Document:

Exhibit 10.1

 

Exhibit 10.1

SETTLEMENT AGREEMENT AND GENERAL RELEASE

     This Settlement Agreement and General Release (the “Agreement”) is entered into as of this
16th day of February, 2006 (the “Effective Date”), between Sprint
Communications Company L.P., a Delaware limited partnership, having offices at 6500 Sprint Parkway,
Overland Park, Kansas 66251, on behalf of itself and all parent, subsidiary and affiliated
corporations (“Sprint”), excluding the business of the Sprint local telecommunications division
operations as generally described in the Form 10 filed January 23, 2006, with the United States
Securities and Exchange Commission by LTD Holding Company, which includes, but is not limited to
the companies listed in the attached Exhibit “A,” each a corporation with its principal place of
business located at 5454 W. 110th Street, Overland Park, Kansas 66211 and operating as an ILEC (as
defined in 47 CFR § 6l.26(a)(2)) (“LTD Local”) and US LEC Corp., and all of its
affiliates or subsidiaries, including, but not limited to US LEC of Alabama Inc., US LEC of Florida
Inc., US LEC of Georgia Inc., US LEC of North Carolina Inc., US LEC of Tennessee Inc., US LEC of
Virginia L.L.C., US LEC of Maryland Inc., US LEC of Pennsylvania Inc., US LEC of South Carolina
Inc., and US LEC Communications Inc. (collectively “US LEC”) (Sprint and US LEC together, the
“Parties”).

     WHEREAS, disputes have arisen among the Parties regarding US LEC’s charges to Sprint for
certain Switched Access Services in connection with 8YY Traffic sent by US LEC to Sprint for
delivery to Sprint’s 8YY customers; and

     WHEREAS, the Parties desire to enter into this Agreement to resolve all disputes between
Sprint and US LEC relating to US LEC’s Switched Access Services billed for 8YY Traffic sent by US
LEC to Sprint, without any admission of wrongdoing or liability on the part of either Party; and

 

 

     WHEREAS, the Parties desire to avoid future billing disputes and for that purpose an agreement
governing the conduct of fixture business regarding access services (“Access Services Agreement”)
is being executed contemporaneously with this Agreement.

     NOW, THEREFORE, in consideration of the mutual benefit of the exchanges detailed below, the
Parties agree as follows:

     1. Payments

     a. Within ten (10) business days of the execution of this Agreement, Sprint shall pay to US
LEC the total sum of [***] by wire transfer which shall be deemed full payment in settlement of all
invoices sent by US LEC to Sprint for Switched Access Service for CIC 333 for all billed 8YY usage,
and for all other outstanding balances arising from US LEC invoices disputed by Sprint, for all
usage periods up to and including [***]. Payment will be made by wire transfer to:

     [***]

     b. For all US LEC invoices for Switched Access Service for usage beginning [***], Sprint shall
make payment to US LEC by a mutually agreed electronic means for all amounts not subject to a good
faith dispute under the terms of the Access Services Agreement referenced in the recitals to this
Agreement and as required by [***]. In each instance of a dispute, and in accordance with the
terms of [***] Sprint shall deliver to US LEC a written statement of the amount in dispute, all
reasons for the dispute, and provide to US LEC any documentation in Sprint’s possession supporting
Sprint’s basis to dispute the invoice.

 

			
	[***]	 	These portions of this exhibit
have been omitted and filed
separately with the Commission
pursuant to a request for
confidential treatment.

2

 

     2. Releases

     a. Except as set forth in this Agreement, Sprint releases US LEC, and its and their directors,
officers, shareholders, trustees, employees, representatives, agents, independent contractors, and
attorneys from any and all claims arising from the billing and payment for Switched Access
Services by US LEC to Sprint, including but not limited to the billing of Switched Access Service
for 8YY Traffic, at any time up to and including the usage period ending [***], whether such claim
is known or unknown, accrued or inchoate.

     b. Except as set forth in this Agreement, upon receipt of the payment required by Paragraph
1.a hereof, US LEC releases Sprint and its and their directors, officers, shareholders, trustees,
employees, representatives, agents, independent contractors, and attorneys from any and all claims
arising out of the non-payment or dispute of invoices that have been issued by US LEC to Sprint for
Switched Access Services, including 8YY Traffic, at any time up to and including the usage period
ending [***], whether such claim is known or unknown, accrued or inchoate.

     3. Definitions

     For purposes of this Agreement the following definitions shall control:

     a. “Switched Access Service” means a service providing access to the switched
- network of a telecommunications carrier for the purpose of originating or terminating
inter-exchange interstate and intrastate telecommunications. Switched Access Service does not
include local switched service, but does include 8YY Traffic sent by US LEC to Sprint.

 

			
	[***]	 	These portions of this exhibit have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment.

3

 

     b. “ILEC” means an incumbent local exchange carrier (as that term is defined in 47 CFR §
61.26(a)(2)).

     c. “Proprietary Information” means information that is marked or otherwise specifically
identified in writing as proprietary, confidential or trade secret. Proprietary Information
includes, but is not limited to, the terms of this Agreement, and the discussions, correspondence
and negotiations that led to the Agreement,

     d. “8YY Traffic” and “8YY Calls” means interstate and intrastate calls, including Wireless 8YY
Calls, intended to terminate to a telephone number for which there is no charge to the calling
party by an interexchange carrier for making and completing the calls.

     e. “Wireless 8YY Traffic” or “Wireless 8YY Calls” means interstate and intrastate 8YY calls
from CMRS Providers’ subscribers.

     f. “Government Agency” means a federal or state board, agency, authority, commission, or other
entity with jurisdiction over the traffic which is the subject of this Agreement, including but not
limited to the Federal Communications Commission (“FCC”).

     g. “Act” means the Communications Act of 1934, as amended by the Telecommunications Act of
1996.

     h. “CMRS Provider” means an entity that provides mobile service, as defined in Section 153(27)
of the Act, for profit (i.e. with the intent of receiving compensation or monetary gain), is an
interconnected service; and is available to the public, or to such classes of eligible users as to
be effectively available to a substantial portion of the public.

