedy in the event of
any outage periods or interruption of Service.
(f) In the event Lessor determines it is necessary to
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interrupt Service on a Circuit for maintenance, Lessor shall use
its best efforts to give Lessee notice thereof by telephone.
Lessor will use its best efforts to schedule such Service
interruptions on weekends between midnight and 3:00 a.m. Credits
will not be allowed with respect to such Service interruptions.
8. Representations and Warranties of Lessor and Lessee.
(a) Lessor hereby represents and warrants to Lessee
that this Agreement has been validly authorized, executed and
delivered by Lessor and represents a valid and binding obligation
of Lessor.
(b) Lessee hereby represents and warrants to Lessor
that this Agreement has been validly authorized, executed and
delivered by Lessee and represents a valid and binding obligation
of Lessee.
(c) Except as set out in Paragraphs (1) and (b) above:
(i) ALL EXPRESS AND IMPLIED WARRANTIES,
INCLUDING BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PURPOSE OR USE ARE EXPRESSLY EXCLUDED AND
DISCLAIMED. LESSEE ACKNOWLEDGES THAT IT HAS NOT RELIED ON ANY
WRITTEN OR ORAL REPRESENTATIONS BY LESSOR CONCERNING THE SUBJECT
OF THIS AGREEMENT OTHER THAN THOSE EXPRESSED IN THIS AGREEMENT;
and
(ii) LESSOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, TO ANY OTHER PERSON OR ENTITY
CONCERNING THE SERVICE PROVIDED HEREUNDER AND LESSEE SHALL DEFEND
AND INDEMNITY LESSOR FROM ANY CLAIMS MADE BY ANY CUSTOMER OF
LESSEE OR UNDER ANY WARRANTY OR REPRESENTATION BY LESSEE TO ANY
THIRD PARTY.
9. FCC Permits, Authorization and Filings. Lessor shall
take all necessary and appropriate steps, as soon as possible, to
procure from the Federal Communications Commission the necessary
authorizations, if any, to deliver Service hereunder to Lessee
and whatever approvals are necessary from any other federal or
state agency. In the event that Lessor cannot obtain all
necessary federal, state or local authority to provide Service
hereunder. Lessor shall promptly give written notice thereof to
Lessee, and such notice shall constitute termination without
liability of either party hereto of all obligations hereunder.
10. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the validity and performance
hereof, shall be governed by the laws of the State of Texas
without regard to its principles of choice of law.
11. Convenience of Titles. Headings contained herein are
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for convenience only and do not modify, enlarge or limit the
scope of the body of the section thereof in any manner.
12. Notices. All notice and other communications hereunder
shall be in writing and shall be deemed to have been duly given
as of the date of delivery, facsimile transmission or mailing,
and if mailed, first class postage prepaid, certified or
registered mail, return receipt requested to the following
persons, unless contrary instructions are given by the parties in
writing:
If to Lessee: Startec, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lessor: Communications Transmission Group, Inc.
5000 Plaza on the Lake, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Operating Officer
With a copy to: Sales Administrator
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
13. Waiver of Breach or Violation not Deemed Continuing.
The waiver by either party hereto of a breach or violation of any
provision of this Agreement shall not operate as or be construed
to be a waiver of any subsequent breach hereof.
14. Bankruptcy. In the event of the bankruptcy or
insolvency of either party hereto or if either party hereto shall
make an assignment for the benefit of credits or take advantage
of any act or law for relief of debtors, the other party to this
Agreement shall have the right to terminate this Agreement
without further obligation or liability on its part.
15. Limits of Liability. Lessor's sole duty under this
Agreement shall be the provision of Service to Lessee under the
terms and conditions set forth herein. Lessee's sole remedy for
Lessor's failure to perform its obligations hereunder shall be
Lessee's right to credit with respect to outage periods. In no
event shall Lessor be liable for any special, incidental,
indirect, punitive, reliance or consequential damages, whether
foreseeable or not, including but not limited to, damage or loss
of property or equipment, loss of profits or revenue, cost of
capital, cost of replacement services, or claims of customers for
service interruptions or transmission problems, occasioned by any
defect in the service provided hereunder, delay in availability
of the service provided hereunder, failure of the service
provided hereunder or any other cause whatsoever; and in no event
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shall Lessor be liable at any time for any amount in excess of
the aggregate amount it has prior to such time collected from
Lessee with respect to Service delivered hereunder.
16. Business Relationship. This Agreement shall not create
any agency, employment, joint venture, partnership,
representation, or fiduciary relationship between the parties.
Neither party shall have the authority to, nor shall any party
attempt to, create any obligation on behalf of the other party.
17. Indemnity.
(a) Each party shall indemnify, defend, release and
hold harmless the other party and all of its officers, agents,
directors, shareholders, subcontractors, subsidiaries, employees
and other affiliates (collectively "Affiliates"), from and
against any action, claim, court cost, damage, demand, expense,
liability, loss, penalty, proceeding or suit, (collectively,
together with related attorneys' fees; including costs and
disbursements, "Claims") imposed upon either party by reason of
damages to property or injuries, including death, as a result of
a negligent act or omission on the part of the indemnifying party
or any of its Affiliates in connection with: (i) the performance
of this Agreement; or (ii) other activities relating to the
property or facilities which are the subject of this Agreement.
In the event a Claim relates to the negligence of both parties,
the relative burden of the Claim shall be attributed equitably
between the parties in accordance with the principles of
comparative negligence.
