-----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, FsXP1tgZOaSRhf5l8PuMNkzzMfyNyatwvz4xnoT0RYjsjRLtTKItAK0JjxTOh2DU 6h/sSBMg7l1ipG7cppe5Ew== 0000912057-02-042051.txt : 20021112 0000912057-02-042051.hdr.sgml : 20021111 20021112165011 ACCESSION NUMBER: 0000912057-02-042051 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STARTEK INC CENTRAL INDEX KEY: 0001031029 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 841370538 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12793 FILM NUMBER: 02817660 BUSINESS ADDRESS: STREET 1: 100 GARFIELD STREET CITY: DENVER STATE: CO ZIP: 80206 BUSINESS PHONE: 3033616000 MAIL ADDRESS: STREET 1: 100 GARFIELD STREET CITY: DENVER STATE: CO ZIP: 80206 10-Q 1 a2093268z10-q.htm 10-Q

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STARTEK, INC. FORM 10-Q INDEX

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2002.
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO .

Commission File Number 1-12793

STARTEK, INC.
(Exact name of Registrant as specified in its charter)

DELAWARE		84-1370538
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

100 Garfield Street
Denver, Colorado 80206
(Address of principal executive offices)
(Zip Code)

(303) 361-6000
(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 ý No o

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.

Common Stock, $.01 Par Value—14,185,361 shares as of November 7, 2002.

STARTEK, INC.
FORM 10-Q
INDEX


PART I.		FINANCIAL INFORMATION
Item 1.		Financial Statements (unaudited)
		Condensed Consolidated Balance Sheets - December 31, 2001 and September 30, 2002
		Condensed Consolidated Income Statements - Three months ended September 30, 2001 and 2002 Nine months ended September 30, 2001 and 2002
		Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 2001 and 2002
		Notes to Condensed Consolidated Financial Statements
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.		Quantitative and Qualitative Disclosure About Market Risk
Item 4.		Controls and Procedures
PART II.		OTHER INFORMATION
Item 6.		Exhibits and Reports on Form 8-K
SIGNATURES
CERTIFICATIONS

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

STARTEK, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(dollars in thousands)

		December 31, 2001			September 30, 2002
ASSETS
Current assets:
	Cash and cash equivalents	$	14,282		$	15,682
	Investments		35,804			41,777
	Trade accounts receivable, less allowance for doubtful accounts of $789 and $810, respectively		26,185			26,924
	Inventories		2,614			2,078
	Income tax receivable		—			336
	Deferred tax assets		3,394			5,199
	Prepaid expenses and other assets		1,274			809

Total current assets			83,553			92,805
Property, plant and equipment, net			42,017			38,738
Long-term deferred tax assets			3,533			471
Other assets			50			112

Total assets		$	129,153		$	132,126

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable	$	11,978		$	8,323
	Accrued liabilities		6,357			8,176
	Income taxes payable		2,192			—
	Current portion of long-term debt		3,605			2,451
	Other		292			437

Total current liabilities			24,424			19,387
Long-term debt, less current portion			8,201			5,130
Other			919			550
Stockholders' equity:
	Common stock		141			142
	Additional paid-in capital		48,002			49,889
	Cumulative translation adjustment		(431	)		(176	)
	Unrealized loss on investments available for sale		(2,190	)		(5,385	)
	Retained earnings		50,087			62,589

Total stockholders' equity			95,609			107,059

Total liabilities and stockholders' equity		$	129,153		$	132,126

See notes to condensed consolidated financial statements.

STARTEK, INC. AND SUBSIDIARIES
Condensed Consolidated Income Statements
(dollars in thousands, except per share data)
(unaudited)

		Three Months Ended September 30,				Nine Months Ended September 30,
		2001		2002		2001			2002
Revenues		$	42,893	$	52,095	$	117,668		$	141,406
Cost of services			32,715		39,016		88,362			106,030

Gross profit			10,178		13,079		29,306			35,376
Selling, general and administrative expenses			6,110		5,834		18,123			16,133

Operating profit			4,068		7,245		11,183			19,243
Net interest income and other			257		47		3,521			1,013
Loss on impaired investment			—		—		(3,040	)		—

Income before income taxes			4,325		7,292		11,664			20,256
Income tax expense			1,650		2,786		4,409			7,754

Net income (A)		$	2,675	$	4,506	$	7,255		$	12,502

Weighted average shares of common stock (B)			14,061,337		14,168,463		14,043,685			14,124,884
Dilutive effect of stock options			277,076		227,991		129,334			237,192

Common stock and common stock equivalents (C)			14,338,413		14,396,454		14,173,019			14,362,076

Earnings per share:
	Basic (A/B)	$	0.19	$	0.32	$	0.52		$	0.89
	Diluted (A/C)	$	0.19	$	0.31	$	0.51		$	0.87

See notes to condensed consolidated financial statements.

STARTEK, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)

			Nine months Ended September 30,
			2001			2002
Operating Activities
Net income			$	7,255		$	12,502
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization			4,732			6,882
	Deferred income taxes			1,684			3,072
	Loss on sale of assets			—			2
	Loss on investment impairment			3,040			—
	Changes in operating assets and liabilities:
		Sales of trading securities, net		7,823			1,856
		Trade accounts receivable, net		(3,904	)		(739	)
		Inventories		(4,126	)		536
		Prepaid expenses and other assets		(193	)		403
		Accounts payable		6,075			(3,655	)
		Income taxes payable		(2,788	)		(2,171	)
		Accrued and other liabilities		1,624			1,595

Net cash provided by operating activities				21,222			20,283
Investing Activities
Purchases of investments available for sale				(19,270	)		(31,785	)
Proceeds from disposition of investments available for sale				6,518			18,803
Purchases of property, plant and equipment				(16,006	)		(3,495	)
Proceeds from disposition of property plant and equipment				1			38

Net cash used in investing activities				(28,757	)		(16,439	)
Financing Activities
Stock options exercised				908			1,531
Principal payments on borrowings, net				(5,899	)		(4,295	)

Net cash used in financing activities				(4,991	)		(2,764	)
Effect of exchange rate changes on cash				(473	)		320

Net decrease in cash and cash equivalents				(12,999	)		1,400
Cash and cash equivalents at beginning of period				22,543			14,282

Cash and cash equivalents at end of period			$	9,544		$	15,682

Supplemental Disclosure of Cash Flow Information
Cash paid for interest			$	255		$	341
Income taxes paid			$	6,291		$	6,601
Change in unrealized loss on investments available for sale, net of tax			$	434		$	(3,195	)

See notes to condensed consolidated financial statements.