     4. Fees and Expenses

     Each Party will pay its own attorneys’ fees and expenses.

     5. Successors and Assigns

     This Agreement shall be binding upon the Parties’ successors and assigns.

4

 

     6. Confidential Nature of Settlement

     a. The Parties agree to hold in the strictest confidence the substance of any and all
settlement negotiations, documents exchanged during settlement discussions, or information learned
or acquired during settlement discussions, as well as the terms of any final agreements that may be
reached as a result of settlement discussions (collectively, “Settlement Information”), and not to
reveal any such Settlement Information to any person except as provided herein.

     b. Each party will hold in confidence Proprietary Information disclosed by the other party
except if it (a) was previously known by the receiving party free from any obligation to keep it
confidential, (b) is independently developed by the receiving party, (c) becomes publicly
available, and/or (d) is disclosed to the receiving party by a third party without breach of any
confidentiality obligation. Proprietary Information may be disclosed to an entity or person that
controls a party (including such controlling party’s directors, officers and shareholders), and to
a party’s legal counsel, auditors and investment advisers, provided that such representatives are
bound by appropriate confidentiality obligations that by their terms include the information
considered Proprietary Information hereunder. Proprietary Information may also be used in any
proceeding between the Parties to establish rights and obligations under this Agreement.

     c. If either Party is required to disclose Proprietary Information in judicial or
administrative proceedings, such Party will, unless prohibited by applicable law or the terms of
the applicable order, (i) give the other Party prompt written notice and the opportunity, in
advance of such disclosure, to seek protective arrangements and will cooperate with the other Party
(at such other Party’s expense) in that regard, and (ii) disclose only that Proprietary Information
required to be disclosed.

5

 

     d. US LEC and Sprint may each issue a press release regarding the settlement and this
Agreement, which may include statements as to financial impact but not the specific financial
terms, or as may be required by the securities laws as their respective securities counsel may
advise.

     7. Authority.

     a. US LEC Corp. has full corporate and other authority to execute and deliver this Agreement,
including but not limited to the release, to perform its obligations hereunder, and to consummate
the transactions contemplated hereby on behalf of US LEC.

     b. US LEC has duly executed and delivered this Agreement, and this Agreement constitutes (when
executed and delivered) the legal, valid and binding obligation of US LEC, and is enforceable
against it in accordance with its terms, except that such enforcement (i) may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally, and (ii)
is subject to the availability of equitable remedies, as determined in the discretion of the court
before which such a proceeding may be brought.

     c. Sprint has full corporate and other authority to execute and deliver this Agreement,
including but not limited to the releases, to perform its obligations hereunder, and to consummate
the transactions contemplated hereby.

     d. Sprint has duly executed and delivered this Agreement, and this Agreement constitutes (when
executed and delivered) the legal, valid and binding obligation of Sprint, and is enforceable
against it in accordance with its terms, except that such enforcement (i) may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally, and (ii)
is subject to the availability of equitable remedies, as determined in the discretion of the court
before which such a proceeding may be brought.

6

 

     8. No Third Party Beneficiaries

     This Agreement does not provide and is not intended to provide third parties with any remedy,
claim, liability, reimbursement, cause of action, or other privilege.

     9. Entire Agreement

     This Agreement and the Access Services Agreement referenced in the recitals to this Agreement
contains the entire understanding between Sprint and US LEC with respect to the resolution of the
matters addressed in this Agreement. Nothing contained in this Agreement shall have the effect of
impairing US LEC’s rights or Sprint’s rights under the US LEC tariffs or under applicable law,
except as specifically set forth in this Agreement or in the Access Services Agreement.

     10. Preparation of Document and Effectiveness

     Each Party has participated in the creation of this Agreement. No legal principle
interpreting the Agreement against the drafter will apply. Each Party in entering into this
Agreement has completely read and fully understood the terms and conditions of the Agreement. This
Agreement shall not become effective unless and until the Access Services Agreement referenced in
the recitals to this Agreement is fully executed. If the Access Services Agreement is not executed
within five (5) business days of the date of execution of this Agreement, or if the payment
contemplated by paragraph 1.a. of this Agreement is not received, then this Agreement shall become
void.

     11. No Admission

     Neither any provision of this Agreement taken individually nor the Agreement taken as a whole
is to be construed as an admission of liability by any of US LEC, Sprint, or their past and current
directors, stockholders, officers, employees, representatives, agents, assignors or assignees.

7

 

     12. Counterparts

     The parties agree that this Agreement may be executed in a number of counterparts, each of
which shall be considered an original instrument, but all of which together shall be considered but
one and the same instrument. This Agreement shall be binding on all signatories hereto, even if
executed in any number of counterparts,

     13. Notices

     All notices required or permitted under this Agreement and all requests for approvals,
consents, and waivers must be in writing and must be delivered by a method providing for proof of
delivery (including express courier if receipt is acknowledged by the recipient) and will be deemed
delivered when actually received. Fax and e-mail delivery methods do not constitute written
notice. Any notice or request will be delivered to the addresses specified below.

If to US LEC:

Thomas Gooley

Vice President-Treasurer

US LEC Corp.

6801 Morrison Boulevard

Morrocroft III

Charlotte, NC 28211

Fax number: 704-602-1133

e-mail: tgooley@uslec.com

with a copy to

General Counsel

US LEC Corp.

