-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FMrPJWQqQNUfL0unQzg9wxv0TqrbUf0D6qpo10IAZWdJWrXy6/87V4FrvaeCmXHt +uTMM7bdlggWfb+O84qf1w== 0000950109-99-001865.txt : 19990517 0000950109-99-001865.hdr.sgml : 19990517 ACCESSION NUMBER: 0000950109-99-001865 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CSG SYSTEMS INTERNATIONAL INC CENTRAL INDEX KEY: 0001005757 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 470783182 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27512 FILM NUMBER: 99624506 BUSINESS ADDRESS: STREET 1: 7887 EAST BELLEVIEW AVE STREET 2: SUITE 1000 CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3037962850 MAIL ADDRESS: STREET 1: 5251 DTC PARKWAY SUITE 625 CITY: ENGLEWOOD STATE: CO ZIP: 80111 10-Q 1 FORM 10-Q FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to _____________ Commission file number 0-27512 CSG SYSTEMS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 47-0783182 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 7887 East Belleview, Suite 1000 Englewood, Colorado 80111 (Address of principal executive offices, including zip code) (303) 796-2850 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- Shares of common stock outstanding at May 7, 1999: 51,677,250 CSG SYSTEMS INTERNATIONAL, INC. FORM 10-Q For the Quarter Ended March 31, 1999 INDEX
Page No. -------- Part I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998 .......................................................... 3 Condensed Consolidated Statements of Income for the Three Months Ended March 31, 1999 and 1998......................................................... 4 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1999 and 1998 .................................................. 5 Notes to Condensed Consolidated Financial Statements ........................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ......................................................... 8 Item 3. Quantitative and Qualitative Disclosures About Market Risk...................... 15 Part II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ............................................... 16 Signatures ..................................................................... 17 Index to Exhibits .............................................................. 18
2 CSG SYSTEMS INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts)
March 31, December 31, 1999 1998 ASSETS ----------------- --------------- ------ (unaudited) Current assets: Cash and cash equivalents ............................................................... $ 40,035 $ 39,593 Accounts receivable- Trade- Billed, net of allowance of $2,637 and $2,051 .................................... 58,499 60,529 Unbilled ......................................................................... 4,883 2,828 Other ................................................................................ 728 1,179 Deferred income taxes ................................................................... 2,092 1,803 Other current assets .................................................................... 2,558 2,275 ----------------- --------------- Total current assets ................................................................. 108,795 108,207 ----------------- --------------- Property and equipment, net of depreciation of $26,039 and $23,765 ........................ 24,587 24,711 Software, net of amortization of $35,856 and $35,391 ...................................... 8,916 9,422 Noncompete agreements and goodwill, net of amortization of $26,154 and $24,878 ............ 6,218 7,596 Client contracts and related intangibles, net of amortization of $19,430 and $17,671 ...... 59,482 59,791 Deferred income taxes ..................................................................... 54,302 59,389 Other assets .............................................................................. 2,037 2,380 ----------------- --------------- Total assets ........................................................................ $ 264,337 $ 271,496 ================= =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt .................................................... $ 19,821 $ 19,125 Customer deposits ....................................................................... 10,582 10,018 Trade accounts payable .................................................................. 10,634 10,471 Accrued employee compensation ........................................................... 9,965 12,276 Deferred revenue ........................................................................ 11,683 13,470 Conversion incentive payments ........................................................... 18,881 22,032 Accrued income taxes .................................................................... 7,643 6,756 Other current liabilities ............................................................... 7,563 7,009 ----------------- --------------- Total current liabilities ............................................................ 96,772 101,157 ----------------- --------------- Non-current liabilities: Long-term debt, net of current maturities ............................................... 91,179 109,125 Deferred revenue ........................................................................ 192 216 ----------------- --------------- Total non-current liabilities ........................................................ 91,371 109,341 ----------------- --------------- Stockholders' equity: Preferred stock, par value $.01 per share; 10,000,000 shares authorized; zero shares issued and outstanding ................................................... -- -- Common stock, par value $.01 per share; 100,000,000 shares authorized; 51,637,850 shares and 51,465,646 shares outstanding .................................. 517 515 Common stock warrants; 3,000,000 warrants outstanding ................................... 26,145 26,145 Additional paid-in capital .............................................................. 124,190 120,599 Deferred employee compensation .......................................................... (255) (328) Notes receivable from employee stockholders ............................................. (331) (478) Accumulated other comprehensive income (loss)-cumulative translation adjustments ........ (126) 38 Treasury stock, at cost, 66,986 shares and 66,000 shares ................................ (132) (97) Accumulated deficit ..................................................................... (73,814) (85,396) ----------------- ---------------- Total stockholders' equity ........................................................... 76,194 60,998 ----------------- ---------------- Total liabilities and stockholders' equity ........................................... $ 264,337 $ 271,496 ================= ================
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 CSG SYSTEMS INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED (in thousands, except per share amounts)
Three months ended ---------------------------- March 31, March 31, 1999 1998 ------------ ------------ Total revenues ............................................ $ 71,087 $ 49,308 Expenses: Cost of revenues: Direct costs ....................................... 28,096 22,082 Amortization of client contracts ................... 1,789 1,068 ------------ ------------ Total cost of revenues ....................... 29,885 23,150 ------------ ------------ Gross margin (exclusive of depreciation) .................. 41,202 26,158 ------------ ------------ Operating expenses: Research and development .............................. 7,620 6,525 Selling and marketing ................................. 3,273 2,397 General and administrative: General and administrative ......................... 6,282 5,602 Amortization of noncompete agreements and goodwill.. 1,318 1,341 Stock-based employee compensation .................. 73 74 Depreciation .......................................... 2,409 1,842 ------------ ------------ Total operating expenses ..................... 20,975 17,781 ------------ ------------ Operating income .......................................... 20,227 8,377 ------------ ------------ Other income (expense): Interest expense ................................... (2,224) (2,546) Interest income .................................... 641 660 Other .............................................. (21) (7) ------------ ------------ Total other .................................. (1,604) (1,893) ------------ ------------ Income before income taxes ................................ 18,623 6,484 Income tax provision .................................. (7,041) -- ------------ ------------ Net income ................................................ $ 11,582 $ 6,484 ============ ============ Basic net income per common share: Net income available to common stockholders ............ $ 0.22 $ 0.13 ============ ============ Weighted average common shares ......................... 51,565 51,025 ============ ============ Diluted net income per common share: Net income available to common stockholders ............ $ 0.21 $ 0.12 ============ ============ Weighted average common shares ......................... 54,216 52,737 ============ ============
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 CSG SYSTEMS INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (in thousands)
Three months ended --------------------------------- March 31, March 31, 1999 1998 -------------- ------------- Cash flows from operating activities: Net income .................................................................................. $ 11,582 $ 6,484 Adjustments to reconcile net income to net cash provided by (used in) operating activities- Depreciation ............................................................................. 2,409 1,842 Amortization ............................................................................. 3,899 2,846 Deferred income taxes .................................................................... 4,796 (3,699) Stock-based employee compensation ........................................................ 73 74 Changes in operating assets and liabilities: Trade accounts and other receivables, net .............................................. 345 (6,540) Other current and noncurrent assets .................................................... (294) (94) Accounts payable and accrued liabilities ............................................... (517) (2,561) -------------- ------------- Net cash provided by (used in) operating activities .................................. 22,293 (1,648) -------------- ------------- Cash flows from investing activities: Purchases of property and equipment, net .................................................... (2,317) (3,494) Additions to software ....................................................................... -- (571) Conversion and other incentive payments ..................................................... (4,601) -- -------------- ------------- Net cash used in investing activities ................................................ (6,918) (4,065) -------------- ------------- Cash flows from financing activities: Proceeds from issuance of common stock ...................................................... 2,305 1,260 Payments on notes receivable from employee stockholders ..................................... 181 -- Payments on long-term debt .................................................................. (17,250) -- -------------- ------------- Net cash provided by (used in) financing activities .................................. (14,764) 1,260 -------------- ------------- Effect of exchange rate fluctuations on cash .................................................. (169) 104 -------------- ------------- Net increase (decrease) in cash and cash equivalents .......................................... 442 (4,349) Cash and cash equivalents, beginning of period ................................................ 39,593 20,417 -------------- ------------- Cash and cash equivalents, end of period ...................................................... $ 40,035 $ 16,068 ============== ============= Supplemental disclosures of cash flow information: Cash paid (received) during the period for- Interest .................................................................................. $ 1,950 $ 2,311 Income taxes .............................................................................. $ 96 $ (70)
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 CSG SYSTEMS INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL The condensed consolidated financial statements at March 31, 1999, and for the three months then ended are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management's discussion and analysis of financial condition and results of operations, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1998, filed with the Securities and Exchange Commission (the Company's 1998 10-K). The results of operations for the three months ended March 31, 1999, are not necessarily indicative of the results for the entire year ending December 31, 1999. 2. STOCK SPLIT On March 5, 1999, the Company completed a two-for-one stock split, effected as a stock dividend, for stockholders of record on February 8, 1999. Share and per share data for all periods presented herein have been adjusted to give effect to the split. 3. NET INCOME PER COMMON SHARE Basic net income per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income per common share is consistent with the calculation of basic net income per common share while giving effect to dilutive potential common shares outstanding during the period. For all periods presented, dilutive potential common shares consisted entirely of stock options. For the quarters ended March 31, 1999 and 1998, weighted average outstanding stock options of 3,200 and 761,128, respectively, have been excluded from the computation of diluted net income per common share because the exercise prices of these options were greater than the average market price of the common shares for the respective quarters. For the quarters ended March 31, 1999 and 1998, the weighted average dilutive potential common shares (calculated using the treasury stock method) from Common Stock Warrants of 2,012,527 and 1,225,386, respectively, are excluded from the diluted net income per common share calculation as the events necessary to allow the exercise of the warrants had not been satisfied as of March 31, 1999 or 1998. The Company expects certain of these warrants to become exercisable during 1999. See additional discussion of the Common Stock Warrants in the Company's 1998 10-K. 6 4. COMPREHENSIVE INCOME The Company's components of comprehensive income was as follows (in thousands): Three months ended March 31, ---------------------------- 1999 1998 ------- ------- Net income........................... $11,582 $ 6,484 Foreign currency translation adjustments...................... (164) 80 ------- ------- Comprehensive income................ $11,418 $ 6,564 ======= ======= 5. RECLASSIFICATION OF PRIOR PERIOD AMOUNTS Certain March 31, 1998 amounts have been reclassified to conform with the March 31, 1999 presentation. 6. ACCOUNTING PRONOUNCEMENTS ISSUED BUT NOT YET EFFECTIVE In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and for Hedging Activities" (SFAS 133) was issued. The Statement establishes accounting and reporting standards requiring every derivative instrument, as defined, to be recorded in the balance sheet as either an asset or liability measured at its fair value. The Statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Company expects to adopt SFAS 133 no later than fiscal year 2000, and does not expect the adoption of this Statement to have a significant effect on the Company's consolidated financial statements. 7 CSG SYSTEMS INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The following table sets forth certain financial data and the percentage of total revenues of the Company for the periods indicated (in thousands):
Three months ended March 31, --------------------------------------------------- 1999 1998 ------------------------ ------------------------ % of % of Amount Revenue Amount Revenue ----------- ----------- ----------- ----------- Total revenues ...................................................... $ 71,087 100.0% $ 49,308 100.0% Expenses: Cost of revenues: Direct costs ................................................... 28,096 39.5 22,082 44.8 Amortization of client contracts ............................... 1,789 2.5 1,068 2.1 ----------- ----------- ----------- ----------- Total cost of revenues ................................... 29,885 42.0 23,150 46.9 ----------- ----------- ----------- ----------- Gross margin (exclusive of depreciation) ......................... 41,202 58.0 26,158 53.1 ----------- ----------- ----------- ----------- Operating expenses: Research and development ....................................... 7,620 10.7 6,525 13.2 Selling and marketing .......................................... 3,273 4.6 2,397 4.9 General and administrative: General and administrative .................................... 6,282 8.8 5,602 11.4 Amortization of noncompete agreements and goodwill ............ 1,318 1.9 1,341 2.7 Stock-based employee compensation ............................. 73 0.1 74 0.2 Depreciation ................................................... 2,409 3.4 1,842 3.7 ----------- ----------- ----------- ----------- Total operating expenses ...................................... 20,975 29.5 17,781 36.1 ----------- ----------- ----------- ----------- Operating income .................................................... 20,227 28.5 8,377 17.0 ----------- ----------- ----------- ----------- Other income (expense): Interest expense ............................................... (2,224) (3.1) (2,546) (5.2) Interest income ................................................ 641 0.8 660 1.3 Other .......................................................... (21) -- (7) -- ----------- ----------- ----------- ----------- Total other ................................................... (1,604) (2.3) (1,893) (3.9) ----------- ----------- ----------- ----------- Income before income taxes .......................................... 18,623 26.2 6,484 13.1 Income tax provision ............................................. (7,041) (9.9) -- -- ----------- ----------- ----------- ----------- Net income .......................................................... $ 11,582 16.3% $ 6,484 13.1% =========== =========== =========== ===========
8 Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998 Revenues. Total revenues for the three months ended March 31, 1999, increased 44.2% to $71.1 million, from $49.3 million for the three months ended March 31, 1998. Revenues from processing and related services for the three months ended March 31, 1999, increased 48.0% to $59.0 million, from $39.8 million for the three months ended March 31, 1998. Of the total increase in revenue, approximately 68% resulted from an increase in the number of customers of the Company's clients which were serviced by the Company and approximately 32% was due to increased revenue per customer. Customers serviced as of March 31, 1999 and 1998, respectively, were 30.5 million and 23.6 million, an increase of 29.4%. The increase in the number of customers serviced was due to the conversion of additional customers by new and existing clients to the Company's systems, and internal customer growth experienced by existing clients. From January 1, 1999 through March 31, 1999, the Company converted and processed approximately 1.0 million additional customers on its systems. Total annualized domestic revenue per customer account for the first three months of 1999 was $9.10, compared to $8.13 for the same period in 1998, an increase of 11.9%. Revenue per customer increased primarily due to a greater percentage of processing revenues in 1999 being generated under the Tele-Communications, Inc. (TCI) processing contract (the TCI Contract), and to a lesser degree, increased usage of ancillary services by clients and price increases included in client contracts. Revenues from software and related product sales and professional consulting services for the three months ended March 31, 1999, increased 27.9% to $12.1 million, from $9.5 million for the three months ended March 31, 1998. This increase relates primarily to the continued penetration of sales of software and services to the Company's existing client base, as well as sales to new clients. Cost of Revenues. Direct costs as a percentage of related revenues were 39.5% for the three months ended March 31, 1999, compared to 44.8% for the three months ended March 31, 1998. The improvement between periods relates primarily to better overall leveraging of processing costs as a result of the continued growth of the customer base processed on the Company's system. Amortization of client contracts for the three months ended March 31, 1999, increased 67.5% to $1.8 million, from $1.1 million for the three months ended March 31, 1998. The increase in expense is due primarily to an increase in amortization of the value assigned to the TCI Contract. The value assigned to the TCI Contract is being amortized over the life of the contract in proportion to the financial minimums included in the contract. Gross Margin. Gross margin for the three months ended March 31, 1999, increased 57.5% to $41.2 million, from $26.2 million for the three months ended March 31, 1998, due primarily to revenue growth. The gross margin percentage increased to 58.0% for the three months ended March 31, 1999, compared to 53.1% for the three months ended March 31, 1998. The overall increase in the gross margin percentage is due primarily to the increase in processing and related services revenue per customer while controlling the cost of delivering such services. Research and Development Expense. Research and development (R&D) expense for the three months ended March 31, 1999, increased 16.8% to $7.6 million, from $6.5 million for the three months ended March 31, 1998. As a percentage of total revenues, R&D expense decreased to 10.7% for the three months ended March 31, 1999, from 13.2% for the three months ended March 31, 1998. During the three months ended March 31, 1998, the Company capitalized third party, contracted programming costs of approximately $0.6 million, related primarily to enhancements to existing products. The Company did not capitalize any software development costs during the three months ended March 31, 1999. As a result, total R&D development expenditures (i.e., the total R&D costs expensed, plus the capitalized development costs) for the three months ended March 31, 1999 and 1998, were $7.6 million, or 10.7% of total revenues, and $7.1 million, or 14.4% of total revenues, respectively. The overall increase in the R&D expenditures between periods is due primarily to increased efforts on several products which are in development and 9 enhancements of the Company's existing products. The increased R&D expenditures consist primarily of increases in salaries, benefits, and other programming-related expenses. Selling and Marketing Expense. Selling and marketing (S&M) expense for the three months ended March 31, 1999, increased 36.5% to $3.3 million, from $2.4 million for the three months ended March 31, 1998. As a percentage of total revenues, S&M expense decreased to 4.6% for the three months ended March 31, 1999, from 4.9% for the three months ended March 31, 1998. The overall decrease in S&M expenses as a percentage of total revenues is due primarily to increased revenues, while controlling S&M costs. General and Administrative Expense. General and administrative (G&A) expense for the three months ended March 31, 1999, increased 12.1% to $6.3 million, from $5.6 million for the three months ended March 31, 1998. As a percentage of total revenues, G&A expense decreased to 8.8% for the three months ended March 31, 1999, from 11.4% for the three months ended March 31, 1998. The increase in G&A expenses relates primarily to the continued expansion of the Company's administrative staff and other administrative costs to support the Company's overall growth. The decrease in G&A expenses as a percentage of total revenues is due primarily to increased revenues, while controlling G&A costs. Depreciation Expense. Depreciation expense for the three months ended March 31, 1999, increased 30.8% to $2.4 million, from $1.8 million for the three months ended March 31, 1998. The increase in expense relates to capital expenditures made during 1998 and the first three months of 1999 in support of the overall growth of the Company, consisting principally of computer hardware and related equipment and statement processing equipment and related facilities. Depreciation expense for all property and equipment is reflected separately in the aggregate and is not included in the other components of operating expenses. Operating Income. Operating income for the three months ended March 31, 1999, was $20.2 million or 28.5% of total revenues, compared to $8.4 million or 17.0% of total revenues for the three months ended March 31, 1998. The increase between years relates to the factors discussed above. Interest Expense. Interest expense for the three months ended March 31, 1999, decreased 12.6% to $2.2 million, from $2.5 million for the three months ended March 31, 1998, with the decrease attributable primarily to scheduled principal payments on the Company's long-term debt and a decrease in interest rates between periods. Income Tax Provision. As of December 31, 1997, the Company had recorded a valuation allowance against certain deferred tax assets since realization of future tax benefits was not sufficiently assured as of that date. During the first quarter of 1998, the Company realized a portion of the deferred tax assets such that the overall income tax provision for the quarter was zero. During the fourth quarter of 1998, the Company concluded that it was more likely than not that it would realize the entire tax benefit from its deferred tax assets and eliminated the entire valuation allowance as of December 31, 1998. For the three months ended March 31, 1999, the Company's recorded an income tax provision of $7.0 million, or an effective income tax rate of approximately 38%, which represents the Company's estimate of the effective book income tax rate for 1999. Adjusted Results of Operations - ------------------------------ The Company incurred certain one-time or acquisition-related charges (Acquisition Charges) in connection with the CSG Acquisition in November 1994. The Acquisition Charges include amortization of acquired software, client contracts and related intangibles, noncompete agreement, goodwill, and stock-based compensation and totaled $2.0 million and $2.1 million for the quarters ended March 31, 1999 and 1998, respectively. The Company's adjusted results of operations excluding the impact of these items are shown in the following table. In addition to the exclusion of these expenses from the calculation, the adjusted results of operations were computed using an effective income tax rate of 38%, and outstanding shares on a diluted basis. See the Company's "Management's Discussion and Analysis of Financial Condition and 10 Results of Operations" contained in the Company's 1998 10-K for additional discussion regarding the Acquisition Charges and the impact of such charges on operations.
