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                                                                   EXHIBIT 10.13

            AGREEMENT FOR RESALE OF LOCAL WIRELINE TELECOMMUNICATIONS
                  SERVICES AND PROVISION OF ANCILLARY SERVICES

                                     Between

                           Z-TEL COMMUNICATIONS, INC.

                                       and

                       SPRINT COMMUNICATIONS COMPANY L. P.

                                   dated as of

                                February 4, 2003










     Materials contained in this exhibit have been omitted pursuant to a
request for confidential treatment submitted to the Securities and Exhchange
Commission.  Those omitted materials have been filed separately.  Omitted
materials are indicated by placing *** characters in
lieu at the omitted materials.
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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                      <C>
PREAMBLE ...........................................................................................      1

AGREEMENT ..........................................................................................      1

DEFINITIONS ........................................................................................      2

Section I. Scope of Services 16
           1.1. Statement of Work ..................................................................     16
           1.2. Agency and Resale Modes ............................................................     16
                    1.2.1. Migration ...............................................................     17
                    1.2.2. Implementation ..........................................................     17
                    1.2.3. Modification ............................................................     17
           1.3. Geographic Scope of Services .......................................................     17
                    1.3.1. Compliance with Regulations .............................................     17
           1.3.2. Service Area Additions ...........................................................     17
                    1.3.3. Service Area Limitations ................................................     17
           1.4. Local Wholesale Services ...........................................................     17
                    1.4.1. Termination of Long Distance Calls ......................................     18
                    1.4.2. Access to Toll Free Services ............................................     18
           1.5. Z Node Services ....................................................................     18
                    1.5.1. Extension of Capabilities ...............................................     18
           1.6. Long Distance Services .............................................................     18
           1.7. Travel Card Services ...............................................................     18
           1.8. Inside Wire Services ...............................................................     18
           1.9. OSS Services Supplied by Z-Tel .....................................................     19
                    1.9.1. Inbound Sales ...........................................................     19
                    1.9.2. Third Party Verification ................................................     19
                    1.9.3. Provisioning ............................................................     20
           1.9.4. Customer Care Escalations ........................................................     20
                    1.9.5. Access Charges ..........................................................     20
                    1.9.6. End User Billing ........................................................     20
                    1.9.7. Payment Posting .........................................................     20
                    1.9.8. CDR Processing ..........................................................     20
                    1.9.9. Responding to Subpoenas .................................................     21
                    1.9.10. Reports ................................................................     21
                    1.9.11. LEC Relations ..........................................................     21
                    1.9.13. Repair .................................................................     21
                    1.9.13. Collections ............................................................     21
                    1.9.14. Training ...............................................................     21
                    1.9.15. Fraud Detection ........................................................     21
</TABLE>

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<TABLE>
<S>                                                                                                      <C>
                    1.9.16. Long Distance Services Exception .......................................     21
           1.10. OSS Functions Provided by Sprint ..................................................     21
                    1.10.1. Marketing ..............................................................     22
                    1.10.2. Customer Acquisition and TPV ...........................................     22
                    1.10.3. Order Entry ............................................................     22
                    1.10.4. Customer Care (Customer Interface and Tier 1 Resolution)................     22
                    1.10.5. Change Orders ..........................................................     22
                    1.10.6. Lockbox ................................................................     22
                    1.10.7. Tax Reconciliation/Filings/Remittances .................................     22
                    1.10.8. Transport (to Z-Node) ..................................................     22
           1.10.9. Fulfillment .....................................................................     23
                    1.10.10. Investigating Complaints ..............................................     23
                    1.10.11. Commission Program ....................................................     23
                    1.10.12. Additional Executive Reports ..........................................     23
                    1.10.13. Sprint Retained or Assumed Function ...................................     23
           1.11. Ancillary Services ................................................................     24
           1.12. Upgrades, Updates and New Z-Tel Services or Functionalities .......................     24
                    1.12.1. Upgrades and Updates ...................................................     24
                    1.12.2. New Services or Functionalities ........................................     24

                    1.12.3. Timing of Availability .................................................     25
                    1.12.4. Pricing ................................................................     25
                    1.12.5. Proprietary Work Requested by Sprint ...................................     25
                    1.12.6. Similarly Situated .....................................................     25
           1.13. Promotional Programs Excluded .....................................................     25
           1.14. Maintenance .......................................................................     26
           1.15. Notice of Changes .................................................................     26
           1.16. Grandfathering ....................................................................     27

Section II. Term, Termination and Transition .......................................................     27
           2.1. Initial Term .......................................................................     27
           2.2. Renewal Term .......................................................................     28
           2.3. Termination ........................................................................     28
                    2.3.1. Termination by Sprint ...................................................     28
                    2.3.2. Termination by Z-Tel ....................................................     30
           2.4. Obligations upon Expiration or Termination .........................................     30
                    2.4.1. Sprint's Obligations ....................................................     30
                    2.4.2. Z-Tel's Obligations .....................................................     31
                    2.4.3. Removal of Property .....................................................     32
           2.5. Transition of Customers ............................................................     32

                    2.5.1. Compliance with Law .....................................................     33
                    2.5.2. Failure to Pay During Transition ........................................     33
                    2.5.3. Assistance ..............................................................     33
                    2.5.4. New Orders ..............................................................     34
                    2.5.5. Transition Costs ........................................................     34
</TABLE>

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<TABLE>
<S>                                                                                                      <C>
                    2.5.6. Transition Period Duration ..............................................     36
           2.6. Exit from Telecommunications Service by Sprint .....................................     37
           2.7. Lawful Purposes ....................................................................     37

Section III. Reserved ..............................................................................     38

Section IV. Fees and Charges .......................................................................     38
           4.1. Basis of Fees ......................................................................     38
           4.2. Interface Establishment Fee ........................................................     38
                    4.2.1. Development of PCS Interfaces ...........................................     38
           4.3. Service Fee Prepayment and Resulting Credit ........................................     39
                    4.3.1. Use Stimulation .........................................................     39
           4.4. Excluded Activities ................................................................     39
           4.5. SLC and PICC Charges ...............................................................     39
           4.6. Z-Tel OSS Support ..................................................................     39
                    4.6.1. Gross-Up of Expense .....................................................     39
                    4.6.2. Allocation of Employee Expense ..........................................     42
                    4.6.3. Pre-approved ............................................................     42
                    4.6.4. Adjustment to Headcount .................................................     42
                    4.6.5. Escalation of Headcount Matters .........................................     43
                    4.6.6. Level of Support ........................................................     43
                    4.6.7. Cost of Living Adjustment ...............................................     43
                    4.6.8. Minimization of Expense .................................................     44
           4.7. Allocation of **** and Usage Fees ..................................................     44
                    4.7.1. Allocation of **** Fees .................................................     44
                    4.7.2. Allocation of Usage Fees ................................................     44
           4.8. Slamming and Cramming Impact Expenses ..............................................     44
           4.9. Changes in Fees and Direct Costs ...................................................     45
                    4.9.1. Adjustment Process for ***** Fees Not in *****...........................     45
                    4.9.2. Resolution of Fee Change Disputes .......................................     45
                    4.9.3. ***** Fee Adjustments in *****...........................................     46
                    4.9.4. *****....................................................................     46
           4.10. Recovery of Taxes and Regulatory Fees .............................................     46
           4.11. Permitted Fees and Charges ........................................................     46

Section V. Billing and Billing Disputes ............................................................     47
           5.1. Invoicing of Fees ..................................................................     47
                    5.1.1. Invoice Date ............................................................     47
                    5.1.2. **** Recurring Fees .....................................................     47
                    5.1.3. Z-Tel Dedicated Support Fees ............................................     47
                    5.1.4. Receipt Credits .........................................................     47
           5.2. Back Billing .......................................................................     47
           5.3. Billing Disputes ...................................................................     47
                    5.3.1. No Withholding of ***** Fees ............................................     48
                    5.3.2. Withholding of ***** Fees ...............................................     48
                    5.3.3. Notice of Billing Dispute ...............................................     48
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<TABLE>
<S>                                                                                                      <C>
                    5.3.4. Payment Will Not Prejudice ..............................................     48
                    5.3.5. Restitution .............................................................     49
                    5.3.6. Resolution Period .......................................................     49
                    5.3.7. Joint Effort Regarding Third-Party Disputes .............................     49

Section VI. Payments ...............................................................................     49
           6.1. Responsibility .....................................................................     49
           6.2. Payment Schedule ...................................................................     49
                    6.2.1. **** Recurring Fees .....................................................     49
                    6.2.2. Other **** Fees .........................................................     50
                    6.2.3. Z-Tel Dedicated Support Fees ............................................     50
                    6.2.4. All Other Fees ..........................................................     50
           6.3. Currency and Payment Method ........................................................     50
           6.4. Late Payment Fees ..................................................................     50
                    6.4.1. Undisputed Amounts ......................................................     50
                    6.4.2. Disputed Amounts ........................................................     50
           6.5. Sprint Adjustments .................................................................     50

Section VII. Relationship to End Users .............................................................     51
           7.1. Serving End Users ..................................................................     51
           7.2. Points of Contact ..................................................................     51
           7.3. End User Interfaces ................................................................     51

Section VIII. Authorizations .......................................................................     51
           8.1. Listing Information ................................................................     51
           8.2. Authorization and Verification Requirements ........................................     52
                    8.2.1. Z-Tel Verification and Retention ........................................     52
                    8.2.2. Sprint Verification and Retention .......................................     52

Section IX. Z-Tel Responsibilities and Warranties ..................................................     52
           9.1. Z-Tel Cooperation ..................................................................     52
           9.2. Good Standing ......................................................................     52
           9.3. Z-Tel Compliance with Laws .........................................................     53
           9.4. Prior Consent for Branding .........................................................     53
           9.5. Sprint End User Interaction ........................................................     53
           9.6. No Contravention ...................................................................     53
           9.7. Sufficiency of Z-Tel Fundamental Technology ........................................     53
           9.8. Non-Discrimination .................................................................     54
           9.9. Toll-Free Access ...................................................................     54
           9.10. Restricting Service ...............................................................     54
           9.11. Tariffs ...........................................................................     55
           9.12. Material Threat ...................................................................     55
           9.13. Network Protection ................................................................     55
           9.14. Responding to Subpoenas ...........................................................     55
           9.15. Insurance .........................................................................     55
</TABLE>

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<TABLE>
<S>                                                                                                      <C>
                    9.15.1. Certificates of Insurance ..............................................     56
                    9.15.2. No Limitation ..........................................................     57
           9.16. Fee Increases .....................................................................     57
           9.17. Change of Control .................................................................     57

Section X Sprint Responsibilities and Warranties ...................................................     57
           10.1. Sprint Compliance with Laws .......................................................     57
                    10.1.1. Authority in Place .....................................................     57
                    10.1.2. Demonstrated Proof of Authority ........................................     57
           10.2. Subscriber Fees ...................................................................     57
           10.3. No Contravention ..................................................................     57
           10.4. Hazards, Interference, Etc ........................................................     58
           10.5. Security ..........................................................................     58
           10.6. Subpoenas .........................................................................     58
           10.7. Sprint Compliance with Laws .......................................................     58
           10.8. Acceptable Use ....................................................................     58
           10.9. Long Distance Choice ..............................................................     58
                    10.9.1. PIC Selection ..........................................................     58
                    10.9.2. Carrier Arrangements ...................................................     58
                    10.9.3. Proof of Authorization .................................................     58
                    10.9.4. Responsibility for ANI Usage ...........................................     59
                    10.9.5. Manual Processing ......................................................     59
           10.10. Connectivity to Z-Node ...........................................................     59
           10.11. Fraud ............................................................................     59
           10.12. Forecasts ........................................................................     60
           10.13. Compliance with Regulatory Rules .................................................     60
           10.14. Future Services ..................................................................     60
           10.15. Use of Service ...................................................................     60
           10.16. Insurance ........................................................................     61
                    10.16.1. Coverage ..............................................................     61
                    10.16.2. Certificates of Insurance .............................................     62
                    10.16.3. No Limitation .........................................................     62
                    10.16.4. Self Insurance ........................................................     62
           10.17. Material Threat ..................................................................     62
           10.18. Reverse Engineering ..............................................................     63
           10.19. Interconnection Agreements .......................................................     63
           10.20. Z-Tel Vendors ....................................................................     63

Section XI. Service Level and Remedy ...............................................................     63
           11.1. SLAs ..............................................................................     63
                    11.1.1. Performance Levels .....................................................     63
                    11.1.2. Actions by ILECs and Regulatory Authorities ............................     63
           11.2. Force Majeure Application .........................................................     63

Section XII. Disaster Recovery, Back-up System .....................................................     64
</TABLE>

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<TABLE>
<S>                                                                                                      <C>
           12.1. On-Site Disaster Recovery Plan ....................................................     64
           12.2. Back-Up Plan ......................................................................     64
                    12.2.1. Plan Contents ..........................................................     64
                    12.2.2. Plan Development .......................................................     65
                    12.2.3. Joint Disaster Planning Team ...........................................     65
           12.3. Material Breach ...................................................................     65
           12.4. Implementation of Back-Up Plan; Back-Up System ....................................     65
                    12.4.1. Timing of Implementation ...............................................     65
                    12.4.2. Location ...............................................................     66
                    12.4.3. Z-Tel's Assistance and Cooperation .....................................     66
                    12.4.4. Back-up System Operations ..............................................     66
                    12.4.5. Operating Methods and Procedures .......................................     66
                    12.4.6. Title ..................................................................     68
           12.5. Testing of Back-Up System .........................................................     68
                    12.5.1. Z-Tel Back-Up Materials ................................................     68
                    12.5.2. Restrictions on Sprint's Access and Use of Z-Tel Back-Up Materials .....     68
                    12.5.3. Z-Tel's Assistance .....................................................     69

Section XIII. Third Party Agreements ...............................................................     69
           13.1. Third-Party Agreements ............................................................     69

Section XIV. Technology Delivery, Technology License and Escrow ....................................     69
           14.1. Technology License Grant ..........................................................     69
           14.2. Triggering Event ..................................................................     70
                    14.2.1. Exercise of Option .....................................................     70
                    14.2.2. Royalty Payment ........................................................     71
           14.3. Technology Escrow .................................................................     71
           14.4. Technology Escrow Materials .......................................................     71
                    14.4.1. Deposit ................................................................     71
           14.4.2. Upgrades and Updates of Technology Escrow Materials .............................     72
           14.5. Audit of Technology Escrow Materials ..............................................     73
           14.6. Release of Technology Escrow Materials ............................................     73
           14.7. Bankruptcy ........................................................................     73
           14.8. Disputes Regarding Delivery or Release of Technology Escrow Materials .............     73
           14.9. Assignment of Technology License ..................................................     74
           14.10. Remedies Limited .................................................................     74

Section XV. Confidentiality ........................................................................     74
           15.1. Confidentiality ...................................................................     74
           15.2. Return or Destruction of Confidential Information .................................     75
           15.3. Third Party Disclosure Requests ...................................................     75
           15.4. Required Disclosures ..............................................................     75
           15.5. Equitable Relief ..................................................................     75
           15.6. Survival ..........................................................................     76
</TABLE>

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<TABLE>
<S>                                                                                                      <C>
Section XVI. Property Rights; License; Trademarks ..................................................     76
           16.1. Property Rights and Usage .........................................................     76
           16.2. Title to Equipment ................................................................     76
           16.3. Grant of Use License ..............................................................     76
                    16.3.1. Retail Limitation ......................................................     77
                    16.3.2. Brand Limitation .......................................................     77
                    16.3.3. Sales Agents ...........................................................     77
           16.4. Trademarks ........................................................................     77
                    16.4.1. Sprint Branding Exception ..............................................     77
                    16.4.2. Z-Tel Branding Exception ...............................................     77

Section XVII. Disclaimer of Warranties .............................................................     77
           17.1. Disclaimer of Warranties ..........................................................     77

Section XVIII. Limitations on Liability ............................................................     78
           18.1. Limitations .......................................................................     78
           18.2. Application .......................................................................     78

Section XIX. Indemnification .......................................................................     78
           19.1. Indemnification ...................................................................     78
           19.2. Damages ...........................................................................     79
           19.3. Procedure .........................................................................     79

Section XX. Audits .................................................................................     80
           20.1. Adequate Books and Records ........................................................     80
           20.2. Right to Audit ....................................................................     80
           20.3. Verification of Third Party Charges ...............................................     81
           20.4. Disclosure ........................................................................     81

Section XXI. Miscellaneous .........................................................................     81
           21.1. Good Faith Performance ............................................................     81
           21.2. No Exclusivity ....................................................................     81
           21.3. Taxes .............................................................................     81
           21.4. Noninterference ...................................................................     82
           21.5. Dispute Resolution ................................................................     82
                    21.5.1. Escalation Procedures ..................................................     82
                    21.5.2. Negotiations ...........................................................     82
                    21.5.3. Disputes Involving Billing .............................................     82
                    21.5.4. Continued Performance ..................................................     82
           21.6. Entire Agreement ..................................................................     82
           21.7. Compliance with Ethical Business Practices ........................................     83
           21.8. Assignment ........................................................................     83
           21.9. Binding Agreement .................................................................     83
           21.10. Litigation Venue .................................................................     83
           21.11. Governing Law ....................................................................     83
           21.12. Legal Fees .......................................................................     83
</TABLE>

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<TABLE>
<S>                                                                                                      <C>
           21.13. Letter of Agency .................................................................      83
           21.14. Notices ..........................................................................      83
                    21.14.1. Deemed Delivery .......................................................      83
                    12.14.2. Super Notice ..........................................................      84
                    21.14.3. Saturday, Sunday or Legal Holiday .....................................      84
           21.15. Waiver ...........................................................................      84
           21.16. Relationship of the Parties ......................................................      84
           21.17. Third Party Beneficiaries ........................................................      84
           21.18. Construction .....................................................................      84
           21.19. Severability .....................................................................      85
           21.20. Survival .........................................................................      85
           21.21. Counterparts .....................................................................      85
           21.22. Law Enforcement Cooperation ......................................................      85
           21.23. Emergency Interfaces .............................................................      85
           21.24. Payphone Services Prohibited .....................................................      86
           21.25. Sprint Services ..................................................................      86
           21.26. Waiver of Jury Trial .............................................................      86

List of Schedules and Exhibits .....................................................................      88

Schedule A Statement of Work .......................................................................      89

Schedule B Service Level Agreement and Remedies ....................................................      89

           Definitions .............................................................................      90

           1.0 SLA Generic Types ...................................................................      93
           1.1 Stabilization Period SLAs ...........................................................      93
           1.2 Operational SLAs ....................................................................      94
           1.3 Triggering Event SLAs ...............................................................      96
           2.0 Roles and Responsibilities ..........................................................      99
           3.0 Reporting ...........................................................................     100
           4.0 Exclusions ..........................................................................     101
           5.0 Service Level Agreement Change Process ..............................................     103
                  Attachment A .....................................................................     105
                  Attachment B .....................................................................     108
                  Metric Definition ................................................................     108

Schedule C Pricing Schedule ........................................................................     109

</TABLE>

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<TABLE>
<S>                                                                                                      <C>
Schedule D Z-Tel Fundamental Technology ............................................................     111

Schedule E Existing Z-Tel Technology ...............................................................

Schedule 10.8 Acceptable Use Policy ................................................................     113

Schedule 13.1 Conditions, Restrictions, Rules, Policies, Procedures, Limitations and Rights
              Imposed or Granted under Z-Tel's Third Party Agreements and Licenses .................     116

Designee Schedule Sprint and Z-Tel Contact Information .............................................     117

Exhibit A Form Transition Escrow Agreement .........................................................     120

Exhibit B Technology Escrow Agreement ..............................................................     130

Exhibit C Form of Text for Initial SEC Filing and Press Release ....................................     131

Exhibit D Form of Blanket Agency Agreement Letter for Local Service Providers ......................     132
</TABLE>

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                     AGREEMENT FOR RESALE OF LOCAL WIRELINE
             TELECOMMUNICATIONS SERVICES AND PROVISION OF ANCILLARY
                                    SERVICES

         THIS AGREEMENT, dated as of February 4, 2003, is between Z-TEL
COMMUNICATIONS, INC. ("Z-Tel") a Delaware corporation having its principal place
of business at 601 South Harbour Island Boulevard, Suite 220, Tampa, Florida
33602, on the one hand, and SPRINT COMMUNICATIONS COMPANY L.P. ("Sprint") a
Delaware limited partnership having its principal place of business at 6200
Sprint Parkway, Overland Park, KS 66251, on the other. Z-Tel and Sprint are
sometimes referred to collectively in this Agreement as the "Parties" and
individually as a "Party."

                                    PREAMBLE

         Z-Tel and Sprint are both Competitive Local Exchange Carriers. Z-Tel
provides bundled packages of local, long-distance and enhanced
telecommunications services, primarily to residences and small businesses. Z-Tel
provides its Telephone Exchange Services using the unbundled network elements
("UNES") of Incumbent Local Exchange Carriers ("ILECS") under Interconnection
Agreements and tariffs on file with State Public Utility Commissions ("PUCS").
This Agreement sets forth the terms and conditions under which Z-Tel will
provide to Sprint:

                  (a) certain Z-Tel Telecommunications Services and Information
         Services to be branded by Sprint for resale to Sprint's End Users,

                  (b) certain ancillary services and functions for Sprint's own
         use and for use in providing Telecommunications Services and
         Information Services to such Sprint End Users, and

                  (c) Operation Support Systems Services.

                                    AGREEMENT

         NOW THEREFORE, in reliance upon the foregoing Preamble, the mutual
covenants and agreements contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged by
each Party to the other, Z-Tel and Sprint agree to the following terms and
conditions.

                                       1
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                                   DEFINITIONS

AFFILIATE means:

         (a) any Person affiliated with, controlling, controlled by, under
         common control with, or directly or indirectly operated by a party to
         this Agreement,

                  (b) any Person in which a party to this Agreement has a direct
         or indirect beneficial ownership (as defined in Rule 13d-3 under the
         Securities Exchange Act of 1934, as amended) of fifty percent (50%) or
         more of the voting stock of such Person or in which a party to this
         Agreement has a controlling interest, and

         (c) with respect to Sprint, any Person that is engaged in the sale of
         Sprint-branded products.

The Persons described in paragraphs (a) and (b) are Owned Affiliates and the
Persons described in paragraph (c) are Contractual Affiliates.

ALTERNATIVELY BILLED SERVICES or ABS refers to (a) local and long distance calls
placed through an operator and billed to the called party (e.g., collect) or to
a third number, and (b) information provider per fee calls via dedicated NPA/NXX
codes such as 900 and 976.

ANCILLARY SERVICES means any facility or service that is requested by Sprint
that is not a Telecommunications Service or an Information Service that is
necessary or desirable to directly support delivery by Sprint of
Telecommunications Services and Information Services to its End Users and is not
identified as a function to be performed by Z-Tel in the SOW.

ANI or AUTOMATIC NUMBER IDENTIFICATION means the automatic identification of the
calling station used for routing and billing.

AUP or AUTHORIZED USE PLAN has the meaning set forth in Section 10.8.

BACK-UP PLAN has the meaning set forth in Section 12.2.

BACK-UP SYSTEM has the meaning set forth in Section 12.2.

BANKRUPTCY or BANKRUPT means the happening of any of the following events
concerning a Party:

         (a) the filing of an application for, or a consent to, the appointment
         of a trustee,

                                       2
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         receiver or liquidator for all or any substantial portion of the
         Party's assets;

         (b) the filing of a voluntary petition in bankruptcy;

         (c) the filing of a pleading in any court of record admitting inability
         to pay debts as they come due;

         (d) the making of an assignment for the benefit of creditors;

         (e) the consenting to, or default in the answering of, a bankruptcy
         petition filed;

         (f) the entry of a judgment or decree in any bankruptcy or insolvency
         proceeding adjudicating bankruptcy or insolvency;

         (g) the entry of an order for any relief in any bankruptcy or
         insolvency proceeding;

         (h) when one hundred twenty (120) calendar days after the commencement
         of any involuntary proceeding seeking reorganization, arrangement,
         composition, readjustment, liquidation, dissolution, or similar relief
         under any statute, law or regulation, the proceeding has not been
         dismissed; and

         (i) when ninety (90) calendar days after the appointment, without the
         Party's consent or acquiescence, of a trustee, receiver or liquidator
         of the Party or all or any substantial portion of the Party's assets,
         the appointment has not been vacated or stayed or when ninety (90)
         calendar days after the stay the appointment has not been vacated.

BILLING DATE means the date on which the bill is transmitted to the receiving
Party.

BILLING DISPUTE means any claim on any contractual basis that any dollar amount
in any bill issued for services performed under this Agreement is not rightly
due and payable.

BUSINESS DAY means any day that is not a Saturday, Sunday or legal holiday.

CHANGE OF CONTROL means the occurrence of any of the following events:

                  (a) Any "person" (as that term is defined in Sections 3(a)(9),
         13(d), and 14(d) of the Securities Exchange Act of 1934 (the "EXCHANGE
         ACT") and the rules under the Exchange Act, including Rule 13d-5(b))
         acquires, directly or indirectly, "beneficial ownership" (as determined
         under Rule 13d-3 under the Exchange Act) of securities entitled to vote
         generally in the election of Z-Tel's directors ("VOTING SECURITIES") so
         that, after the acquisition, the "person" holds, directly or
         indirectly, shares of voting securities representing forty percent
         (40%) or more of the combined voting power of Z-Tel's then outstanding
         voting securities, other than an acquisition of voting securities:

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                           (i) by a trustee or other fiduciary holding the
                  securities under any employee benefit plan (or related trust)
                  sponsored or maintained by Z-Tel or any person that Z-Tel
                  controls,

                           (ii) by any employee benefit plan (or related trust)
                  sponsored or maintained by Z-Tel or any person that Z-Tel
                  controls,

                           (iii) by Z-Tel,

                           (iv) by a corporation owned, directly or indirectly,
                  by Z-Tel's stockholders in substantially the same proportions
                  as their ownership of Z-Tel stock, or

                           (v) in a transaction that would not be a Change in
                  Control under clause (c) below.

                  Notwithstanding the foregoing, an event is not a "Change of
         Control" under this subparagraph (a) unless:

                                    (A) the "person" is one or more Change of
                           Control Companies or any of their respective
                           Affiliates or successors, or

                                    (B) the "person" includes one or more Change
                           of Control Companies or any of their respective
                           Affiliates or successors, and any included Change of
                           Control Company, Affiliate or successor owns,
                           controls or otherwise holds (together with its
                           Affiliates and successors) voting securities
                           representing in aggregate ***** or more of the
                           combined voting power of the "person's" then
                           outstanding voting securities.

                  For purposes of this Agreement, the "CHANGE OF CONTROL
         COMPANIES" are *****************************************************
         ********************************************************************
         ********************************************************************
         For the avoidance of doubt, nothing in the proceeding will limit
         the effectiveness of the exclusions set forth in clauses (i), (ii),
         (iii), (iv), and (v) of this subparagraph (a).

                           (b) A change occurs in the composition of Z-Tel's
         Board of Directors that causes less than a majority of Z-Tel's
         directors to be directors that meet one or more of the following
         descriptions:

                           (i) a director who:

                           (A) has been a director of Z-Tel for a continuous
                  period of at least the previous twelve (12) months, or

                                       4
<PAGE>

                            (B) was a director of Z-Tel as of the Effective Date
                  and has continued that role continuously without interruption
                  since the Effective Date,

                           (ii) a director whose election or nomination as
                  director was approved by a vote of at least two-thirds of the
                  then directors described in this clause (b) by prior
                  nomination or election, but excluding, for the purpose of this
                  subclause (b)(ii), any director whose initial assumption of
                  office occurred as a result of:

                                    (A) an actual or threatened election contest
                           with respect to the election or removal of directors
                           or other actual or threatened solicitation of proxies
                           or consents by or on behalf of a person or group
                           other than Z-Tel's Board of Directors, or

                                    (B) a tender offer, merger, sale of
                           substantially all of Z-Tel's assets, consolidation,
                           reorganization or business combination that would be
                           a Change in Control under clause (c) below, or

                           (iii) a director who was serving on Z-Tel's Board of
                  Directors as a result of the consummation of a transaction
                  that would not be a Change in Control under clause (c) below.

                  Notwithstanding the foregoing, an event is not a "Change of
         Control" under this subparagraph (b) unless after the event a majority
         of Z-Tel's directors are representing (through any arrangement,
         agreement, or understanding), were designated by, or are employed by,
         one or more of the Change of Control Companies or any of their
         respective Affiliates or successors.

                  (c) Z-Tel consummates (whether directly involving Z-Tel or
         indirectly involving Z-Tel through one or more intermediaries):

                           (i) a merger, consolidation, reorganization or
                  business combination,

                           (ii) a sale or other disposition of all or
                  substantially all of its assets, or

                           (iii) the acquisition of assets or stock of another
                  entity,

in each case, other than in a transaction:

                                    (A) that results in Z-Tel's voting
                           securities outstanding immediately before the
                           transaction continuing to represent (either by
                           remaining outstanding or by being converted into
                           voting securities of Z-Tel or the person that, as a
                           result of the transaction,

                                       5
<PAGE>

                           controls, directly or indirectly, Z-Tel or owns,
                           directly or indirectly, all or substantially all of
                           Z-Tel's assets or otherwise succeeds to Z-Tel's
                           business (Z-Tel or such person, the "SUCCESSOR
                           ENTITY")) directly or indirectly, at least *****
                           *********** of the combined voting power of the
                           Successor Entity's outstanding voting securities
                           immediately after the transaction,

                                    (B) after which more than **********
                           ***** of the members of the Successor Entity's Board
                           of Directors were members of Z-Tel's Board of
                           Directors when Z-Tel's Board of Director's approved
                           the transaction (or whose election or nomination was
                           approved by a vote of at least two-thirds of the
                           members who were members of Z-Tel's Board of
                           Directors at that time), and

                                    (C) after which no person or group
                           beneficially owns voting securities representing
                           ********** or more of the combined voting
                           power of the Successor Entity (but no person or group
                           will be treated for purposes of this clause (C) as
                           beneficially owning ********** or more of
                           combined voting power of the Successor Entity solely
                           because of the voting power the person or group held
                           in Z-Tel before the consummation of the transaction.

                  Notwithstanding the foregoing, an event is not a "Change of
         Control" under this subparagraph (c) unless it results, whether through
         one transaction or a series of related transactions occurring during
         any 365-day period, in the "ultimate parent entity" (as defined in the
         Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
         the rules and regulations promulgated under such act, but using a *****
         rather than a **********) of Z-Tel becoming any of the Change of
         Control Companies or any of their respective Affiliates or successors.

                  (d) Z-Tel liquidates or dissolves.

CHANGE IN FEE NOTICE has the meaning set forth in Section 4.9.1.

CLAIM has the meaning set forth in Section 19.1.

CLLI means Common Language Location Identifier.

CLEC means a Competitive Local Exchange Carrier.

CLEC FEES mean fees and charges imposed upon Z-Tel by a CLEC other than Sprint
in connection with services that Z-Tel provides to Sprint under this Agreement.

COMMITTED FORECAST has the meaning set forth in Section 10.12.

                                       6
<PAGE>

COMPLEX TRANSITION has the meaning set forth in Section 2.5.5(b)(ii).

CONFIDENTIAL INFORMATION means and includes the following information:

         (a) customer information, supplier information, distributor
         information, material terms of any contracts (including this
         Agreement), marketing philosophies, strategies, techniques and
         objectives (including service roll-out dates and volume estimates),
         legal and regulatory positions and strategies, advertising and
         promotional copy, competitive advantages and disadvantages, performance
         specifications, non-published financial data, network configurations,
         product or service plans, attributes, designs, technical and functional
         specifications, costs, prices and names, computer software (including
         third party software), inventions, discoveries, technological
         developments, "know how," business opportunities (including planned or
         proposed financings, mergers, acquisitions, ventures and partnerships)
         and methodologies and processes (including the look and feel of
         computer screens and reports) for provisioning (whether in connection
         with interexchange carriers or incumbent local exchange carriers),
         customer assistance, order acceptance and tracking, repairs and
         commissions; and

         (b) information for which the disclosing Party has an obligation of
         confidentiality if the disclosing party discloses the obligation to the
         recipient Party in writing before or contemporaneously with the
         disclosure.

Notwithstanding the foregoing, Z-Tel Fundamental Technology, Z-Tel Technology
and Z-Tel Technical Information constitute Confidential Information of Z-Tel.

"Confidential Information" excludes information that:

                           (i) is not designated in writing (at the time of
                  delivery or promptly thereafter) or conspicuously marked as
                  "confidential" or "proprietary" or likewise using words of
                  similar import or is not otherwise specifically identified in
                  this Agreement as Confidential Information;

                           (ii) is or becomes generally known or available by
                  publication, commercial use or otherwise through no fault of
                  the receiving Party;

                           (iii) is known and has been reduced to tangible form
                  by the receiving Party at the time of disclosure and is not
                  subject to restriction;

                           (iv) is independently developed by the receiving
                  Party without use of the disclosing Party's Confidential
                  Information;

                           (v) is lawfully obtained from a third party who has
                  the right to make such disclosure; or

                           (vi) is released in writing for publication by the
                  disclosing Party.

Notwithstanding the foregoing, any information disclosed to a Party by the other
Party

                                       7
<PAGE>

before the Effective Date in connection with the negotiation of this Agreement,
the SOW, the SLAs, the October Letter Agreement and the December Letter
Agreement, or disclosed in connection with an audit under Section 20.2 is
presumed to be Confidential Information of the disclosing Party, even if:

                  (A)      it was not designated in writing (at the time of
                           delivery or promptly thereafter) or conspicuously
                           marked as "confidential" or "proprietary" or likewise
                           using words of similar import, or

                  (B)      is not otherwise specifically identified in this
                           Agreement as Confidential Information, unless the
                           information falls within one or more of the
                           exclusions described in clauses (ii) through (vi)
                           above.

CRAMMING means the submission or inclusion of unauthorized, misleading or
deceptive charges for products or services on End User's bills.

CUSTOM SOFTWARE means software that Z-Tel owns or exclusively licenses (and
related documentation).

CUSTOMER BILLING means the process of maintaining customer usage information,
calculating taxes and fees (with the exception of fees determined by applicable
state and federal regulatory agencies, such fees will be determined in Sprint's
sole discretion), and preparing and delivering customer invoices and printing
additional invoices for past due accounts. Z-Tel's billing services are
described in greater detail in the SOW.

CUSTOMER DATA RECORDS or CDRS refers to information relating to the quantity,
location and amount of use pertaining to telephone exchange service or telephone
toll service not necessarily contained in a customer's bill but available from
carriers on an ANI or CLLI code basis.

CPNI or CUSTOMER PROPRIETARY NETWORK INFORMATION means:

         (a) information that relates to the quantity, technical configuration,
         type, destination, location, and amount of use of a Telecommunications
         Service subscribed to by any customer of a telecommunications carrier,
         and that is made available to the carrier by the customer solely by
         virtue of the carrier-customer relationship; and

         (b) information contained in the bills pertaining to telephone exchange
         service or telephone toll service received by a customer of a carrier.

This term does not include subscriber list information.

DECEMBER LETTER AGREEMENT means the letter agreement dated December 10, 2002,
between Sprint (signed by Gary Owens) and Z-Tel (signed by N. Dumas Garrett).

DISCONNECT means the process by which dial tone is disabled by the serving
carrier in

                                       8
<PAGE>
association with an End User line.

DISPATCH and NO DISPATCH refers to whether or
not a telephone technician is required to undertake fieldwork or visit the End
User's premises in establishing or maintaining/repairing Telecommunications
Service.

EFFECTIVE DATE means the date first written above.

END USER means, with respect to any party, the party's retail customers
including business users. "Sprint's End Users" (and derivatives thereof)
includes any End User of Sprint's Affiliates who are purchasing Local Wholesale
Services.

ESCROW ACCOUNT has the meaning set forth in Section 2.5.5(c).

FCC means the Federal Communications Commission.

FORECAST has the meaning set forth in Section 2.5.5 (c)(ii)(A).

FORCE MAJEURE EVENT means any of the following events, if not the result of any
act or omission of the Party asserting its rights under Section 11.2:

                  (a) acts of God, such as fire, flood, earthquake or other
         natural cause,

                  (b) terrorist events, riots, insurrections, explosions, war or
         national emergency, vandalism,

                  (c) strikes, boycotts, lockouts or other labor difficulties,

                  (d) judicial, legal or other action of any governmental
         authority, which action makes performance of this Agreement
         impracticable, and

                  (e) utility curtailments, power failures, cable cuts, failure
         caused by telecommunications provider(s) (including failures or delays
         caused by ILECs in provisioning facilities or services or in providing
         or maintaining those facilities or services).

ILEC or INCUMBENT LOCAL EXCHANGE CARRIER means with respect to an area, the
local exchange carrier that:

         (a) on the date of enactment of the Telecommunications Act of 1996,
         provided telephone exchange service in such area; and

         (b) (i) on the date of enactment of the Telecommunications Act of 1996,
         was deemed to be a member of the exchange carrier association pursuant
         to Section 69.601(b) of the FCC's regulations (47 C.F.R. *69.601(b));
         or (ii) is a person or entity that, on or after such date of enactment,
         became a successor or assign of a member described in clause (i).

ILEC FEES means fees and charges that an ILEC imposes upon Z-Tel for

                                       9
<PAGE>

interconnection, provisioning, change orders and other operational support
services, unbundled access, network elements, ABS and any other services the
ILEC provides to Z-Tel under applicable tariffs, Interconnection Agreements, or
associated agreements, including any penalties or fees that the ILEC imposes for
Slamming or other infractions that result from actions of Sprint or its
employees, agents or contractors (other than Z-Tel or its third party vendors
acting outside the scope of this Agreement).

INDEMNIFYING PARTY has the meaning set forth in Section 19.1.

INDEMNITEES has the meaning set forth in Section 19.1.

IXC means Interexchange Carrier.

INFORMATION SERVICE(S) has the meaning set forth in Section 3(20) of the
Communications Act of 1934, as amended, 47 U.S.C. Section 153(20).

INITIAL SOW means the SOW executed by the Parties as of the Effective Date and
attached to this Agreement as Schedule A.

INITIAL TERM is defined in Section 2.1.

INTELLECTUAL PROPERTY RIGHTS means any patent, copyright, trade name, trademark,
service mark, trade secret or any other intellectual property right, now or
hereafter owned, controlled or licensable by either party. Except as expressly
stated in this Agreement, neither Party may use any patent, copyrightable
materials, trademark, trade name, trade secret, or other intellectual property
right of the other Party except under a separate license agreement between the
Parties granting the rights.

INTERCONNECTION AGREEMENT means a contract (as it may be amended from time to
time) by and between Z-Tel and an ILEC or CLEC under which the ILEC or CLEC,
among other things, agrees to sell and provide to Z-Tel interconnection,
unbundled access and other services and functions for Z-Tel's use in providing
its Telecommunications Services.

INTERFACE ESTABLISHMENT FEE has the meaning set forth in Section 4.2.

JOINT DISASTER PLANNING TEAM has the meaning set forth in Section 12.2.3.

LAW means any code, law, ordinance, regulation, reporting or licensing
requirement, rule or statute (as amended from time to time) applicable to an
individual, entity or association or to an individual's, entity's or
association's assets, properties, liabilities or business, including:

         (a) those that any Regulatory Authority promulgates, interprets or
         enforces,

         (b) any judicial or regulatory interpretation of any of the foregoing,
         and

         (c) the common law.

                                       10
<PAGE>

LIQUIDATION EVENT means:

         (a) the filing of a voluntary petition in bankruptcy by Z-Tel under
         Chapter 7 of the United States Bankruptcy Code;

         (b) the conversion of an existing proceeding for reorganization of
         Z-Tel into a proceeding for liquidation, dissolution, or similar relief
         under Chapter 7 of the United States Bankruptcy Code;

         (c) when one hundred twenty (120) calendar days after the commencement
         of any involuntary proceeding seeking liquidation, dissolution, or
         similar relief against Z-Tel under Chapter 7 of the United States
         Bankruptcy Code, the proceeding has not been dismissed; or

         (d) Z-Tel ceases ongoing business operations.

LOCAL NUMBER PORTABILITY or LNP means the mechanism by which an End User may
move service from one carrier's local switch to another carrier's local switch
without changing telephone numbers.

LOCAL WHOLESALE SERVICES means:

         (a) Telephone Exchange Service that Z-Tel provides to other carriers
         for resale to their End Users, and other associated services through
         use of Z-Tel's OCN, such as basic and adjunct to basic vertical
         services, and exchange access functionality, and

         (b) Telephone Exchange Service that Z-Tel supports for sale by Sprint
         to its End Users, and other associated services through use of Sprint's
         OCN, such as basic and adjunct to basic vertical services and exchange
         access functionality.

LONG DISTANCE SERVICES means communications between two (2) End Users that
crosses predetermined local exchange boundaries. For purposes of this Agreement,
Long Distance Services are considered to be a subset of Telecommunications
Services and may include IntraLATA and InterLATA toll services (e.g., 1+
origination) and Toll Free Services.

LW BASED CUSTOMERS has the meaning set forth in Section 2.6.

LW BASED SERVICES means Telecommunications Services and information access based
upon the Local Wholesale Services.

MARKS means any and all trademarks, service marks, trade names, logos,
insignias, copyrights or other similar intellectual property belonging or
licensed to a party.

OCTOBER LETTER AGREEMENT means the letter agreement dated October 17, 2002,
between Z-Tel (signed by N. Dumas Garrett) and Sprint (signed by Harry
Campbell).

                                       11
<PAGE>

OCN means operating company number.

