AFFILIATE TRANSACTION AGREEMENT

For

Interexchange Carrier Services for

Internal Telecommunications

Between

SOUTHWESTERN BELL COMMUNICATION SERVICES, INC.

And

NEVADA BELL TELEPHONE COMPANY

PACIFIC BELL TELEPHONE COMPANY

SOUTHWESTERN BELL TELEPHONE COMPANY

SBC Agreement No. 00012603

Agreement No. 00012603

TABLE OF CONTENTS

Section No.
Schedule No.
Exhibit No. / Description / Page
“Specific Terms and Conditions”
/ 3
§1 / Definitions / 3
§2 / Term / 4
§3 / Services / 4
§4 / Prices / 7
§5 / Orders for Services / 9
§6 / Delivery / 9
§7 / Service Level Commitments and Credits / 9
§8 / Network Optimization / 9
§9 / Technology migration / Services Not Offered by SBCS / 10
§10 / Fraudulent Use / 10
§11 / Responsibilities of Each Individual Customer / 10
§12 / Hardware or Software Not Provided by SBCS / 11
§13 / Property Rights / 11
§14 / General Terms and Conditions / 12
§15 / Statutes / 12
§16 / Order of Precedence / 12
§17 / Entire Agreement / 12
Signature Page
/ 13
Schedule A “Products, Services and Rates”
/ 14
§A-1 / International Usage Charges / 15
§A-2 / Usage Charges Summary / 27
§A-3 / Surcharge Rates (OA, DA, CC) / 29
§A-4 / Out-of-Region Surcharge Rates / 31
§A-5 / Toll Free Service Charges / 36
§A-6 / Private Line and Dedicated Access Line Service Charges / 37
§A-7 / ATM Service Charges / 38
§A-8 / Frame Relay Service Charges / 39
Schedule B “Service Level Agreement”
/ 40
§B-1 / Voice Availability / 40
§B-2 / Installation Guarantees / 40
§B-3 / Private Line Services / 40
§B-4 / Frame Relay Service and ATM Service / 43
§B-5 / SBCS Support Responsibilities and Escalation Procedures / 47
§B-6 / Network Reports / 48
Section No.
Schedule No.
Exhibit No. / Description / Page
Schedule C“General Terms and Conditions”
/ 50
§C-1 / Access / 50
§C-2 / Dispute Resolution / 51
§C-3 / Force Majeure / 51
§C-4 / Governing Law / 52
§C-5 / Indemnification-Infringement / 52
§C-6 / Indemnification-Property, Injury and Death / 52
§C-7 / Insurance / 53
§C-8 / Invoicing and Payment / 54
§C-9 / Litigation and Arbitration / 55
§C-10 / No Partnership / 55
§C-11 / Notices / 55
§C-12 / Proprietary Information / 55
§C-13 / Records and Audit / 56
§C-14 / Taxes / 56
§C-15 / Termination / 57
§C-16 / Transitional Services / 57
§C-17 / Releases Void / 57
§C-18 / Warranty / 57
Exhibit 1 / Exhibit 1: “Affiliate Transactions, Policies, Guidelines and Reporting Requirements” / 59
Exhibit 2 / Exhibit 2: “Non-Disclosure Agreements” / 60

2

Agreement No. 00012603

AFFILIATE TRANSACTION AGREEMENT

for

Interexchange Carrier Services for

Internal Telecommunications

THIS AFFILIATE TRANSACTION AGREEMENT FOR INTER-EXCHANGE CARRIER SERVICES (“Agreement”), effective on the date when signed by the last signatory (“Effective Date”) by and among Southwestern Bell Communication Services, Inc. (“SBCS”) and Nevada Bell Telephone Company (“NB”), Pacific Bell Telephone Company, (“Pacific”) and Southwestern Bell Telephone Company (“SWBT”), (collectively, the “Customers”).

WHEREAS, the Customers referred to in this Agreement are regulated telephone companies.

This Agreement acknowledges since the Customers are regulated telephone companies, SBCS’ prices will be charged at the lower of fully distributed cost or market price as described in the Affiliate Transactions Policies, Guidelines and Reporting Requirements. At least annually during this Agreement term, both Customer and SBCS shall evaluate and make any necessary mutually agreed upon amendments on a prospective basis to remain in compliance.

NOW THEREFORE, the parties intending to be legally bound agree as follows:

SPECIFIC TERMS AND CONDITIONS.

1.   DEFINITIONS.

For the purposes of this Agreement, the following terms and all other terms defined in this Agreement shall have the meanings so defined unless the context clearly indicates otherwise. A term defined in the singular shall include the plural and vice versa when the context so indicates.