For the three months ended March 31, ------------------------------------ 1999 1998 ---- ---- (in thousands, except per share amounts) Adjusted Results of Operations: Operating income........................... $22,251 $10,428 Operating income margin.................... 31.3% 21.1% Income before income taxes................. 20,647 8,535 Net income ................................ 12,801 5,292 Earnings per diluted common share.......... .24 .10 Weighted average diluted common shares..... 54,216 52,737
TCI Contract and AT&T Merger - ---------------------------- During the three months ended March 31, 1999 and 1998, revenues from TCI and affiliated companies generated under the TCI Contract represented approximately 44.2% and 39.1% of total revenues, respectively. The TCI Contract has a 15-year term and expires in 2012. The TCI Contract has minimum financial commitments over the term of the contract and includes exclusive rights to provide customer care and billing products and services for TCI's offerings of wireline video, all Internet/high-speed data services, residential wireline telephony services, and print and mail services. The TCI Contract provides certain performance criteria and other obligations to be met by the Company. The Company is required to perform certain remedial efforts and is subject to certain penalties if it fails to meet the performance criteria or other obligations. The Company is also subject to an annual technical audit to determine whether the Company's products and services include innovations in features and functions that have become standard in the wireline video industry. To date, the Company believes it has complied with the terms of the contract. Since execution of the TCI Contract in September 1997 through March 31, 1999, the Company has successfully converted approximately 8.6 million TCI cable television customers onto its system. Approximately 1.7 million additional TCI cable television customers are currently scheduled to be converted during the remainder of 1999. AT&T completed its merger with TCI in March 1999. At this time, it is too early to determine the near- and long-term impact, if any, the merger will have on the Company's relationship with the combined entity. AT&T has announced its planned efforts to provide convergent communications services in 10 United States cities during 1999. The Company is participating in those convergent trials and is working closely with AT&T to provide customer care and billing services to customers in those cities. The Company expects to continue performing successfully under the TCI Contract, and is hopeful that it can continue to sell products and services to the combined entity that are in excess of the minimum financial commitments included in the contract. Liquidity and Capital Resources - ------------------------------- As of March 31, 1999, the Company's principal sources of liquidity included cash and cash equivalents of $40.0 million. The Company also has a revolving credit facility in the amount of $40.0 million, of which there were no borrowings outstanding. The Company's ability to borrow under the revolving credit facility is subject to maintenance of certain levels of eligible receivables. At March 31, 1999, all of the $40.0 million revolving credit facility was available to the Company. The revolving credit facility expires in September 2002. As of March 31, 1999 and December 31, 1998, respectively, the Company had $58.5 million and $60.5 million in net trade accounts receivable, a decrease of $2.0 million. The Company's trade accounts receivable balance includes billings for several non-revenue items, such as postage, communication lines, 11 travel and entertainment reimbursements, sales tax, and deferred items. As a result, the Company evaluates its performance in collecting its accounts receivable through its calculation of days billings outstanding (DBO) rather than a typical days sales outstanding (DSO) calculation. DBO is calculated based on the billings for the period (including non-revenue items) divided by the average net trade accounts receivable balance for the period. The Company's DBO calculations for the three months ended March 31, 1999 and 1998 were 60 days and 58 days, respectively. During the three months ended March 31, 1999, the Company generated $22.3 million of net cash flow from operating activities. Cash generated from these sources and the proceeds of $2.3 million from the issuance of common stock through the Company's stock incentive plans were used to (i) fund capital expenditures of $2.3 million, (ii) pay conversion and other incentive payments of $4.6 million, and (iii) repay long-term debt of $17.3 million, which includes $2.3 million of scheduled payments and an optional prepayment of $15.0 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the three months ended March 31, 1999 was $26.3 million or 36.9% of total revenues, compared to $12.9 million or 26.1% of total revenues for the three months ended March 31, 1998. EBITDA is presented here as a measure of the Company's debt service ability and is not intended to represent cash flows for the periods. Interest rates for the term and revolving credit facilities are chosen at the option of the Company and are based on the LIBOR rate or the prime rate, plus an additional spread, with the spread dependent upon the Company's leverage ratio. Effective April 1, 1999, the spread on the LIBOR rate and the prime rate will be 0.50% and 0%, respectively. The Company is required to make certain conversion incentive payments under the TCI Contract, with the amounts and the timing of the payments based principally upon the number of TCI customers converted to, and the total number of TCI customers processed on, the Company's customer care and billing system. Total payments as of March 31, 1999 have been approximately $7.1 million. Based on the conversions performed to date and the future conversions scheduled as of March 31, 1999, the Company expects to pay the remaining $18.9 million to TCI in 1999. The Company continues to make significant investments in capital equipment, facilities, and research and development. The Company had no significant capital commitments as of March 31, 1999. The Company believes that cash generated from operations, together with the current cash and cash equivalents and the amount available under the revolving credit facility, will be sufficient to meet its anticipated cash requirements for operations, income taxes, debt service, conversion incentive payments and capital expenditures for both its short and long-term purposes. Year 2000 - --------- The Company's business is dependent upon various computer software programs and operating systems that utilize dates and process data beyond the year 2000. The Company's actions to address the risks associated with the year 2000 are as follows: The Company's State of Readiness. The Company has established a corporate program to coordinate its year 2000 (Y2K) compliance efforts across all business functions and geographic areas. The scope of the program includes addressing the risks associated with the Company's (i) information technology (IT) systems (including the Company's products and services), (ii) non-IT systems that include embedded technology, and (iii) significant vendors and their Y2K readiness. The Company is utilizing the following steps in executing its Y2K compliance program: (1) awareness, (2) assessment, (3) renovation (including upgrades and enhancements to the Company's products), (4) validation and testing, and (5) implementation. The Company has completed the awareness and assessment steps for all areas. 12 Products and Services. The renovation step has been substantially completed for - --------------------- all significant products and services, and the Company now is focusing its efforts on validation and testing. The Company's most significant renovation effort involved its core product, Communications Control System (CCS). CCS utilizes one subroutine for calculating dates, with the various computer programs within CCS with date dependent calculations accessing this subroutine. As a result, all date calculations are performed in one location. The renovation of this subroutine and the related interfaces to the various date dependent programs has been completed. The Company has completed the testing of the CCS application using its standard testing methodologies, while adding date simulation to specifically address the Y2K risk. Such date simulation considered pre-2000, cross over, and post-2000 time frames, including year 2000 leap year considerations. The renovated and tested version of CCS has been implemented into the production environment. The Company expects to be substantially completed with its testing of third party interfaces (e.g., addressable devices) to CCS by the end of the second quarter of 1999. The Company is dependent upon the third parties for such testing, and expects to be completed with the testing by the end of the third quarter of 1999. The interfaces are not complex and are considered low risk by the Company. For the Company's software products, no significant renovation is believed necessary, as the products are relatively new and were designed to be Y2K compliant. The Company is testing these products with similar date simulation techniques discussed above to ensure they are Y2K compliant. Such testing is substantially completed, with the remaining testing expected to be done by the end of the second quarter of 1999. The Company has developed a process to manage further updates or enhancements to any product related software code which has been tested and internally certified as Y2K compliant, and is considering a plan to "freeze" all changes to mission critical product related software after November 1999. The Company also plans to retest CCS (through an initial program load of the CCS system) in the fourth quarter of 1999 to ensure continued Y2K compliance. Several CSG clients are conducting tests of the Company's products in conjunction with their own operating environments. Several test phases have been completed (beginning in December 1998), with additional phases continuing into the third quarter of 1999, including participation by TCI in such testing. Internal Systems. Renovation and/or testing of the Company's significant - ---------------- internal use IT Systems (e.g., payroll systems, accounting systems, etc.) is substantially complete, with all systems expected to be tested and implemented by the end of the second quarter of 1999. The Company has a substantial number of non-IT systems that include embedded technology (e.g., buildings, plant, equipment and other infrastructure) that are owned and managed by the lessors of the buildings in which the Company is located. The Company has sent letters to its lessors requesting certifications of the Y2K compliance of the embedded systems. The Company has received some of the certifications from lessors and expects to receive the remaining certifications by the end of the second quarter of 1999. Letters have also been sent to third parties providing other internal non-IT systems with embedded technology (e.g., statement insertion machines, copy machines, etc.). Some of the Y2K certifications and/or upgrades are complete, with all systems expected to be completed by the end of the second quarter of 1999. Significant Vendors. As part of the Company's Y2K compliance program, the - ------------------- Company has contacted its significant vendors to assess their Y2K readiness. For substantially all mission critical third party software embedded in or specified for use in conjunction with the Company's IT systems and products, the Company's communications with the vendors indicates that the vendors believe they are fully Y2K compliant. The remaining vendors indicate that they are substantially Y2K compliant. The Company expects to receive further enhancements from these vendors as they become available throughout 1999 to bring the products into full Y2K compliance. Such third party software has been or is being tested in conjunction with the testing of the IT systems and products discussed above. All other significant vendors (including the Company's vendor who provides data processing services for CCS) have indicated they are substantially Y2K compliant. There can be no assurance that (i) the 13 Company's significant vendors will succeed in their Y2K compliance efforts, or (ii) the failure of vendors to address Y2K compliance will not have a material adverse effect on the Company's business or results of operations. The Costs to Address the Company's Year 2000 Issues. Since inception of its program in 1995 through March 31, 1999, the Company has incurred and expensed costs of approximately $3.2 million related to Y2K compliance efforts. The total estimated costs to complete the Company's Y2K compliance effort are approximately $0.7 million. The estimated costs to complete, which does not include any costs which may be incurred by the Company if its significant vendors fail to timely address Y2K compliance, is based on currently known circumstances and various assumptions regarding future events. However, there can be no assurance that these estimates will be achieved and actual results could differ materially from those anticipated. The Risks of the Company's Year 2000 Issues. The Company's failure to timely resolve the Y2K risks could result in system failures, the generation of erroneous information, and other significant disruptions of business activities, including among others, access to CCS and the use of related software products, and timely printing and delivery of clients' customers' statements. Although the Company believes it will be successful in its Y2K compliance efforts, there can be no assurance that the Company's systems and products contain all necessary date code changes. In addition, the Company's operations may be at risk if its vendors and other third parties (including public and private infrastructure services, such as electricity, water, gas, transportation, and communications) fail to adequately address the Y2K issue or if software conversions result in system incompatibilities with these third parties. To the extent that either the Company or a third party vendor or service provider on which the Company relies does not achieve Y2K compliance, the Company's results of operations could be materially adversely affected. Furthermore, it has been widely reported that a significant amount of litigation surrounding business interruption will arise out of Y2K issues. It is uncertain whether, or to what extent, the Company may be affected by such litigation. As is the case with many software companies and service providers, if the Company's current or future clients experience significant business interruptions due to their failure to achieve Y2K compliance, the Company's results of operations could be materially adversely affected. There can be no assurance that the Company's current or future clients will adequately and successfully address their Y2K risk and not experience any business interruptions. The Company's Contingency Plan. The Company is addressing the need for any Y2K specific contingency plan as part of its overall business continuity planning, with modifications to the plan where Y2K specific exposures are identified as the Company continues to execute its Y2K compliance project during 1999. The Company is establishing a Y2K task force for all mission critical operations of the Company which will provide dedicated personnel to escalate the resolution of any Y2K specific matters that may occur. The Company has implemented a restricted vacation policy for December 1999 and January 2000 to ensure all mission critical personnel are available if any Y2K specific matters occur. The (i) inability to timely implement a contingency plan, if deemed necessary, and (ii) the cost to develop and implement such a plan, may have a material adverse effect on the Company's results of operations. Certain Factors That May Affect Future Results of Operations. Except for statements of existing or historical facts, the foregoing discussion of Y2K consists of forward-looking statements and assumptions relating to forward- looking statements, including without limitation the statements relating to future costs, the timetable for completion of Y2K compliance efforts, potential problems relating to Y2K, the Company's state of readiness, third party representations, and the Company's plans and objectives for addressing Y2K problems. Certain factors could cause actual results to differ materially from the Company's expectations, including without limitation (i) the failure of vendors and service providers to timely achieve Y2K compliance, (ii) system incompatibilities with third parties resulting from 14 software conversions, (iii) the Company's systems and products not containing all necessary date code changes, (iv) the failure of existing or future clients to achieve Y2K compliance, (v) potential litigation arising out of Y2K issues, the risk of which may be greater for information technology based service providers such as the Company, (vi) the failure of the Company's validation and testing phase to detect operational problems internal to the Company, in the Company's products or services or in the Company's interface with service providers, vendors or clients, whether such failure results from the technical inadequacy of the Company's validation and testing efforts, the technological infeasibility of testing certain non-IT systems, the perceived cost-benefit constraints against conducting all available testing, or the unavailability of third parties to participate in testing, or (vii) the failure to timely implement a contingency plan to the extent Y2K compliance is not achieved. Quantitative and Qualitative Disclosures About Market Risk - ---------------------------------------------------------- There have been no material changes to the Company's market risks during the three months ended March 31, 1999. See the Company's 1998 10-K for additional discussion regarding the Company's market risks. 15 CSG SYSTEMS INTERNATIONAL, INC. PART II. OTHER INFORMATION Item 1-5. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 2.19H* Fourth and Twenty-Second Amendments and Schedule L to Restated and Amended CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and TCI Cable Management Corporation. 27.01 Financial Data Schedule (EDGAR Version only) 99.01 Safe Harbor for Forward-Looking Statements Under the Private Securities Litigation Reform Act of 1995-Certain Cautionary Statements and Risk Factors (b) Reports on Form 8-K None - ------------------ * Portions of the exhibit have been omitted pursuant to an application for confidential treatment, and the omitted portions have been filed separately with the Commission. 16 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: May 14, 1999 CSG SYSTEMS INTERNATIONAL, INC. /s/ Neal C. Hansen ------------------------------------------ Neal C. Hansen Chairman and Chief Executive Officer (Principal Executive Officer) /s/ Greg A. Parker ------------------------------------------ Greg A. Parker Vice President and Chief Financial Officer (Principal Financial Officer) /s/ Randy R. Wiese ------------------------------------------ Randy R. Wiese Vice President and Controller (Principal Accounting Officer) 17 CSG SYSTEMS INTERNATIONAL, INC. INDEX TO EXHIBITS Exhibit Number Description - ------ ----------- 2.19H* Fourth and Twenty-Second Amendments and Schedule L to Restated and Amended CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and TCI Cable Management Corporation. 27.01 Financial Data Schedule (EDGAR Version only) 99.01 Safe Harbor for Forward-Looking Statements Under the Private Securities Litigation Reform Act of 1995-Certain Cautionary Statements and Risk Factors - ------------------ * Portions of the exhibit have been omitted pursuant to an application for confidential treatment, and the omitted portions have been filed separately with the Commission. 18 EX-2.19H 2 4TH, 22ND & SCH L TO RESTATED/AMEND. CSG/TCI AGMT EXHIBIT 2.19H Pages where confidential treatment has been requested are stamped "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission," and places where information has been redacted have been marked with (***). FOURTH AMENDMENT TO RESTATED AND AMENDED CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT BETWEEN CSG SYSTEMS, INC. AND TCI CABLE MANAGEMENT CORPORATION This Fourth Amendment (the "Amendment") is executed this 31st day of March, 1999, and is made by and between CSG Systems, Inc., a Delaware corporation ("CSG") and TCI Cable Management Corporation ("Customer"). CSG and Customer entered into a certain Restated and Amended CSG Master Subscriber Management System Agreement dated August 10, 1997, which has subsequently been amended pursuant to separately executed amendments (collectively, the "Agreement"), and now desire to amend the Agreement in accordance with the terms and conditions set forth in this Amendment. If the terms and conditions set forth in this Amendment shall be in conflict with the Agreement, the terms and conditions of this Amendment shall control. Any terms in initial capital letters or all capital letters used as a defined term but not defined in this Amendment, shall have the meaning set forth in the Agreement. Upon execution of this Amendment by the parties, any subsequent reference to the Agreement between the parties shall mean the Agreement as amended by this Amendment. Except as amended by this Amendment, the terms and conditions set forth in the Agreement shall continue in full force and effect according to their terms CSG and Customer agree as follows: 1. Section 7 of the Agreement shall be modified to include the following as Section 7(h): CSG represents and warrants that all components of any systems/products and/or services purchased by Customer to perform the activities authorized or contemplated by the Agreement or by any schedules or exhibits thereto, are designed to be used prior to, during and after the calendar year 2000 A.D., and that the systems/product will operate during each such time period without error or interruption relating to date data, including without limitation, any error or interruption relating to, or the product of, date data which represents or references different centuries or more than one century, or leap year, in any level of any systems/product hardware or software, including, without limitation, microcode, firmware, application programs, user interfaces, files and databases (such representation and warranty being referred to as "Year 2000 Compliant"). If CSG is unable or unwilling to correct the system/product/service within a reasonable period of time after receiving written notice from Customer specifying the nature of the failure, then Customer shall have the right to seek all other available remedies, subject to the limitations contained in this Agreement. 2. Attachment 3 which sets forth the Performance Standards is hereby deleted and replaced with Attachment 3 attached hereto. 3. Section 9(b) of Schedule A is deleted in its entirety and replaced with the following: (i) CSG will make available to Customer 3.1 Full Time Equivalent employees ("Technical FTEs") per increment of one million (1,000,000) of Customer's subscribers being processed by the CCS Services, up to a maximum of forty (40) Technical FTEs. Pursuant to the terms of this Section 9(b), the Technical FTEs will provide the following services related to the maintenance and development of the CCS Services received by Customer, pursuant to priorities determined by Customer: (A) database maintenance programming (i.e., update re-zips, recreating reports, performing statement reruns, cycle changes, file stripes, cycle freezes, code table adds, changes and deletes, refund check reruns, adding "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission" systems/prins/agents, all CSG telecommunication access fee adds, changes or deletes, respools, forms change and UDF Mirrors); (B) product enhancement that will most likely be used by other CSG customers in the cable operator industry; and (C) product enhancement that is Customer specific. The fees for services rendered by the Technical FTEs are set forth in Schedule D. However, Customer (***) for any fees associated with any services described in subsection (A) above that fall within the allotment set forth in Subsection (i) above. Any such services in excess of that allotment shall be billable in accordance with the fees set forth in 1.II.W of Schedule D. Customer shall (***) be responsible for (***) percent (***%) of the product development fees set forth in 1.II.W of Schedule D associated with the rendering of any services that are described in subsection (B) above that fall within the allotment set forth in subsection (i) above. Subject to the terms of the Master Agreement, any such services in excess of that allotment shall be billable in accordance with the fees set forth in 1.II.W of Schedule D. Customer shall be responsible for (***) percent (***%) of the fees set forth in Schedule D associated with the rendering of any services that are described in subsection (C) above. Notwithstanding anything to the contrary, the foregoing relates to fees to be charged to Customer to cover CSG's development costs, not operational costs. If any Statements of Work relating to any services described in this Section 9(b) involve additional operating expenses to CSG, Customer will be responsible for any such costs in accordance with the terms of the Master Agreement and any applicable Statements of Work. (ii) CSG's Product Management group and Customer's Subscriber Billing Group shall review all requests for services under this Section 9(b), and if they reasonably determine that any such services constitute enhancements that could be implemented into CSG's CCS Products as part of CSG's regular development activities, CSG will not bill Customer for such services. If this is not the case, however, Customer shall pay for such services in accordance with the preceding paragraph. CSG and Customer agree to form a committee to resolve any disagreements regarding the classification of services hereunder and/or any dispute regarding the classification of services under Subsection (iii) below. If necessary, this committee shall meet monthly (as part of the CSG/TCI Monthly Operations Review). (iii) CSG and Customer shall mutually agree upon the category of services requested by Customer prior to the rendering of any services by CSG. Notwithstanding anything contained in this Section 9(b), Customer shall, at no additional cost, be entitled, on an annual basis, to three thousand (3,000) hours of service by the Technical FTEs in connection with services for which CSG and Customer cannot agree upon one of the three categories described in subsection (i) above. (iv) Any technical services requested by Customer during any given month in excess of those provided by the Technical FTEs pursuant to the first sentence of subsection (i) above may be provided by CSG at the fees set forth in Schedule D. CSG will provide Customer with a monthly report that describes all activities undertaken by the Technical FTEs during such month. (v) CSG and Customer will, on an annual basis, review the procedures set forth in this Section 9(b) to determine whether modifications are necessary to achieve greater efficiency. (vi) If Customer requests that any Completion Date set forth in a Statement of Work be made sooner, CSG shall investigate the feasibility of such request and shall inform Customer of its determination. If CSG notifies Customer that performance under the Statement of Work can be expedited, and if there are any additional costs associated with any such modification, CSG shall so notify Customer of the extent of the additional costs and Customer shall be responsible for any such additional costs. If CSG notifies Customer that performance cannot be expedited, CSG shall provide Customer with its business reasons for its determination. 4. The Conversion/Implementation Services for CCS are set forth on Exhibit A-2 attached hereto. 5. Exhibit C-3 which sets forth the installation and support services for the CCS Products (excluding Vantage) currently states that the installation and support services ACSR are to be completed. Exhibit C-3 is hereby amended to include the following installation and support services for ACSR: 2 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES ACSR Only Installation & Startup - Server Located at System Site ---------------------------------------------------------------- Included Project Implementation Support (3-4 month duration) Assigned project manager and product consultant (shared resources) Requirements definition and project planning meeting on site Project plan and customer specifications document Ongoing project coordination, status reporting and post project review Engineering 1 day visit/survey (single location) Server and network configuration and sizing (single server) Site network requirements documentation and diagram Field services Single server/disk array assembly, software installation, and configuration at CSG site - 4 days Single server testing at CSG site - 1 day Customer site prep, server installation, and pre-production system check/support - 5 days on site On-site Training (an instructor day is 1 instructor, for 1 full day, for up to 8 students) ACSR User Training - 3 instructor days Omaha Based Training ACSR Technical Administrator Training - one seat at a regularly scheduled Omaha based class 1 copy of User Guide and Systems Administration Guide Not Included (Customer responsibilities and/or services available for additional fees included under Additional Services) Customer completes agreed to project requirements as defined and scheduled LAN cabling and hub installation Workstation installation Printer installation IBM 4030 installation by CSG Additional server(s) field services Remote site engineering services ACSR Only Installation & Startup - Centralized Server Configuration at TCI -------------------------------------------------------------------------- Location -------- Included Project Implementation Support . Assigned project manager (shared resources) . Ongoing project coordination, status reporting and post project review . Troubleshoot/test printers (cash register, work order, report). Includes Brixton configuration and Jet Direct configuration. . Master port configuration . Build ACSR.INI configuration file in accordance with TCI standards and mainframe settings. . Define LU pools and mainframe access with each site. . Training preparation . Passwords/profiles built . LU's tested . Mainframe access verified. . Post conversion support (Front line) . Trouble shoot ACSR application errors . Trouble shoot w/s configuration and printer errors . Fine tuning of ACSR environment Engineering . Place order for the programming for the TCI common LU pool. . Place order for the programming of RMS & Cash Register printers. 3 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES . Update engineering diagrams, on-call book, and customer on-line profile to shorten the amount of time needed to troubleshoot a call . Supply INS Tech with LU and access for Terminal Control Blocks (TCB). . Build TCB records for mainframe access . Place Addressability orders for the sites . Assignment of Z numbers . Necessary programming/definition . Verify programming on TCI/CSG's side when working with TCI install vendor System Operations . Maintains integrity of ACSR code and all its distributed components. . Sets-up ACSR code distribution paths for new installs. . Ongoing support for TCI install vendor installation procedures. . All technical trouble ticket resolution during installation . Create and maintain installation documentation for TCI install vendor . Build/update/maintain installation CD-ROM for TCI install vendor . Update distribution servers ANDS database with site specific workstation information. . Update/install Operator IDs on distribution server. . Implement customer selected ACSR configuration information (ACSR.INI) Field services . Telephone Support for Equipment Installation On-site Training (an instructor day is 1 instructor, for 1 full day, for up to 8 students) . ACSR User Training - 3 instructor days Omaha Based Training . ACSR Technical Administrator Training - one seat at a regularly scheduled Omaha based class Documentation . 