OSS SERVICES or OPERATIONS SUPPORT SYSTEM SERVICES means all functionalities (as
well as the hardware, software and documentation) that is reasonably necessary,
required or useful to directly or indirectly support delivery of LW Based
Services or Z-Tel Information Services to Sprint's End Users. Included within
OSS Services, without limitation, are the following functionalities: ordering,
provisioning, billing and collection, fulfillment, sales, preparing and handling
CDRs, and customer care. For the avoidance of doubt, "OSS Services" does not
include any Telecommunications Service, any Information Service or any
customization of Z-Tel Technology that is developed as an Ancillary Service.

PERSON means a natural person, sole proprietorship, corporation, limited
liability company, cooperative, partnership, trust, unincorporated association
or organization, body corporate or other entity with juridical personality, or
governmental authority or body, as well as a natural person acting in a Person's
capacity as trustee, executor, administrator or other legal representative.
Pronouns that refer to a Person have a similarly extended meaning.

PICC means Presubscribed Interexchange Carrier Charge as it relates to the FCC's
allowed recovery of interstate access costs through flat monthly charges imposed
on an End User's specified carrier of 1+ interstate interexchange traffic.

PRICING SCHEDULE has the meaning set forth in Section 4.1.

PROVISIONING SERVICES means the overall process and procedures by which Sprint
will be established as the primary local exchange and interexchange service
provider for Sprint's new End Users. A customer has been provisioned when the
customer's telephone line has a dial tone and can be used for both local
exchange and interexchange calling.

PUBLICITY has the meaning set forth in Section 15.3.

RECEIPT CREDITS has the meaning set forth in Section 5.1.4.

REGULATORY AUTHORITY means, as to any subject matter or Person, any of the
following entities having jurisdiction over the subject matter or Person:

         (a) any court,

         (b) any governmental, regulatory or administrative agency,

         (c) any commission, authority or instrumentality, and

         (d) any other public body, domestic or foreign.

REPAIR has the meaning set forth in Section 1.9.12.

RENEWAL TERM has the meaning set forth in Section 2.2.

                                       12
<PAGE>

SALES CHANNEL INTERFACE means the mechanized systems and interfaces by which
Z-Tel provides the Provisioning Services. The Sales Channel Interface involves
both Z-Tel proprietary and third party vendor proprietary components.

SERVICES means the Telecommunications Services, Information Services, Ancillary
Services, OSS Services, Provisioning Services, and any other services that Z-Tel
provides or is required to provide to Sprint under this Agreement.

SERVICE FEES means those fees charged by Z-Tel and required to be paid by Sprint
and identified in Schedule C as Z-Tel Support Service Recurring Fee and Z-Tel
Support Service Non-Recurring Fee.

SERVICE LEVEL AGREEMENTS or SLAS means specified levels of service that Z-Tel is
responsible to provide in relation to Local Wholesale Services, Z-Node Services
and OSS Services.

SHORT TERM DEFERRED REVENUE means revenues offset to future periods for revenue
recognition purposes that are included in current liabilities.

SLAMMING means a change of provider of Telecommunications Service without
obtaining a subscriber's authorization and verification under 47 C.F.R. Part 64.

SLC means Subscriber Line Charge as it relates to the FCC's allowed recovery of
interstate access costs through flat monthly charges on an End User's bill.

SPRINT DESIGNATED PROVIDER has the meaning set forth in Section 2.5(b).

SPRINT MARKET means the area of initial deployment and implementation in the
geographic locations specified in the Initial SOW, and such other locations or
franchise areas that are identified in subsequent SOWs.

SPRINT MARKS means any and all Marks belonging or licensed to Sprint.

SPRINT RETAINED FUNCTION means any support service or OSS Service that Sprint
has undertaken to perform for itself under this Agreement or under the SOW.

SPRINT TRIGGERING EVENT has the meaning set forth in Section 2.3.2(a).

STATEMENT OF WORK or SOW means a written document, in the form of Schedule A,
that the Parties execute and that sets forth the additional terms and conditions
governing specific Services, together with all modifications and supplements
thereto, now existing or hereafter arising.

SUPER NOTICE has the meaning set forth in Section 21.14.2.

TECHNICAL INFORMATION means configuration, interface, system integration and
other related data, information and materials.

                                       13
<PAGE>

TECHNOLOGY ESCROW AGENT has the meaning set forth in Section 14.3.

TECHNOLOGY ESCROW AGREEMENT has the meaning set forth in Section 14.3.

TECHNOLOGY ESCROW MATERIALS has the meaning set forth in Section 14.4.1.

TECHNOLOGY LICENSE has the meaning set forth in Section 14.1.

TECHNOLOGY USE LICENSE has the meaning set forth in Section 16.3.

TELECOMMUNICATIONS means the transmission, between or among points specified by
the user, of information of the user's choosing, without change in the form or
content of the information as sent and received.

TELECOMMUNICATIONS SERVICES means the offering of telecommunications for a fee
directly to the public, or to such classes of users as to be effectively
available directly to the public, regardless of the facilities used.

TELEPHONE EXCHANGE SERVICE means:

         (a) service within a telephone exchange, or within a connected system
         of telephone exchanges within the same exchange area operated to
         furnish to subscribers intercommunicating service of the character
         ordinarily furnished by a single exchange, and which are covered by the
         exchange service charge, or

         (b) comparable service provided through a system of switches,
         transmission equipment, or other facilities (or combination thereof) by
         which a subscriber can originate and terminate a Telecommunications
         Service.

Telephone Exchange Service involves the combination of loop, switch port and any
other necessary elements required to provide an unbroken signal of 350 + 440 Hz
reflecting that telephone service is currently provided and that the telephone
company is ready to receive dialed digits.

TERM means the Initial Term, all Renewal Terms and any transition period.

TIER 1 RESOLUTION means discussion/resolution at the first level of management.
For purposes of this Agreement, the Tier 1 Resolution will typically be at the
Manager or Supervisor job title.

TIER 2 RESOLUTION means discussion/resolution at the second level of management.
For purposes of this Agreement, the Tier 2 Resolution will typically be at the
Director job title.

TIER 3 RESOLUTION means discussion/resolution at the third level of management.
For purposes of this Agreement, the Tier 3 Resolution will typically be at the
Assistant Vice President or Vice President job title.

                                       14
<PAGE>


TOLL FREE SERVICE means a Long Distance Service whereby subscribers receive
calls from specified areas with no charge to the person who is calling. Instead,
all charges are billed to the called party.

TPV or THIRD PARTY VERIFICATION means corroboration, by an independent authority
in compliance with applicable law, of an End User's intent regarding selection
of local and interexchange carrier(s).

TRANSITION has the meaning set forth in Section 2.5.

TRANSITION DATE has the meaning set forth in Section 2.5.5(c).

TRANSITION ESCROW AGENT has the meaning set forth in Section 2.5.5(c).

TRANSITION ESCROW AGREEMENT has the meaning set forth in Section 2.5.5(c).

TRANSITION FEES has the meaning set forth in Section 2.5.5(c).

TRANSITION SERVICE has the meaning set forth in Section 2.5.

TRAVEL CARD SERVICES means services that allow End Users to make local and long
distance calls from a telephone number other than their subscribed location and
have those calls billed to their Z-Tel-provided LW Based Service account. Access
to Travel Card Services is typically provided through a customer dialed toll
free number where the customer is then asked to input both account and dialing
information.

TRUSTEE has the meaning set forth in Section 14.7.

USE STIMULATION CREDIT has the meaning set forth in Section 4.3.1.

USE STIMULATION PERIOD has the meaning set forth in Section 4.3.1.

Z-TEL BACK-UP MATERIALS has the meaning set forth in Section 12.5.1.

Z-TEL DEDICATED SUPPORT FEES has the meaning set forth in Section 4.6.

Z-LINE PLATFORM or Z-NODE means the facilities that Z-Tel owns or controls
through which Z-Tel provides Z-Node Services. The term excludes facilities that
Z-Tel leases from any ILEC, Internet service provider, interexchange carrier,
wireless provider or any other Telecommunications Service provider or
Information Service provider.

Z-NODE SERVICES means any proprietary Z-Tel Information Service or Z-Tel Adjunct
to Basic Service provided as a vertical feature through the Z-Line Platform.
Available Z-Node Services include Voice Mail, Family Mail Box, Find Me, On-Line
Account Maintenance, Notify Me, and Web Access. For the avoidance of doubt,
Z-Node Services will not include access to Z-Tel's Personal Voice Assistant
service ("PVA(tm) service").

Z-TEL FUNDAMENTAL TECHNOLOGY means, collectively:

                                       15
<PAGE>

         (a) all Custom Software that Z-Tel uses in the performance of its
         obligations under this Agreement, and

                  (b) all Technical Information that Z-Tel owns

(as itemized in Schedule E) in each case to the extent necessary to enable
Sprint (through the use of reasonably trained technicians, and when used in
combination with the third-party hardware, software, information, materials,
products and services that are identified on Schedule 9.7 of this Agreement) to
establish complete operational systems capable of generating and providing
products and services substantially the same as those Z-Tel provides to Sprint
under this Agreement.

Z-TEL MARKS means any and all Marks belonging to Z-Tel.

Z-TEL PERSONNEL means any and all Z-Tel employees, agents, and independent
contractors, and the employees, agents and independent contractors of these
agents and independent contractors, that Z-Tel directly or indirectly supplies
or otherwise uses to perform Services for Sprint under this Agreement.

Z-TEL TECHNOLOGY means, collectively, all Z-Tel Fundamental Technology and all
other software (including all related documentation), and all other
configuration, interface, system integration and other data, information and
material that Z-Tel owns that is necessary to enable Sprint (through the use of
reasonably trained technicians, and when used in combination with third-party
hardware, software, information, materials, products and services) to establish
operational systems capable of generating and providing products and services
substantially the same as those Z-Tel provides to Sprint under this Agreement
(as itemized in Schedule E).

Z-TEL TRIGGERING EVENT has the meaning set forth in Section 2.3.1(a).

                         SECTION I. - SCOPE OF SERVICES

         1.1. STATEMENT OF WORK. The initial SOW attached to this Agreement as
Schedule A describes and defines the services and support that Z-Tel will
provide to Sprint to enable Sprint to provide Telecommunications and related
services. The initial SOW sets forth the respective responsibilities of the
Parties and includes the procedures for requesting the provisioning of Local
Wholesale Services and the other services described in this Agreement. The
Parties will work together to amend the Statement of Work to effect changes in
environment such as to facilitate ongoing Z-Tel Services for Sprint End Users on
a Sprint OCN.

         1.2. AGENCY AND RESALE MODES. Z-Tel will perform its obligations under
this Agreement (and, in particular, under this Section I and under the SOW) for
the benefit of Sprint both * **************** *******

                                       16
<PAGE>

*******************************************************************************
************************ In the latter case, Z-Tel will serve as Sprint's
subcontractor to facilitate the furnishing of the Services to Sprint and the
Sprint End User.

                  1.2.1. MIGRATION. From time to time during the Term, Sprint
         may, in its sole discretion, migrate Sprint End Users from Z-Tel's
         ******************* and thereafter utilize the Z-Tel Services in the
         same or lesser manner as before, as Sprint determines and communicates
         to Z-Tel in writing. Z-Tel will assist and cooperate with Sprint on all
         Sprint End User migrations, including any necessary amendments to the
         Statement of Work. The Parties will use their respective best efforts
         to accomplish these migrations in an expeditious, economical manner,
         minimizing any disruption of service to the Sprint End User. For any
         Sprint End Users not migrated to ************* before August 2, 2003,
         the migration escrow provisions under Sections 2.5.5(c) through
         2.5.5(i) will apply.

                  1.2.2. IMPLEMENTATION. The Services that Z-Tel will provide
         under this Agreement will be implemented in accordance with the
         implementation schedule set forth in the SOW.

                  1.2.3. MODIFICATION. Z-Tel and Sprint will cooperate to amend
         the SOW from time to time to alter the procedures or responsibilities
         or to include any additional procedures or services. A SOW may be
         amended only with the written consent of both Sprint and Z-Tel.

         1.3. GEOGRAPHIC SCOPE OF SERVICES. Upon the schedule described in the
SOW, Z-Tel will provide Local Wholesale Services, associated Z-Node Services and
OSS Services to Sprint in every geographic area in which Z-Tel offers retail
services directly to End Users or wholesale services and that is also in a
service area covered by a Regional Bell Operating Company (including former
G.T.E. territory).

                  1.3.1. COMPLIANCE WITH REGULATIONS. The geographic areas in
         which Z-Tel is required to provide the Services under this Agreement
         may be limited to the extent necessary to comply with regulations,
         orders, or policies that are issued by the FCC or by state public
         service commissions.

                  1.3.2. SERVICE AREA ADDITIONS. Upon the addition of a new
         Z-Tel retail service area or upon Sprint's written request to add
         additional service areas, Sprint and Z-Tel will work together to update
         the SOW, allowing for reasonable timeframes for deployment and
         implementation of the Service to Sprint within the new service area.

                  1.3.3. SERVICE AREA LIMITATIONS. Certain optional services
         (such as Long Distance Service or Inside Wiring Service) may have a
         more limited service area than Local Wholesale Services. Service area
         limitations for Z-Tel's products will be described in the SOW.

         1.4. LOCAL WHOLESALE SERVICES. Z-Tel will provide Local Wholesale
Services to

                                       17
<PAGE>


Sprint for Sprint's use solely in providing retail Telecommunications Services
to Sprint's End Users. Z-Tel will provide the Local Wholesale Services to Sprint
to substantially the same extent and in substantially the same manner that Z-Tel
makes retail and wholesale Telecommunications Services available under tariff or
in a general offering, on the Effective Date of the Agreement, incorporating all
features and functionality included in a general release and made available to
its customers but, to avoid doubt, excluding PVA(tm) service. Sprint may not
wholesale the Local Wholesale Service to any carrier providing
Telecommunications Services under alternative certification or tariff issued by
or filed with the FCC or any state public service commission without Z-Tel's
written consent. Notwithstanding the foregoing (or any other retail restriction
in this Agreement to the contrary), Sprint may wholesale Local Wholesale
Services to its Contractual Affiliates to the extent necessary to facilitate
their furnishing of the Services to their End Users who use Sprint-branded
products and services.

                  1.4.1. TERMINATION OF LONG DISTANCE CALLS. Local Wholesale
         Service lines that Z-Tel provides as part of its basic service offering
         allow basic termination of domestic and international toll traffic for
         which the originating party pays.

                  1.4.2. ACCESS TO TOLL FREE SERVICES. Local Wholesale Service
         lines that Z-Tel provides as part of its basic service offering allow
         basic dialed access to Toll Free Services that other parties offer.

         1.5. Z NODE SERVICES. Z-Tel will provide to Sprint, for Sprint's use
solely in conjunction with providing retail Telecommunications Services to
Sprint's End Users utilizing Local Wholesale Services, the Z-Node Services that
Z-Tel, as of the Effective Date, offers to Z-Tel's own retail customers.

                  1.5.1. EXTENSION OF CAPABILITIES. If Sprint desires to offer
         Z-Node Services in a manner that does not utilize Z-Tel's Local
         Wholesale Services, the Parties will negotiate in good faith on the
         terms and conditions of such an offering and, when setting rates for
         such an offering, the Parties will take into account aggregate Sprint
         volumes across all points of service in setting volume discounts.

         1.6. LONG DISTANCE SERVICES. End User billed Long Distance Services
(e.g., out dial toll via 1+ or 0+ dialing, toll free services) are not provided
under this Agreement. Z-Tel's provision and support of Toll Free services is
limited to domestic applications.

         1.7. TRAVEL CARD SERVICES. Z-Node supported Travel Card Services are
not provided under this Agreement. Under the SOW, Z-Tel will bill Sprint Travel
Card usage in conjunction with Local Wholesale Services provisioned via this
Agreement.

         1.8. INSIDE WIRE SERVICES. Subject to availability, Z-Tel will provide,
upon Sprint's written request, support for Sprint's End Users relative to
on-premise wiring (i.e., wiring on the customer side of the network interface
device) in selected markets through arrangements with third party vendors.

                                       18
<PAGE>

         1.9. OSS SERVICES SUPPLIED BY Z-TEL. As and to the extent described in
the SOW, Z-Tel will provide to Sprint, and Sprint will utilize, the OSS Services
that are necessary to implement Section 1.2 of this Agreement. When providing
these OSS Services, Z-Tel:

                           (a) will utilize various internal and external OSS
                  Services,

                           (b) may provide Sprint with direct access to certain
                  of these OSS Services, and

                           (c) may utilize the products and services of the
                  approved vendors described in the SOW. The Parties may add or
                  delete vendors from this approved list by amending the SOW.

         If Z-Tel procures one or more products or services from a different
vendor than the vendor providing the products or services as of the Effective
Date, Z-Tel will make reasonable efforts to obtain the products or services from
the new vendor on terms and conditions at least as favorable to Sprint as those
existing as of the Effective Date.

         If Z-Tel's breach of its agreement with a vendor leads to the loss of
the vendor (except for a Z-Tel breach caused, in whole or in part, by Sprint's
act or omission), thereby necessitating a change to a new vendor, Z-Tel will
bear the difference, if any, by which the pricing terms that the new vendor
offers for the products or services exceed the pricing terms that Z-Tel and
Sprint previously enjoyed with the replaced vendor.

         If Z-Tel desires to obtain any products or services from a vendor that
is not on the approved vendor list under the SOW, the Parties will negotiate in
good faith concerning the selection of the alternative vendor. If the Parties
are unable to select a mutually acceptable alternative vendor, Sprint will have
the right either:

                           (d) to designate a vendor for providing the product
                  or service in conjunction with LW Based Services, or

                  (e) to undertake, with Z-Tel's transition assistance, to
         provide the product or service itself in conjunction with LW Based
         Services through Sprint's own internal operations.

         Specific functions that Z-Tel will perform in connection with Sprint's
rendering of Telecommunications and related services to Sprint's End Users
include the following functions, each of which is described more fully in the
SOW.

                  1.9.1. INBOUND SALES. Inbound sales is the process by which
         customer orders are received and processed internally.

                  1.9.2. THIRD PARTY VERIFICATION. In conjunction with Sprint's
         marketing associated with the Services Z-Tel provides under this
         Agreement, Z-Tel will interface with independent third party(ies) who
         will verify that Sprint's End User acquisition efforts fully comply
         with all state and federal regulations related to

                                       19
<PAGE>

         Slamming (but only to the extent that Sprint directs).

                  1.9.3. PROVISIONING. Through the provisioning process, Sprint
         will be established as the local exchange and the primary interexchange
         service provider for Sprint's new End Users.

                  1.9.4. CUSTOMER CARE ESCALATIONS. When customer inquiries,
         change orders, repair orders and other customer-related matters cannot
         be handled through normal operational interfaces, they are escalated to
         higher levels of management. After the initial escalation at the
         Manager level (which Sprint will handle), Z-Tel will seek satisfactory
         resolution regarding the service problems by contacting higher levels
         of management for the associated service provider or third party
         vendor.

                  1.9.5. ACCESS CHARGES. Z-Tel will bill, on its behalf and at
         its rates, all access fees charged to interexchange carriers in
         connection with interexchange calls made or received by Sprint End
         Users provisioned through Z-Tel's *** under this Agreement. Sprint will
         bill, either itself or through a third party, at Sprint's rates, all
         access fees charged to interexchange carriers in connection with
         interexchange carriers calls made or received by Sprint End Users
         provisioned through Sprint's *** under this Agreement. Z-Tel will, if
         asked by Sprint, direct data feeds from the ILECs to Sprint or its
         third party provider at Z-Tel's cost.

                  1.9.6. END USER BILLING. The End User billing services that
         Z-Tel will provide to Sprint under this Agreement will incorporate the
         maintenance of customer usage information, inclusion of taxes and fees
         in customer invoices, preparing and delivering customer invoices and
         printing additional invoices for past due accounts. A prototype of a
         Sprint End User bill is incorporated into the Initial SOW. Sprint may
         determine, to the extent technically feasible and legally permissible:

                           (a) the look, feel, appearance and content of the End
                  User bill from commercially feasible options described in the
                  SOW,

                           (b) the types of charges, surcharges, taxes and other
                  fees appearing on the End User bill, and the descriptions
                  thereof, and

                           (c) the form and content of any messages included on
                  or in the End User bills.

                  1.9.7. PAYMENT POSTING. Upon its receipt of payment
         information (e.g., payment received, NSF payment, etc.) from Sprint or
         Sprint's vendor in a manner and format described in the SOW, Z-Tel will
         update customer account information within Z-Tel's support system.

                  1.9.8. CDR PROCESSING. Z-Tel will process ILEC call records in
         a manner compatible with Sprint's and Z- Tel's billing requirements as
         documented in the SOW.

                                       20
<PAGE>

                  1.9.9. RESPONDING TO SUBPOENAS. In response to subpoenas,
         court orders and administrative agency orders to produce information,
         including those calling for call detail records, when the targeted
         telephone numbers belong to Sprint End Users using Z-Tel's OCN, Z-Tel
         will produce information as required by Law. Sprint and Z-Tel will
         cooperate in complying with these subpoenas, court orders and
         administrative agency orders.

                  1.9.10. REPORTS. Z-Tel will provide Sprint with periodic and
         real-time reports detailing the transaction activity for Sprint's End
         Users who are receiving Services, in the format and frequency jointly
         developed by Z-Tel and Sprint and incorporated into the SOW.

                  1.9.11. LEC RELATIONS. When Sprint is utilizing Z-Tel's
         services through Z-Tel's *** for any Sprint End User, Z-Tel will act as
         the primary interface for operational escalations, Interconnection
         Agreement interpretation and all other matters involving local exchange
         carriers associated with the furnishing of Z-Tel's Local Wholesale
         Services to those Sprint End Users (except carrier to carrier Slamming
         complaints under FCC rules). At Sprint's direction, Z-Tel may provide
         additional LEC relations support in association with Sprint End Users
         that Z-Tel provisions utilizing Sprint's ***.

                  1.9.12. REPAIR. Z-Tel will be the interface with the End User
         for the report and resolution of service issues ("REPAIR"). Z-Tel will
         provide Tier 1 Resolution, Tier 2 Resolution and Tier 3 Resolution of
         service issues.

                  1.9.13. COLLECTIONS. Z-Tel will be responsible for all
         collections and collection activities associated with Sprint customers
         using LW Based Services except as otherwise expressly agreed to in
         writing by Sprint and Z-Tel.

                  1.9.14. TRAINING. As more fully described in the SOW, Z-Tel
         will provide reasonable training to Sprint's employees and
         representatives in the use of the Z-Tel systems and interfaces
         including the Sales Channel Interface.

                  1.9.15. FRAUD DETECTION. Z-Tel will initiate service orders
         that block Sprint End User dial-around originating calls, calls to
         information services providers, collect calls and other traffic that
         poses a high potential risk of fraud unless otherwise instructed by
         Sprint. Z-Tel will not be responsible for the failure of ILEC systems
         to properly restrict End User calling through the mechanisms described
         in the preceding sentence. Z-Tel's liability for fraud is set forth in
         Section 10.11.

                  1.9.16. LONG DISTANCE SERVICES EXCEPTION. In accordance with
         the SOW, Z-Tel will provide Long Distance Services to Sprint's End
         Users in limited instances (e.g., Z-Node Find Me Service) through
         Z-Tel's third-party providers.

         1.10. OSS FUNCTIONS PROVIDED BY SPRINT. As more fully described in the
SOW,

                                       21
<PAGE>

Sprint will provide the following support services without Z-Tel's direct
involvement in connection with Sprint's rendering of Telecommunications and
related services to Sprint's End Users.

                  1.10.1. MARKETING. Sprint will be responsible for all
         marketing, advertising and product development and management in
         association with the services it seeks to sell to End Users.

                  1.10.2. CUSTOMER ACQUISITION AND TPV. Sprint will be
         responsible for all activity associated with acquiring End User
         commitments to purchase Sprint services. Sprint will also be
         responsible for selecting, directing, managing and paying the Third
         Party Verification vendor(s).

                  1.10.3. ORDER ENTRY. Sprint will initiate order entry for
         Services through Z-Tel's Sales Channel Interface. For this purpose,
         Z-Tel will provide to Sprint access to Z-Tel's Sales Channel Interface.

                  1.10.4. CUSTOMER CARE (CUSTOMER INTERFACE AND TIER 1
         RESOLUTION). Sprint will be the primary interface with its End Users
         for all customer care functions except Repair. Sprint-provided customer
         care functions will include customer inquiries, change orders and
         matters related to Sprint End User requests and inquiries. Sprint will
         also escalate customer care problems that require unique handling to
         the Manager level for the associated service provider or third party
         vendor.

                  1.10.5. CHANGE ORDERS. Sprint will be the primary interface
         with its End Users for requests for changes in Service deliverables.
         Sprint will enter change orders through Z-Tel's Sales Channel
         Interface. For this purpose, Z-Tel will provide to Sprint access to
         Z-Tel's Sales Channel Interface.

                  1.10.6. LOCKBOX. Sprint will receive payments from its End
         Users and reconcile the payments with billing invoices. Sprint will be
         responsible for transmitting data necessary for Z-Tel's posting of the
         payment information to back office systems.

                  1.10.7. TAX RECONCILIATION/FILINGS/REMITTANCES. Sprint will be
         responsible for all remittances (including documentation) to taxing
         authorities in connection with Z-Tel's furnishing of Services to Sprint
         and Sprint's End Users, except for any taxes on Z-Tel's gross income,
         Z-Tel's payroll taxes and withholdings, Z-Tel's real and personal
         property taxes, and any other taxes for which the Law imposes the
         remittance obligation on Z-Tel. For the avoidance of doubt, this
         Section 1.10.7 does not alter the allocation of tax payment obligations
         set forth in Section 4.10 of this Agreement.

                  1.10.8. TRANSPORT (TO Z-NODE). Sprint will separately
         establish and pay for transport in association with connectivity to the
         Z-Node (e.g., "00" transport and call forwarding associated with the
         call forward/don't answer and call forward/busy central office
         features).

                                       22
<PAGE>

                  1.10.9. FULFILLMENT. Fulfillment involves the delivery of new
         account materials to Sprint's new End Users.

                  1.10.10. INVESTIGATING COMPLAINTS. Sprint will investigate and
         resolve all Sprint End User and carrier to carrier complaints. Z-Tel
         will support these efforts as Sprint requests from time to time as set
         forth in the SOW. Each Party will support the other Party's complaint
         investigation and resolution efforts upon the other Party's reasonable
         request.

                  1.10.11. COMMISSION PROGRAM. Sprint will administer, as well
         maintain any records necessary to administer, any commission program
         associated with its agents and sales force.

                  1.10.12. ADDITIONAL EXECUTIVE REPORTS. Sprint may develop
         service management reports in addition to those that Z-Tel provides
         under this Agreement. For this purpose, Z-Tel will provide to Sprint
         access to standardized data through its report portal and training in
         the use of the report portal.

                  1.10.13. SPRINT RETAINED OR ASSUMED FUNCTION. Sprint may
         assume responsibility for any OSS function that Z-Tel then provides:

                           (a) upon at least ninety (90) calendar days' prior
                  notice by Sprint and appropriate modification of the SOW,

                           (b) immediately upon the occurrence of any
                  Liquidation Event with concurrent Super Notice to Z-Tel, and

                           (c) upon the occurrence of any Z-Tel Triggering Event
                  that is not a Liquidation Event and at least thirty (30)
                  calendar days' prior Super Notice by Sprint and appropriate
                  modification of the SOW.

                  In the event of Sprint's assumption of a function under this
         Section 1.10.13 when SOW modification(s) is required to effect Sprint's
         take-over of an OSS function outside the provisions of release of the
         Technology Escrow Materials (Section 14.6), Sprint:

                   (d) will not require Z-Tel's approval to the extent it
                  pertains to whether Sprint's assumption of the function
                  occurs, and

                   (e) will require Z-Tel's approval to the extent it pertains
                  to:

                                    (i) the technical and logistical manner in
                           which the Parties accomplish the transfer of the
                           function, and

                                    (ii) the Parties' resolution of any material
                           adverse technical effects that the Parties reasonably
                           expect Sprint's assumption of the function (or
                           Sprint's subsequent performance of the function) to
                           have on Z-Tel's continued furnishing of other
                           Services under this Agreement.

                                       23
<PAGE>

                  In the event of Sprint's assumption of an OSS function under
         this Section 1.10.13, Z-Tel will provide the assistance described in
         Sections 2.4.2(g) and 2.5.3 as they pertain to the OSS function.

         1.11. ANCILLARY SERVICES. Z-Tel will have no obligation to perform for
Sprint any Ancillary Service that is a Sprint Retained Function or any service
that Z-Tel does not perform in the ordinary course of providing
Telecommunications Services to its own End Users.

         1.12. UPGRADES, UPDATES AND NEW Z-TEL SERVICES OR FUNCTIONALITIES.

                  1.12.1. UPGRADES AND UPDATES. Z-Tel may deploy, upgrade,
         migrate and maintain its network, services and operational support
         systems at its discretion and modify its network, services and
         operational support systems to the extent applicable Law permits,
         whether through the incorporation of new equipment or software or
         otherwise. Z-Tel will provide reasonable notification in writing of
         changes to the Z-Tel network, services, and operational support systems
         that will impact Sprint's operations or performance.

                  If Z-Tel develops an upgrade of, or update to, the Z-Line
         Platform or the Z-Tel Fundamental Technology, then the Parties will
         negotiate in good faith regarding the related service fee(s) that would
         be payable to Z-Tel, if any, for the upgrade or update.

                  Unless initiated, or reasonably required, to maintain
         interfaces with ILEC operational support systems, Z-Tel will not
         implement the upgrade or update for the furnishing of the Services to
         Sprint and Sprint's End Users without Sprint's consent (which Sprint
         will not unreasonably withhold or delay) if it:

                           (a) would cause Sprint to incur more than *****
                  for internal changes that Sprint must reasonably make to
                  utilize the upgrade or update,

                           (b) would cause a material disruption in the
                  provision of services to Sprint's End Users, or

                           (c) would materially reduce the functionality or
                  quality of the Z-Tel Services to Sprint and Sprint's End
                  Users.

                 In accordance with the SLAs, Z-Tel will avoid service
         disruption to Sprint and Sprint's End Users resulting from these
         changes.

                  1.12.2. NEW SERVICES OR FUNCTIONALITIES. If Z-Tel desires to
         deploy additional service functionality (e.g., DSL) on a general
         release basis to its retail or wholesale users (whether because the
         additional functionality is newly developed, newly acquired, newly
         available or otherwise) and Sprint desires to

                                       24
<PAGE>


         internally utilize the additional functionality or make it available to
         Sprint's End Users, then the Parties will negotiate in good faith an
         amendment of the scope of services under this Agreement and a
         corresponding adjustment in Z-Tel Service Fees (if appropriate given
         the circumstances) before Z-Tel makes these additional features and
         functions available to Sprint and Sprint's End Users.

                  1.12.3. TIMING OF AVAILABILITY. Z-Tel will make additional
         services and functionalities available for use by Sprint and Sprint's
         End User on the timetable described in the appropriate SOW, but with
         Z-Tel offered service availability no more than thirty (30) calendar
         days after making the services and functionality available on a general
         release basis or to similarly situated Z-Tel customers. Notwithstanding
         the foregoing, when capacity constraints exist Z-Tel may phase in new
         services and functionalities to Sprint End Users on a pro rata basis
         with Z-Tel's other wholesale customers based upon parameters to be
         negotiated between the Parties in conjunction with the adoption of a
         SOW.

                  1.12.4. PRICING. Z-Tel will make additional services and
         functionalities described in Section 1.12 available to Sprint on
         pricing terms *********************************************************
         *********************************************************************.

                  1.12.5. PROPRIETARY WORK REQUESTED BY SPRINT. If Sprint
         requests that Z-Tel undertake product modifications or development of
         new service functionalities, Z-Tel and Sprint will negotiate in good
         faith an applicable Statement of Work concerning the terms and
         conditions (including costs, timeframes and deliverables) on which
         Z-Tel will develop, and make available to Sprint and Sprint's End
         Users, the product modifications or service functionalities. If the
         Parties do not agree on these terms and conditions, nothing in the
         preceding sentence obligates Z-Tel to undertake the product
         modifications or the development of new service functionalities. *****
         stated otherwise in the SOW, ******************************************
         ***********************************************************************
         ***********************************************************************
         ************************************************************incorporate
         pre-existing Z-Tel intellectual or proprietary property or rights,
         Z-Tel will license, for the term of this Agreement, the pre-existing
         intellectual or proprietary property or rights to Sprint for use in
         connection with the works made for hire for the term of this Agreement.

                  1.12.6. ***************. For purposes of Section ****, a
         customer that is "*****************" to Sprint is a customer purchasing
         Services on ******* ***************************************************
         **********************************************************************.

         1.13. PROMOTIONAL PROGRAMS EXCLUDED. Sprint will not be entitled to
participate in any Z-Tel plan, program, discount or promotion under which Z-Tel
End Users or prospective Z-Tel customers may obtain products or services in
return for trying, subscribing to or using any Z-Tel Services, including any
Z-Tel Telecommunications Service or Information Access.

                                       25
<PAGE>

         1.14. MAINTENANCE. Subject to the customer notification requirements,
under applicable Law, if any, Z-Tel may perform any routine or emergency
maintenance under the SOW that may limit or suspend the availability of the
Services despite Z-Tel's best efforts to avoid adverse effects on the Services.
The suspension of the availability of any of the Services under this Section
1.14 will not be deemed to be a violation by Z-Tel of any of its obligations
under this Agreement. Unless Sprint requests expedited treatment, Z-Tel will
give Sprint:

                           (a) at least ******* Business Days' prior written
                  notice of scheduled outages affecting Sprint's End Users for
                  maintenance purposes, and

                           (b) at least ******* Business Days' prior written
                  notice of scheduled maintenance work that is reasonably
                  expected to affect the OSS Systems.

         1.15. NOTICE OF CHANGES. Z-Tel may discontinue or withdraw any Service
during the Term under the following terms:

                           (a) Z-Tel's action is subject to any notice
                  requirements under the Law.

                           (b) Z-Tel's action is subject to Sprint's compliance
                  with any requirement under the Law in any jurisdiction:

                                    (i) that Sprint provide certain notice to
                           its End Users or others before effecting the exit or
                           withdrawal of the Service from the jurisdiction, or

                                    (ii) that Sprint obtain regulatory approval
                           before exiting or withdrawing the Service from the
                           jurisdiction and accomplish any required steps toward
                           that end.

                           (c) Subject to Z-Tel's compliance with subsections
                  (a) and (b) above, Z-Tel must provide Sprint with at least
                  sixty (60) calendar days' written notice of the proposed
                  discontinuation or withdrawal of the Service except in the
                  case of:

                                    (i) a discontinuation or withdrawal of a
                           Service that is required by applicable Law, for which
                           Z-Tel will give Sprint as much advance written notice
                           as reasonably possible;

                                    (ii) a Service that Sprint is no longer
                           utilizing under this Agreement; or

                                    (iii) termination of this Agreement by Z-Tel
                           under Section II of this Agreement.

                                       26
<PAGE>

         Upon receipt of written notice from Z-Tel concerning Z-Tel's desire to
discontinue or withdraw any Service, Sprint will use commercially reasonable
efforts to expeditiously:

                           (d) provide any legally required notice to the
                  affected Sprint End Users,

                           (e) obtain any necessary regulatory approval relating
                  to the exit or withdrawal, and

                           (f) take any actions that are necessary or
                  appropriate in connection with the regulatory approval.

         Except when Service termination is required by Law or in the event of a
Z-Tel termination under Section 2.3.2 or an expiration under Sections 2.1 and
2.2, Z-Tel will bear the cost of any required notification of Sprint End Users
associated with Z-Tel's discontinuance or withdrawal of any Service that Z-Tel
provides to Sprint under this Agreement.

         1.16. GRANDFATHERING. To the extent permitted by applicable Law, Z-Tel
will provide grandfathered Services to Sprint's End Users under the same
conditions by which Z-Tel grandfathers Services to its own End Users. Among
these conditions are those that the Services:

                           (a) will be available only to Sprint End Users who
                  already have the service;

                           (b) may not be moved to another location;

                           (c) will be available only to the extent facilities
                  are available to provide the service, and

                           (d) will be available for a maximum period of two (2)
                  years following the end of:

                                    (i) the Initial Term, or

                                    (ii) if this Agreement is renewed for one or
                           more Renewal Terms, the last Renewal Term.

                 SECTION II. - TERM, TERMINATION AND TRANSITION

         2.1. INITIAL TERM. This Agreement is effective and the Parties'
obligations commence upon the Effective Date and will expire at midnight on
January 31, 2006 ("INITIAL TERM"), unless this Agreement is terminated earlier
under its terms.

                                       27
<PAGE>

         2.2. RENEWAL TERM. Upon expiration of the Initial Term, this Agreement
will renew automatically on a year-by-year basis (each year a "RENEWAL TERM")
until:

                           (a) either Party notifies the other in writing at
                  least one hundred eighty (180) calendar days before the end of
                  the then current term of its desire that this Agreement expire
                  at the end of that term (in which case this Agreement will
                  terminate then), or

                           (b) this Agreement is otherwise terminated under this
                  Section II.

         2.3. TERMINATION.

                  2.3.1. TERMINATION BY SPRINT.

                           (a) Sprint may, by written Super Notice to Z-Tel
                  (including a description of the relevant event(s)), terminate
                  this Agreement immediately upon the occurrence of any of the
                  following events (each a "Z-TEL TRIGGERING EVENT"):

                                    (i) Z-Tel materially breaches any provision
                           of this Agreement and fails to cure the breach within
                           thirty (30) calendar days after receiving written
                           notice from Sprint;

                                    (ii) Z-Tel's performance under this
                           Agreement as measured by applicable SLAs for order
                           processing, billing, OSS availability, Repair, data
                           file transmission or Z-Node availability fails to
                           meet the triggering event criteria as established in
                           Schedule B and Z-Tel fails to cure this variance
                           within thirty (30) calendar days after receiving
                           written notice from Sprint;

                                    (iii) there occurs a Disconnect of Z-Tel
                           ILEC UNE services affecting greater than
                           **************** of Sprint's End Users that Z-Tel is
                           then serving through any particular ILEC;

                                    (iv) there is a material adverse change in
                           Z-Tel's regulatory environment, including any change
                           in applicable Laws that materially and adversely
                           affects Z-Tel's ability to perform its obligations
                           under this Agreement;

                                    (v) there is a Change of Control;

                                    (vi) there is a material adverse change in
                           Z-Tel's financial condition, evidenced by:

                                             (A) simultaneously meeting three or
                                    more of the following criteria:

                                             (1) Z-Tel fails to hold cash and
                                    cash equivalents of at least **********.

                                       28
<PAGE>


                                                     (2) Z-Tel fails to maintain
                                    a ****************************************
                                    ****************************************
                                    ****************************************,

                                                     (3) Z-Tel fails to maintain
                                    a ****************************************
                                    ****************************************
                                    ****************************************

                                                     (4) Z-Tel fails to maintain
                                    ****************************************
                                    ****************************************
                                    ****************************************

                                                     (5) *******************
                                    ****************************************
                                    ****************************************
                                    ****************************************
                                    ****************************************

                                                     (6) Z-Tel materially
                                             breaches any agreement for borrowed
                                             money (including any material
                                             violation of a debt covenant); or

                                    (B) Z-Tel receives a going concern
                           qualification from its auditors;

                                    (vii) Z-Tel ceases ongoing business
                           operations; or

                                    (viii) Z-Tel becomes Bankrupt, makes a
                           general assignment for benefit of creditors or has a
                           receiver appointed for its assets, or a court of
                           competent jurisdiction issues an order for Z-Tel's
                           winding up.

                           For purposes of this Section 2.3.1, cash and cash
                  equivalents exclude any restricted amounts.

                           (b) Within ***** calendar days after the end of
                  each month, Z-Tel will provide a certificate to Sprint by
                  Super Notice signed by Z-Tel's Chief Financial Officer,
                  providing:

                                    (i) the current numerical value for each of
                           the criteria under Section 2.3.1(a)(vi)(A) with
                           supporting good faith financial statements, and

                                       29
<PAGE>

                                    (ii) certifying that the information
                           contained in the certificate is accurate as of the
                           date of the certificate.

                           Z-Tel will provide Sprint with final financial
                  statements in supplement to the statements provided under
                  Section 2.3.1(b)(i) promptly when the final statements become
                  available.

                           (c) Sprint may terminate this Agreement under an
                  express termination right of Sprint provided in this
                  Agreement.

                  2.3.2. TERMINATION BY Z-TEL. Z-Tel may terminate this
         Agreement under any of the following conditions:

                           (a) Z-Tel may, by written Super Notice to Sprint,
                  terminate this Agreement immediately upon the occurrence of
                  any of the following events (each a "SPRINT TRIGGERING
                  EVENT"):

                                    (i) Sprint fails to fulfill any of its
                           payment obligations concerning undisputed amounts set
                           forth in this Agreement (to the extent any amounts
                           may be disputed under this Agreement) and fails to
                           cure the breach within ten (10) Business Days after
                           receiving written Super Notice from Z-Tel;

                                    (ii) Sprint materially breaches any
                           provision of this Agreement and fails to cure the
                           breach within thirty (30) calendar days after
                           receiving written notice from Z-Tel; and

                                    (iii) there is a material adverse change in
                           Sprint's regulatory environment, including any change
                           in applicable Laws that materially and adversely
                           affects Sprint's ability to perform its obligations
                           under this Agreement.

                           (b) Z-Tel may terminate this Agreement under an
                  express termination right of Z-Tel provided in this Agreement.