“Business Day” Means 8:00 a.m. thru 5:00 p.m. (Pacific Time), Monday thru Friday, excluding company posted holidays.

“Firm Order Commitment” (FOC) Means a document wherein SBCS advises that Services requested in an Order for Service are available and contains the information set forth in Section 5(d).

“Network Acceptance” Means a written notice from SBCS to the Customers wherein SBCS certifies that its network is capable of providing Services.

“Order for Service” Means each order executed by an individual Customer ordering Services pursuant to Section 5.

“Services” Means those products set forth in Section 3 and Schedule A, or any additional or new services, features or function as the parties may mutually agree upon and that are described in Schedule A Addendum.

2. TERM.

The price and terms and conditions of the Agreement will apply for three years from the date of Network Acceptance by SBCS (“Initial Term”) unless the Agreement is extended as follows:

(a)   When the Initial Term of this Agreement expires, each Customer has the right, in its sole discretion, to extend the Agreement for itself for up to two additional one-year extensions at prices, terms and conditions herein or as modified pursuant to this Agreement.

(b)   The Initial Term of this Agreement may be extended for any individual Customer or all Customers.

(c)   A Customer shall give Ninety (90) days written notice to SBCS of its intent to extend the Initial Term of this Agreement for an additional year (the “Extension Notice”). Additionally, these constraints apply to Ninety (90) days prior to the expiration of the Initial Term, or, as the case may be, ninety (90) days prior to the expiration of the first additional one-year extension.

(d)   The Extension Notice shall set forth the following (i) the Customer(s) which is extending the Initial Term and (ii) proposed modifications, if any, of the terms and conditions of this Agreement.

(e)   Within thirty (30) days after receipt of the Extension Notice SBCS shall give written notice to the Customer if the proposed modifications, if any, set forth in the Extension Notice are acceptable. SBCS and Customer shall execute an amendment to this Agreement as to those modifications that are acceptable. If any modifications are unacceptable SBCS and Customer shall negotiate in good faith the dispute concerning those modifications that are unacceptable. If the parties are unable to reach an agreement concerning any disputed modifications by the start of the extended anniversary date, the term of this Agreement shall be extended for an additional year based upon the price, terms and conditions set forth herein, as amended by those modifications set forth in the Extension Notice that are acceptable. Upon resolution of any disputed modifications, an amendment of this Agreement incorporating the same shall be executed by the parties, and such amendment shall relate back to the extended anniversary date of this Agreement.

3. SERVICES.

An individual Customer may order from SBCS the Services set forth below as soon as SBCS has the ability to provide such Services. SBCS shall keep the parties reasonably advised as to the planned schedule date(s), if any, of its ability to provide the below Services and any other additional or new products, services, features or function thereof not listed below. The Services available as of the Effective Date are set forth in Schedule A entitled “Products, Services and Rates,” the parties shall execute an Addendum to Schedule A as soon as additional or new products and Services are available.

(a) Inbound Service Call Types:

(1)   Termination to Dedicated: The capability to terminate calls on a dedicated access line.

(2)   Termination to Switched: The capability to terminate calls using a standard switched access line

(3)   Affiliate Toll Free Service: the capability to terminate calls using a standard switched access line where the Customer terminates intraLATA and interLATA in region calls and SBCS terminates interLATA out of region calls.

(b)   Inbound Service Features:

(1)   Basic Call Routing Features: Includes Time of Day, Day of Week, Day of the Year, NPA/NXX, and Percentage Traffic Allocation Routing. This is the only feature currently available from SBCS for Affiliate Toll Free Service.

(2)   Announcements: The capability of playing standardized announcements prior to call answering for various types of messages

(3)   Announcement Customization: Capabilities that allow for various prerecorded announcements to play when associated calling conditions are met, e.g., after hour messages

(4)   Call Redirection: The ability to transfer a call to another call center agent at a separate facility and terminate the original call center agent’s connection to the caller.

(5)   Direct Termination Overflow: Allows a call to “overflow” to switched access lines for completion by the Customer if the dedicated line is busy.

(6)   PRI Interface ANI / DNIS: The ISDN equivalent of a T-1 circuit, which is delivered to a Customer’s premises. Automatic Number Identification (“ANI”) provides for the transmission of the telephone number of the originating party so calls can be routed based on the number’s identity. Dialed Number Identification Service (“DNIS”) provides the number the caller dialed to reach the agent or automatically distribute the call so calls can be handled differently.

(c)   Outbound Call Types:

(1)   Dedicated / Dedicated: Provides the ability to place calls from one dedicated access location to another dedicated access location. These requirements exist for VPN services.