STARTEK, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In management's opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results during the three and nine months ended September 30, 2002 are not necessarily indicative of operating results that may be expected for the full year or any other interim period.

The condensed consolidated balance sheet as of December 31, 2001 was derived from audited financial statements, but does not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. For further information, refer to consolidated financial statements and footnotes thereto included in StarTek, Inc.'s annual report on Form 10-K for the year ended December 31, 2001.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 141 also includes guidance on the initial recognition and measurement of goodwill and other intangible assets arising from business combinations completed after June 30, 2001. SFAS No. 142 prohibits the amortization of goodwill and intangible assets with indefinite useful lives. SFAS No. 142 requires that these assets be reviewed for impairment at least annually. Intangible assets with finite lives will continue to be amortized over their estimated useful lives. The Company adopted SFAS No. 141 and No. 142 on January 1, 2002, and the adoption of these statements did not result in any material impact.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations". SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and associated asset retirement costs. The Company will adopt SFAS No. 143 in the first quarter of fiscal year 2003. The Company believes the adoption of SFAS No. 143 will not have a material impact on the Company

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which establishes one accounting model to be used for long-lived assets to be disposed of by sale and broadens the presentation of discontinued operations to include more disposal transactions. SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets to Be Disposed Of", and the accounting and reporting provisions of Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions". The Company adopted SFAS No. 144 on January 1, 2002 and the adoption of this statement did not result in any material impact.

2. Earnings Per Share

Basic earnings per share is computed based on weighted average number of common shares outstanding. Diluted earnings per share is computed based on weighted average number of common shares outstanding plus effects of outstanding stock options using the "treasury stock" method.

3. Loss on Impaired Investment

In January 2001, the Company purchased an investment in Six Sigma, LLC ("Six Sigma"). Six Sigma provided its audited financial statements, which included an unqualified independent auditors' opinion. The purpose of Six Sigma was to provide revolving platform financing to its customer, a national mortgage company ("Mortgage Company") and all advances were to be secured by first mortgages or deeds of trust on residential properties located in 47 different states. Six Sigma was to receive interest from the Mortgage Company and a portion of the loan origination fees. Subsequently, a federal court placed the Mortgage Company into receivership based on allegations by the Securities and Exchange Commission that the president of the Mortgage Company had misappropriated large amounts of funds. The concurrent default on the line of credit extended by Six Sigma to the Mortgage Company triggered a bankruptcy filing by Six Sigma. Based on the limited information available to the Company, the Company believed its investment in Six Sigma had been impaired, and in the quarter ended March 31, 2001, took a charge for a loss on the entire investment balance of $3,000 and accrued interest and fees of $40.

4. Investments

As of December 31, 2001, investments available for sale consisted of:

	Basis		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Corporate bonds	$	13,478	$	375	$	(816	)	$	13,037
Equity securities		17,409		293		(3,414	)		14,288

Total	$	30,887	$	668	$	(4,230	)	$	27,325

As of September 30, 2002, investments available for sale consisted of:

	Basis		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Corporate bonds	$	19,202	$	113	$	(1,107	)	$	18,208
Equity securities		24,666		54		(7,774	)		16,946

Total	$	43,868	$	167	$	(8,881	)	$	35,154

As of September 30, 2002, amortized costs and estimated fair values of investments available for sale by contractual maturity were:

		Basis		Estimated Fair Value
Corporate bonds maturing within:
	One year or less	$	10,298	$	9,995
	Two to five years		8,904		8,213

			19,202		18,208
Equity securities			24,666		16,946

Total		$	43,868	$	35,134

Equity securities primarily consisted of publicly traded common stock of US based companies, exchange-traded funds, equity mutual funds, and real estate investment trusts.

As of December 31, 2001, the Company was invested in trading securities, which, in the aggregate, had an original cost and fair market value of $8,344 and $8,479, respectively. As of September 30, 2002, the Company was invested in trading securities, which, in the aggregate, had an original cost and fair market value of $6,920 and $6,623, respectively. Trading securities consisted primarily of US and international mutual funds and investments in limited partnerships. Certain investments include hedging and derivative securities. Trading securities were held to meet short-term investment objectives. As part of trading securities and as of September 30, 2002, the Company had sold put options for a total of 146,000 shares of US equity securities which, in the aggregate, had a basis and fair market value of $110 and $127, respectively. The foregoing put options were reported net as components of trading securities and expire between October 19, 2002 and November 16, 2002.

Risk of loss to the Company regarding its current investments in the event of nonperformance by any party is not considered substantial. The foregoing put options may involve elements of credit and market risks in excess of the amounts recognized in the Company's financial statements. A substantial decline and/or change in value of equity securities, equity prices in general, international equity mutual funds, investment limited partnerships, and/or call and put options could have a material adverse effect on the Company's portfolio of trading securities. Also, trading securities could be materially and adversely affected by increasing interest and/or inflation rates or market expectations thereon, poor management, shrinking product demand, and other risks that may affect single companies, as well as groups of companies.