         2.4. OBLIGATIONS UPON EXPIRATION OR TERMINATION.

                  2.4.1. SPRINT'S OBLIGATIONS. Upon the expiration of the Term
         or the earlier termination of this Agreement under Section 2.3 or
         Section 4.9.2, within thirty (30) calendar days after the end of the
         Term, in addition to any other post-termination obligations that this
         Agreement imposes on Sprint:

                           (a) Sprint will pay to Z-Tel when due all undisputed
                  charges owing to Z-Tel for the Services that Z-Tel renders
                  under this Agreement through the end of the Term (net of
                  amounts that Z-Tel owes to Sprint, such as Receipt Credits and
                  Use Stimulation Credits).

                                       30
<PAGE>

                           (b) Sprint will pay Z-Tel, within thirty (30)
                  calendar days after the end of the Term, for any software or
                  hardware that Z-Tel acquired to support Sprint's Services that
                  are non-standard to the Z-Tel Services.

                           (c) Sprint will remove from Z-Tel's premises within
                  forty-five (45) calendar days after the end of the Term all
                  property that Sprint owns.

                           (d) Sprint will return to Z-Tel within forty-five
                  (45) calendar days after the end of the Term all software,
                  access keys and any other property that Z-Tel provides to
                  Sprint under this Agreement (other than items for which Sprint
                  already paid Z-Tel), subject, however, to Sprint's rights
                  under the Technology License described in Section 14.1.

                           (e) In connection with termination (except under
                  Sections 2.1 and 2.2), Sprint will pay to Z-Tel an amount
                  equal to ******** the remainder of the charges or
                  ************** the early termination fees (whichever is less)
                  for any leased line(s) that Z-Tel purchased for Sprint if
                  these charges and fees are imposed upon Z-Tel by an underlying
                  service provider other than Sprint and Z-Tel does not utilize
                  these facilities in servicing other customers. However,
                  Sprint's obligations under this Section 2.4.1(e) as to any
                  leased line will not exceed ************ months of the
                  scheduled lease charges if the lessor is not Sprint or any of
                  its Owned Affiliates.

                           (f) In connection with termination (except under
                  Sections 2.1 and 2.2), Sprint will pay to Z-Tel an amount
                  equal to all of the remainder of the charges or all of the
                  early termination fees (whichever is less) for any leased
                  line(s) that Z-Tel purchased for Sprint if these charges and
                  fees are imposed upon Z-Tel by Sprint or a Sprint Owned
                  Affiliate as the underlying service provider and Z-Tel does
                  not utilize these facilities in servicing other customers.

                  2.4.2. Z-TEL'S OBLIGATIONS. Upon the expiration of the Term or
         the earlier termination of this Agreement under Section 2.3 or Section
         4.9.2, Z-Tel will, in addition to any other post-termination
         obligations that this Agreement imposes on Z-Tel:

                           (a) pay to Sprint within ************** after the end
                  of the Term all Use Stimulation Credits and other charges
                  owing to Sprint in connection with the Services that Z-Tel
                  renders under this Agreement through the end of the Term,

                           (b) credit to Sprint via bill credits all collected
                  Receipt Credits within ten (10) calendar days after Z-Tel
                  collects the Receipt Credits,

                           (c) return to Sprint within forty-five (45) calendar
                  days after the end of the Term all equipment and other
                  property that Sprint provides to Z-Tel under this Agreement,

                                       31
<PAGE>

                           (d) deliver to Sprint within forty-five (45) calendar
                  days after the end of the Term all of Z-Tel's right, title and
                  possession in and to the software or hardware that Z-Tel
                  acquired to support Sprint's Services that are non-standard to
                  the Z-Tel Services and for which Sprint has paid Z-Tel under
                  Section 2.4.1(b),

                   (e) perform all requested Services under this Agreement
                  during the notice or transition period except as provided
                  under the first paragraph of Section 2.5, and under Sections
                  2.5.2 and 2.5.4,

                   (f) provide Sprint technical assistance (at Sprint's expense)
                  and access to the Z-Node during the notice or transition
                  period except as provided under the first paragraph of Section
                  2.5, and under Sections 2.5.2 and 2.5.4, for the purpose of
                  developing and implementing a plan and interface to transfer
                  Sprint End User data to any system that Sprint designates, to
                  the extent feasible using Z-Tel's existing technology, and
                  otherwise cooperate with Sprint (at Sprint's request and
                  expense) with the transfer of all Sprint End Users from
                  Z-Tel's ************************** that Sprint otherwise
                  designates,

                   (g) for any Sprint End User, on Sprint's behalf and direction
                  submit any required orders to the appropriate ILEC to change
                  from Z-Tel's **** to any system that Sprint designates,

                   (h) for any Sprint End User, redirect Z-Node homing to any
                  system or location that Sprint designates, to the extent
                  feasible using Z-Tel's existing technology,

                   (i) mitigate the charges and fees otherwise payable to Sprint
                  under Section 2.4.1(e), and

                   (j) refund any amounts that Sprint pays under Section
                  2.4.1(e) with respect to lease charges paid, to the extent
                  Z-Tel utilizes leased line(s) originally purchased for Sprint.

                  2.4.3. REMOVAL OF PROPERTY. Any Party's property that the
         Party does not remove from the other Party's premises within forty-five
         (45) calendar days after the termination or expiration of the Term will
         be considered abandoned property that the possessing Party may dispose
         of without paying any compensation to the abandoning Party. Nothing in
         this Section 2.4.3 affects the rights of any Party under Section XV
         with respect to the return or destruction of Confidential Information.

         2.5. TRANSITION OF CUSTOMERS. Upon the expiration, or a termination, of
this Agreement under Section II or Section 4.9.2 of this Agreement, or at any
other time upon Sprint's written request, and in each case only if Sprint has
paid all prior undisputed

                                       32
<PAGE>

balances involving charges set forth in this Agreement (net of amounts that
Z-Tel owes to Sprint, such as Receipt Credits and Use Stimulation Credits),
Sprint may cause a transition (a "TRANSITION") of LW Based Services and OSS
Services (the process of moving, the "TRANSITION SERVICE") from Z-Tel or a Z-Tel
third party service provider to:

         (a) a Sprint Owned Affiliate,

         (b) a third party service provider that Sprint selects (each of (a) and
         (b), a "SPRINT DESIGNATED PROVIDER"), or

         (c) directly to Sprint.

                  2.5.1. COMPLIANCE WITH LAW. Sprint and not Z-Tel will be
         responsible for establishing a process for the Transition of each
         Sprint End User in compliance with all relevant Law, including all Laws
         regarding authorization and verification of changes in the selection of
         a provider of Telecommunications Service.

                  2.5.2. FAILURE TO PAY DURING TRANSITION. During the
         Transition, Z-Tel will be entitled to the continuing payment of all
         undisputed fees and charges set forth in this Agreement relating to the
         Services Z-Tel is still providing. Any failure by Sprint to make any
         undisputed payment in a timely manner during a Transition will give
         rise to Z-Tel's right to suspend providing Transition Services to
         Sprint upon ten (10) Business Days' prior written Super Notice. If
         Z-Tel suspends providing Transition Services to Sprint under this
         Section 2.5.2, Z-Tel will reinstate providing Transition Services to
         Sprint within 24 hours of receipt of payment in full by Sprint of all
         undisputed payments then due and owing (net of amounts that Z-Tel owes
         to Sprint, such as Receipt Credits and Use Stimulation Credits).

                  2.5.3. ASSISTANCE. During a Transition, Z-Tel will provide the
         following assistance to Sprint, and Sprint and Z-Tel will use their
         respective best efforts to accomplish the following:

                           (a) coordinate the Transition between Z-Tel or the
                  applicable Z-Tel third party service provider and the Sprint
                  Designated Provider or Sprint (as Sprint directs) through the
                  provision and use of applicable CLLI (Bellcore - Common
                  Language Location Identification) Codes, CIC (Carrier
                  Identification Code) Codes, OCN Codes, ACNA (Access Customer
                  Name Abbreviation) Codes, LRN (Local Routing Numbers) used for
                  LNP (Local Number Portability) or other necessary
                  telecommunication provider information to minimize service
                  interruptions during the Transition of the operation, service
                  and control of the Transition Service;

                           (b) ensure that users of the Transition Service will
                  continue to have access to the Service during the Transition;

                                       33
<PAGE>

                           (c) ensure that the Transition does not affect
                  either:

                                    (i) other Z-Tel-provided services that are
                           not subject to the Transition, or

                                    (ii) other Transition Services that have
                           already been transitioned;

                           (d) ensure that the Transition does not disrupt
                  Sprint's End Users use of any Transition Service; and

                           (e) settle all outstanding bills, invoices and
                  prepayments in a manner that is consistent with this
                  Agreement.

                  2.5.4. NEW ORDERS. After termination of this Agreement and
         during any Transition period, Z-Tel will accept orders for new service
         solely in its discretion.

                  2.5.5. TRANSITION COSTS.

                           (a) Following a notice of termination under Section
                  2.3 or Sprint's decision to migrate End Users, the Parties
                  will negotiate in good faith to determine what additional work
                  and services are reasonably appropriate or necessary in
                  connection with the Transition.

                           (b) On a monthly basis during the Transition Z-Tel
                  will provide Sprint detailed invoices describing services
                  rendered and the costs of performing those services. Sprint
                  will reimburse Z-Tel for all undisputed transition fees and
                  charges within thirty (30) calendar days after its receipt of
                  Z-Tel's invoice as follows:

                                    (i) Sprint will pay to Z-Tel *************
                           per Transition line for its additional work and
                           services to effect the transition of Sprint's End
                           Users without service interruption to the extent the
                           Transition solely involves movement to Sprint's OCN
                           serviced via Telution and when the Transition solely
                           involves configuration, manipulation of account data
                           or both and Sprint utilizes Z-Tel to Transition
                           service under the contract as an Ancillary Service.

                                    (ii) When the Transition involves more than
                           configuration, manipulation of account data or both,
                           or utilizes an account vendor other than Telution (a
                           "COMPLEX TRANSITION"), Z-Tel will make available to
                           Sprint or its contractor, documentation and data
                           necessary to effect self development of a Transition
                           procedure and will cooperate with Sprint in
                           implementation of any resultant Transition program.

                                    (iii) If Z-Tel's subject matter experts are
                           required to spend time in support of development of a
                           Sprint Transition Plan or its

                                       34
<PAGE>

                           implementation, Z-Tel will bill Sprint for such
                           support on a time and material basis.

                                    (iv) Sprint will also pay any fees and
                           charges that would apply from ILEC and Third Party
                           Vendors under Schedule C.

                           (c) Sprint will deliver to Commerce Bank, N.A. (the
                  "TRANSITION ESCROW AGENT") under the terms of an escrow
                  agreement in the form attached to this Agreement as Exhibit A
                  (the "TRANSITION ESCROW AGREEMENT") for deposit into an escrow
                  account (the "ESCROW ACCOUNT") certain funds for Z-Tel
                  Dedicated Support fees, Basic System Support fees,
                  **********************************************, and Third
                  Party unit based fees (the "TRANSITION FEES") for the Sprint
                  End Users that have not been Transitioned by either ninety
                  (90) calendar days after the notice of termination date or
                  August 2, 2003, whichever occurs first (the "TRANSITION
                  DATE").

                                    (i) The purpose of the escrow is to secure
                           Sprint's payment obligations to Z-Tel. No amounts
                           will be escrowed if the Transition has not occurred
                           because Z-Tel has not completed the necessary work on
                           ILEC interfaces.

                           (ii) The specific amount that Sprint will escrow is
                           determined as follows:

                                             (A) if the Transition has been
                                    delayed beyond the Transition Date for two
                                    (2) months or less, the amount to be
                                    escrowed is one months Transition Fees
                                    (based on the most current of the forecasts
                                    described in Section 10.12, the "FORECAST")
                                    for the Sprint End Users that have not yet
                                    been Transitioned, and

                                             (B) if the Transition has been
                                    delayed beyond the Transition Date for more
                                    than two (2) months, the amount to be
                                    escrowed is two (2) months Transition Fees
                                    (based on the Forecast) for the Sprint End
                                    Users that have not yet been Transitioned.

                           (iii) Upon completion of the Transition of all
                           Sprint End Users off Z-Tel's OCN and payment of all
                           non-disputed due fees due Z-Tel for Transitioned
                           Sprint End Users for Services provided while served
                           by Z-Tel's OCN, Z-Tel will direct the Transition
                           Escrow Agent to return to Sprint all funds remaining
                           in the Escrow Account within ten (10) calendar days
                           after the Transition completion date.

                                    (d) If the Transition has not occurred
                  because Z-Tel has not

                                       35
<PAGE>

                  completed the necessary work on ILEC interfaces, then for any
                  new Sprint End Users added to Z-Tel's OCN after the Transition
                  Date, Sprint will not be obligated to escrow any fees or pay
                  the **************** per transition line under Sections
                  2.5.5(b), (c) and (d).

                           (e) After establishment of the Escrow Account, Sprint
                  will continue to pay Z-Tel's invoices when due and Z-Tel is
                  not required to seek payment for its invoices from the
                  Transition Escrow Agent.

                           (f) Sprint and Z-Tel will true-up the Escrow Account
                  balance on a monthly basis until the termination of the
                  Transition Escrow Agreement as follows:

                                    (i) Within a reasonable period after the end
                           of each month after the Transition Date, the
                           Transition Escrow Agent will provide to Sprint and
                           Z-Tel a statement reflecting the balance of funds in
                           the Escrow Account.

                                    (ii) Within five (5) Business Days after
                           receiving the Transition Escrow Agent's statement,
                           Sprint will deposit in the Escrow Account the
                           additional funds that are necessary to cause the
                           balance of the Escrow Account to equal or exceed the
                           amount then required under Section 2.5.5(c)(ii).

                           (g) Sprint is entitled to disbursement from the
                  Escrow Account the amount by which the balance of the Escrow
                  Account reflected in the Transition Escrow Agent's statement
                  exceeds the amount then required under Section 2.5.5(c)(ii).

                           (h) Z-Tel is entitled to disbursements from the
                  Escrow Account from time to time during the term of the
                  Transition Escrow Agreement in amounts equal to any Transition
                  Fees payable by Sprint under this Agreement that Sprint does
                  not pay when due.

                           (i) The Transition Escrow Agent will disburse the
                  funds in the Escrow Account in accordance with the provisions
                  of the Transition Escrow Agreement.

                           (j) During any Transition period following
                  termination under this Agreement, so long as there are any
                  Sprint End Users utilizing Z-Tel's OSS Services, Sprint will
                  pay Z-Tel a monthly minimum Service Fee of **********.

                  2.5.6. TRANSITION PERIOD DURATION.

                           (a) For any termination under Section 4.9.2 of this
                  Agreement, Z-Tel's

                                       36
<PAGE>

                  obligation to assist Sprint in the Transition will cease
                  (subject to applicable Law) as of the later of:

                                    (i) **************** calendar days
                           after the termination of this Agreement, and

                                    (ii) the date on which Sprint or a Sprint
                           Designated Provider has obtained the consents and
                           approvals from ILECs or Regulatory Authorities that
                           are necessary or appropriate for processing
                           applicable service orders.

                  Sprint will diligently pursue the consents and approvals
         required in this Section 2.5.6(a).

                           (b) For any termination, or expiration, under Section
                  2.1 and 2.2 of this Agreement, the duration of the Transition
                  period will not be limited.

                           (c) For termination due to a Z-Tel Triggering Event
                  or a Sprint Triggering Event, Z-Tel's obligation to assist
                  Sprint in the Transition will cease the later of (subject to
                  applicable Law):

                                    (i) **************** calendar days
                           after termination of this Agreement, and

                                    (ii) until Sprint or a Sprint Designated
                           Provider obtains the consents and approvals from such
                           ILECs or Regulatory Authorities that are necessary or
                           appropriate for processing applicable service orders.

                  Sprint or the applicable Sprint Designated Provider will
         diligently pursue the consents and approvals required in this Section
         2.5.6(c).

         2.6. EXIT FROM TELECOMMUNICATIONS SERVICE BY SPRINT. Should Sprint
decide to cease providing LW Based Services to its End Users who receive those
services under this Agreement (collectively, the "LW BASED CUSTOMERS") or to
sell the LW Based Customers, then, to the extent allowed by Law, Sprint will
grant to Z-Tel, for the earlier of fifteen (15) Business Days or until Z-Tel
submits a bid, the right to bid on the purchase, in whole or in part, of the LW
Based Customers for future LW Based Services.

         2.7. LAWFUL PURPOSES. Z-Tel will furnish the Local Wholesale Services
subject to the condition that Sprint uses them only for lawful purposes. Z-Tel
may suspend any Local Wholesale Services that Sprint uses in violation of Law if
Z-Tel provides at least fifteen (15) Business Days' prior written Super Notice
to Sprint before the suspension. Z-Tel may suspend any Local Wholesale Services
immediately and without prior notice to Sprint (but with contemporaneous written
Super Notice to Sprint) if any law enforcement agency advises Z-Tel that its
Local Wholesale Services are being used in violation of applicable Law. Any
suspension of Local Wholesale Services by Z-Tel under this Section 2.7 will be
limited to the extent necessary to eliminate the unlawful purpose or use.

                                       37
<PAGE>

                             SECTION III. - RESERVED

                         SECTION IV. - FEES AND CHARGES

         4.1. BASIS OF FEES.

         (a) Z-Tel will provide Local Wholesale Services, Z-Node Services, Long
Distance Services and Z-Tel's OSS Services to Sprint as specified in this
Agreement and the SOW in accordance with the charges and fees described on
Schedule C to this Agreement (the "PRICING SCHEDULE") and Section 4.6 below.

         (b) Sprint and Z-Tel will negotiate fees and charges for new
functionality and services in accordance with Section 1.12.2 of this Agreement.
Fees and charges in association with the development of Ancillary Services will
be separately established within the applicable SOW for each project.

         (c) With the exception of ******************************************
*********************************************************************
************************************************************s.

         (d) The **********************************************************
**********************************************************************
********************************************************************.

         4.2. INTERFACE ESTABLISHMENT FEE. For initialization of Z-Tel service
and support interfaces, Z-Tel will be entitled to an one-time payment of
*************** from Sprint, and Sprint will pay to Z-Tel such fee in full in
immediately available funds within five (5) calendar days after the Effective
Date ("INTERFACE ESTABLISHMENT FEE") less any amounts that Sprint pays to Z-Tel
under the October Letter Agreement or the December Letter Agreement. The
Interface Establishment Fee compensates Z-Tel for its costs associated with
configuration of Operations Support System Services and its costs associated
with the hiring of appropriate and necessary employees to process and support
the Services that Z-Tel will provide to Sprint. Z-Tel will provide operational
interfaces capable of supporting Sprint's End User orders in accordance with the
time schedule set forth in the Initial SOW

                  4.2.1 DEVELOPMENT OF PCS INTERFACES. The development of
         interfaces by Z-Tel necessary to support a Sprint PCS offering is not
         incorporated into the initial interface establishment project or the
         Interface Establishment Fee. The Parties will jointly develop a
         separate SOW with respect to these additional interfaces. The target
         completion date for the additional SOW is February 15, 2003, and this
         SOW will itemize separate charges, scheduled delivery dates and high
         level project requirements. Upon completion of the additional SOW for
         PCS

                                       38
<PAGE>

         interface development, which the parties will expeditiously negotiate
         in good faith, and payment of any up front fees and charges required
         under that SOW, Z-Tel will develop interfaces necessary to support a
         Sprint PCS offering.

         4.3. SERVICE FEE PREPAYMENT AND RESULTING CREDIT. Within five (5)
Business Days after the Effective Date, Sprint will pay *************** to Z-Tel
as a prepayment towards Sprint's fees under Schedule C (net of any additional
amounts that Sprint pays to Z-Tel, beyond the Interface Establishment Fee, under
the October Letter Agreement or the December Letter Agreement (including the
$**************** Trial Payment (as defined in the December Letter) and
$*************** Extension Payment (as defined in the December Letter)).

                  4.3.1. USE STIMULATION. Beginning in the first month Sprint
         has ********* active End Users utilizing Local Wholesale Services that
         Z-Tel has provisioned (the "USE STIMULATION PERIOD"), Z-Tel will credit
         Sprint at the rate of up to *********** monthly to be credited against
         the Service Fee prepayment described in Section 4.3 ("USE STIMULATION
         CREDIT"). ********************
         ***********************************************************************
         ***********************************************************************
         ***********************************************************************
         ***********************************************************************
         ***********************************************************************
         ***********************************************************************
         ***********************************************************************
         ***********************************************************************
         ***********************************************************************
         ***********************************************************************
         **********.

         4.4. EXCLUDED ACTIVITIES. Indirect costs (such as general software or
processing enhancements, costs associated with increasing capacity generally and
costs supporting Z-Tel activities that Sprint has not pre-approved) will be
Z-Tel's responsibility. ****** **********..

         4.5. SLC AND PICC CHARGES. Sprint will solely determine the amount of,
and be entitled to, any End User access charges (e.g., SLC and PICC charges)
associated with Sprint End Users provisioned under this Agreement. SLC and PICC
charges will not accrue to Z-Tel.

         4.6. Z-TEL OSS SUPPORT. Z-Tel will be entitled to and, subject to
Section 5.3, Sprint will pay to Z-Tel when due, ****************************
***************** in support of Z-Tel's OSS Service offerings that Sprint and
Sprint's End Users utilize ("Z-TEL DEDICATED SUPPORT FEES").

                           4.6.1. GROSS-UP OF EXPENSE. In determining the
         *********************************** who are engaged in the furnishing
         of Z-Tel's OSS Services:

                                       39
<PAGE>

                           (a) ************************************************
                  **************************************************************
                  **************************************************************
                  ***************

                           (b) the following maximum rates per paid hour by
                  function will apply:


<TABLE>
<CAPTION>
                    FUNCTION                            PAID HOURLY RATE           GROSSED UP RATE
                    --------                            ----------------           ---------------
<S>                                                     <C>                        <C>
Reject (e.g., New Install, Migrate, Change              *********                  ************
Order, Suspend, Restore, Disconnect)

Support (Escalation)                                    ********                   ***********
                                                        ********                   *********
                                                        *********:                 *********
Support (Change Order)                                  **********
                                                                                   **********
                                                        *********                  **********
Support (all other activities, such as Repair           **********
Level II, TOS, Pending Order, Line Swap)                **********                 **********
                                                                                   **********
                                                        **********
                                                        **********
                                                        ***********
                                                        ***********
Repair Level I                                          ***********:               **********
                                                        ***********                **********:
</TABLE>

                           (c) Sprint will pay ****************************:

                  FUNCTION MAXIMUM WEEKS PAID

                  Reject: ******

                  Support:
                   Repair Level II: *******************************
                   TOS: ********************************
                   Escalation: ***********************************)
                   Pending Order: *************
                   Line SWAP: *********************

                                       40
<PAGE>

                   Repair Level 1:  ******************

                           Sprint will not pay for any (and Z-Tel will be
                  responsible for all) expenses related to
                  *************************. Sprint will not pay
                  ***************************************.

                   (d) Sprint and Z-Tel will negotiate in good faith to
                  determine the *******************************************
                  **************************************************.

                   (e) Z-Tel will meet the following productivity measures (AHT
                  and Utilization):

                           Trouble Tickets: ************

                           Repair Level 1 Tickets: *********

                           Support - Repair Level II Tickets: *********

                           Support - TOS Tickets: **************

                           Support - Escalation Tickets: ************

                           Support - Pending Order Changes: ********

                           Support - Line SWAP Request: *************

                   For purposes of the foregoing, "Utilization" means the time
                  spent working tickets divided by paid time. The agreed upon
                  Utilization rate will be **********************************

                           Sprint and Z-Tel will negotiate in good faith to
                  modify and true-up, as appropriate, the foregoing processes
                  and measures every six (6) months during the first year of the
                  Term and annually thereafter.

                   (f) Sprint unit costs as contained in this Section 4.6.1 will
                  not exceed ***** **********of the negotiated rate per function
                  unless Sprint pre-approves the exception in writing. Sprint's
                  Committed Forecast under Section 10.12 will include a unit
                  cost calculation for each function described in this Section
                  4.6. This calculation will take into consideration:

                                    (i) ************************,

                                    (ii) *****************************

                                    (iii) *****************************

                                    (iv) ******************************

                                    (v) **********************************

                                    (vi) *************************************

                                       41
<PAGE>

                                    (vii) *********************************.

                           Notwithstanding any other provision of this Section
                  4.6 or Schedule C, Sprint's costs for headcount under this
                  Agreement in any particular month will not exceed
                  ******************* of the aggregate unit cost calculations
                  under this Section 4.6.1(f) for that month except with
                  Sprint's written consent.

                           (g) Notwithstanding the above, charges associated
                  with Z-Tel personnel supporting the collection of past due
                  balances of Sprint End Users is separately incorporated in the
                  Pricing Schedule. For clarity purposes, the hourly fee
                  associated with collection activity, as stated in the Pricing
                  Schedule, is not subject to gross-up under subsection (a) of
                  this Section 4.6.1.

         4.6.2. ALLOCATION OF EMPLOYEE EXPENSE. For employee expenses, Z-Tel
will:

                           (a) identify employees that are exclusively
                  performing services for Sprint, and

                           (b) with respect to employees that do not exclusively
                  perform services for Sprint, establish a project code within
                  its payroll system for tracking and allocating, pro rata, the
                  expense of these employees by reference to hours worked for
                  Sprint.

          Sprint must approve the number of employees and the rate per employee
         charge back for each allocated employee expense. The maximum grossed-up
         cost per person per month for the following functions is:

                   CDR Processing: *********
                   Line Loss: *********
                   Payment Processing: *********
                   Payment / NSF Research: ********
                   Retail Billing: ********
                   Subscriber Management: ********
                   Applications: ********
                   Provisioning Support **********

                  4.6.3. PRE-APPROVED. Included in each Committed Forecast (as
         defined in Section 10.12) that Sprint submits to Z-Tel under Section
         10.12 will be an estimate of the Z-Tel headcount that is necessary to
         support Sprint's forecasted volume of business during the period for
         which the Committed Forecast applies. ****************** that Sprint
         submits in the Committed Forecast will be considered pre-approved by
         Sprint for purposes of Schedule C.

                  4.6.4. ADJUSTMENT TO ************. From the date of Z-Tel's
         receipt of

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<PAGE>

         Sprint's ******************, Z-Tel will have ********************** to
         submit a written objection to Sprint regarding the volumes and
         associated headcount reflected in Sprint's Committed Forecast. Z-Tel
         will be deemed to have accepted Sprint's ************************ does
         not provide this written objection in the specified time period. If
         Z-Tel provides a timely written objection to the volumes reflected in
         Sprint's Committed Forecast as they affect Z-Tel ********* (including
         with the objection an alternative Z-Tel volume forecast and a
         description of the disputed portion of the Committed Forecast), the
         Parties will negotiate in good faith to adjust the forecast in such a
         manner that:

                           (a) both parties are satisfied that the forecast
                  represents reasonable expectations of anticipated demand, and

                           (b) Z-Tel can perform the Services consistently with
                  the forecast and in compliance with its obligations under this
                  Agreement, including compliance with relevant SLAs.



                  4.6.5. ESCALATION OF ********* MATTERS. If the Parties cannot
         reach agreement regarding the volume and ********* forecast, they may
         utilize the dispute resolution process set forth in Section 21.5. If
         resolution between Parties cannot be reached within ***********
         calendar days after submission to the dispute resolution process, Z-Tel
         will use the most recent Sprint Committed Forecast as the basis of
         operations while the dispute resolution process proceeds. During the
         pendency of the dispute resolution process, Z-Tel will be relieved of
         all SLAs (other than SLAs concerning Utilization) that are affected or
         impacted by the difference between:

                           (a) ********* under the Committed Forecast, and

                           (b) ********* under the alternative forecast that
                  Z-Tel submits under Section 4.6.4 above.

                  4.6.6. LEVEL OF SUPPORT. Z-Tel will endeavor in good faith to
         fully perform the contracted-for Services to the extent practicable
         without regard to forecast levels.

                  4.6.7. COST OF LIVING ADJUSTMENT. On each anniversary date of
         the Effective Date during the Term, with ninety (90) calendar days
         prior written notice, Z-Tel may adjust ******************** established
         in this Section 4.6 to the extent it can reasonably document that
         Z-Tel's paid ********************* have risen since the inception of
         the Agreement or the last anniversary date (whichever is applicable).
         In no instance may the ******************** rise:

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<PAGE>

                           (a) more in any year than the consumer price index
                  for prior year as announced by the United States federal
                  government, and

                           (b) more than six percent (6%) in the aggregate over
                  the Initial Term.

                  4.6.8. MINIMIZATION OF EXPENSE. If Z-Tel believes that the
         actual headcount need (based on forecasted volumes) is less than the
         forecasted headcount, it will use commercially reasonable efforts to
         minimize the ******** ********* to Sprint.

         4.7. ******** ************** FEES.

                  4.7.1. ************* *********FEES. In allocating *******
         Fees, each LW Based services End User will be assigned a unique
         purchase order number consisting of the customer's ANI number,
         identifying the retail CLEC (that is, Z-Tel, Sprint or other Z-Tel
         Local Wholesale Services customer) and the CLLI code for the ILEC end
         office serving the End User. In those cases in which the ILEC reports
         usage based upon ANIs, Z-Tel will allocate the Local Wholesale Service
         *********************************************** customers based upon
         ANIs. *************************************************
         *****************************************:

                           (a****************************************** in the
                  area served by the end office times the aggregate number of
                  calendar days in the month that the customers were LW Based
                  Services customers,

                           (b) *****************************************
                  Wholesale Services customers have in the area served by the
                  end office ***********
                  ******************************************* that the customers
                  were customers,

                           (c)
                  *************************************************. 4.7.2.
                  *******************. In cases in which *********** are
                  reported on an aggregate basis, Z-Tel will
                  ********************************
                  **********************************************************.

         4.8. ******************* EXPENSES.

                           (a) Sprint, including its Affiliates, will pay all
                  ********** ************************************ ************
               ***************************

                            (i) Sprint's (or its Affiliates', employees' and
                           agents') failure to obtain a subscriber's
                           authorization and verification in accordance with the
                           procedures specified in 47 C.F.R. Part 64 to change a
                           provider or telecommunications service,

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<PAGE>

                            (ii) Sprint's (or its Affiliates', employees' and
                           agents') misrepresentation in the course of marketing
                           or obtaining or verifying consent to a change in
                           provider or telecommunications service, in connection
                           with this Agreement,

                            (iii) the failure of a Third Party Verification
                           provider if Sprint is providing its own Third Party
                           Verification Services from time to time under this
                           Agreement, or

                            (iv) Sprint's (or its Affiliates', employees' and
                           agents') acts or omissions

                           For purposes of clarification, Z-Tel will not be
                  deemed to be an agent to Sprint under this Section 4.8.

                           (b) Z-Tel will pay all fees, penalties, charges,
                  expenses and costs that any ILEC or Regulatory Authority
                  imposes on either Party to the extent they result from Z-Tel's
                  (or its Affiliates, employees and agents) actions or omissions
                  including the failure of a Third Party Verification provider
                  if Z-Tel is providing Third Party Verification Services from
                  time to time under this Agreement.

         4.9. CHANGES IN FEES AND DIRECT COSTS. Except for ************ charges
modified in conformance with Section 4.6.7, ************************** that
Sprint must pay under this Agreement will ******************* during the Term,
except as more fully described in this Section 4.9.

                  4.9.1. ADJUSTMENT PROCESS FOR ****** FEES NOT IN EXCESS OF
         MARKET RATE. Z-Tel will notify Sprint in writing (a "CHANGE IN FEE
         NOTICE") of any increase or decrease in the ******* Fees because of an
         ****************************************************************** or
         arbitration order. Z-Tel will use reasonable commercial efforts to
         provide this notice to Sprint at least thirty (30) calendar days before
         the effective date of the ******* Fee change. Z-Tel will notify Sprint
         through a Change in Fee Notice of any other increase or decrease in the
         ******** Fees within fifteen (15) calendar days after Z-Tel becomes
         aware of the increase or decrease (but, if the effective date of the
         *******Fee change is less than fifteen (15) calendar days after Z-Tel
         becomes aware of the change, Z-Tel will notify Sprint immediately upon
         becoming aware of the change).

                  With any Change in Fee Notice, Z-Tel will submit to Sprint a
         proposed revised Pricing Schedule (including the anticipated **** Fee
         change effective date) along with a summary of the underlying action
         necessitating the ***** Fee change. Subject to Section 4.9.2, absent a
         written objection by Sprint in response to a Z-Tel Change in Fee
         Notice, the changes in ****** Fees payable by Sprint under this
         Agreement will become effective as of the specified effective date.

                  4.9.2. RESOLUTION OF FEE CHANGE DISPUTES. If Sprint objects in
         writing to any proposed change in *****Fees, the Parties will negotiate
         in good faith

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<PAGE>

         concerning an appropriate modification in the ***** Fees payable under
         this Agreement. If the Parties do not reach an agreement on the new
         **** Fees within sixty (60) calendar days after the date of Z-Tel's
         Change in Fee Notice, then this Agreement will automatically terminate
         one hundred eighty (180) calendar days after the date of Z-Tel's Change
         in Fee Notice. In the event of termination under this Section 4.9.2,
         the **** Fee change will go into effect as of the specified effective
         date and Sprint will pay Z-Tel at the new rate from that date through
         the end of the Term.

                  4.9.3. **** FEE ADJUSTMENTS IN EXCESS OF MARKET RATE. Z-Tel
         will not implement any **** fee changes that are above market rates
         without Sprint's written consent.

                  4.9.4. CHANGE IN NON-ILEC FEES. Other than in accordance with
         Section 4.6.7 and in association with postage, Z-Tel will not change
         any ********** fees under this Agreement without Sprint's written
         consent unless:

                  (a) the fee change is reasonably not avoidable by Z-Tel;

                  (b) Z-Tel had given Sprint advance notice of at least ninety
                  (90) calendar days of contract negotiations and consulted with
                  Sprint on service and pricing issues related to the proposed
                  increase from the date of notice until any implementation of
                  the proposed fee change; and

                           (c) Z-Tel has made a good faith effort to minimize
                  the economic effects of the fee increase on Sprint's business.

                  4.9.5. CHANGE IN POSTAGE. Z-Tel will automatically implement
         and bill to Sprint any changes in rates of the United States Postal
         Service in association with providing billing of Sprint End Users on
         Sprint's behalf.

         4.10. RECOVERY OF TAXES AND REGULATORY FEES. The Party upon which
applicable Law imposes the payment obligation will bear any federal, state or
local excise, sales or use taxes (excluding any taxes levied on income) or
regulatory fees (e.g., fees from local 911) resulting from performance of this
Agreement even if this Agreement or applicable Law places the obligation to
collect and remit the taxes upon the other Party. But Z-Tel will pass through to
Sprint, and Sprint will bear, any sales or use tax or any regulatory fee arising
from the Services that Z-Tel provides to Sprint or Sprint's End Users.

         4.11. PERMITTED FEES AND CHARGES. Except as otherwise explicitly
described or contemplated under this Agreement (for avoidance of doubt,
including the SOW), the fees and charges set forth on Schedule C are the only
fees and charges that Z-Tel may bill to Sprint, and Sprint is obligated to pay
when due, for the Services that Z-Tel will provide under this Agreement to
Sprint and Sprint's End Users.

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<PAGE>

                    SECTION V. - BILLING AND BILLING DISPUTES

         5.1. INVOICING OF FEES. Z-Tel will provide invoicing to Sprint in an
electronic format that is acceptable to Sprint.

                  5.1.1. INVOICE DATE. Z-Tel will invoice all fees and charges
         payable by Sprint to Z-Tel under this Agreement, other than *********
         Fees and Z-Tel Dedicated Support Fees, monthly in arrears. Z-Tel will
         invoice Sprint no later than the 23rd day of each month. Each Z-Tel
         invoice will also reflect prior Sprint payments, Receipt Credits, Use
         Stimulation Credits and reconciliation.

                  5.1.2. ILEC RECURRING FEES. Each month, Z-Tel will calculate
         the actual ************** Fees relating to Sprint End Users based upon
         actual ****** billing. Z-Tel will then invoice Sprint for the following
         month's estimated ******* Recurring Fees, basing the estimate on the
         sales forecasts for the following month described in Section 10.12 and
         the SOW. The monthly invoice that Z-Tel sends to Sprint for the
         estimated *********** Fees will reflect:

                           (a) a true - up of the estimated ************ Fees
                  that Sprint previously paid for the prior month and the actual
                  ************ Fees relating to Sprint's End Users for the prior
                  month, and

                           (b) any settlement amount due from Sprint to Z-Tel or
                  from Z-Tel to Sprint because of the true-up.

                  5.1.3. Z-TEL DEDICATED SUPPORT FEES. Bi-weekly, Z-Tel will
         calculate the actual Z-Tel Dedicated Support Fees based upon
         ************** and Section 4.6. Z-Tel will then invoice Sprint for
         ************* as directed in Section 4.6.

                  5.1.4. RECEIPT CREDITS. Z-Tel will credit to Sprint, against
         Sprint's balance of usage charges due to Z-Tel, Z-Tel's usage base cash
         receipts (less direct costs, cost of collections and uncollected
         amounts) in connection with the local Telecommunications Services
         provided to Sprint through Z-Tel ("RECEIPT CREDITS"). Z-Tel will apply
         this credit for any month no later than thirty (30) calendar days after
         collection.

         5.2. BACK BILLING. Notwithstanding anything to the contrary contained
in this Agreement (but subject to Section 5.3), Sprint will pay any invoices
without regard to whether this Agreement has expired or been terminated,
rescinded or cancelled, to the extent the fees are related to services provided
to Sprint by Z-Tel during the Term. Z-Tel will credit or remit to Sprint any
overpayment associated with the true-up of prior invoices without regard to
whether this Agreement has expired or been terminated, rescinded or cancelled.

         5.3. BILLING DISPUTES. Notwithstanding any other provision of this
Agreement, disputes between the Parties concerning any invoice that Z-Tel
presents to Sprint for

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<PAGE>

payment will be resolved in accordance with this Section 5.3.

                  5.3.1. NO WITHHOLDING OF ****** FEES. Under no circumstances
         will Sprint withhold payment of any Z-Tel bill for ******* Fees. If
         Sprint withholds any ******* Fee invoiced by Z-Tel for a given month
         for any reason, Z-Tel's duty to perform its obligations under this
         Agreement will be suspended until one (1) Business Day after Z-Tel
         receives the unpaid invoiced Sprint ***** Fees. Z-Tel's right to
         suspend service under this Section 5.3.1 is in addition to and not in
         lieu of any other remedies available to it under this Agreement and
         under applicable Law. Sprint stipulates and agrees that:

                           (a) Sprint's withholding of ******* Fees will cause
                  irreparable harm to Z-Tel, and.

                           (b) Sprint will consent to the granting of emergency
                  relief by any court of competent jurisdiction, including
                  injunctive relief.

                  5.3.2. WITHHOLDING OF ********* FEES. In the event of any good
         faith dispute about the amount due from Sprint to Z-Tel for *********
         fees, Sprint may withhold up to a maximum of *************** of the
         amount invoiced for non-ILEC fees for a given month. But if Z-Tel
         incorrectly billed more than ****** ********* of any monthly bill, then
         Sprint may thereafter withhold up to *** ******************* of any
         disputed amount.

                  If Sprint withholds any amount greater than this Section 5.3.2
         permits of the amount invoiced by Z-Tel for *********** fees for a
         given month for any reason, Sprint stipulates and agrees that:

                           (a) such withholding will cause irreparable harm to
                  Z-Tel, and

                           (b) it will consent to the granting of emergency
                  relief by any court of competent jurisdiction, including but
                  not limited to injunctive relief.

                  5.3.3. NOTICE OF BILLING DISPUTE. A Party wishing to raise a
         Billing Dispute must notify the other party in writing of the dispute
         within one hundred eighty (180) calendar days (but this deadline will
         be tolled during any audit) after the Billing Date, describing the
         billing discrepancies in reasonable detail together with supporting
         documentation so the billing party can fully understand the nature of
         the dispute. Except in situations involving Audits under this
         Agreement, any party that does not notify the other of a Billing
         Dispute in writing within one hundred eighty (180) calendar days after
         the Billing Date thereby waives any claim it may otherwise have
         regarding that bill or any part not disputed within one hundred eighty
         (180) calendar days, regardless of when the claim was discovered. This
         section will not limit either Party to pursue any remedies available by
         law or equity against the other Party for fraudulent acts.

                  5.3.4. PAYMENT WILL NOT PREJUDICE. Payment will not prejudice
         a Party's

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<PAGE>

         right to dispute charges so long as they are disputed in the manner and
         timeframe specified in this Agreement.

                  5.3.5. RESTITUTION. Disputed charges mutually agreed upon in
         favor of one Party will be paid by the other Party within five (5)
         Business Days of the resolution along with interest payments calculated
         based upon the lesser of ten percent (10%) per annum or the maximum
         allowed by law.

                  5.3.6. RESOLUTION PERIOD. The Parties will engage in good
         faith negotiations and use reasonable efforts to resolve Billing
         Disputes by the respective representatives of both Parties listed on
         the Designee Schedule within the timeframes and escalation process set
         forth below:

                           5.3.6.1. ESCALATION. If the Parties fail to resolve
                  the dispute within thirty (30) calendar days , the dispute
                  will be escalated to senior executives of each party for
                  resolution for a period of fifteen (15) calendar days.