1 copy of User Guide and Systems Administration Guide Conversion/Account Management Department . Work with the TCI NOC to resolve network related issues . Work with CSG departments to resolve ACSR setup issues . ACSR.INI file definition and education . Gathering op ids and security for Mail/News functionality . Code table SL set-up, (for services display in ACSR) . Printer mapping on the server/mainframe . General ACSR education Post conversion support -Various Departments . Support ongoing problems with cash register printing, including configurations that get changed once setup . Support ongoing RMS printing issues, including changes to print ID's, formatting of paper, printer queues on the TCI servers that are not printing, HP JetDirect card issues, and canceling print jobs at the TCI server level . Support of TCI's NOC on issues that are not CSG related. Includes workstation and LAN issues . Work with CSG departments in problem determination of ACSR application issues . Coordination for mainframe adds/changes after conversion Not Included (Customer responsibilities and/or services available for additional fees included under Additional Services) Customer completes agreed to project requirements as defined and scheduled LAN cabling and hub installation Workstation installation Printer installation Additional server(s) field services 4 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." Remote site engineering services Telephony Installation & Startup (In addition to ACSR) - ----------------------------------------------------- Project Implementation Support Assigned project manager and product consultant (shared resources) Requirements definition and project planning meeting Project plan and customer specifications document Ongoing project coordination, status reporting and post project review Engineering Network and server sizing and configuration (single server) Network requirements diagram and documentation Field Services Single server software installation, configuration and testing at CSG (40 hours) Single server with one workstation - installation* and pre-production check at customer site (40 hours) Training and Documentation 1 seat in ACSR/Telephony New Client class at CSG 1 seat in ACSR/Telephony Train-the-Trainer class at CSG CSG Documentation Library on CD-ROM includes ACSR documentation Installation and Start-up Services Not Included in the above packages (customer responsibility and/or services available for additional fees) Additional workstation installation Printer installation Network interface cards/devices Circuit installation Remote site engineering services Definition and implementation of all billing and financial management parameters Custom report design and development Operational system requirements and implementation Coordination of all vendor activities pertaining to telephony operational network and database management 6. Schedule D is hereby deleted and replaced with Schedule D attached hereto, which includes fees for all products licensed and services purchased by Customer from CSG through October 2, 1998. The fees set forth in such Schedule D shall be effective as of August 10, 1997; however, Section 4 of the Agreement shall be applied with respect to the fees contained in the attached Schedule D based on the actual date of execution of the agreement, amendment or document pursuant to which Customer committed to license the appropriate product or purchase the appropriate service. 7. Section 6 of Schedule F is hereby deleted and replaced with the following: 6. Per Cycle Minimum. As of the Commencement Date as defined in Section 8 below, for each month that this Agreement is in effect, each System Site will maintain per each billing cycle a minimum of three thousand (3000) subscribers on the CCS Services. Additionally, the cycle set-up charges set forth in Section 6 of Schedule D shall be modified in the following scenarios: For each System Site with 0 to 12,000 subscribers: (i) the $(***) per cycle set up fee for less than 3000 subscribers will be waived if no more than 4 cycles are opened. However, the fee will apply to all cycles opened over 4 that have less than 3000 subscribers, and (ii) the $(***) per cycle set up fee for less than 550 subscribers 5 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." will be waived if no more than 4 cycles are opened. However, the fee will apply to all cycles opened over 4 that have less than 550 subscribers. For each System Site with 12,000 to 50,000 subscribers: (i) the $(***) per cycle set up fee for each System Site with less than 3,000 subscribers will be waived for a period of one year after conversion of such System Site if no more than 6 cycles are opened for such System Site, (ii) the $(***) per cycle set up fee for each System Site with less than 550 subscribers will be waived for a period of one year after conversion of such System Site if no more than 6 cycles are opened for such System Site, (iii) each System Site using the cycle placement strategy will not be charged the set up fee for opening more cycles if the number of subscribers per cycle meets the 550 and 3,000 subscriber minimums set forth in Section 6 of Schedule D, and (iv) one year after conversion of each System Site, the $15 and $50 cycle set up fees for each System Site will apply to all cycles not meeting the respective minimum number of subscribers. For each System Site with greater than 50,000 subscribers: (i) the $(***) per cycle set up fee for each System Site with less than 3,000 subscribers will be waived for a period of one year after conversion of such System Site if no more than 10 cycles are opened for such System Site, (ii) the $(***) per cycle set up fee for each System Site with less than 550 subscribers will be waived for a period of one year after conversion of such System Site if no more than 10 cycles are opened for such System Site, (iii) each System Site using the cycle placement strategy will not be charged the set up fees for opening more cycles if the number of subscribers per cycle meets the 550 and 3,000 subscriber minimums set forth in Section 6 of Schedule D, and (iv) one year after conversion of each System Site, the $(***) and $(***) cycle set up fees for each System Site will apply to all cycles not meeting the respective minimum number of subscribers. 8. Schedule F shall be amended to include Exhibit F-1 attached hereto. 9. The definition of APIs set forth in subsection (ii) of Section 1 of Schedule Q is hereby deleted and replaced with the following: xBOI, Product/Services, and Fleet Management. 10. Section 3 of Schedule Q is hereby deleted and replaced with the following: "Designated Environment" means the combination of the other computer programs and hardware equipment CSG specified for use with the APIs and ISP Domain server as set forth in Exhibit Q-1, or otherwise approved by CSG in writing for Customer's use with the APIs or ISP Domain server. Customer may use the APIs and ISP Domain server only in the Designated Environment and will be solely responsible for upgrading the Designated Environment to the specifications that CSG may provide from time to time. CSG shall provide Customer with prompt notice in the case of any modifications to the Designated Environment. CSG shall use its best efforts to continue to support a Designated Environment that Customer has not upgraded pursuant to CSG's notice. However, if Customer fails to update the Designated Environment within twelve (12) months of receipt of notice from CSG or otherwise uses the APIs or ISP Domain server outside the certified Designated Environment, any maintenance and support of the ISP Domain provided by CSG will be pursuant to a Statement of Work executed by CSG and Customer under Schedule B. CSG shall certify the Designated Environment prior to the commencement of CSG's obligations under this Schedule Q, including its obligations to maintain and support the ISP Domain. However, if Customer makes any changes to the Designated Environment other than pursuant to notice provided by CSG, any efforts required by CSG to certify such Designated Environment shall be undertaken pursuant to a Statement of Work executed by CSG and Customer under Schedule B. Any other use or transfer of the ISP Domain will require CSG's prior approval, which may be subject to additional charges. THIS AMENDMENT is executed on the day and year first shown above. CSG SYSTEMS, INC. ("CSG") TCI CABLE MANAGEMENT CORPORATION ("Customer") By: /s/ Joseph T. Ruble By: /s/ Ann Montgomery -------------------------- ----------------------------- 6 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES By: /s/ Joseph T. Ruble By: /s/ Ann Montgomery -------------------------- ----------------------------- Title: Vice President and General Title: SVP Fulfillment Svcs & Operations Counsel ---------------------------------- ------------------------------ 7 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." ATTACHMENT 3 Customer/CSG Performance Standards Matrix
- -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- Performance Standard Performance Assumptions Notes Cure Process Penalty Description Standard - -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- CCS Host System Monthly average of Excludes nightly, If CSG fails to If after 60 day Availability (***)% of the monthly and meet performance notice and scheduled uptime, quarterly scheduled standard, Customer opportunity to cure which includes PPV downtime. CSG will will provide CSG is given, and subsystem. use reasonable best with written notice performance standard efforts to increase of such is not then met, the monthly average non-performance and repeated to (***)%. a 60 day period to nonperformance will cure. be noted. - -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- CCS Host System Monthly average of Customer will pay Excludes nightly, If CSG fails to CSG will give Availability - High (***)% of the an incremental monthly and meet performance Customer credit for Availability Option scheduled uptime for $(***)/sub/month, quarterly scheduled standard, Customer the incremental the CICS system, plus (***) million sub downtime will provide CSG (***) per subscriber (***)% uptime for the minimum. Customer with written notice fee for (***) during PPV subsystem must decide by (***) of such the (***) period for implementation non-performance and described above that by 2/98. This a 30 day period to CSG fails to meet pricing expires cure. Such cure may the performance (***). be exercised no standard after the more frequently 30 day cure period. than (***) per year without penalty. - -------------------- --------------------- ------------------- -------------------- --------------------- ---------------------
8 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission."
- -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- Performance Standard Performance Assumptions Notes Cure Process Penalty Description Standard - -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- CCS System Nightly CSG will reduce to a CSG will make best If CSG fails to meet If after 60 day Scheduled Downtime monthly average of efforts to reduce performance notice and (***) minutes a day this to under (***) standard, Customer opportunity to cure by (***) and to a minutes by (***). will provide CSG is given, monthly average of with written notice performance standard (***) minutes a day of such is not then met, by (***). non-performance and repeated a 60 day period to nonperformance will cure. be noted. - -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- CCS Conversion Available by (***) (***) current PPV/Adjustments/ If CSG fails to meet Nonperformance will Backlog Automation monthend conversions Customer conversion Payments will be performance be noted, and (***). (see notes). personnel will be completed by (***) standard, Customer available to work on monthend. will provide CSG project with written notice Phase 1 work order of such backlog will be beta non-performance and tested (***) a 30 day period to monthend. Phase 2 cure. will be beta tested (***) monthend. - -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- CCS Statements (***)% of statements Customer will agree To begin (***) If CSG fails to meet If after 30 day Mailing in mail within (***) to cycle placement Excludes customer performance notice and hours. strategy as long as requested and standard, Customer opportunity to cure customer does not conversionholds and will provide CSG is given, receive a prorate reruns. Clock with written notice performance standard during conversion, begins at midnight of such is not then met, cycle spread or the night of cutoff. non-performance and repeated placement strategy. a 30 day period to nonperformance will cure. be noted. - -------------------- --------------------- ------------------- -------------------- --------------------- ---------------------
9 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission."
- -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- Performance Standard Performance Assumptions Notes Cure Process Penalty Description Standard - -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- CCS Batch Generated (***)% by (***) CST To begin (***). If CSG fails to meet If after 30 day Work Order Mon-Sat, by (***) System has performance standard, notice and Availability CST on Sunday. capability to print Customer will opportunity to cure workorders at provide CSG with is given, predefined times for written notice of performance standard a scheduled day's such non-performance is not then met, work. and a 30 day period repeated to cure. nonperformance will be noted. - -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- Transaction Response Monthly average of (***) Response time If after 30 day Time For the CSG (***) seconds or methods will be notice and Network (CCS, ACSR less, (***) of the developed and opportunity to cure and ACSR Telephony) time measured. Complaints is given, will be verified by performance standard CSG and Customer. If is not then met, response time is repeated exceeded, nonperformance will nonperformance will be noted. be noted, and CSG will use reasonable best efforts to cure within (***) - -------------------- --------------------- ------------------- -------------------- --------------------- ---------------------
10 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission."
- -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- Performance Standard Performance Assumptions Notes Cure Process Penalty Description Standard - -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- Transaction Response Monthly average of Response time Response time If after 30 days Time for the TCI (***) seconds or begins when CSG methods will be notice and Network (CCS, ACSR less, (***)% of the receives developed and opportunity to cure and ACSR Telephony) time transaction from measured. Complaints is given, TCI Network and will be verified by performance standard ends when CSG CSG and Customer. If is not then met, passes transaction response time is repeated to the TCI Network. exceeded, nonperformance will nonperformance will be noted. be noted, and CSG will use reasonable best efforts to cure within (***). - -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- CSG Conversion (***)% of the Data must be If CSG fails to If after 30 days Downtime monthly received by meet performance notice and conversions CSG no less standard, opportunity to will be merged than (***) Customer will cure is given, on the hours prior to provide CSG with performance mutually merge date / written notice standard is not agreed upon time of such then met, date. non-performance repeated and a 30 day nonperformance period to cure. will result in a (***). - -------------------- --------------------- ------------------- -------------------- -------------------- --------------------- CCS Conversion (***)% of the Excludes If conversion CSG will (***) Balancing data that is agreed upon does not balance reported is exceptions to agreed upon balanced/ exceptions, reconciled to (***). source system data. - -------------------- --------------------- ------------------- -------------------- -------------------- ---------------------
11 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission."
- -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- Performance Standard Performance Assumptions Notes Cure Process Penalty Description Standard - -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- Inbound calls A Monthly If CSG fails to Customer will work to PSC average of meet performance with CSG until (***)% standard, Customer performance answered will provide CSG standards are met. within average with written If standards are not of (***) notice of such met more than (***) seconds. non-performance times per year Voicemail and a 30 day nonperformance will calls returned period to cure. be noted. If within a standards are not monthly met more than (***) average of times per year in (***) minutes (***) consecutive (***)% of the years, repeated time. nonperformance will be noted. - -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- Statements of 1. (***)% 1. SOW must 1. Response 1. If Statement of 1. If an extension Work responded to be executed includes Work request is is not acceptable to within (***) within (***) development not processed in Customer, business days, days to cost, estimated accordance with nonperformance will (***)% within retain ongoing cost and the performance be noted. (***) business implementation estimated (***) standard, CSG will days, measured date. implementation. contact Customer 2. If the completion annually. Statements to determine if an date is missed for of Work to 2. NA extension is more than (***) 2. Completing be initiated acceptable to executed Statements executed through Customer. of Work per year, Statement of accepted repeated Work by channels and 2. If Statement of nonperformance will completion defined Work is not be noted. date set forth process. completed pursuant in Statement to the completion of Work. 2. There are date set forth in no Customer the executed originated Statement of Work, scope or CSG will contact requirements Customer to changes determine if an during the extension of the process of completion date is performing acceptable to the Services Customer. under the Statement of Work. - -------------------- --------------------- ------------------- -------------------- --------------------- ---------------------
12 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission."
- -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- Performance Standard Performance Assumptions Notes Cure Process Penalty Description Standard - -------------------- --------------------- ------------------- -------------------- --------------------- --------------------- Enhancement Received by CSG will make Based on complexity If documentation Customer best efforts to of changes in documentation within (***) meet a (***) day Enhancement, is received days of receipt documentation (***) days implementation deliverables will be for a (***)% of the measured on a (***) quarterly time basis. If release, documentation is not Customer will received within have the (***) days, CSG will right (if use reasonable best needed) to efforts to correct. delay the If documentation is quarterly received less than release. (***) days more than (***) times per year, nonperformance will be noted. - -------------------- --------------------- ------------------- -------------------- --------------------- ---------------------
13 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." EXHIBIT A-2 (Page 1 of 4) CCS Implementation and Conversion THE FOLLOWING VIDEO CONVERSION SERVICES ARE AVAILABLE FOR THE FEES SET FORTH ON SCHEDULE D: - ---------- I) FOR SITE CONVERSIONS WITH SUBSCRIBER COUNTS OF LESS THAN 20,000 __________ A) Training Aids and Documentation - 1 Set --------------------------------------- CCS CBT Access for three (3) months. Manuals and job aids for your video system staff. These manuals and job aids are used to complement your CBT courses. Each employee would be provided the necessary job aids and manuals. Job Aids: Logon/Sign On, Logoff/Sign Off, CBT Training System, House File, Sales Support, Adjustment Transactions, Adjustment Practice Sheet, Converter Inventory/Addressability Transactions, Converter Sample Invoices, Select System Additional copies: $(***) for the Job Aids and $(***) for the Manual. One CD of the "Cable Source" Communication Control System User Guides. This system documentation explains all reports and transactions of the Communication Control System. Additional copies: See Schedule D One CCS Conversion Manual. This manual describes the major components necessary for set-up and conversion/implementation to the CCS system. Additional copies: CSG's then-current prices One "CableSource User Data File" On CD. This manual describes the 300 plus parameters provided to allow you flexibility in establishing your processing requirements. This manual will be primarily reviewed by the Conversion Specialist during your first visit. Additional copies: See Schedule D A test system that provides for the opportunity to practice "hands on" training without impacting your actual data base. (Deaccessed after conversion) One RMS Manual On CD. This manual describes all functionality and commands of the CSG print package. Additional copies: See Schedule D One ESP User's Guide Additional copies: CSG's then-current prices B) Recommended Site Visits ----------------------- Initial Visit . Overview of the conversion/implementation process. This incorporates reviewing conversion tasks, timeline and responsible parties. . Establish and/or review of corporate standards, as they relate to User Data File, Code Tables, Service Codes and Report settings. . Define Conversion Specifications. This process defines fields, values and variables used on current billing processor and how that will be converted to CCS. 14 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES EXHIBIT A-2 (Page 2 of 4) Pre-Conversion Review . Review set up of User Data File, Code Tables and reports. . Review pricing and taxing structure of video site. . Review and approve Conversion/Implementation Specifications. . Establish statement messages and review ESP Statement Options. . Assign a CSG Product Consultant to assist with defining operational procedures (Metros only). Post Conversion . Audit converted data the morning after merge. . Coordinate input of accumulated backlog (work orders, payments, adjustments and PPV) . Review exceptions created through conversion/implementation process and take necessary action. . Review pricing and taxing structure. . Balance cash. . Review reports and assist with determining needs for daily distribution. . Review and release first cycle of generated statements. . CSG will provide resources to each System Site based upon the following guidelines: . The first 300K subs per System Site - 1 per 60,000 subs . After 300K subs per System Site - 1 per 75,000 subs Third Week . Review reports. . Assist with month-end financial balancing. . Provide potential solutions for day to day procedural issue resolution. (i.e. work order printing, routing, dispatch, converter inventory). . System Sites with under 5,000 subscribers do not receive third week support C) Database Clean-up ----------------- Homes Passed. All addresses that currently reside on your database will be compared against the Group One Zip + 4 files. The following items will occur: . Street names, suffixes (street, avenue) will be standardized in accordance with U.S.P.S. records. . Nine digit zip code established - normally from 90-98% of address will be assigned the 4 digit add-on list of addresses that did not meet U.S.P.S. standards will be provided. Rural areas may have lower percentages. . Bar-coding of Zip + 4 statement will be performed by CSG. . Re-zip of your data base occur every quarter - this allows CSG to continue to qualify for the highest postal discounts. . List of duplicate address records will be provided for cleanup purposes. Converter Data Base. All converters will be passed through CCS edit programs, the following items will occur: . Listing of duplicate serial numbers including the location of the box will be provided. . If you are addressable, a listing of duplicate terminal address (prom number) will be provided. . Invalid model numbers, invalid serial number formats will be identified. Subscriber Data Base. Standard CCS edits requirements will be performed along with any specific site requested information. The following items are provided as examples: . Site requested service codes, discount codes. . Site requested campaign codes. . Subscribers receiving free services. . Invalid phone numbers. 15 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES . Any specific site requested data. EXHIBIT A-2 (Page 3 of 4) D) Management Training at CSG Facility ----------------------------------- . In depth lecture seminar designed for managers and supervisors. . Covers all aspects of the Communication Control system. . Includes a detailed training manual and all additional training materials. . Opportunity to tour the CSG Mail Facility. . 2 seats per Cabledata/CableMax Corp. for New Client Training. . 1 seat per Cabledata/CableMax Corp. for System Support Training which includes ESP Statement Functions, RMS Printing, UDF/Code Table, Selects, Security and PPV Admin. capabilities. II) 20,000 - 49,999 SUBSCRIBERS CATEGORIES ________________________ Includes everything as listed in Section I, plus the following: Recommended Site Visits - ----------------------- Training . CSG training will be on-site to conduct "Train the Trainer" courses for site's training staff. . CSG trainers will train site staff on CCS/ACSR facets and functionality, based upon agenda and needs created by Video site management. . Includes 1 instructor for 3 days. Third Week . Review reports. . Assist with month-end financial balancing. . Provide potential solutions for day to day procedural issues. (i.e. work order printing, routing, dispatch, converter inventory). III) 50,000 - 119,999 SUBSCRIBERS CATEGORY Includes everything as listed above in Section II, except regarding: Recommended Site Visits - ----------------------- Training . CSG training will be on-site to conduct "Train the Trainer" courses for site's training staff. . CSG trainers will train site staff on CCS/ACSR facets and functionality, based upon agenda and needs created by Video site management. . Includes 1 instructor for 5 days. . 1 seat per Cabledata/CableMax Corp. for ACSR Technical Training (at CSG Facility). 16 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES EXHIBIT A-2 (Page 4 of 4) IV) 120,000 + SUBSCRIBERS CATEGORIES _______________________________ Includes everything as listed above in Section III, except: Recommended Site Visits - ----------------------- Training . CSG training will be on-site to conduct "Train the Trainer" courses for site's training staff. . CSG trainers will train site staff on CCS/ACSR facets and functionality, based upon agenda and needs created by Video site management. . Includes 2 instructors for 5 days. . 2 seat per Cabledata/CableMax Corp. for ACSR Technical Training (at CSG Facility). . System Support training for 2 days V) TRAINING COURSE DEVELOPMENT _____________________________________ CSG will provide to TCI one FTE, at no charge, through the end of 1997 to assist with course and material development. VI) MISCELLANEOUS __________________________________________________ (1) TCI may move on-site instructor days among System Sites at their discretion as long as they do not exceed the total number of instructor days allowed in a given month. (2) CSG training personnel will attend the TCI Training Certification Class and receive a passing grade (75% or greater) before training TCI System Site personnel. VII) FOR MANUAL CONVERSIONS _____________________________________________ Customer shall receive the following: . 1 set of documentation on CD . initial visit . System set up (System/Prin/Agent, Maintenance requests, lockbox, RMS) . Parameter file set up for cards 1-143, Service / Package / Install Codes and Code Tables . 3 months access to CBT . 1 Seat for New Client Training in Omaha . Manual Database Build Instructions / Procedure Document . Addressability support and set up if applicable 17 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES SCHEDULE D FEES INDEX 1.................... CCS(TM) WIRELINE VIDEO AND CABLEMAX 2.................... TECHNICAL SERVICES 3.................... CCS(TM) - ISP SERVICES FEES 4.................... CCS(TM) TELEPHONY SERVICES FEES 5.................... CCS(TM) DISCOUNTS 6.................... CCS PRINT AND MAIL SERVICES FEES 7.................... CSG VANTAGE(R) 8.................... HITS DIGITAL 9.................... ACSR(R) SOFTWARE LICENSE/MAINTENANCE/INSTALLATION 10................... CSG VANTAGEPOINT(TM) 11................... ISP DOMAIN SERVER SOFTWARE (SINGLE SITE LICENSE) 12................... USAGE HANDLING SYSTEM 13................... INFO EXPRESS 14................... DATA COMMUNICATIONS SERVICES 15................... FINANCIAL SERVICES 16................... SUMMITRAK CUSTOMER MANAGEMENT SYSTEM 17................... SUMMITRAK PAY-PER-VIEW SERVICE 18 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." 1. CCS(TM) WIRELINE VIDEO AND CABLEMAX PROCESSING- - -------------------------------------------------- Basic Monthly Subscriber Charge (herein after referred to as BSC) - $(***) Minimums:
(Base processing and ancillary services) Monthly Subscriber Minimum Monthly Processing Fee Minimum - ------------------------------------------- -------------------------- ------------------------------ September 1, 1997 through December 31, 1997 3,906,250 $(***) January 1, 1998 through March 31, 1998 4,864,387 $(***) April 1, 1998 through June 30, 1998 6,928,006 $(***) July 1, 1998 through September 30, 1998 7,959,906 $(***) October 1, 1998 through December 31, 1998 10,023,585 $(***) January 1, 1999 through December 31, 1999 13,000,000 $(***) January 1, 2000 through December 31, 2000 13,000,000 $(***) January 1, 2001 through December 31, 2001 13,000,000 $(***) January 1, 2002 through December 31, 2012 13,000,000 $(***) Year 2003 to Year 2012*
*The monthly processing fee minimum for the years 2003 to 2012 will commence using the year 2002 monthly processing fee minimum adjusted annually pursuant to the terms and conditions of the Master Agreement. On-Line Allowance And Overage Charges: - -------------------------------------------------------------------------------- MONTHLY ON-LINE ALLOWANCE PER MONTHLY PER ITEM SUBSCRIBER OVERAGE CHARGE - -------------------------------------------------------------------------------- A. Work Orders on file 7.64 $(***) - -------------------------------------------------------------------------------- B. Statements stored on-line 6.25 $(***) - -------------------------------------------------------------------------------- C. Details stored on-line 45.84 $(***) - -------------------------------------------------------------------------------- D. Memos stored on-line 6.0 $(***) - -------------------------------------------------------------------------------- E. Inactive subscribers on file .40 $(***) - -------------------------------------------------------------------------------- CCS(TM) - Ancillary Service Fees
- ----------------------------------------------------------------------------------------------- ANCILLARY SERVICE FEES - ----------------------------------------------------------------------------------------------- ONE TIME MONTHLY MONTHLY CHARGE PER CHARGE PER CHARGE PER ITEM SYSTEM SYSTEM SUBSCRIBER PER ITEM - ----------------------------------------------------------------------------------------------- I. Reporting & Decision Support Services - ----------------------------------------------------------------------------------------------- A. Microfiche - ----------------------------------------------------------------------------------------------- A. Originals $(***) - ----------------------------------------------------------------------------------------------- B. Duplicates $(***) - ----------------------------------------------------------------------------------------------- B. Reporting Package-includes Basic Vantage Reporting and Selects Reporting (with Selects Reporting Usage included up to $(***) per subscriber) $(***) - ----------------------------------------------------------------------------------------------- C. Selects - ----------------------------------------------------------------------------------------------- 1. Set-up fee per select (per system) $(***) - ----------------------------------------------------------------------------------------------- 2. Select Records to Print $(***) - ----------------------------------------------------------------------------------------------- 3. Select Records to Magnetic Tape $(***) - ----------------------------------------------------------------------------------------------- Volume Discount Greater than 1,000,000 (per acct selected) $(***) - -----------------------------------------------------------------------------------------------
19 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission."