5. Inventories

The Company purchases components of its clients' products as an integral part of its supply chain management services. At the close of an accounting period, packaged and assembled products (together with other associated costs) are reflected as finished goods inventories pending shipment. The Company generally has the right to be reimbursed from its clients for unused inventories. Client-owned inventories are not valued in the Company's balance sheet. Inventories consisted of:

	December 31, 2001		September 30, 2002
Purchased components and fabricated assemblies	$	1,903	$	1,210
Finished goods		711		868

Total	$	2,614	$	2,078

6. Principal Clients

The following table represents revenue concentrations of the Company's principal clients:

	Three months ended September 30,				Nine months ended September 30,
	2001		2002		2001		2002
Microsoft Corp.	41.3	%	35.6	%	47.0	%	31.0	%
AT&T Wireless Services, Inc.	20.7	%	25.9	%	20.2	%	26.7	%
AT&T Corp.	11.1	%	13.2	%	12.2	%	14.5	%
Deutsche Telekom, AG	12.1	%	12.6	%	*		12.9	%

*: Represents less than 10% of total revenue.

The loss of a principal client and/or changes in timing or termination of a principal client's product launch or service offering would have a material adverse effect on the Company's business, revenues, operating results, and financial condition. To limit the Company's credit risk, management performs ongoing credit evaluations of its clients. Although the Company is directly impacted by economic conditions in which its clients operate, management does not believe substantial credit risk existed as of September 30, 2002.

7. Comprehensive Income

Financial Accounting Standards Board Statement No. 130, "Reporting Comprehensive Income", establishes standards for reporting and display of comprehensive income. Comprehensive income is defined essentially as all changes in stockholders' equity, exclusive of transactions with owners. Comprehensive income was $38 and $3,055 for the three months ended September 30, 2001 and 2002, respectively. Comprehensive income was $3,628 and $9,562 for the nine months ended September 30, 2001 and 2002, respectively.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

All statements contained in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" or elsewhere in this Form 10-Q which are not statements of historical facts are forward-looking statements that involve substantial risks and uncertainties. Forward-looking statements are preceded by terms such as "may", "will", "should", "anticipates", "expects", "believes", "plans", "future", "estimate", "continue", and similar expressions. The following are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, inflation and general economic conditions in the Company's and its clients' markets, risks associated with the Company's reliance on principal clients, loss or delayed implementation of a large project or service offering for a principal client, which could cause substantial quarterly variation in the Company's revenues and earnings, difficulties in managing rapid growth, risks associated with rapidly changing technology, dependence on labor force, risks associated with international operations and expansion, control by principal stockholders, dependence on key personnel, dependence on key industries and trends toward outsourcing, risks associated with the Company's contracts, highly competitive markets, risks of business interruptions, volatility of the Company's stock price, risks related to the Company's Internet web site operations, risks related to the Company's portfolio of Internet domain names, and risks related to changes in valuation of the Company's investments. These factors include risks and uncertainties beyond the Company's ability to control; and, in many cases, the Company and its management cannot predict the risks and uncertainties that could cause actual results to differ materially from those indicated by use of forward-looking statements. Similarly, it is impossible for management to foresee or identify all such factors. As such, investors should not consider the foregoing list to be an exhaustive statement of all risks, uncertainties, or potentially inaccurate assumptions. All forward-looking statements herein are made as of the date hereof, and the Company undertakes no obligation to update any such forward-looking statements. All forward-looking statements herein are qualified in their entirety by information set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations"—"Factors That May Affect Future Results" section of the Company's annual report on Form 10-K for the year ended December 31, 2001.

The following table sets forth certain unaudited condensed consolidated income statement data expressed as a percentage of revenues:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2001		2002		2001		2002
Revenues	100.0	%	100.0	%	100.0	%	100.0	%
Cost of services	76.3		74.9		75.1		75.0

Gross profit	23.7		25.1		24.9		25.0
Selling, general and administrative expenses	14.2		11.2		15.4		11.4

Operating profit	9.5		13.9		9.5		13.6
Net interest income and other	0.6		0.1		3.0		0.7
Loss on impaired investment	—		—		(2.6	)	—

Income before income taxes	10.1		14.0		9.9		14.3
Income tax expense	3.8		5.3		3.8		5.5

Net income	6.3	%	8.7	%	6.1	%	8.8	%

Three Months Ended September 30, 2002 Compared to Three Months Ended September 30, 2001

Revenues. Revenues increased $9.2 million, or 21.5%, from $42.9 million to $52.1 million during the three months ended September 30, 2001 and 2002, respectively. Growth in technical support services provided 50% of the increase. Supply chain management and provisioning management services also increased substantially.

Cost of Services. Cost of services increased $6.3 million, or 19.3%, from $32.7 million to $39.0 million during the three months ended September 30, 2001 and 2002, respectively. As a percentage of revenues, cost of services was 76.3% and 74.9% during the three months ended September 30, 2001 and 2002, respectively. This percentage amount declined primarily as a result of changes in the mix of services provided, partially offset by a shift in managers to operations, which results in additional cost of services but a decrease in selling, general and administrative expense.

Gross Profit. Due to the foregoing factors, gross profit increased $2.9 million, or 28.5%, from $10.2 million to $13.1 million during the three months ended September 30, 2001 and 2002, respectively. As a percentage of revenues, gross profit was 23.7% and 25.1% during the three months ended September 30, 2001 and 2002, respectively.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $0.3 million, or 4.5%, from $6.1 million to $5.8 million during the three months ended September 30, 2001 and 2002, respectively. As a percentage of revenues, selling, general and administrative expenses were 14.2% and 11.2% during the three months ended September 30, 2001 and 2002, respectively. The decrease in selling, general and administrative expenses as a percentage of revenue and by $0.3 million was primarily due to a shift in managers to operations and the attendant shift in costs from selling, general and administrative expense to cost of services, but was partially offset by the hiring of senior level management, which the Company has substantially completed.

Operating Profit. As a result of the foregoing factors, operating profit increased from $4.1 million to $7.2 million during the three months ended September 30, 2001 and 2002, respectively. As a percentage of revenues, operating profit was 9.5% and 13.9% during the three months ended September 30, 2001 and 2002, respectively.