                           5.3.6.2. FINAL RESOLUTION. If the Parties fail to
                  mutually resolve or settle the dispute within the aggregate
                  forty-five (45) calendar day period described in Section
                  5.3.6.1 (unless both Parties have agreed in writing to extend
                  such period), either Party may seek court resolution. Neither
                  Party may seek court resolution until expiration of the
                  resolution and escalation period.

                  5.3.7. JOINT EFFORT REGARDING THIRD-PARTY DISPUTES. Z-Tel and
         Sprint will work together to resolve disputes with ILECs and third
         parties arising from performance of the services described in this
         Agreement. But, to the extent Sprint has not migrated Sprint End Users
         to its own *** under Section 1.2, and notwithstanding any other
         provision in this Agreement, Z-Tel will have sole authority to resolve
         disputes with ILECs and third parties, and resolution of the disputes
         will be final. To the extent Sprint has migrated Sprint End Users to
         its own ***, Sprint will have sole authority to resolve disputes with
         ILECs and third parties related to those Sprint End Users on Sprint's
         ***.

                             SECTION VI. - PAYMENTS

         6.1. RESPONSIBILITY. Sprint will be responsible for and pay all
undisputed charges for the Services that Z-Tel provides to Sprint or Sprint's
End Users under this Agreement. Subject to Section 10.11, Sprint, and not Z-Tel,
will bear the risk of any failure by Sprint's End Users to pay charges to
Sprint.

         6.2. PAYMENT SCHEDULE. Sprint will pay Z-Tel by wire transfer the
undisputed amounts for fees incurred under this Agreement as follows.

                  6.2.1. ************** FEES.

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<PAGE>

                           (a) For Sprint End Users on Z-Tel's ***, Sprint will
                  prepay each month an amount equal to one month's estimated
                  recurring **** Fees, based on monthly forecasts, as described
                  in Section 10.12 and the SOW.

                           (b) Sprint will pay to Z-Tel the recurring **** Fees
                  within ********************** after receiving the invoice from
                  Z-Tel.

                  6.2.2. ********** FEES. Sprint will pay all other **** Fees
         within ********************** after receiving an invoice from Z-Tel.

                  6.2.3. Z-TEL DEDICATED SUPPORT FEES. Sprint will pay all Z-Tel
         Dedicated Support Fees within ********************** after receiving an
         invoice from Z-Tel.

                  6.2.4. ALL OTHER FEES. Sprint will pay all other fees for
         Services under this Agreement within ************************* after
         receiving the invoice from Z-Tel.

         6.3. CURRENCY AND PAYMENT METHOD. All payments will be made via wire
transfer in US Dollars in immediately available funds.

         6.4. LATE PAYMENT FEES.

          6.4.1. UNDISPUTED AMOUNTS. If any undisputed payment or undisputed
         portion of a payment is not received by Z-Tel when due, or if any
         undisputed portion of the payment is not in immediately available
         funds, then Sprint will pay a late fee to Z-Tel. The late fee will be
         equal to the lesser of one and one half percent (1.5%) or the maximum
         percentage allowed by Law multiplied by the undisputed portion of a
         payment not received by the due date. An additional late fee of the
         lesser of one and one half percent (1.5%) or the maximum percentage
         allowed by law multiplied by the undisputed portion of a payment not
         received by the due date will accrue each subsequent month during which
         the undisputed payment or undisputed portion of a payment is not made.
         Z-Tel will be entitled to these late payment fees in addition to and
         not in lieu of all other remedies available to Z-Tel under this
         Agreement or otherwise permitted by Law.

          6.4.2. DISPUTED Amounts. If Sprint makes any payment to Z-Tel that it
         previously disputed, whether the payment is made voluntarily or
         pursuant to a settlement or order, it will pay a late fee to Z-Tel. The
         late fee will be equal to the lesser of eighteen percent (18%) per
         annum or the maximum percentage allowed by law multiplied by the
         disputed amount and will be assessed from the initial due date until
         the date of dispute resolution or order and Sprint will pay the amount
         within five (5) Business Days. Z-Tel will be entitled to these
         late-payment fees in addition to and not in lieu of all other remedies
         available to Z-Tel under this Agreement or otherwise permitted by Law.

         6.5. SPRINT ADJUSTMENTS. Sprint will have the right, in its sole
discretion, to

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<PAGE>

adjust, via credit, refund or otherwise, the invoices of Sprint
End Users. These Sprint adjustments will not reduce payments due from Sprint to
Z-Tel under this Agreement.

                    SECTION VII. - RELATIONSHIP TO END USERS

         7.1. SERVING END USERS. Z-Tel may serve directly any End User and may
continue to market, sell and deliver its own Telecommunications Services and
other Services or otherwise establish independent relationships with any End
User. However, Z-Tel will not target Sprint End Users for switching to Z-Tel
retail services or use End User information gained from its performance of this
Agreement to market directly to Sprint End Users or for any other reason not
related to Z-Tel's performance of its obligations under this Agreement;
provided, however, that the foregoing prohibition does not prohibit Z-Tel from
advertising or offering services to any Sprint End User in connection with a
general advertising or sales effort made in geographic areas where there are
Sprint End Users.

         7.2. POINTS OF CONTACT. Except when documented in the SOW, Sprint will
be Z-Tel's single point of contact for all Services purchased and provided under
this Agreement. Except as otherwise provided in this Agreement, as modified and
supplement by the SOW, Z-Tel will not be required to have any contact with
Sprint's End Users, and Sprint will act as the single point of contact for
Sprint's End Users' service needs, including sales, service, design, order
taking, provisioning, change orders, training, maintenance, post sale servicing,
billing, collection and inquiry. Sprint will inform its End Users that they are
customers of Sprint. Z-Tel will refer Sprint's End Users who inadvertently
contact Z-Tel with questions regarding Sprint's services to Sprint. Likewise,
Sprint will refer Z-Tel customers who inadvertently contact Sprint with
questions regarding Z-Tel services to Z-Tel. Nothing in this Agreement will
prohibit either Party from discussing its products or services with End Users of
the other Party who solicit this information.

         7.3. END USER INTERFACES. From technically and commercially feasible
options documented in the SOW, Sprint will control the look, feel, appearance
and, as applicable, content of Z-Tel's presentation to and interaction with the
End User, including the following End User interfaces: Internet, fulfillment,
Third-Party Verification, system interfaces, voice mail, credit screening,
customer service, IVR and provisioning.

                         SECTION VIII. - AUTHORIZATIONS

         8.1. LISTING INFORMATION. Sprint authorizes Z-Tel to release Sprint
listing information regarding its End Users to other carriers and their
publishers for the purposes of publishing directories and providing directory
assistance, except to the extent Sprint's End Users have specifically requested
that they not be listed in a directory (i.e., non-publish or non-list) and
Sprint or the Sprint End User has communicated this End User request to Z-Tel.
Z-Tel will not be liable for the content or accuracy of the listing information.

                                       51
<PAGE>

         8.2. AUTHORIZATION AND VERIFICATION REQUIREMENTS. Simultaneously with
the execution of this Agreement, Sprint will execute and deliver to Z-Tel a
letter of authorization in substantially the same form as Schedule D to this
Agreement.

                  8.2.1. Z-TEL VERIFICATION AND RETENTION. To the extent set
         forth in the SOW, Z-Tel will obtain, in compliance with applicable
         regulatory requirements, authorization and verification of the
         selection of a provider of Telecommunications Service from Sprint's End
         Users in connection with Sprint's use of the Local Wholesale Services.
         When Z-Tel performs the services for Sprint, Z-Tel will:

                           (a) maintain records of those authorizations and
                  verifications in formats that meet ILEC and federal and state
                  regulatory requirements, as applicable, and

                           (b) deliver copies of any authorization or
                  verification records to Sprint, any ILEC or any Regulatory
                  Authority upon request, as soon as reasonably feasible, but in
                  no event more than seventy-two (72) hours after Z-Tel receives
                  Sprint's request.

                  8.2.2. SPRINT VERIFICATION AND RETENTION. Unless otherwise
         specified in the SOW, Sprint will obtain authorization and verification
         of the selection of a provider of Telecommunications Service from all
         End Users from whom Sprint employees or agents take orders in
         connection with Sprint's use of the Local Wholesale Services. In
         conjunction with performing authorization and verification, Sprint
         will:

                           (a) maintain records of those authorizations and
                  verifications in formats that meet ILEC and federal and state
                  regulatory requirements, as applicable; and

                           (b) deliver copies of any authorization or
                  verification records to Z-Tel, any ILEC or any Regulatory
                  Authority upon request, as soon as reasonably feasible, but in
                  no event more than seventy-two (72) hours after a regulatory
                  request is received.

               SECTION IX. - Z-TEL RESPONSIBILITIES AND WARRANTIES

         9.1. Z-TEL COOPERATION. Z-Tel will work reasonably and cooperatively
with Sprint to establish and modify the Telecommunications Services to be
offered by Sprint and, as modified by Sprint from time to time, utilizing the
Local Wholesale Services, Z-Node Services and other ancillary and support
services described in this Agreement.

         9.2. GOOD STANDING. Z-Tel represents and warrants that Z-Tel is and
will remain, at all times during the Term, in good standing with each applicable
ILEC and CLEC and under each applicable Interconnection Agreement. Z-Tel will
maintain Interconnection Agreements with ILECs that do not prohibit it from
performing the services that it is

                                       52
<PAGE>

obligated to perform under this Agreement. Z-Tel will notify Sprint in writing
within ten (10) calendar days after the change if there is a change in any
Interconnection Agreement, and promptly after Z-Tel becomes aware of the change
if there is a change in any Law, in each case giving rise to a material change
in Z-Tel's delivery of Local Wholesale Services under this Agreement.

         9.3. Z-TEL COMPLIANCE WITH LAWS. Z-Tel will be responsible for
obtaining and keeping in effect in all material respects all FCC, state
regulatory commission, franchise authority and other regulatory approvals that
are necessary in connection with the performance of its obligations under this
Agreement. Z-Tel will perform its obligations under this Agreement in compliance
in all material respects with all Laws. Z-Tel will reasonably cooperate with
Sprint in obtaining and keeping in effect the regulatory approvals for which
Sprint is responsible. Notwithstanding any other provision of the Agreement,
Z-Tel will have no obligation to perform under this Agreement in any state or
jurisdiction in which Sprint has not obtained authorization as required by Law
or Regulatory Authority for providing the Telecommunications Services or other
Services contemplated by this Agreement or for the conduct of business within
the state or jurisdiction.

         9.4. PRIOR CONSENT FOR BRANDING. Except as set forth in the SOW, any
use by a Party of the other Party's Marks is subject to obtaining the other
Party's prior written consent.

         9.5. SPRINT END USER INTERACTION. When Z-Tel Personnel must interact
with Sprint customers to perform Z-Tel's obligations under this Agreement, Z-Tel
Personnel will identify themselves as representing Sprint. Sprint consents to
Z-Tel's use of the necessary Sprint Marks solely for the foregoing purpose.

         9.6. NO CONTRAVENTION. Z-Tel represents and warrants that the execution
and delivery of this Agreement, the performance by Z-Tel of its obligations
under this Agreement and the exercise by Z-Tel of the rights created by this
Agreement do not and will not:

                  (a) violate Z-Tel's Certificate of Incorporation or bylaws, or

                  (b) constitute a breach of or a default under any agreement or
         instrument to which Z-Tel is a party to or by which it or its assets
         are bound, which breach or default would have a material adverse effect
         on Z-Tel's ability to perform its obligations under this Agreement.

         9.7. SUFFICIENCY OF Z-TEL FUNDAMENTAL TECHNOLOGY. Z-Tel represents and
warrants that the Z-Tel Fundamental Technology is sufficient to enable Sprint,
through the use of reasonably trained technicians, and when used in combination
with the other hardware, software, information, materials, products and services
listed on Schedule 9.7 of this Agreement, to establish complete operational
systems capable of generating and providing products and services substantially
the same as those that Z-Tel provides to Sprint under this Agreement.

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<PAGE>

         9.8. NON-DISCRIMINATION. Z-Tel will provide services to Sprint under
this Agreement that are equal or better in quality and provided within the same
time intervals as Z-Tel generally provides in the comparable metropolitan market
places the services to itself, its End Users and its wholesale customers with
similar or lesser volume than Sprint.

         9.9. TOLL-FREE ACCESS. If Z-Tel uses toll-free numbers in connection
with providing services under this Agreement, Z-Tel will assign the toll-free
number and select Sprint as the interexchange carrier serving the toll-free
number.

         9.10. RESTRICTING SERVICE. To the extent that applicable Law permits,
Z-Tel will, within one Business Day, submit to the relevant ILEC an order to cut
off or restrict service to any Sprint End User based upon Sprint's written
instructions to do so. If the ILEC order system is unavailable on the day that
Z-Tel receives Sprint's instructions to cut off or restrict service, Z-Tel will
submit the order as soon as practicable when the ILEC order system becomes
available. Further, if the ILEC rejects a Z-Tel order dealing with cut off or
restriction of service, then Z-Tel will work with Sprint to promptly correct the
order problems and resubmit the order. Subject to these conditions and Section
5.3, after Z-Tel receives Sprint's written instructions to cut off or restrict
service to a Sprint End User, Sprint will be liable for, and Z-Tel entitled to,
only those fees and costs in connection with the Sprint End User in question
that are:

                  (a) incurred through the third Business Day after Z-Tel's
         receipt of Sprint's written instructions; except that Sprint will also
         be liable for, and Z-Tel entitled to,

                           (i) fees and costs through the first Business Day
                  after Z-Tel resubmits an order to cut off or restrict service
                  that the ILEC rejected in processing, and

                           (ii) fees and costs through the second Business Day
                  after Z-Tel resubmits an order to cut off or restrict service
                  that was delayed because the ILEC order system was
                  unavailable, or

                  (b) incurred after that point for services that applicable Law
         does not permit to be cut off or restricted.

         In case of disagreement between the Parties as to whether applicable
Law permits the full implementation of any particular Sprint instruction to cut
off or restrict service that is being provided through Z-Tel's ***, Z-Tel will,
upon receiving a second written instruction from Sprint, fully implement the cut
off or restriction as Sprint instructs if Sprint executes, in a form that is
reasonably acceptable to Z-Tel, a written agreement to indemnify Z-Tel for any
damages, penalties, fine or expenses that Z-Tel may incur from the
implementation.

         Z-Tel will, immediately upon Sprint's written request, implement any
cut off or restriction of service if the service is being provided through
Sprint's ***.

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         9.11. TARIFFS. If Z-Tel is required to file any tariff in connection
with wholesale services governed by this Agreement, then it will take all steps
necessary to ensure that such tariff is consistent with this Agreement and
preserves for Sprint the full benefit of the rights provided by this AGREEMENT.
Z-Tel will provide Sprint with prior written notice of the filing of any
material tariff modification filed under this Section 9.11. Four (4) times
annually upon Sprint's request, Z-Tel will provide Sprint with copies of all
wholesale tariffs. However, in the event of a conflict between this Agreement
and any Z-Tel tariff, to the extent that applicable Law permits, the Agreement
will prevail. Under no circumstances will Z-Tel voluntarily file any tariff that
raises any prices under this Agreement without Sprint's consent.

         9.12. MATERIAL THREAT. As soon as possible, but in any case within
fifteen (15) Business Days after Z-Tel learns in writing of the commencement of
any suit or administrative, arbitration or other proceeding against Z-Tel, any
of its Affiliates or their respective businesses, assets or properties, and in
each case only to the extent an adverse judgment in the suit or proceeding would
materially impact Z-Tel's ability to fulfill its obligations under this
Agreement, Z-Tel will provide to Sprint a reasonably detailed description of the
threat summarizing its potential impacts both operationally and financially.

         9.13. NETWORK PROTECTION. Z-Tel may, without incurring any liability,
cancel or suspend service in whole or in part, immediately upon contemporaneous
verbal notice and subsequent prompt written notice to Sprint, as set forth in
the SOW, if Z-Tel reasonably determines that this action is necessary to protect
its personnel, agents, facilities, certifications or services or to prevent or
to protect it, Sprint and their respective Affiliates against fraud. If the
activity involves a suspected criminal offense, Z-Tel may notify law enforcement
authorities.

         9.14. RESPONDING TO SUBPOENAS. In response to subpoenas, court orders
and administrative agency orders concerning the production of information,
including those calling for call detail records, when the targeted telephone
numbers belong to Sprint End Users using Sprint's OCN, Z-Tel will produce
information as the Law requires. Sprint and Z-Tel will cooperate in complying
with these subpoenas, court orders and administrative agency orders.

         9.15. INSURANCE. Z-Tel will obtain and keep in force during the Term
not less than the following insurance:

                           (a) Commercial General Liability insurance,
                  including:

                                    (i) bodily injury,

                                    (ii) property damage,

                                    (iii) personal and advertising injury
                           liability, and

                                    (iv) contractual liability covering
                           operations, independent contractor and
                           products/completed operations hazards,

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<PAGE>

                  with limits of not less than $1,000,000 combined single limit
                  per occurrence and $2,000,000 annual aggregated, naming
                  Sprint, its Affiliates and their respective officers,
                  directors and employees as additional insureds;

                           (b) Workers' Compensation insurance, as provided for
                  in any jurisdiction in which Z-Tel personnel who perform
                  Services under this Agreement work, with an Employer's
                  Liability limit of not less that $500,000 for bodily injury by
                  accident or disease;

                           (c) Business Auto insurance covering:

                                    (i) owned,

                                    (ii) non-owned, and

                                    (iii) hired autos,

                  with limits of not less than $1,000,000 combined single limit
                  per accident for bodily injury and property damage liability,
                  naming Sprint, its Affiliates and their respective officers,
                  directors and employees as additional insureds;

                           (d) Umbrella/Excess Liability with limits of not less
                  than $3,000,000 combined single limit in excess of the
                  above-references Commercial General Liability, Employer's
                  Liability and Business Auto Liability, naming Sprint, its
                  Affiliates and their respective officers, directors and
                  employees as additional insureds; and

                           (e) Professional Errors and Omissions Liability
                  Coverage with limits of not less than $1,000,000 per
                  occurrence and $3,000,000 annual aggregate, naming Sprint, its
                  Affiliates and their respective officers, directors and
                  employees as additional insureds.

                  9.15.1. CERTIFICATES OF INSURANCE.

                           (a) All required insurance policies will be issued by
                  insurers who are:

                                    (i) financially reputable, and

                                    (ii) licensed to do business in all
                           jurisdictions where Services are provided under this
                           Agreement.

                           (b) Z-Tel will provide Sprint with certificates of
                  insurance that:

                                    (i) are industry standard in form and
                           content,

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<PAGE>

                                    (ii) evidence that all the required
                           coverages are in force, and

                                    (iii) have been endorsed to provide that no
                           policy will be canceled or materially altered without
                           first giving Sprint thirty (30) calendar days' prior
                           written notice.

                  9.15.2. NO LIMITATION. Nothing contained in this Section 9.15
         limits Z-Tel's liability to Sprint to the limits of insurance certified
         or carried.

 9.16. FEE INCREASES. Z-Tel represents and warrants that no provisions in any
Z-Tel contract with Third Party Vendors contain any clause that will result in
an increase in the fees charged to Sprint upon the reduction of the volume of
services purchased by Z-Tel.

 9.17. CHANGE OF CONTROL. Z-Tel will provide Super Notice to Sprint of any
Change of Control within five (5) Business Days after Z-Tel becomes aware of the
Change of Control occurrence.

               SECTION X. - SPRINT RESPONSIBILITIES AND WARRANTIES

         10.1. SPRINT COMPLIANCE WITH LAWS. Sprint will obtain and keep in
effect in all material respects all approvals and authorizations from the FCC,
state regulatory commissions, franchise authorities and other regulatory
approvals necessary in connection with its use of Local Wholesale Services and
other Services as contemplated in this Agreement. Sprint will reasonably
cooperate with Z-Tel in obtaining and keeping in effect in, all material
respects, the regulatory approvals for which Z-Tel is responsible.

                  10.1.1. AUTHORITY IN PLACE. Sprint will not place orders for
         any Services under this Agreement (except for mutually agreeable
         technical trial orders and orders with due dates after any expected
         regulatory authorization or approval is due) unless all applicable
         regulatory authorizations and approvals are in place.

                  10.1.2. DEMONSTRATED PROOF OF AUTHORITY. Sprint will provide
         proof of any applicable regulatory authorization upon Z-Tel's written
         request.

         10.2. SUBSCRIBER FEES. Sprint will have sole and unilateral control of
the prices charged to Sprint End Users subscriber services.

         10.3. NO CONTRAVENTION. Sprint represents and warrants that its
execution and delivery of this Agreement, its performance of its obligations
under this Agreement, and its exercise of its rights under this Agreement do not
and will not:

                           (a) violate Sprint's Certificate of Incorporation or
                  bylaws, or

                           (b) constitute a breach of or a default under any
                  agreement or instrument to which Sprint is a party to or by
                  which it or its assets are bound, which breach or default
                  would have a material adverse effect on

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                  Sprint's ability to perform its obligations under this
                  Agreement.

         10.4. HAZARDS, INTERFERENCE, ETC. Upon notice from Z-Tel, Sprint
promptly will eliminate any hazard, service obstruction or interference that any
Sprint hardware, software, use, content or action is causing or is likely to
cause to Z-Tel's technical operations to the extent that (i) Sprint's use of the
hardware, software or content, (ii) Sprint's action, or (iii) the hazard,
service obstruction or interference relates to or arises under this Agreement.
If Sprint requests that Z-Tel assist it in removing the hazard, service
obstruction or interference, Z-Tel may, but is not required to, assist in the
removal. Any such assistance Z-Tel may provide will be billed to and paid by
Sprint as a direct cost.

         10.5. SECURITY. Sprint or Sprint's End Users will be solely responsible
for selection of security, and use of any code, password or other means
necessary to restrict access to their computers, servers or other equipment
through the Services.

         10.6. SUBPOENAS. At Sprint's request and direction, Sprint authorizes
Z-Tel to comply with all subpoenas, court orders and administrative agency
orders to produce information, including those calling for detailed call
records, when the targeted telephone numbers belong to Sprint's End Users using
Sprint's OCN or Z-Tel's OCN. Sprint will cooperate with Z-Tel in complying with
these subpoenas, court orders and administrative agency orders.

         10.7. SPRINT COMPLIANCE WITH LAWS. In its performance of this Agreement
and its use of the Services, Sprint will comply in all material respects with
all applicable Law.

         10.8. ACCEPTABLE USE. When using the Services, Sprint will comply in
all material respects with Z-Tel's Acceptable Use Policy ("AUP"), a copy of
which is attached to this Agreement as Schedule 10.8. Notwithstanding the
foregoing provisions of this Section 10.8, to the extent that any term in
Schedule 10.8 is inconsistent with the terms of this Agreement (excluding
Schedule 10.8), the latter will prevail. The Parties do not intend that any
provision of Schedule 10.8 limit any right of Sprint under this Agreement.

         10.9. LONG DISTANCE CHOICE. Sprint will be responsible for providing
Z-Tel with the Sprint End User's choice of pre-subscribed interexchange carrier.

                  10.9.1. PIC SELECTION. Unless Sprint otherwise directs on an
         End User order, as part of the ILEC order, Z-Tel will PIC Sprint for
         all inter and intra LATA Services.

                  10.9.2. CARRIER ARRANGEMENTS. When Sprint acts as its own Long
         Distance Carrier or selects a carrier other than Z-Tel or Z-Tel's
         designated third-party provider, Sprint will be fully responsible to
         Sprint's End Users for the refusal of the long distance provider to
         provide a Sprint End User's long distance services.

                  10.9.3. PROOF OF AUTHORIZATION. Sprint is responsible for
         obtaining valid

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<PAGE>

         authorization and verification to establish or change long-distance
         providers and will provide copies of this authorization and
         verification to Z-Tel upon Z-Tel's written request.

                  10.9.4. RESPONSIBILITY FOR ANI USAGE. Except as otherwise
         provided in Section 10.11 regarding fraud, Sprint will be financially
         responsible for long distance usage generated under this Agreement by
         each End User ANI that Z-Tel activates on Sprint's behalf.

                  10.9.5. MANUAL PROCESSING. Z-Tel will manually process the
         pre-subscribed interexchange carrier when a Sprint End User purchases
         only local Telephone Exchange Service.

         10.10. CONNECTIVITY TO Z-NODE. Unless otherwise stated in the SOW,
Sprint will be responsible for establishing, maintaining and paying for the
physical facilities utilized to provide Sprint End User access to the Z-Node.

         10.11. FRAUD. Z-Tel and Sprint will work cooperatively and reasonably
with each other to develop systems for detecting, preventing and limiting fraud.

                           (a) Subject to Section 5.3, Sprint will be
                  responsible for paying Z-Tel for any costs, charges or fees
                  that Z-Tel incurs or are otherwise due to Z-Tel under this
                  Agreement that arise from consumer fraud involving Sprint End
                  Users (or Persons reasonably believed by Z-Tel to be Sprint
                  End Users because of order entry errors by Sprint, Sprint's
                  Affiliates or their respective contractors), except as set
                  forth in subparagraph (b) of this Section 10.11, and for
                  Sprint's internal fraud.

                           (b) *************************************************
                  **************************************************************
                  Annually, Z-Tel will be responsible for other fraud associated
                  with its ordinary negligence in the annual aggregate up to the
                  greater of:

                                    (i) ******************

                                    (ii) Two and one half percent (2.5%) of the
                           aggregate Z-Tel Service Fees that Sprint paid during
                           the immediately preceding twelve (12) month period.

                           (c) Sprint will limit its right to recover from Z-Tel
                  to the amount Z-Tel is able to recover from third parties,
                  concerning:

                                    (i) fraudulent usage by a Sprint End User;

                                    (ii) excessive billing of ILEC Fees
                           resulting in higher Local Wholesale Services to
                           Sprint; or

                                    (iii) excessive billing of non-ILEC fees
                           resulting in higher

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<PAGE>

                           Local Wholesale Services fees or Ancillary Service
                           fees to Sprint.

                           (d) If Sprint has taken full financial responsibility
                  for fraud under subsection (a) of this Section 10.11, Z-Tel
                  will assign to Sprint, within ten (10) calendar days after
                  Sprint's request, any claim against the Sprint End User, the
                  ILEC or the third party that arises from that fraud, but in
                  each case only to the extent it applies to the Sprint End
                  User.

                           (e) Notwithstanding the foregoing, this Section 10.11
                  does not cover Slamming/Cramming, which is addressed in
                  Section 4.8.

         10.12. FORECASTS. No later than the 20th calendar day of each month,
Sprint will provide Z-Tel with forecasts regarding the expected types, volumes
and locations of the Services that Sprint's End Users will purchase for each
month in the upcoming six (6) months during the Term, together with related
headcount forecasts. The forecast provided on or before the 20th calendar day of
any particular month will be a binding forecast, as further described in this
Section 10.12, for the second month during which the forecast is provided (this
forecast, for the second month, being the "COMMITTED FORECAST"). For example, a
forecast that Sprint provides on or before the 20th day of March will be binding
for the month of May. Sprint has no minimum purchase obligation; therefore, a
forecast may project zero purchase volume. Sprint will have no liability to
Z-Tel for the accuracy or inaccuracy of the forecasts except for headcount under
a Committed Forecast that has been accepted under Section 4.6.

         10.13. COMPLIANCE WITH REGULATORY RULES. Sprint represents and warrants
to Z-Tel that it has and will continue to comply in all material respects with
all applicable rules and regulations relating to End User listing information,
including CPNI and other related rules and regulations. Sprint further
represents that it will comply in all material respects with applicable Law
governing billing and disconnecting an End User's Telecommunication Service
(including any applicable Law requiring notice to End Users of disconnection for
non-payment of service fees). Upon Z-Tel's written request, Sprint will provide
documentation, within five (5) calendar days or as necessary to meet regulatory
demands, related to specific Sprint End User accounts proving compliance in all
material respects with these disconnect rules and regulations that may exist in
a given regulatory jurisdiction.

         10.14. FUTURE SERVICES. During the Term, Sprint will allow Z-Tel to bid
on future services and related Telecommunications Services that Sprint desires.
Sprint is not obligated to grant this opportunity to Z-Tel for the furnishing of
services clearly outside Z-Tel's areas of expertise.

         10.15. USE OF SERVICE.

                  (a) RETAIL SERVICES. Sprint represents and warrants that it
         will use Z-Tel-provided services solely to compete in and provide
         retail services (or wholesale

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         services to its Contractual Affiliates for use in selling
         Sprint-branded services at retail).

                  (b) DATA ENTRY. Sprint will not knowingly enter into any Z-Tel
         or third party system any data that is profane, threatening, indecent,
         libelous, defamatory or unlawful, or that violates or infringes any
         trademark, copyright or similar rights of others. Sprint will not
         knowingly enter any data that is false or misleading. Z-Tel will
         provide Sprint with reasonable notice and opportunity to cure any
         misuse unless the misuse is deemed by Z-Tel to be fraudulent or likely
         to result in irreparable harm to Z-Tel.

                  (c) NETWORK MISUSE. Sprint and its Affiliates and their
         respective End Users may not, without authorization:

                           (i) conduct any intrusion into any part of Z-Tel's
                           system,

                           (ii) tamper with non-Sprint End User accounts
                  resident on Z-Tel's system,

                           (iii) use any of Z-Tel's machines, files, accounts or
                  networks to access any non-Sprint system,

                           (iv) utilize any part of Z-Tel's system to seek
                  intentionally information on, obtain copies of, or modify
                  files, passwords or other data belonging to non-Sprint End
                  Users,

                           (v) scan Z-Tel's network (or other networks through
                  Z-Tel's system) with intent to breach security, or

                           (vi) use Z-Tel access to OSS systems or ILEC systems
                  for purposes not contemplated by this Agreement.

         Sprint has no obligation under this Section 10.15 concerning any
prohibited action described in this Section 10.15 by any Person other than
Sprint and Sprint's Owned Affiliates unless the Person accessed Z-Tel's systems
through a Sprint account under this Agreement.

         10.16. INSURANCE.

                  10.16.1. COVERAGE. Sprint will obtain and keep in force during
         the Term not less than the following insurance:

                           (a) Commercial General Liability insurance, including
                  bodily injury, property damage, personal and advertising
                  injury liability, and contractual liability covering
                  operations, independent contractor and products/completed
                  operations hazards, with limits of not less than $1,000,000
                  combined single limit per occurrence and $2,000,000 annual
                  aggregated,

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<PAGE>

                           (b) Workers' Compensation insurance, as provided for
                  in any jurisdiction in which Sprint personnel who perform
                  Services under this Agreement work, with an employer's
                  liability limit of not less than $500,000 for bodily injury by
                  accident or disease,

                           (c) Business Auto insurance covering owned, non-owned
                  and hired autos, with limits of not less than $1,000,000
                  combined single limit per accident for bodily injury and
                  property damage liability, and

                           (d) Umbrella/Excess Liability insurance with limits
                  of not less than $3,000,000 combined single limit in excess of
                  the above-referenced Commercial General Liability, Employer's
                  Liability and Business Auto Liability.

                  10.16.2. CERTIFICATES OF INSURANCE.

                           (a) All required insurance polices will be issued by
                  insurers who are:

                                    (i) financially reputable, and

                                    (ii) licensed to do business in all
                           jurisdictions where Services are provided under this
                           Agreement.

                           (b) Sprint will provide certificates of insurance
                  that:

                                    (i) are industry standard in form and
                           content,

                                    (ii) evidence that all the required
                           coverages are in force, and

                                    (iii) have been endorsed to provide that no
                           policy will be canceled or materially altered without
                           first giving Z-Tel at least thirty (30) calendar
                           days' prior written notice.

                  10.16.3. NO LIMITATION. Nothing contained in this Section
         10.16 limits Sprint's liability to Z-Tel to the limits of insurance
         certified or carried.

                  10.16.4. SELF INSURANCE. At its option, Sprint may self insure
         all or part of the insurance requirements listed in this Section 10.16.
         If Sprint elects to self insure, Sprint will provide written notice to
         Z-Tel outlining its self insurance coverages. Notwithstanding its
         election to self insure, Sprint will remain responsible to Z-Tel for
         the occurrences listed in this Section 10.16 in the same manner as if
         Sprint had elected to obtain this insurance coverage from a third party
         insurer.

         10.17. MATERIAL THREAT. Sprint will provide notice to Z-Tel as soon as
possible, but in any case within fifteen (15) Business Days after Sprint learns
in writing of the

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commencement of any suit or administrative, arbitration or other proceeding
against Sprint, any of its Owned Affiliates or their respective businesses,
assets or properties, in each case only to the extent an adverse judgment in the
suit or proceeding would materially impact Sprint's ability to fulfill its
obligations under this Agreement. Sprint will provide a reasonably detailed
description of the threat summarizing its potential impacts both operationally
and financially.

         10.18. REVERSE ENGINEERING. Sprint will not copy (except for making
back-up copies and other uses expressly permitted in furtherance of this
Agreement), de-compile or reverse engineer Z-Tel Technology or create derivative
works from the Z-Tel Technology. Sprint acknowledges that a violation of this
Section 10.18 will cause immediate and irreparable harm to Z-Tel and that Z-Tel
would not have an adequate remedy at law for the violation and, therefore, in
the event of any violation or threatened violation, Z-Tel may seek an injunction
restraining the violation or further violation in this situation.

         10.19. INTERCONNECTION AGREEMENTS. Sprint acknowledges that
Interconnection Agreements between Z-Tel and local exchange carriers are
available for review and copying at the applicable state public utility or
public service commissions.

         10.20. Z-TEL VENDORS. Sprint will not enter into any agreement,
contract, arrangement or understanding with ********************* for purposes
of avoiding any Service Fees under this Agreement, or substituting any Service
contemplated to be provided by Z-Tel under this Agreement during the Term,
except solely in connection with the Back-Up Plan, Back-Up System or Technology
Escrow under Sections XII and XIV. Sprint acknowledges that violation or
threatened violation of this Section 10.20 will cause immediate and irreparable
harm to Z-Tel and, in this event, an injunction restraining the violation may be
entered.

                     SECTION XI. - SERVICE LEVEL AND REMEDY

         11.1. SLAS. Z-Tel will provide the Services in accordance with the
applicable service level agreement ("SLA") attached to this Agreement as
Schedule B.

                  11.1.1. PERFORMANCE LEVELS. The SLAs will detail service
         standards and available remedies when Z-Tel's Services do not meet
         specified standards. Z-Tel's service levels will meet or exceed the
         standard of service that the ILECs provide or that Z-Tel provides in
         general release to its own retail and wholesale customers.

                  11.1.2. ACTIONS BY ILECS AND REGULATORY AUTHORITIES. Neither
         Party will be liable for any delay or failure to the extent it results
         from the requirements of Law or the acts, delays or failures to act of
         any Regulatory Authority or any ILEC with which Z-Tel has an
         Interconnection Agreement.

         11.2. FORCE MAJEURE APPLICATION. If a Force Majeure Event interferes
with a Party's performance of its obligations under this Agreement, both Parties
are excused from their respective performance on a day-to-day basis to the
extent of the interference, but only if:

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<PAGE>

                         (a) the Force Majeure Event is beyond the reasonable
                  control of the Party asserting its rights under this Section
                  11.2,

                         (b) the affected Party notifies the other Party as soon
                  as practicable concerning the nature and expected duration of
                  the asserted Force Majeure Event, and

                         (c) the affected Party uses all commercially reasonable
                  efforts to avoid or remove the causes of nonperformance and
                  resumes performance promptly after the causes have been
                  removed.

                SECTION XII. - DISASTER RECOVERY, BACK-UP SYSTEM

         12.1. ON-SITE DISASTER RECOVERY PLAN. Attached as Schedule 12.1 is a
Disaster Recovery Plan. During the Term, Z-Tel will materially comply with the
Disaster Recovery Plan.

                  12.2. BACK-UP PLAN. Z-Tel and Sprint will develop a written
implementation plan (the "BACK-UP PLAN") for a Back-Up System that will provide
in an emergency situation or upon a Z-Tel Triggering Event, when activated, an
alternative mechanism for providing access to OSS Services necessary to support
Sprint End Users' utilization of Local Wholesale Services (the "BACK-UP
SYSTEM"). The Back-Up Plan will describe the day-to-day maintenance and
operation of the Back-Up System.

                  12.2.1. PLAN CONTENTS. The Back-Up Plan will contain:

                           (a) key business objectives and associated
                  performance requirements,

                           (b) key assumptions,

                           (c) a high-level system strategic architecture,

                           (d) an itemization of the architecture elements to be
                  replicated,

                           (e) a bar chart showing an approximate timeframe for
                  assembling the strategic architecture,

                           (f) a detailed plan to cover the implementation
                  activity,

                           (g) a listing of equipment necessary to implement the
                  Back-Up Plan, along with projected ordering dates, prices (if
                  applicable), anticipated delivery dates and required
                  installation intervals,

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<PAGE>

                           (h) engineering drawings and specifications,

                           (i) a listing of connectivity requirements,

                           (j) an itemization regarding Z-Tel cost recovery,

                           (k) procedures and timetables for testing of the
                  Back-Up System's ability to takeover primary OSS functions
                  from Z-Tel's Tampa system, and

                           (l) procedures and expectations concerning amendments
                  and updates of the Back-Up Plan.

                  12.2.2. PLAN DEVELOPMENT. Z-Tel will deliver a preliminary
        Back-Up Plan to Sprint on or before February 28, 2003. Z-Tel and Sprint
        will negotiate in good faith to agree on a finalized Back-Up Plan on or
        before March 31, 2003. When the Parties have agreed in writing upon the
        Back-Up Plan, it will be incorporated into this Agreement by this
        reference.

                  12.2.3. JOINT DISASTER PLANNING TEAM. The Parties will
         establish a joint planning team, which will consist of at least one,
         but no more than three, representatives from each Party (as designated
         by each Party), for the purpose of developing and supporting
         implementation of the Back-Up Plan (the "JOINT DISASTER PLANNING
         Team"). The Parties' respective representatives on the Joint Disaster
         Planning Team will be at a level that can make commitments for their
         respective Party concerning the development of the Back-Up Plan. They
         also will have appropriate qualifications and skills within the subject
         matter. The Joint Disaster Planning Team will meet as appropriate or
         necessary to meet the completion deadlines set forth above in this
         Section 12.2.

         12.3. MATERIAL BREACH. The Parties agree that time is of the essence in
developing the Back-Up Plan. Z-Tel's failure to meet the schedule for
development of the Back-Up Plan as set forth in Section 12.2 above will
constitute a material breach of this Agreement unless the failure was caused by
any delay attributable to Sprint.

         12.4. IMPLEMENTATION OF BACK-UP PLAN; BACK-UP SYSTEM. At any time or
times during the Term, Sprint may build a Back-Up System that replicates the OSS
systems and OSS functions included in the Z-Tel Fundamental Technology (and
related Z-Tel Technology and third party interfaces) in accordance with the
Back-Up Plan. The Back-Up System will not be in active operation unless and
until (i) Z-Tel requests Sprint to make the Back-Up System operational in an
emergency situation or (ii) Sprint elects to make the Back-Up System operational
in conjunction with the Technology License following a Z-Tel Triggering Event.

                  12.4.1. TIMING OF IMPLEMENTATION. Sprint may deploy the
         Back-Up System as it pertains to OSS systems and OSS functions (and
         related third party

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         interfaces) at any time or times during the Term, other than during a
         Transition period following the termination of this Agreement (and
         whether in one or more phases), in its sole discretion. In this case,
         Sprint will determine the timetable and manner in which the deployment
         of the Back-Up System will occur, based upon the implementation plan
         contained in the Back-Up Plan, except that:

                           (a) Sprint may delay or otherwise extend the
                  timetable for the deployment of the Back-Up System that is set
                  forth in the Back-Up Plan, in its sole discretion, but upon
                  reasonable notice to Z-Tel, and

                           (b) Sprint may accelerate the timetable for the
                  deployment of the Back-Up System that is set forth in the
                  Back-Up Plan with the written consent of Z-Tel which may not
                  be unreasonably withheld.

                  12.4.2. LOCATION. Sprint may construct the Back-Up System at
         one location of its choosing, utilizing equipment, connectivity and
         labor in compliance with the Back-Up Plan.

                  12.4.3. Z-TEL'S ASSISTANCE AND COOPERATION. Sprint may request
         reasonable assistance from Z-Tel in implementing the Back-Up Plan
         (including assistance concerning third party vendor and data
         interfaces) and constructing the Back-Up System. Z-Tel will render
         reasonable assistance as Sprint requests on a time and materials basis
         (the details of which the Parties will agree upon in the Back-Up Plan),
         but following Sprint's first request for implementation assistance,
         Z-Tel may delay the commencement of its assistance for up to thirty
         (30) calendar days with reasonable cause. Z-Tel must provide written
         notice of its delay request, together with an explanation of the cause,
         to Sprint via Super Notice.

                  12.4.4. BACK-UP SYSTEM OPERATIONS. Except as set forth in a
         mutually agreed upon SOW concerning Z-Tel's assistance with
         installation and maintenance:

                           (a) Sprint will be solely responsible for the
                  installation and maintenance of the Back-Up System on an
                  ongoing basis,

                           (b) Sprint will be solely responsible for the
                  operation of the Back-Up System upon a Z-Tel Triggering Event
                  and the Technology License becoming effective, and

                           (c) Sprint and Z-Tel will share operational
                  responsibility as directed in the Back-Up Plan in association
                  with utilization of the Back-Up System upon the occurrence of
                  a Z-Tel request to activate the Back-Up System in aid response
                  to an emergency situation.

                  12.4.5. OPERATING METHODS AND PROCEDURES.

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                           (a) Upon Z-Tel's request for the Back-Up System to
                  become operational in an emergency situation, to the extent
                  technologically possible, operation of the Back-Up System will
                  be in material compliance with standard Z-Tel methods and
                  procedures for the duration of the emergency.