6801 Morrison Boulevard

Morrocroft III

Charlotte, NC 28211

Fax number: 704-319-3007

If to Sprint:

Director, Access Verification

6500 Sprint Parkway

KSOPHL0402-4A153

Overland Park, KS 66251

8

 

with a copy to:

David Nall

Director, Government Affairs - Wireline

401 9th Street N.W.

Suite 400

DCWAS0101-462

Washington, DC 20004-2133

and

Joseph P. Cowin

Senior Counsel

6450 Sprint Parkway

KSOPHN02I4 - 2A62l

Overland Park, KS 66251

9

 

     14. Governing Law

     a. This Settlement Agreement will be governed by the Federal Communications Act, 47 USC § 151
et seq., rulings of the FCC and by the laws of the state of North Carolina, without regard to its
choice of law provisions.

	 	 	 	 	 	 	 	 	 
	 	Executed on behalf of	 	US LEC CORP., US LEC OF NORTH CAROLINA INC., US LEC OF GEORGIA INC.,
US LEC OF ALABAMA INC., US LEC OF TENNESSEE INC., US LEC OF SOUTH CAROLINA INC., US LEC
OF PENNSYLVANIA INC., US LEC OF VIRGINIA L.L.C., US LEC OF MARYLAND INC., US LEC OF
FLORIDA INC., and US LEC COMMUNICATIONS INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ J. L. Patrick	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Print Name J.L. Patrick	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Title: EVP/CFO	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Date: 2/16/06	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	SPRINT COMMUNICATIONS COMPANY, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Kathryn B. Lawler	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Print Name: Kathryn B. Lawler	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Title: Director, Access Verification	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Date: 2/16/06	 	 

10

 

EXHIBIT A

     Sprint Local Telephone Operating Companies

Sprint — Florida, Incorporated

Carolina Telephone and Telegraph Company

United Telephone — Southeast, Inc. (Operates in Tennessee and Virginia)

United Telephone Company of the Carolinas

Central Telephone Company

Central Telephone Company of Virginia

The United Telephone Company of Pennsylvania

United Telephone Company of New Jersey, Inc.

United Telephone Company of Ohio

United Telephone Company of Indiana, Inc.

United Telephone Company of Texas, Inc.

Central Telephone Company of Texas

Sprint Missouri, Inc.

United Telephone Company of Kansas

United Telephone Company of South central Kansas

United Telephone Company of Eastern Kansas

United Telephone Company of Southeastern Kansas

Sprint Minnesota, Inc.

United Telephone Company of the West

United Telephone Company of the Northwest

Sprint Local CICs billed by US LEC

[***]

 

			
	[***]	 	These portions of this exhibit have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment.

11Exhibit 10.2

 

Exhibit 10.2

AGREEMENT

     This Settlement Agreement (the “Agreement”) is entered into as of this 17th day of February,
2006, between MCI, LLC (formerly known as MCI, Inc.) and all of its subsidiaries (collectively
herein “MCI”), including but not limited to MCI Network Services, Inc. (formerly known as MCI
WORLDCOM Network Services, Inc.) and MCI Communications Services, Inc. (formerly known as MCI
WORLDCOM Communications, Inc.) and US LEC Corp., and all of its affiliates (including
subsidiaries), including but not limited to US LEC Communications Inc., US LEC of Alabama Inc., US
LEC of Florida Inc., US LEC of Georgia Inc., US LEC of Maryland Inc., US LEC of North Carolina
Inc., US LEC of South Carolina Inc., US LEC of Pennsylvania Inc., US LEC of Tennessee Inc., and US
LEC of Virginia LLC (collectively “US LEC”). (MCI and US LEC are referred to together as the
“Parties” and individually as a “Party.”)

     WHEREAS, disputes have arisen among the Parties regarding US LEC’s charges to MCI for certain
Switched Access Services in connection with 8YY Traffic sent by US LEC to MCI for delivery to MCI’s
8YY customers; and

     WHEREAS, on or about April 26, 2005, US LEC filed an action in the United States District
Court for the Western District of North Carolina, Charlotte Division, Civil Action No.
3:05-CV-171-MU against MCI, alleging that MCI wrongfully has refused to pay US LEC for Switched
Access Services US LEC has rendered to MCI (the “Litigation”); and

     WHEREAS, MCI filed an Answer and Counterclaim in the Litigation on or about May 17, 2005 and
filed an Amended Counterclaim on or about October 3, 2005, alleging that US LEC wrongfully had
billed it certain access charges in connection with 8YY Traffic, to which US LEC filed Answers on
June 8, 2005 and October 21, 2005, respectively; and

 

 

     WHEREAS, the Parties desire to enter into this Agreement to resolve all disputes between MCI
and US LEC relating to US LEC’s Switched Access Services billed by US LEC to MCI, without any
admission of wrongdoing or liability on the part of either Party, and to set certain future rights,
obligations and other business arrangements of the Parties, and to settle the Litigation.

