printer-friendly

Sample Business Contracts

IRU Capacity Agreement - AT&T Corp. and Tel-Save Inc.

Sponsored Links

                             IRU CAPACITY AGREEMENT

               This IRU Capacity  Agreement (the "Agreement") is entered into as
of December 29, 1998 (the "Effective Date") between AT&T Corp.  ("AT&T"),  a New
York  corporation  with offices at 295 North Maple Avenue,  Basking  Ridge,  New
Jersey 07920, and Tel-Save, Inc. ("Tel-Save"),  a Pennsylvania  corporation with
offices at 6805 Route 202, New Hope, Pennsylvania 18938.

                                   BACKGROUND

          This Agreement is made with reference to the following facts:

          A. AT&T operates a fiber optic  communications  system (as such system
exists now, and as it is modified from time to time, the "AT&T Network").

          B. AT&T  desires to  provide,  and  Tel-Save  desires  to  obtain,  an
indefeasible  right to use optical fibers and dedicated circuit capacity derived
with network electronics and circuit electronics on the AT&T Network.

                               TERMS OF AGREEMENT

          1    Definitions

               1.1  "Tel-Save  Backbone  Network"  shall mean, at any date,  the
Tel-Save Routes as of that date.

               1.2  "Capacity"  shall  mean the DS-3  Capacity  on the  Tel-Save
Backbone Network,  including both (a) the circuit capacity, as measured in terms
of  transmission  and (b) a portion of the relevant  fiber strands  necessary to
transport such capacity.

               1.3  "DS-3  Capacity"  shall  mean  DS-3  transmission   capacity
between AT&T Central  Offices,  meeting the  specifications  set forth in AT&T's
Technical Reference 54014 and its addenda, as revised from time to time.

               1.4  "DS-3  Electronics" shall mean the technology and components
that  enable  DS-3  testing,   multiplexing,   and  transmission,   meeting  the
specifications set forth in AT&T's Technical Reference 54014 and its addenda, as
revised from time to time.

               1.5  "Indefeasible   Right  to  Use"  or  "IRU"  shall  mean  the
exclusive, unrestricted, and indefeasible right to use the relevant Capacity for
any legal  purpose.  The  granting  of such IRU does not  convey  title or legal
ownership of any fibers or equipment on the AT&T  Network.  Notwithstanding  the
occurrence  of a breach by the  receiving  party of any legal duty or obligation
imposed  by any  contract,  by the  law of  torts  (including  simple  or  gross
negligence,  strict  liability  or willful  misconduct),  or by federal or state
laws, rules, regulations,  orders, standards or ordinances, during the Term, the
granting party shall have no right to revoke or restrict in any manner or to any
degree whatsoever,  through  injunctive relief or otherwise,  the use of the IRU
granted to the receiving party.  The parties mutually  understand and agree that
any such breach shall be  compensable,  if at all, by a remedy at law and not at
equity.


                            AT&T/Tel-Save Proprietary
                      Subject to non-disclosure obligations


<PAGE>
                                                                          Page 2

               1.6  "Specifications"  shall mean, the service specifications set
forth in AT&T Technical Reference 54014, as revised from time to time.

               1.7  "Tel-Save Routes" shall mean the routes between AT&T Central
Offices over which Tel-Save obtains rights to use capacity under this Agreement,
including the routes listed in Attachment A.

               1.8  "Total  Interruption"  means any situation in which Tel-Save
suffers a total loss of connectivity in one or more Tel-Save Routes, lasting two
or more  hours,  which loss is not caused by  Tel-Save,  and that does not occur
within or as a result of equipment connections that Tel-Save provides.

          2.   Indefeasible Right to Use. AT&T hereby grants to Tel-Save for the
Term of this Agreement an IRU in the Capacity, contingent upon timely receipt of
payment as specified in Section 5 of this Agreement.

          3.   Term.  This  Agreement  is  binding  on  the  parties  as of  the
Effective Date and,  subject to the  termination  provisions of this  Agreement,
shall  remain in effect  until  December 31, 2023 (such period is referred to as
the "Term").

          4.   Implementation.  AT&T and Tel-Save shall work  together,  in good
faith, to develop a mutually  agreeable  implementation  schedule for furnishing
the Capacity and  associated  DS-3  Electronics,  and the parties  agree to work
together,  in good  faith,  in the  future to develop  necessary  implementation
schedules, as appropriate.

          5.   Payment.  In consideration  for the IRU granted  hereunder in the
Capacity, Tel-Save shall pay an IRU Fee to AT&T of $11,652,512.26, to be paid on
or before March 1, 1999.