                           (b) Upon activation of the Back-Up System by Sprint
                  upon the occurrence of a Triggering Event and the Technology
                  License becoming effective, to the extent technologically
                  possible and consistent with Sprint's providing and
                  maintaining service to Sprint End Users, Sprint will operate
                  the Back-Up System in material compliance with standard Z-Tel
                  methods and procedures for a period of forty-five (45)
                  calendar days.

                           (c) Sprint's obligations under the foregoing
                  subparagraphs (a) and (b) are subject to the following
                  conditions precedent:

                                    (i) that Z-Tel will furnish to Sprint a copy
                           of Z-Tel's standard methods and procedures upon
                           declaring an emergency threat or situation (whichever
                           is earlier) that may require activation of the
                           Back-Up System, and

                                    (ii) that Z-Tel's operation of its systems
                           is in material compliance with these standard methods
                           and procedures both (A) immediately before the
                           occurrence of the emergency or the Triggering Event
                           and (B) during the periods designated in this Section
                           12.4.5.

                           (d) Sprint will return to Z-Tel all copies it
                  possesses of the methods and procedures it receives from Z-Tel
                  under Section 12.4.5(c)(i) upon the return to standard
                  operations after the cessation of the emergency.

                           (e) During the periods designated in this Section
                  12.4.5, Z-Tel and Sprint will work together to address any
                  Sprint concerns or problems that Sprint raises with Z-Tel
                  concerning Z-Tel's standard methods and procedures in
                  association with operating and maintaining the Back-Up System.

                           (f) Notwithstanding any provision of this Section
                  12.4, Sprint will have no obligation for the operation of the
                  Back-Up System in material compliance with Z-Tel's standard
                  methods and procedures during the ********* calendar day
                  period following Sprint's receipt of them from Z-Tel or the
                  Technology Escrow Agent. In the event of an emergency, during
                  this ********************** period Sprint will operate the
                  Back-Up System as Z-Tel directs, and Z-Tel will be solely
                  responsible for Sprint's operation of the Back-Up System in
                  material compliance with Z-Tel's directions.

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                  12.4.6. TITLE. Sprint will retain all title to the Back-Up
         System equipment. Z-Tel will not take any action that would affect
         Sprint's title to the Back-Up System equipment.

         12.5. TESTING OF BACK-UP SYSTEM. Upon completing the Back-Up Plan
implementation, the Parties will cooperate in the initial testing of the Back-Up
System in accordance with the Back-Up Plan. Furthermore, the Parties will
cooperate in any subsequent testing of the Back-Up System under a schedule to be
adopted in the Back-Up Plan which will allow Sprint to request testing and
require Z-Tel to participate in testing (a) no more frequently than once every
six (6) months if Sprint has ************************************** this
Agreement during the month preceding a Sprint request, and (b) at least once a
year if Sprint has more than **************************************************
********** under this Agreement during the month preceding a Sprint request.
Notwithstanding the above the Parties may agree to conduct more frequent
testing. Testing will not involve live End Users

                  12.5.1. Z-TEL BACK-UP MATERIALS. In conjunction with the
         testing of the Back-Up System, Z-Tel make available for use in the
         testing the following, as they pertain to the OSS systems and OSS
         functionality and as more specifically described in the Back-Up Plan
         (the "Z-TEL BACK-UP MATERIALS"):

                           (a) necessary elements of the existing Z-Tel
                  Fundamental Technology,

                           (b) the Z-Tel Fundamental Technology that Z-Tel
                  subsequently utilizes on Sprint's behalf during the Term, and

                           (c) the operating systems and interfaces (as
                  designated within the existing Z-Tel Technology and to which
                  Z-Tel has the necessary license rights) necessary to operate
                  the Back-Up System.

                  12.5.2. RESTRICTIONS ON SPRINT'S ACCESS AND USE OF Z-TEL
         BACK-UP MATERIALS. Except for the limited purpose of testing the
         Back-Up System as described in this Section 12.5 with Z-Tel's
         assistance or as provided under the Technology License (upon the
         Technology License becoming effective), Sprint has no rights in or to
         the Z-Tel Back-Up Materials and will not, and will not permit its
         officers, Affiliates, employees or agents to:

                           (a) use the Back-Up Materials,

                           (b) use any source code for the Z-Tel Technology,

                           (c) modify, update, enhance or make derivative works
                  of the Z-Tel Technology, or

                           (d) translate, reverse engineer, decompile, recompile
                  or disassemble the object code version of any Z-Tel
                  Technology.

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                  12.5.3. Z-TEL'S ASSISTANCE. Z-Tel will assist Sprint with the
         development and testing of the Back-Up system as provided in this
         Section 12.5 and in the Back-Up Plan (including assistance concerning
         third party vendor and ILEC cooperation and interfaces, and assistance
         resolving any operational problems discovered in the testing) on a time
         and materials basis (the details of which the Parties will agree upon
         in the Back-Up Plan).

                     SECTION XIII. - THIRD PARTY AGREEMENTS

         13.1. THIRD-PARTY AGREEMENTS.

                  (a) When the Services that Z-Tel is to render under this
         Agreement require the use of third party services, software or
         facilities (including those of ILECs), this Agreement and Z-Tel's
         furnishing of Services under this Agreement will be subject to those
         conditions, restrictions, rules, policies, procedures, limitations and
         rights imposed or granted under the third party agreements or licenses,
         including Interconnection Agreements, that are described in the
         attached Schedule 13.1.

                  (b) Sprint will comply with the conditions, restrictions,
         rules, policies, procedures, limitations and rights contained in
         Schedule 13.1 of this Agreement with respect to third-party vendors
         providing or licensing products or services to Z-Tel or Sprint in
         connection with Z-Tel's furnishing of Services to Sprint. Z-Tel may
         reasonably amend or supplement Schedule 13.1 from time to time during
         the Term upon at least thirty (30) calendar days' written notice to
         Sprint. Any new condition, restriction, rule, policy, procedure,
         limitation or right that Z-Tel adds to Schedule 13.1 by amendment or
         supplement under this Section 13.1(b) will be binding on Sprint upon
         and after Sprint's receipt of Z-Tel's notice under this Section
         13.1(b).

                  (c) Except when the Parties have otherwise agreed in writing,
         Z-Tel will be responsible for securing all necessary rights, licenses
         and permissions for Sprint concerning Sprint's use during the Term of
         the third party services, software and facilities set forth in Schedule
         13.1, including Sprint's use under the license granted in Section 16.3
         of this Agreement.

       SECTION XIV. -- TECHNOLOGY DELIVERY, TECHNOLOGY LICENSE AND ESCROW.

         14.1. TECHNOLOGY LICENSE GRANT. Subject to Section 14.8, Z-Tel grants
to Sprint, effective upon the happening of a Z-Tel Triggering Event a worldwide,
perpetual, irrevocable, non-cancelable and non-terminable, non-exclusive,
non-assignable and non-sublicensable (except with respect to Sprint's Owned
Affiliates) right and license (the "TECHNOLOGY LICENSE"):

                  (a) to use:

                           (i) the Z-Tel Fundamental Technology,

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                           (ii) all pre-existing Z-Tel intellectual or
                  proprietary property or rights incorporated into the works for
                  hire belonging to Sprint that are described in Section 1.12.5,
                  and

                           (iii) any Z-Tel modifications of third party software
                  to the extent Z-Tel has a right to license the modified third
                  party software, and

                  (b) to exercise all rights in connection therewith (other than
         the right to alienate the same or to take any action to put it in the
         public domain), including the rights:

                           (i) to display, perform, execute, modify, develop and
                  otherwise create derivative works of the licensed technology,

                           (ii) to make copies of the licensed technology,
                  whether or not modified,

                           (iii) to use the licensed technology (including in
                  combination with any other information, data, materials or
                  intellectual property), and

                           (iv) to permit Sprint's independent contractors and
                  Sprint's Owned Affiliates to exercise any or all of the
                  foregoing rights solely for the benefit of Sprint and its
                  Affiliates and the Sprint End Users,

all solely to the extent reasonably necessary or useful to enable Sprint and its
Owned Affiliates to deploy, generate, test, develop, use for training, maintain
and support, market, sell and otherwise use and provide services comparable to
the Services under this Agreement, including as Sprint or any of its Owned
Affiliates may subsequently modify or develop them under this license.

         The Technology License includes Z-Tel Technology that Z-Tel does not
own only to the extent that it is, or will be, capable of being sublicensed by
Z-Tel to Sprint, and is subject to any license agreements between Z-Tel and the
licensors of this Z-Tel Technology.

         14.2. TRIGGERING EVENT.

                  14.2.1. EXERCISE OF OPTION. If a Z-Tel Triggering Event
         occurs, then:

                           (a) the Z-Tel Fundamental Technology will be subject
                  to the Technology License set forth in Section 14.1, and

                           (b) Sprint may obtain the release from escrow of the
                  source code for the Z-Tel Fundamental Technology and the other
                  Technology Escrow Materials in accordance with the Technology
                  Escrow Agreement with contemporaneous written Super Notice to
                  Z-Tel, and

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                           (c) upon Sprint's request, Z-Tel will immediately:

                                    (i) deliver to Sprint all of the
                           then-existing Z-Tel Fundamental Technology to the
                           extent that Z-Tel owns it or is capable of
                           sublicensing it under any applicable agreements
                           between Z-Tel and its licensors, and

                                    (ii) take all actions that are commercially
                           reasonable to facilitate Sprint's procurement and use
                           of any Z-Tel Fundamental Technology that Z-Tel does
                           not deliver under Section 14.2.1(c)(i) because Z-Tel
                           does not own or is prohibited from sublicensing the
                           Z-Tel Fundamental Technology.

                  14.2.2. ROYALTY PAYMENT. To the extent Sprint is not otherwise
         paying Service Fees under this Agreement for any individual Sprint ANI,
         then:

                           (a) If Sprint exercises its option under Section
                  14.2.1 because of a Liquidation Event, or if Z-Tel
                  subsequently has a Liquidation Event after a Z-Tel Triggering
                  Event, then Sprint will have no royalty obligation to Z-Tel
                  for the Technology License at either time.

                           (b) If Sprint exercises its option under Section
                  14.2.1 because of a Z-Tel Triggering Event that is not a
                  Liquidation Event, then Sprint will pay to Z-Tel a royalty for
                  its use of the Technology License equal to ********* ***** per
                  month per line for adjunct to basic and enhanced services
                  provided to Sprint End Users using the Technology License.
                  Sprint will pay the royalty payment due for any month to Z-Tel
                  or Z-Tel's assignee by the end of the following month.

                           (c) For any month in which Sprint pays Z-Tel Service
                  Fees under this Agreement for any particular line, Z-Tel will
                  credit against those fees all applicable royalty payments that
                  Sprint pays under this Section 14.2.2 for that month for that
                  particular line.

         14.3. TECHNOLOGY ESCROW. Contemporaneously with the execution of this
Agreement, the Parties will enter into a technology escrow agreement (the
"TECHNOLOGY ESCROW AGREEMENT") in substantially the form of the attached Exhibit
B with DSI Technology Escrow Services, Inc. (the "TECHNOLOGY ESCROW AGENT") to
secure Sprint's rights under this Section 14. This Technology Escrow will be
established and maintained at Sprint's expense for Sprint's sole benefit. If the
Technology Escrow Agreement terminates or otherwise expires for any reason
during the Term, Z-Tel will immediately enter into a new escrow arrangement with
the Technology Escrow Agent (or another independent escrow agent reasonably
acceptable to Sprint to serve as Technology Escrow Agent) substantially in the
form of Exhibit C and in accordance with this Section 14.3.

         14.4. TECHNOLOGY ESCROW MATERIALS.

                  14.4.1. DEPOSIT. Within forty-five (45) calendar days after
         the Effective

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         Date, Z-Tel will deposit into escrow with the Technology Escrow Agent,
         as provided for under the Technology Escrow Agreement, copies of all of
         the then existing Z-Tel Fundamental Technology, including all source
         code and:

                           (a) related documentation and materials (e.g.,
                  annotations, flow charts, schematics, statements of principles
                  of operations, operational methods and procedures, software
                  summaries, software design, program logic, program listings,
                  functional specifications, logical models and architecture
                  standards describing the data flows, data structures and
                  control logic):

                                    (i) for the Z-Tel Fundamental Technology,
                           and

                                    (ii) for all modifications and enhancements
                           that Z-Tel makes to third party software included in
                           the Z-Tel Technology (to the extent that Z-Tel has a
                           right to license them to Sprint),

                           (b) software development tools that Z-Tel (or any of
                  its Affiliates) uses to provide any Services under this
                  Agreement, and

                           (c) training materials related to the use of the
                  Z-Tel Fundamental Technology

         (collectively, together with the Z-Tel Fundamental Technology, the
         "TECHNOLOGY ESCROW MATERIALS").

                  Z-Tel acknowledges that the Z-Tel Technology contains embedded
         third party software. Z-Tel will assist Sprint in determining the
         identity of all third parties who have granted Z-Tel licenses to use
         their software in the Z-Tel Technology. Subject to Section 10.20 of
         this Agreement, Z-Tel grants Sprint the right to negotiate license
         agreements with any third party that has granted Z-Tel a software
         license that is embedded in the Z-Tel Technology.

                  14.4.2. UPGRADES AND UPDATES OF TECHNOLOGY ESCROW MATERIALS.

                           (a) If at anytime Z-Tel delivers a scheduled release
                  to any Z-Tel Fundamental Technology, Z-Tel will immediately
                  upgrade or update the Technology Escrow Materials. However, if
                  at anytime Z-Tel implements any upgrade, update, patch or
                  other change to the Z-Tel Fundamental Technology that is not a
                  scheduled release, Z-Tel will add these unscheduled release
                  materials to the Escrow Materials on a monthly basis.

                           (b) Not less frequently than on a monthly basis
                  during the Term, Z-Tel will either:

                                    (i) deposit copies of the then-current
                           Technology Escrow Materials with the Technology
                           Escrow Agent, subject to the Technology Escrow
                           Agreement, or provide to Sprint a written

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                           statement, signed by Z-Tel's Chief Technology
                           Officer, Senior Vice President Enterprise Systems or
                           more senior officer, that there has been no change in
                           the Z-Tel Fundamental Technology as of the date of
                           the statement, and

                                    (ii) provide to Sprint a written statement,
                           signed by Z-Tel's Chief Technology Officer, Senior
                           Vice President Enterprise Systems or more senior
                           officer, that the Technology Escrow Materials, as of
                           the date of the statement, are current and accurately
                           reflect the Z-Tel Fundamental Technology as of that
                           date.

                  These written statements will be part of the Technology Escrow
                  Materials.

         14.5. AUDIT OF TECHNOLOGY ESCROW MATERIALS. The Parties will designate
a mutually acceptable neutral third party who, at Sprint's expense and request
from time to time, will audit the Technology Escrow Materials that Z-Tel
deposits with the Technology Escrow Agent for purposes of determining whether
Z-Tel has fulfilled its deposit obligations under this Section XIV. This auditor
will be bound by reasonable confidentiality restrictions that prohibit him from
directly or indirectly providing to Sprint or any third party any information,
data or knowledge pertaining to the Z-Tel Fundamental Technology, except as
necessary for the limited purpose of disclosing to Sprint the existence of any
deficiency determined in the audit. Z-Tel will promptly, upon written notice
from Sprint, correct any deficiency that the audit discloses.

         14.6. RELEASE OF TECHNOLOGY ESCROW MATERIALS. Release of the Technology
Escrow Materials to Sprint will be on the terms and conditions (including
notice, redeposit and other provisions) set forth in the Technology Escrow
Agreement. Any release will, in any event, be granted to Sprint whenever Sprint
provides written notice to the Technology Escrow Agent, with a copy to Z-Tel,
stating that a Triggering Event has occurred and demanding release of the
Technology Escrow Materials to Sprint. Any Technology Escrow Materials released
to Sprint under this Section 14.6 will be subject to the Technology License.

         14.7. BANKRUPTCY. Z-Tel's obligations and rights under this Section 14
extend:

                  (a) to any trustee in bankruptcy, receiver, administrator or
         liquidator appointed for Z-Tel ("TRUSTEE"),

                  (b) to Z-Tel as debtor-in-possession, and

                  (c) to any other successor in interest to Z-Tel.

         14.8. DISPUTES REGARDING DELIVERY OR RELEASE OF TECHNOLOGY ESCROW
MATERIALS. If a court of competent jurisdiction determines that any delivery of
Technology Escrow Materials under this Section XIV or any release of the
Technology Escrow Materials should not have occurred and the court issues an
order against Sprint to that effect, then:

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                           (a) Sprint will return the Technology Escrow
                  Materials and all copies and records thereof to the Technology
                  Escrow Agent; and

                           (b) The Technology License will be rescinded, and

                           (c) Sprint will pay to Z-Tel within ten (10) Business
                  Days the difference between the fees and charges paid to Z-Tel
                  under Section 14.2.2 and the full fees and charges due Z-Tel
                  under Schedule C for Services Z-Tel has, or would have,
                  provided from the time of the rescinded release or delivery of
                  the Technology Escrow Materials through the date of
                  rescission.

         14.9. ASSIGNMENT OF TECHNOLOGY LICENSE. Sprint and its Owned Affiliates
may assign the Technology License, in whole or in part, at any time, only to a
successor in interest or to a purchaser of all or substantially all of Sprint's
assets or of the assets of that portion of Sprint's business (or any Affiliate's
business) to which the Technology License pertains.

         14.10. REMEDIES LIMITED. Subject to Section 14.8, Z-Tel expressly
acknowledges and agrees that the Technology License granted under Section 14.1
is perpetual, irrevocable, non-cancelable, non-terminable and royalty free
(except to the extent otherwise set forth in this Section XIV) and that in the
event of any dispute over the payment of any monies (other than royalties due
under this Section XIV) that Z-Tel contends are due and owing by Sprint under
this Agreement, or any breach of this Agreement in regard to the Technology
License, Z-Tel's sole and exclusive remedy will be a suit for damages and not
revocation, termination, cancellation or limitation of the Technology License.

                          SECTION XV. - CONFIDENTIALITY

         15.1. CONFIDENTIALITY. In connection with the performance of this
Agreement, either Party may gain access to or receive Confidential Information
of the other Party. Both Parties will hold the other Party's Confidential
Information in confidence and trust and strictly limit disclosure of it to their
employees and agents who have a need to know it for purposes of this Agreement.
Except with the other Party's prior written consent, neither Party will
disclose, use or permit (by Persons within their respective control) the use or
disclosure of the other Party's Confidential Information, except in satisfying
its obligations under this Agreement. Each Party will protect the other Party's
Confidential Information from inappropriate disclosure, whether inadvertent or
intentional, using at least the same degree of care they ordinarily use in
safeguarding and protecting their own proprietary information, but in no event
using less than reasonable care.

         Notwithstanding the foregoing, either Party may disclose the other
Party's Confidential Information if:

                           (a) the disclosure is required by applicable Law,
                  rule or regulation, a court order or an order of a similar
                  judicial or administrative body or the rules of any stock
                  exchange, and

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                           (b) the disclosing Party notifies the other Party in
                  writing of the requirement and cooperates reasonably with that
                  Party in obtaining a protective or similar order concerning
                  the disclosure.

         15.2. RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION. Confidential
Information, disclosed in connection with this Agreement will remain the
exclusive property of the disclosing Party, in that Party's sole discretion.
Each Party will promptly return to the other Party or destroy or erase all
Confidential Information of the other Party in its possession or control upon
the earlier of (i) the receipt of the other Party's written request for return
or destruction of Confidential Information, and (ii) the termination of this
Agreement.

         15.3. THIRD PARTY DISCLOSURE REQUESTS. If either Party receives any
written or oral third party request, order, instruction or solicitation for the
disclosure of Confidential Information not in conformance with this Agreement or
becomes aware of any attempt by a third party to improperly gain access to
Confidential Information, the Party will immediately notify the other Party of
the request, order, instruction or solicitation, or of the attempt, and fully
disclose the details surrounding the request, order, instruction or solicitation
or attempt.

Notwithstanding the foregoing, publication of information relating to this
Agreement may occur through press releases, articles, interviews and speeches
("PUBLICITY") as described in this paragraph. Both Parties must approve the
content of any Publicity before its publication. Neither Party will, without the
other Party's prior written consent, make any news release, public announcement,
denial or confirmation of this Agreement, its value or its terms and conditions,
or in any other manner advertise or publish this Agreement, its value or its
terms and conditions. Nothing in this Agreement is intended to imply that either
Party will agree to any publicity whatsoever. Either Party may, in its sole
discretion, withhold its consent to any Publicity. The Parties will utilize the
text attached to this Agreement as Exhibit C for filing with the SEC in
association with a SEC Form 8-K report, if any, and its initial press release,
if any, pertaining to the execution of this Agreement. The Parties will use the
materials in Exhibit C and the statements set forth on Schedule 15.3 as the
basis of initial public verbal disclosures if any, regarding the execution of
this Agreement.

         15.4. REQUIRED DISCLOSURES. Notwithstanding any other provision of this
Agreement with at least five (5) Business Days' prior written notice and
consultation with the other Party, a Party may disclose its business
relationship with the other Party and the existence of this Agreement in the
exercise of reasonable judgment:

                  (a) under a request or requirement of any Regulatory
         Authority, or

                  (b) to the extent required under applicable Law or the rules
         of any securities exchange or automated quotation system.

         15.5. EQUITABLE RELIEF. Each Party acknowledges that a violation of
this Section XV will cause immediate and irreparable harm to the other Party.
Therefore, in such an

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event the other Party may seek an injunction restraining the violation or
further violation.

         15.6. SURVIVAL. The provisions of this Section XV will survive the
termination or expiration of the Term for five (5) years.

               SECTION XVI. - PROPERTY RIGHTS; LICENSE; TRADEMARKS

         16.1. PROPERTY RIGHTS AND USAGE. Sprint acknowledges:

                           (a) that ownership of and title to all of the
                  property and all other materials that Z-Tel or its suppliers
                  develop or provide in connection with this Agreement
                  (including any trade secrets, know-how, methodologies and
                  processes related to Z-Tel's Services, and including any
                  equipment, facilities, computer software (in object code and
                  source code form), script, programming code, data, information
                  or HTML script) will remain solely with and in Z-Tel or its
                  suppliers, as the case may be, and

                           (b) that Z-Tel or its suppliers, as the case may be,
                  retain all copyrights, trademarks, patents, trade secrets and
                  any other proprietary rights inherent in or appurtenant to the
                  property and other materials described in Section 16.1(a)
                  above, except as expressly provided under this Agreement.
                  Sprint may use this property and materials only as provided in
                  this Agreement or under the Technology License.

         16.2. TITLE TO EQUIPMENT. Subject to Sections XIV, this Agreement does
not convey to Sprint title of any kind to any of the equipment or transmission
facilities that Z-Tel uses to provide the Services.

         16.3. GRANT OF USE LICENSE. Z-Tel grants Sprint a limited, worldwide,
non-exclusive, non-transferable (except as provided in this Agreement), royalty
free (other than as provided in Schedule C), irrevocable license to access and
use, during the Term and exclusively in connection with fulfilling the terms and
conditions of this Agreement and marketing, selling and using the Services (the
"TECHNOLOGY USE LICENSE"):

                           (a) the Z-Tel Technology to the extent owned or
                  licensable by Z-Tel, the Sales Channel Interface, the Z-Line
                  Platform, the Z-Tel OSS Services, the Z-Node Services and all
                  other Services outlined in this Agreement, and

                           (b) all pre-existing Z-Tel intellectual or
                  proprietary property or rights incorporated into the works for
                  hire belonging to Sprint that are described in Section 1.12.5.

All rights concerning the Services, including intellectual property or similar
proprietary rights with respect thereto, belong solely and exclusively to Z-Tel,
whether or not they are embedded in any of the Services.

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                  16.3.1. RETAIL LIMITATION. This Technology Use License is only
         for Sprint's use in connection with providing LW Based Services
         directly (or indirectly through Sprint's Affiliates) to Sprint's End
         Users. Notwithstanding any other provision of this Agreement, Sprint
         will not be limited in its ability:

                           (a) to add features or functionality,

                           (b) to package, bundle, integrate, joint sell, or

                           (c) to engage in any other product, marketing or
                  other business approach (but Sprint will not offer Z-Node
                  Services on a stand-alone basis).

                  16.3.2. BRAND LIMITATION. Through this Technology Use License,
         Sprint may sell the LW Based Services by way of the Sprint Marks listed
         in the SOW.

                  16.3.3. SALES AGENTS. Nothing within this Section 16.3 will be
         interpreted to restrict Sprint's ability to use sales agents to procure
         retail End Users.

         16.4. TRADEMARKS. Each Party will not use any Mark of the other Party
in any manner whatsoever without the other Party's prior written approval,
except as expressly provided in this Agreement. Notwithstanding anything to the
contrary contained in this Agreement or in any approval or authorization
(existing now or in the future), a Party's Marks are and will remain solely and
exclusively the Party's property. Except as expressly provided in this Agreement
in this Section XVI, a Party will not, by virtue of this Agreement or any
activities under this Agreement, acquire any right, title, interest or license
in the other Party's Marks.

                  16.4.1. SPRINT BRANDING EXCEPTION. Z-Tel is authorized and
         required to use the Sprint Marks in providing Local Wholesale Services
         and related services to Sprint when Z-Tel is in direct contact with
         Sprint's End Users and acting on Sprint's authority. Z-Tel's use of
         Sprint Marks will comply with Sprint's brand usage guidelines (a copy
         of which is attached as Schedule 16.4.1). Sprint may update, modify and
         amend these guidelines at any time and from time to time during the
         Term, in its sole discretion, and in this event Sprint will provide to
         Z-Tel a copy of the update, modification or amendment through the
         notice provisions of Section 21.14.

                  16.4.2. Z-TEL BRANDING EXCEPTION. Sprint is authorized to use
         the Z-Tel Marks in referencing Sprint's underlying provider of network
         and enhanced services.

                    SECTION XVII. - DISCLAIMER OF WARRANTIES

         17.1. DISCLAIMER OF WARRANTIES. EXCEPT AS PROVIDED IN SECTION IX (Z-Tel
Responsibilities and Warranty), SECTION XI (Service Level and Remedy) AND THE
SLAs, Z-TEL PROVIDES THE SERVICES AND PRODUCTS "AS IS," WITHOUT WARRANTY OF ANY
KIND, WHETHER EXPRESS OR IMPLIED. Z-

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TEL DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Z-TEL DOES
NOT WARRANT THAT THE SERVICES WILL BE UNINTERRUPTED OR ERROR-FREE, OR THAT THE
SERVICES WILL MEET SPRINT'S REQUIREMENTS.

                    SECTION XVIII. - LIMITATIONS ON LIABILITY

         18.1. LIMITATIONS. Except as provided in Section XI (Service Level and
Remedy) or the SLAs referenced in Section XI and as otherwise expressly provided
in this Agreement, no Party will be liable to the other Party for any loss,
defect or equipment failure caused by the conduct of the other Party, the other
Party's agents, servants or contractors, ILECs or others acting in aid or
concert with, or as vendors to, the other Party. With the exception of fines and
penalties that regulatory or taxing authorities impose, in no event will either
Party have any liability whatsoever to the other Party for any indirect,
special, consequential, incidental or punitive damages, including, but not
limited to loss of anticipated profits or revenue or other economic loss in
connection with or arising from anything said, omitted or done under this
Agreement, even if the other Party has been advised of the possibility of these
damages. For purposes of this Section 18.1, Z-Tel will be deemed to not be an
agent, servant, contractor or Person acting in aid or concert with, or as vendor
to, Sprint. For purposes of this Section 18.1, Sprint will be deemed to not be
an agent, servant, contractor or Person acting in aid or concert with, or as
vendor to, Z-Tel.

         18.2. APPLICATION. The limitations of liability in this Agreement will
apply:

                           (a) whether the action in which recovery sought is
                  based on contract or non-intentional tort, or under a statute
                  or rule, and

                           (b) notwithstanding that a limited liability Party is
                  alleged to be jointly liable with one or more Parties or
                  otherwise.

                         SECTION XIX. - INDEMNIFICATION

         19.1. INDEMNIFICATION. Each Party (the "INDEMNIFYING PARTY") will
indemnify and hold harmless the other Party and its permitted assigns, and its
partners, officers, directors, employees and agents, and each of their
representatives, and its successors and assigns (collectively, the
"INDEMNITEES") at all times from and after the Effective Date against and in
respect of any Damages (defined in Section 19.2) suffered by the Indemnitees as
a result of any claims, actions or demands (collectively, a "CLAIM") by a third
party to the extent caused by or arising out of:

                           (a) any material breach by the Indemnifying Party of
                  any of its representations, warranties or covenants contained
                  in this Agreement;

                           (b) any grossly negligent act or omission, or any
                  willful misconduct or omission, by the Indemnifying Party,
                  including any grossly negligent or willful failure to comply
                  with due care with regard use or

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                  storage of CPNI, Slamming, Cramming or use or storage of
                  subscriber list information;

                           (c) subject to Sections 4.8 and 10.11, any fraud
                  associated with the Indemnifying Party's End Users or
                  accounts;

                           (d) the Indemnitee's use of the Indemnifying Party's
                  Marks in accordance with this Agreement;

                           (e) the Indemnifying Party's use of the Indemnitee's
                  Marks in violation of this Agreement; or

                           (f) any illegal acts by the Indemnifying Party or its
                  Affiliates, directors, officers, employees and agents.

         For purposes of subparagraph (f), Z-Tel is not an agent of Sprint, and
Sprint is not an agent of Z-Tel.

         19.2. DAMAGES. For the purposes of this Agreement and unless otherwise
specifically provided, the term "Damages" includes:

                           (a) all amounts finally awarded or charged against an
                  Indemnitee,

                           (b) any amounts paid in settlement as permitted by
                  this Section XIX, and

                           (c) all out-of-pocket expenses or costs incurred by
                  the Indemnitee(s), including reasonable professional and
                  attorneys' fees and expenses.

         19.3. PROCEDURE. Promptly upon the Indemnitee's receipt of prompt
written Super Notice of any demand, assertion, claim, action or proceeding,
judicial or otherwise, with respect to any matter as to which an Indemnifying
Party has agreed to indemnify an Indemnitee under this Agreement, the Indemnitee
will give prompt written Super Notice to the Indemnifying Party, together with a
statement of any material information respecting the matter that the Indemnitee
then possesses. The Indemnifying Party may contest and defend the Claim with
respect to which it has been called upon to indemnify the Indemnitee under this
Agreement, except that:

                           (a) the Indemnifying Party will deliver written
                  notice of its intention to contest the Claim to the Indemnitee
                  within twenty (20) calendar days after the Indemnifying
                  Party's receipt of notice of the Claim;

                           (b) the Indemnifying Party will pay all costs and
                  expenses of the contest or defense, including all reasonable
                  attorneys' and accountants' fees, and the cost of any bond
                  required by Law to be posted in connection with the contest or
                  defense;

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                           (c) the Indemnifying Party will contest or defend the
                  Claim through attorneys it has employed for that purpose, at
                  its sole cost and expense, but the Indemnitee may participate
                  in the contest or defense of the Claim through attorneys of
                  its own choosing, at its cost and expense without the
                  Indemnifying Party's contribution or indemnification for these
                  costs or expenses;

                           (d) if, after such opportunity, the Indemnitee does
                  not elect to participate in the contest or defense of the
                  Claim, the Indemnitee (subject to paragraph (f) below) will be
                  bound by the results that the Indemnifying Party obtains,
                  including any out-of-court settlement or compromise;

                           (e) If the Indemnifying Party assumes the contest or
                  defense of the Claim, the Indemnitee will not settle, or
                  attempt to settle, the Claim without the Indemnifying Party's
                  prior written consent, which consent the Indemnifying Party
                  may withhold in its good faith discretion; and

                           (f) the Indemnifying Party will not settle any Claim
                  without the Indemnitee's prior written consent, which consent
                  the Indemnitee may withhold in its good faith discretion,
                  unless the settlement contains a complete and unconditional
                  release of the Indemnitee and does not involve the imposition
                  of any nonmonetary relief on the Indemnitee.

                              SECTION XX. - AUDITS

         20.1. ADEQUATE BOOKS AND RECORDS. Each party will maintain, during the
Term and for at least three (3) years after the expiration or earlier
termination of the Term, the records pertaining to Services as are required to
be maintained under the SOW. Each Party represents and warrants to the other
Party that its records fairly and adequately substantiate the Services provided,
the fees due and the payments made and received under this Agreement.

         20.2. RIGHT TO AUDIT. Sprint and its accountants, attorneys and agents
will have the right to audit Z-Tel's records relating to its performance under
this Agreement at reasonable times and places upon prior written notice for the
sole purposes of confirming that all charges and payments have been made, and
all SLAs have been satisfied, each in accordance with this Agreement. The right
to audit will include the right to verify that costs associated with the ILECs
and other third party vendors fairly represent the direct costs incurred by
Z-Tel.

         The audits will in no event be more frequent than two (2) times per
year. Sprint will provide Z-Tel with at least twenty (20) calendar days' prior
notice of an audit, but Z-Tel may reasonably delay any audit if Z-Tel is
temporarily unable to assist Sprint and its auditors. In conjunction with the
audit notice, Sprint will give a written list of the materials requested for
review during the audit, but Sprint's auditors will not be limited by this list
if they discover that additional materials may be relevant or helpful to the
audit. Z-Tel will make the information that Sprint reasonably requires to
conduct the

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audit available on a timely basis during normal business hours and assist Sprint
and its internal or external auditors as reasonably necessary. Z-Tel may provide
to Sprint certain materials concerning Z-Tel operations not connected with the
furnishing of Services to Sprint only under a limited use release.

         Sprint will provide to Z-Tel the results of the audit. Z-Tel will not
be responsible for Sprint's expenses incurred for an audit, unless the audit
discloses an over billing in excess of five percent (5%) during the period the
audit covers, in which case Z-Tel will pay for the entire cost of the audit.
Z-Tel will immediately, but in no event more than ten (10) calendar days after
discovery of an over billing, reimburse Sprint for the over billing disclosed by
the audit, together with simple interest for the period of time between the date
on which overpayment was made and the date on which Sprint is reimbursed, at a
rate of one percent (1%) per month. Notwithstanding the foregoing, if Z-Tel
disputes that it has over billed Sprint, the dispute will be treated as a
Billing Dispute under this Agreement. Sprint will immediately, but in no event
more than ten (10) calendar days after discovery of an under billing, reimburse
Z-Tel for the under billing disclosed by the audit. Notwithstanding the
foregoing, if Sprint disputes that Z-Tel under billed Sprint, the dispute will
be treated as a Billing Dispute under this Agreement.

         20.3. VERIFICATION OF THIRD PARTY CHARGES. Upon Sprint's written
request, but no more than once annually, Z-Tel will provide a certificate signed
by Z-Tel's Chief Financial Officer (except in the case of certificates
concerning ILEC reconciliation, which will be signed by Z-Tel's Chief Technology
Officer) attesting that charges associated with third party services reflects
the fees contained in underlying Z-Tel vendor agreements and the charges that
Z-Tel has incurred on behalf of Sprint End Users.

         20.4. DISCLOSURE. The documents and information reviewed in connection
with the audits under Section 20.2 will be subject to the confidentiality
provisions set forth in Section XV unless they fall within one or more of the
exclusions (ii), (iii), (iv) or (v) from what constitutes Confidential
Information, as set forth in the Definitions section of this Agreement. Nothing
in this Section XX requires the disclosure of any other contract or agreement if
the disclosure would breach an agreement with a third party.

                          SECTION XXI. - MISCELLANEOUS

         21.1. GOOD FAITH PERFORMANCE. The Parties will act in good faith in the
performance of their obligations under this Agreement consistent with the
purposes of this Agreement. Except as otherwise specifically noted in this
Agreement, neither party will unreasonably delay, withhold or condition any
approval or consent that this Agreement requires or permits.

         21.2. NO EXCLUSIVITY. Neither party is required to deal exclusively
with the other Party. Both Parties are free to enter into similar agreements
with other parties, including competitors of one another.

         21.3. TAXES. The Party so obligated to pay taxes or regulatory fees may
contest the taxes or fees in good faith, at its own expense, and will be
entitled to the benefit of

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any refund or recovery, but the Party will not permit any lien to exist on any
asset of the other Party by reason of the contest.

         21.4. NONINTERFERENCE. During the Term and for a period of twelve (12)
months thereafter, neither Party, nor any of its Affiliates or representatives,
will induce or attempt to induce any person who is an employee, vendor or
supplier of the other Party to terminate such relationship. Neither Party will
use any scheme, artifice or device to circumvent the purposes of this Section
21.4.

         21.5. DISPUTE RESOLUTION.

                  21.5.1. ESCALATION PROCEDURES. The Parties will work in good
         faith to resolve informally any disputes internally by escalating them
         as necessary to progressively higher levels of management. The Parties
         will exchange escalation lists setting forth responsible officers,
         including names, departments, titles and telephone numbers.

                  21.5.2. NEGOTIATIONS. The Parties will attempt in good faith
         to resolve any claim, controversy, or dispute between them, their
         agents, employees, officers, directors or Affiliates through
         negotiation. This provision will not be construed as a waiver of a
         Party's rights to seek legal or regulatory intervention as provided by
         Law.

                  21.5.3. DISPUTES INVOLVING BILLING. Except as described in
         Section 21.5.4, this Section 21.5 does not apply to billing disputes.
         Billing Disputes are addressed in Section 5.3 of this Agreement.

                  21.5.4. CONTINUED PERFORMANCE. Unless performance is otherwise
         expressly excused under this Agreement, both Parties will continue to
         perform during the Dispute Resolution process, including with respect
         to Billing Disputes. Notwithstanding the foregoing, nothing in this
         Section 21.5.4 will affect any right of either Party to terminate this
         Agreement to the extent expressly permitted under Section II of this
         Agreement.

 21.6. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the Parties concerning the subject matter of this Agreement and supersedes all
prior agreements, understandings and arrangements, both oral and written,
between the Parties concerning the subject matter. Furthermore, this Agreement
has been negotiated and fully reviewed by counsel for both Parties.

         Except as otherwise provided in this Agreement, this Agreement may not
be modified, amended, altered or rescinded in any manner, except by written
instrument signed by both of the Parties. All exhibits, schedules and other
attachments to this Agreement are incorporated by this reference as integral
parts of this Agreement. To the extent there is any conflict between this
Agreement and any schedule or exhibit to this Agreement, this Agreement
(excluding the schedule or exhibit in question) will govern.

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         21.7. COMPLIANCE WITH ETHICAL BUSINESS PRACTICES. Each Party will
supervise and review all employees or agents engaged in marketing services to or
taking orders from End Users to prevent, to the maximum extent feasible, the
switching of any individual or entity's telephone service without that
individual or entity's permission.

         21.8. ASSIGNMENT. Neither Party may assign this Agreement without the
written consent of the other Party, which will not be unreasonably withheld. Any
attempt to assign this Agreement in contravention of the preceding sentence is
void. Notwithstanding the foregoing, Sprint may assign its rights and
obligations under this Agreement to any of its Owned Affiliates, but upon the
assignment and assumption, Sprint will remain obligated under this Agreement for
such assigned obligations.

         21.9. BINDING AGREEMENT. Subject to the preceding paragraph, this
Agreement will inure to the benefit of and be binding on the Parties and their
respective successors and permitted assigns.

         21.10. LITIGATION VENUE. In the event of litigation, the Parties agree
that venue will not be in Kansas or Florida.

         21.11. GOVERNING LAW. Provisions of this Agreement subject to the
jurisdiction of the FCC will be governed and interpreted in accordance with
applicable federal Laws. Provisions of this Agreement subject to the
jurisdiction of any state Regulatory Authority will be governed and interpreted
in accordance with applicable state Laws. In all other cases, this Agreement
will be governed and interpreted under the substantive Laws of Delaware, without
reference to its principles of conflicts or choice of law. The Parties
acknowledge that this Agreement will be performed in part in Delaware.

         21.12. LEGAL FEES. Regarding any dispute under this Agreement, a
prevailing party, as determined by a court of competent jurisdiction, will be
entitled to payment of the entire court costs and reasonable attorneys' fees
incurred in investigating, preparing and conducting any litigation that might
arise under this Agreement.

         21.13. LETTER OF AGENCY. Simultaneously with the execution of this
Agreement, Sprint will execute and deliver to Z-Tel a letter of authorization in
substantially the same form as Schedule D to this Agreement.

         21.14. NOTICES.

                  21.14.1. DEEMED DELIVERY. Any notices or deliveries permitted
         or required by this Agreement must be given by messenger or by
         overnight delivery with Federal Express, United Parcel Service,
         Airborne Express or a similarly nationally recognized overnight
         delivery service. These notices or deliveries will be deemed to have
         been given (i) upon delivery by messenger, if a receipt is obtained for
         delivery, (ii) one (1) calendar day after timely deposit for overnight
         delivery with Federal Express, United Parcel Service, Airborne Express
         or similar nationally recognized overnight delivery service, if the
         service obtains a confirmation of delivery, or (iii) three (3) Business
         Days after mailing, if mailed via certified or registered U.S. mail,
         return receipt requested; if the notice is

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<PAGE>

         delivered, deposited for delivery, mailed or sent to the Party's
         address as set forth on the Designee Schedule:

                  21.14.2. SUPER NOTICE. For certain situations that under this
         Agreement expressly require "Super Notice," Super Notice means that the
         notice must be given both:

                           (a) as set forth in Section 21.14.1, and

                           (b) to the senior executives of the recipient listed
                  on the Designee Schedule, via electronic mail and overnight
                  delivery via Federal Express, United Parcel Service, Airborne
                  Express or a similarly nationally recognized overnight
                  delivery service, with delivery confirmation requested.