     NOW, THEREFORE, in consideration of the mutual benefit of the exchanges detailed below, the
Parties agree as follows:

1. Definitions.

     For purposes of this Agreement the following definitions, in addition to any other definitions
specified herein, shall control:

     a. “Proprietary Information” means information that is marked or otherwise specifically
identified in writing as proprietary, confidential or trade secret by the disclosing Party.
Proprietary Information includes, but is not limited to, all documents and testimony identified or
marked as “Confidential” during the course of the Litigation, the terms of this Agreement, and the
discussions, correspondence and negotiations that led to this Agreement.

     b. “Switched Access Service” means a service providing access to the switched network of a
Telecommunications Carrier for the purpose of originating or terminating interexchange interstate
and intrastate telecommunications between MCI’s interexchange carrier network and an MCI customer
or subscriber placing or receiving an interexchange call. Switched Access Service does not include
local exchange service. Switched Access Service includes (i) access service for traffic in which
(A) the interexchange call originates and terminates on the public switched telephone network, (B)
both the called party and the calling party use ordinary customer premises equipment, and (C) no
net protocol conversion occurs and no enhanced functionality to either the calling or the called
party is provided by the provider’s

2

 

use of IP technology, even-though the call may at some point in the transmission be converted
to Internet Protocol (“IP”); (ii) (prospectively from the effective date of any such FCC orders)
services that the FCC orders shall be subject to switched access charges; and (iii) interexchange
access service for 8YY Traffic sent by US LEC to MCI regardless of whether US LEC provides the
local dial tone to the end user calling the MCI 8YY customer provided that no carrier other than US
LEC performs and actually assesses MCI a charge, for which MCI is liable, for an originating end
office local switching function to a given call.

     c. “8YY Traffic” and “8YY Calls” mean interstate and intrastate calls intended to terminate to
a telephone number for which there is no charge to the calling party by an interexchange carrier
for making and completing the calls, and includes, but is not limited to, calling parties making
calls from businesses, institutions or other entities that may obtain local dial tone from carriers
other than US LEC.

     d. “Act” means the Communications Act of 1934, as amended by the Telecommunications Act of
1996.

     e. “Telecommunications Carrier” means any provider of telecommunications services (as such
term is defined as of the Effective Date in Section 3(46) of the Act (47 U.S.C. § 153(46)))
regulated under Title II of the Act, except that such term shall not include aggregators of
telecommunications services as defined as of the Effective Date by Section 226 of the Act.

     f. “CMRS Provider” means an entity that provides mobile service, as defined as of the
Effective Date in Section 3(27) of the Act (47 U.S.C. § 153(27)), for profit (i.e., with the intent
of receiving compensation or monetary gain), where the mobile service is an interconnected service
and is available to the public, or to such classes of eligible users as to be

3

 

effectively available to a substantial portion of the public, or that provides the functional
equivalent service of such mobile service.

     g. “Wireless 8YY Traffic” or “Wireless 8YY Calls” means interstate and intrastate 8YY Calls
from CMRS Providers’ subscribers.

     h. “Effective Date” means the date of execution of this Agreement by the second of the two
Parties to execute it.

     i. “Government Agency” means a federal or state board, agency, authority, commission, or other
entity with jurisdiction over the traffic which is the subject of this Agreement, including but not
limited to the Federal Communications Commission (“FCC”).

     j. “US LEC End Users” means customers of US LEC that are not Telecommunications Carriers or
CMRS Providers, and who subscribe to US LEC services or facilities either through US LEC tariffs or
contracts, which services include, among other services, direct connectivity with US LEC for
delivery of 8YY Calls to the appropriate interexchange carriers. US LEC End Users specifically
include businesses, institutions, and other entities that may obtain local dial tone from carriers
other than US LEC, but deliver outbound 8YY Calls to US LEC via a direct connection where no other
carrier performs and actually assesses MCI a charge, for which MCI is liable, for an originating
end office local switching function on a given call.

     2. Consideration.

     a. Without either Party admitting any wrongdoing with respect to any invoice sent to MCI by US
LEC for Switched Access Service or the non-payment of any such invoice, within

4

 

ten (10) business days of the Effective Date, MCI will pay to US LEC the total sum of [***] by
check (with the check to be received by US LEC within the ten (10) business day period) in full
settlement of all claims released in this Agreement.

     b. Upon payment by MCI to US LEC in accordance with paragraph 2.a., US LEC agrees that it will
take all necessary actions to credit, or otherwise extinguish, the billed and outstanding amounts
due from MCI on the accounts listed on Schedule 1 attached hereto and incorporated herein (or any
account(s) subsequently discovered by a Party with notice of such additional account(s) provided to
the other Party with sufficient information to demonstrate that the account included Switched
Access Service charges for the usage period from [***] and up to and including [***] and the entity
to which the bill was directed was a former or existing MCI company or subsidiary [***]) for any
Switched Access Service for the usage period from [***] up to and including [***], including any
late payment charges associated with any such outstanding balances for Switched Access Services.
Both Parties represent that they share a good faith belief as of the Effective Date that the
carrier accounts listed on the attached Schedule 1 (which include as part of the carrier account,
the various Carrier Identification Codes (“CICs”) assigned to MCI and used by US LEC for billing
purposes) are the carrier accounts of the MCI companies and subsidiaries and comprise all the MCI
accounts and reflect all the MCI CICs for which US LEC has assessed any unpaid or disputed Switched
Access Service charges upon MCI companies and subsidiaries for the usage period from [***] through
[***], though this representation does not preclude either Party from subsequent discovery in good
faith and notice as provided in this paragraph.

 

			
	[***]	 	These portions of this exhibit have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment.

