Exhibit 10.12
December 21, 1998
Mr. Tom Sullivan
Executive Vice President
Telecorp Communications, Inc.
1101 17/th/ Street, Suite 900
Washington, DC 20036
Letter of Agreement
Dear Tom:
This Letter of Agreement ("LOA") serves to identify the terms by which AT&T
Wireless Services, Inc. ("AWS") will arrange to purchase interstate and
intrastate long distance voice and/or data services (the "Services") from AT&T
Carrier Markets ("Carrier Markets") for the shared use of Telecorp
Communications, Inc. ("Carrier") and other Affiliated Markets as such term is
defined below. If you are in agreement with the terms described herein, please
sign below.
Sharing Arrangement
In exchange for making certain volume commitments to Carrier Markets, AWS has
negotiated the right to purchase the Services at the rates specified in LOA
Attachments 1 and 2, respectively, so that Affiliated Markets can share the use
of these Services at such rates. By sharing the Services, with AWS as the
intermediary enabling such sharing, the Affiliated Markets can efficiently
obtain the Services at the best possible terms and conditions. For the Services
they purchase under this LOA, Affiliated Markets will pay the rates that AWS
pays to Carrier Markets for such services, as specified in LOA Attachments 1 and
2. AWS does not mark up the charges for the Services or receive any type of
commission or fee.
Affiliated Market Status
This sharing arrangement is for the benefit of Affiliated Markets, and Carrier's
eligibility to purchase the Services under this LOA is contingent upon Carrier
maintaining its status as an Affiliated Market. An Affiliated Market means any
facilities-based company that: (a) is controlled by AWS; (b) is an entity in
which AWS has at least fifty percent (50%) voting interest; (c) shares switching
facilities with AWS; (d) is managed by AWS; (e) has purchased a portion of CMRS
spectrum from AWS in which AWS maintains an ownership interest; or (f) is a
party to an agreement providing for the interoperability of Carrier's system and
AWS' system as each is operated in accordance with the IS-136 or
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Letter of Agreement
December 21, 1998
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successor standard. The terms and conditions identified in this LOA will
terminate no later than three (3) months after the cessation of Carrier as an
Affiliated Market or immediately upon termination of AWS' contract with Carrier
Markets. AWS agrees it will endeavor to provide Carrier with a minimum of three
(3) months notice of such termination. In addition, AWS may terminate this LOA
upon any breach by Carrier of the AT&T Wireless Services Network Membership
License Agreement between AT&T Corp. and Telecorp PCS, Inc. dated as of July 17,
1998 which breach is not cured in accordance with the provisions of such
agreement.
Provision of Service and Rates
Carrier may order any of the Services described in LOA Attachments 1 and 2 and
AWS will provide those Services to Carrier pursuant to this LOA. Carrier agrees
to pay all recurring and nonrecurring charges for the Services it orders as
specified in LOA Attachments 1 and 2. (Carrier will need to contact appropriate
personnel at Carrier Markets with specific information to determine pricing for
certain data elements.) Please note that volume and minimum revenue commitments
between AWS and Carrier Markets in LOA Attachments 1 and 2 are confidential and
have been blacked out.
Taxes and Surcharges
Carrier shall pay any applicable local, state, federal, public utilities, gross
receipts or other taxes, surcharges, assessments, recoveries or fees imposed on
AWS, Carrier Markets or Carrier as a result of the sale, installation, use or
provision of the Services described in this LOA, except to the extent customer
provides a valid tax exemption certificate to AT&T prior to the delivery of
Services and except for taxes based on AWS' or Carrier Markets' net income.
Consistent with FCC rules, because Carrier is not an end user, Carrier Markets
will not impose any Federal Universal Service Fund surcharges on the Services.
However, if the FCC changes its rules in this regard, Carrier Markets will
adjust its imposition of surcharges accordingly.