Net Interest Income and Other. Net interest income and other decreased $0.2 million, or 81.7% from $0.3 million to $47,000 during the three months ended September 30, 2001 and 2002, respectively. Substantially all net interest income and other continues to be derived from cash equivalents and investment balances, partially offset by interest expense incurred as a result of the Company's various debt and lease arrangements. The decrease is the result of the weakened economy and lower interest rates.

Income Before Income Taxes. As a result of the foregoing factors, income before income taxes increased $3.0 million, or 68.6%, from $4.3 million to $7.3 million during the three months ended September 30, 2001 and 2002, respectively. As a percentage of revenues, income before income taxes increased from 10.1% to 14.0% during the three months ended September 30, 2001 and 2002, respectively.

Income Tax Expense. Income tax expense during the three months ended September 30, 2001 and 2002 reflects a provision for federal, state, and foreign income taxes at an effective rate of 38.2% for both periods.

Net Income. Based on the factors discussed above, net income increased $1.8 million, or 68.4%, from $2.7 million to $4.5 million during the three months ended September 30, 2001 and 2002, respectively.

Nine Months Ended September 30, 2002 Compared to Nine Months Ended September 30, 2001

Revenues. Revenues increased $23.7 million, or 20.2%, from $117.7 million to $141.4 million during the nine months ended September 30, 2001 and 2002, respectively. This increase was largely due to increased revenue from technical support services, together with an increase in provisioning management and a decrease in supply chain management services.

Microsoft's European contract with the Company was not renewed when it expired on June 30, 2002. While this negatively impacted revenues in the second quarter due to the ramp-down schedule, and in the third quarter due to the loss of the contract, operating profits have not been, and are not expected to be, materially adversely affected because of the low operating margins of this revenue. Management has adjusted personnel levels and infrastructure accordingly.

Cost of Services. Cost of services increased $17.7 million, or 20.0%, from $88.4 million to $106.0 million during the nine months ended September 30, 2001 and 2002, respectively. As a percentage of revenues, cost of services was 75.1% and 75.0% during the nine months ended September 30, 2001 and 2002, respectively. This percentage decrease was primarily due to changes in the mix of services provided, partially offset by a shift in managers to operations, which results in additional cost of services but a decrease in selling, general and administrative expense.

Gross Profit. Due to the foregoing factors, gross profit increased $6.0 million, or 20.7%, from $29.3 million to $35.4 million during the nine months ended September 30, 2001 and 2002, respectively. As a percentage of revenues, gross profit was 24.9% and 25.0% during the nine months ended September 30, 2001 and 2002, respectively.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $2.0 million, or 11.0%, from $18.1 million to $16.1 million during the nine months ended September 30, 2001 and 2002, respectively. As a percentage of revenues, selling, general and administrative expenses were 15.4% and 11.4% during the nine months ended September 30, 2001 and 2002, respectively. The decrease in selling, general and administrative expenses as a percentage of revenue and by $2.0 million was primarily due to a shift in managers to operations and the attendant shift in costs from selling, general and administrative expense to cost of services, but was partially offset by the hiring of senior level management, which the Company has substantially completed.

Operating Profit. As a result of the foregoing factors, operating profit increased from $11.2 million to $19.2 million during the nine months ended September 30, 2001 and 2002, respectively. As a percentage of revenues, operating profit was 9.5% and 13.6% during the nine months ended September 30, 2001 and 2002, respectively.

Net Interest Income and Other. Net interest income and other decreased $2.5 million, or 71.2%, from $3.5 million to $1.0 million during the nine months ended September 30, 2001 and 2002, respectively. Substantially all net interest income and other continues to be derived from cash equivalents and investment balances, partially offset by interest expense incurred as a result of the Company's various debt and lease arrangements. The decrease is the result of the weakened economy and lower interest rates.

Loss on Impaired Investment. In January 2001, the Company purchased an investment in Six Sigma, LLC ("Six Sigma"). Six Sigma provided its audited financial statements, which included an unqualified independent auditors' opinion. The purpose of Six Sigma was to provide revolving platform financing to its customer, a national mortgage company ("Mortgage Company") and all advances were to be secured by first mortgages or deeds of trust on residential properties located in 47 different states. Six Sigma was to receive interest from the Mortgage Company and a portion of the loan origination fees. Subsequently, a federal court placed the Mortgage Company into receivership based on allegations by the Securities and Exchange Commission that the president of the Mortgage

Company had misappropriated large amounts of funds. The concurrent default on the line of credit extended by Six Sigma to the Mortgage Company triggered a bankruptcy filing by Six Sigma. Based on the limited information available to the Company, the Company believed it to be probable that its investment in Six Sigma had been impaired, and in the quarter ended March 31, 2001, took a charge for a loss on the entire investment balance of $3.0 million and accrued interest and fees of $0.04 million.

Income Before Income Taxes. As a result of the foregoing factors, income before income taxes increased $8.6 million, or 73.7%, from $11.7 million to $20.3 million during the nine months ended September 30, 2001 and 2002, respectively. As a percentage of revenues, income before income taxes increased from 9.9% to 14.3% during the nine months ended September 30, 2001 and 2002, respectively.

Income Tax Expense. Income tax expense during the nine months ended September 30, 2001 and 2002 reflects a provision for federal, state, and foreign income taxes at an effective rate of 37.8% and 38.3%, respectively.

Net Income. Based on the factors discussed above, net income increased $5.2 million, or 72.3%, from $7.3 million to $12.5 million during the nine months ended September 30, 2001 and 2002, respectively.

Liquidity and Capital Resources

Since its initial public offering, the Company has primarily financed its operations, liquidity requirements, capital expenditures, and capacity expansion through cash flows from operations, and to a lesser degree, through various forms of debt and leasing arrangements.