5

 

     c. The Parties agree further that for services provided to MCI by any current or future
US LEC company, affiliate, subsidiary, successor or assign:

     (i) For the usage period from December 1, 2005 through December 31, 2006, MCI will pay
US LEC for Switched Access Services that US LEC provides to MCI in connection with
intrastate Wireless 8YY Calls at the [***] rates, and for all access elements currently
charged by US LEC for intrastate 8YY Calls made by US LEC’s End Users, pursuant to the then
effective state tariff or price list. With respect to Wireless 8YY Calls only, US LEC will
not bill MCI and MCI will not pay US LEC for the intrastate End User Access element as
defined in the US LEC intrastate switched access tariffs (i.e., “End User Access provides
Customer with the access from end office switches to end users, for use in furnishing their
communications services”);

     (ii) For the usage period from January 1, 2007 through December 31, 2007, MCI will pay
US LEC for Switched Access Services US LEC provides to MCI in connection with intrastate
Wireless 8YY Calls at a rate that is [***] rate for the access elements that US LEC charges
for [***] Wireless 8YY Calls under its then effective [***] switched access tariff unless
the US LEC tariffed or otherwise effective intrastate rates applicable to intrastate
Wireless 8YY Calls arc lower than [***] rate then, in such case, the US LEC tariffed or
otherwise effective intrastate rates shall apply;

     (iii) For usage from January 1, 2008 and thereafter MCI will pay US LEC for Switched
Access Services US LEC provides to MCI in connection with intrastate Wireless 8YY Calls at a
rate that is equal to the [***] rate for all access elements that US

 

			
	[***]	 	These portions of this exhibit have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment.

6

 

LEC charges for such 8YY Calls under its then-effective [***] switched access tariff or
otherwise effective [***] for such 8YY Calls pursuant to [***] law or [***] rules or
regulations unless the US LEC [***] rates applicable to intrastate Wireless 8YY Calls are
[***] rate then, in such case, the US LEC [***] rates shall apply;

     (iv) The Parties agree that US LEC may bill and MCI will timely pay for Switched Access
Service (including for intrastate 8YY Wireless Calls under this Agreement) that US LEC
provides MCI for the access rate elements and, except as agreed in Sections 2.c.(i), (ii)
and (iii), at the [***] rates, as such rates may from time to time be modified or amended in
the ordinary course of business, and such services include but are not limited to 8YY Calls
(other than Wireless 8YY Calls, the rates for which are addressed above and all database
queries including database queries for Wireless 8YY Calls. Unless expressly stated in this
Agreement, the rules and regulations from the applicable US LEC tariff will govern the
provision of Switched Access Services by US LEC, subject to MCI’s right to challenge the
validity or applicability of the rules and regulations of US LEC’s tariff, unless the
challenge is inconsistent with the terms of this Agreement.

     d. For invoices for services on or after December 1, 2005, MCI will retain the right to
dispute in good faith, in accordance with the process set forth in the applicable US LEC tariff, US
LEC’s invoices for Switched Access Services, but not on any basis that challenges US LEC’s right to
bill for Wireless 8YY Calls or otherwise is inconsistent with this Agreement.

     e. Through December 31, 2006, MCI will retain the right to challenge US LEC’s rates for
intrastate Switched Access Service, but only as part of a general challenge to

 

			
	[***]	 	These portions of this exhibit have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment.

7

 

competitive carrier intrastate switched access rates or the applicability of the rate elements
for intrastate Wireless 8YY Calls in a proceeding before a Government Agency, so long as US LEC’s
right to bill for Wireless 8YY Calls is not challenged. In the event a Government Agency enters an
order in such a proceeding which expressly directs that competitive carrier intrastate access rates
for Wireless 8YY Calls be reduced, both retroactively and prospectively, [***] to which the Parties
have agreed herein, then, as between MCI and US LEC, the provisions of such order and any changes
mandated thereby will apply prospectively only, except as set forth in this subsection (e). To the
extent that US LEC’s aggregate billings (i.e. for all states) for intrastate Wireless 8YY Traffic
(“Aggregate Intrastate Wireless 8YY Charges”) to MCI exceed [***] per month at the time the
Government Agency order becomes effective, the changes mandated thereby may be applied
retroactively in the state where such an order is entered to the extent that for any month for one
year preceding the date the order becomes effective the monthly aggregate billing exceeded [***]
unless the Government Agency orders a shorter period of retroactivity in which case the shorter
period will apply, and in no event shall any reductions be applied retroactively to the period
prior to November 30, 2005. Any refund due to MCI as a consequence of a retroactive rate reduction
in a state shall be calculated as follows:

     (i) For each month that US LEC’s Aggregate intrastate Wireless 8YY Charges exceeded[***
,] US LEC’s billed intrastate 8YY Wireless Traffic access charges for that state for that
month will be divided by US LEC’s [***];

     (ii) with the resulting fraction of subsection (i) multiplied by the amount of [***]
that exceeded [***] for that month.

 

			
	[***]	 	These portions of this exhibit have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment.

8

 

Any prospective reduction shall begin, or retroactive refund will be due, only at the time
such order becomes effective, which for purposes of this Agreement means that the Government Agency
has issued an order with either a specified effective date or date determined by the statutory
period after publication of the order has occurred, as applicable, and such Government Agency order
is not stayed;

     f. US LEC shall cooperate with MCI’s requests for, and shall use all commercially reasonable
efforts to provide either separately or on US LEC’s invoices for interstate and intrastate access
traffic, such data as is reasonably necessary to permit MCI to distinguish invoiced charges for
Wireless 8YY Traffic from invoiced charges for non-Wireless 8YY Traffic, and to distinguish
invoiced charges for non-Wireless 8YY Traffic originated with a US LEC assigned telephone number in
the industry Local Number Portability Databases or other industry databases that reflect assignment
of the telephone numbers (a “US LEC Number”) from non-Wireless 8YY Traffic that bears a non-US LEC
assigned telephone number in the industry Local Number Portability Databases (a “non-US LEC
Number”); provided, however, that MCI agrees that it will cooperate with US LEC, and shall use
commercially reasonable efforts, to identify the type of data needed by MCI and any data already
available, or made available, to MCI that would permit MCI to distinguish invoiced charges for the
Wireless 8YY Traffic from the invoiced charges for non-Wireless 8YY Traffic and to distinguish
invoiced charges for non-Wireless 8YY Traffic originated with a US LEC Number from non-Wireless 8YY
Traffic that bears a non-US LEC Number. This paragraph does not obligate US LEC to purchase or
upgrade its billing systems in any way, nor to take extraordinary measures to provide such data.

     g. Notwithstanding any other provision of this Agreement, a Party may file or otherwise
disclose this Agreement or portion thereof with any governmental person or body to

9

 

the extent required by law, provided that such Party shall do so only to the extent necessary
(in whole or in part) and shall take all reasonable steps otherwise to preserve the confidentiality
of this Agreement as provided by Section 8 of this Agreement, including where appropriate
disclosure under seal. In addition, if, and to the extent, necessary to give effect to the terms
of this Agreement, US LEC shall amend any of its tariffs.