Volume Commitment
Carrier agrees to the Minimum Traffic Volume Commitment(s) as specified in LOA
Attachment 3. AWS and Carrier agree that the Minimum Traffic Volume
Commitment(s) will be adjusted a minimum of once each calendar year at the time
specified by AWS. Such Minimum Traffic Volume Commitment(s) may be adjusted
more frequently upon mutual agreement between AWS and Carrier. During the first
calendar year, the Minimum Traffic Volume Commitment for Carrier shall be as
specified by Carrier at its sole discretion. Following the first calendar year,
the Minimum Traffic Volume Commitment for Carrier may be increased any amount or
may be decreased by any amount up to ten percent (10%) at Carriers' sole
discretion. If Carrier
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proposes to reduce the Minimum Traffic Volume Commitments by more than ten
percent (10%), it may do so only with AWS' permission.
If Carrier fails to meet any minimum traffic volumes, Carrier will pay a
Shortfall Charge equal to the difference between the charges for the Minimum
Traffic Volume Commitment and the amount of eligible charges for that Minimum
Traffic Volume Commitment incurred during the commitment period. The Shortfall
Charge will be calculated as follows for voice traffic: the difference between
Carrier's Minimum Voice Traffic Volume Commitment (in terms of Minutes of Use)
and the actual voice traffic volume will be multiplied by $0.0360. The
Shortfall Charge will be calculated as follows for data traffic: 1) the
difference between Carrier's Minimum Data DS I Volume Commitment (in terms of
the number of DS Is) and the actual DS I volume will be multiplied by $1,121; 2)
the difference between Carrier's Minimum Data DS') Volume Commitment (in terms
of the number of DS3s) and the actual DS3 volume will be multiplied by $7,227;
3) Carrier will be charged the difference between Carrier's Minimum Frame Relay
Commitment (in terms of dollars per month) and the average of Carrier's actual
Frame Relay monthly charges. AWS will use the Shortfall Charge it collects from
Carrier to pay any Shortfall Charges AWS is obligated to pay Carrier Markets.
If the Shortfall Charges that AWS collects from all of the Affiliated Markets
participating in the sharing arrangement exceed the amount of the shortfall
charge that AWS must pay Carrier Markets, AWS will refund to Carrier its pro
rata share of the overage.
Carrier is not obligated to meet that portion of their Minimum Data Volume
Commitment for which Carrier Markets is unable to deliver service within a
reasonable time frame. A reasonable time frame for delivery of baseline service
(POP, or point-of-presence, to POP) is defined as approximately fourteen (14)
business days for DS1s and twenty-five (25) business days for DS3s. The
reasonable time frame for delivery of DS1s and DS3s may be extended if the Local
Exchange Carrier requires a longer installation interval. A reasonable time
frame for the delivery of Frame Relay is defined as approximately thirty-five
(35) calendar days. Please note that Carrier must provide accurate tie-down
information and a "firm order" must be placed in the Carrier Markets
provisioning system before the time frames identified above become valid.
As applicable, Carrier agrees to provide a fifteen (15) month voice traffic
volume forecast document to AWS on a quarterly basis for use in network
planning. AWS will provide Carrier with the format for the traffic volume
forecast document.
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Rate Review
At the initiation of Carrier, not more than one time within any twelve (12)
month period, the parties agree to review the rates for the Services described
in this LOA. If Carrier wishes to adjust the rates, Carrier must provide
evidence to AWS that substantially lower rates are offered by other
interexchange providers for Services that are comparable in quality and have
comparable minimum volume and duration requirements. Upon receipt of such
evidence AWS will use good faith efforts to work with Carrier to adjust the
rates, if appropriate, in order to ensure that such rates are reasonably
competitive.
Billing
Carrier will be billed monthly for the Services it purchases from AWS. Payment
is due upon presentation of a bill, and must be received no later than thirty
(30) days after the bill date. For voice services, the bill date is the day
after the end of the usage period covered by the bill; for data services, the
bill date is the first day of the service period covered by the bill. Any
charges not paid within such a period will be considered past due. Interest
charges may be added to any past due amounts at the lower of twelve percent
(12.0%) per year or the maximum rate allowed by law.