          6.   Testing. Prior to making any Capacity available to Tel-Save under
this Agreement, AT&T shall test the Capacity on a route-specific basis to ensure
that the  Capacity  is in  conformity  with the  Specifications.  If any testing
establishes  that the  Capacity  does not  conform to the  Specifications,  AT&T
promptly shall correct such  nonconformity and conduct  additional testing prior
to making the Capacity available to Tel-Save.

          7.   Outage  Credits.  In  the  event  of a  Total  Interruption  in a
specific  Tel-Save Route that is due to circumstances  within AT&T's  reasonable
control (fiber cuts shall not be deemed to be within AT&T's reasonable control),
Tel-Save shall be entitled to an outage credit. For each two hour period of such
a Total  Interruption,  Tel-Save  shall  receive  an outage  credit at a rate of
$20.00 for each such  period of a Total  Interruption  for each  Tel-Save  Route
where the Total  Interruption  occurs. The duration of such a Total Interruption
will be measured from the time of notice to AT&T's network control center that a
Total  Interruption  has occurred to the time of restoration of the Service.  No
credit will be provided for any scheduled interruption. An outage credit will be
applied against other amounts due to AT&T from Tel-Save,  or, to the extent such
sums are not due to AT&T, provided as a refund.

          8.   Chronic  Failure.  If there shall occur,  within any period of 12
consecutive months, more than four Total Interruptions  caused by factors within
AT&T's reasonable control,


                            AT&T/Tel-Save Proprietary
                      Subject to non-disclosure obligations


<PAGE>
                                                                          Page 3

AT&T  will  demonstrate  to  Tel-Save  actions  taken  by  AT&T to  reduce  such
Interruptions. If there shall occur more than two additional Total Interruptions
due to factors within AT&T's  reasonable  control  within the  subsequent  three
month  period,  this  shall be deemed a Chronic  Failure  for  purposes  of this
Agreement.

          9.   Interference.  In the event that AT&T believes in good faith that
Tel-Save's use of the Tel-Save Backbone Network is interfering unreasonably with
the use of AT&T service by others or the operation of the AT&T Network, AT&T may
immediately  restrict or suspend the Capacity,  without liability on the part of
AT&T, and then notify  Tel-Save of the action that AT&T has taken and the reason
for such action.  For purposes of the  foregoing  sentence,  the normal usage by
Tel-Save of all or any part of the Capacity shall be deemed to be reasonable. To
the  extent  doing so does  not  interfere  with its  ability  to  prevent  such
interference,  AT&T will attempt to limit any  restriction  or suspension  under
this Section to the Capacity that are causing such interference.

         10.   Relocation.   Unless   the   circumstances   make   such   notice
impracticable, AT&T shall give Tel-Save at least 90 days prior written notice of
any scheduled relocation of any portion of the Tel-Save Backbone Network, and as
much advance notice as possible of any unscheduled  relocation.  AT&T shall have
the right to direct  any  relocation  of any  portion of the  Tel-Save  Backbone
Network,  including  but not  limited to the right to  determine  the extent and
timing of, and the methods to be used for, such relocation;  provided,  however,
that unless otherwise agreed, any such relocation:  (i) shall be constructed and
tested in accordance with the  Specifications,  and (ii) shall not result in any
Interruption in excess of two hours or degradation of the Capacity. In the event
an AT&T  Central  Office is  relocated  or  replaced  by a new site,  AT&T shall
relocate  the  applicable  Tel-Save  Capacity.  Any  such  relocation  shall  be
undertaken  at no  cost  to  Tel-Save,  except  in  cases  where  relocation  is
accompanied  by  additions  or other  work to  benefit  Tel-Save  and for  which
Tel-Save agrees in writing to pay.

         11.   Use of the Capacity and  Restriction on Resale.  Tel-Save may use
the Capacity for any lawful  purpose and Tel-Save  represents  and warrants that
its use of the Capacity and its offering of services using the Tel-Save Backbone
Network will comply with all  applicable  government  codes,  ordinances,  laws,
rules,  regulations and/or restrictions.  Tel-Save may sell, trade,  exchange or
otherwise make  available to any person or entity any service  provided over the
Tel-Save Backbone Network.