     3. Releases.

     a. Except as set forth in this Agreement, MCI releases US LEC and its and their directors,
officers, shareholders, employees, representatives, agents, independent contractors, and attorneys
from

	 	(i)	 	any claims, counterclaims or defenses that were made in the
Litigation relating to the time period up to and including [***];
	 
	 	(ii)	 	any claims, counterclaims, or defenses arising from the nucleus
of operative facts at issue in the Litigation that occurred up to and including
[***];
	 
	 	(iii)	 	any claims arising from the conduct of the Litigation; and
	 
	 	(iv)	 	any claims, counterclaims or defenses related to the services
provided by US LEC to MCI, including but not limited to the billing of Switched
Access Service for 8YY Traffic, provided during the usage period from [***] up
to and including [***],

regardless of whether any of the foregoing in subparagraphs a. i-iv is known or unknown, accrued or
inchoate.

 

			
	[***]	 	These portions of this exhibit have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment.

10

 

     b. Except as set forth in this Agreement, upon receipt of the payment required by
Paragraph 2.a hereof, US LEC releases MCI and its and their directors, officers, shareholders,
trustees, employees, representatives, agents, independent contractors, and attorneys from

	 	(i)	 	any claims, counterclaims or defenses that were made in the
Litigation relating to the time period up to and including [***];
	 
	 	(ii)	 	any claims, counterclaims, or defenses arising from the nucleus
of operative facts at issue in the Litigation that occurred up to and including
[***];
	 
	 	(iii)	 	any claims arising from the conduct of the Litigation; and
	 
	 	(iv)	 	any claims, counterclaims or defenses related to the services
provided by US LEC to MCI, including but not limited to the billing of Switched
Access Service for 8YY Traffic, provided during the usage period from [***] up
to and including [***],

regardless of whether any of the foregoing in subparagraphs b. i-iv is known or unknown, accrued or
inchoate.

     c. MCI hereby represents, warrants and agrees that (i) it has not assigned or otherwise
divested itself of any part of the claims being released hereby, (ii) no person or entity has any
interest or ownership of the claims covered by this Agreement, and (iii) MCI will indemnify, defend
and hold US LEC harmless from and against any or all of any part of the claims so assigned or
otherwise divested which is or are brought against US LEC.

 

			
	[***]	 	These portions of this exhibit have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment.

11

 

     d. US LEC hereby represents, warrants and agrees that (i) it has not assigned or
otherwise divested itself of any part of the claims being released hereby, (ii) no person or entity
has any interest ownership of the claims covered by this Agreement, and (iii) US LEC will
indemnify, defend and hold MCI harmless from and against any or all of any part of the claims so
assigned or otherwise divested which is or are brought against MCI.

     e. Notwithstanding anything to the contrary contained in this Section 3, nothing in this
Agreement shall release any claims for amounts due (if any) for direct end office trunks purchased
by MCI from US LEC pursuant to US LEC’s FCC switched access tariff.

4. Dispute Resolution.

     a. In the event that a dispute should arise concerning the interpretation of or performance of
this Agreement, the Parties agree that resolving the dispute(s) as promptly and efficiently as
possible will best serve their respective interests. The disputing Party must submit in writing to
the other Party the basis of the dispute in sufficient detail to permit the other Party to respond
to the dispute.

     b. If the Parties cannot resolve a dispute concerning the interpretation of or performance of
this Agreement through negotiation within sixty (60) days after one Party notifies the other Party
of the dispute, then the dispute shall be referred to one designated representative from MCI at the
director level or above and one representative from US LEC at the director level or above. If the
Parties remain unable to resolve their dispute within sixty (60) days after the referral set forth
above, then the dispute shall be referred to one designated representative from MCI at the vice
president level or above (or their designee) and one representative from US LEC at the vice
president level or above.

     c. If the dispute is not resolved at the vice president level or above within 30 days after
the final escalation set forth in paragraph 4.b above, then either Party may seek resolution

12

 

of the dispute by binding arbitration administered by the American Arbitration Association in
accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction. The arbitration shall be held in
Charlotte, North Carolina.

     d. The provisions of this Paragraph 4 shall not be construed to prohibit either Party from
seeking preliminary injunctive relief in any court of competent jurisdiction after exhaustion of
the escalation procedures, provided that no court action may supersede a binding arbitration
initiated under subsection 4.c. above for resolution of the merits of such dispute. Any litigation
seeking a preliminary injunction may be brought only with notice to the other Party, and each Party
hereby waives the right to seek ex parte relief.