- ----------------------------------------------------------------------------------------------- ANCILLARY SERVICE FEES - ----------------------------------------------------------------------------------------------- ONE TIME MONTHLY MONTHLY CHARGE PER CHARGE PER CHARGE PER ITEM SYSTEM SYSTEM SUBSCRIBER PER ITEM - ----------------------------------------------------------------------------------------------- 4. Audit Master Tape with Carrier Sort $(***) - ----------------------------------------------------------------------------------------------- Volume Discount Greater than 1,000,000 (per acct selected) $(***) - ----------------------------------------------------------------------------------------------- 5. TAC File Audit $(***) - ----------------------------------------------------------------------------------------------- 6. Tape Charges $(***) - ----------------------------------------------------------------------------------------------- 7. Special Reports - ----------------------------------------------------------------------------------------------- Audit Confirmation Statements $(***) - ----------------------------------------------------------------------------------------------- Sales Call Cards $(***) - ----------------------------------------------------------------------------------------------- 8. Auto dialer - ----------------------------------------------------------------------------------------------- a. Records read $(***) - ----------------------------------------------------------------------------------------------- b. Minimum charge per report $(***) - ----------------------------------------------------------------------------------------------- c. Maximum charge per report $(***) 9. Labels (printed at CSG's Production Facility) - ----------------------------------------------------------------------------------------------- Set-up fee per select (per system) $(***) - ----------------------------------------------------------------------------------------------- a. Cheshire labels $(***) - ----------------------------------------------------------------------------------------------- Volume Discount - ----------------------------------------------------------------------------------------------- Greater than 100,000 (indiv. job) $(***) - ----------------------------------------------------------------------------------------------- Greater than 500,000 (indiv. job) $(***) - ----------------------------------------------------------------------------------------------- b. Cheshire Labels w/ carrier sort $(***) - ----------------------------------------------------------------------------------------------- Volume Discount - ----------------------------------------------------------------------------------------------- Greater than 100,000 (indiv. job) $(***) - ----------------------------------------------------------------------------------------------- Greater than 500,000 (indiv. job) $(***) - ----------------------------------------------------------------------------------------------- c. Applying Cheshire labels (each) $(***) - ----------------------------------------------------------------------------------------------- d. LAB labels $(***) - ----------------------------------------------------------------------------------------------- e. 4-Up Gum Labels $(***) - ----------------------------------------------------------------------------------------------- f. 4-Up Gum Labels w/ carrier sort $(***) - ----------------------------------------------------------------------------------------------- II. Other Ancillary Services - ----------------------------------------------------------------------------------------------- A. Equipment Inventory Incl. in BSC - ----------------------------------------------------------------------------------------------- B. Tape transmission (lockbox) Incl. in BSC - ----------------------------------------------------------------------------------------------- 1. Conversion Lockbox Cross Reference $(***) - ----------------------------------------------------------------------------------------------- C. Audio response units - ----------------------------------------------------------------------------------------------- 1. Access fee $(***) - ----------------------------------------------------------------------------------------------- 2. Transaction charge (per PPV item) $(***) - ----------------------------------------------------------------------------------------------- D. Automatic Number Identification (ANI) - ----------------------------------------------------------------------------------------------- 1. Access fee $(***) - ----------------------------------------------------------------------------------------------- 2. Transaction fee (per PPV item) $(***) - ----------------------------------------------------------------------------------------------- E. Autopackaging (maximum (***)) Incl. in BSC - ----------------------------------------------------------------------------------------------- F. Pay Per View - ----------------------------------------------------------------------------------------------- 1. PPV events (per event) $(***) - ----------------------------------------------------------------------------------------------- 2. Build events, per supplier tape $(***) - ----------------------------------------------------------------------------------------------- 3. Event schedule download $(***) - ----------------------------------------------------------------------------------------------- 4. Output of Authorization Profiles $(***) - ----------------------------------------------------------------------------------------------- G. Account number format change $(***) - ----------------------------------------------------------------------------------------------- H. Addition for a system, principle or agent (Note 2)
20 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission."
- ----------------------------------------------------------------------------------------------- ANCILLARY SERVICE FEES - ----------------------------------------------------------------------------------------------- ONE TIME MONTHLY MONTHLY CHARGE PER CHARGE PER CHARGE PER ITEM SYSTEM SYSTEM SUBSCRIBER PER ITEM - ----------------------------------------------------------------------------------------------- 1. Setup of new system (Note 3) $(***) - ----------------------------------------------------------------------------------------------- 2. Setup of new principle/agent (Note 3) $(***) - ----------------------------------------------------------------------------------------------- 3. Add new agents (up to 10) (Note 3) $(***) - ----------------------------------------------------------------------------------------------- I. Equipment interfaces - ----------------------------------------------------------------------------------------------- Charge for TAC Interface Incl. in BSC - ----------------------------------------------------------------------------------------------- Charge for Non-TAC Interface (exclusive of HITS Digital) $ (***) - ----------------------------------------------------------------------------------------------- DMX Monthly Fees $ (***) - ----------------------------------------------------------------------------------------------- Volume Discount - ----------------------------------------------------------------------------------------------- 1 to 35 System Sites $ (***) - ----------------------------------------------------------------------------------------------- 36 to 70 System Sites $ (***) - ----------------------------------------------------------------------------------------------- 71 to 140 System Sites $ (***) - ----------------------------------------------------------------------------------------------- greater than 140 users $ (***) - ----------------------------------------------------------------------------------------------- J. Special reports (each request) - ----------------------------------------------------------------------------------------------- 1. Duplicate terminal address reports $(***) - ----------------------------------------------------------------------------------------------- 2. Duplicate house address report $(***) - ----------------------------------------------------------------------------------------------- 3. Duplicate house/sub compare report $(***) - ----------------------------------------------------------------------------------------------- 4. Duplicate sub/converter compare report $(***) - ----------------------------------------------------------------------------------------------- 5. Duplicate phone report $(***) - ----------------------------------------------------------------------------------------------- 6. Trouble call reports - ----------------------------------------------------------------------------------------------- a. Repeat trouble calls within 30 days(CPWM-060) $(***) - ----------------------------------------------------------------------------------------------- a. Trouble calls within 60 days of install (CPWM-400) $(***) - ----------------------------------------------------------------------------------------------- K. Tape Requests (per request) - ----------------------------------------------------------------------------------------------- 1. Subscriber Masterfile $(***) - ----------------------------------------------------------------------------------------------- 2. House Masterfile $(***) - ----------------------------------------------------------------------------------------------- 3. Converter Masterfile $(***) - ----------------------------------------------------------------------------------------------- 4. Work Order Masterfile $(***) - ----------------------------------------------------------------------------------------------- 5. General Ledger Incl. In BSC - ----------------------------------------------------------------------------------------------- 6. Financial Summary Tape Incl. In BSC - ----------------------------------------------------------------------------------------------- 7. General Ledger & Financial Summary Incl. In BSC - ----------------------------------------------------------------------------------------------- L. User data/ report data files - special services - ----------------------------------------------------------------------------------------------- 1. Late user data file cards $(***) - ----------------------------------------------------------------------------------------------- 2. Late reports data file cards $(***) - ----------------------------------------------------------------------------------------------- 3. Late statement message card $(***) - ----------------------------------------------------------------------------------------------- 4. Special user data file build $(***) - ----------------------------------------------------------------------------------------------- 5. Special reports data file build $(***) - ----------------------------------------------------------------------------------------------- M. Deconversion fees - ----------------------------------------------------------------------------------------------- 1. Deconversion Tapes per Site (incl. 2 sets) $(***) - ----------------------------------------------------------------------------------------------- N. Statement Reruns (Note 3) - ----------------------------------------------------------------------------------------------- 1. Monetary $(***)/sub plus $(***) - ----------------------------------------------------------------------------------------------- 2. Non-Monetary $(***)/sub plus $(***) - -----------------------------------------------------------------------------------------------
21 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission."
- ----------------------------------------------------------------------------------------------- ANCILLARY SERVICE FEES - ----------------------------------------------------------------------------------------------- ONE TIME MONTHLY MONTHLY CHARGE PER CHARGE PER CHARGE PER ITEM SYSTEM SYSTEM SUBSCRIBER PER ITEM - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- O. Special Requests (Note 3) - ----------------------------------------------------------------------------------------------- 1. Cycle Freeze - per cycle per PRIN charge $(***) - ----------------------------------------------------------------------------------------------- 2. Standard PRIN Merge/Agent Transfer (reg. schedule) $(***) - ----------------------------------------------------------------------------------------------- P. Converter Batch Upload Via Tape (each tape) $(***) - ----------------------------------------------------------------------------------------------- Q. Mass Adjustments/Passer $(***) - ----------------------------------------------------------------------------------------------- R. Data Extracts (Note 1) Quote $(***) - ----------------------------------------------------------------------------------------------- S. Dialog (1st sign-on ID at no charge) - ----------------------------------------------------------------------------------------------- 1. Each Additional ID $(***) - ----------------------------------------------------------------------------------------------- 2. Passport $(***) - ----------------------------------------------------------------------------------------------- 3. Software/Diskette (each) $(***) - ----------------------------------------------------------------------------------------------- T. Expand Bill Codes $(***)/sub (subscribers who exceed 24 billing who exceed codes) 24 billing $(***) codes. - ----------------------------------------------------------------------------------------------- U. Frequent Buyer Program (data storage and processing) - ----------------------------------------------------------------------------------------------- Monthly Number of Subscribers Access Fee - ----------------------------------------------------------------------------------------------- 0 - 10,000 $(***) - ----------------------------------------------------------------------------------------------- 10,001 - 50,000 $(***) - ----------------------------------------------------------------------------------------------- 50,001 - 100,000 $(***) - ----------------------------------------------------------------------------------------------- 100,001 - 200,000 $(***) - ----------------------------------------------------------------------------------------------- 200,001 - 500,000 $(***) - ----------------------------------------------------------------------------------------------- Over 500,000 $(***) - ----------------------------------------------------------------------------------------------- W. System Enhancements - ----------------------------------------------------------------------------------------------- Programming Charge per hour $(***) - ----------------------------------------------------------------------------------------------- X. Deconversion Fees/Per Basic Subscriber $(***) - ----------------------------------------------------------------------------------------------- Y. Refund Check - ----------------------------------------------------------------------------------------------- 1. Refund Check Prep $(***) - ----------------------------------------------------------------------------------------------- 2. Refund Check DR Posted $ (***) - ----------------------------------------------------------------------------------------------- 3. Refund Check Account File $ (***) - ----------------------------------------------------------------------------------------------- 4. Money Order Processing $ (***) - ----------------------------------------------------------------------------------------------- Z. Computer Based Training - ----------------------------------------------------------------------------------------------- Students Number (Instructor+1 Student / month) $(***) - ----------------------------------------------------------------------------------------------- 1. Additional Student #s (per month) $(***) - ----------------------------------------------------------------------------------------------- 2. Course Materials $(***) - ----------------------------------------------------------------------------------------------- 3. Code Table Books $ (***) - ----------------------------------------------------------------------------------------------- 4. Job Aids (per set) $ (***) - ----------------------------------------------------------------------------------------------- AA. CCS Host System Availability- High System Availability Option (option to execute expires 12/01/97). (Requires a minimum of 7 million subscribers) $(***) - ----------------------------------------------------------------------------------------------- AB. TCI Marketing Download Incl. in BSC - ----------------------------------------------------------------------------------------------- AC. Test Production System Access- - ----------------------------------------------------------------------------------------------- 1. Access to one (1) agent with up to 1,000 subscribers $(***) - -----------------------------------------------------------------------------------------------
22 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission."
- ----------------------------------------------------------------------------------------------- ANCILLARY SERVICE FEES - ----------------------------------------------------------------------------------------------- ONE TIME MONTHLY MONTHLY CHARGE PER CHARGE PER CHARGE PER ITEM SYSTEM SYSTEM SUBSCRIBER PER ITEM - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- 2. Subscribers in excess of 1,000 $(***) - -----------------------------------------------------------------------------------------------
Note 1: CSG agrees to waive the daily download fee for the Central Region VantagePoint(TM) (Version 1.0) for Video Services through December 31, 1998. Subsequent to December 31, 1998, the daily download fee for the Central Region VantagePoint(TM) (Version 1.0) for Video Services will be $(***) per subscriber per month. Note 2: Conversion services include the initial set-up of System, Principles and Agents. These fees are related to post-conversion services. Note 3: These services qualify as Database Maintenance Programming as referenced in Schedule A, Section 9(b). CCS(TM) Video Conversion Services (Reimbursable Expenses are excluded and billable): A. For Manual Conversions with subscriber counts of less than 20,000 (per System Site): CSG Start-Up Fee - $(***) (per System Site) CSG Support - $(***)/day plus Reimbursable Expenses On Data Bases Over 10K Subs, CSG will offer the following: - - Programmatic Load of House Data - $(***) (per System Site) - - Programmatic Load of Converter Data - $(***) (per System Site) B. For Programmatic Conversions (per System Site):
- -------------------------------------------------------------------------------------------------------------- PROGRAMMATIC CONVERSION SITE SIZE - -------------------------------------------------------------------------------------------------------------- 20,000 to 30,000 to 60,000 to 29,999 59,999 90,000 Greater than 90,000 - -------------------------------------------------------------------------------------------------------------- 1. Known Processor* - -------------------------------------------------------------------------------------------------------------- Total Conversion/Implementation Fee $(***) $(***) $(***) $(***) - -------------------------------------------------------------------------------------------------------------- 2. Foreign Processor - -------------------------------------------------------------------------------------------------------------- Total Conversion/Implementation Fee $(***) $(***) $(***) $(***) - --------------------------------------------------------------------------------------------------------------
*Known Processors: BSI, EDS - System 1 (CMS), Service Electric, CableData, ISD, Toner, Parallex, Touchstone, Cablestar, Quickdata, SUMMITrak, EAZY. C. Cablemax Conversions: Total conversion and implementation fee- $(***) per System Site. D. Training: Additional Training (for up to 8 students)- $(***) per day, per instructor. (Based on an 8 hour day) 23 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." E. CSG Product Documentation Library: - ------------------------------------- . CD-ROM Format (includes Volume 1-IV User Guide, UDF/RMS Manual and Interfaces Manual)- $(***) . Hard Copy (per copy per System Site) 1. CCS User Guide Volume 1- $(***) 2. CCS User Guide Volume 2- $(***) 3. CCS User Guide Volume 3- $(***) 4. CCS User Guide Volume 4- $(***) 5. CCS User Guide RMS/UDF Manual- $(***) 6. CCS User Guide Interfaces Manual- $(***) . Complete Set of all six guides referenced above- $(***) . Updates to Complete Set of all six guides referenced above- $(***) 2. TECHNICAL SERVICES FEES - - ---------------------------- Fees vary depending on the project. See the respective Statement of Work. Standard Hourly Rates for Consultants are as follows: Associate $(***) per hour minimum of $(***) per day Consultant $(***) per hour minimum of $(***) per day Senior Consultant $(***) per hour minimum of $(***) per day Principal $(***) per hour minimum of $(***) per day Project Manager $(***) per hour minimum of $(***) per day Director $(***) per hour minimum of $(***) per day Vice President $(***) per hour minimum of $(***) per day 24 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." 3. CCS(TM) - ISP SERVICES FEES - - -------------------------------- Basic Monthly Subscriber Charge (herein after referred to as BSC) - Monthly Subscriber Volume Monthly Fee Per Subscriber ------------------------- -------------------------- 0 to 99,999 $(***) 100,000 to 349,999 $(***) 350,000 to 749,999 $(***) 750,000 to 999,999 $(***) 1,000,000 and greater $(***) Monthly Per System/Principle Charge included in BSC. On-Line Allowance And Overage Charges: Year Monthly Subscriber Minimums Monthly Fee Minimums ---- ----------------------------- -------------------- 1998 10,000 $(***) 1999 100,000 $(***) 2000 350,000 $(***) 2001 750,000 $(***) 2002 1,000,000 $(***) 2003 to 2012* *The monthly processing fee minimum for the years 2003 to 2012 will commence using the year 2002 monthly processing fee minimum adjusted annually pursuant to the terms and conditions of the Master Agreement. 25 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." - -------------------------------------------------------------------------------- MONTHLY ON-LINE ALLOWANCE PER MONTHLY PER ITEM SUBSCRIBER OVERAGE CHARGE - -------------------------------------------------------------------------------- A. Work Orders on file 7.64 $(***) - -------------------------------------------------------------------------------- B. Statements stored on-line 6.25 $(***) - -------------------------------------------------------------------------------- C. Details stored on-line 45.84 $(***) - -------------------------------------------------------------------------------- D. Memos stored on-line 6.0 $(***) - -------------------------------------------------------------------------------- E. Inactive subscribers on file .40 $(***) - -------------------------------------------------------------------------------- CCS-ISP Ancillary Service Fees
- ----------------------------------------------------------------------------------------------- ANCILLARY SERVICE FEES - ----------------------------------------------------------------------------------------------- ONE TIME MONTHLY MONTHLY CHARGE PER CHARGE PER CHARGE PER ITEM SYSTEM SYSTEM SUBSCRIBER PER ITEM - ----------------------------------------------------------------------------------------------- I. Reporting & Decision Support Services - ----------------------------------------------------------------------------------------------- A. Microfiche - ----------------------------------------------------------------------------------------------- A. Originals Included in BSC - ----------------------------------------------------------------------------------------------- B. Duplicates $(***) - ----------------------------------------------------------------------------------------------- B. Basic Vantage Reporting Included in BSC - ----------------------------------------------------------------------------------------------- C. Selects - ----------------------------------------------------------------------------------------------- 1. Set-up fee per report Included in then $(***) BSC* - ----------------------------------------------------------------------------------------------- 2. Select records to print Included in then $(***) BSC* - ----------------------------------------------------------------------------------------------- 3. Select records to magnetic tape Included in then $(***) BSC* - ----------------------------------------------------------------------------------------------- 4. Tape Charges $(***) - ----------------------------------------------------------------------------------------------- 5. Auto dialer - ----------------------------------------------------------------------------------------------- a. Records read Included in BSC - ----------------------------------------------------------------------------------------------- b. Minimum charge per report Included in BSC - ----------------------------------------------------------------------------------------------- c. Maximum charge per report Included in BSC - ----------------------------------------------------------------------------------------------- 6. Labels (printed at CSG's Production Facility) - ----------------------------------------------------------------------------------------------- a. Cheshire labels $(***) - ----------------------------------------------------------------------------------------------- b. LAB labels $(***) - ----------------------------------------------------------------------------------------------- II. Other Ancillary Services - ----------------------------------------------------------------------------------------------- A. Equipment Inventory Included in BSC - ----------------------------------------------------------------------------------------------- B. Autopackaging (maximum $(***)) Included in BSC - ----------------------------------------------------------------------------------------------- C. Account number format change $(***) - ----------------------------------------------------------------------------------------------- D. Addition for a system, principle or agent (Note 2) - ----------------------------------------------------------------------------------------------- 1. Setup of new system (Note 3) $(***) - ----------------------------------------------------------------------------------------------- 2. Setup of new principle/agent (Note 3) $(***) - ----------------------------------------------------------------------------------------------- 3. Add new agents (up to 10) (Note 3) $(***) - ----------------------------------------------------------------------------------------------- E. File maintenance (each request) (Note 3) Quote - ----------------------------------------------------------------------------------------------- F. Tape Requests (per request) - ----------------------------------------------------------------------------------------------- 1. Subscriber Masterfile $(***) - ----------------------------------------------------------------------------------------------- 2. House Masterfile $(***) - ----------------------------------------------------------------------------------------------- 3. Converter Masterfile $(***) - ----------------------------------------------------------------------------------------------- 4. Work Order Masterfile $(***) - ----------------------------------------------------------------------------------------------- 5. General Ledger Incl. In BSC - ----------------------------------------------------------------------------------------------- 6. Financial Summary Tape Incl. In BSC - ----------------------------------------------------------------------------------------------- 7. General Ledger & Financial Summary Incl. In BSC - -----------------------------------------------------------------------------------------------
26 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission."