                  21.14.3. SATURDAY, SUNDAY OR LEGAL HOLIDAY. Notices deemed to
         have been given or delivered as set forth above on a Saturday, Sunday
         or legal holiday will instead be deemed to have been given or delivered
         on the next succeeding day that is not a Saturday, Sunday or legal
         holiday.

         21.15. WAIVER. No failure or delay by either Party to this Agreement in
the exercise of any right, power or remedy it may have will operate as a waiver,
nor will any single or partial exercise of any right, power or remedy by either
Party preclude any other or further exercise by the Party of that right, power
or remedy or the exercise of any other right, power or remedy. No express waiver
or assent by any Party to any breach of or default in any term or condition of
this Agreement will constitute a waiver of or assent to any succeeding breach of
or default in the same or any other term or conditions of this Agreement.

         21.16. RELATIONSHIP OF THE PARTIES. Nothing in this Agreement, or in
the course of dealing between the Parties under this Agreement, will be deemed
to create between the Parties (including their respective directors, officers,
employees and agents) a partnership, joint venture, association, employment
relationship or any other relationship, other than that of independent
contractors with respect to each other. Neither Party will have the authority to
commit or legally bind the other Party in any manner whatsoever, including, the
acceptance or making of any agreement, representation or warranty.

         21.17. THIRD PARTY BENEFICIARIES. Except as expressly stated in Section
21.8, this Agreement inures to the benefit of Z-Tel and Sprint only and no third
party will have any rights under this Agreement.

         21.18. CONSTRUCTION. This Agreement was negotiated at arms' length and
will not be construed more strongly against any Party regardless of which Party
was responsible for its preparation. Whenever from the context it appears
appropriate, each term stated in either the singular or the plural includes the
singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender include the other genders. The word "Agreement" and words of
similar import referring to this Agreement refer to this

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Agreement as a whole, including the Schedules and Exhibits attached to it, and
not to any particular provision of this Agreement. Whenever the word "include,"
"includes" or "including" is used in this Agreement, it is deemed to be followed
by the words "without limitation."

         21.19. SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable, this Agreement will be constructively amended to the extent
necessary and possible to achieve the same objectives as the severed provision
was intended to achieve, and the remaining provisions of this Agreement will
continue in full force and effect.

         21.20. SURVIVAL. The Parties' obligations under the following
provisions will survive the termination or expiration of this Agreement
(following the Term): 1.9.9, 2.4, 2.5, 4.3.1, 4.8, 4.10, 4.11, 5.2, 5.3, 9.14,
10.4 (first sentence only), 10.6, 10.11 (excluding the first sentence), 11.2,
12.5.2, 14.1, 14.2.2, 14.7, 14.8, 14.9, 14.10, XV, 16.1, 16.4 (but not 16.4.1 or
16.4.2), XVII, XVIII, XIX, 20.1, 21.1, 21.4, 21.6, 21.8, 21.9, 21.10, 21.11,
21.12, 21.14, 21.15, 21.18, 21.19, 21.20, 21.26, and, any other provisions of
this Agreement that, by their terms or by their nature are contemplated to
survive (or to be performed after) termination of this Agreement will, in each
case, survive cancellation, expiration or termination of this Agreement and
continue in full force and effect. Furthermore, Z-Tel and Sprint obligations
regarding the retention of records will survive this Agreement until expiration
of applicable regulatory requirements.

         21.21. COUNTERPARTS. This Agreement may be executed in several
counterparts, all of which taken together will constitute one single agreement
between the Parties. Signed facsimile copies of this Agreement, addenda,
attachments, schedules and exhibits will legally bind the Parties to the same
extent as original documents.

         21.22. LAW ENFORCEMENT COOPERATION. Each Party may cooperate with law
enforcement authorities and national security authorities to the full extent
required or permitted by applicable Law in matters related to services provided
by it under this Agreement, including, the production of records, the
establishment of new lines or the installation of new services on an existing
line to support law enforcement or national security operations, and the
installation of wiretaps, trap-and-trace facilities and equipment, and dialed
number recording facilities and equipment. A Party will not be obligated to
inform the other Party or the other Party's End Users of actions taken in
cooperating with law enforcement or national security authorities, except to the
extent required by applicable Law.

         21.23. EMERGENCY INTERFACES. Z-Tel will use commercially reasonable
efforts to facilitate the prompt, robust, reliable and efficient interconnection
of Z-Tel systems to relevant 911/E-911 emergency platforms and systems. Z-Tel
and Sprint will comply with all applicable rules and regulations (including 911
taxes and surcharges as defined by local requirements) pertaining to the
provision of 911-E911 services. Each Party will be responsible for securing any
necessary certification from local public safety access points or county or
municipal coordinators required before that Party initiates service within a new
geographic area.

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         21.24. PAYPHONE SERVICES PROHIBITED. Notwithstanding any other
provision of this Agreement, under no circumstances may Sprint use any facility
or service that Z-Tel provides under this Agreement in connection with public
pay telephone facilities or services.

         21.25. SPRINT SERVICES. Z-Tel will give Sprint the opportunity to bid
on Z-Tel's transport and wireless services by giving Sprint a request for
proposal at least thirty (30) calendar days before the date that Z-Tel intends
to decide on its service provider for these product offerings. Transport and
wireless services include wireless voice, wireline and wireless long distance,
Internet connectivity, and teleconferencing.

         If Sprint elects to submit a proposal to Z-Tel concerning Z-Tel's
desired services, the proposed prices will take into account Z-Tel's expected
volume. If Sprint's offer meets the service requirements that Z-Tel establishes
and matches or exceeds the most favorable terms and conditions among qualified
offers that Z-Tel receives from other vendors, then to the extent allowed under
Z-Tel's existing contracts, Z-Tel will select Sprint as its preferred service
provider for the services under bid and transfer those services to Sprint as its
current commitments expire and technical interfaces are established.

         If Sprint's offer does not match or exceed the most favorable terms and
conditions among qualified offers that Z-Tel receives from other vendors or does
not meet the service requirements that Z-Tel established in the initial bid,
request than Z-Tel will:

                           (a) advise Sprint promptly concerning why Sprint's
                  offer was not competitive or not compliant, suggesting the
                  change or changes that are needed to make Sprint's offer
                  competitive and/or compliant, and

                           (b) allow Sprint the opportunity to resubmit its
                  offer.

         Sprint will have no obligation to submit or resubmit any offer.

         If any Sprint revised offer meets the service requirements that Z-Tel
established in its initial bid request and matches or exceeds the most favorable
terms and conditions among qualified offers that Z-Tel receives from other
vendors, then to the extent allowed under Z-Tel's existing contracts Z-Tel will
select Sprint as its preferred service provider for the services under bid and
transfer those services to Sprint as its current commitments expire and
technical interfaces are established.

         In addition to the other requirements set forth in this Section 21.25,
Z-Tel will be required to select Sprint as its service provider only if Sprint
has paid to Z-Tel at least five-hundred-thousand dollars ($500,000) in Z-Tel
Service Fees in the month preceding Z-Tel's request for a proposal.

         21.26. WAIVER OF JURY TRIAL. Z-Tel and Sprint knowingly, voluntarily
and intentionally waive any rights they may have to a trial by jury in respect
of any litigation arising in based on, or arising out of, under or in connection
with, this Agreement or any other course of conduct, course of dealing,
statements (whether verbal or written) or

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actions of Z-Tel or Sprint. This provision is a material inducement for the
Parties to enter into this Agreement.

         IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.

Z-TEL COMMUNICATIONS, INC.                SPRINT COMMUNICATIONS COMPANY L.P.

By:                                       By:
____________________________________      ______________________________________

Name:                                     Name:
____________________________________      ______________________________________

Title:                                    Title:
____________________________________      ______________________________________

Date:                                     Date:
____________________________________      ______________________________________

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                         LIST OF SCHEDULES AND EXHIBITS

<TABLE>
<CAPTION>
SCHEDULE /
 EXHIBIT                                DESCRIPTION
--------                                -----------
<S>                  <C>
Schedule A           Initial Statement of Work

Schedule B           Service Level Agreement

Schedule C           Pricing Schedule

Schedule D           Z-Tel Fundamental Technology

Schedule E           Existing Z-Tel Technology

Schedule 10.8        Z-Tel's Acceptable Use Policy

Schedule 13.1        Conditions, Restrictions, Rules, Policies, Procedures,
                     Limitations and Rights Imposed or Granted under Z-Tel's
                     Third Party Agreements and Licenses

Designee Schedule    Contact Information for Notices Sent To Sprint and
                     Z-Tel

Exhibit A            Form of Transition Escrow Agreement

Exhibit B            Form of Technology Escrow Agreement

Exhibit C            Form of Text for Initial SEC Filing and Press Release

Exhibit D            Form of Blanket Agency Agreement Letter for Local Service
                     Providers
</TABLE>

                                       88
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                                   SCHEDULE A

                            INITIAL STATEMENT OF WORK

                                  See Attached.


                                      ****
This entire schedule, consisting of 123 pages, has been omitted pursuant to a
request for confidentiality.


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                                   SCHEDULE B


                      SERVICE LEVEL AGREEMENT AND REMEDIES


           See Attached.SERVICE LEVEL AGREEMENT AND REMEDIES PREAMBLE

         A. Service Level Agreements (SLAs) will be put into place to ensure
                  that both Z-Tel and SPRINT jointly provide quality service at
                  the lowest cost while maximizing revenue opportunities and
                  complying with regulatory requirements.

         B. The Definitive Agreement (including the exhibits and schedules
                  attached to it) constitutes the entire agreement between the
                  Parties and supersedes all other agreements and
                  understandings, both written and oral, between the Parties,
                  with respect to the transactions between Sprint and Z-Tel
                  including this Schedule B. To the extent there is any conflict
                  between this Schedule B and the Definitive Agreement, the
                  Definitive Agreement (excluding Schedule B) will govern. All
                  capitalized terms used but not otherwise defined in this
                  Schedule B will have the meaning provided in the Definitive
                  Agreement.

         C. SLAs will be defined where the service level is objectively
                  measurable and one Party has the clear ability to control it.

         D. These service level agreements will be tied to the greatest extent
                  possible to one or more of the following key objectives
                  identified in the Statement of Work between the Parties:
                  quality, timeliness, cost and revenue.

         E. Both Parties will use their best efforts to provide services
                  hereunder that are at least equal in quality and provided
                  within the same time intervals as each Party provides to
                  itself or to its own end user customers, but at a minimum at a
                  level appropriate for a national common carrier class service
                  provider.

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         DEFINITIONS

         ACTION PLAN

         An Action Plan is a plan to correct or minimize deviation from expected
         performance. Where appropriate, each Action Plan will include a defined
         implementation schedule. For clarity purposes, the Action Plan
         responding to any Significant Miss will include an implementation
         schedule.

         ATTACHMENT A

         Attachment A to this Schedule B is a matrix listing all Stabilization,
         Operational and Administrative SLAs.

         ATTACHMENT B

         Attachment B to this Schedule B are SLA Definition sheets identifying
         for each SLA details regarding calculation of each specific metric.

         BILL CREDITS

         Bill Credits are credits that are given to SPRINT on a Z-Tel bill. Bill
         Credits may also be applied to an ILEC bill.

         CACS

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         CACs means Computer Aided Collection System.

         COMX

         COMX is *************** application that supports the provisioning of
         orders.

         CURE AND SIGNIFICANT MISS CURE PERIOD

         The Significant Miss Cure Period is the period of time to correct a
         condition where performance does not meet expectations. Unless
         otherwise stated in this document or the Definitive Agreement, the
         Significant Miss Cure Period for any operational SLA will be thirty
         (30) calendar days. For purposes of clarification, a Cure for any
         Operational SLA will only be deemed to have been effected if there is
         no reoccurrence of the Significant Miss during the following 30
         calendar day period. A cure for a Triggering Event SLA and the cure
         period for a Triggering Event SLA will be governed by the Definitive
         Agreement.

         DATA FEEDS

         Data Feeds are the electronic delivery of predefined information.

         DEFINITIVE AGREEMENT

         Definitive Agreement means the AGREEMENT FOR RESALE OF LOCAL WIRELINE
         TELECOMMUNICATIONS SERVICES AND PROVISION OF ANCILLARY SERVICES between
         SPRINT and Z-Tel.

         DEMARC

         Demarc means the meet point or point of interface between the two
         Parties.

         DISCONNECT

         Disconnect is the submission of a Local Service Order (LSR) to an ILEC
         to terminate local telephone service.

         EXPECTED SERVICE LEVEL

         Level of performance within any particular SLA which if met or exceeded
         will be deemed to be satisfactory by Z-Tel and Sprint.

         ILEC

         ILEC means Incumbent Local Exchange Carrier.

         LOCKBOX

         Lockbox is the process used to process payments.

         LSR

         LSR means Local Service Order.

         LSR SUBMISSION

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         LSR Submission is the process used to submit a Local Service Order to
         an ILEC.

         PROVISIONING

         Provisioning is the process used to provide or set up service to a
         customer.

         REJECT

         A Reject is an LSR sent back from the ILEC without having been
         executed.

         REPORTS

         Reports are compilations of data prepared for management purposes.

         RESPONSE TIME

         Response Time is the time required for a system to reply to an inquiry
         or complete a function.

         ROOT CAUSE ANALYSIS

         Root Cause Analysis is the analysis performed to determine the actual
         cause of an event, condition or status.

         SALES

         Sales means the process used to enable customers to purchase a product.

         SIGNIFICANT MISS

         Performance below the Expected Service Level during any given month
         which is not Cured during the subsequent thirty (30) calendar day
         period.

         SLA

         SLA means Service Level Agreement.

         SERVICE MANAGEMENT COMMITTEE

         The Service Management Committee will consist of up to three
         representatives from each Party as designated by the individual Party.
         Designees will be at a level that can generally make commitments for
         the Party relative to this SLA document, SLA Metrics, SLA Remedies, and
         SLA Adjustments/Exclusions as described in Section 6 of this Schedule
         B. The Service Management Committee will meet monthly or as required to
         perform the functions designated in this document, including reviewing
         performance levels and developing Action Plans as necessary to correct
         any Significant Misses.

         SNIP

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<PAGE>

         SNIP is the process of suspending a customer's telephone service

         STABILIZATION PERIOD

         The Stabilization Period is from the Effective Date through April 30,
         2003.

         STABILIZATION PERIOD SLAS

         The Stabilization Period SLAs are the SLA measurements computed during
         the period from the Effective Date through April 30, 2003.

         STATEMENT OF WORK

         The Statement of Work is the document attached to the Definitive
         Agreement as Schedule A, that describes and defines, at a high level,
         the Services and Software that Z-Tel will provide to SPRINT so that
         SPRINT can provide its Local Wholesale (LW) Based Services to SPRINT
         customers.

         TRIGGERING EVENT PERFORMANCE LEVEL

         Level of performance which if not maintained will impact commercial
         viability of Sprint product offerings.

         Z-NODE

         The Z-Node is the combination of Z-Tel hardware and software that is
         used to provide some of the enhanced telephone services to be provided
         by Z-Tel under the Definitive Agreement.

1.0 SLA GENERIC TYPES

         There will be three (3) generic types of SLAs:

         1.1 STABILIZATION PERIOD SLAS

                  1.1.1 Stabilization Period SLAs will be utilized to measure
                           operational effectiveness and identify areas for
                           performance improvement.

                  1.1.2 Stabilization Period SLAs will be computed beginning
                           on the Effective Date of this Agreement (or as soon
                           as reasonably possible) through April 30, 2003.

                  1.1.3 Stabilization Period SLAs are identified in
                           Attachment A to this Agreement, which may be updated
                           from time to time pursuant to the process outlined in
                           Section 7.0 of this Agreement.

                  1.1.4  The Stabilization Period SLAs will be measured and
                           reviewed by the Service Management Committee.

                  1.1.5  Any SLA Significant Miss, as would be determined
                           under

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<PAGE>

                           Section 21.2.3 below, if applicable, will require
                           Z-Tel to develop and implement a plan of action to
                           correct material deviations from the expected result

                  1.1.6  No financial penalties or remedies will apply to
                           missed Stabilization Period SLAs.

                  1.1.7  The Significant Miss Cure Period for any
                           Stabilization Period SLA performance problems as
                           determined by the Service Management Committee will
                           be negotiated between the Parties.

                  1.1.8  The Stabilization Period SLAs will become Operational
                           SLAs on May 1, 2003.

         1.2 OPERATIONAL SLAS

                  1.2.1.  Operational SLAs will be utilized to measure
                           effectiveness of methods, procedures, hardware,
                           configurations and resource alignment and identify
                           areas for performance improvement.

                           1.2.1.1  Operational SLAs performance will be
                                      reported within **********************
                                      after each calendar month by Z-Tel.

                           1.2.1.2 Operational SLAs will be computed and
                                    applied only after April 30, 2003.

                           1.2.1.3 Operational SLAs are intended to provide
                                    insight on all key areas of performance.

                           1.2.1.4 All of the Operational SLAs will be reviewed
                                    at a monthly meeting of the Service
                                    Management Committee which meeting is to be
                                    held no later than **********************
                                    after each calendar month.

                           1.2.2.1 For each SLA, the documentation in the SLA
                                    Definition Pages (Attachment B) will
                                    identify (as appropriate):

                  1.2.2.   The operational SLAs subject to this agreement are as
                           identified in Attachment A and Attachment B to this
                           Service Level Agreement document, which may be
                           updated from time to time pursuant to the process
                           outlined in Section 7.0 of this Agreement.

                                       95

<PAGE>

                           a. a definition

                           b. special exclusions and/or exceptions

                           c. performance standard(s)

                           d. methodology and data source

                           e. calculation including numerator, denominator and
                                applicable periods of time

                  1.2.2.2  For each SLA the documentation will establish
                           performance and/or availability standards.

                           1.2.2.2.1  Service level goals incorporated
                                      into SLAs will be oriented to supporting a
                                      standard that would sustain general
                                      commercial operations at the level of
                                      performance which Z-Tel provides to its
                                      own retail customers, but at a minimum at
                                      a level appropriate for a national common
                                      carrier class service provider.

                            1.2.2.2.2 SLA documentation will establish
                                      an Expected Service Level for each
                                      Operational SLA, which is the level that
                                      should be met by Z-Tel.

         1.2.3. Operational SLA Remedies

                  1.2.3.1 For any Operational SLA, performance at or above the
                           Expected Service Level will be within expectations of
                           both parties and no remedy will apply.

                  1.2.3.2 Any performance below the Expected Service Level will
                           require an Action Plan (including Root Cause
                           Analysis) to be jointly developed by the Parties to
                           address and, wherever possible, correct material
                           deviations from the expected result.

                  1.2.3.2.1 The implementation period for any Action Plan will
                             be negotiated between the Parties based upon the
                             circumstances involved.

                                       96

<PAGE>

                  1.2.3.3 A Significant Miss for an Operational SLA will result
                           in the imposition of a one percent (1%) liquidated
                           damage provision calculated against the Z-Tel Service
                           Fees of the month in which service did not meet the
                           necessary standard and applied to the monthly invoice
                           next issued by Z-Tel.

                           1.2.3.3.1 Liquidated damage provisions will be
                                      implemented through bill credits.

                           1.2.3.3.2 Bill credits issued in conjunction with
                                      Section 1.2.3.3 may not be utilized to
                                      offset ILEC Fees.

                           1.2.3.3.3 In no event, will the accumulated penalties
                                      for SLA Significant Misses exceed ********
                                      ************  of the Z-Tel Service ******
                                      collected by Z-Tel under the Definitive
                                      Agreement for that month.

         1.3 TRIGGERING EVENT SLAS

                  1.3.1  Triggering Event SLAs will define situations where
                           there is a severe impact on SPRINT's ability to meet
                           minimal customer service or operational requirements
                           such that Z-Tel's failure to meet such SLAs would
                           permit SPRINT to terminate the Definitive Agreement
                           with cause upon providing to Z-Tel the appropriate
                           notice and opportunity to cure.

                  1.3.2  These Triggering Event SLAs will not be in effect for
                           the Stabilization Period..

                  1.3.3  Z-Tel's uncured failure to meet any Triggering Event
                           SLA requirements, as stated in Section 1.3.4.1.1
                           below, with proper notice by Sprint as described in
                           the Definitive Agreement may be deemed and designated
                           as a "Z-Tel Triggering Event" under the terms of the
                           Definitive Agreement.

                  1.3.4  Triggering Event SLAs

                           1.3.4.1 Triggering Event SLAs will be a subset of
                                    Operational SLAs as defined in Section
                                    12.2.2 and the attached Attachment A.

                                  1.3.4.1.1 Triggering Event SLAs and their
                                             associated Triggering Event Failure
                                             Levels are as follows:

                                       97

<PAGE>

<TABLE>
<CAPTION>
                                                                      TRIGGERING
                                                                        EVENT
ID    ACTIVITY      NAME          DESCRIPTION         MEASURE        PERFORMANCE
----  --------   ----------      --------------   --------------    ---------------
<S>   <C>        <C>             <C>              <C>               <C>
P 1   ********   ******          **************   ******            ***************
                 **********      **************   **************    ***************
                                 **************   **************    ***********
                                 **************   **************
                                 **************   **************
                                 **************   **************
                                 ****             **************
                                                  ********

P.2   *******    ********        **************   **************    ***************
                                 **************   **************    ***************
                                 **************   **************    *********
                                 **************   **************
                                 **************   **************
                                 **************   **************
                                 **************   **************
                                 ***********      ****

P 3   *******    ******          **************   **************    ***************
                 **********      **************   **************    ***************
                                 **************   **************    ***************
                                 **************   **************    ***************
                                 **************   **************    ***************
                                 **************   **************    ***************
                                 ****             **************    ************
                                                  ****
</TABLE>

                                       98

<PAGE>

<TABLE>
<S>   <C>        <C>             <C>              <C>               <C>
B 1A  *******    ******          **************   **************    ***************
                 **********      **************   **************    ***************
                                 **************   **************    ***************
                                 **************   **************    ***************
                                 **************   **************    ***************
                                 **************   **************    ***************
                                 ****             **************    ***************
                                                  ****              ************

B 1B  *******    ******          **************   **************    ***************
                 **********      **************   **************    ***************
                                 **************   **************    *************
                                 **************   **************
                                 **************   **************
                                 **************   **************
                                 ****             **************
                                                  ****

B 2   *******    ******          **************   **************    ***************
                 **********      **************   **************    ***************
                                 **************   **************    ***********
                                 **************   **************
                                 **************   **************
                                 **************   **************
                                 ****             **************
                                                  ****

S 1A  *******    ******          **************   **************    ***************
                 **********      **************   **************    ***************
                                 **************   **************    ***********
                                 **************   **************
                                 **************   **************
                                 **************   **************
                                 ****             **************
                                                  ****

S 2   *******    **********      **************   **************    ***************
                 **********      **************   **************    ***************
                                 **************   **************    ***********
                                 **************   **************
                                 **************   **************
                                 **************   **************
                                 ****             **************
                                                  ****
</TABLE>

                                       99

<PAGE>

                                1.3.4.1.2 No Triggering Event will be
                                             attributed where performance has
                                             been at or exceeded the Triggering
                                             Event Performance Level.

                                1.3.4.1.3 Where performance falls below the
                                             Triggering Event Performance Level
                                             after any Exclusions as defined in
                                             Section 5.0 or in the SLA Detail
                                             Sheets, Sprint may declare a
                                             Triggering Event.

                                1.3.4.1.4 Z-Tel's failure to meet Triggering
                                             Event SLA requirement(s) will not
                                             be deemed a Triggering Event if
                                             Z-Tel's failure is directly caused
                                             by a decision between the Parties
                                             not to agree to a specific
                                             headcount support level, until the
                                             dispute over the approval of the
                                             headcount in question is resolved.
                                             In order to invoke relief from
                                             performance remedies under Section
                                             4.6.5, Z-Tel must provide timely
                                             Super Notice, in writing, that such
                                             refusal by SPRINT to approve
                                             specific headcount level presents a
                                             substantial risk of causing Z-Tel
                                             to fail to meet the critical terms
                                             of such Triggering Event SLA.

                                1.3.4.1.5 For Triggering Event purposes, Reject
                                             Handling will be suspended as a
                                             Triggering Event Metric if percent
                                             rejects for Sprint exceeds the
                                             performance for Z-Tel's retail
                                             operations by more than *****

                                1.3.4.1.6 Triggering Event SLA changes may be
                                initiated from time to time through the Service
                                Management Committee. However, changes to the
                                list of Triggering Event SLAs and/or the
                                associated Triggering Event Failure Levels will
                                require an amendment to this document, signed by
                                both Parties.

2.0 ROLES AND RESPONSIBILITIES

         Roles and responsibilities in regard to SLAs are as stated below:

         2.1 Z-Tel Will:

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<PAGE>

                  2.1.1.   On schedules mutually agreed upon by Z-Tel and
                           SPRINT, measure and report to SPRINT on Z-Tel's
                           performance as it relates to those SLA performance
                           categories identified in this Schedule B.

                  2.1.2.   Use best efforts to promptly resolve all system and
                           service delivery matters as they pertain to the SLAs
                           identified in this Schedule B and applicable to the
                           services supported and managed by Z-Tel.

         2.2 SPRINT Will:

                  2.2.1.   Use Z-Tel Technology and equipment in accordance with
                           the feature and functionality descriptions.

                  2.2.2.   Provide workstation and system security.

                  2.2.3.   Provide any underlying data that is necessary in an
                           accurate timely fashion.

                  2.2.4.   Not create any queries and/or executables that will
                           perform any functions targeted at blocking access to
                           or interfering with components provided to them by
                           Z-Tel.

                  2.2.5.   Not create mechanisms to generate fictitious customer
                           service records (e.g., orders, trouble tickets,
                           SNIPS, billing errors, outages, etc.) as a method of
                           sampling Z-Tel compliance with SLAs except as agreed
                           to between the Parties.

3.0 Reporting.

         Unless otherwise specifically provided herein:

         3.1 During the Stabilization Period the Parties will further
                  define the details of how, when and the manner in which each
                  specific SLA will be measured, reported and tracked.

         3.2 After completion of the Stabilization Period, as soon as
                  reasonably practical after each calendar month-end, but not to
                  exceed 5 Business days after the end of a calendar month, each
                  Party will report to the other Party the actual service levels
                  for the previous calendar month for all SLAs specified in this
                  Schedule B.

         3.3 Reporting formats and media will be proposed by each Party and
                  agreed upon by the other Party during the Stabilization
                  Period.

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<PAGE>

4.0 EXCLUSIONS

         4.1    Notwithstanding exclusions contained in the normal calculation
                  of individual SLAs as described in Section 2.2.2.1 above,
                  Z-Tel may exclude from the determination of its actual
                  performance of any applicable Service Level the period of time
                  for which any of the conditions set forth below ("Exclusions")
                  adversely affect Z-Tel's ability to meet such Service Levels.

                  4.1.1  Outages for maintenance or the installation, upgrade
                           or replacement of equipment or software that are
                           scheduled and executed within the maintenance windows
                           agreed to by Z-Tel and SPRINT, and other times agreed
                           upon in advance by SPRINT. Z-Tel will schedule with
                           SPRINT, at least two (2) business days in advance
                           where possible, any additional scheduled maintenance
                           requiring system downtime for system software
                           upgrades.

                  4.1.2  As established in Section *** of the Definitive
                           Agreement ("Escalation of *********** Matters."),
                           Z-Tel's failure to meet the P1, P2, P3, or P4
                           Operational and Triggering Event SLA's will not be
                           deemed a Significant Miss if Z-Tel's failure is
                           directly caused by the decision between parties not
                           to agree to a specific *********** support levels,
                           until the dispute over the approval of the forecast
                           in question is resolved. In order to invoke Section
                           5.1.2, Z-Tel must provide timely Super Notice, in
                           writing, that such refusal by Sprint to approve
                           specific headcount level(s) presents a substantial
                           risk of causing Z-Tel to fail to meet the critical
                           terms of such Operational SLA. For purposes of
                           clarification, this provision will not have any
                           affect on any Operational and Triggering Event SLA's
                           other than P1, P2, P3, or P4.

                  4.1.3  During the period beginning on the Efffective Date
                           through July 2003, any Sprint forecast that
                           understates its actual demands for Z-Tel services in
                           the aggregate (i.e., all states combined for
                           residential and small business service) by more than
                           ***** ************ for any Committed Forecast will
                           relieve Z-Tel of its duty to fully perform in
                           accordance with the applicable P1, P2, P3, P4, B2 and
                           S1B Operational and Triggering Event SLAs for that
                           month provided that Z-Tel has made reasonable efforts
                           to respond to any updated forecast, taking into
                           consideration the time that the forecast was updated.
                           For purposes of clarification, this provision will
                           not have any affect on any Operational SLA's and
                           Triggering Event other than P1, P2, P3, P4, B2, and
                           S1B.

                                      102

<PAGE>
                  4.1.4  For the period beginning August 1, 2003 and
                           continuing through the Term of the Definitive
                           Agreement, any Sprint forecast that understates its
                           actual demands for Z-Tel services in the aggregate
                           (i.e., all states combined for residential and small
                           business service) by more than ******* *************
                           for any Committed Forecast will relieve Z-Tel of its
                           duty to fully perform in accordance with the
                           applicable P1, P2, P3, P4, B2 and S1B Operational and
                           Triggering Event SLAs for that month provided that
                           Z-Tel has made reasonable efforts to respond to any
                           updated forecast, taking into consideration the time
                           that the forecast was updated. For purposes of
                           clarification, this provision will not have any
                           affect on any Operational and Triggering Event SLA's
                           other than P1, P2, P3, P4, B2 and S1B.

                  4.1.5  Outages for maintenance or installation, upgrade or
                           replacement of equipment or software that are
                           scheduled and executed by ******.

                  4.1.6  Any transactions excluded by mutual written agreement
                           of Z-Tel and SPRINT and as documented in this
                           document or the SLA Details sheet (Attachment B).

                  4.1.7  If an event described as a Force Majeure Event in the
                           Definitive Agreement the relevant period for the
                           event will be subtracted from the applicable SLA
                           measurements. Nonetheless, Z-Tel will notify SPRINT
                           in advance if Z-Tel knows of a situation where an
                           event or special request will cause the
                           unavailability of the application.

                  4.1.8  Problems adversely affecting the delivery of Services
                           and resulting from components (hardware, software,
                           systems, network, switch failures, switch tape
                           failures and other related failures), for which
                           SPRINT (or any third party engaged by or acting on
                           behalf of SPRINT) is operationally and
                           administratively responsible, will not be considered
                           in calculating the applicable SLA measurements.
                           Nonetheless, Z-Tel will notify SPRINT in advance if
                           Z-Tel knows of a situation where problems with
                           components for which SPRINT is responsible will cause
                           a stoppage or delays of Z-Tel Services.

                  ILEC and IXC problems adversely affecting the
                           delivery of Services and resulting from components
                           (hardware, software, systems, network, switch
                           failures, switch tape failures, signaling and other
                           related failures), which are outside the control of
                           Z-Tel, its affiliates and primary vendors (i.e.,
                           ***************************************), will not be
                           considered in calculation of the applicable SLA
                           measurements. Nonetheless, Z-Tel shall notify SPRINT
                           in advance if Z-Tel knows of a situation where
                           problems with components

                                      103

<PAGE>

                           provided by third parties, other than its affiliates
                           and primary vendors, will cause a stoppage or delay
                           of Z-Tel Services.

                  4.1.10   Problems related to a prioritization or
                           reprioritization of tasks or incidents by SPRINT
                           where Z-Tel has apprised SPRINT with written warning
                           to the Service Management Committee within 72 hours
                           of Sprint's prioritization or reprioritization
                           request that such prioritization (or lack of
                           prioritization in the case of incidents) or
                           reprioritization may affect SLAs.

                  4.1.11   Delays due to non-receipt or late receipt of SPRINT
                           input, where the non-receipt or late receipt was
                           beyond the control of Z-Tel.

                  4.1.12   Temporary exclusions from Service Level Agreement
                           performance measurements requested by Z-Tel, and
                           approved in writing by SPRINT, to implement major
                           changes in applications, environments, conversions,
                           or systems software.

                  4.2.1  Both parties will work in good faith to resolve any
                           differences of opinion as they relate to the
                           appropriateness and accuracy of Exclusions as
                           described in Section 5.1 above.

         4.2  Within 5 days of providing Reports under Section 4.0 of this
                  SLA Agreement, Z-Tel will provide written notice along with a
                  reasonable explanation of any Exclusions pertaining to monthly
                  data as described in Section 5.1 which have been incorporated
                  into that month's reports.

5.0 Service Level Agreement Change Process

         5.1  New SLAs may be added or substituted or existing SLAs may be
                  modified or deleted, through the process set forth in this
                  Section.
                           5.1.1 It is the intent of the Parties to maintain a
                           fair, reasonable, attainable, accurate, meaningful,
                           and consistent

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<PAGE>

                           measurement of Z-Tel's performance of Services.

                           5.1.2 Relative to the above standard, all SLAs will
                           be reviewed at least annually.

                           5.1.3 Events or changes that materially affect
                           delivery of services by either Party could initiate
                           the need to delete or modify existing SLAs or add new
                           SLAs. Such events and changes may include: the
                           Parties' planning processes, changes in SPRINT's
                           business (e.g., business requirements, changes in
                           volumes), regulatory requirements, changes in ILEC
                           methods and procedures, vendor changes in methods and
                           procedures, and audit requirements.

                           5.2.1 Upon identifying the need to add, delete or
                           modify any SLA, Z-Tel or SPRINT will prepare a
                           written analysis that supports the SLA change (a
                           "Service Level Agreement Change Proposal") and submit
                           it to the other Party.

                           5.2.2 The Parties will then review the Service Level
                           Agreement Change Proposal and the receiving Party
                           will have sixty (60) calendar days to respond with an
                           assessment of the ramifications of the request (e.g.,
                           cost impacts, impact on business, etc.).

                           5.2.3 All Service Level Agreement Change Proposals
                           must be mutually agreed upon through the Service
                           Management Committee before any SLAs are added,
                           deleted or modified. If the Service Management
                           Committee is unable to reach consensus on any
                           proposed Service Level Agreement change, the Parties
                           will attempt to resolve the matter pursuant to the
                           escalation procedures in the Definitive Agreement.

                           5.2.4 Any new SLAs will not be enforced for ninety
                           days, unless otherwise agreed, after initial
                           publication of the metric as agreed to between the
                           Parties.

                           5.2.5 Additionally, by mutual written agreement,
                           which shall include accepted minutes of proceedings
                           of the Service Management Committee, major change
                           initiatives as determined by the Service Management
                           Committee may cause the suspension of one or more
                           SLAs for a period of one to three months after
                           implementation of the major change. During this
                           suspension period the involved service level(s) will
                           be pursued on a best efforts basis.

         5.2  SLA Change Process. Changes to SLAs will only be effected
                  through the following SLA Change Process.

Agreed to by the Parties, as signified below:

SPRINT Communications Company LP   Z-Tel Communications, Inc

BY:_____   BY:


Print Name       Print Name


Title        Title


Date        Date

                                      105

<PAGE>

                                  ATTACHMENT A

                                OPERATIONAL SLAS

<TABLE>
<CAPTION>
 ID    TYPE SLA   ACTIVITY     NAME    DESCRIPTION  MEASURE    TARGET    Source
<S>    <C>        <C>        <C>       <C>          <C>       <C>        <C>
P 1     ******    *******    *******     *******    *******   ********   ******
        ******    *******    *******     *******    *******   ********   ******
        **        *******    *******     *******    *******   *          ******
        ******    *******    *******     *******    *******   ********   ******
        ******    *******    *******     *******    *******   *******    **
        **        *****      *****       *****      *****
        ******    *******    *******     *******    *******
        ******    *******    *******     *******    *******
        ******
        ******
        **

P 2     ******    *******    *******     *******    *******   ********   ******
        ******    ******     *****       *******    *******   ******     ******
        ******    *******    *******     *******    *******   ********   ******
        ******    *******    *******     *******    *******   ******     ******
        ******                           *******    *******   ********   **
        **                               *****      *****     ****
                                         *******    *******   ********
                                         *******    *******   ******

P 3     ******    *******    *******     *******    *******   ********   ******
        ******    ******     *****       *******    *******   ******     ******
        ******    *******    *******     *******    *******   ********   ******
        ******    *******    *******     *******    *******   ******     ******
        ******                           *******    *******   ********   **
        **                               *****      *****     ****
                                         *******    *******   ********
                                         *******    *******   ******

P 4     ******    *******    *******     *******    *******   ********   ******
        ******    ******     *****       *******    *******   ******     ******
        ******    *******    *******     *******    *******   ********   ******
        ******    *******    *******     *******    *******   ******     ******
        ******                           *******    *******   ********   **
        **                               *****      *****     ****
                                         *******    *******   ********
                                         *******    *******   ******

B 1A    ******    *******    *******     *******    *******   ********   ******
        ******    ******     *****       *******    *******   ******     ******
        ******    *******    *******     *******    *******   ********   ******
        ******    *******    *******     *******    *******   ******     ******
        **                               *******    *******   ********   **
                                         *****      *****     ****
                                         *******    *******   ********
                                         *******    *******   ******
</TABLE>

                                      106

<PAGE>

<TABLE>
<S>    <C>        <C>        <C>       <C>          <C>       <C>        <C>
B 1B    ******    *******    *******     *******    *******   ********   ******
        ******    ******     *****       *******    *******   ******     ******
        ******    *******    *******     *******    *******   ********   ******
        ******    *******    *******     *******    *******   ******     ******
        **                               *******    *******   ********   **
                                         *****      *****     ****
                                         *******    *******   ********
                                         *******    *******   ******

B 2     ******    *******    *******     *******    *******   ********   ******
        ******    ******     *****       *******    *******   ******     ******
        ******    *******    *******     *******    *******   ********   ******
        ******    *******    *******     *******    *******   ******     ******
        **                               *******    *******   ********   **
                                         *****      *****     ****
                                         *******    *******   ********
                                         *******    *******   ******

S1A     ******    *******    *******     *******    *******   ********   ******
        ******    ******     *****       *******    *******   ******     ******
        ******    *******    *******     *******    *******   ********   ******
        ******    *******    *******     *******    *******   ******     ******
        **                               *******    *******   ********   **
                                         *****      *****     ****
                                         *******    *******   ********
                                         *******    *******   ******

S1B     ******    *******    *******     *******    *******   ********   ******
        ******    ******     *****       *******    *******   ******     ******
        ******    *******    *******     *******    *******   ********   ******
        ******    *******    *******     *******    *******   ******     ******
        **                               *******    *******   ********   **
                                         *****      *****     ****
                                         *******    *******   ********
                                         *******    *******   ******

S 2     ******    *******    *******     *******    *******   ********   ******
        ******    ******     *****       *******    *******   ******     ******
        ******    *******    *******     *******    *******   ********   ******
        ******    *******    *******     *******    *******   ******     ******
        **                               *******    *******   ********   **
                                         *****      *****     ****
                                         *******    *******   ********
                                         *******    *******   ******

S 3     ******    *******    *******     *******    *******   ********   ******
        ******    ******     *****       *******    *******   ******     ******
        ******    *******    *******     *******    *******   ********   **
        ******    *******    *******     *******    *******   ******     ******
        **                               *******    *******              ******
                                         *******    *******              **
                                         *****      *****
                                         *******    *******

</TABLE>

                                      107

<PAGE>

<TABLE>
<S>    <C>        <C>        <C>       <C>          <C>       <C>        <C>
S 4     ******    *******    *******     *******    *******   ********   ******
        *                                *******    *******   ******     *
                                         *******    *******   ********
                                         *******    *******   ******
                                         *******    *******   ********
                                         *****      *****     ****
                                         *******    *******   ********
                                         *******    *******   ******
</TABLE>

                                      108

<PAGE>

                                  ATTACHMENT B

                                METRIC DEFINITION

                                      ****


This entire attachment, consisting of 17 pages, has been omitted pursuant to a
request for confidentiality treatment.


                                      109

<PAGE>

                                   SCHEDULE C

                                PRICING SCHEDULE


                                      ****

This entire schedule, consisting of 11 pages, has been omitted pursuant to a
request for confidentiality treatment.


                                      110

<PAGE>

                                   SCHEDULE D

                          Z-TEL FUNDAMENTAL TECHNOLOGY


                                      ****

This entire schedule, consisting of 3 pages, has been omitted pursuant to a
confidential treatment request.

                                      111

<PAGE>

                                   SCHEDULE E

                           EXISTING Z-TEL TECHNOLOGY

                                      ****

This entire schedule, consisting of 15 pages, has been omitted pursuant to a
request for confidential treatment.

                                      112

<PAGE>

                                  SCHEDULE 10.8

                             ACCEPTABLE USE POLICY

This Acceptable Use Policy ("AUP") establishes guidelines for acceptable use of
e-mail, internet, networking and operational support system services (the "AUP
SERVICES") provided by Z-Tel Communications, Inc. ("WE" or "Z-TEL") to Sprint,
Sprint's Affiliates Sprint's End Users (each, a "SPRINT CUSTOMER" and
collectively "SPRINT CUSTOMERS"). Sprint has no obligation under this Schedule
10.8 concerning any prohibited action described in this Schedule 10.8 by any
Sprint Customer other than Sprint and Sprint's Owned Affiliates unless the
Sprint Customer accessed Z-Tel's systems through a Sprint account or Sprint
interface under this Agreement.