5. Dismissal of Pending, Litigation and Return of Discovery Material.

     a. Immediately upon receipt of the payment to US LEC required in Paragraph 2.a hereof, the
Parties shall file a Stipulation of Dismissal, with prejudice, of the Litigation.

     b. Within five (5) business days of the filing of the Stipulation of Dismissal, and to the
extent permitted by applicable law, the Parties shall each return to the producing Party all
material produced during discovery, including deposition transcripts and exhibits, and neither
Party nor its counsel shall keep any copy of any document produced in discovery by the other party
for any reason, except with respect to a copy of any such document produced to a Government Agency
in response to a duly authorized request from such Agency, and only for as long as such Agency
requires such document to be kept. Neither Party has any obligation to retrieve any document which
was filed with the Court, either under seal or as an attachment or an exhibit. To the extent that
any information exchanged in discovery may have been used by counsel and become part of attorney
work product, that work product shall be destroyed by

13

 

counsel within the time period contemplated by this paragraph, and such counsel shall so
certify to the other Party in writing.

     c. The Parties agree to execute and exchange any such further documentation as may be
reasonably required to give effect to the Agreement

6. Fees and Expenses.

     Each Party will pay its own attorneys’ fees and expenses associated with the Litigation and
this Agreement, except to any extent otherwise provided for herein.

7. Successors and Assigns.

     This Agreement shall be binding upon, and inure to the benefit of, the Parties’ successor and
assigns.

8. Confidential Nature of Settlement.

     a. The Parties agree to hold in the strictest confidence the substance of any and all
settlement negotiations, documents exchanged during settlement discussions, or information learned
or acquired during settlement discussions, as well as the terms of any final agreement that may be
reached as a result of settlement discussions (collectively, “Settlement Information”), and not to
reveal any such Settlement Information to any person except as provided herein. The existence of
this Agreement is not confidential, but the terms of this Agreement are confidential.

     b. Each Party will hold in confidence Proprietary Information disclosed by the other Party
except if it (a) was previously known by the receiving Party prior to the beginning of the
Litigation free from any obligation to keep it confidential, (b) is independently developed by the
receiving Party, (c) becomes publicly available except through a breach of this provision by the
receiving Party, and/or (d) is disclosed to the receiving Party by a third party without breach of
any confidentiality obligation. Only the exception in clause (c) of the prior sentence shall apply

14

 

to the Settlement information. Proprietary Information or Settlement Information may be
disclosed to an entity or person that controls a Party (including such controlling party’s
directors officers and controlling shareholders), to a Party’s legal counsel, senior lenders and
their counsel and auditors, provided that such representatives are bound by appropriate
confidentiality obligations, and in such regulatory filings as may by required, and then only to
the extent required, by the securities laws as the Parties’ respective securities counsel may
advise. No Proprietary Information or Settlement Information can be used or introduced by either
Party as evidence in any other litigation, arbitration or state or agency proceeding of any kind,
except that Proprietary Information or this Agreement and its terms may be used in any proceeding
between the Parties to establish rights and obligations under this Agreement if such information is
properly filed with the Court under seal and subject to a protective order protecting it from
disclosure to persons other than the Parties and court personnel.

     c. If, after the Effective Date of this Agreement, either Party is required to disclose
Proprietary Information or Settlement Information or this Agreement in judicial or administrative
proceedings, such Party will, unless prohibited by applicable law or the terms of the applicable
order, (i) give the other Party prompt written notice and the opportunity, sufficiently in advance
of such disclosure, if feasible, to seek protective arrangements and will cooperate reasonably with
the other Party (at such other Party’s expense) in that regard, and (ii) disclose only that portion
of the Proprietary Information or Settlement Information or Agreement required to be disclosed.

     d. Either Party may issue a press release regarding the settlement that may include any
information that may be required to be included in any filing with the Securities and Exchange
Commission by the securities laws as their respective securities advisors may advise, except the
release may state that the Parties have settled this dispute concerning Switched Access

15

 

Service and the Litigation but shall not include the specific financial terms of the
settlement. The Parties agree to exchange a copy of such portion of the press release that relates
to the discussion of the settlement of this dispute concerning Switched Access Service or the
Litigation with reasonable time for review prior to its publication, and shall obtain the consent
of the other Party to the text of the press release prior to the publication of the press release,
which consent shall not unreasonably be withheld.

     e. The Parties acknowledge and agree that any breach of the obligations of this Paragraph 8
will cause damage to the other Party and the breaching party shall be liable to the non-breaching
party for such damages and subject to any other remedies at law or equity.

9. Non-Disparagement.

     a. Beginning as of the Effective Date of this Agreement, MCI and US LEC agree to use
reasonable efforts to ensure that their respective directors, officers, senior management
personnel, attorneys, or lobbyists (collectively “Representatives”) do not make any untrue,
misleading, or defamatory statements or representations, either orally or in writing, to any third
persons regarding any Party to this Agreement on the grounds of the right to bill for Wireless 8YY
Calls or otherwise relating to the nucleus of operative facts at issue in the Litigation, or if
either Party becomes aware of such conduct by its Representatives, to make reasonable efforts to
stop the conduct.

     b. The Parties acknowledge and agree that any breach of the obligations of this Paragraph 9
may cause harm to the other Party and its affiliates, and that therefore either US LEC or MCI,
whichever is harmed, shall be entitled to injunctive relief prohibiting the breaching Party from
any further violation or threatened future violation of this Paragraph 9. The Parties agree that
it is not a violation of this Paragraph 9 for a Party to participate in a challenge to competitive
carrier switched access rates or the applicability of the rate elements for 8YY

16

 

Wireless Calls, or in a proceeding before a Government Agency, or in a lawsuit before a court
or arbitration panel, provided that no untrue, misleading or defamatory statements or
representations of US LEC’s right to bill, or practice in billing, for Wireless 8YY Calls are made
(which provision does not preclude a Party from referring to prior orders or other prior official
statements of a court or Government Agency addressing such topics) and that, in such proceeding, no
claims are asserted against US LEC that are in any way inconsistent with the provisions of this
Agreement.