- ----------------------------------------------------------------------------------------------- ANCILLARY SERVICE FEES - ----------------------------------------------------------------------------------------------- ONE TIME MONTHLY MONTHLY CHARGE PER CHARGE PER CHARGE PER ITEM SYSTEM SYSTEM SUBSCRIBER PER ITEM - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- G. User data/ report data files - special services - ----------------------------------------------------------------------------------------------- 1. Late user data file cards $(***) - ----------------------------------------------------------------------------------------------- 2. Late reports data file cards $(***) - ----------------------------------------------------------------------------------------------- 3. Late statement message card $(***) - ----------------------------------------------------------------------------------------------- 4. Special user data file build $(***) - ----------------------------------------------------------------------------------------------- 5. Special reports data file build $(***) - ----------------------------------------------------------------------------------------------- H. Deconversion fees - ----------------------------------------------------------------------------------------------- 1. Deconversion Tapes per System Site (incl. 2 sets) $(***) - ----------------------------------------------------------------------------------------------- 2. Online access fee Quote - ----------------------------------------------------------------------------------------------- I. Statement Reruns (Note 3) - ----------------------------------------------------------------------------------------------- 1. Monetary $(***)/sub plus $(***) - ----------------------------------------------------------------------------------------------- 2. Non-Monetary $(***)/sub plus $(***) - ----------------------------------------------------------------------------------------------- J. Special Requests (Note 3) - ----------------------------------------------------------------------------------------------- 1. Cycle Freeze - per cycle per PRIN charge $(***) - ----------------------------------------------------------------------------------------------- K. Mass Adjustments (per SAM transaction)/Passer $(***) - ----------------------------------------------------------------------------------------------- L. Data Extracts Quote $(***) - ----------------------------------------------------------------------------------------------- M. Expand Bill Codes $(***)plus $(***)/sub (subscribers who exceed 24 billing who exceed 24 codes) billing codes. - ----------------------------------------------------------------------------------------------- N. System Enhancements - ----------------------------------------------------------------------------------------------- Programming Charge per hour $(***) - -----------------------------------------------------------------------------------------------
*First ten (10) selects are included in the BSC. Note 2: Conversion services include the initial set-up of System, Principles and Agents. These fees are related to post-conversion services. Note 3: These services qualify as Database Maintenance Programming as referenced in Schedule A, Section 9(b). CCS(TM) ISP Conversion Services - ------------------------------- (Reimbursable Expenses are excluded and billable): A. For Manual Conversions- Quote B. Programmatic Conversions- Quote C. Training: Additional Training (for up to 8 students)- $(***) per day, per instructor. (Based on an 8 hour day) CSG Product Documentation Library: - ---------------------------------- . CD-ROM Format (includes Volume 1-IV User Guide, UDF/RMS Manual and Interfaces Manual)- $(***) . Hard Copy (per copy per System Site) 1. CCS User Guide Volume 1- $(***) 2. CCS User Guide Volume 2- $(***) 3. CCS User Guide Volume 3- $(***) 4. CCS User Guide Volume 4- $(***) 5. CCS User Guide RMS/UDF Manual- $(***) 27 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." 6. CCS User Guide Interfaces Manual- $(***) . Complete Set of all six guides referenced above- $(***) . Updates to Complete Set of all six guides referenced above- $(***) 4. CCS(TM) TELEPHONY SERVICES FEES - - ------------------------------------ Basic Monthly Subscriber Charge (herein after referred to as BSC) - $(***) Includes: 1. Customer record and file maintenance 2. Processing of rated messages 3. E911 updates 4. Directory listing updates 5. Number portability updates 6. Customer Account record exchange updates (CARE) 7. Line information data base updates (LIDB) 8. TAR updates 9. ESP Statement, one physical page/Telephony Format (excludes postage, paper and envelope costs). . Software development required is per Quote. 10. Selected CCS Service Fees 11. Basic Vantage Reporting Services Minimums: Year Monthly Subscriber Minimums Monthly Processing Fee Minimums - ---- ----------------------------- ------------------------------- 1998 10,000 $(***) 1999 20,000 $(***) 2000 30,000 $(***) 2001 40,000 $(***) 2002 50,000 $(***) 2003 to 2012* *The monthly processing fee minimum for the years 2003 to 2012 will commence using the year 2002 monthly processing fee minimum adjusted annually pursuant to the terms and conditions of the Master Agreement. Monthly Per System/Principle Charge included in BSC. On-Line Allowance And Overage Charges: - -------------------------------------------------------------------------------- MONTHLY ON-LINE ALLOWANCE PER MONTHLY PER ITEM SUBSCRIBER OVERAGE CHARGE - -------------------------------------------------------------------------------- A. Work Orders on file 7.64 $(***) - -------------------------------------------------------------------------------- B. Statements stored on-line 6.25 $(***) - -------------------------------------------------------------------------------- C. Details stored on-line 45.84 $(***) - -------------------------------------------------------------------------------- D. Memos stored on-line 6.0 $(***) - -------------------------------------------------------------------------------- E. Inactive subscribers on file .40 $(***) - -------------------------------------------------------------------------------- 28 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." CCS Telephony - Ancillary Service Fees
- ---------------------------------------------------------------------------------------------- ANCILLARY SERVICE FEES - ---------------------------------------------------------------------------------------------- ONE TIME MONTHLY MONTHLY CHARGE PER CHARGE PER CHARGE PER ITEM SYSTEM SYSTEM SUBSCRIBER PER ITEM - ---------------------------------------------------------------------------------------------- I. Reporting & Decision Support Services - ---------------------------------------------------------------------------------------------- A. Microfiche - ---------------------------------------------------------------------------------------------- A. Originals Included in BSC - ---------------------------------------------------------------------------------------------- B. Duplicates $(***) - ---------------------------------------------------------------------------------------------- B. Basic Vantage Reporting Included in BSC - ---------------------------------------------------------------------------------------------- C. Selects - ---------------------------------------------------------------------------------------------- 1. Set-up fee per report Included in then $(***) BSC* - ---------------------------------------------------------------------------------------------- 2. Select records to print Included in then $(***) BSC* - ---------------------------------------------------------------------------------------------- 3. Select records to magnetic tape Included in then $(***) BSC* - ---------------------------------------------------------------------------------------------- 4. Auto dialer - ---------------------------------------------------------------------------------------------- a. Records read Included in BSC - ---------------------------------------------------------------------------------------------- b. Minimum charge per report Included in BSC - ---------------------------------------------------------------------------------------------- c. Maximum charge per report Included in BSC - ---------------------------------------------------------------------------------------------- 5. Labels (printed at CSG's Production Facility) - ---------------------------------------------------------------------------------------------- a. Cheshire labels $(***) - ---------------------------------------------------------------------------------------------- b. LAB labels $(***) - ---------------------------------------------------------------------------------------------- II. Other Ancillary Services - ---------------------------------------------------------------------------------------------- A. Equipment Inventory Included in BSC - ---------------------------------------------------------------------------------------------- B. Tape transmission (lockbox) - ---------------------------------------------------------------------------------------------- 1. Per remittance processor Included in BSC - ---------------------------------------------------------------------------------------------- 2. Lockbox reversal Included in BSC - ---------------------------------------------------------------------------------------------- 3. Conversion Lockbox Cross Reference $(***) - ---------------------------------------------------------------------------------------------- C. Autopackaging (maximum $(***)) Included in BSC - ---------------------------------------------------------------------------------------------- D. Account number format change $(***) - ---------------------------------------------------------------------------------------------- E. Addition for a system, principle or agent (Note 2) - ---------------------------------------------------------------------------------------------- 1. Setup of new system (Note 3) $(***) - ---------------------------------------------------------------------------------------------- 2. Setup of new principle/agent (Note 3) $(***) - ---------------------------------------------------------------------------------------------- 3. Add new agents (up to 10) (Note 3) $(***) - ---------------------------------------------------------------------------------------------- F. File maintenance (each request) (Note 3) Quote - ---------------------------------------------------------------------------------------------- G. Tape Requests (per request) - ---------------------------------------------------------------------------------------------- 1. Subscriber Masterfile $(***) - ---------------------------------------------------------------------------------------------- 2. House Masterfile $(***) - ---------------------------------------------------------------------------------------------- 3. Converter Masterfile $(***) - ---------------------------------------------------------------------------------------------- 4. Work Order Masterfile $(***) - ---------------------------------------------------------------------------------------------- 5. General Ledger Incl. In BSC - ---------------------------------------------------------------------------------------------- 6. Financial Summary Tape Incl. In BSC - ---------------------------------------------------------------------------------------------- 7. General Ledger & Financial Summary Incl. In BSC - ---------------------------------------------------------------------------------------------- H. User data/ report data files - special services - ---------------------------------------------------------------------------------------------- 1. Late user data file cards $(***) - ---------------------------------------------------------------------------------------------- 2. Late reports data file cards $(***) - ---------------------------------------------------------------------------------------------- 3. Late statement message card $(***) - ---------------------------------------------------------------------------------------------- 4. Special user data file build $(***) - ---------------------------------------------------------------------------------------------- 5. Special reports data file build $(***) - ----------------------------------------------------------------------------------------------
29 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission."
- ---------------------------------------------------------------------------------------------- ANCILLARY SERVICE FEES - ---------------------------------------------------------------------------------------------- ONE TIME MONTHLY MONTHLY CHARGE PER CHARGE PER CHARGE PER ITEM SYSTEM SYSTEM SUBSCRIBER PER ITEM - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- I. Deconversion fees - ---------------------------------------------------------------------------------------------- 1. Deconversion Tapes per Site (incl. 2 sets) $(***) - ---------------------------------------------------------------------------------------------- 2. Online access fee Quote - ---------------------------------------------------------------------------------------------- J. Statement Reruns (Note 3) - ---------------------------------------------------------------------------------------------- 1. Monetary $(***)/sub plus $(***) - ---------------------------------------------------------------------------------------------- 2. Non-Monetary $(***)/sub plus $(***) - ---------------------------------------------------------------------------------------------- K. Special Requests (Note 3) - ---------------------------------------------------------------------------------------------- 1. Cycle Freeze - per cycle per PRIN charge $(***) - ---------------------------------------------------------------------------------------------- L. Converter Batch Upload Via Tape (each tape) $(***) - ---------------------------------------------------------------------------------------------- M. Mass Adjustments (per SAM transaction)/Passer $(***) - ---------------------------------------------------------------------------------------------- N. Data Extracts Quote $(***) - ---------------------------------------------------------------------------------------------- O. Expand Bill Codes $(***)/sub (subscribers who exceed 24 billing $(***) who exceed 24 codes) plus billing codes. - ---------------------------------------------------------------------------------------------- P. System Enhancements - ---------------------------------------------------------------------------------------------- Programming Charge per hour $(***) - ---------------------------------------------------------------------------------------------- Q. Switch Polling Quote Quote - ---------------------------------------------------------------------------------------------- R. New or updates to rate plans Quote Quote - ---------------------------------------------------------------------------------------------- S. Special reports, fiche, or research Quote Quote - ---------------------------------------------------------------------------------------------- T. CMDS Processing Quote Quote - ----------------------------------------------------------------------------------------------
*First ten (10) selects are included in the BSC. Note 2: Conversion services include the initial set-up of System, Principles and Agents. These fees are related to post-conversion services. Note 3: These services qualify as Database Maintenance Programming as referenced in Schedule A, Section 9(b). CCS(TM) Telephony Conversion Services - ------------------------------------- (Reimbursable Expenses are excluded and billable): A. For Manual Conversions- Quote B. Programmatic Conversions- Quote C. Training: Additional Training (for up to 8 students)- $(***) per day, per instructor. (Based on an 8 hour day) CSG Product Documentation Library: - ---------------------------------- . CD-ROM Format (includes Volume 1-IV User Guide, UDF/RMS Manual and Interfaces Manual)- $(***) . Hard Copy (per copy per System Site) 1. CCS User Guide Volume 1- $(***) 2. CCS User Guide Volume 2- $(***) 3. CCS User Guide Volume 3- $(***) 4. CCS User Guide Volume 4- $(***) 5. CCS User Guide RMS/UDF Manual- $(***) 6. CCS User Guide Interfaces Manual- $(***) . Complete Set of all six guides referenced above- $(***) 30 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." . Updates to Complete Set of all six guides referenced above- $(***) 5. CCS(TM) DISCOUNTS- - --------------------- (a) Multiple CCS Services. For any account (an "account" is defined as a ---------------------- subscriber assigned to one subscriber number) which receives more than one of the following CCS Services - wireline video, ISP or residential telephony, on the same account, the aggregate basic subscriber monthly charge for all of the CCS Services that are billed under such account will be calculated by taking the sum of the basic subscriber charge set forth on Schedule D for each CCS Service ---------- billed under such account and subtracting $(***) per account per month, for each CCS Service in excess of one, billed under such account. The $(***) discount is not subject to Section 4 of the Master Agreement. (b) Incremental New Subscribers. The basic subscriber charge for wireline video ---------------------------- subscribers set forth in Schedule D shall be eligible for discounts as follows: ---------- The number of increments of 100,000 CCS wireline video subscribers in excess of the Minimum for CCS wireline video subscribers multiplied times the applicable Discount Factor set forth in the table below multiplied times the current basic subscriber charge for CCS wireline video subscribers. Year Discount Factor - ----------------------------------------------------- --------------- Effective Date through December 31, 1998 (***)% January 1, 1999 through December 31, 1999 (***)% January 1, 1999 through December 31, 2000 (***)% January 1, 1999 through December 31, 2001 (***)% January 1, 1999 through December 31, 2002 (***)% January 1, 1999 through December 31, 2003 (***)% January 1, 1999 through December 31, 2004 (***)% January 1, 1999 through December 31, 2005 (***)% January 1, 1999 through December 31, 2006 (***)% January 1, 1999 through December 31, 2007 (***)% January 1, 1999 through December 31, 2008 (***)% January 1, 1999 through December 31, 2009 (***)% January 1, 1999 through December 31, 2010 (***)% January 1, 1999 through December 31, 2011 (***)% January 1, 1999 through December 31, 2012 (***)% 31 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." 6. CCS PRINT AND MAIL SERVICES FEES (per System Site) - -----------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------- ITEM/DESCRIPTION PRICE - --------------------------------------------------------------------------------------------------------------------------------- I. ESP(R) Processing Fees - --------------------------------------------------------------------------------------------------------------------------------- A. First Physical Page, Duplexed (Front & Back), Black & White Print Only - --------------------------------------------------------------------------------------------------------------------------------- 1. Generic Format $(***) per statement per month - --------------------------------------------------------------------------------------------------------------------------------- 2. Data Warehouse Format $(***) per statement per month - --------------------------------------------------------------------------------------------------------------------------------- 3. CCS ACSR/Telephony Format Quote - --------------------------------------------------------------------------------------------------------------------------------- 4. Custom Format Quote - --------------------------------------------------------------------------------------------------------------------------------- B. Additional Physical Pages*, Duplexed (Front & Back), Black & White Print Only - --------------------------------------------------------------------------------------------------------------------------------- 1. Statement $(***) per physical page per month - --------------------------------------------------------------------------------------------------------------------------------- 2. Ad Page/Coupon Page** $(***) per physical page per month - --------------------------------------------------------------------------------------------------------------------------------- C. Start Up Fees - --------------------------------------------------------------------------------------------------------------------------------- Initial Cable System Location*** $(***) - --------------------------------------------------------------------------------------------------------------------------------- Additional Cable System Locations**** $(***) - --------------------------------------------------------------------------------------------------------------------------------- D. CD-ROM Archival (only available for ESP statements) $(***) per Data Frame plus postage - --------------------------------------------------------------------------------------------------------------------------------- 1. Duplicate CD-ROM (price each) $(***) - --------------------------------------------------------------------------------------------------------------------------------- E. ESP Development and Programming $(***) per hour/minimum per day - --------------------------------------------------------------------------------------------------------------------------------- F. Special Request Build Fee $(***) per build, per System Site - --------------------------------------------------------------------------------------------------------------------------------- G. Customized Statement Paper Quote - --------------------------------------------------------------------------------------------------------------------------------- H. ESP Deconversion Fee $(***) per hour - --------------------------------------------------------------------------------------------------------------------------------- I. Statement Extract Fee $(***) per statement per month - ---------------------------------------------------------------------------------------------------------------------------------
*NOTE: An additional physical page means text items, such as billing details or system-generated statement messages that overflow onto an additional physical page with no more graphics than those graphics tied to messages via the statement message module and no programmer intervention. The page may include static company information, such as, policies and procedures, payment locations, franchise authorities, etc. Only graphics from the ESP graphics library may be used on the additional physical page. Set-up and changes to this page are billed at the ESP Development and Programming Fee. ** An ad page/coupon page means targeted messages, coupons or advertisements using text, graphics and coupon borders generated on an additional physical page. No reverses or dark photos may be used, only gray scale graphics. This page may be duplexed, but only text may be printed on the back side. The conditional logic for this page can be by zip code or franchise. Set-up and changes to this page are billed at the ESP Development and Programming Fee. *** Initial Cable System Location start-up includes: 16 hours of format programming and standard ESP conversion efforts (data testing through ESP format with confirmation of data standards and verification and approval by customer). Additional format programming and conversion efforts billed at ESP Development and Programming rates. **** Additional Cable System Location start-up includes: Standard ESP conversion efforts (data testing through ESP format with confirmation of data standards and verification and approval by customer). Pricing assumes no changes in format. Additional format programming and conversion efforts billed at ESP Development and Programming rates. - --------------------------------------------------------------------------------------------------------------------------------- II. Print and Mail Ancillary Service Fees - --------------------------------------------------------------------------------------------------------------------------------- A. Past Due Notices (excludes postage) - --------------------------------------------------------------------------------------------------------------------------------- 1. Generic, per notice $(***) - --------------------------------------------------------------------------------------------------------------------------------- 2. Generic, with bold lettering, per notice $(***) - --------------------------------------------------------------------------------------------------------------------------------- 3. Custom, per notice Quote - --------------------------------------------------------------------------------------------------------------------------------- B. Computer Letters (excludes postage) - --------------------------------------------------------------------------------------------------------------------------------- 1. Generic, per letter $(***) - --------------------------------------------------------------------------------------------------------------------------------- 2. Custom, per letter Quote - ---------------------------------------------------------------------------------------------------------------------------------
32 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." 6. CCS PRINT AND MAIL SERVICES FEES (per System Site )
- --------------------------------------------------------------------------------------------------------------------------------- ITEM/DESCRIPTION PRICE - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- C. Delinquency Labels - --------------------------------------------------------------------------------------------------------------------------------- 1. Spooled to site $(***) per label - --------------------------------------------------------------------------------------------------------------------------------- 2. Printed 4-up labels $(***) per label - --------------------------------------------------------------------------------------------------------------------------------- 3. Printed Cheshire labels $(***) per label - --------------------------------------------------------------------------------------------------------------------------------- 4. Printed LAB labels $(***) per label - --------------------------------------------------------------------------------------------------------------------------------- 5. Reports ($(***) minimum charge) $(***) per report, per site - --------------------------------------------------------------------------------------------------------------------------------- D. Development and Programming $(***) per hour/minimum per day - --------------------------------------------------------------------------------------------------------------------------------- E. Special Request Build Fee $(***) per build, per System Site - --------------------------------------------------------------------------------------------------------------------------------- F. Paper, Envelope, Supply Purchasing Quote - --------------------------------------------------------------------------------------------------------------------------------- G. Inserts - --------------------------------------------------------------------------------------------------------------------------------- 1. Printing Services - --------------------------------------------------------------------------------------------------------------------------------- a. Marketing/ad inserts Quote - --------------------------------------------------------------------------------------------------------------------------------- b. Other communication Quote - --------------------------------------------------------------------------------------------------------------------------------- 2. Processing (maximum of 5 inserts per statement) (Note 1) $(***) per insert per month - --------------------------------------------------------------------------------------------------------------------------------- 3. Late insert notification $(***) per version per site - --------------------------------------------------------------------------------------------------------------------------------- 4. Late arrival of inserts $(***) per version per site - --------------------------------------------------------------------------------------------------------------------------------- 5. Holds or notification of insufficient inserts $(***) - --------------------------------------------------------------------------------------------------------------------------------- 6. Returns to customer (handling fee) $(***) (Shipping costs passed to customer) - --------------------------------------------------------------------------------------------------------------------------------- H. Set up charge - --------------------------------------------------------------------------------------------------------------------------------- 1. Cycle size per System Site less than 550 statements $(***) per cycle per System site - --------------------------------------------------------------------------------------------------------------------------------- 2. Cycle size per System Site equal to or greater than 550 statements and less than 3,000 statements $(***) per cycle per System site - --------------------------------------------------------------------------------------------------------------------------------- 3. Cycle size per System Site equal to or greater than 3,000 statements No Charge per cycle per System site - ---------------------------------------------------------------------------------------------------------------------------------