(2)   Dedicated / Switched: Provides the ability to place calls from one dedicated access location to a switched access location. These requirements exist for VPN and 1+ services.

(3)   Switched / Switched: Provides the ability to place calls from one switched access location to another switched access location. These requirements exist for VPN and 1+ services.

(4)   Switched/Dedicated: Provides the ability to place calls from one switched access location to another dedicated access location. These requirements exist for VPN services.

(d)   Outbound Call Features:

(1)   Restriction Capabilities: Pre-selected stations and lines may be restricted from dialing certain telephone numbers, e.g. international numbers.

(2)   Security: SBCS’ capability to prevent fraudulent calling by automatic fraud detection and monitoring.

(3)   Call Origination: The various methods for originating a calling card call, e.g., 0+, 1800/888/877.

(4)   International Authorization Codes: International Authorization Codes from authorized designated SBC stations or a mutually agreeable alternative shall be provided by SBCS.

(e)   Data Services / Access Services:

(1)   Fiber Optic type services: A flexible and reliable method of transport for various digital signals with different capacities in a very economical manner.

(f)   Data Services / Private Line Services:

(1)   T-1 Service: The capability to provide Digital Signal Level One transmissions at either 1.544 Mbps (clear) or 1.536. This service is dependent upon SBCS offering ESF, B8Zs or only AMI.

(2)   T-3 Service: The capability to provide Digital Signal Level Three One transmissions at 45 Mbps.

(g)   Data Services / Frame Relay:

(1)   Port Speeds Offered: The ability to provide from 56 to 64 kbps through DS-1.

(2)   (2) PVC Speeds Offered: The ability to provide various port speeds.

(3)   Congestion Management: The ability of a network to effectively deal with heavy traffic volumes. Congestion management mechanism used are: (i) blocking traffic on the ingress vs. egress and (ii) algorithms that assign spare capacity based on pre-purchased PVCs vs. FIFO.

(h)   Data Services / Asynchronous Transfer Mode (“ATM”):

(1)   Classes of Service Offered: The ability to provide Virtual Circuit Connections (VCCs) and Virtual Path Connections (VPCs) using Constant Bit Rate, Variable Bit Rate, and Unspecified Bit Rate Classes of Service.

(2)   Alternate POP / Core Switch Access: The ability to request termination of redundant client connections to an alternate SBCS point of presence (POP) and/or alternate core switch to avoid single points of failure due to a common network element in either the ATM or transport layer.

(3)   Congestion / Failure Management: The ability to dynamically reroute VCCs and VPCs around congested or failed paths in the SBCS network in response to detected problems in the core switch and transport networks.

(4)   Access Port Speeds: The ability to accept DS1, DS3 and OC3c access port speeds using ATM Forum UNI 3.1 and 4.0 standard interfaces.

(5)   PVC Bandwidths: The ability to provision VPCs and VCCs with 56kbs/64kbs increments for connections smaller than 1.536Mbs and provision VPCs and VCCs with 1Mbs increments for connections larger than 1.536Mbs.

(i)   Network Management Services:

(1)   SBCS shall provide monthly network performance reports to the Customer. Upon availability, SBCS will provide the Customer with on-line access utilized for network monitoring purposes.

(2) Reporting Tools: Within 30 days of the implementation of this Agreement, SBCS shall begin discussion with the Customers leading to the development of a timeline and a due date targeting September 2000 for the implementation of electronic access to each Customer for reports summarizing current connections for all physical data services (private lines) and logical data services (Frame Relay and ATM) including A and Z end points, SBCS circuit Ids, class of service parameters, traffic descriptors, etc. Access may be provided via a secured web site, dedicated connection for a firewalled IP connection, etc.

4. PRICES.

The price for Services shall be charged at the lower of Fully Distributed Cost (“FDC”) or market price as described in; (i) the Affiliate Transactions, Policies, Guidelines and Reporting Requirements, attached hereto as Exhibit 1, as amended from time to time, (ii) in accordance with the affiliate transaction rules adopted by the FCC presently in 47 C.F.R. § 32.27, as the same may be amended from time to time, and (iii) applicable state affiliate transaction rules governing the individual Customer.

(a)  The price for the Services, the foregoing, are set forth in Schedule A, are subject to the following sub-paragraphs. The price for additional and/or new products, services, features or functions will be based upon the foregoing. Subject to the below sub-paragraphs: reflected in an executed Addendum to Schedule A.

(b)  There shall be no minimum revenue commitment of any kind or type, including but not limited to “sub-minimum commitments” of revenue, volume or location.