I.  SYSTEM AND NETWORK SECURITY.

Z-Tel reserves the right to take action against the unauthorized use or
attempted unauthorized use of Z-Tel's AUP Services or systems. Unauthorized use
or attempted unauthorized use includes, but is not limited to, password
cracking, defrauding others into releasing their passwords, denial-of-service
attacks, sending packets with an illegal packet size, UDP flooding,
ping-flooding, half-open TCP connection flooding, etc. A Sprint Customer may not
use Z-Tel's systems, programs, scripts and commands, nor send messages, with the
intent to interfere with any End User's terminal session.

         A Sprint Customer may not use the AUP Services in a manner that
encumbers Z-Tel's disk space, processors or other system resources beyond those
allowed by the specific type of account. A Sprint Customer may not make any
attempts to interfere with an AUP Service, overload an AUP Service or attempt to
disable a Z-Tel host. A Sprint Customer may not use any of the AUP Services or
Z-Tel's systems to transmit computer viruses, trojan horses, cancelbots, or
other destructive programming code. Non-authorized relays through any third
party systems are strictly prohibited.

         Each Sprint Customer must respect the privacy of others. Each Sprint
Customer will not represent itself as another person unless explicitly
authorized to do so by that person.

 Z-Tel may take actions reasonably necessary to protect its network, systems,
and relationships with third parties when a Sprint Customer's activity is
causing critical performance problems for Z-Tel. When any Sprint Customer's
service is compromised due to Z-Tel action under this policy, Z-Tel will provide
concurrent Super Notice to Sprint as described on the Designee Schedule.

         When a Sprint Customer is apparently violating this policy but the
activity is not causing significant performance problems for Z-Tel, Z-Tel will
provide notice of its intent to impair the service of the Sprint Customer at
least three Business Days before such action is taken. Z-Tel will work with
Sprint to avoid impairment to the service of a Sprint Customer by identifying
potential concerns with individual Sprint Customers and notifying Sprint so that
Sprint may work with the Sprint Customer to change its behavior before it
becomes a significant problem.

                                      113

<PAGE>

II.  E-MAIL

         Each Sprint Customer will not continue to send e-mail through Z-Tel's
systems to a recipient if that recipient has requested that the Sprint Customer
discontinue the communication. Each Sprint Customer will not, through Z-Tel's
systems, flood/spam newsgroups with commercial or non-commercial postings. The
Sprint Customers will not use Z-Tel's AUP Services to send unsolicited
advertising messages to non-Sprint End Users.

         Other activities that Sprint Customers are prohibited from engaging in
through Z-Tel's systems under this Agreement include:

                  (i)  transmission of e-mail or newsgroup postings that are
                           harassing, libelous, defamatory, legally obscene or
                           pornographic, threatening, abusive, or hateful to
                           non-consenting recipients;

                  (ii) forwarding or propagation of chain letters of any
                           type (including charity requests or petitions for
                           signatures);

                  (iii) "Mail bombing" or "Syn flood" attacks that overburden
                           a recipient computer system by sending a high volume
                           of spurious data which effectively impedes
                           functionality, or totally disables recipient
                           system(s), and any other methods of denial of
                           service;

                  (iv) forging header information on e-mail or any other
                           material transmitted through our servers;

                  (v)  impersonating any person or entity including, but not
                           limited to, any Z-Tel employee or officer;

                  (vi) forging headers or otherwise manipulate identifiers
                           in order to disguise the origin of any Content (as
                           defined in Section III below);

                  (vii) stalking or otherwise harassing another;

                  (viii) collecting or storing proprietary information about
                           non-Sprint End Users; and

                  (ix)  using the Sprint Customer's account, or network
                           connection, to collect replies of messages sent from
                           any another provider that violates the rules of this
                           AUP.

III.  CONTENT

         All information, data, text, sound, messages or other materials that
are publicly posted on a website or privately transmitted by a party (other than
Z-Tel) ("CONTENT") using Z-Tel's systems are the sole responsibility of the
person that originated the Content.

                                      114

<PAGE>
Z-Tel exercises no control whatsoever over the Content created on or passing
through its network and, therefore, does not guarantee the accuracy, integrity
or quality of the Content. Each Sprint Customer, and not Z-Tel, is entirely
responsible for all Content that it uploads, posts, emails or otherwise
transmits via the AUP Services. Under no circumstances will Z-Tel be liable in
any way for any Content, including, but not limited to, for any errors or
omissions in any Content, or for any loss or damage of any kind incurred as a
result of the use of any Content posted, emailed or otherwise transmitted by the
AUP Services. The inclusion of a link on any site managed by Z-Tel does not
imply an endorsement of the linked site by Z-Tel.

IV.  COMPLIANCE WITH LAW; COPYRIGHT AND OTHER INTELLECTUAL PROPERTY
          INFRINGEMENT.

         The Sprint Customers may not use any AUP Service to initiate a
transmission of or store any information, data, or material in a manner that
would intentionally or unintentionally violate any applicable local, state,
national or international treaties, laws, rules or regulations, including, but
not limited to:

                  (i) any applicable patent, trademark or copyright law,

                  (ii) any regulations promulgated by the U.S. Securities and
         Exchange Commission, or

                  (iii) any rules of any national or other securities exchange,
         including, without limitation, the New York Stock Exchange, the
         American Stock Exchange and any NASDAQ market.

         Z-Tel reserves the right to remove any and all materials from its
systems that it reasonably believes infringe on another's copyright or other
intellectual property rights. Z-Tel may remove these materials at any time upon
receiving a complaint or notice of alleged infringement. If Sprint has a good
faith belief that a user of Z-Tel's AUP Services is infringing on a copyright,
please notify us:

                   Legal Counsel

                   Z-Tel Communications, Inc.
                  601 S. Harbour Island Boulevard, Suite 220
                  Tampa, FL 33602

Any such notification should include the identity and location of the alleged
infringing material.

         The Sprint Customers cannot sue or recover any damages whatsoever from
Z-Tel as a result of Z-Tel's decision to remove offending material from Z-Tel's
server.

VII.  INTERNATIONAL USE

         Z-Tel makes no representation that materials on its site are
appropriate or available for use in locations outside the United States, and
accessing them from territories where their contents are illegal is prohibited.
Sprint Customers who choose to access Z-Tel's network or Web site from other
locations do so on their own initiative and are responsible for compliance with
local laws.

VIII.  GENERAL

Use of other organizations' networks or computing resources is subject to their
respective permission and usage policies.

                                      115

<PAGE>

                                  SCHEDULE 13.1

  CONDITIONS, RESTRICTIONS, RULES, POLICIES, PROCEDURES, LIMITATIONS AND RIGHTS
      IMPOSED OR GRANTED UNDER Z-TEL'S THIRD PARTY AGREEMENTS AND LICENSES

         To the extent Sprint or any Sprint Affiliate, or any of their
respective employees, gain, under this Agreement, access to or use of any
software, hardware, technology, technical information, documentation, or other
intellectual property ("THIRD-PARTY TECHNOLOGY") provided to Z-Tel by any
third-party vendor ("Z-TEL THIRD-PARTY VENDOR"), Sprint will comply with the
following obligations and ensure that the Sprint Affiliate or employee also
complies with the following obligations, but in each case only to the extent
that Z-Tel is obligated to do so.

         To the extent that any agent (including marketing agents) or other
independent contractor of any tier of Sprint or any Sprint Owned Affiliate, or
any Sprint End User, gains, under this Agreement through Sprint, access to or
use of any Third Party Technology provided to Z-Tel by any Z-Tel Third-Party
Vendor, Sprint will ensure that the agent, independent contractor or Sprint End
User complies with the obligations set forth below (but only to the extent Z-Tel
is obligated to do so).

         1. Sprint may use Third-Party Technology only in furtherance of this
Agreement and only on the terms and conditions of this Agreement. Sprint will
not copy, distribute, or disseminate any Third-Party Technology or any part
thereof, except as expressly permitted by and subject to the limits of Sprint's
license rights under this Agreement.

         2. Sprint will:

                  (a) hold Confidential Information of Z-Tel Third-Party Vendors
                           in strict confidence;

                                      116

<PAGE>

                  (b) limit disclosure of Z-Tel Third-Party Vendor
                           Confidential Information to Sprint's own employees
                           and others having a need to know the Confidential
                           Information;

                  (c) notify Z-Tel promptly of any unauthorized use or
                           disclosure of Z-Tel Third-Party Vendor Confidential
                           Information; and

                  (d) cooperate with and assist Z-Tel to stop or minimize
                           any such unauthorized use or disclosure.

         Sprint will protect the confidentiality of the Third-Party Technology,
using the same degree of care used to protect its own intellectual property of
like importance, but in any case using no less than a reasonable degree of care.


                                      117

<PAGE>

             DESIGNEE SCHEDULE SPRINT AND Z-TEL CONTACT INFORMATION

A. In accordance with Section 5.3.6 of the Agreement the following persons will
be contacted in the event of a billing dispute:

<TABLE>
<CAPTION>
                            Sprint (Name/Title)               Z-Tel (Name/Title)
                            -------------------               ------------------
<S>                         <C>                               <C>
Within ** calendar days     Mark A. Hall                      Linda Dellaero
                            Manager, Decision Support         Accounts Receivable
                            6360 Sprint Parkway               Manager
                            Mailstop  KSOPHE0406              601 South Harbour Island
                            Overland Park, KS  66251          Blvd.
                            mark.a.hall@mail.sprint.com       Suite 220
                            Phone: 913-762-1065               Tampa, FL 33602
                                                              ddellaero@z-tel.com
                                                              Phone:  813-233-4517

Within ** calendar days     Sean W. Garrett                   Frank Straub
                            Director, Decision Support        Director of Finance &
                            6360 Sprint Parkway               Accounting
                            Mailstop KSOPHE0406               601 South Harbour Island
                            Overland Park, KS  66251          Blvd.
                            sean.w.garrett@mail.sprint.com    Suite 220
                            Phone:  913-762-1525              Tampa, FL 33602
                                                              fstraub@z-tel.com
                                                              Phone:  813-233-4746
</TABLE>

                                      118
<PAGE>

<TABLE>
<S>                         <C>                               <C>
Within ** calendar days     Joe F. Meyer                      Don Davis
                            Vice President                    Vice President
                            6360 Sprint Parkway               601 South Harbour Island
                            Mailstop KSOPHE0402               Blvd.
                            Overland Park, KS 66251           Suite 220
                            joe.f.meyer@mail.sprint.com       Tampa, FL 33602
                            Phone: 913-762-7798               ddavis@z-tel.com
                                                              Phone:  813-233-4615
</TABLE>

B. In accordance with Section 21.14.1, all notices under the Agreement will be
sent:

         To Z-Tel:

                       Z-Tel Communications, Inc.
                       601 South Harbour Island Boulevard
                       Suite 220
                       Tampa, Florida  33602

         To Sprint:

                       Sprint Communications Company L.P.
                       Mailstop: KSOPHE 0410-4B177
                       6360 Sprint Parkway
                       Overland Park, Kansas 66251-1666
                       Attn:  David Palan

         and, if the notice is to Z-Tel, a copy, which will not constitute
         notice, is delivered, deposited for delivery, mailed or sent in the
         same manner to:

                       Andrew Graham, Esquire
                       Z-Tel Communications, Inc.
                       601 South Harbour Island Boulevard
                       Suite 220
                       Tampa, Florida  33602

         and, if the notice is to Sprint, a copy, which will not constitute
         notice, is delivered, deposited for delivery, mailed or sent in the
         same manner to:

                       Michelle Brown, Esquire
                       Sprint Communications Company L.P.
                       Mailstop: KSOPHN 0304-3B653
                       6450 Sprint Parkway
                       Overland Park, Kansas 66251-6100

                                      119

<PAGE>

Any Party may change the address to which notices are to be delivered by giving
notice of the change of address in the manner set forth above

C. In accordance with Section 21.14.2 of the Agreement, Super Notice will be
sent:

         If to Z-Tel:

                       Z-Tel Communications, Inc.
                       601 South Harbour Island Boulevard
                       Suite 220
                       Tampa, Florida  33602
                       Attn:  Robert A. Curtis
                       Email:  rcurtis@z-tel.com

         If to Sprint:

                       Sprint Communications Company L.P.
                       Mailstop: KSOPHE0402
                       6360 Sprint Parkway
                       Overland Park, Kansas 66251-1666
                       Attn:  Joe F. Meyer
                       Email: joe.f.meyer@mail.sprint.com

and if to Sprint under Schedule 10.8, also to:

              Liz Cecini
              6360 Sprint Parkway
              Carver A
              Mailstop: KSOPHE0402-4C450
              Overland Park, KS 66251-1666

                                      120

<PAGE>

                                    EXHIBIT A

                          TRANSITION ESCROW AGREEMENT

This Transition Escrow Agreement (the "Agreement") is dated as of ________,
2003, by and among COMMERCE BANK, NATIONAL ASSOCIATION, Kansas City, Missouri, a
national banking association duly organized and existing under the laws of the
United States (the "Escrow Agent"), SPRINT COMMUNICATIONS COMPANY L.P., a
Delaware limited partnership ("Sprint"), and Z-TEL COMMUNICATIONS, INC., a
Delaware corporation ("Z-Tel")(each a "Party" and collectively the "Parties").

Sprint and Z-Tel are parties to a Services Agreement (as defined in Section 1).
Under the terms of the Services Agreement, Sprint has agreed to deposit, as
security for payment, a portion of projected fees for Z-Tel services into escrow
with Escrow Agent upon execution of this Agreement.

In consideration of the mutual covenants set forth in this Agreement, the
Parties agree as follows:

         1. DEFINITIONS.

         "AUTHORIZED INVESTMENTS" means those investments acceptable to Sprint
         as communicated by Sprint to Escrow Agent from time to time, which
         investments will be in AAA rated, short-term, investment grade
         instruments that can be sold in a secondary market.

"AUTHORIZED REPRESENTATIVE" means, as to Sprint, _______________; and as to
Z-Tel, ___________________.

          "ESCROW ACCOUNT" means the escrow account created under Section 2 of
         this Agreement and maintained by Escrow Agent under this Agreement.

          "ESCROW AGENT" means Commerce Bank, National Association, Kansas City,
         Missouri, or its successor under this Agreement.

          "ESCROW ASSETS" means the assets deposited into the Escrow Account
         under Section 3 and any substitutions, replacements, investments or
         reinvestments of the assets under this Agreement.

                  "EXCESS BALANCE DISBURSEMENT REQUEST" has the meaning set
         forth in Section 6(a).

          "INVESTMENT INCOME" means earnings accrued from the investment of the
         Escrow Assets.

          "SERVICES AGREEMENT" means the Agreement for Resale of Local Wireline
         Telecommunications Services and Provision of Ancillary Services dated
         as of February __, 2003, between Sprint and Z-Tel.

          "UNPAID FEES DISBURSEMENT REQUEST" has the meaning set forth in
         Section 6(b).

         All capitalized terms used, but not defined in this Agreement have the
meaning set forth in the Services Agreement (which meanings are incorporated
into this Agreement by this reference).

         2. CREATION OF THE ESCROW ACCOUNT. Contemporaneously with the execution
and delivery of this Agreement, Escrow Agent will create and establish an escrow
account for the purpose of receiving and holding the Escrow Assets in trust
under this

                                      121

<PAGE>

Agreement (the "ESCROW ACCOUNT").

         3. OWNERSHIP AND REGISTRATION OF THE ESCROW ASSETS. The Escrow Assets
will be the property of Sprint until disbursed under this Agreement. Escrow
Agent will hold the Escrow Assets in bearer form (if not cash) or, if
registered, registered in the name of Escrow Agent or its nominee.

         4. INITIAL DEPOSIT TO THE ESCROW ACCOUNT.

                  (a) Under the Services Agreement, Sprint agreed to deliver to
         Escrow Agent for deposit into the Escrow Account certain funds for
         Basic System Support fees, ILEC Recurring fees, ILEC Non-Recurring
         fees, ILEC Usage fees, Z-Tel Dedicated Support fees and Third Party
         unit-based fees (collectively, the "TRANSITION FEES") for the Sprint
         End Users that have not been Transitioned. The purpose of the escrow is
         to secure Sprint's payment obligations to Z-Tel. No amounts would be
         escrowed if the Transition has not occurred because Z-Tel has not
         completed the necessary work on the ILEC interfaces.

                  (b) The specific amount that Sprint agreed to escrow is
determined as follows:

                           (i) if the Transition has been delayed beyond the
                  Transition Date (as defined in Section 2.5.5(c) of the
                  Services Agreement) for two (2) months or less, the amount to
                  be escrowed is one month's Transition Fees (as estimated
                  reasonably and in good faith and based on the most current
                  Committed Forecast described in Section 10.12 of the Services
                  Agreement, the "TRANSITION FEE FORECAST") for the Sprint End
                  Users that have not yet been Transitioned, and

                   (ii) if the Transition has been delayed beyond the Transition
                  Date for more than two (2) months, the amount to be escrowed
                  is two (2) months' Transition Fees (based on the Transition
                  Fee Forecast) for the Sprint End Users that have not yet been
                  Transitioned.

                   (iii) however, after the initial deposit, the Escrow Account
                  balance will not fall below an amount equal to at least fifty
                  (50) percent of the Escrow Account balance from the previous
                  month, without the prior consent of Z-Tel unless a final
                  disbursement of the Escrow Funds has occurred.

          (c) Upon execution of this Agreement Sprint will deposit into the
         Escrow Account the amount described in Section 4(b)(i). Sprint and
         Z-Tel agree that this amount is $____________.

    (d) Escrow Agent is not responsible for the sufficiency of the amount of
          the Escrow Assets. Escrow Agent will hold the Escrow Assets in trust
          and disburse them only as set forth in this Agreement.

                                      122

<PAGE>

         5. TRUE-UP OF ESCROW ASSET BALANCE. Sprint and Z-Tel will true-up the
Escrow Account Balance on a monthly basis until the termination of this
Agreement as follows:

         (a) Within a reasonable period after the end of each month after the
     Transition Date, Escrow Agent will provide to Sprint and Z-Tel a statement
     reflecting the balance of the Escrow Assets.

          (b) Within five (5) Business Days after receiving Escrow Agent's
     statement, Sprint will deposit in the escrow the additional funds that are
     necessary to cause the balance of the Escrow Assets to equal or exceed the
     amount then required under

         Section 4.

         6. DISBURSEMENTS.

                  (a) Sprint is entitled to disbursement from the escrow of the
         amount by which the balance of the Escrow Assets reflected in Escrow
         Agent's statement exceeds the amount then required under Section 4.
         Sprint may request this disbursement solely by sending to Z-Tel a
         written request for escrow disbursement. Z-Tel will within five (5)
         Business Days request disbursement from the escrow, of the amount by
         which the balance of the Escrow Assess reflected in the Escrow Agent's
         statement exceeds the amount then required under Section 4, by sending
         to the Escrow Agent a request for disbursement in the form attached to
         this Agreement as Attachment A (an "EXCESS BALANCE DISBURSEMENT
         REQUEST"), with a contemporaneous copy to Sprint.

   (b) Z-Tel is entitled to disbursements from the escrow from time to time
         during the term of this Agreement in amounts equal to any Transition
         Fees payable by Sprint under the Services Agreement that Sprint does
         not pay when due. Z-Tel may request this disbursement solely by sending
         to Escrow Agent a request for disbursement in the form attached to this
         Agreement as Attachment B (an "UNPAID FEES DISBURSEMENT REQUEST"), with
         a contemporaneous copy to Sprint.

   (c) Escrow Agent will disburse the Escrow Assets in accordance with the
         following provisions:

                   (i) If Escrow Agent receives an Excess Balance Disbursement
                  Request from Z-Tel requesting that all or any portion of the
                  Escrow Assets be disbursed to Sprint, Escrow Agent will
                  disburse the requested Escrow Assets to Sprint in accordance
                  with the instructions contained in the Excess Balance
                  Disbursement Request within ten (10) Business Days after
                  receiving the Excess Balance Disbursement Request.

                   (ii) If Escrow Agent receives a Unpaid Fees Disbursement
                  Request from Z-Tel (with Z-Tel's certification of its delivery
                  of the request to Sprint and

                                      123

<PAGE>

                  Z-Tel's certification that the Escrow Assets requested to be
                  disbursed to Z-Tel are for Transition Fees payable by Sprint
                  under the Services Agreement that Sprint has not paid when
                  due) requesting that all or any portion of the Escrow Assets
                  be disbursed to Z-Tel, Escrow Agent will disburse the
                  requested Escrow Assets to Z-Tel in accordance with the
                  instructions contained in the Unpaid Fees Disbursement Request
                  within ten (10) Business Days after receiving the Unpaid Fees
                  Disbursement Request without regard to any objection from
                  Sprint concerning the Unpaid Fees Disbursement Request.

                  (d) The Parties agree and acknowledge that (i) only Z-Tel may
         seek disbursement from the Escrow Agent, (ii) Z-Tel will be irreparably
         harmed by any delay in disbursement by the Escrow Agent relative to any
         Unpaid Fees Disbursement Request, and (iii) Sprint may not threaten to
         take or take any action to delay (other than obtaining a stay from a
         court of competent jurisdiction) the payment by the Escrow Agent.

         7. INCOME ON ESCROW ASSETS.

  (a) All Investment Income, if any, is solely Sprint's property.

          (b) At the time of the final disbursement of the Escrow Assets, Escrow
         Agent will immediately disburse to Sprint all Investment Income in the
         manner Sprint instructs except to the extent such Investment Income is
         disbursed to Z-Tel because the balance of the Escrow Assets falls short
         of the amount then required under Section 4.

         8. INVESTMENT OF ESCROW ASSETS. Escrow Agent will invest and reinvest
the Escrow Assets in Authorized Investments as Sprint directs in writing from
time to time. Escrow Agent will initially invest the Escrow Assets in the
Financial Square Treasury Obligation Fund.

         9. TERMINATION. This Agreement will continue in effect until Escrow
Agent has disbursed all of the Escrow Assets under this Agreement, at which time
this Agreement will terminate. The provisions of Sections 1, 4 through 8 and 10
through 23 will survive the termination of this Agreement.

         10. FEES AND EXPENSES. Escrow Agent will be entitled to the fees and
expenses set forth on Attachment B for performing its duties under this
Agreement. Sprint and Z-Tel will each pay for one-half (1/2) of all fees or
expenses payable to Escrow Agent under this Agreement.

         11. DUTIES OF ESCROW AGENT.

          (a) Escrow Agent is liable as a depository only, with its duties being
         only those specifically provided in this Agreement, which are
         ministerial in nature and not

                                      124

<PAGE>

         discretionary. Escrow Agent is not responsible for any mistake of fact
         or error in judgment, or for any acts or failure to act of any kind it
         takes in good faith and believes to be authorized or within the rights
         or powers conferred under this Agreement, unless there is shown willful
         misconduct or gross negligence.

          (b) Escrow Agent is not responsible for the sufficiency or accuracy of
         the form, execution or validity of the documents delivered or Escrow
         Assets deposited under this Agreement, nor for any description of
         property or other matter noted in the documents. Escrow Agent is not
         responsible for any default by Sprint or Z-Tel. Escrow Agent has no
         obligation to seek Sprint's and Z-Tel's performance of their respective
         obligations under this Agreement. Escrow Agent is not responsible for
         the lapsing of any rights under any statutes of limitation concerning
         the Escrow Assets. Escrow Agent is not liable for collection of items
         until it receives the cash proceeds of the items. Escrow Agent is not
         liable for interest on any deposit of money.

                  (c) Escrow Agent is not responsible for the identity,
         authority or rights of persons executing or delivering, or purporting
         to execute or deliver any document or item under this Agreement and
         when performing its duties under this Agreement it may rely absolutely
         and be fully protected in acting upon any item, document or other
         writing it believes to be authentic. Escrow Agent may, as a condition
         to the disbursement of money or property, require from the payee or
         recipient a receipt for the disbursement and, upon final payment or
         distribution, require a release from any liability arising out of its
         execution or performance of its obligations under this Agreement.

                  (d) Sprint and Z-Tel will jointly indemnify and hold harmless
         Escrow Agent from and against all costs, damages, liabilities and
         expenses Escrow Agent incurs in connection with or arising out of this
         Agreement that Escrow Agent incurs as a result of claims or actions by
         third parties. Escrow Agent may consult with and engage the services of
         legal counsel of its choice with respect to any matter pertaining to
         this Agreement. Sprint and Z-Tel will jointly and severally reimburse
         Escrow Agent for the reasonable costs and expenses of the legal
         counsel.

                  (e) Escrow Agent retains the right to resign upon giving at
         least thirty (30) calendar days' prior written notice to Sprint and
         Z-Tel.

 12. GOOD FAITH PERFORMANCE. The parties to this Agreement will act in good
faith in the performance of their obligations under this Agreement consistent
with the purposes of this Agreement. Except as otherwise specifically noted in
this Agreement, neither party will unreasonably delay, withhold or condition any
approval or consent that this Agreement requires or permits.

                                      125

<PAGE>

 13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the Parties concerning the subject matter of this Agreement and supersedes all
prior agreements, understandings and arrangements, both oral and written,
between the Parties concerning the subject matter. Furthermore, this Agreement
has been negotiated and fully reviewed by counsel for all Parties. Except as
otherwise provided in this Agreement, this Agreement may not be modified,
amended, altered or rescinded in any manner, except by written instrument signed
by both of the Parties. All attachments, schedules and other attachments to this
Agreement are incorporated by this reference as integral parts of this
Agreement.

 14. ASSIGNMENT. No Party may assign this Agreement without the written consent
of the other Parties, which will not be unreasonably withheld. Any attempt to
assign this Agreement in contravention of the preceding sentence is void.
Notwithstanding the foregoing, Sprint may assign its rights and obligations
under this Agreement to any of its Owned Affiliates, but upon the assignment and
assumption, Sprint will remain obligated under this Agreement for such assigned
obligations.

 15. BINDING AGREEMENT. Subject to the preceding paragraph, this Agreement will
inure to the benefit of and be binding on the Parties and their respective
successors and permitted assigns.

 16. LITIGATION VENUE. In the event of litigation arising from any dispute under
this Agreement, the Parties agree that venue will not be in Kansas or Florida.

 17. GOVERNING LAW. This Agreement will be governed and interpreted under the
substantive laws of Missouri, without reference to its principles of conflicts
or choice of law. The Parties acknowledge that this Agreement will be performed
in part in Missouri.

 18. LEGAL FEES. Regarding any dispute under this Agreement, a prevailing party,
as determined by a court of competent jurisdiction, will be entitled to payment
of the entire court costs and reasonable attorneys' fees incurred in
investigating, preparing and conducting any litigation that might arise under
this Agreement.

 19. NOTICES.

          (a) Any notices or deliveries permitted or required by this Agreement
         must be given by messenger or by overnight delivery with Federal
         Express, United Parcel Service, Airborne Express or a similarly
         nationally recognized overnight delivery service. These notices or
         deliveries will be deemed to have been given (i) upon delivery by
         messenger, if a receipt is obtained for delivery, (ii) one (1) calendar
         day after timely deposit for overnight delivery with Federal Express,
         United Parcel Service, Airborne Express or similar nationally
         recognized overnight delivery service, if the service obtains a
         confirmation of delivery, or (iii) three (3) Business Days after
         mailing, if mailed via certified or registered U.S. mail, return
         receipt requested; if the notice is delivered, deposited for delivery,
         mailed or sent to the Party's address as set forth below:

                                      126

<PAGE>

         To Commerce:

                          Commerce Bank, N.A.
                          Corporate Trust Department, TBMZ-5
                          P.O. Box 419248
                          Kansas City, MO 64141-6248

         To Commerce via messenger or overnight delivery:

                          Commerce Bank, N.A.
                          Attn: Corporate Trust Department
                          922 Walnut Street, 3rd Floor
                          Kansas City, MO 64106

         To Z-Tel:

                          Z-Tel Communications, Inc.
                          601 South Harbour Island Boulevard
                          Suite 220
                          Tampa, Florida  33602
                          Attn:  Donald C. Davis

         To Sprint:

                          Sprint Communications Company L.P.
                          Mailstop: KSOPHE 0410-4B177
                          6360 Sprint Parkway
                          Overland Park, Kansas 66251-1666
                          Attn:  David Palan

         and, if the notice is to Z-Tel, a copy, which will not constitute
         notice, is delivered, deposited for delivery, mailed or sent in the
         same manner to

                          Andrew Graham, Esquire
                          Z-Tel Communications, Inc.
                          601 South Harbour Island Boulevard
                          Suite 220
                          Tampa, Florida  33602

         and, if the notice is to Sprint, a copy, which will not constitute
         notice, is delivered, deposited for delivery, mailed or sent in the
         same manner to:

                                      127

<PAGE>

                          Michelle Brown, Esquire
                          Sprint Communications Company L.P.
                          Mailstop: KSOPHN 0304-3B653
                          6450 Sprint Parkway
                          Overland Park, Kansas 66251-6100

         Any Party may change the address to which notices are to be delivered
         by giving notice of the change of address in the manner set forth
         above.

          (b) Notices deemed to have been given or delivered as set forth above
         on a Saturday, Sunday or legal holiday will instead be deemed to have
         been given or delivered on the next succeeding day that is not a
         Saturday, Sunday or legal holiday.

 20. WAIVER. No failure or delay by any Party to this Agreement in the exercise
of any right, power or remedy it may have will operate as a waiver, nor will any
single or partial exercise of any right, power or remedy by either Party
preclude any other or further exercise by the Party of that right, power or
remedy or the exercise of any other right, power or remedy. No express waiver or
assent by any Party to any breach of or default in any term or condition of this
Agreement will constitute a waiver of or assent to any succeeding breach of or
default in the same or any other term or conditions of this Agreement.

 21. CONSTRUCTION. This Agreement was negotiated at arms' length and will not be
construed more strongly against any Party regardless of which Party was
responsible for its preparation. Whenever from the context it appears
appropriate, each term stated in either the singular or the plural includes the
singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender include the other genders. The word "Agreement" and words of
similar import referring to this Agreement refer to this Agreement as a whole,
including the Schedules and Attachments attached to it, and not to any
particular provision of this Agreement. Whenever the word "include," "includes"
or "including" is used in this Agreement, it is deemed to be followed by the
words "without limitation."

 22. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable, this Agreement will be constructively amended to the extent
necessary and possible to achieve the same objectives as the severed provision
was intended to achieve, and the remaining provisions of this Agreement will
continue in full force and effect.

 23. COUNTERPARTS. This Agreement may be executed in several counterparts, all
of which taken together will constitute one single agreement between the
Parties. Signed facsimile copies of this Agreement, addenda, attachments,
schedules and attachments will legally bind the Parties to the same extent as
original documents.

                                      128

<PAGE>

 24. WAIVER OF JURY TRIAL. Z-Tel, Commerce, and Sprint knowingly, voluntarily
and intentionally waive any rights they may have to a trial by jury in respect
of any litigation arising in based on, or arising out of, under or in connection
with, this Agreement. This provision is a material inducement for the Parties to
enter into this Agreement.

This Agreement is executed as of the date first above written.

SPRINT COMMUNICATIONS        Z-TEL COMMUNICATIONS, INC.
COMPANY L.P.

By________________________   By
Name______________________   Name ______________________
Title ____________________   Title _______________________

COMMERCE BANK, N.A.

By _________________________
Name _______________________
Title ______________________

                                  ATTACHMENT A

                  FORM OF EXCESS BALANCE DISBURSEMENT REQUEST

This disbursement request (the "EXCESS BALANCE DISBURSEMENT REQUEST") is made as
of __________, by Z-Tel Communications, Inc., a Delaware corporation
("Z-TEL").

Z-Tel, Sprint Communications Company L.P, a Delaware limited partnership
("SPRINT"), and Commerce Bank, N.A., Kansas City, Missouri, a national banking
association duly organized and existing under the laws of the United States (the
"ESCROW AGENT"), are each parties to that certain Transition Escrow Agreement
dated ___________ (the "ESCROW AGREEMENT").

In accordance with Section 5 of the Escrow Agreement, Z-Tel requests that Escrow
Agent distribute [$___________ from] the Escrow Assets to Sprint pursuant to the
wire transfer instructions attached as Schedule I.

Z-Tel has caused this Excess Balance Disbursement Request to be executed by its
respective duly authorized officers on the date first written above.

Z-TEL COMMUNICATIONS, INC.

By: ____________________________
Name: __________________________
Title: _________________________

                                      129

<PAGE>

                                  ATTACHMENT B

                    FORM OF UNPAID FEES DISBURSEMENT REQUEST

This disbursement request (the "UNPAID FEES DISBURSEMENT REQUEST") is made as
of __________, by Z-Tel Communications, Inc., a Delaware corporation ("Z-TEL").

Z-Tel, Sprint Communications Company L.P., a Delaware limited partnership
("SPRINT"), and Commerce Bank, N.A., Kansas City, Missouri, a national banking
association duly organized and existing under the laws of the United States (the
"ESCROW AGENT"), are each parties to that certain Transition Escrow Agreement
dated ___________ (the "ESCROW AGREEMENT").

In accordance with Section 5 of the Escrow Agreement, Z-Tel requests that Escrow
Agent distribute [$_________ from] the Escrow Assets to Z-Tel pursuant to the
wire transfer instructions attached as Schedule I.

         Z-Tel certifies that it has delivered a copy of this Unpaid Fees
Disbursement Request to Sprint pursuant to the requirements of Section 19 of the
Escrow Agreement.

         Z-Tel certifies that the Escrow Assets requested to be disbursed to
Z-Tel are for Transition Fees payable by Sprint under the Services Agreement
that Sprint has not paid when due.

Z-Tel has caused this Unpaid Fees Disbursement Request to be executed by its
respective duly authorized officers on the date first written above.

Z-TEL COMMUNICATIONS, INC.

By: _______________________
Name: _____________________
Title: ____________________

                                   SCHEDULE I

                           WIRE TRANSFER INSTRUCTIONS

Bank:

                                      130
<PAGE>
                                   Exhibit B


                           TECHNOLOGY ESCROW AGREEMENT

                      Account Number ______________________

      This Technology Escrow Agreement ("Agreement") is effective February 4,
2003, among DSI TECHNOLOGY ESCROW SERVICES, INC. ("DSI"), Z-Tel Communications,
Inc., a Delaware corporation ("Company"), and SPRINT COMMUNICATIONS COMPANY L.P.
a Delaware limited partnership ("Sprint") (collectively the "PARTIES.")

      A. Company and Sprint have entered into an Agreement for Resale of Local
Wireline Telecommunications Services and Provision of Ancillary Services dated
as of February 4, 2003, pertaining in part to Sprint's use of certain
fundamental technology of Company (the "SERVICES AGREEMENT").

      B. Company desires to conceal its fundamental technology except under
certain limited circumstances.

      C. The availability of the fundamental technology of Company is critical
to Sprint in the conduct of its business and, therefore, Sprint needs access to
such fundamental technology under certain circumstances.

      D. Company and Sprint desire to establish an escrow with DSI to provide
for the retention, administration and controlled access of and to such
fundamental technology materials of Company.

      E. The parties desire this Agreement to be supplementary to the Services
Agreement under the United States Bankruptcy Code, specifically 11 USC Section
365(n).

                              ARTICLE 1 -- DEPOSITS

      1.1 OBLIGATION TO MAKE DEPOSIT. On or before March 21, 2003, Company will
deliver to DSI the fundamental technology and other materials required to be
deposited by the Services Agreement ("DEPOSIT MATERIALS"); the materials to be
delivered initially to DSI are identified on Attachment A. Attachment A has been
prepared and signed by Company and Sprint. DSI has and will have no obligation
with respect to the preparation, signing or delivery of Attachment A.

      1.2 IDENTIFICATION OF TANGIBLE MEDIA. Before each delivery of the Deposit
Materials to DSI, Company will conspicuously label for identification each
document, magnetic tape, disk or other tangible media upon which the Deposit
Materials are written or stored. Additionally, Company will complete a
Description of Deposit Materials in the form of Attachment B to this Agreement
by listing each such tangible media by the item label description, the type of
media and the quantity. Each Attachment B will be signed by Company and
delivered to DSI with the Deposit Materials. DSI will have no
<PAGE>
obligation with respect to this Agreement, except the obligation to notify the
Parties regarding the status of the account as required in Section 2.2 below,
unless and until Company makes the initial deposit with DSI.

      1.3 DEPOSIT INSPECTION. When DSI receives Deposit Materials and the
applicable Attachment B, DSI will conduct a deposit inspection by visually
matching the labeling of the tangible media containing the Deposit Materials to
the item descriptions and quantity listed on Attachment B. In addition to the
deposit inspection, Sprint may elect to cause a verification of the Deposit
Materials in accordance with Section 1.6 below.

      1.4 ACCEPTANCE OF DEPOSIT. At completion of each deposit inspection, if
DSI determines that the labeling of the tangible media matches the item
descriptions and quantity on the applicable Attachment B, DSI will date and sign
such Attachment B and mail a copy of it to Company and Sprint. If DSI determines
that the labeling does not match the item descriptions or quantity on such
Attachment B, DSI will:

            (a) note the discrepancies in writing on such Attachment B;

            (b) date and sign such Attachment B with the exceptions noted; and

            (c) mail a copy of such Attachment B to Company and Sprint. DSI's
      acceptance of the deposit occurs upon the signing of the applicable
      Attachment B by DSI.

      Delivery of the signed Attachment B to Sprint is Sprint's notice that the
Deposit Materials have been received and accepted by DSI.

      1.5 COMPANY'S REPRESENTATIONS. Company represents as follows:

            (a) Company lawfully possesses all of the Deposit Materials
      deposited with DSI;

            (b) With respect to all of the Deposit Materials, Company has the
      right and authority to grant to DSI and Sprint the rights as provided in
      this Agreement;

            (c) The Deposit Materials are not subject to any lien or other
      encumbrance;

            (d) The Deposit Materials consist of the fundamental technology and
      other materials identified in the Services Agreement and Attachment A; and

            (e) The Deposit Materials are readable and useable in their current
      form or, if any portion of the Deposit Materials is encrypted, the
      decryption tools and decryption keys have also been deposited.



                                      -2-
<PAGE>
      1.6 VERIFICATION. Sprint will have the right, at Sprint's expense, to
cause a verification of any Deposit Materials by DSI or another neutral party
that is acceptable to Z-Tel. Sprint will notify Company and DSI of Sprint's
request for verification. Company will have the right to be present at the
verification. Verification determines, in different levels of detail, the
accuracy, completeness, sufficiency and quality of the Deposit Materials. In the
event that DSI provides a verification for Sprint pursuant to this Section, DSI
will provide Sprint only information resulting from a Level One Verification as
a Level One Verification is described on Schedule 2.1 to this Agreement.

      1.7 DEPOSIT UPDATES. If at any time Company undergoes a scheduled release
to any Deposit Materials, Company will, pursuant to Section 14.4.2 of the
Services Agreement, immediately upgrade or update the Deposit Materials. If at
any time Company implements any upgrade, update patch or other change for any
Deposit Materials that is not a scheduled release, Company will, pursuant to
Section 14.4.2 of the Services Agreement, add these unscheduled release
materials to the Deposit Materials on a monthly basis. Not less frequently than
on a monthly basis during the Term, pursuant to Section 14.4.2 of the Services
Agreement, Company will either:

            (a) deposit copies of the then-current Deposit Materials with DSI or
      provide to Sprint and to DSI a written statement, signed by Company's
      Chief Technology Officer, Senior Vice President Enterprise Systems or more
      senior officer, that there has been no change in the Deposit Materials as
      of the date of the statement, or

            (b) provide to Sprint and to DSI a written statement, signed by
      Company's Chief Technology Officer, Senior Vice President Enterprise
      Systems or more senior officer, that the Deposit Materials, as of the date
      of the statement, are current and accurately reflect the Deposit Materials
      as of that date. These written statements will be part of the Deposit
      Materials.

      All deposit updates will be listed on a new Attachment B and Company will
sign the new Attachment B. Each Attachment B will be held and maintained
separately within the escrow account. An independent record will be created that
will document the activity for each Attachment B. The processing of all deposit
updates will be in accordance with Sections 1.2 through 1.6 above. All
references in this Agreement to the Deposit Materials will include the initial
Deposit Materials and any and all updates.

      1.8 REMOVAL OF DEPOSIT MATERIALS. The Deposit Materials may be removed
and/or exchanged only on written instructions signed by Company and Sprint or as
otherwise provided in this Agreement.

                 ARTICLE 2 -- CONFIDENTIALITY AND RECORD KEEPING



                                      -3-
<PAGE>
      2.1 CONFIDENTIALITY. DSI will maintain the Deposit Materials in a secure,
environmentally safe, locked facility that is accessible only to authorized
representatives of DSI. DSI will have the obligation to reasonably protect the
confidentiality of the Deposit Materials. Except as provided in this Agreement,
DSI will not disclose, transfer, make available or use the Deposit Materials.
DSI will not disclose the content of this Agreement to any third party. If DSI
receives a subpoena or any other order from a court or other judicial tribunal
pertaining to the disclosure or release of the Deposit Materials, DSI will
immediately notify the parties to this Agreement unless prohibited by law. It
will not be the responsibility of DSI to challenge any such order; provided,
however, that DSI does not waive its rights to present its position with respect
to any such order. DSI will not be required to disobey any order from a court or
other judicial tribunal. (See Section 7.5 below for notices of requested
orders.) In the event that DSI provides a verification for Sprint pursuant to
Section 1.6 of this Agreement, DSI will provide Sprint only information
resulting from a Level One Verification as a Level One Verification is described
on Schedule 2.1 to this Agreement.