Note 1: Insert processing fees are based on inserts consistent with CSG specifications (See Exhibit F-1). 33 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." 7. CSG VANTAGE(R) - - ------------------- One Time Start-up Fee (per System Site): - ---------------------------------------- System Site Subscriber Count Start Up Fee ---------------------------- ------------ 0 to 49,999 $(***) 50,000 to 99,999 $(***) 100,000 and greater $(***) Workstation Fees: - ----------------- . One-Time Fee - $(***) per workstation . Annual Fee - $(***) per workstation Basic Vantage Reporting (per System Site): - ------------------------------------------ Monthly Subscriber Fee: $(***) per Basic Subscriber Includes 0.5 CPU Minutes per 1,000 Basic Subscribers, monthly maintenance, daily updates and file loads, initial file load, eight user ID's, installation and training services in Omaha, and Query Library (per query). Training (per System Site): - --------------------------- . Conversion: 1. Basic Vantage training at a regularly scheduled Omaha training class, as space permits. This will be allocated at one (1) class for up to two (2) people for the first $(***) (or portion of) of the "Monthly Subscriber Fee" for Vantage. For each additional $(***) (or portion of) of the "Monthly Subscriber Fee", one (1) additional person may attend the training class. 2. Basic Vantage training at a scheduled regional training class, as space permits. This will be allocated at one (1) class for up to two (2) people for the first $(***) (or portion of) of the "Monthly Subscriber Fee" for Vantage. For each additional $(***) (or portion of) of the "Monthly Subscriber Fee", one (1) additional person may attend the training class. 3. Basic Vantage training at a customer requested time and/or location is available on at the rate of $(***)/day plus Reimbursable Expenses for up to 8 students. Ancillary Fees (per System Site): - --------------------------------- . Additional File Loads: $(***) per subscriber . Additional User IDs: $(***) each . File Structure Changes $(***) per hour . Application development $(***) per hour . Downline Load Software $(***) per System Site . Additional CPU usage* $(***) per CPU minute . Usage by Regional and Corporate Billing Staff $(***) per CPU minute . Database Restructure** $(***) per System Site *CSG Vantage usage information (CPU Minutes) is tracked within CSG's Vantage processing environment through the use of a tool that provides systems management, chargeback, and resource accounting functions. Usage is tracked for the CPU time it takes the query to run and process against the Relational Database Management System (RDBMS). Vantage usage is not collected for network transmission time, elapsed time associated with wait in a shared resource environment, and elapsed time while developing a request(s). Vantage usage information is tracked in CPU Seconds. Charges for additional Vantage CPU Usage will be calculated for the total TCI entity using the total of allocated CPU minutes for those System Sites being charged for Basic Vantage Reporting compared to the actual CPU Usage of the total TCI entity. **This fee is for the deletion of an existing Vantage site (sys/prin) or the movement of an existing Vantage site (sys/prin) from one Division or Joint Venture structure to an alternate existing Division or Joint Venture structure within the currently defined TCI Vantage database schema. 34 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." Static Tables: - -------------- . One Time Set-up Fee: $(***) per System Site . Monthly Load Fee: $(***)/data base per System Site . Monthly Disk Storage: $(***)/megabyte (minimum of $(***) per month) per System Site Monetary Transactions (Customer may store between one and six months of data): - ------------------------------------------------------------------------------ . One Time Set-up Fee: $(***) per System Site . Monthly Processing Fee: $(***) per sub, $(***) minimum per System Site . Monthly Disk Storage: $(***)/megabyte (minimum of $(***) per month) per . System Site Additional Work Order History: - ------------------------------ . One Time Set-up Fee: $(***) per System Site . Monthly Processing Fee: $(***) for each month beyond two years for each database per System Site . Monthly Disk Storage: $(***)/megabyte (minimum of $(***) per month) per System Site Scheduling Calendar: - -------------------- . One Time Set-up Fee: $(***) per System Site . Monthly Processing Fee: $(***)for each monthly schedule stored per System Site . Monthly Disk Storage: $(***)/megabyte (minimum of $(***) per month) per System Site Cluster Coding: Annual subscription pricing available on request - --------------- Third Party Software: - --------------------- Is not incorporated and a separate purchase order shall be executed for third party software at CSG's Standard Price List. Forest & Trees $(***)/workstation Forest & Trees Annual Maintenance $(***)/workstation Output Charges: Per agreement - --------------- NOTE: CSG will store up to 13 months of Customer's financial data and up to 24 - ---- months of Customer's work order data in the CSG Vantage database for so long as Customer pays the Fees and Charges for Vantage. 8. HITS DIGITAL - - ----------------- A. Perpetual Software Licenses in addition to the Agreement for licenses for 300 - -------------------------------------------------------------------------------- System Sites executed by the parties, dated June 30, 1997. - ---------------------------------------------------------- Perpetual Software Licenses: $(***) per System Site . Includes HITS Digital Access (1.0 specifications) . Includes CSG's standard one-time implementation for each System Location with work performed by CSG personnel in Omaha. Monthly Support Services: System Site Size Monthly Fee per System Site ---------------- --------------------------- 0 - 9,999 subscribers $(***) 10,000 - 24,999 subscribers $(***) 25,000 and greater subscribers $(***) B. HITS Implementation/Training: - -------------------------------- 35 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." . $(***) per day per person plus Reimbursable Expenses . C. HITS Interface Development: - ------------------------------ . Development through 2.0 Specifications - $(***) per hour per person plus Reimbursable Expenses. . Development beyond 2.0 Specifications - $(***) per hour per person plus Reimbursable Expenses. Fees vary depending on the project. The terms and conditions for each project will be set forth in the respective Statement of Work. 9. ACSR(R) SOFTWARE LICENSE/MAINTENANCE/INSTALLATION/THIRD PARTY SOFTWARE- - --------------------------------------------------------------------------- A. CSG LICENSE FEES (prices exclude third party software, hardware, - ------------------------------------------------------------------- implementation, installation and customization): - ------------------------------------------------ ACSR Perpetual Licenses for 5,000 workstations: $ (***) (Additional ACSR perpetual Licenses- $(***) per workstation) ACSR Telephony Perpetual Licenses for 125 workstations: $ (***) ACSR/CBT Perpetual Software License Fees (per server) $ (***) CSG ANNUAL SOFTWARE MAINTENANCE FEES: - ------------------------------------- ACSR Perpetual Software License Maintenance Fees for 5,000 workstations: $ (***) (Additional ACSR Perpetual Software License Maintenance Fees- 20% of License Fees) ACSR Telephony Perpetual Software License Maintenance Fees for 125 workstations: $ (***) ACSR/CBT Perpetual Software License Maintenance Fees (per server) $ (***) PAYMENT TERMS: - -------------- . Due at Contract Execution: $ (***) . Due at September 30, 1997: $ (***) . Due 60 days after Contract Execution: $ (***) . Due December 15, 1997 $ (***) . Due March 15, 1998 $ (***) . Due June 15, 1998 $ (***) . Due July 15, 1998 $ (***) NOTE: Subsequent years annual maintenance fees are due on the anniversary of CSG granting of the software license. Monthly Facilities Management Processing (at CSG Facility) Support Fee - $(***) - ------------------------------------------------------------------------------- per month* - ---------- Includes: . UHS Facilities Management for Telephony . SDS Facilities Management for Telephony *Does not include third party software or hardware costs 36 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." CCS Products: ACSR Telephony - (Schedule C) - ------------------------------------------- NOTE: . All third party fees are subject to change per third party vendor agreements and are provided at CSG's Standard Price List. . Other third party software may be required for Telephony depending on customer's interface requirements for E911, CARE, etc. B. INSTALLATION SERVICES: - -------------------------- (REIMBURSABLE EXPENSES ARE EXCLUDED AND BILLABLE) - ------------------------------------------------- ACSR Only Installation & Startup Fee: - ---- Per System Site with Centralized TCI Server Configuration - $(***) Includes the support detailed in the Master Agreement Exhibit (C-3). Per Server located at System Site - $(***) Includes the support detailed in the Master Agreement Exhibit (C-3). ACSR Telephony Installation & Startup Fees (In addition to ACSR) - $(***). - -------------- Includes the additional support detailed in the Master Agreement Exhibit (C-3). 37 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." ACSR/CIT/ACSR Telephony-Startup And Installation- Additional Services - ---------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------- PRICE PER DESCRIPTION PRICE PER DAY DEVICE PRICE PER HOUR PRICE PER ITEM PRICE PER MONTH - -------------------------------------------------------------------------------------------------------------------------------- Site Survey (Per Location, $(***)/day min) $(***) - -------------------------------------------------------------------------------------------------------------------------------- Site Diagram ($(***)/day min) $(***) - -------------------------------------------------------------------------------------------------------------------------------- Server Configuration, Software Installation, and Testing (At CSG) $(***) - -------------------------------------------------------------------------------------------------------------------------------- Site Prep, Server Installation, and pre-production Support $(***) - -------------------------------------------------------------------------------------------------------------------------------- 4030 Installation ($(***)/day min) $(***) - -------------------------------------------------------------------------------------------------------------------------------- Advantis Installation - 56k IP $(***) - -------------------------------------------------------------------------------------------------------------------------------- Advantis Installation - Above 56k IP $(***) - -------------------------------------------------------------------------------------------------------------------------------- Printer Install ($(***)/day min) $(***) - -------------------------------------------------------------------------------------------------------------------------------- Workstation Install ($(***)/day min) - -------------------------------------------------------------------------------------------------------------------------------- Quantity Per Site - -------------------------------------------------------------------------------------------------------------------------------- 0 to 5 $(***) - -------------------------------------------------------------------------------------------------------------------------------- 6 to 11 $(***) - -------------------------------------------------------------------------------------------------------------------------------- 12 to 22 $(***) - -------------------------------------------------------------------------------------------------------------------------------- 23 to 33 $(***) - -------------------------------------------------------------------------------------------------------------------------------- 34 to 44 $(***) - -------------------------------------------------------------------------------------------------------------------------------- 45 to 65 $(***) - -------------------------------------------------------------------------------------------------------------------------------- LAN Hub Install ($(***)/day min) $(***) - -------------------------------------------------------------------------------------------------------------------------------- Router Install ($(***)/day min) $(***) - -------------------------------------------------------------------------------------------------------------------------------- Modem Install ($(***)/day min) $(***) - -------------------------------------------------------------------------------------------------------------------------------- Copy of CBT On CD ROM - In Addition To License/Maint Fee $(***) - -------------------------------------------------------------------------------------------------------------------------------- 1. CD-ROM Format $(***) 2. Binder/Paper Format $(***) 3. Binder/Paper Format Updates $(***) - -------------------------------------------------------------------------------------------------------------------------------- Custom Technical Support-Hourly $(***) - -------------------------------------------------------------------------------------------------------------------------------- Custom Technical Support - Monthly Contract (includes 50 hours support) $(***) - -------------------------------------------------------------------------------------------------------------------------------- 1 Instructor Day User Training - Up to 8 Students $(***) - -------------------------------------------------------------------------------------------------------------------------------- Hourly Technical Support, Consulting, Systems Integration $(***) - -------------------------------------------------------------------------------------------------------------------------------- AOI API License Fee (per application/per server interfaced) $(***) - -------------------------------------------------------------------------------------------------------------------------------- AOI API Annual Maintenance Fee (per application/per server interfaced $(***) - -------------------------------------------------------------------------------------------------------------------------------- AML (ACSR Message Link) w/ Data Warehouse - Perpetual License Fee $(***) - -------------------------------------------------------------------------------------------------------------------------------- AML (ACSR Message Link) w/ Data Warehouse - Annual Maintenance Fee $(***) - -------------------------------------------------------------------------------------------------------------------------------- Forest & Trees License Fee (for CIT) $(***) - -------------------------------------------------------------------------------------------------------------------------------- Forest & Trees Annual Maintenance Fee (for CIT) $(***) - --------------------------------------------------------------------------------------------------------------------------------
38 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." C. ACSR/ CIT/ ACSR TELEPHONY- (Third Party Software): - ------------------------------------------------------ NOTES: 1) All third party fees are subject to change per third party vendor agreements and are provided at CSG's Standard Price List 2) Other third party software may be required for Telephony depending on customer's interface requirements for E911, CARE, etc. 3) ACSR Telephony requires CSG's ACSR and ESP.
. Third Party License And Maintenance Fees License (1 time) Maint (annual) Netmanage or Chameleon Host Link 1 to 9 workstations $ (***)/per workstation $ (***) 10 to 25 workstations $ (***)/per workstation $ (***) 26 to 99 workstations $ (***)per workstation $ (***) 100 to 499 workstations $ (***)/per workstation $ (***) 500 to 999 workstations $ (***)/per workstation $ (***) Brixton PU2.1 SNA Core Software $ (***)/per server $ (***) Brixton session for SNA server $ (***)/per 2 copies $ (***) (2 required per workstation sold in blocks of 20 only) Brixton 3270 solaris client (1 required per server only) $ (***)/per copy $ (***) BEA Tuxedo (required with CIT or Telephony) $ (***)/per workstation $ (***) Platinum EPM Agent $ (***)/per server $ (***) (required with CIT or Telephony) Platinum Forest & Trees* (1 required with CIT) $ (***)/per copy $ (***) *1 recommended with Telephony Platinum Autosys Agent (required with Telephony) $ (***)/per server $ (***) Postalsoft (required with Telephony) $ (***)/per workstation $ (***) ($(***) min) ($(***) min) . Third Party Subscription Fees (Annual) Postalsoft (required with Telephony) US Addresses Canadian Addresses 1 to 25 workstations $ (***) $ (***) 26 to 50 workstations $ (***) $ (***) 51 to 250 workstations $ (***) $ (***) 251 to 500 workstations $ (***) $ (***) 501+ workstations $ (***) $ (***)
39 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." 10. CSG VANTAGEPOINT(TM) - - -------------------------- A. VantagePoint(TM) (version 1.0) for Video Services: - ----------------------------------------------------- License Fee- $(***) Includes Perpetual License Fee for one (1) single site with 12 users, unlimited records in database, standard installation and training, all required Third Party Software and other third party software associated with CSG VantagePoint(TM): . Payment Terms For License Fees: Due at contract execution $(***) Due at December 15, 1997 $(***) Due at July 15, 1998 $(***) Annual Software Maintenance Fee - Twenty percent (20%) of License Fee. . Payment Terms For First Year Software Maintenance Fee: Due at contract execution $(***) B. VantagePoint(TM) (version 1.0) for Telephony Services: - --------------------------------------------------------- License Fee for one (1) Perpetual License (single site, 12 users, limited to 500,000 records): $(***) Annual Software Maintenance Fee - Twenty percent (20%) of License Fee. $(***) . Payment Terms (Initial License Fee & First Year Maintenance): Due 60 days after Contract Execution $(***) Due December 15, 1997 $(***) Due March 15, 1998 $(***) Due June 15, 1998 $(***) License Fee for additional records in excess of 500,000: 500,001 to 1,000,000 $(***) 1,000,0001 and greater $(***) Annual Software Maintenance Fee for additional License Fees- Twenty percent (20%) of License Fee. . Payment Terms (License Fee & First Year Maintenance): Due upon CSG granting of License for additional records. C. NOTE: Subsequent years annual maintenance fees are due on the anniversary of - -------- CSG granting of the software license. NOTE: The fees set forth below apply only with respect to the three VantagePoint(TM) licenses (Doc. #2995) executed January 9, 1998. Fees: ----- 3 Customer Site Licenses- $ (***) ($(***) per customer site license) Annual Maintenance Fee - 1998 maintenance - 3@ $(***) per customer site $ (***) Subsequent Years Annual Maintenance Fee (due on Jan. 1, 1999 and each subsequent Jan. 1st) - 3@ $(***) per customer site $ (***)* Installation/Training - 3@ $(***) per customer site $ (***) Daily Data Feed (after 12/31/98) $ (***) /sub/month* * These prices are not subject to Section 4 of the Master Agreement prior to January 1, 1999; there will be no price increase for any of the fees listed in this Amendment prior to January 1, 1999. Thereafter, these prices shall be subject to Section 4. 40 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." Payment Terms: (per customer site) -------------- License Fee- - 1st payment (20% of license fee) due thirty days from execution date of this Amendment - 2nd payment (40% of license fee) due on installation completion or 6/15/98, whichever comes first - Final payment (40% of license fee) due on installation completion or 9/30/98, whichever comes first. Annual Maintenance Fee- - 100% of the 1998 Annual Maintenance Fee due thirty days after installation completion or 9/30/98, whichever comes first. - 100% of the Annual Maintenance Fee invoiced Jan. 1, 1999 and each subsequent Jan. 1 and due sixty days from date of invoice. Installation / Training Fee - - 100% due thirty days from installation completion or 9/30/98, whichever comes first. NOTE: For a period of 36 months from the execution date of this Amendment, Customer shall have the right to license additional workstations of the CSG VantagePoint User Application Modules set forth on page 3 of Exhibit E-1 for $(***) per workstation per User Application Module and an annual maintenance fee of $(***) per workstation per User Application Module. Thereafter, Customer may license additional workstations for a mutually agreeable fee. * License fee includes third party software set forth in page 2 of Exhibit E-1. * License fee includes daily data feeds through 12/31/98. * If Customer cancels its marketing download (included in BSC) then the VantagePoint data feed will be provided free of charge. * Customer is responsible for reimbursing CSG for all of CSG's travel and travel related expenses. * 12 copies of VantagePoint documentation will be provided free of charge for each customer site. D. Modules Included per Perpetual License: - ------------------------------------------ Data Model/Conversion Engine Marketing Analysis System Campaign Management System Executive Information System ESP Message Link ACSR Message Link E. Exclusions: - -------------- . Customization to be subcontracted with Technical Services separately through a Statement of Work.. . Hardware and Equipment, CSG's Standard Price List. 41 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." 11. ISP DOMAIN SERVER SOFTWARE ( SINGLE SITE LICENSE) - - ------------------------------------------------------- Perpetual License Fee: . $(***) per server (with up to 1,000,000 subscribers) due at delivery . Licenses for additional subscribers in excess of 1,000,000 will be at CSG's then current rates. Annual Software Maintenance Fee: . First year maintenance- $(***) due at delivery . Subsequent years maintenance- 20% of license fee ISP DOMAIN XBOI - - ----------------- XBOI Development Fee: $(***) XBOI Development Fee Includes: ------------------------------ . XBOI development team through January 1, 1998 . Project Management through January 1, 1998 . XBOI Executable development . XBOI Documentation . Product/Services API Executable . Product/Services API Documentation . Four (4) XBOI "Chalk Talk" sessions in Omaha . Statement Extract Development . Test Environment/Integration Testing Support . New Client Training . System Set Up . NT server installation Payment Terms For Development Fees: ----------------------------------- Due at November 30, 1997 $(***) Due at February 28, 1998 $(***) XBOI Perpetual License Fee: $(***) . (License Fee is waived) . XBOI Perpetual License includes XBOI Executable Version 1.0 Version 1.0 includes the following transactions: SIU, SRQ, HSE, HIU, WOC, WCM, WIU, CII, CIU, SCU, WDO, WHS, WRQ, WTC, WDS, WCS, WRS, MBH, MBC, SAG, SAX, SAR, SAI, SAP, SSS. Version 1.1 to include the following additional transactions: SFS, SSL, SMA, SMC, SMD, SMS, SAA, SRR, SAD. Version 1.X to include the following additional transactions: SAT and Extension to UHS. . Functionality for the SAT transaction will be determined after the Usage Handling (UH) and the Service Delivery (SD) components have been defined. Annual Software Maintenance Fee: . First year maintenance-$(***) due at delivery . Subsequent years maintenance-$(***) due on anniversary date of delivery . Version 1.1 will be provided under maintenance 42 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." 12. USAGE HANDLING SYSTEM - - --------------------------- Perpetual License Fee: . $(***) per server (with up to 1,000,000 subscriber services) due at delivery . Licenses for additional subscribers in excess of 1,000,000 will be at CSG's then current rates. Annual Software Maintenance Fee: . First year maintenance- $(***) due at delivery . Subsequent years maintenance- 20% of license fee 13. INFO EXPRESS - - ------------------ Software License Fees: - ---------------------- Perpetual Local Info Express License fee $(***) per IVR (minimum initial purchase of 50 licenses) . Third party hardware and software is additional Software License Annual Maintenance Fees: 20% of License fee - ----------------------------------------- Software License and Maintenance Payment Terms: - ----------------------------------------------- (for initial purchase of 50 licenses and related First year maintenance Fees) . $(***) due upon Execution of this Agreement . $(***) due on November 1, 1998 . Subsequent annual software maintenance Fees due on anniversary date of software license. Installation Services: - ---------------------- Includes: $(***) per IVR Installation . Installation of application on IVR . Configuration of application software . Configuration of CSG intelligent router . Configuration of EIS Gateway . Performance Testing Additional Consulting or Training Services: - ------------------------------------------- (fees set forth in Schedule D). 14. DATA COMMUNICATION SERVICES- - -------------------------------- CSG agrees to provide Customer through December 31, 1997, for each System Site that used CSG Services prior to August 1, 1997 the following communication services. . For all System sites with equal to or greater than 12,000 subscribers, CSG will provide, at no cost to Customer, the necessary hardware, software, communication line and communication equipment to provide communication services to such System Sites. . For System Sites with equal to or greater than 12,000 subscribers but less than 50,000 subscribers, the communication line provided will be a 9600 baud circuit. . For System Sites with equal to or greater than 50,000 subscribers, but less than 75,000 subscribers, the communication line provided will be a 14,400 baud circuit. . For System Sites with 75,000 and more subscribers, the communication line provided will be a 19,300 baud circuit. 43 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES Customer will be responsible for all communication charges for System Sites with less than 12,000 subscribers and for any "Satellite office." For all System Sites that initiated services after July 31, 1997, Customer will be responsible for all communication services charges. Effective January 1, 1998, Customer will be responsible for all communication services charges, regardless of the date that CSG services were initiated. 44 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." DATA COMMUNICATION SERVICES - (Without DBAN)
- ----------------------------------------------------------------------------------------------------------------------- NUMBER CIRCUIT SPEED/Without DBAN MONTHLY OF MAXIMUM PRINTERS (M-P = Multiple Locations per Circuit) INSTALLATION CHARGE CHARGE**** DEVICES* SUPPORTED** (P-P = Dedicated Circuit per Location) (per System Site) (per System Site) - ----------------------------------------------------------------------------------------------------------------------- 1 - 4*** 1-480 CPS M-P 4.8 KBPS / SNA $(***) $(***) - ----------------------------------------------------------------------------------------------------------------------- 10 - 35 1-475 LPM P-P 9.6 KBPS / SNA $(***) $(***) 1-480 CPS - ----------------------------------------------------------------------------------------------------------------------- 3546 - 75 1-600 LPM 1-475 LPM P-P 19.2 KBPS / SNA $(***) $(***) - ----------------------------------------------------------------------------------------------------------------------- 76 - 160 2-600 LPM P-P 56 KBPS / SNA $(***) $(***) 2-475 LPM - -----------------------------------------------------------------------------------------------------------------------