                            AT&T/Tel-Save Proprietary
                      Subject to non-disclosure obligations


<PAGE>
                                                                          Page 4

         12.   Limitation of Liability.  AT&T'S LIABILITY, IF ANY, FOR ANY CLAIM
OR  SUIT  BY  TEL-SAVE  OR ITS  AFFILIATES,  FOR  DAMAGES  ASSOCIATED  WITH  THE
INSTALLATION,  PROVISION, TERMINATION, MAINTENANCE, REPAIR OR RESTORATION OF ANY
OF THE  CAPACITY  SHALL NOT EXCEED AN AMOUNT  EQUAL TO THE  PRORATED  PORTION OF
CHARGES FOR THE AFFECTED  CAPACITY FOR THE PERIOD DURING WHICH THAT CAPACITY WAS
AFFECTED.  IN NO EVENT SHALL AT&T OR TEL-SAVE BE LIABLE IN  CONNECTION  WITH THE
PROVISION,   USE  OR  RESALE  OF  THE   CAPACITY   FOR   INDIRECT,   INCIDENTAL,
CONSEQUENTIAL, RELIANCE OR SPECIAL DAMAGES, INCLUDING WITHOUT LIMITATION DAMAGES
FOR LOST PROFITS OR DIMINISHED BUSINESS VALUE,  REGARDLESS OF THE FORM OF ACTION
WHETHER IN CONTRACT,  INDEMNITY  WARRANTY,  STRICT LIABILITY OR TORT,  INCLUDING
WITHOUT  LIMITATION  NEGLIGENCE OF ANY KIND WHETHER ACTIVE OR PASSIVE,  PROVIDED
THAT: (A) NOTHING IN THIS SECTION SHALL LIMIT THE PARTIES' RESPECTIVE RIGHTS AND
OBLIGATIONS  UNDER  SECTION  7.2   ("INDEMNIFICATION")  OF  THE  MASTER  CARRIER
AGREEMENT ENTERED INTO BETWEEN TEL-SAVE AND AT&T ON APRIL 22,. 1998 (THE "MCA");
(B) THE  LIMITATIONS  OF LIABILITY  DESCRIBED  IN THIS SECTION  SHALL NOT RENDER
INAPPLICABLE  ANY CHARGES OR OTHER  LIABILITIES  FOR WHICH A PARTICULAR  AMOUNT,
FORMULA  OR  OTHER  METHOD  OF  CALCULATION  IS  SPECIFICALLY  PROVIDED  IN THIS
AGREEMENT;  AND (C)  NOTHING  IN  THIS  AGREEMENT  SHALL  LIMIT  EITHER  PARTY'S
LIABILITY IN TORT FOR (1) THAT PARTY'S WILLFUL OR INTENTIONAL  MISCONDUCT OR (2)
DAMAGES TO INDIVIDUALS  OR THEIR ESTATES FOR BODILY INJURY OR DEATH  PROXIMATELY
CAUSED BY THAT PARTY'S NEGLIGENCE.

         13.   Termination.

               13.1 Upon the  expiration of the Term of this  Agreement,  use of
the  Capacity  shall  terminate  and  Tel-Save  shall  owe  AT&T  no  additional
consideration.

               13.2 In the event Tel-Save abandons or otherwise relinquishes use
of any of the Capacity  subsequent to the start of the term  ("Abandonment") and
notifies AT&T of that Abandonment,  Tel-Save shall be entitled to a reuse credit
dependent  on the time of Notice as follows:  (1)  Abandonment  during years one
through  three of the Term,  an amount equal to 1/10th of 1% of the pro-rata IRU
fee regarding the abandoned  facilities for each  remaining  month of the of the
Term of the  Commitment;  (2)  Abandonment  during years four through six of the
Term,  an amount  equal to 1/12th of 1% of the pro-rata  IRU fee  regarding  the
abandoned  facilities  for  each  remaining  month  of the of  the  Term  of the
Commitment;  (3)  Abandonment  during  years seven  through ten of the Term,  an
amount  equal to 1/15th of 1% of the pro-rata IRU fee  regarding  the  abandoned
facilities for each remaining  month of the of the Term of the  Commitment;  (4)
Abandonment  during years eleven through fifteen of the Term, an amount equal to
1/18th of 1% of the pro-rata IRU fee regarding the abandoned facilities for each
remaining  month of the of the Term of the Commitment;  (5)  Abandonment  during
years sixteen through twenty of the Term, an amount equal to 1/36th of 1% of the
pro-rata IRU fee regarding the abandoned  facilities for each remaining month of
the of the Term of the Commitment;  and (6) Abandonment  during years twenty-one
through twenty-five of the Term, an amount equal to 1/72nd of 1% of the pro-rata
IRU fee regarding the abandoned  facilities for each  remaining  month of the of
the Term of the Commitment.  Upon notice of Abandonment,  AT&T shall be entitled
to reuse the  facilities  for its own use or in the  provision  of  capacity  or
services the others.



                            AT&T/Tel-Save Proprietary
                      Subject to non-disclosure obligations

<PAGE>


                                                                          Page 5

         14.   Default.

               14.1 AT&T has the right to terminate  this  Agreement upon thirty
days' prior written  Notice of Default in the event  Tel-Save fails to make full
and  timely  payment of the IRU Fee as  specified  in Section 5. In the event of
such  termination,  AT&T shall be entitled  not only to revoke the IRU  granted,
which is contingent  upon timely payment of the IRU Fee, but also to collect the
sum of $500,000 as liquidated damages for the failure to pay the IRU Fee. In the
event that AT&T is required to institute collection  procedures,  AT&T will also
be entitled to the reasonable  attorneys' fees necessary to effect collection of
that amount.