The Company maintains a $10.0 million unsecured line of credit with Wells Fargo Bank West, N.A. (the "Bank"). Borrowings under the line of credit bear interest at the Bank's prime rate minus 1% (3.75% as of September 30, 2002). Under this line of credit, the Company is required to maintain minimum tangible net worth of $65.0 million and operate at a profit. The Company may not pay dividends in an amount that would cause a failure to meet these financial covenants. As of September 30, 2002 and the date of this Form 10-Q, the Company was in compliance with the financial covenants, and $10 million was available under this line of credit.

As of September 30, 2002, the Company had cash, cash equivalents, and investment balances of $57.5 million, working capital of $73.4 million, and stockholders' equity of $107.1 million. Cash and cash equivalents are not restricted. See "Quantitative and Qualitative Disclosure About Market Risk" set forth herein for further discussions regarding the Company's cash, cash equivalents, investments available for sale, and trading securities.

Net cash provided by operating activities was relatively constant at $21.2 million and $20.3 million for the nine months ended September 30, 2001 and 2002, respectively. The increases in net income and accounts receivable and decrease in inventory are offset by decreases in accounts payable and net sales of trading securities.

Net cash used in investing activities was $28.8 million and $16.4 million for the nine months ended September 30, 2001 and 2002, respectively. This decrease was primarily due to a decrease in purchases of property, plant, and equipment, partially offset by a net increase in investments available for sale.

Net cash used in financing activities was $5.0 million and $2.8 million for the nine months ended September 30, 2001 and 2002, respectively. Financing activities during both periods consisted of principal payments on borrowings, partially offset by proceeds from exercises of employee stock options.

The effect of currency exchange rate changes on translation of the Company's United Kingdom and Canada operations was not substantial during the nine months ended September 30, 2002. Terms of the Company's agreements with clients and subcontractors are typically in US dollars except for certain agreements related to its United Kingdom and Canada operations. If the international portion of the Company's business grows, more revenues and expenses will be denominated in foreign currencies, which increases the Company's exposure to fluctuations in currency exchange rates. See "Quantitative and Qualitative Disclosure About Market Risk" set forth herein for a further discussion of the Company's exposure to foreign currency exchange risks in connection with its investments.

Management believes the Company's cash, cash equivalents, investments, anticipated cash flows from future operations, and $10.0 million line of credit will be sufficient to support its operations, capital expenditures, and various repayment obligations under its debt and lease agreements for the foreseeable future. Liquidity and capital requirements depend on many factors, including, but not limited to, the Company's ability to retain or successfully and timely replace its principal clients and the rate at which the Company expands its business, whether internally or through acquisitions and strategic alliances. To the extent funds generated from sources described above are insufficient to support the Company's activities in the short or long-term, the Company will be required to raise additional funds through public or private financing. No assurance can be given that additional financing will be available, or if available, it will be available on terms favorable to the Company.

Contractual Obligations (in thousands)

The following table summarizes, as of September 30, 2002, our obligations to make future payments under contractual commitments:

	Less than one year		One to three Years		Four to five Years		After five years		Total
Long-term debt(1)	$	2,451	$	3,761	$	391	$	978	$	7,581
Operating leases(2)		1,089		1,639		1,227		1,134		5,089

Total Contractual Obligations	$	3,540	$	5,400	$	1,618	$	2,112	$	12,670

(1): Long-term debt consists of fixed rate equipment loans ranging from 5.0% to 7.0%, variable rate equipment loans, non-interest bearing promissory notes, and other debt obligations.
(2): The Company leases facilities and equipment under various non-cancelable operating leases.

Critical Accounting Policies and Judgments

The Company recognizes revenues as process management services are completed. The Company's cost of services includes labor, telecommunications, materials, and freight expenses that are variable in nature, and certain facility expenses. All other operating expenses, including expenses related to technology support, sales and marketing, human resources, and other administrative functions not allocable to specific client services, are included in selling, general and administrative expenses, which generally tend to be either semi-variable or fixed in nature.

As part of cash management, the Company invests in corporate bonds, bond mutual funds, international mutual funds, limited partnerships, real estate investment trusts, and various forms of equity securities. Investments are classified as trading securities and investments available for sale based on the Company's intent at the date of purchase. Trading securities are bought and held principally for the purpose of selling them in the near term. Debt securities that the Company has both the positive intent and ability to hold to maturity are classified as held to maturity. The Company currently has no investments in this classification. All other investments not deemed to be trading securities or held to maturity are classified as investments available for sale. Trading securities and investments available for

sale are carried at fair market values. Fair market values are determined by the most recently traded price of the security or underlying investment at the balance sheet date. Due to the potential limited liquidity of some of these instruments, the most recently traded price may be different from the value that might be realized if the Company were to sell or close out the transactions. Such differences are not considered significant to the Company's results of operations, financial condition or liquidity. Changes in the fair market value of trading securities are reflected on the income statement. Changes in the fair market value of investments held for sale are reflected in stockholders' equity. The Company exercises judgment in evaluating permanent impairment of investments available for sale and recognizes any such impairment on the income statement.

In preparing its financial statements, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates its estimates and judgments on an ongoing basis, including those related to bad debts, inventory valuations, property, plant and equipment, intangible assets, income taxes, restructuring costs, contingences, and litigation. The Company bases its estimates and judgments on historical experience and on various other factors that management believes to be reasonable under the circumstances. Actual results may differ from these estimates.

The Company exercises judgment in evaluating its long-lived assets for impairment. Management believes the Company's businesses will generate sufficient undiscounted cash flow to more than recover the investments it has made in property, plant and equipment.

New Accounting Pronouncements

Inflation and General Economic Conditions

Although management cannot accurately anticipate effects of domestic and foreign inflation on the Company's operations, management does not believe inflation has had, or is likely in the foreseeable future to have, a material adverse effect on the Company's results of operations or financial condition.