NOTE: * DEVICES equals terminals, printers, addressable, ARU, and ANI connections Requires 3174-91R controller or SNA gateway. Printers just being used for screen print are counted as devices but are not included here. ** Requires IBM 3174 controller or SNA gateway. *** Printers just being used for screen print are counted as devices but are not included here. **** Includes all modems and maintenance fees for installations and centralized help desk in the Continental U.S. For point-to-point circuits running at 9.6 KBPS; 14.4 KBPSand 19.2 KBPS,; and 56KBPS dial- back-up capability price $(***) per month, one time installation $(***). Each site must supply two business lines to connect to the dial-back-up modem. In addition, customer will pay any usage charges incurred. This capability backs up only the circuit, does not support modems or node. 56 KBPS/SNA circuit is required for each server running to ACSR software. If Customer requests to add DBAN to an existing circuit, the additional fee is a one time charge of $(***) for 9.6 and 19.2KBPS circuits plus $(***) per month. Customers are responsible for having two (2) Full Business Lines (FBL) installed to support their DBAN on the 9.6 and 19.2 line speeds. The Customer is responsible for any installation fees and monthly recurring fees. For a 56KBPS circuit Customer the additional fee is a one time charge of $(***) plus $(***) per month. When DBAN is activated, Customer will incur long distance expenses while operating on the back up lines. Locations outside the Continental U.S. can be supported by dedicated circuits, and will be subject to the following monthly surcharges: submissions of special bid from CSG's Network Provider. Alaska- $(***) (Circuit) ; N/A (Dial-Back-Up) oHawaii- $(***) (Circuit) ; $(***) (Dial-Back-Up) oPuerto Rico- $(***) (Circuit) ; $(***) (Dial-Back-Up) - -------------------------------------------------------------------------------- Customer will incur CSG's out-of-pocket order processing and telco expenses for any order canceled. CSG will not place orders more than 120 days before the conversion date. The above fees apply only with respect to System Sites set forth on Exhibit A-1 as of the Effective Date; however, with respect to System Sites added to Exhibit A-1 after the Effective Date, such fees are subject to change at any time. 45 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." DATA COMMUNICATION SERVICES - (With DBAN)
- ----------------------------------------------------------------------------------------------------------------------- NUMBER CIRCUIT SPEED/With DBAN MONTHLY OF MAXIMUM PRINTERS P-P = Dedicated Circuit INSTALLATION CHARGE CHARGE**** DEVICES* SUPPORTED** (per Location) (per System Site) (per System Site) - ----------------------------------------------------------------------------------------------------------------------- 1- 35 1-475 LPM P-P 9.6 KBPS / SNA $(***) $(***) 1-480 CPS - ----------------------------------------------------------------------------------------------------------------------- 35 - 75 1-600 LPM P-P 19.2 KBPS / SNA $(***) $(***) 1-475 LPM - ----------------------------------------------------------------------------------------------------------------------- 76 - 160 2-600 LPM P-P 56 KBPS Fan Out / SNA $(***) $(***) 2-475 LPM - -----------------------------------------------------------------------------------------------------------------------
NOTE: * DEVICES equals terminals, printers, addressable, ARU, and ANI connections ** Requires IBM 3174 controller or SNA gateway *** Printers just being used for screen print are counted as devices but are not included here. **** Includes all modems and maintenance fees for installations and centralized help desk in the Continental U.S. For point-to-point circuits running at 9.6 KBPS; ; 19.2 KBPS; and 56KBPS. Customers are responsible for having two (2) Full Business Lines (FBL) installed to support their DBAN on the 9.6 and 19.2 line speeds. The Customer is responsible for any installation fees and monthly recurring fees. When DBAN is activated, Customer will incur long distance expenses while operating on the back up lines. Locations outside the Continental U.S. can be supported by dedicated circuits, and will be subject to submissions of special bid from CSG's Network Provider. - -------------------------------------------------------------------------------- Customer will incur CSG's out-of-pocket order processing and telco expenses for any order canceled. CSG will not place orders more than 120 days before the conversion date. The above fees apply only with respect to System Sites set forth on Exhibit A-1 as of the Effective Date; however, with respect to System Sites added to Exhibit A-1 after the Effective Date, such fees are subject to change at any time. 46 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." TCP/IP CONNECTIONS DATA COMMUNICATIONS PRICING HOST SERVER REQUIRED AT CUSTOMER LOCATION
- -------------------------------------------------------------------------------------------------------------------- CIRCUIT SPEED INSTALLATION MONTHLY* P-P = Dedicated Circuit CHARGE CHARGE (per Location) (per System Site) (per System Site) - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Primary/Connection - -------------------------------------------------------------------------------------------------------------------- IP Circuits 56 KBPS $(***) $(***) - -------------------------------------------------------------------------------------------------------------------- 128 KBPS $(***) $(***) - -------------------------------------------------------------------------------------------------------------------- 256 KBPS $(***) $(***) - -------------------------------------------------------------------------------------------------------------------- 512 KBPS $(***) $(***) - -------------------------------------------------------------------------------------------------------------------- 1,544 MBPS $(***) $(***) - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- SECOND LEASED LINE IS AVAILABLE EQUAL TO THE PRIMARY LINE CIRCUIT SPEED INSTALLATION MONTHLY* P-P = Dedicated Circuit CHARGE CHARGE (per Location) (per System Site) (per System Site) - -------------------------------------------------------------------------------------------------------------------- Secondary Connection - -------------------------------------------------------------------------------------------------------------------- 56 KBPS $(***) $(***) - -------------------------------------------------------------------------------------------------------------------- 128 KBPS $(***) $(***) - -------------------------------------------------------------------------------------------------------------------- 256 KBPS $(***) $(***) - -------------------------------------------------------------------------------------------------------------------- 512 KBPS $(***) $(***) - -------------------------------------------------------------------------------------------------------------------- 1,544 MBPS $(***) $(***) - --------------------------------------------------------------------------------------------------------------------
NOTE: Token ring or SDLC adapter card can be installed in any of the above configurations. Token Ring Card is $(***) per month SDLC Adapter Card/SNA Support is $(***) per month * All IP connections require a back up connection as reviewed with CSG's Engineer.Includes all modems and maintenance fees for installations and centralized help desk in the Continental U.S. For point-to-point circuits running at 9.6 KBPS; 14.4 KBPS; and 19.2 KBPS, dial- back-up capability price $(***) per month, one time installation $(***). Each site must supply two business lines to connect to the dial-back-up modem. In addition, customer will pay any usage charges incurred. This capability backs up only the circuit, does not support modems or node. 56 KBPS circuit is required to support CSG's data warehouse product. Locations outside the Continental U.S. can be supported by dedicated circuits, and will be subject to submissions of special bid from CSG's Network Provider. - -------------------------------------------------------------------------------- Customer will incur CSG's out-of-pocket order processing and telco expenses for any order canceled. CSG will not place orders more than 120 days before the conversion date. The above fees apply only with respect to System Sites set forth on Exhibit A-1 as of the Effective Date; however, with respect to System Sites added to Exhibit A-1 after the Effective Date, such fees are subject to change at any time. 47 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." NETWORK SERVICES - TIMELINES AND PRICING
- ---------------------------------------------------------------------------------------------------------------------- # OF WORK DAYS PRICING TYPE OF SERVICE (Mon. - Fri. excluding holidays) (per System Site) - ---------------------------------------------------------------------------------------------------------------------- SNA Circuit installations 35 work days from entry into CSG's per Customer contract order process system. Entry into the system can take 2 - 5 days after the physical site information (complete address, technical contact and phone number) is verified. Multi-Protocol (MPN) Circuit 40 work days from entry into CSG's order installations process system after design review of your network configuration which can take 7 - 10 days. - ---------------------------------------------------------------------------------------------------------------------- Circuit expedites (SNA circuits only 25 work days (no guarantee on meeting requested $(***) Processing fee, -- multi-protocol circuits can not delivery date) plus installation and be expedited) monthly line fees. - ---------------------------------------------------------------------------------------------------------------------- Change circuit speed (upgrades from 35 work days $(***) processing 4.8 to 9.6, 9.6 bridged to 9.6 point fee/plus installation to point, and from 19.2 to 56k are cost and monthly line not included because a new circuit fees is required) 9.6 point to point to 14.4 or 19.2 (only requires a modem change) - ---------------------------------------------------------------------------------------------------------------------- Disconnect circuit (Can not be 30 work days $(***) expedited) - ---------------------------------------------------------------------------------------------------------------------- On-Prem move 20 work days $(***) plus telco charges - ---------------------------------------------------------------------------------------------------------------------- Off-Prem move Disruptive 25 work days $(***) plus telco charges Non-disruptive (New Start Up) 35 work days plus 2 -5 days for verification of address, technical contact and phone number. - ---------------------------------------------------------------------------------------------------------------------- Dial Back up to an Alternate Node 35 work days $(***) plus cost of new (DBAN) telco line* - ---------------------------------------------------------------------------------------------------------------------- Switched 56 Backup (56kbps only) 35 work days $(***) plus cost of new telco line * - ---------------------------------------------------------------------------------------------------------------------- Passport/ TCP/IP Dial 10 work days $(***) plus a one time $(***) diskette charge** - ---------------------------------------------------------------------------------------------------------------------- NOTE: Expedites for the following services will incur an additional processing fee $(***) (expedite processing fee) - ---------------------------------------------------------------------------------------------------------------------- Access Changes (Region Change, Group 5 work days $(***) per controller ID Change, Sys/Prin Add/Delete) - ---------------------------------------------------------------------------------------------------------------------- Add Terminal Controller Unit (Add PU) 15 work days $(***) - ---------------------------------------------------------------------------------------------------------------------- Change Terminal Controller Unit 15 work days $(***) - ---------------------------------------------------------------------------------------------------------------------- Delete Terminal Controller Unit 15 work days $(***) (Delete PU) - ----------------------------------------------------------------------------------------------------------------------
48 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission."
- ---------------------------------------------------------------------------------------------------------------------- # OF WORK DAYS PRICING TYPE OF SERVICE (Mon. - Fri. excluding holidays) (per System Site) - ---------------------------------------------------------------------------------------------------------------------- Reconfigure Terminal 10 work days $(***) Controller/Brixton (various order types/changes requires a reconfiguring of the controller/addressable device) - ---------------------------------------------------------------------------------------------------------------------- Add R# (Remote Job Entry) 30 work days $(***) (first time setup) Add R# - Change to existing setup 30 work days $(***) (change from existing setup) - ---------------------------------------------------------------------------------------------------------------------- Add Ports for terminals, printers, 15 work days $(***) per port, $(***) PC's and additional sessions max/controller - ---------------------------------------------------------------------------------------------------------------------- Change ports 15 work days $(***) per port - ---------------------------------------------------------------------------------------------------------------------- Delete ports 15 work days $(***) per port - ---------------------------------------------------------------------------------------------------------------------- Re-installation of an addressable 10 work days (assumes all programming and $(***) per hour device (assumes device was connectivity remained unchanged) (1 hour minimum) previously disconnected by Customer) - ---------------------------------------------------------------------------------------------------------------------- Add Ports for addressable devices 20 work days per contract exhibit - ---------------------------------------------------------------------------------------------------------------------- Change ports for addressable devices 20 work days per contract exhibit - ---------------------------------------------------------------------------------------------------------------------- Add PU for addressable devices 20 work days per contract exhibit - ----------------------------------------------------------------------------------------------------------------------
* client will incur reoccurring monthly charges plus usage rate ** client will incur hourly usage rate 49 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." Equipment Installation Outside Normal Work Hours - ------------------------------------------------ . Technicians are available for over-the-phone equipment installation during the hours of 5:00 AM and 9:00 PM CST Monday through Friday at no additional charge to the Customer. If a Customer prefers to have a device installed outside the established work hours, on a weekend, or a holiday --- the Customer will be billed at a rate of $(***) per hour (1 hour minimum) for technical assistance Technical and Engineering Services/Support - CSG charges for consulting - ------------------------------------------ services, non-standard installation services and technical assistance on Customer owned/leased equipment or Customer local/wide area networks) . Technical onsite visit is $(***) per day (8 hour day) plus travel and related expenses . Consulting Services via phone is $(***) per hour (1 hour minimum) Direct Connect Into The CSG Millenium Center (per System Site) - -------------------------------------------------------------- (For Customer Frame Relay Configurations) Installation Fee: $(***) Monthly Recurring: $(***) CSG Direct Connect (Customer Frame Relay): - ----------------------------------------- If a Customer chooses to do a direct connect into the CSG Denver facility, there are charges associated with this connection. CSG has equipment in place to isolate our Customers from one another and to provide a firewall to the mainframe services CSG offers. CSG Customers are responsible for there own circuit(s) into the facility as well as any equipment associated with that circuit, including the DSU(s) and router(s). CSG would then provide a "subnet" into our Cisco router equipment. Mainframe services are provided through our router equipment. The costs associated with this connectivity includes a one-time connect fee, and a monthly fee thereafter. All Frame Relay connections must be reviewed with a CSG Engineer. CSG's Direct Connect Services Include: 1. Cisco 7000 and Cisco 7206 Routers . CSG's access to the mainframe services . Redundant power supplies . Configured for "Hot Standby" to provide redundancy and reliability . Covered by Cisco on a 7/24 maintenance agreement . Includes base unit . Includes the cards necessary to supply the ports for our Customers 2. Managed Hubs . Necessary to provide a "subnet" for each Customer on a private dedicated segment of the routers 1. Cabinets . Provide the necessary rack space to "cleanly" mount all equipment 2. Facility Floor Space . A temperature controlled, UPS'd facility for all Customer equipment 3. Mainframe TIC Connection . CSG pays a cost associated with our connection to the mainframe 4. Remote Monitoring . Tools to monitor the Cisco routers, Token Ring subnets, and Ethernet subnets . Tools to page an on-call engineer when a threshold has been exceeded . Tools to do packet level analysis . Tools to perform utilization/trending analysis 50 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES 5. Network Engineer . To support CSG's direct connect equipment . Does NOT provide coverage for the Customer's equipment Customer will incur CSG's out-of-pocket order processing and telco expenses for any order canceled. CSG will not place orders more than 120 days before the conversion date. The above fees apply only with respect to System Sites set forth on Exhibit A-1 as of the Effective Date; however, with respect to System Sites added to Exhibit A-1 after the Effective Date, such fees are subject to change at any time. 51 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." CCS Equipment Pricing: - --------------------- Provided at CSG's then current rates. Note: Customer is responsible for obtaining and installation of all computer hardware, software, peripherals and necessary communications facilities, including, but not limited to printers, servers, power supply, workstations, printers, concentrators, communications equipment and routers (the "Required Equipment") which are necessary in order for the Customer to utilize the Services and Products as defined in the Master Agreement. Customer shall be responsible for the Required Equipment, including, but not limited to the costs of procuring, installing, bar coding hardware/software, operating and maintaining such Required Equipment unless otherwise noted in the Customer's Master Agreement. 52 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." 15. FINANCIAL SERVICES' FEES - - ------------------------------ A. Credit Card Processing: - -------------------------- 1. Real-time authorization and daily settlement of "one-off" credit card transactions (a) Start up fee $(***) one time charge per System Site (b) Maintenance fee $(***) monthly charge per System Site (c) Accepted transaction fee $(***) per item per System Site 2. Recurring Credit Card Transactions (per System Site) (a) Accepted Transaction Fee . 0-1,000 transactions $(***) per item . 1,001 -2,000 transactions $(***) per item . 2,001 - 3,000 transactions $(***) per item . 3,001 - 4,000 transactions $(***) per item . 4,001 - 5,000 transactions $(***) per item . 5,001 and up transactions $(***) per item B. Cash Register Receipts: Each CSG Customer System Site will be charged a monthly fixed fee of $(***) for processing front counter receipts for payment and equipment. Each CSG Customer System Site will be charged a one-time start-up fee of $(***) "Other Fees": Cash Register Receipts processing requires specific approved and certified equipment and forms. Additional pricing for equipment and forms is available upon request. 53 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." 16. SUMMITRAK CUSTOMER MANAGEMENT SYSTEM - - ------------------------------------------ Monthly processing fee per subscriber* - $(***) (Price does not include postage costs) Customer is responsible for any and all hardware, software and communication lines required with the use of the Summitrak Customer Management System. *Pricing is subject to change on or after January 1, 1998 based upon mutually agreed terms. 17. SUMMITRAK PAY-PER-VIEW SERVICE - - ------------------------------------ Monthly processing fee per transaction* - $(***) Monthly minimum processing fee - $(***) Customer is responsible for any and all hardware, software and communication lines required with the use of the Impulse Pay-Per-View Service System. *Pricing is subject to change on or after January 1, 1998 based upon mutually agreed terms. CSG SYSTEMS, INC. ("CSG") TCI CABLE MANAGEMENT CORPORATION("Customer") By: /s/ Joseph T. Ruble By: /s/ Ann Montgomery ------------------------ ------------------------------ Note: Any other fees and charges for any CSG Product or Service provided or licensed to Customer and not listed above shall be set forth in the subsequently executed Schedule for such Product or Service. 54 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." EXHIBIT F-1 (page 1 of 3) ----------- Mailing Services Specifications and Packaging of Inserts - -------------------------------------------------------- The client can supply the inserts or CSG can produce them for the client. Printing of inserts by CSG allows fast, reliable delivery, permits shorter lead-times, and ensures that all of the design and production specifications described below will be met. CSG requires that a 5% overage be added to the volume of inserts you order to allow for any damages. The inserts must be delivered 7 business days prior to the start date. Failure to meet this lead-time will result in a $(***) late fee and will delay the insertion of those pieces. Additional fees are applicable if LOAs and/or inserts arrive after print cycle which would requires statement and postal report reruns. CSG will destroy inserts within 60 days of receipt unless disposition says to return. Inserts should not be shipped prior to 30 days before first cycle used. No insert will be stored for longer than 90 days at the CSG warehouse. Specifications for inserts - -------------------------- 1) Size ---- If the size of your statement is 7 x 11: a) Maximum size of a finished insert = 7 x 3 1/2 inches b) Minimum size of a finished insert = 5 1/2 x 3 inches If the size of your statement is 8 1/2 x 11: a) Maximum size of a finished insert = 8 3/4 x 3 3/4 inches b) Minimum size of a finished insert = 5 1/2 x 3 inches 2) Paper specifications -------------------- a) Paper stock minimum weights are: 50 lbs. minimum - uncoated and unfolded 50 lbs. minimum - coated and folded *60 lbs. offset paper is considered standard. b) Anything under 50 lbs. stock or hard finished paper cannot be inserted. (Example: varnish) c) Maximum weight is postcard stock. 3) Fold ---- a) Single folds are acceptable. b) Unacceptable are two-fold that are accordion folds, end folds, or `Z' folds. c) Folds must have sharp creases which maintain the accuracy of the fold throughout the print run. Below are graphics that show acceptable and not acceptable insert fold for machine insertion. d) Folded inserts must face the same direction in each bundle. Do not crisscross inserts within bundles, as this will result in a rebanding charge. Special are should be taken during folding and packaging to prevent the inserts from nesting one inside the other. Acceptable folds for machine insertion - ---------- [GRAPHIC] [GRAPHIC] Single fold is acceptable Standard three fold is acceptable 55 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES EXHIBIT F-1 (page 2 of 3) ----------- Not acceptable for machine insertion -------------- [GRAPHIC] [GRAPHIC] Accordion fold is not acceptable End fold is not acceptable CSG does not insert pieces with staples, plastic, metal, magnets or other foreign materials as these jam and can damage the machines. If you are not certain an insert will meet CSG's specifications please contact your Insert Control Representative. 4) Identification of inserts ------------------------- a) Inserts that are similar in appearance must have the Client ID # or Business Unit # printed on the insert itself. This needs to be placed on the outside of the insert that readily identifies one version from another. The advantage of having the insert number on each insert and in a consistent location is to aid in identifying the inserts as they are received at the warehouse. It also provides each department that handles the inserts an instant visual as they verify, prepare and insert the statement order. b) Large orders of look-a-like inserts, either generic or customized, should be preceded by a manifest which lists quantity, Client ID # or Business Unit #. This will assure the proper distribution of the inserts. c) Quantity - please note that the printing industry standard is plus or minus 10% so make adjustments accordingly. CSG requests an additional 5% over the amount needed for machine damages during insertion. Packaging of the inserts - ------------------------ 1) Banding ------- a) Banding is required for all inserts. They are to be banded into 3-4 inch bundles the quantity per bundle must be divisible by 50; the quantity per bundle must be consistent in each bundle. b) Paper banding is preferred over other types. Paper bands must be of heavy stock and no less than 3 inches wide and securely fastened. c) Rubber band should be size #64 (3 1/2x1/32x1/4) * Single sheet inserts should be banded with a single rubber band placed in the center of the bundle. Ensure that the bands are not too tight, which could cause warping; or too weak which could snap during shipment * Multi-page folded inserts should be banded with a rubber band placed on each end. This prevents warping of material and allows a better flow during insertion with less damages. d) The fold of the inserts must face the same direction in a bundle. e) Shrink wrapping is permissible. Ionization of shrink wrapped bundles is preferred. All unbanded material for insertion into cycle billing orders will be banded at a cost to the client of $5.00 per 1,000. 56 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES EXHIBIT F-1 (page 3 of 3) ----------- 2) Packing and Shipping -------------------- a) Boxes need to be packaged so that contents do not shift, move or otherwise be subject to damage during shipment. Delays occur in the processing of inserts when a package is received with contents damaged. Inserts damaged excessively during shipping will be refused. b) All material should be shipped in securely taped, strong cartons (200 lb. test cardboard) with reinforced sides to prevent the material from becoming curled, bent at the corners or mutilated during shipment. c) Total box weight cannot exceed 50 lbs. Inserts should be securely packed within the cartons. d) Only one version or type of insert per box. e) A shipping document must accompany each shipment, again listing customer name, customer/system #, number of cartons, and quantity per box. f) CSG will refuse any C.O.D. shipment. g) All inserts shipped to CSG will be inspected to ensure that specifications are adhered to. Insert shipments that do not adhere to specifications or have quantities that are in question may not be accepted. CSG Systems the right to refuse inserts that do not meet our specifications or are damaged during shipment. h) All material must be delivered on wooden pallets of 36" x 48" in dimension. (DO NOT double stack pallets) 57 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES EXHIBIT 2.19H Pages where confidential treatment has been requested are stamped "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission," and places where information has been redacted have been marked with (***). TWENTY-SECOND AMENDMENT TO RESTATED AND AMENDED CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT BETWEEN CSG SYSTEMS, INC. AND TCI CABLE MANAGEMENT CORPORATION This Twenty-Second Amendment (the "Amendment") is executed this 31st day of March, 1999, and is made by and between CSG Systems, Inc., a Delaware corporation ("CSG") and TCI Cable Management Corporation ("Customer"). CSG and Customer entered into a certain Restated and Amended CSG Master Subscriber Management System Agreement dated August 10, 1997, which has subsequently been amended pursuant to separately executed amendments (collectively, the "Agreement"), and now desire to amend the Agreement in accordance with the terms and conditions set forth in this Amendment. If the terms and conditions set forth in this Amendment shall be in conflict with the Agreement, the terms and conditions of this Amendment shall control. Any terms in initial capital letters or all capital letters used as a defined term but not defined in this Amendment, shall have the meaning set forth in the Agreement. Upon execution of this Amendment by the parties, any subsequent reference to the Agreement between the parties shall mean the Agreement as amended by this Amendment. Except as amended by this Amendment, the terms and conditions set forth in the Agreement shall continue in full force and effect according to their terms. CSG and Customer agree as follows: 1. Schedule D of the Agreement is hereby amended to include the fees set forth below for CSG.web.