10. No Third Party Beneficiaries.

     This Agreement does not provide and is not intended to provide third parties not expressly
enumerated in this Agreement with any remedy, claim, liability, reimbursement, cause of action, or
other privilege.

11. Entire Agreement.

     This Agreement contains the entire understanding between MCI and US LEC with respect to the
resolution of the matters addressed in this Agreement.

12. Preparation of Documents and Effectiveness.

     Each Party has participated in the creation of this Agreement. No legal principle
interpreting the Agreement against the drafter will apply. Each Party in entering into this
Agreement has completely read and fully understood the terms and conditions of the Agreement. The
Parties acknowledge that they have had the opportunity to consult with legal counsel of their
choosing prior to entering into this Agreement, that they know and understand this Agreement’s
contents, and that they are executing this Agreement knowingly and voluntarily.

13. No Admission.

     Neither any provision of this Agreement taken individually nor the Agreement taken as a whole
is to be construed as an admission of liability by any of US LEC, MCI, or their directors,

17

 

stockholders, officers, employees, representatives, agents, assignors or assignees or as an
admission of any allegation or argument made by any person in the Litigation, all of which
liabilities, allegations, and argument have been expressly denied.

14. Counterparts.

     The parties agree that this Agreement may be executed in a number of counterparts, each of
which shall be considered an original instrument, but all of which together shall be considered but
one and the same instrument, and may be delivered by facsimile from one Party to the other when
executed. This Agreement shall be binding on all signatories hereto, even if executed in any
number of counterparts.

15. Notices.

     All notices required or permitted under this Agreement and all requests for approvals,
consents, and waivers must be in writing and must be delivered via hand-delivery or overnight
cornier delivery and will be deemed delivered when actually received. Fax and e-mail delivery
methods do not constitute written notice. Any notice or request will be delivered to the addresses
specified below.

If to US LEC:

Thomas Gooley

Vice President-Treasurer

US LEC Corp.

6801 Morrison Boulevard

Morrocroft III

Charlotte, NC 28211

Fax number: 704-602-1133

e-mail: tgooley@uslec.com

with a copy to

	 	 	 
	 

	 	General Counsel
	 

	 	US LEC Corp.
	 

	 	6801 Morrison Boulevard
	 

	 	Morrocroft III

18

 

	 	 	 
	 

	 	Charlotte, NC 28211
	 

	 	Fax number: 794-319-3007

If to MCI:

	 	 	 
	 

	 	Peter H. Reynolds
	 

	 	Director, National Carrier Contracts and Initiatives
	 

	 	Verizon Business
	 

	 	22001 Loudoun County Parkway
	 

	 	Suite G2-3-6l4
	 

	 	Ashburn, VA 20147
	 

	 	Fax number (703) 886-0118
	 

	 	e-mail: Peter.H.Reynolds@verizonbusiness.com

with a copy to:

	 	 	 
	 

	 	Brian H. Benjet
	 

	 	Verizon Business
	 

	 	1133 19th Street, NW
	 

	 	Washington, DC 20036
	 

	 	Fax Number (202) 736-6072
	 

	 	e-mail: brian.benjet@verizonbusiness.com

     A Party may change the name and/or address to which notice is to be delivered by sending notice to
the applicable notice address.

16. Power, Authority and Legal Capacity to Bind.

     Each Party represents that it has the requisite power, authority and legal capacity to make,
execute, and deliver this Agreement and to fully perform its duties and obligations under this
Agreement, and that neither this Agreement nor the performance by such Party of any duty or
obligation under this Agreement will violate any other contract, agreement, covenant or restriction
by which such Party is bound. To the extent that this Agreement is in conflict with any other
contract, agreement, covenant or restriction by which such Party is bound, the Parties hereby agree
that such conflict is not material.

17. Governing Law.

     This Agreement will be governed by the laws of the state of North Carolina, without regard to
its choice of law provisions.

19

 

18. Waiver Amendment, Modification and Interpretation.

     No waiver, amendment or modification of any provision of this Agreement shall be effective
unless in writing and signed by the Parties. My waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it is given. No prior drafts of this
Agreement, or any negotiations regarding the terms contained in these drafts, or any related
agreements shall be admissible in any court to vary or interpret the terms of this Agreement, the
Parties hereto agreeing that this Agreement constitutes the final expression of the Parties’
agreement and supersedes all prior written and oral understandings regarding the terms of this
Agreement.

	 	 	 	 	 	 	 
	Executed on behalf of	 	US LEC CORP., US LEC OF ALABAMA INC., US LEC OF FLORIDA INC., US LEC OF
GEORGIA INC., US LEC OF MARYLAND INC., US LEC OF NORTH CAROLINA INC., US
LEC OF PENNSYLVANIA INC., US LEC OF SOUTH CAROLINA INC., US LEC OF
TENNESSEE INC., US LEC OF VIRGINIA L.L.C., and US LEC COMMUNICATIONS INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas R. Gooley	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Print Name: Thomas R. Gooley	 	 
	 
	 	 	 	 	 	 
	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Date: 2/17/06	 	 
	Executed on behalf of:	 	MCI, LLC, MCI NETWORK SERVICES, INC., AND MCI COMMUNICATIONS SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Randal S. Milch	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Print Name: Randal S. Milch	 	 
	 
	 	 	 	 	 	 
	 	 	Title: Senior Vice President – Legal and External Affairs	 	 
	 
	 	 	 	 	 	 
	 	 	Date: 7 February 2006	 	 

20

 

Schedule 1

MCI Accounts

As of 11/30/2005

[***]

 

      

 

			
	[***]	 	These portions of this exhibit have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment.

21

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