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EXHIBIT 10.21
AMENDMENT NO. 5
TO SERVICE AGREEMENT
This Amendment No. 5 to Service Agreement (this "Amendment") is entered
into as of the 26th day of March, 1997, between Phoenix Network, Inc., a
Delaware corporation ("Carrier") and US ONE Communications Services Corp., a
Delaware corporation ("USOC").
RECITALS
A. Carrier and US ONE Communications Corp., a Delaware corporation
and parent corporation of USOC ("Parent") entered into a Communications
Services Agreement, dated May 22, 1996 (the "Original Agreement") regarding the
provision of various services by Parent to Carrier.
B. With the consent of Carrier, Parent assigned its rights and
obligations under the Original Agreement to USOC on November 9, 1996.
C. Amendment No. 1 to Service Agreement was entered into by Carrier
and Parent on October 11, 1996, Amendment No. 2 to Service Agreement was
entered into by Carrier and Parent on October 11, 1996; Amendment No. 3 to
Service Agreement was entered into on January 3, 1997 and Amendment No. 4 was
entered into on December 30, 1996 (hereinafter, the "Prior Amendments"). (The
Original Agreement, as amended by the Prior Amendments, is referred to herein
as the "Agreement.")
D. Pursuant to this Amendment, Carrier and USOC desire to amend the
Agreement to more closely reflect the parties' intentions.
AGREEMENT
Now, therefore, in consideration of the mutual covenants and agreements
set forth herein, the parties hereto agree as follows:
1. Capitalized Terms. Capitalized terms used without definition
herein shall have the meanings assigned to them in the Agreement.
2. Charges.
a. Postalized Charges. Retroactively effective to January 1,
1997, USOC shall charge Carrier $[ ] per minute for all Eligible
Traffic (as hereinafter defined) and $[ ] per minute for all Carrier
Switched Eligible Traffic (as hereinafter defined). The total monthly
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charges to Carrier shall be calculated by multiplying the number of Billable
Minutes (as hereinafter defined) of Eligible Traffic and Carrier Switched
Eligible Traffic, respectively, times the applicable rate. Carrier and USOC
agree to revisit the per minute rates set forth in this Section 2.a. on, but no
later than, December 31, 1997, and not less frequently than semi-annually
thereafter from the date of this Amendment, and to reduce (but never increase)
such rates to the same extent and degree that average LEC tariffs for access
charges (originating and terminating) have decreased. As an example of this
computation, if LEC access charge tariffs have decreased by $0.0050 per minute
since the last rate re-evaluation, then, at the next rate re-evaluation, the
per minute rate for Eligible Traffic and the per minute rate for Carrier
Switched Eligible Traffic shall each also be reduced by $0.0050 per minute.
b. Dedicated Services Charges. On behalf of Carrier, USOC
will provision special access service at the DS-1 level and charge Carrier a
monthly recurring charge equal to the LEC tariff rate less [ ]% and a
Carrier Switched Eligible Traffic usage rate of $[ ] per minute for 1+
and 800 interstate and intrastate traffic.
c. Non-Recurring Charges. For network build out on behalf of
Carrier, USOC shall pass through and xxxx to Carrier any non-recurring charges
billed to USOC by the ILEC for Carrier Identification Code ("CIC") activation,
CIC redirection and trunk installation.
d. Payments to Carrier; Offsets to USOC Charges.
Retroactively effective to January 1, 1997, Carrier shall deduct from the
amounts charged by USOC pursuant to Sections 2(a), 2(b) and 2(c) hereof, and,
to the extent the following items exceed the charges from USOC in any month
hereunder, USOC agrees to promptly pay the excess amount to Carrier of, the
following:
i. All costs incurred by Carrier for termination services
provided by vendor carriers pursuant to Approved Vendor
Contracts (as hereinafter defined) for Eligible Traffic
and Carrier Switched Eligible Traffic;
ii. All costs incurred by Carrier for 800 origination services
provided by vendor carriers pursuant to Approved Vendor
Contracts for Eligible Traffic and Carrier Switched
Eligible Traffic;
iii. All costs incurred by Carrier in securing inter-machine
trunk transmission lines ("IMTs") pursuant to Section 5,
provided that Carrier has used its reasonable efforts to
secure best available pricing for such IMTs; and
iv. Any Vendor Carrier Shortfalls (as hereinafter defined),
provided, however, that as a condition precedent to USOC's
responsibility to Carrier for Vendor Carrier Shortfalls in
any given month, Carrier's Billable Minutes during such
month shall equal or exceed the product of (a) Carrier's
Billable Minutes for January 1997 and (b) the Applicable
Percentage. The Applicable Percentage shall be [ ]%, [
]%, [ ]% and [ ]% during each of the six month periods
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ending on June 30, 1997, December 31, 1997, June 30, 1998,
and December 31, 1998, respectively. The foregoing
condition precedent shall terminate on December 31, 1998.
e. Network Design Fee. In addition to the foregoing payment
and/or offset obligations, USOC shall pay to Carrier a network design fee of
$[ ], payable in three equal monthly installments of $[ ] each on
each of March 31, April 30 and May 31, 1997.
f. Certain Definitions. As used herein, the following terms
shall have the following meanings:
i. Eligible Traffic shall mean shall mean all of Carrier's 1+
and 800 interstate and intrastate long distance traffic
that is routed by at least one of USOC's long distance
switches, excluding, however, any traffic that is also
routed by a long distance switch owned by Carrier.
ii. Carrier Switched Eligible Traffic shall mean all of
Carrier's 1+ and 800 interstate and intrastate long
distance traffic that is routed by at least one of USOC's
long distance switches, but which is also routed by at
least one long distance switch owned by Carrier.
iii. Billable Minutes shall mean the number of minutes spent by
Carrier's customers on long distance telephone
conversations, measured from the time the person at the
terminating end picks up the telephone to the time the
person at the originating end hangs up the telephone.
iv. Vendor Carrier Shortfalls shall mean the amount by which
Carrier's total monthly minimum dollar usage commitments
to its vendor carriers under Approved Vendor Contracts
exceeds all amounts Carrier has been billed by its vendor
carriers under Approved Vendor Contracts that apply toward
Carrier's monthly minimum dollar usage commitments.