If Carrier wishes to dispute a charge-on a bill, Carrier must identify the
amount of the disputed charge and provide a full written explanation of the
basis for the dispute within ninety (90) days after the bill date. A pending
billing dispute does not relieve Carrier of the obligation to pay the disputed
charge.
Marks
Nothing in this LOA creates in Carrier any rights in the AT&T or AWS'
tradenames, trademarks, service marks or any other intellectual property of AT&T
or AWS.
Account Team Support
Carrier will be supported directly by a Carrier Markets account team consisting
of a sales manager, voice and/or data account executives, as well as technical
and customer care support. All orders should be placed directly with the
Carrier Markets account team and all issues and concerns regarding Services
contracted for under this LOA should be addressed directly with such account
team members.
CMRS
The Services that AWS purchases from Carrier Markets for Carrier under this LOA
are provided to Carrier solely for Carrier's provision of the Services to its
commercial mobile radio services ("CMRS") customers, for calls that originate on
Carrier's CMRS system and those CMRS systems that share Carrier's switches, and
not for any other purpose.
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Compliance with Master Carrier Agreement
Carrier agrees to comply with the obligations imposed on Customer and its End
Users as set forth in Paragraphs 9 through 14 and 16 through 35 of the attached
Master Carrier Agreements (LOA Attachments I and 2 and the attachments thereto),
and to afford AWS the same rights and protections afforded to AT&T thereunder.
AWS and Carrier Markets will afford Carrier the rights and protections, if any,
afforded to Customer and its End Users under Paragraphs 9 through 14 and 16
through 35 of the attached Master Carrier Agreements (LOA Attachments 1 and 2
and the attachments thereto).
Confidentiality
All information contained in this LOA and its Attachments is considered
confidential and is governed by the confidentiality agreement(s) in place
between AWS and Carrier, together with the Confidentiality provision in
Paragraph 20 of the attached Master Carrier Agreements (LOA Attachments 1 and
2).
Term
The Term of this LOA runs concurrently with the Terms of the long distance data
services and long distance voice services Master Carrier Agreements (LOA
Attachments 1 and 2 and the attachments thereto). These Terms are approximately
36 months from the first day of the first full billing month of the first
service provided to the first Affiliated Market under each of the respective
Master Carrier Agreements. Accordingly, the Term of this LOA for Carrier may be
shorter than 36 months.
Specifically, the long distance voice services Master Carrier Agreement (LOA
Attachment 1 and the attachments thereto) provides that:
"The Term of this Attachment consists of a Ramp-Up Period of 6
months and a Full Service Period of 36 months. The Ramp-Up Period
begins on the first full billing month for the first service
provided under this Attachment. For each service provided under
this Attachment, the Full Service Period begins on the day after
the Ramp-Up Period ends, which day is referred to as the Term
Start Date."
Specifically, the long distance data services Master Carrier Agreement (LOA
Attachment 2 and the attachments thereto) provides that:
"The Term of this Attachment is 36 months. For each service
provided under this Attachment, the Term begins on the first day
of the first full billing month for the first service provided
under this Attachment, which day is referred to as the Customer's
Initial Service Date (CISD). Different Services may have
different billing cycles, and so the billing months may
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December 21, 1998
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be staggered. For each service, however, the Term will begin
within one month after the Term begins for the first service
provided under this Agreement."
If Carrier decides to terminate this LOA prior to the end of such Term, Carrier
will be liable for the Minimum Traffic Volume Commitment(s) made above through
the end of said Term.
Sincerely,
AT&T WIRELESS SERVICES, INC.
/s/ Kerri Landeis
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Kerri Landeis
Director, External Affairs
Accepted and agreed:
Telecorp Communications, Inc.
By: /s/ Thomas H. Sullivan
------------------------------------
Signature
Thomas H. Sullivan
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Printed Name
President
- ----------------------------------------
Title
January 4, 1999
- ----------------------------------------
Date
Attachment 1 - Voice Contract
Attachment 2 - Data Contract
Attachment 3 - Minimum Traffic Volume Commitments
AT&T PROPRIETARY