(b) In the event any action shall be brought against
the indemnified party, such party shall immediately notify the
indemnifying party in writing, and the indemnifying party, upon
the request of the indemnified party, shall assume the defense
thereof on behalf of the indemnified party and its Affiliates and
shall pay all expenses and satisfy all judgments which may be
incurred by or rendered against the indemnified party or its
Affiliates in connection therewith, provided that the indemnified
party shall not be liable for any settlement of any such action
effected without its written consent.
(c) Notwithstanding the termination of this Agreement
for any reason, this Paragraph 17 shall survive such termination.
18. Insurance.
(a) Throughout the term of this Agreement and any
extension thereof, each party shall maintain, and, upon written
request, shall provide to the other proof of adequate liability
insurance:
(i) Worker's compensation insurance up to the
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amount of the statutory limit in the state or states where work
is to be performed;
(ii) Employer's liability insurance with a
limit of not less than $200,000 per claim with an all-states
endorsement;
(iii) Comprehensive general liability insurance
with a limit of not less than $1,000,000 per occurrence for
bodily injury liability and property damage liability, including
coverage extensions for blanket contractual liability, personal
injury liability and products and completed operations liability.
19. Assignment. Neither party hereto may assign this
Agreement without the express written consent of the other party
hereto. Such consent shall not be unreasonably withheld.
20. Assignment by Lessor. Notwithstanding the foregoing,
however, (1) a security interest in this Agreement may be granted
by Lessor to any lender to secure borrowings by Lessor or any of
its affiliates ("Affiliates") and (2) Lessor may assign all its
rights and obligations hereunder with respect to any Circuit to
any Affiliate. Upon such assignment, this Agreement shall be
deemed to be multiple agreements, each upon the terms and
conditions set forth herein by and between Lessee and Lessor, and
between Lessee and such Affiliate, with respect to such Circuit.
21. Confidential Relationship. Unless required by law, the
parties hereto shall not disclose, duplicate, or copy, or use for
any purpose other than the performance of this Agreement, and
shall treat as confidential and as proprietary all information,
specifications, drawings, blueprints, nomenclature, samples, and
models supplied or disclosed to each other in connection with
this Agreement, all of which shall be returned to the respective
owners thereof upon completion of this Agreement.
Notwithstanding the foregoing however, Lessor may make such
information available to its lenders. Neither party shall in any
manner advertise or publish or release for publication any
statement mentioning the other party or the fact that the other
party has furnished or contracted to furnish goods and services
hereunder or quote the opinion of any employees of such other
party, unless written consent of such other party shall first be
obtained or unless required by law.
22. Taxes. The amounts payable by Lessee under this
Agreement do not include any State or local sales or use taxes,
or utility taxes, however designated which may be levied on the
goods and services provided by Lessor hereunder. With respect to
such taxes, if applicable, Lessee shall furnish Lessor with an
appropriate exemption certificate or pay to Lessor, upon timely
presentation of invoices therefore, such amounts thereof as
Lessor may be by law required to collect or pay. Any and all
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other taxes, including but not limited to franchise, net or gross
income, license, occupation, and real or personal property taxes,
shall be timely paid by Lessor.
23. Binding Arbitration. Upon notice to the other party,
any party may refer any dispute or claim arising out of or
relating to this Agreement to arbitration in Austin, Texas in
accordance with the commercial arbitration rules of the American
Arbitration Association then prevailing and, in such event
neither party may commence any action based on such dispute or
claim, and, if any action has been commenced, it shall be stayed,
pending the outcome of such arbitration proceeding. Each party
shall select one independent arbitrator within ten days of such
notice and the two arbitrators shall then select a third
arbitrator within an additional ten days to form a three-person
panel of arbitrators. The panel of arbitrators shall have the
power to order specific performance if requested. Any award,
order, or judgment pursuant to such arbitration shall be deemed
final and binding and may be enforced by any court of competent
jurisdiction. All such arbitration proceedings shall be
conducted on a confidential basis. The panel of arbitrators may,
as part of the arbitration award, permit the substantially
prevailing party to recover all or part of its attorney's fees
and other out-of-pocket costs incurred in connection with such
arbitration. Lessee may, at its option, continue to accept what
it considers to be below-standard Service and pay the charges
hereunder relating thereto during such pendency of such
arbitration, without prejudice thereto.
24. Legal Construction. In case any one or more of the
provisions contained in this Agreement shall, for any reason be
held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and this Agreement shall be construed
as if such invalid, illegal or unenforceable provision had never
been contained herein.
25. Entire Agreement; Amendments. This Agreement
constitutes the entire agreement among the parties pertaining to
the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings of such parties in
connection herewith. This Agreement may only be modified or
supplemented by an instrument in writing executed by each party.
26. No Personal Liability. Each action or claim against
any party arising under or relating to this Agreement shall be
made only against such party is a corporation, and any liability
relating thereto shall be enforceable only against the corporate
assets of such party. No party shall seek to ▇▇▇▇▇▇ the
corporate veil or otherwise seek to impose any liability relating
to, or arising from, this Agreement against any shareholder,
employee, officer or director of the other party. Each of such
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persons is an intended beneficiary of the mutual promises set
forth in this section and shall be entitled to enforce the
obligations of this section.
In confirmation of their consent hereto and intention to be
legally bound hereby, the parties have executed this agreement
below:
Startec, Inc. Communication Transmission
Group, Inc.
By: /s/ By: /s/
(Signature) (Signature)
▇▇▇▇▇▇▇ ▇▇▇ ▇.▇. ▇▇▇▇▇▇▇
(Name - please print) (Name - please print
Controller Executive Vice President
Chief Finance Officer
(Title - please print) (Title - please print)
LIST OF EXHIBITS
Exhibit A Form of Purchase Order
Exhibit B Maintenance and other Additional Services
Exhibit C List of On-net Cities
Exhibit D List of Rates for On-net Service