- --------------------------------------------------------------------------------------------------------------------------------- CSG.Web Product License Fee (Enterprise-Wide Version of CSG.Web) - --------------------------------------------------------------------------------------------------------------------------------- ITEM/DESCRIPTION PRICE - --------------------------------------------------------------------------------------------------------------------------------- Perpetual Software License Fees* 1. CSG.web Perpetual License Fee $(***) - --------------------------------------------------------------------------------------------------------------------------------- Annual Software Maintenance Fees: 1. CSG.web Annual Maintenance Fee $(***) for the maintenance period commencing upon the execution of this Amendment and ending December 31, 1999. $(***) per calendar year commencing on January 1, 2000 - --------------------------------------------------------------------------------------------------------------------------------- Other Fees: - --------------------------------------------------------------------------------------------------------------------------------- 1. Monthly Transaction Fees** - --------------------------------------------------------------------------------------------------------------------------------- a. Monetary Transactions (Note 1) $(***) per monetary transaction b. Non-Monetary Transactions (Note 2) $(***) per non-monetary transaction - --------------------------------------------------------------------------------------------------------------------------------- 2. System Principle Activation Fee (one-time)*** $(***) per System Principle - --------------------------------------------------------------------------------------------------------------------------------- 3. Mandatory custom development of work product - --------------------------------------------------------------------------------------------------------------------------------- Minimum per installation (40 hours) $(***) - --------------------------------------------------------------------------------------------------------------------------------- Hourly rate $(***) per hour, per person - --------------------------------------------------------------------------------------------------------------------------------- 4. Optional Training - --------------------------------------------------------------------------------------------------------------------------------- Per day rate (one trainer/8 hour day) $(***) per day plus travel and travel related expenses. - ---------------------------------------------------------------------------------------------------------------------------------
*Fees payable in accordance with Section 1 of the Agreement. **A portion of the Monthly Transaction Fees include Facilities Management of the CSG.web software *** This fee is only charged to those System Principles that convert CSG.web subsequent to the initial Enterprise-Wide implementation. "Confidential Treatment Requested and the Redacted Material has been separately filed with the Commission." Note 1: Definition of Monetary Transactions: Monetary Transactions shall currently be defined as web-site activity that creates CCS System transactions which result in a sale of product or services to the web user including, the ordering of Pay Per View services and Upgrade services on addressable sites only. Note 2: Definition of Non-Monetary Transactions: Non-Monetary Transactions shall currently be defined as web-site activity that creates CCS System transactions other than those currently defined above as Monetary Transactions including, viewing Subscriber Statements and viewing Existing Services. The total fee that Customer shall be obligated to pay CSG for non-monetary transactions only, in any calendar month, shall not exceed $(***) (***) per subscriber per month (the "Cap"), based on Customer's total subscriber base for the applicable calendar month. Note 3: No Hit Transactions shall currently include the following: (a) The current method of Payment of the Bill, which involves the interaction of a CSR or other designated representative. (b) The display of the Channel Line-up (c) "Who are We" informational pages. (d) Survey informational pages (e) Merchandise informational pages Should new transactions arise which are not listed herein, which CSG desires to designate as monetary transactions, CSG shall first notify Customer and give Customer the opportunity to restrict subscriber's access to such transactions if Customer desires to do so. 2. In the event that CSG develops an electronic commerce solution that provides substantially the same functionality and services as CSG.web, and Customer elects to utilize such electronic commerce solution, CSG agrees to negotiate with Customer, in good faith, regarding Customer's investment in CSG.web. THIS AMENDMENT is executed on the day and year first shown above. CSG SYSTEMS, INC. ("CSG") TCI CABLE MANAGEMENT CORPORATION ("Customer") By: /s/ Joseph T. Ruble By: /s/ Scott D. Besselievre -------------------------------- -------------------------------------- Name: Joseph T. Ruble Name: Scott D. Besselievre ------------------------------ ------------------------------------ Title: V.P. & General Counsel Title: Executive Director, Customer Ops ----------------------------- ----------------------------------- 2 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES EXHIBIT 2.19H SCHEDULE L CSG.web(TM) SOFTWARE LICENSE This Schedule L is made as of this 31st day of March, 1999, between CSG Systems, Inc. ("CSG") and TCI Cable Management Corporation ("Customer"), pursuant to the Restated and Amended Master Subscriber Management System Agreement executed as of August 10, 1997, and of which this Schedule L forms an integral part. 1. License and Facilities Management Services. CSG hereby grants Customer, and Customer hereby accepts from CSG, a non-exclusive and non-transferable right to use CSG.web software product described in Section 2 below ("CSG.web") and in the designated environment described in Section 3 below (the "Designated Environment"), for the fees set forth in Schedule D and subject to the terms and ---------- conditions specified below and in the Master Agreement. Also for the fees set forth in Schedule D, Customer shall purchase the Facilities Management Services ---------- described in Exhibit L-1. 2. CSG.web. "CSG.web" means (i) the machine-readable object code version of the computer programs described in the Product Schedule attached hereto as Exhibit L-1, whether embedded on disc, tape or other media (the "Software"), which will be located at CSG's premises unless CSG and Customer execute an amendment to this Agreement that expressly provides otherwise; (ii) the published user manuals and documentation that CSG makes generally available for the Software (the "Documentation"), (iii) the fixes, updates, upgrades or new versions of the Software or Documentation that CSG may provide to Customer under this Schedule L ---------- (the "Enhancements") and (iv) any customization or addition to the Software, Documentation or Enhancements that CSG may provide pursuant to Schedule B ---------- executed concurrently with this Schedule L (the "Customization"). Nothing in ---------- this Schedule L will entitle Customer to receive the source code of the ---------- Software, in whole or in part. 3. Designated Environment. "Designated Environment" means the combination of the other computer programs and hardware equipment CSG specifies for use with the System as set forth in Exhibit L-1, or otherwise approved by CSG in writing for Customer's use with CSG.web. Customer may use CSG.web only in the Designated Environment and will be solely responsible for upgrading the Designated Environment to the specifications that CSG may provide from time to time. If Customer fails to do so, CSG will have no obligation to continue maintaining and supporting CSG.web. CSG shall certify the Designated Environment prior to the commencement of CSG's obligations under this Schedule L. Unless CSG has ---------- certified the Designated Environment, CSG shall have no obligation to perform under this Schedule L, including no obligation to maintain and support CSG.web. ---------- Any other use of CSG.web will require CSG's prior approval, and may be subject to additional charges. If Customer uses CSG.web via the Facilities Management Services described in Exhibit L-1 and as a result CSG does not provide Customer with any Software, the foregoing provisions regarding the Designated Environment will not be applicable. 4. Use. If, at any time during the term of this Schedule L (and as reflected by ---------- an executed amendment hereto), CSG.web is used by Customer other than pursuant to the facilities management arrangement contemplated hereby, Customer shall follow the restrictions set forth in this Section 5. Customer may use CSG.web only in the Designated Environment for the term set forth in Section 7, below, and only in and for providing a world wide web site for Customer. Customer will not use CSG.web to provide or create a world wide web site to or on behalf of any third parties. Customer will not install the Software, Enhancements, or Customization except on its own internal server located at its place of business. Except as otherwise mandated by applicable law, Customer may make only one back-up archival copy of the Software, Enhancements or 1 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES Customization. Customer will reproduce all confidentiality and proprietary notices on each of these copies and maintain an accurate record of the location of each of these copies. Customer will not otherwise copy, translate, modify, adapt, decompile, disassemble or reverse engineer CSG.web, except as and to the extent expressly authorized by applicable law. 5. Maintenance And Support. (a) Maintenance. Following expiration of the Warranty Period, CSG will provide ----------- Customer with phone support from Monday through Friday 8 a.m. to 5 p.m. (Central Time) to advice, consult and assist with the use of the then-current version of CSG.web and diagnose and correct routine problems that Customer may encounter (the "Hot-Line Support"), and also publication updates and the fixes and updates that CSG may make generally available (the "Updates") for the fees set forth in Schedule D. Hot-Line Support and Updates do not include support any third party - ---------- software. (b) Customization. Customer acknowledges that the Updates may not operate with ------------- the Customization. At Customer's request, CSG may provide Customer with customization services to modify the Updates to operate with the Customization. CSG and Customer will establish the terms, conditions and charges under which CSG provides any such customization services in a Statement Of Work incorporated into Schedule B. In no event will any such customization services affect ---------- Customer's acceptance of CSG.web pursuant to this Schedule L. ---------- (c) Limitation. The Updates or Enhancements will not include any upgrade or new ---------- version of CSG.web that CSG and its licensors decide, in their sole discretion, to make generally available as a separately priced item. This Section will not be interpreted to require CSG to (i) develop and release Updates or Enhancements or (ii) customize the Updates or Enhancements to satisfy Customers' particular requests. If an Update or Enhancement replaces the prior version of the System, Customer will promptly install the Update or Enhancement and destroy such prior version upon installing the Update or Enhancement. CSG will have no obligation to maintain and support CSG.web if Customer has modified CSG.web. At Customer's request, CSG will provide maintenance and support of CSG.web containing such Customer modifications at CSG's standard hourly rates and charges. 6. Term. This Schedule L shall be coterminous with the term set forth in Section ---------- 16 of the Master Agreement. Agreed and accepted this 31st day of March, 1999, by: CSG SYSTEMS, INC. ("CSG") TCI CABLE MANAGEMENT CORPORATION ("Customer") By: /s/ Joseph T. Ruble By: /s/ Scott D. Besselievre ----------------------------- -------------------------------- EXHIBIT L-1 PRODUCT SCHEDULE 2 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES Exhibit L-1 Product Description and Facilities Management Services ------------------------------------------------------ 1. Product Description. CSG.web is a web site on the Internet's World Wide Web which can be accessed by any user accessing the world wide web through any commercially available web browser. The user must enter the Uniform Resource Locator, URL, designated by the Client in order to access the web site. CSG will supply Client with the URL associated with each of the following components so that the Client can incorporate any or all of these features into a current or newly created web site: CSG.web contains multiple CSG customer management and billing software interface components: . Display customer billing statement information . Pay balance via credit card using Netscape's Secure Sockets Layer (secure file is provided to Customer) . Display scheduled pay per view movies and events . Process pay per view movie and event orders . Display customers current services and pending PPV movies and events. . Display channel lineup and premium services: . Process service upgrade orders: . Web administration screens for minor CSG.web modifications maintained by Client for: Use and placement of graphical images; Use and placement of text and descriptions; URL and URL positioning; Background color selection; default work order settings; PPV movies of the month; services available for ordering on the web; and image management. 2. Facilities Management Services. . Manage the web server where the CSG.web customized pages reside . Make the CSG.web customized pages available when accessed via links on Customer's web site. . Manage the CSG.web CGI programs . Manage the interface between CSG's web server and CSG's CCS billing system 3. Designated Environment. Notes: The following applies only in regards to the products actually licensed - ----- by Customer and may be subject to change as the specific hardware configuration cannot be completely identified and certified until after the business requirements of Customer are determined during the pre-install visit. 3 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES The Support Services do not include support of any products if used outside the certified Designated Environment (i.e. other hardware, software, or other modifications have been introduced by Customer that are outside the certified Designated Environment). In such a case, CSG may agree to provide customized technical support for CSG's then-current fees for such services. CSG.web is operated within a scalable 3 tier architecture partitioned to allow components to run on multiple servers. This allows Clients to run part of CSG.web on their web server. CSG.web CGI programs must be integrated into the clients web site running on their web server. . Clients Portion: Maintain a web site which contains some or all of CSG.web components running on a web server operated by the client at the clients location. . CSG's Portion: Maintain a back-end server accessible through the Internet through the Customer's web site for processing CSG customer management and billing software transactions. Client must use the following hardware and software to operate CSG.web: . A server connected to the Internet running operating system AIX, or any other operating system approved by CSG. . Netscape Enterprise Commerce Plus server software version 1.0 or better. . Firewall security platform approved by CSG, e.g. RSA Encryption Software. NOTE: The above is subject to change. The specific hardware configuration cannot be completely identified and certified until after the business requirements of Customer are determined. 4 CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES OF THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR OUTSIDE THEIR RESPECTIVE COMPANIES EX-27.01 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AS OF MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 40,035 0 61,136 2,637 0 108,795 50,626 26,039 264,337 96,772 91,179 517 0 0 75,677 264,337 0 71,087 0 29,885 7,620 0 2,224 18,623 7,041 11,582 0 0 0 11,582 0.22 0.21
EX-99.01 4 SAFE HARBOR EXHIBIT 99.01 SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 CERTAIN CAUTIONARY STATEMENTS AND RISK FACTORS CSG Systems International, Inc. and its subsidiaries (collectively, the Company) or their representatives from time to time may make or may have made certain forward-looking statements, whether orally or in writing, including without limitation, any such statements made or to be made in the Management's Discussion and Analysis of Financial Condition and Results of Operations contained in its various SEC filings or orally in conferences or teleconferences. The Company wishes to ensure that such statements are accompanied by meaningful cautionary statements, so as to ensure to the fullest extent possible the protections of the safe harbor established in the Private Securities Litigation Reform Act of 1995. ACCORDINGLY, THE FORWARD-LOOKING STATEMENTS ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO AND ARE ACCOMPANIED BY THE FOLLOWING MEANINGFUL CAUTIONARY STATEMENTS IDENTIFYING CERTAIN IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENTS. This list of factors is likely not exhaustive. The Company operates in a rapidly changing and evolving business involving the converging communications markets, and new risk factors will likely emerge. Management cannot predict all of the important risk factors, nor can it assess the impact, if any, of such risk factors on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those in any forward-looking statements. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT FORWARD-LOOKING STATEMENTS WILL BE ACCURATE INDICATORS OF FUTURE ACTUAL RESULTS, AND IT IS LIKELY THAT ACTUAL RESULTS WILL DIFFER FROM RESULTS PROJECTED IN FORWARD-LOOKING STATEMENTS AND THAT SUCH DIFFERENCES MAY BE MATERIAL. RELIANCE ON CCS - --------------- The Company derived approximately 78% and 77% of its total revenues from its primary product, Communications Control System (CCS), and related products and services in the years ended December 31, 1998 and 1997, respectively. CCS and related products and services are expected to provide the substantial majority of the Company's total revenues in the foreseeable future. The Company's results will depend upon continued market acceptance of CCS and related products and services, as well as the Company's ability to continue to adapt and modify them to meet the changing needs of its clients. Any reduction in demand for CCS would have a material adverse effect on the financial condition and results of operations of the Company. REQUIREMENTS OF THE TCI CONTRACT - -------------------------------- The TCI Contract requires the conversion of additional TCI customers onto the Company's customer care and billing system. The TCI Contract provides certain performance criteria and other obligations to be met by the Company. The Company is subject to various remedies and penalties if it fails to meet the performance criteria or other obligations. The Company is also subject to an annual technical audit to determine whether the Company's products and services include innovations in features and functions that have become standard in the wireline video industry. If an audit determines the Company is not providing such an innovation and it fails to do so in the manner and time period dictated by the contract, then TCI would be released from its exclusivity obligation to the extent necessary to obtain the innovation from a third party. To fulfill the TCI Contract and to remain competitive, the Company believes it will be required to develop new and advanced features to existing products and services, as well as new products and services, all of which will require substantial research and development. TCI also would have the right to terminate the TCI Contract in the event of certain defaults by the Company. The termination of the TCI Contract or of any of TCI's commitments under the contract would have a material adverse effect on the financial condition and results of operations of the Company. TCI AND AT&T MERGER - ------------------- During the three months ended March 31, 1999 and 1998, revenues from TCI and affiliated companies represented approximately 44.2% and 39.1% of total revenues, respectively. The TCI Contract has minimum financial commitments over the 15-year life of the contract and includes exclusive rights to provide customer care and billing products and services for TCI's offerings of wireline video, all Internet/high speed data services, residential wireline telephony services, and print and mail services. As discussed above, the TCI Contract provides certain performance criteria and other obligations to be met by the Company. To date, the Company believes it has complied with the terms of the contract. Since execution of the TCI Contract in September 1997 through March 31, 1999, the Company has successfully converted approximately 8.6 million TCI cable television customers onto its system. Approximately, 1.7 million additional TCI cable television customers are currently scheduled to be converted during the remainder of 1999. AT&T completed its merger with TCI in March 1999. At this time, it is too early to determine the near- and long-term impact, if any, the merger will have on the Company's relationship with the combined entity. AT&T has announced its planned efforts to provide convergent communications services in 10 United States cities during 1999. The Company is participating in those convergent trials and is working closely with AT&T to provide customer care and billing services to customers in those cities. The Company expects to continue performing successfully under the TCI Contract, but its failure to do so would have a material adverse effect on the financial condition and results of operations of the Company. CONVERSION TO THE COMPANY'S SYSTEMS - ----------------------------------- The Company's ability to convert new client sites to its customer care and billing systems on a timely and accurate basis is necessary to meet the Company's contractual commitments and to achieve its business objectives. Converting multiple sites under the schedules required by contracts or business requirements is a difficult and complex process. One of the difficulties in the conversion process is that competition for the necessary qualified personnel is intense and the Company may not be successful in attracting and retaining the personnel necessary to complete conversions on a timely and accurate basis. The inability of the Company to perform the conversion process timely and accurately would have a material adverse effect on the results of operations of the Company. DEPENDENCE ON CABLE TELEVISION AND DBS INDUSTRIES - ------------------------------------------------- The Company's business is concentrated in the cable television and Direct Broadcast Satellite (DBS) industries, making the Company susceptible to a downturn in those industries. During the years ended December 31, 1998 and 1997, the Company derived 78% and 73%, and 13% and 11% of its total revenues from companies in the U.S. cable television and U.S. DBS industries, respectively. A decrease in the number of customers served by the Company's clients, loss of business due to non-renewal of client contracts, industry consolidation, and/or changing consumer demand for services would adversely effect the results of operations of the Company. There can be no assurance that new entrants into the cable television market will become clients of the Company. Also, there can be no assurance that cable television providers will be successful in expanding into other segments of the converging communications markets. Even if major forays into new markets are successful, the Company may be unable to meet the special billing and customer care needs of that market. The cable television industry is undergoing significant ownership changes at an accelerated pace. In addition, cable television providers are consolidating, decreasing the potential number of buyers for the Company's products and services. Consolidation in the industry may put at risk the Company's ability to leverage its existing relationships. Should this consolidation result in a concentration of cable television customer accounts being owned by companies with whom the Company does not have a relationship, or with whom competitors are entrenched, it could negatively effect the Company's ability to maintain or expand its market share, thereby adversely effecting the results of operations. NEW PRODUCTS AND RAPID TECHNOLOGICAL CHANGE - ------------------------------------------- The market for customer care and billing systems is characterized by rapid changes in technology and is highly competitive with respect to the need for timely product innovations and new product introductions. The Company believes that its future success in sustaining and growing the annual revenue per customer account depends upon continued market acceptance of its current products, including CCS and related products and services, and its ability to enhance its current products and develop new products that address the increasingly complex and evolving needs of its clients. Substantial research and development will be required to maintain the competitiveness of the Company's products and services in the market. Development projects can be lengthy and costly, and are subject to changing requirements, programming difficulties, a shortage of qualified personnel, and unforeseen factors which can result in delays. There can be no assurance of continued market acceptance of the Company's current products or that the Company will be successful in the timely development of product enhancements or new products that respond to technological advances or changing client needs. Also, the introduction and consumer acceptance of billing statements that are presented and paid electronically over the Internet may happen more rapidly than the Company anticipates. If electronic bill presentation and payment proliferates and the Company is unable to respond with a solution quickly, such failure could have a material adverse effect on the Company's results of operations. CONVERGING COMMUNICATIONS MARKETS - --------------------------------- The Company's growth strategy is based in large part on the continuing convergence and growth of the cable television, DBS, telecommunications, and on-line services markets. If these markets fail to converge, grow more slowly than anticipated, or if providers in the converging markets do not accept the Company's solution for presenting multiple communications services on a single bill, there could be a material adverse effect on the Company's growth. COMPETITION - ----------- The market for the Company's products and services is highly competitive. The Company directly competes with both independent providers of products and services and in-house systems developed by existing and potential clients. Many of the Company's current and potential competitors have significantly greater financial, marketing, technical, and other competitive resources than the Company, and many already have significant international operations. There can be no assurance that the Company will be able to compete successfully with its existing competitors or with new competitors. ATTRACTION AND RETENTION OF PERSONNEL - ------------------------------------- The Company's future success depends in large part on the continued service of its key management, sales, product development, and operational personnel. The Company is particularly dependent on its executive officers. The Company believes that its future success also depends on its ability to attract and retain highly skilled technical, managerial, and marketing personnel, including, in particular, additional personnel in the areas of research and development and technical support. Competition for qualified personnel is intense, particularly in the areas of research and development and technical support. The Company may not be successful in attracting and retaining the personnel it requires, which would adversely effect the Company's ability to meet its commitments and new product delivery objectives. VARIABILITY OF QUARTERLY RESULTS - -------------------------------- The Company's quarterly revenues and results, particularly relating to software and professional services, may fluctuate depending on various factors, including the timing of executed contracts and the delivery of contracted services or products, the cancellation of the Company's services and products by existing or new clients, the hiring of additional staff, new product development and other expenses, and changes in sales commission policies. No assurance can be given that results will not vary due to these factors. Fluctuations in quarterly results may result in volatility in the market price of the Company's Common Stock. DEPENDENCE ON PROPRIETARY TECHNOLOGY - ------------------------------------ The Company relies on a combination of trade secret and copyright laws, nondisclosure agreements, and other contractual and technical measures to protect its proprietary rights in its products. The Company also holds a limited number of patents on some of its newer products, and does not rely upon patents as a primary means of protecting its rights in its intellectual property. There can be no assurance that these provisions will be adequate to protect its proprietary rights. Although the Company believes that its intellectual property rights do not infringe upon the proprietary rights of third parties, there can be no assurance that third parties will not assert infringement claims against the Company or the Company's clients. INTERNATIONAL OPERATIONS - ------------------------ The Company's business strategy includes a commitment to the marketing of its products and services internationally, and the Company has acquired and established operations outside of the U.S. The Company is subject to certain inherent risks associated with operating internationally. Risks include product development to meet local requirements such as the conversion to EURO currency, difficulties in staffing and management, reliance on independent distributors or strategic alliance partners, fluctuations in foreign currency exchange rates, compliance with foreign regulatory requirements, variability of foreign economic conditions, changing restrictions imposed by U.S. export laws, and competition from U.S.-based companies which have firmly established significant international operations. There can be no assurance that the Company will be able to manage successfully the risks related to selling its products and services in international markets. INTEGRATION OF ACQUISITIONS - --------------------------- As part of its growth strategy, the Company seeks to acquire assets, technology, and businesses which would provide the technology and technical personnel to expedite the Company's product development efforts, provide complementary products or services or provide access to new markets and clients. Acquisitions involve a number of risks and difficulties, including expansion into new geographic markets and business areas, the requirement to understand local business practices, the diversion of management's attention to the assimilation of acquired operations and personnel, potential adverse short-term effects on the Company's operating results, and the amortization of acquired intangible assets. YEAR 2000 - --------- The Company's business is dependent upon various computer software programs and operating systems that utilize dates and process data beyond the year 2000. If the actions taken by the Company to mitigate its risks associated with the year 2000 are inadequate, there could be a material adverse effect on the financial condition and results of operations of the Company. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional discussion of the Company's efforts to address the year 2000 risks. RELATIONSHIP WITH FIRST DATA CORPORATION - ---------------------------------------- The Company has entered into a data processing services agreement with FDC. The Company is dependent upon FDC to perform these services for the operation of CCS. The inability of FDC to perform these services satisfactorily could have a material adverse effect on the financial condition and results of operations of the Company. The existing agreement is scheduled to expire in December 2001. -----END PRIVACY-ENHANCED MESSAGE-----