[Portions of this Program Enrollment Terms have been redacted. The redacted
portions are marked with an asterisk. The Company has applied to the
Securities and Exchange Commission for
confidential treatment of the redacted portions.]
EFFECTIVE DATE:____________
WORLDCOM NETWORK SERVICES, INC.
CLASSIC/TRANSCEND(TM) SWITCHED SERVICES
PROGRAM ENROLLMENT TERMS
These Program Enrollment Terms (the "PET") are made this 1st day of
November, 1998, by and between WorldCom Network Services, Inc. ("WorldCom") and
Incomnet Communications Corporation (successor-in-interest to National Telephone
& Communications, Inc.) ("Customer") and are a part of their Telecommunications
Services Agreement for Switched Services. Capitalized terms not defined herein
shall have the meaning ascribed to them in the TSA, the Service Schedule or the
applicable Rate and Discount Schedule.
1. PRIOR AGREEMENT: Notwithstanding anything to the contrary contained in
Section 24 of the Telecommunications Services Agreement (the "TSA"), the
parties acknowledge that they previously executed that certain
Telecommunications Services Agreement dated November 15, 1994, and more
particularly described as TSA#NTC-941101 (the "Prior Agreement"). The
parties agree that as of the Effective Date described in Section 2 below,
(i) the Prior Agreement will be canceled in its entirety and of no further
force or effect with the exception of certain accrued obligations arising
under the Prior Agreement such as the payment of money or the application
of credits arising prior to the Effective Date, and provisions intended to
survive termination, such as limitation of liability, indemnification and
confidentiality, and (ii) all Services currently being provided under the
Prior Agreement will be provisioned and maintained by WorldCom taking
into account the terms and conditions of this Agreement (including the
rates set forth in the Rate Schedule attached herewith).
2. SERVICE TERM: The Service Term shall commence as of November 1, 1998 (the
"Effective Date") and shall continue through and include October 31, 2001
(the "Service Term"), subject to extension as provided in Subsection 3(B)
below; provided, however, in no event will this Agreement be extended past
October 31, 2003. Upon expiration of the Service Term, the Switched
Services in question will continue to be provided pursuant to the same
terms and conditions as are then in effect (including, without limitation,
the applicable rates, discounts and commitments, if any), subject to
termination by either party upon ninety (90) days prior written notice to
the other party.
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3. CUSTOMER'S MINIMUM MONTHLY REVENUE COMMITMENT/DEFICIENCY CHARGE:
(A) Commencing with the November, 1998, billing period (i.e., December,
1998 invoice) and continuing through the end of the Service Term, Customer
agrees to maintain, on a take-or-pay basis, Monthly Revenue (as defined in
the applicable Rate Schedule) of at least the amounts shown below
(collectively, "Customer's Minimum Revenue Commitment") in the respective
periods shown (collectively, the "Commitment Period"), subject to
modification as described in Section 4 below.
Minimum Monthly
Period Revenue Commitment
------ ------------------
11/1/98 (12/1/98 invoice) through 4/30/99 [*]
5/1/99 (6/1/99 invoice) through 10/31/99 [*]
11/1/99 (12/1/99 invoice) through 10/31/00 [*]
11/1/00 (12/1/00 invoice) through 10/31/01 [*]
(B) In the event the Service Term is extended as described in Subsection
4(C) below, Customer's Minimum Revenue Commitment during the extension
period(s) will be as follows for the periods indicated.
Minimum Monthly
Period Revenue Commitment
------ ------------------
11/1/99 (12/1/01 invoice) through 10/31/02 [*]
11/1/00 (12/1/02 invoice) through 10/31/03 [*]
(C) In the event Customer does not maintain Customer's applicable Minimum
Revenue Commitment in any month shown above, then for those month(s) only,
Customer will pay WorldCom the difference between Customers applicable
Minimum Revenue Commitment and Customer's actual Monthly Revenue (as
described in the applicable Rate Schedule) for such month (collectively,
the "Deficiency Charge"). The Deficiency Charge will be due at the same
time payment is due for Service provided to Customer, or immediately in an
amount equal to Customer's applicable Minimum Revenue Commitment(s) for
the unexpired portion of the Service Term, if WorldCom terminates this
Agreement based on Customer's default.