Reliance on Principal Client Relationships

The following table represents revenue concentrations of the Company's principal clients:

	Three months ended September 30,				Nine months ended September 30,
	2001		2002		2001		2002
Microsoft Corp.	41.3	%	35.6	%	47.0	%	31.0	%
AT&T Wireless Services, Inc.	20.7	%	25.9	%	20.2	%	26.7	%
AT&T Corp.	11.1	%	13.2	%	12.2	%	14.5	%
Deutsche Telekom, AG	12.1	%	12.6	%	*		12.9	%

*: Represents less than 10% of total revenue.

The loss of a principal client and/or changes in timing or termination of a principal client's product launch or service offering would have a material adverse effect on the Company's business, revenues, operating results, and financial condition. There can be no assurance the Company will be able to retain its principal clients or, if it were to lose any of its principal clients, would be able to timely replace the revenue generated by the lost clients. Additionally, the amount and growth rate of revenues derived from the Company's principal clients in the past is not necessarily indicative of revenues that may be expected from such clients in the future.

Variability of Quarterly Operating Results

The Company's business is seasonal and is at times conducted in support of product launches for new and existing clients. Historically, the Company's revenues have been substantially lower in the quarters preceding the fourth quarter due to timing of its clients' marketing programs and product launches, which are typically geared toward the holiday buying season. However, the Company's revenues and operating results for the three and nine months ended September 30, 2002 are not necessarily indicative of revenues or operating results that may be experienced in future periods. Additionally, the Company has experienced and expects to continue to experience, quarterly variations in revenues and operating results as a result of a variety of factors, many of which are outside the Company's control, including: (i) timing of existing and future client product launches or service offerings; (ii) expiration or termination of client projects; (iii) timing and amount of costs incurred to expand capacity in order to provide for further revenue growth from existing and future clients; (iv) seasonal nature of certain clients' businesses; (v) cyclical nature of certain high technology clients' businesses; and (vi) changes in the amount and growth rate of revenues generated from the Company's principal clients.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

The following discusses the Company's exposure to market risks related to changes in interest rates and other general market risks, equity market prices and other general market risks, and foreign currency exchange rates as of September 30, 2002. All of the Company's investment decisions are supervised or managed by its Chairman of the Board. The Company's investment portfolio policy, approved by the Board of Directors during 1999, provides for, among other things, investment objectives and portfolio allocation guidelines. This discussion contains forward-looking statements subject to risks and uncertainties. Actual results could vary materially as a result of a number of factors, including but not limited to, changes in interest and inflation rates or market expectations thereon, equity market prices, foreign currency exchange rates, and those set forth in the "Management's Discussion and Analysis of Financial Condition and Results of Operations"—"Factors That May Affect Future Results" section of the Company's annual report on Form 10-K for the year ended December 31, 2001.

Interest Rate Sensitivity and Other General Market Risks

Cash and Cash Equivalents. The Company had $15.7 million in cash and cash equivalents, which consisted of: (i) $15.4 million invested in various money market funds and overnight investments at a combined weighted average interest rate of approximately 1.64%; and (ii) $0.3 million in various non-interest bearing accounts. Cash and cash equivalents are not restricted. Management considers cash equivalents to be short-term, highly liquid investments readily convertible to known amounts of cash, and so near their maturity they present insignificant risk of changes in value because of changes in interest rates. The Company does not expect any substantial loss with respect to its cash and cash equivalents as a result of interest rate changes, and estimated fair value of its cash and cash equivalents approximates original cost.

Investments Available for Sale. The Company had investments available for sale, which, in the aggregate, had a basis and fair market value of $43.9 million and $35.2 million, respectively. Investments available for sale generally consisted of corporate bonds, bond mutual funds, and various forms of equity securities. The Company's investment portfolio is subject to interest and inflation rate risks and will fall in value if interest and/or inflation rates or market expectations thereon increase.

Fair market value of and estimated cash flows from the Company's investments in corporate bonds are substantially dependent upon credit worthiness of certain corporations expected to repay their debts to the Company. If such corporations' financial condition and liquidity adversely changes, the Company's investments in their debts can be expected to be materially and adversely affected.

The table below provides information as of September 30, 2002 about maturity dates and corresponding weighted average interest rates related to certain of the Company's investments available for sale:

			Expected Maturity Date —Cost—
	Weighted Average Interest Rates		Expected Maturity Date —Cost—
	Weighted Average Interest Rates		< 1 year		2 years		3 years		4 years		5 years		Thereafter		Total		Fair Value
	(dollars in thousands)
Corporate bonds	6.28	%	$	10,298											$	10,298	$	9,995
Corporate bonds	6.36	%			$	2,233										2,233		1,556
Corporate bonds	9.67	%					$	3,832								3,832		3,803
Corporate bonds	6.69	%									$	2,839				2,839		2,854

Total	7.03	%	$	10,298	$	2,233	$	3,832	$	—	$	2,839	$	—	$	19,202	$	18,208

Management believes the Company has the ability to hold the foregoing investments until maturity, and therefore, if held to maturity, the Company would not expect the future proceeds from these investments to be affected, to any significant degree, by the effect of a sudden change in market interest rates. Declines in interest rates over time will, however, reduce the Company's interest income derived from future investments.

As part of its investments available for sale portfolio, the Company was invested in equity securities that, in aggregate, had a basis and fair market value of $24.7 million and $16.9 million, respectively.

Outstanding Debt of the Company. As of September 30, 2002, the Company had outstanding debt of $7.6 million, $1.0 million of which bears no interest as long as the Company complies with the terms of the debt arrangement.

The following table provides information as of September 30, 2002 about loans entered into by the Company that are secured by the equipment purchased with the loan proceeds:

Loan date	Term	Interest rate	Outstanding	Covenants/Penalties
10/26/98	48 months	7.00%	$0.2 million	None
10/22/99	48 months	Variable (3.15% at 9/30/02)	$0.6 million	Maintenance of certain operating ratios.
11/2/01	48 months	5.02%	$5.1 million US (Canadian loan)	Penalty if prepaid in first two years.
12/6/01	48 months	5.41%	$0.6 million US (Canadian loan)	Penalty if prepaid in first two years.