Amounts which Carrier has been billed by its vendor
carriers under Approved Vendor Contracts in any given
month shall be deemed to include all amounts paid by USOC
to Carrier pursuant to Sections 2.d.i., 2.d.ii. and
2.d.iii. on account of services resold to USOC under such
Approved Vendor Contracts, but to exclude any payments
made by Carrier to vendor carriers solely on account of
missed monthly minimum dollar usage commitments.
v. Approved Vendor Contracts shall mean (a) all of Carrier's
vendor carrier contracts entered into on or prior to March
15, 1997 ("Existing Contracts"), (b) any extension of or
successor to an Existing Contract that has an equivalent
or lesser term length, equal or lesser volume commitments,
and
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pricing and other terms that are at least as favorable as
its predecessor Existing Contract, and (c) any vendor
carrier contract approved by USOC.
3. PIC Management. USOC shall manage the PIC process for Carrier at
no charge to Carrier.
4. Billing Reconciliation and Procedures. USOC shall ensure that
the actual monthly charges submitted to Carrier pursuant to Section 2 are
reconciled with and match the Call Detail Records ("CDRs") for Billable Minutes
of Eligible Traffic and Carrier Switched Eligible Traffic. On the 3rd Monday
of every month, representatives of USOC and Carrier shall meet to agree on the
net charges due from or to Carrier pursuant to Section 2 hereof, and, at the
first such meeting, USOC and Carrier shall reconcile all charges applying
retroactively from the date of this Amendment. Such meetings shall be held at
the offices of USOC and Carrier, on alternating months. In the event of a
dispute as to the amount of any payments or offsets claimed by either party
pursuant to this Amendment, the parties agree to adhere to Section 4.4 of the
Original Agreement regarding billing disputes.
5. Network Services Purchase Arrangement. Carrier agrees to sell
inter-machine trunking services to USOC, subject to availability and required
service intervals. Carrier also agrees that USOC shall have the right to
determine which vendor carrier shall be used by Carrier, pursuant to the
Approved Vendor Contracts, on new routes purchased after the date of this
Amendment by USOC under this Section 5, provided, however, that USOC agrees
that the IMT spans designated on Attachment 1 hereto shall be purchased by the
vendors designated thereon ("CD" denoting Comdisco and "WTG" denoting
LDDS/WorldCom and its affiliates). Carrier shall also resell "off-net" network
termination services to USOC via its Approved Vendor Contracts for Eligible
Traffic and Carrier Switched Eligible Traffic. Notwithstanding anything in
this Amendment or the Agreement to the contrary, USOC agrees that Carrier will
maintain within its discretion one or more contracts with vendor carriers, or
provisions within Approved Vendor Contracts, in order to handle call traffic
other than Eligible Traffic and Carrier Switched Eligible Traffic.
6. Traffic Conversion. Carrier shall convert 100% of its eligible
1+ and 800 interstate and intrastate traffic to Eligible Traffic or Carrier
Switched Eligible Traffic by May 15, 1997, and maintain that percentage
throughout the continued turn-up of USOC's national switching platform, subject
to USOC's capacity and ability to handle such traffic without material service
deficiencies or interruptions. Carrier shall convert at least 90% of its
calling card and international traffic to Eligible Traffic or Carrier Switched
Eligible Traffic by September 15, 1997, subject to Carrier's and USOC's
subsequent agreement on pricing therefor (which Carrier and USOC agree to
negotiate in good faith). USOC hereby represents and warrants that, upon full
deployment of the first fourteen switches listed on Attachment 1 to Amendment
No. 1 to Service Agreement, dated October 11, 1996, and the completion of its
current LATA extension schedule, USOC will be able to accommodate, without
material service deficiencies or interruptions, at least 90% (measured by
minutes) of Carrier's long distance traffic, other than traffic routed by
Carrier's owned switches and originating (a) through Carrier's Feature Group
Ds, or (b) over Carrier's dedicated circuits. USOC
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and Carrier agree to negotiate in good faith an amendment addressing conversion
of Carrier's Feature Group D and dedicated traffic.
7. Titles and Subtitles. The section titles and subtitles used
herein are for reference only and shall not effect the meaning or
interpretation of any provision of this Amendment.
8. Scope. Except to the extent modified or amended herein, the
Agreement shall remain in full force and effect.
9. Term. The term of this Amendment shall run from the date hereof
through the remaining term of the Agreement, provided, however, that Carrier
shall have the option at any time upon 90 days prior written notice to
terminate this Amendment and return to the unbundled, nonpostalized pricing
arrangement embodied in the Agreement without penalty.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written by their duly authorized representative.
US ONE COMMUNICATIONS CORP. PHOENIX NETWORK, INC.
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxxxx
Title: President, Network Services Title: President and CEO
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