4. CUSTOMER'S AGGREGATE MINIMUM REVENUE COMMITMENT:
(A) In addition to Customer's Minimum Monthly Revenue Commitments
described in Section 3 above, commencing with the Effective Date and
continuing through the end of the Service Term (subject to extension as
provided herein) Customer agrees to maintain Monthly Revenue which totals
in the aggregate of at least $250,000,000 (which amount may be increased
as described in Subsection (B) below) ("Customer's Aggregate Commitment").
In order to achieve Customer's Aggregate Commitment, Customer agrees to
maintain cumulative Monthly Revenue of at least the amounts shown below
(collectively, the "Target Amount") in the respective yearly periods
indicated (the "Target Period"):
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Period Target Amount
------ -------------
November, 1998 - October, 1999 (Year 1) [*]
November, 1999 - October, 2000 (Year 2) [*]
November, 2000 - October, 2001 (Year 3) [*]
IF APPLICABLE AS DETERMINED UNDER SUBSECTION (C) BELOW:
November, 2001 - October, 2002 (Year 4) To be Determined
November, 2002 - October, 2003 (Year 5) To be Determined
(B) In the event Customer's actual cumulative Monthly Revenue in any
Target Period (including any Deficiency Charges described in Subsection
3(C) above actually paid by Customer during such Target Period) is greater
than the applicable Target Amount for such Target Period, any excess
amount will be deducted from the Target Amount for such the immediately
following Target Period.
(C) In the event Customer's actual cumulative Monthly Revenue in any
Target Period (including any Deficiency Charges described in Subsection
3(C) above actually paid by Customer during such Target Period) is less
than the applicable Target Amount for such Target Period (hereinafter
referred to as a "Shortfall Amount"), the Shortfall Amount will first be
increased by the applicable percentage shown below and then added to the
Target Amount for the immediately following Target Period. Further,
Customer's Aggregate Commitment will be increased by an amount equal to
the Shortfall Amount times the percentage shown ("Customer's Modified
Aggregate Commitment"). If necessary, the Service Term will be extended
beyond Year 3 but in no event will the extension period go beyond October
31, 2003.
Year Percent
---- -------
1 [*]
2 [*]
3 [*]
4 [*]
Example: Assume Customer's actual Monthly Revenue in Year 1 is [*].
The Target Amount for Year 2 will be [*][[*]+([*]x[*])] and
Customer's Aggregate Commitment will be [*]([*]+[*]x[*]).
(D) As soon as Customer's aggregate Monthly Revenue since November 1,
1998, equals at least Customer's Aggregate Commitment (or Customer's
Modified Aggregate Commitment, if applicable), either Customer or WorldCom
may terminate this Agreement upon at least ninety (90) days' prior written
notice.
5. REQUIREMENTS AGREEMENT: In consideration of the rates set forth in the
Rate Schedule, a reduction in Customer's commitments under the Prior
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, during the Service Term
Customer agrees to purchase one hundred percent (100%) of its
telecommunications services requirements from SWITCHED
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ACCESS Service (1+ and Toll Free) (which services are described in this
Agreement) from WorldCom under the terms and conditions set forth in this
Agreement ("Customer's Requirements Obligation"). Upon request from
WorldCom, Customer agrees to provide WorldCom reasonable documentation
evidencing Customer's compliance with this Section 5 and if requested by
WorldCom, agrees to allow WorldCom or its representatives to audit
Customer's books and records as may be necessary solely to ensure
Customer's compliance with Customer's Requirements Obligation. In the
event Customer is in breach of this Agreement, in addition to WorldCom's
other rights and remedies described in this Agreement, notwithstanding
anything to the contrary contained in the Agreement, WorldCom shall have
the right to immediately increase Customer's SWITCHED ACCESS Service rates
set forth in the Rate Schedule to [*]. Any increase as described herein
will not affect Customer's Commitments set forth in Sections 3 and 4
above.