               14.2 Tel-Save  has the right to  terminate  this  Agreement  with
regard to a specific  Tel-Save  Route upon thirty days' prior written  Notice of
Default  in the event of a Chronic  Failure  (as  defined  in  Section 8 of this
Agreement) on that route. In the event of such termination, the IRU with respect
to such Route shall be terminated and Tel-Save shall be entitled (in addition to
any outage  credits  specified in Section 7 above) to liquidated  damages in the
amount of the pro-rata  share of the IRU that the remaining term of the specific
Tel-Save Route  represents.  In the event that Tel-Save is required to institute
collection  procedures,  Tel-Save  will  also  be  entitled  to  the  reasonable
attorneys' fees necessary to effect collection of that amount.

          15.  Incorporation of Terms by Reference.  The following provisions of
the MCA are  incorporated  by  reference  and made part of this  Agreement as if
fully  set  forth.  As  used in  these  provisions  as  incorporated,  the  term
"Agreement" shall be read as a reference to this Agreement,  the term "Services"
shall  be  read  as a  reference  to  Capacity  under  this  Agreement,  and the
capitalized terms used shall have the meanings set forth in the MCA.

           Indemnification. (ss.7.2.)
           Force Majeure. (ss.7.3.)
           Limitation of Actions. (ss.7.4.)
           Disclaimer of Warranties. (ss.7.5.)
           Exclusive Remedies (ss.7.6.)
           Restrictions Against Use of Name and Brand Identification. (ss.8.1.)
           Inconsistent Use (ss.8.2.)
           No Patent or Software License. (ss.8.3.)
           Taxes to be Billed by AT&T. (ss.9.1.)
           Taxes Not To be Billed by AT&T. (ss.9.2.)
           Gross Receipts Tax. (ss.9.3.)
           Confidential Information. (ss.11.1.)
           Protection of Confidentiality. (ss.11.2.)
           Disclosure to or by Affiliates or Subcontractors. (ss.11.3.)
           Return or Destruction of Confidential Information. (ss.11.4.)
           Disclosure to Consultants. (ss.11.5.)
           Required Disclosure. (ss.11.6.)
           Injunctive Remedy. (ss.11.7.)
           Assignment. (ss.13.3.)
           Third-Party Beneficiaries; Affiliates. (ss.13.4.)
           Relationship of the Parties. (ss.13.5.)
           Acknowledgment of Right to Compete. (ss.13.6.)


                            AT&T/Tel-Save Proprietary
                      Subject to non-disclosure obligations

<PAGE>
                                                                          Page 6


           Network Equipment. (ss.13.7.)
           Removal of Property. (ss.13.8.)
           Notices. (ss.13.9.)
           Compliance with Laws. (ss.13.11.)
           Export Regulation Compliance. (ss.13.12.)
           Choice of Law. (ss.13.13.)
           Severability. (ss.13.14.)
           Construction. (ss.13.16.)
           Descriptive Headings. (ss.13.17.)
           Survival of Terms. (ss.13.18.)
           Modification And Waiver. (ss.13.19.)
           Execution in Counterparts (ss.13.21.)


         16.   Entire  Agreement;  Amendment.  This  Agreement  constitutes  the
entire and final agreement and understanding between the parties with respect to
the subject  matter  hereof,  the granting of IRU Capacity,  and  supersedes all
prior agreements relating to the subject matter hereof,  which are of no further
force or effect.  The Exhibits  referred to herein are integral parts hereof and
are hereby made a part of this Agreement. This Agreement may only be modified or
supplemented  by  an  instrument  in  writing  executed  by  a  duly  authorized
representative of each party.

         IN WITNESS  WHEREOF,  in confirmation of their consent to the terms and
conditions  contained  in this  Agreement  and  intending  to be  legally  bound
thereby,  the parties have  executed  this IRU  Capacity  Agreement on the dates
shown below but effective for all purposes as of the Effective Date.

AT&T Corp.                                        Tel-Save, Inc.

By:                                               By:
   ------------------------                          ------------------------

Title:                                            Title:
      ---------------------                             ---------------------

Date:                                             Date:
     ----------------------                            ----------------------






                            AT&T/Tel-Save Proprietary
                      Subject to non-disclosure obligations

<PAGE>
                                                                          PAGE 1




                                    EXHIBIT A

                      DS-3 CAPACITY CIRCUIT IDENTIFICATION



                                      ***



                            AT&T/Tel-Save Proprietary
                      Subject to non-disclosure obligations