As of September 30, 2002 and the date of this Form 10-Q, the Company was in compliance with the financial covenants of these loans.

Management believes a hypothetical 10.0% increase in interest rates would not have a material adverse effect on the Company. Increases in interest rates would, however, increase interest expense associated with the Company's existing variable rate equipment loan and future borrowings by the Company, if any. For example, the Company may from time to time effect borrowings under its $10.0 million line of credit for general corporate purposes, including working capital requirements, capital expenditures, and other purposes related to expansion of the Company's capacity. Borrowings under the $10.0 million line of credit bear interest at the lender's prime rate less 1% (3.75% as of September 30, 2002). The Company had no outstanding line of credit obligations. As of September 30, 2002 and the date of this Form 10-Q, the Company was in compliance with the financial covenants pertaining to the line of credit. In the past, the Company has not hedged against interest rate changes.

Equity Price Risks, General Market Risks, and Other Risks

Equity Securities. The Company held in its investments available for sale portfolio certain equity securities with basis and fair market value as of September 30, 2002, in the aggregate, of $24.7 million and $16.9 million, respectively. Equity securities primarily consisted of publicly traded common stock of US based companies, exchange-traded funds, equity mutual funds, and real estate investment trusts. A substantial decline in values of equity securities and equity prices in general would have a material adverse effect on the Company's equity investments. Also, prices of common stocks held by the Company would be materially and adversely affected by increasing inflation and/or interest rates or market expectations thereon, poor management, shrinking product demand, and other risks that may

affect single companies, as well as groups of companies. The company has partially hedged against some equity price changes.

Trading Securities. The Company was invested in trading securities, which, in the aggregate, had an original cost and fair market value as of September 30, 2002, of $6.9 million and $6.6 million, respectively. Trading securities consisted primarily of US and international mutual funds, investments in limited partnerships, and US equity securities. Trading securities were held to meet short-term investment objectives. As part of trading securities and as of September 30, 2002, the Company had sold put options for a total of 146,000 shares of US equity securities that, in the aggregate, had a basis and market value of approximately $110,000 and $127,000. The foregoing put options were reported net as components of trading securities and expire in October and November 2002.

Risk of loss regarding its current investments to the Company in the event of nonperformance by any party is not considered substantial. Due to the potential limited liquidity of some of these instruments, the most recently traded price may be different from the value that might be realized if the Company were to sell or close out the transactions. Such differences are not considered significant to the Company's results of operations, financial condition, or liquidity. The foregoing put options may involve elements of credit and market risks in excess of the amounts recognized in the Company's financial statements. A substantial decline and/or change in value of equity securities, equity prices in general, international equity mutual funds, investments in limited partnerships, and/or call and put options could have a material adverse effect on the Company's portfolio of trading securities. Also, trading securities could be materially and adversely affected by increasing interest and/or inflation rates or market expectations thereon, poor management, shrinking product demand, and other risks that may affect single companies, as well as groups of companies.

Foreign Currency Exchange Risks

Of the Company's revenues for the three months ended September 30, 2002, 20.8% were derived from arrangements whereby the Company received payments from clients in currencies other than US dollars. Terms of the Company's agreements with clients and subcontractors are typically in US dollars except for certain agreements related to its United Kingdom and Canada operations. If an arrangement provides for the Company to receive payments in a foreign currency, revenues realized from such an arrangement may be less if the value of such foreign currency declines. Similarly, if an arrangement provides for the Company to make payments in a foreign currency, cost of services and operating expenses for such an arrangement may be more if the value of such foreign currency increases. For example, a 10% change in the relative value of such foreign currency could cause a related 10% change in the Company's previously expected revenues, cost of services, and operating expenses. If the international portion of the Company's business continues to grow, more revenues and expenses will be denominated in foreign currencies, which increases the Company's exposure to fluctuations in currency exchange rates. In the past, the Company has not hedged against foreign currency exchange rate changes related to its international operations.

Item 4. Controls and Procedures

Based on their evaluation of the Company's disclosure controls and procedures (as defined by Rule 13a-14(c) under the Securities Exchange Act of 1934) as of a date within 90 days of the filing date of this quarterly report, the Company's Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective. There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation

Part II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a): Exhibits

10.43		Amended and Restated Services Agreement dated April 1, 2002 between StarTek USA, Inc., and VoiceStream Wireless Corporation*
10.44		Provider Master Service Agreement dated March 21, 2002 between StarTek USA, Inc., and AT&T Wireless Services, Inc.
99.1		Certification of Periodic Report by William E. Meade, Jr.
99.2		Certification of Periodic Report by David I. Rosenthal

*

Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the Securities and Exchange Commission.

(b): Reports on Form 8-K

The Company filed no reports on Form 8-K during the three months ended September 30, 2002.

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.

		STARTEK, INC. (Registrant)
Date: November 12, 2002		/s/ A. EMMET STEPHENSON, JR. A. Emmet Stephenson, Jr. Chairman of the Board
Date: November 12, 2002		/s/ WILLIAM E. MEADE, JR. William E. Meade, Jr. President, Chief Executive Officer, and Director
Date: November 12, 2002		/s/ DAVID I. ROSENTHAL David I. Rosenthal Executive Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Financial and Accounting Officer)

CERTIFICATION

I, William E. Meade Jr., certify that:

1.

I have reviewed this quarterly report on Form 10-Q of StarTek, Inc.;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a.: designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.: evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c.: presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a.: all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b.: any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002

By:

/s/ WILLIAM E. MEADE, JR.

William E. Meade, Jr.
President, Chief Executive Officer, and Director

CERTIFICATION

I, David I. Rosenthal, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of StarTek, Inc.;

2.

3.