6. WAIVER OF DEFICIENCY CHARGES: Upon execution of this Agreement, in
consideration of Customer's Requirements Obligation and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, WorldCom agrees to waive all deficiency charges which have
been assessed Customer under the terms of the Prior Agreement up through
and including October 31, 1998.
7. QUARTERLY REVIEW OF RATES: Provided Customer is in substantial compliance
with the terms of this Agreement, commencing February 1, 1999, and
continuing on the first day of every fourth (4th) month thereafter (i.e.,
June 1, October 1, February 1, etc.), WorldCom and Customer agree to
review the rates hereunder and negotiate in good faith as to whether
modifications are necessary in order to maintain reasonable parity between
such rates and rates then made generally available by WorldCom to its
other carrier customers for the same Services taking into account all of
the terms associated with such rates. In connection with such review, the
parties agree to review the relative state of parity between the
then-current rates offered to Customer under the terms of this Agreement
and the rates generally available in the wholesale marketplace for similar
services and commitments. Provided, however, nothing contained in this
Section 7 will obligate WorldCom to reduce Customer's rates under this
Agreement or obligate or require WorldCom to adopt the same or similar
rates or offer the same or similar products of third parties.
8. CONDITIONAL OBLIGATIONS: The parties specifically acknowledge that the
terms and conditions offered hereunder are contingent upon (i) Customer's
compliance with the requirements set forth in that certain Forbearance
Letter dated October 30, 1998 from Denis Richard, Customer's President and
Chief Executive Officer Robert S. Vetera, Director of Credit for WorldCom,
and (ii) WorldCom and Customer's reconciliation of all of Customer's
accounts on or before March 15, 1999, which reconciliation must be
satisfactory to WorldCom.
9. PROMOTIONAL CREDIT: In consideration of Customer's Minimum Revenue
Commitment (as described in Section 3 above) and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, WorldCom agrees to provide Customer a nine-month promotional
pricing allowance (as
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described herein) based on the incremental growth of charges for
Customer's Interstate SWITCHED ACCESS Service (1+ and Toll Free) within
the 48 contiguous United States ("Promotional Traffic"). For purposes of
this Section 9, the parties agree that the base amount (the "Base Amount")
of charges for such Promotional Traffic will be determined by multiplying
(x) Customer's minutes of Promotional Traffic shown on Customer's November
1, 1998 invoice (i.e., Customer's October, 1998 Promotional Traffic) times
(y)[*](hereinafter referred to as the "Base Amount"). WorldCom will then
apply a discount (the "Promotional Credit") equal to [*] for every dollar
charged Customer over the Base Amount for the Promotional Traffic, if any,
for the nine (9) months commencing with Customer's December 1, 1998
invoice (i.e., Customer's November, 1998 Promotional Traffic) and
continuing through Customer's August 1, 1999 invoice (i.e., Customer's
July, 1999 Promotional Traffic). Promotional Credits, if any, will be
applied by WorldCom one month in arrears. For example, the first
Promotional Credit, if any, based on Customer's December 1, 1998 invoice
will be applied to Customer's January 1, 1998 invoice, and the Promotional
Credit, if any, based on Customer's August 1, 1999 invoice will be applied
to Customer's September 1, 1999 invoice.
IN WITNESS WHEREOF, the parties have executed these Classic/TRANSCEND(TM)
Switched Services Program Enrollment Terms.
WORLDCOM NETWORK SERVICES, INC. INCOMNET COMMUNICATIONS CORPORATION
By By /s/ Michael J. Keebaugh
----------------------------- -----------------------------
(Signature) (Signature)
Michael J. Keebaugh
----------------------------- -----------------------------
(Print Name) (Print Name)
Sr. VP Operations
----------------------------- -----------------------------
(Title) (Title)
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