      2.2 STATUS REPORTS. DSI will issue to Company and Sprint a report
profiling the account history at least semi-annually. DSI may provide copies of
the account history pertaining to this Agreement upon the request of any party
to this Agreement.

      2.3 AUDIT OF DSI RECORDS. During the term of this Agreement, Company and
Sprint will each have the right to inspect the written records of DSI pertaining
to this Agreement. Any inspection will be held during normal business hours and
following reasonable prior notice.

                       ARTICLE 3 -- GRANT OF RIGHTS TO DSI

      3.1 TITLE TO MEDIA. Upon delivery of media to DSI, Company transfers to
DSI the title to the media upon which the Deposit Materials are written or
stored. However, this transfer does not include ownership of the proprietary and
third party technology and materials contained on the media, such as any
copyright, trade secret, patent or other intellectual property rights.

      3.2 RIGHT TO MAKE COPIES. DSI will have the right to make copies of the
Deposit Materials as reasonably necessary to perform its duties under this
Agreement. DSI will copy all copyright, nondisclosure, and other proprietary
notices and titles contained on the Deposit Materials onto any copies made by
DSI. With all Deposit Materials submitted to DSI, Company will provide any and
all instructions as may be necessary to duplicate the Deposit Materials
including but not limited to the hardware and/or software needed.

      3.3 RIGHT TO TRANSFER UPON RELEASE. Company grants to DSI the right to
transfer a copy of the Deposit Materials media to Sprint upon any release of the
Deposit Materials for use by Sprint in accordance with Article 4 below. Except
upon such a



                                      -4-
<PAGE>
release or as otherwise provided in this Agreement, DSI will not transfer the
Deposit Materials.

                         ARTICLE 4 -- RELEASE OF DEPOSIT

4.1 RELEASE CONDITIONS. As used in this Agreement, "RELEASE CONDITION" means any
of the Company Triggering Events as described in the Services Agreement (which
descriptions are incorporated into this Agreement by this reference) including
each of the following Release Conditions:

            (i) Z-Tel materially breaches any provision of the Services
      Agreement and fails to cure the breach within thirty (30) calendar days
      after receiving written notice from Sprint;

            (ii) Z-Tel's performance under the Services Agreement as measured by
      applicable SLAs for order processing, billing, OSS availability, Repair,
      data file transmission or Z-Node availability fails to meet the triggering
      event criteria as established in Schedule B of the Services Agreement and
      Z-Tel fails to cure this variance within thirty (30) calendar days after
      receiving written notice from Sprint;

            (iii) there occurs a Disconnect of Z-Tel ILEC UNE services affecting
      greater than five percent (5%) of Sprint's End Users that Z-Tel is then
      serving through any particular ILEC;

            (iv) there is a material adverse change in Z-Tel's regulatory
      environment, including any change in applicable Laws that materially and
      adversely affects Z-Tel's ability to perform its obligations under this
      Agreement;

            (v) there is a Change of Control;

            (vi) there is a material adverse change in Z-Tel's financial
      condition, evidenced by:

                  (A) simultaneously meeting three or more of the following
            criteria:

                        (1) Z-Tel fails to hold cash and cash equivalents of at
                  least $6.5 million,

                        (2) Z-Tel fails to maintain a current ratio (current
                  assets/(current liabilities less Short Term Deferred Revenue))
                  greater than point six (0.6),

                        (3) Z-Tel fails to maintain a cash ratio ((cash and
                  marketable securities)/(current liabilities less Short Term
                  Deferred





                                      -5-
<PAGE>
                  Revenue)) greater than point one-five (0.15),

                        (4) Z-Tel fails to maintain working capital (current
                  assets minus current liabilities (less Short Term Deferred
                  Revenue)) greater than negative twenty million dollars (-$20
                  million),

                        (5) Z-Tel fails to maintain a ratio of working capital
                  (current assets minus current liabilities (less Short Term
                  Deferred Revenue)) divided by total assets greater than
                  negative point two-three (-0.23), and

                        (6) Z-Tel materially breaches any agreement for borrowed
                  money (including any material violation of a debt covenant);
                  or

                  (B) Z-Tel receives a going concern qualification from its
                  auditors;

            (vii) Z-Tel ceases ongoing business operations; or

            (viii) Z-Tel becomes Bankrupt, makes a general assignment for
            benefit of creditors or has a receiver appointed for its assets, or
            a court of competent jurisdiction issues an order for Z-Tel's
            winding up.

      For purposes of this Section cash and cash equivalents exclude any
restricted amounts.

      Capitalized terms used in this Section, but not defined in this Section
have the meanings set forth on Attachment E.

      4.2 FILING FOR RELEASE. If Sprint believes in good faith that a Release
Condition has occurred, Sprint may provide to DSI written notice of the
occurrence of the Release Condition and a request for the release of the Deposit
Materials by delivering a Notice to DSI and to Company in the form of Attachment
D to this Agreement executed by an officer of Sprint (a "RELEASE INSTRUCTION").
Upon receipt of such notice, DSI will provide a copy of the notice to Company by
commercial express mail.

      4.3 RELEASE OF DEPOSIT. Upon receipt of the Release Instruction from
Sprint, DSI has no obligation to determine independently whether a Release
Condition has occurred and no right to refuse to release the Deposit Materials
to Sprint. If Company disputes DSI's release of the Deposit Materials, Company
and Sprint will resolve the dispute as provided in the Services Agreement.
Regardless of whether Company disputes DSI's release of the Deposit Materials,
DSI is authorized and directed by Company and Sprint to release the Deposit
Materials to Sprint upon receipt of the Release Instruction. Any copying expense
in excess of $100 will be chargeable to Sprint. However, DSI is entitled to
receive any fees due DSI before making the release.



                                      -6-
<PAGE>
      4.4 RETURN OF DEPOSIT. During the term of this Agreement, upon the
resolution of any dispute pursuant to the Services Agreement requiring that the
Deposit Materials be returned to DSI, Sprint will deliver the Deposit Materials,
and all copies of these materials, in accordance with the order issued as a
result of dispute resolution and will certify in writing to Company that Sprint
has no copies of the Deposit Materials in Sprint's possession. Sprint will
conspicuously label for identification each document, magnetic tape, disk or
other tangible media upon which the Deposit Materials are written or stored.
Additionally, Sprint will complete a Description of Deposit Materials in the
form of Attachment B to this Agreement by listing each such tangible media by
the item label description, the type of media and the quantity. The Description
of Deposit Materials will be signed by Sprint and delivered to DSI with the
returned Deposit Materials. Upon receipt of the Deposit Materials DSI will
create a new Attachment B and hold and maintain that Attachment B separately
within the escrow account. DSI will create an independent record that will
document the activity for each above mentioned Attachment B.

      4.5 RETENTION BY DSI OF COPY OF DEPOSIT MATERIALS. Following release of
the Deposit Materials, DSI will retain a copy of the Deposit Materials for the
longer of (a) forty-five (45) calendar days and (b) the final resolution of any
dispute pursuant to the Services Agreement seeking the return of the Deposit
Materials to DSI (including the expiration of the time in which Sprint or
Company may seek judicial review of any order issued as a result of the dispute
resolution). DSI will then transfer to Company all copies of the Deposit
Materials then in its possession (including transferring to Company the title to
the media upon which the Deposit Materials are written or stored) and this
Agreement will terminate.

      4.6 VERIFICATION OF RETURNED DEPOSIT MATERIALS. If Sprint returns the
Deposit Materials to DSI as contemplated by Section 4.4 of this Agreement, DSI
will, upon written request from Z-Tel, compare file sizes and file names between
the returned Deposit Materials and the previously released Deposit Materials,
and take such other reasonable measures as are appropriate for purposes of
attempting to determine whether the returned Deposit Materials are different
from the previously released Deposit Materials. Sprint maintains the
responsibility to ensure the returned Deposit Materials are identical to those
that were released to Sprint pursuant to Section 4.3. The fees for DSI's
verification described in this Section 4.6 will be paid by Sprint.

                        ARTICLE 5 -- TERM AND TERMINATION

      5.1 TERM OF AGREEMENT. The initial term of this Agreement is for a period
of one year (the "INITIAL TERM"). After the Initial Term has expired, this
Agreement will automatically renew from year-to-year unless (a) Company and
Sprint jointly instruct DSI in writing that the Agreement is terminated; or (b)
DSI instructs Company and Sprint in writing that the Agreement is terminated for
nonpayment in accordance with Section 5.2 or by resignation in accordance with
Section 5.3. If the Deposit Materials are subject to another escrow agreement
with DSI, DSI reserves the right, after the Initial Term, to



                                      -7-
<PAGE>
adjust the anniversary date of this Agreement to match the then prevailing
anniversary date of the other applicable escrow arrangements.

      5.2 TERMINATION FOR NONPAYMENT. In the event of the nonpayment of fees
owed to DSI, DSI will provide written notice of delinquency to Sprint and
Company. Either Sprint or Company will have the right to make the payment to DSI
to cure the default. If the past due payment is not received in full by DSI
within sixty (60) calendar days after the date of the notice, then DSI will have
the right to terminate this Agreement at any time thereafter by sending written
notice of termination to all parties. DSI will have no obligation to take any
action under this Agreement so long as any payment due to DSI remains unpaid.

      5.3 TERMINATION BY RESIGNATION. DSI reserves the right to terminate this
Agreement, for any reason, by providing Company and Sprint with ninety (90)
calendar days' written notice of its intent to terminate this Agreement. Within
the ninety (90) day period, Company and Sprint may provide DSI with joint
written instructions authorizing DSI to forward the Deposit Materials to another
escrow company and/or agent or other designated recipient. If DSI does not
receive said joint written instructions within ninety (90) calendar days after
the date of DSI's written termination notice, then DSI will return or otherwise
deliver the Deposit Materials in accordance with Section 5.4.

      5.4 DISPOSITION OF DEPOSIT MATERIALS UPON TERMINATION. Subject to the
foregoing termination provisions, and upon termination of this Agreement, DSI
will return or otherwise deliver the Deposit Materials in accordance with
Company's instructions. If there are no instructions, DSI will return the
Deposit Materials to Company. DSI will have no obligation to return the Deposit
Materials if the Deposit Materials are subject to another escrow agreement with
DSI or have been released to Sprint in accordance with Section 4.3.

      5.5 SURVIVAL OF TERMS FOLLOWING TERMINATION. Upon termination of this
Agreement, the following provisions of this Agreement will survive:

            (a) Company's Representations (Section 1.5);

            (b) The obligations of DSI in Section 2.1 regarding confidentiality
      with respect to the Deposit Materials;

            (c) The rights granted in the sections entitled Right to Transfer
      Upon Release (Section 3.3), if a release of the Deposit Materials to
      Sprint has occurred before termination;

            (d) The obligation to pay DSI any fees and expenses due;

            (e) The provisions of Article 7; and

            (f) Any other provisions in this Agreement that specifically state
      they survive the termination of this Agreement.





                                      -8-
<PAGE>
                             ARTICLE 6 -- DSI'S FEES

      6.1 FEE SCHEDULE. Sprint will pay DSI its standard fees and expenses
applicable to the services provided. DSI will notify Sprint of DSI's fees at
least sixty (60) calendar days before any increase in fees. For any service not
listed on DSI's standard fee schedule, DSI will provide a quote before rendering
the service. Sprint will pay any fees charged by DSI for performing the services
described in Section 4.5 and Section 4.6 of this Agreement.

6.2 PAYMENT TERMS. DSI will not be required to perform any service unless the
payment for that service and any outstanding balances owed to DSI are paid in
full. Initial fees are due upon receipt of a signed contract or receipt of the
Deposit Materials, whichever is earliest. If invoiced fees are not paid within
sixty (60) calendar days after the date of invoice, DSI may terminate this
Agreement in accordance with Section 5.2.

                       ARTICLE 7 -- LIABILITY AND DISPUTES

      7.1 RIGHT TO RELY ON INSTRUCTIONS. DSI may act in reliance upon any
instruction, instrument, or signature from Sprint or Company authorized
representative that DSI believes to be genuine. DSI will not be required to
inquire into the truth or evaluate the merit of any statement or representation
contained in any notice or document. DSI will not be responsible for failure to
act as a result of causes beyond the reasonable control of DSI.

      7.2 INDEMNIFICATION. Company and Sprint each agree to indemnify, defend
and hold harmless DSI from any and all claims, actions, damages, arbitration
fees and expenses, costs, attorney's fees and other liabilities ("LIABILITIES")
incurred by DSI relating in any way to this escrow arrangement unless such
Liabilities were caused solely by the negligence or willful misconduct of DSI.

      7.3 DISPUTE RESOLUTION. In the event of a dispute between Company and
Sprint pursuant to a release of Deposit Materials under Article 4, Company and
Sprint will resolve such dispute in accordance with the Services Agreement. In
the event of any other dispute relating to or arising from this Agreement, DSI
may submit the matter to any court of competent jurisdiction in an interpleader
or similar action. Any and all costs incurred by DSI in connection with such
action, including reasonable attorneys' fees and costs, will be borne 50% by
each of Company and Sprint. DSI will perform any acts ordered by any court of
competent jurisdiction, without any liability or obligation to any party under
the order by reason of the act.

      7.4 CONTROLLING LAW. This Agreement will be governed and construed in
accordance with the laws of the State of Delaware, without regard to its
conflict of law provisions.



                                      -9-
<PAGE>
      7.5 NOTICE OF REQUESTED ORDER. If any party intends to obtain an order
from any arbitrator or any court of competent jurisdiction that may direct DSI
to take or refrain from taking any action, that party will:

            (a) Give DSI at least two (2) Business Days' prior notice of the
      hearing;

            (b) Include in any such order that, as a precondition to DSI's
      obligation, DSI be paid in full for any past due fees and be paid for the
      reasonable value of the services to be rendered under such order; and

            (c) Ensure that DSI not be required to deliver the original (as
      opposed to a copy) of the Deposit Materials if DSI may need to retain the
      original in its possession to fulfill any of its other duties.

      7.6 LIMITATION OF LIABILITY. In no event will DSI be liable for any
incidental, indirect, special, exemplary, punitive or consequential damages,
including, but not limited to, damages (including loss of data, revenue, and/or
profits) costs or expenses (including legal fees and expenses), whether
foreseeable or unforeseeable, that may arise out of or in connection with this
Agreement; and in no event shall the collective liability of DSI exceed ten
times the fees paid under this Agreement. The foregoing limitation of liability
does not apply with respect to any acts of gross negligence, personal injury
claims, property damage claims (excluding the Deposit), or intellectual property
infringement. The foregoing limitation of liability does not apply to any
unauthorized release of the Deposit Materials by DSI (whether intentionally or
negligently or otherwise), and DSI's liability is limited to adjudged, actual
damages (for the avoidance of doubt, actual damages includes incidental,
indirect, special, or consequential damages, but actual damages excludes
exemplary or punitive damages).

                         ARTICLE 8 -- GENERAL PROVISIONS

      8.1 ENTIRE AGREEMENT. This Agreement, which includes Attachments described
in this Agreement, embodies the entire understanding among the parties with
respect to its subject matter and supersedes all previous communications,
representations or understandings, either oral or written. DSI is not a party to
the Services Agreement between Company and Sprint. DSI's only obligations to
Company or Sprint are as set forth in this Agreement. No amendment or
modification of this Agreement will be valid or binding unless signed by all the
parties to this Agreement, except that Attachment A need not be signed by DSI,
Attachment B need not be signed by Sprint and Attachment C need not be signed.

      8.2 NOTICES. All notices, invoices, payments, deposits and other documents
and communications will be given to the parties at the addresses specified in
the attached Attachment C. It will be the responsibility of the parties to
notify each other as provided



                                      -10-
<PAGE>
in this Section in the event of a change of address. The parties will have the
right to rely on the last known address of the other parties. Unless otherwise
provided in this Agreement, all documents and communications may be delivered by
first class mail.

      8.3 SEVERABILITY. In the event any provision of this Agreement is found to
be invalid, voidable or unenforceable, the parties agree that unless it
materially affects the entire intent and purpose of this Agreement, such
invalidity, voidability or unenforceability will affect neither the validity of
this Agreement nor the remaining provisions in this Agreement, and the provision
in question will be deemed to be replaced with a valid and enforceable provision
most closely reflecting the intent and purpose of the original provision.

      8.4 SUCCESSORS. This Agreement will be binding upon and will inure to the
benefit of the successors and assigns of the parties. However, DSI will have no
obligation in performing this Agreement to recognize any successor or assign of
Company or Sprint unless DSI receives clear, authoritative and conclusive
written evidence of the change of parties.

      8.5 REGULATIONS. Company and Sprint are responsible for and warrant
compliance with all applicable laws, rules and regulations, including but not
limited to customs laws, import, export, and re-export laws and government
regulations of any country from or to which the Deposit Materials may be
delivered in accordance with the provisions of this Agreement.

Z-TEL COMMUNICATIONS, INC.               SPRINT COMMUNICATIONS COMPANY L.P.

By: _________________________________   By: _________________________________
Name:________________________________   Name:________________________________
Title:_______________________________   Title:_______________________________
Date:________________________________   Date:________________________________







                  DSI TECHNOLOGY ESCROW SERVICES, INC.

                  By:_______________________________________
                  Name:_____________________________________


                                      -11-
<PAGE>
                                  SCHEDULE 2.1

                               LEVEL 1 - INVENTORY

This series of tests provides insight into whether the necessary information
required to recreate the Depositor's development environment has been properly
stored in escrow. These tests detect errors that often inhibit effective use of
the escrow deposit.

Steps include: Analyzing deposit media readability, virus scanning, developing
      file classification tables, identifying the presence/absence of build
      instructions; and identifying materials required to recreate the
      Depositor's software development environment. At completion of testing,
      DSI will distribute a report to Preferred Beneficiary detailing DSI's
      investigation which will include attachments of any build instructions,
      file classification tables and listings, and listings of required software
      development materials, including without limitation, required source code
      languages and compilers, third-party software, libraries, operating
      systems, and hardware, as well as DSI's analysis of the deposit (when
      identifying materials required to recreate Depositor's software
      development environment, DSI will rely on (1) information provided in
      Depositor's completed questionnaire, this can be obtained via a DSI
      verification representative, and/or (2) DSI's testing experience).




                                      -12-
<PAGE>
                                  ATTACHMENT A

                            MATERIALS TO BE DEPOSITED

                      Account Number ______________________

Z-Tel represents to Sprint that Deposit Materials delivered to DSI will consist
of the following:

Z-Node OA&M Software
Z-Node Service Software and Configuration Specifications to support:
            Voice Mail
            Family Mailbox
            Find Me
            Notify Me
            On-Line Account Maintenance
            Web Access to Features
            Telution Configuration Specifications
Z-Tel Custom Software
            Local Calling Area Lookup
            Local Calling Cap Viewer
            Pre-Processor for CDR (Mediation and Rating)
            Bill Processing Scripts
            Post-Process Validation
Customer Care Interface (CCI) Software
Agent Desktop Phone (ADP) Software
Call Center IVR Scripts
Report Hierarchy & Menus
ILEC Gateway Software
RTS Provisioning Gateway
RTS middleware

For each item above Z-Tel will provide the applicable source code (where
applicable), related documentation, software development tools and training
materials.

_____________________________________    _____________________________________
Z-Tel Communications, Inc.               Sprint Communications Company L.P.

By: _________________________________    By: _________________________________
Name:________________________________    Name:________________________________
Title:_______________________________    Title:_______________________________
Date:________________________________    Date:________________________________




                                      -13-
<PAGE>
                                  ATTACHMENT B

                        DESCRIPTION OF DEPOSIT MATERIALS

Z-Tel Communications, Inc. ___________________________________________________

Account Number _______________________________________________________________

      F. Product Name Version

(Product Name will appear as the Attachment B Name on Account History report)

DEPOSIT MATERIAL DESCRIPTION:

Quantity    Media Type & Size            Label Description of Each Separate Item
______      Disk 3.5" or ____
______      DAT tape ____mm
______      CD-ROM
______      Data cartridge tape ____
______      TK 70 or ____ tape
______      Magnetic tape ____
______      Documentation
______      Other ______________________

PRODUCT DESCRIPTION:
Environment___________________________________________________________________

DEPOSIT MATERIAL INFORMATION:

Is the media or are any of the files encrypted? Yes / No If yes, please include
any passwords and the decryption tools.
Encryption tool name____________________________________ Version______________
Hardware required_____________________________________________________________
Software required_____________________________________________________________
Other required information____________________________________________



                                      -14-
<PAGE>
I certify for Z-TEL that the above described___________________________DSI has
inspected and accepted the above Deposit Materials have been transmitted to
DSI:________________________materials (any exceptions are noted above):

Signature________________________         Signature___________________________
Print Name_______________________         Print Name__________________________
Date_____________________________         Date Accepted_______________________
                                          Attachment B#_______________________

    Send materials to: DSI, 9265 Sky Park Ct., Suite 202, San Diego, CA 92123
                                 (858) 499-1600



                                      -15-
<PAGE>
                                  ATTACHMENT C

                               DESIGNATED CONTACT

                      Account Number ______________________

Notices, deposit material returns and    Invoices to Z-Tel should be
communications to Z-Tel                  addressed to:
should be addressed to:
                                         ____________________________________
                                         ____________________________________
Company Name:_______                     ____________________________________
Address:_______                          ____________________________________

Designated Contact:_______               Contact:_______

Telephone:_______                        ____________________________________
Facsimile:_______                        P.O.#, if required:_________________
E-mail:  _________________________
Verification Contact:  ___________                  (a) E-mail:
                                            _________________________________

Notices and communications to            Invoices to Sprint
Sprint should be addressed to:           should be addressed to:

Company Name:_______                     ____________________________________
                                         ____________________________________
Address:_______                          ____________________________________
Designated Contact:_______                      Contact:_______

Telephone:_______
Facsimile:_______                        P.O.#, if required:_________________
E-mail:  ________________________                    (b) E-mail:
                                            _________________________________

Requests from Z-Tel or Sprint to change the designated contact should be given
in writing by the designated contact or an authorized employee of Z-Tel or
Sprint.

Contracts, Deposit Materials and         Invoice inquiries and fee remittances
notices to                               to DSI should be addressed to:
DSI should be addressed to:

DSI Technology Escrow Services, Inc.     DSI Technology Escrow Services, Inc.
Contract Administration                  PO Box 45156
9265 Sky Park Court, Suite 202           San Francisco, CA  94145-0156
San Diego, CA 92123
Telephone: (858) 499-1600                (858) 499-1636
Facsimile: (858) 694-1919                (858) 499-1637
E-mail: ca@dsiescrow.com

Date:_________________________________


                                      -16-
<PAGE>
                                  ATTACHMENT D

                      TECHNOLOGY ESCROW RELEASE INSTRUCTION

To: DSI Technology Escrow Services, Inc.

From: Sprint Communications Company L.P

Re: Z-Tel/Sprint Technology Escrow

The undersigned Officer certifies, on behalf of Sprint Communications Company
L.P, that a Z-Tel Triggering Event has occurred within the meaning of the
Agreement for Wholesale Telephone Exchange Services, Z-Node Services, Ancillary
Services and Technology License dated February ____, 2003 between Z-Tel
Communications, Inc. and Sprint Communications Company L.P. That event is

_________________________________________________________
____________________________________________________________________________

OR

The undersigned Officer certifies, on behalf of Sprint Communications Company
L.P, that a Z-Tel Liquidation Proceeding has occurred within the meaning of the
Agreement for Wholesale Telephone Exchange Services, Z-Node Services, Ancillary
Services and Technology License dated February _____, 2003 between Z-Tel
Communications, Inc. and Sprint Communications Company L.P. That event is

_________________________________________________________
____________________________________________________________________________

The undersigned Officer also certifies, on behalf of Sprint Communications
Company L.P., that Sprint has tendered to Z-Tel in immediately available funds
all non-disputed fees and charges currently due Z-Tel.

The undersigned Officer demands, on behalf of Sprint Communications Company
L.P., the immediate release of the Technology Escrow Materials to Sprint.

SPRINT COMMUNICATIONS COMPANY L.P.

BY:__________________________
TITLE:_______________________
DATE:________________________







                                      -17-
<PAGE>
                                  ATTACHMENT E

                                   DEFINITIONS

ANCILLARY SERVICES means any facility or service that is requested by Sprint
that is not a Telecommunications Service or an Information Service that is
necessary or desirable to directly support delivery by Sprint of
Telecommunications Services and Information Services to its End Users and is not
identified as a function to be performed by Z-Tel in the SOW.

BANKRUPTCY OR BANKRUPT means the happening of any of the following events:

      (a) the filing of an application for, or a consent to, the appointment of
a trustee, receiver or liquidator for all or any substantial portion of the
party's assets;

      (b) the filing of a voluntary petition in bankruptcy;

      (c) the filing of a pleading in any court of record admitting inability to
pay debts as they come due;

      (d) the making of an assignment for the benefit of creditors;

      (e) the consenting to, or default in the answering of, a bankruptcy
petition filed;

      (f) the entry of a judgment or decree in any bankruptcy or insolvency
proceeding adjudicating bankruptcy or insolvency;

      (g) the entry of an order for any relief in any bankruptcy or insolvency
proceeding;

      (h) when one hundred twenty (120) calendar days after the commencement of
any involuntary proceeding seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any statute, law
or regulation, the proceeding has not been dismissed; and

      (i) when ninety (90) calendar days after the appointment, without the
party's consent or acquiescence, of a trustee, receiver or liquidator of the
Party or all or any substantial portion of the party's assets, the appointment
has not been vacated or stayed or when ninety (90) calendar days after the stay
the appointment has not been vacated.

CHANGE OF CONTROL means the occurrence of any of the following events:

      (a) Any "person" (as that term is defined in Sections 3(a)(9), 13(d), and
14(d) of the Securities Exchange Act of 1934 (the "EXCHANGE ACT") and the rules
under the Exchange Act, including Rule 13d-5(b)) acquires, directly or
indirectly, "beneficial ownership" (as determined under Rule 13d-3 under the
Exchange Act) of securities



                                      -18-
<PAGE>
entitled to vote generally in the election of Z-Tel's directors ("VOTING
SECURITIES") so that, after the acquisition, the "person" holds, directly or
indirectly, shares of voting securities representing forty percent (40%) or more
of the combined voting power of Z-Tel's then outstanding voting securities,
other than an acquisition of voting securities:

      (i) by a trustee or other fiduciary holding the securities under any
employee benefit plan (or related trust) sponsored or maintained by Z-Tel or any
person that Z-Tel controls,

      (ii) by any employee benefit plan (or related trust) sponsored or
maintained by Z-Tel or any person that Z-Tel controls,

      (iii) by Z-Tel,

      (iv) by a corporation owned, directly or indirectly, by Z-Tel's
stockholders in substantially the same proportions as their ownership of Z-Tel
stock, or

      (v) in a transaction that would not be a Change in Control under clause
(c) below.

      Notwithstanding the foregoing, an event is not a "Change of Control" under
this subparagraph (a) unless:

      (A) the "person" is one or more Change of Control Companies or any of
their respective Affiliates or successors, or

      (B) the "person" includes one or more Change of Control Companies or any
of their respective Affiliates or successors, and any included Change of Control
Company, Affiliate or successor owns, controls or otherwise holds (together with
its Affiliates and successors) voting securities representing in aggregate
************************* or more of the combined voting power of the "person's"
then outstanding voting securities.

      For purposes of this Agreement, the "CHANGE OF CONTROL COMPANIES" are
*****************************************************************************
**************************************************************************. For
the avoidance of doubt, nothing in the proceeding will limit the effectiveness
of the exclusions set forth in clauses (i), (ii), (iii), (iv), and (v) of this
subparagraph (a).

      (b) A change occurs in the composition of Z-Tel's Board of Directors that
causes less than a majority of Z-Tel's directors to be directors that meet one
or more of the following descriptions:

      (i) a director who:

            (A) has been a director of Z-Tel for a continuous period of at least
the previous twelve (12) months, or

            (B) was a director of Z-Tel as of the Effective Date and has
continued that role continuously without interruption since the Effective Date,



                                      -19-
<PAGE>
      (ii) a director whose election or nomination as director was approved by a
vote of at least two-thirds of the then directors described in this clause (b)
by prior nomination or election, but excluding, for the purpose of this
subclause (b)(ii), any director whose initial assumption of office occurred as a
result of:

      (A) an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person or group other than Z-Tel's Board of
Directors, or

      (B) a tender offer, merger, sale of substantially all of Z-Tel's assets,
consolidation, reorganization or business combination that would be a Change in
Control under clause (c) below, or

      (iii) a director who was serving on Z-Tel's Board of Directors as a result
of the consummation of a transaction that would not be a Change in Control under
clause (c) below.

      Notwithstanding the foregoing, an event is not a "Change of Control" under
this subparagraph (b) unless after the event a majority of Z-Tel's directors are
representing (through any arrangement, agreement, or understanding), were
designated by, or are employed by, one or more of the Change of Control
Companies or any of their respective Affiliates or successors.

      (c) Z-Tel consummates (whether directly involving Z-Tel or indirectly
involving Z-Tel through one or more intermediaries):

      (i) a merger, consolidation, reorganization or business combination,


      (ii) a sale or other disposition of all or substantially all of its
assets, or


      (iii) the acquisition of assets or stock of another entity,

      in each case, other than in a transaction:

      (A) that results in Z-Tel's voting securities outstanding immediately
before the transaction continuing to represent (either by remaining outstanding
or by being converted into voting securities of Z-Tel or the person that, as a
result of the transaction, controls, directly or indirectly, Z-Tel or owns,
directly or indirectly, all or substantially all of Z-Tel's assets or otherwise
succeeds to Z-Tel's business (Z-Tel or such person, the "SUCCESSOR ENTITY"))
directly or indirectly, at least ******************* of the combined voting
power of the Successor Entity's outstanding voting securities immediately after
the transaction,

      (B) after which more than ******************* of the members of the
Successor Entity's Board of Directors were members of Z-Tel's Board of Directors
when Z-Tel's Board of Director's approved the transaction (or whose election or
nomination was approved by a vote of at least two-thirds of the members who were
members of Z-Tel's Board of Directors at that time), and



                                      -20-
<PAGE>
      (C) after which no person or group beneficially owns voting securities
representing ******************* or more of the combined voting power of the
Successor Entity (but no person or group will be treated for purposes of this
clause (C) as beneficially owning ******************* or more of combined voting
power of the Successor Entity solely because of the voting power the person or
group held in Z-Tel before the consummation of the transaction.

      Notwithstanding the foregoing, an event is not a "Change of Control" under
this subparagraph (c) unless it results, whether through one transaction or a
series of related transactions occurring during any 365-day period, in the
"ultimate parent entity" (as defined in the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
under such act, but using a ******** rather than a ********* of Z-Tel becoming
any of the Change of Control Companies or any of their respective Affiliates or
successors.

      Z-Tel liquidates or dissolves.

      DISCONNECT means the process by which dial tone is disabled by the serving
carrier in association with an End User line.

      END USER means, with respect to any party, the party's retail customers
including business users. "Sprint's End Users" (and derivatives thereof)
includes any End User of Sprint's Affiliates who are purchasing Local Wholesale
Services.

      ILEC or INCUMBENT LOCAL EXCHANGE CARRIER means with respect to an area,
the local exchange carrier that:

      (a) on the date of enactment of the Telecommunications Act of 1996,
provided telephone exchange service in such area; and

            (b) (i) on the date of enactment of the Telecommunications Act of
1996, was deemed to be a member of the exchange carrier association pursuant to
Section 69.601(b) of the FCC's regulations (47 C.F.R. Section 69.601(b)); or
(ii) is a person or entity that, on or after such date of enactment, became a
successor or assign of a member described in clause (i)

      INFORMATION SERVICE(S) has the meaning set forth in Section 3(20) of the
Communications Act of 1934, as amended, 47 U.S.C. Section 153(20).

LOCAL WHOLESALE SERVICES means:

      (a) Telephone Exchange Service that Z-Tel provides to other carriers for
resale to their End Users, and other associated services through use of Z-Tel's
OCN, such as basic and adjunct to basic vertical services, and exchange access
functionality, and



                                      -21-
<PAGE>
      (b) Telephone Exchange Service that Z-Tel supports for sale by Sprint to
its End Users, and other associated services through use of Sprint's OCN, such
as basic and adjunct to basic vertical services and exchange access
functionality.

      OCN means operating company number.

      OSS SERVICES or OPERATIONS SUPPORT SYSTEM SERVICES means all
functionalities (as well as the hardware, software and documentation) that is
reasonably necessary, required or useful to directly or indirectly support
delivery of LW Based Services or Z-Tel Information Services to Sprint's End
Users. Included within OSS Services, without limitation, are the following
functionalities: ordering, provisioning, billing and collection, fulfillment,
sales, preparing and handling CDRs, and customer care. For the avoidance of
doubt, "OSS Services" does not include any Telecommunications Service, any
Information Service or any customization of Z-Tel Technology that is developed
as an Ancillary Service.

      REPAIR means the report and resolution of service issues

      SERVICE LEVEL AGREEMENTS or SLAS means specified levels of service that
Z-Tel is responsible to provide in relation to Local Wholesale Services, Z-Node
Services and OSS Services.

      SHORT TERM DEFERRED REVENUE means revenues offset to future periods for
revenue recognition purposes that are included in current liabilities.

      TELECOMMUNICATIONS SERVICES means the offering of telecommunications for a
fee directly to the public, or to such classes of users as to be effectively
available directly to the public, regardless of the facilities used.

TELEPHONE EXCHANGE SERVICE means:

      (a) service within a telephone exchange, or within a connected system of
telephone exchanges within the same exchange area operated to furnish to
subscribers intercommunicating service of the character ordinarily furnished by
a single exchange, and which are covered by the exchange service charge, or

      (b) comparable service provided through a system of switches, transmission
equipment, or other facilities (or combination thereof) by which a subscriber
can originate and terminate a Telecommunications Service.

Telephone Exchange Service involves the combination of loop, switch port and any
other necessary elements required to provide an unbroken signal of 350 + 440 Hz
reflecting that telephone service is currently provided and that the telephone
company is ready to receive dialed digits.



                                      -22-
<PAGE>
      Z-NODE SERVICES means any proprietary Z-Tel Information Service or Z-Tel
Adjunct to Basic Service provided as a vertical feature through the Z-Line
Platform. Available Z-Node Services include Voice Mail, Family Mail Box, Find
Me, On-Line Account Maintenance, Notify Me, and Web Access. For the avoidance of
doubt, Z-Node Services will not include access to Z-Tel's Personal Voice
Assistant service ("PVA(TM) service")



                                      -23-

<PAGE>

ABA #:

Account #:

Account Holder:

Amount Disbursed:

                                  ATTACHMENT B

                                  ESCROW FEES


ACCEPTANCE AND SET-UP FEE:   $1,500
(payable upon funding the escrow)

ANNUAL ADMINISTRATION FEE:   $1,500
(for services for one year or any
part thereof, payable in advance)

INVESTMENT FEES: Included in the annual administration fee, except for the point
two five percent (0.25%) money management fee charged by the money market funds,
which fee will be in addition to the annual administration fee.

OUT-OF-POCKET EXPENSES: Any out-of-pocket expenses, including fees and charges
for legal counsel or other professional advisors, will be charged as incurred.

                                    EXHIBIT B

                          TECHNOLOGY ESCROW AGREEMENT

                                      131

<PAGE>

                                    EXHIBIT C

             FORM OF TEXT FOR INITIAL SEC FILING AND PRESS RELEASE

             Z-TEL AND SPRINT SIGN AGREEMENT FOR WHOLESALE SERVICES

           MEDIA CONTACTS:
         Sarah E. Bialk            Christine Attalla

         Z-Tel Technologies, Inc.                  PR Results (PR(2))(TM)
         813-233-4586                          630.783.1024
         sbialk@z-tel.com                      cattalla@prresults.org

TAMPA, Fla. (February 4, 2003) - Z-Tel Technologies, Inc. (NASDAQ: ZTEL), a
leading provider of local, long distance and enhanced telecommunications
services, today announced it has signed a non-exclusive, wholesale services
agreement with the Sprint Corporation (NYSE: FON, PCS). The agreement gives
Sprint access to Z-Tel's Web-integrated enhanced communications platform and
operational support systems related to providing local residential telephone
service. Specific financial terms of the agreement were not disclosed.

Z-Tel's Web-integrated enhanced services include Internet-accessible voicemail,
multiple-number call forwarding and message notification by email, cell phone or
pager. The agreement offers Sprint a cost-effective avenue to meet consumers'
increasing demand for bundled telecommunications services outside of Sprint's
existing local markets.

Gregg Smith, president and chief executive officer for Z-Tel, commented, "Our
wholesale business model gives companies access to our state-of-the-art enhanced
services and an efficient way to enter the local services market. We're proud to
offer these benefits to Sprint."

Harry Campbell, president of Sprint's Mass Markets Organization, stated, "Z-Tel
offers valuable functionality for Sprint to conduct market tests to explore
providing a coast-to-coast local telephone service offering."

Smith concluded, "With our demonstrated operational expertise and proprietary,
Web-integrated calling and messaging suite, we're in a unique position to
quickly and seamlessly help companies establish or expand their presence in the
local telecommunications services market."

ABOUT Z-TEL

Z-Tel was founded in the wake of the Telecommunications Act of 1996. With the
establishment of the Unbundled Network Element-Platform (UNE-P), competitive
telecommunications companies became able to provide telephone service to
end-users over the incumbent local

telephone providers' network. Z-Tel was formed around UNE-P with the vision of
developing technology that would imbue the telephone with "Intelligent Dial
Tone," wherein telephone service can be personalized to meet consumers' and
businesses' diverse communications needs in an intelligent, intuitive way. Z-Tel
offers residential and business customers in 46 states value-added bundled local
and long distance phone service with proprietary Internet-accessible calling and
messaging features. Z-Tel also makes these services available on a wholesale
basis. For more information about Z-Tel's innovative services or about Z-Tel,
please visit the Company's Web site at www.ztel.com.

                                      132

<PAGE>

ABOUT SPRINT

Sprint is a global communications company serving more than 26 million business
and residential customers in over 70 countries. With approximately 72,000
employees worldwide and more than $26 billion in annual revenues, Sprint is
widely recognized for developing, engineering and deploying state-of-the-art
network technologies, including the United States' first nationwide all-digital,
fiber-optic network and Sprint's award-winning Tier 1 Internet backbone. Sprint
provides local voice and data services in 18 states and operates the largest
100-percent digital, nationwide PCS wireless network in the United States.

This press release contains forward-looking statements. These forward-looking
statements are based on the belief of our management, as well as assumptions
made by and information currently available to our management. You can identify
forward-looking statements by the fact that they do not relate strictly to
historical or current facts. The words "believe," "anticipate," "intend,"
"expect," "estimate," "project" and similar expressions are intended to identify
forward-looking statements. Forward-looking statements describe our expectations
today of what we believe is most likely to occur or may be reasonably achievable
in the future, but they do not predict or assure any future occurrence and may
turn out to be wrong. Forward-looking statements are subject to both known and
unknown risks and uncertainties and can be affected by inaccurate assumptions we
might make. Consequently, no forward-looking statement can be guaranteed. Actual
future results may vary materially. We do not undertake any obligation to
publicly update any forward-looking statements to reflect new information or
future events or occurrences. These statements reflect our current views with
respect to future events and are subject to risks and uncertainties about us,
including risk factors that are described in detail in Z-Tel's 2001 Annual
Report on Form 10-K filed on March 29, 2002; and in Z-Tel's other filings with
the Securities and Exchange Commission.

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<PAGE>

                                    EXHIBIT D

        Z-TEL BLANKET AGENCY AGREEMENT LETTER FOR LOCAL SERVICE PROVIDERS

         I am an official of Sprint Communications Company L.P. ("SPRINT") and
am authorized to commit my company to the conditions stated in this Agreement:

1.  Sprint will not knowingly submit any inquiries, requests or orders for
         service to Z-Tel without legally adequate authorization and
         verification of the customer to which such inquiries, requests or
         orders are connected.

2.  The agreement between Sprint and the End User provides that the Sprint
         is solely responsible for representing the End User in all requests
         relating to local service. The agreement between Sprint and the End
         User holds the End User responsible to Sprint for all charges incurred
         on the End User's behalf for local service.

3.  Z-Tel may provide ordering and management services to Sprint including
         sending


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<PAGE>

         Sprint orders for local service using the Sprint OCN through Z-Tel
         systems and interfaces. Z-Tel may also resell UNE-based services to
         Sprint that have been ordered using Z-Tel's OCN. When Z-Tel's OCN is
         used, Sprint is responsible to Z-Tel for all charges that are incurred
         in connection with service requests for Sprint's End Users regardless
         of whether the End User meets payment responsibilities to Sprint. When
         Sprint's OCN is used, Sprint is directly responsible to the ILEC for
         all charges that are incurred in connection with service requests for
         Sprint's End Users.

4.  To the extent required, Sprint grants Z-Tel the authorization to act in
         its behalf concerning the placement of local service orders for Sprint
         End Users with any ILEC including both those submitted using the Z-Tel
         OCN and those using a Sprint OCN. Unless agreed to in writing by both
         parties, the Sprint End Users will deal directly with Sprint on all
         inquiries concerning their Local Service. This may include, but is not
         limited to, billing, repair, directory listings, and number
         portability.

5.  Z-Tel is authorized to release all information regarding the Sprint End
         User's local service to Sprint.

6.  This Agreement will continue in effect unless canceled by prior written
         notice by Z-Tel or Sprint at least thirty (30) calendar days before the
         effective date of cancellation. Cancellation will not release or limit
         any matters occurring before the cancellation of this Blanket Agency
         Agreement.

_________________________________________
Signature of Officer

_________________________________________
Title of Officer

_________________________________________
Company Name


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