4.

a.: designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.: evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c.: presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

a.: all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b.: any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002

By:

/s/ DAVID I. ROSENTHAL

David I. Rosenthal
Executive Vice President, Chief Financial Officer, Secretary and Treasurer

EX-10.43 3 a2093268zex-10_43.htm EXHIBIT 10.43
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EXHIBIT 10.43

Portions of this Exhibit marked with "*" have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment

AMENDED AND RESTATED SERVICES AGREEMENT

THIS AMENDED AND RESTATED SERVICES AGREEMENT (this "Agreement") is made effective as of April 1, 2002 (the "Effective Date"), between VoiceStream Wireless Corporation, a Delaware corporation with a principal place of business at 12920 SE 38th Street, Bellevue, WA 98006 ("VSTR"), and STARTEK USA, INC., a Colorado corporation with a principal place of business at 100 Garfield Street, Denver, CO 80206 ("StarTek").

For good and valuable consideration, including the mutual covenants contained in this Agreement, VSTR and StarTek (together, the "Parties" and individually, a "Party") agree as follows:

1. AMENDMENT AND RESTATEMENT. This Agreement amends, restates and supersedes in its entirety that certain Services Agreement, dated as of June 8, 2001, between VSTR and StarTek (the "Prior Agreement") as of the effective date. Except to the extent otherwise provided herein, this Agreement shall govern the relationship of the Parties from and after the Effective Date, and the Prior Agreement shall govern the relationship of the Parties prior to the Effective Date.

2. SCOPE OF WORK.

2.1 Statement of Work. This Agreement authorizes StarTek to perform the Services described in Exhibit A-1 entitled "STATEMENT OF WORK—STANDARD", and Exhibit A-2 entitled "STATEMENT OF WORK—ADVANCED" (collectively, the "Services") and to perform the Services as described in Exhibit A-3 entitled "STATEMENT OF WORK—OFFLINE" which will be completed at a later date. The Parties acknowledge and agree that the Parties' ability to perform certain obligations pursuant to this Agreement is conditioned upon the full, proper and timely performance by the other Party of its obligations pursuant to this Agreement. Each Party shall cooperate fully with the other Party in carrying out the obligations pursuant to this Agreement in a timely and efficient manner and in accordance with the terms hereof.

2.2 Performance of Services. StarTek shall comply in all material respects with all applicable registration and licensing requirements so as to enable StarTek to perform the Services required under this Agreement. StarTek shall have all necessary rights and licenses to use all software and hardware provided by it to perform the Services hereunder, and its performance of the S software and hardware in connection therewith will not infringe any trade name copyright, patent, trade secret or other intellectual property or proprietary right of any third party.

3. INVOICES AND PAYMENT.

3.1 Form of Invoices. All invoices for payment shall be submitted * to VSTR, within * after *, for payment. Such invoices shall be in the form set forth as Exhibit B. Any change in the form of invoice shall require the agreement of the Parties.

3.2 Supporting Documentation. All invoices shall be accompanied by the supporting documentation and information set forth on Exhibit B hereto and delivered in the format of Exhibit B. VSTR may from time to time request additional information from StarTek that may be derived from such supporting documentation and information. StarTek shall provide such additional information as reasonably requested by VSTR. In the event that VSTR requests additional information from StarTek that requires material additional programming to produce such information, StarTek shall only be obligated to provide such additional information within a reasonable time as agreed by StarTek and VSTR,

and at additional cost to VST as provided in A-1 and A-2. All billed production minutes or hours for standard activations must be supported and verifiable by switch reports including proper use and tracking of all AUX states.

3.3 Pricing. VSTR shall be obligated to pay StarTek for Services pursuant to this Agreement at the prices provided in Exhibits A-1 and A-2. VSTR further agrees to pay any *, in connection with the provision, sale, or use of the Services provided hereunder.

3.4 Payment of Invoices. Except to the extent properly disputed by VSTR as provided in Section 3.5, VSTR shall pay all invoices within * of receipt. Any amount payable by VSTR to StarTek hereunder that is not paid by VSTR within * of receipt of invoice shall bear interest at a rate of *, not to exceed the maximum amount allowed by law, from the date such amount was due until the date payment is received by StarTek.

3.5 Dispute of Invoices. VSTR may dispute any invoiced amount payable to StarTek by delivering written notice to StarTek within seven (7) business days of receipt of the invoice. Such notice shall set forth in reasonable detail the amount disputed and the basis and facts upon which VSTR disputes such amount. If VSTR does not provide notice of dispute as provided above, VSTR shall pay the invoice without prejudice to any rights it may have to later dispute the invoice. If VSTR provides a timely and proper notice of dispute as provided above, VSTR and StarTek shall resolve such dispute as provided in this Section 3.5.

3.5.1 Upon receipt by StarTek of a timely and proper notice of dispute of an invoice ("Dispute Notice"), the Controller of StarTek shall contact the outsource manager of VSTR to attempt to resolve such dispute. If such dispute is not resolved within seven (7) business days of receipt by StarTek of the Dispute Notice, the dispute shall be resolved in accordance with Section 3.5.2 below.

3.5.2 If an invoice dispute has not been resolved in accordance with Section 3.5.1 above, the Chief Financial Officer of StarTek shall contact the Executive Director of Outsourcing of VSTR to attempt to resolve such dispute. If such dispute is not resolved within ten (10) business days of receipt by StarTek of the Dispute Notice, the dispute shall be resolved in accordance with Section 3.5.3 below.

3.5.3 If an invoice dispute has not been resolved in accordance with Section 3.5.2 above, the President of StarTek shall contact the Senior Vice President of Customer Care of VSTR (or his or her designee) to attempt to resolve such dispute. If such dispute is not resolved within fifteen (15) business days of receipt by StarTek of the Dispute Notice, the dispute shall be resolved in accordance with Section 3.5.4 below.

3.5.4 Any invoice dispute that has not been resolved in accordance with Section 3.5.3 above shall be subject to mandatory binding arbitration conducted in accordance with the procedures set forth in Exhibit D hereto.

3.6 Reimbursement of Expenses. Subject to VSTR's prior written approval, VSTR shall reimburse StarTek for all necessary and reasonable travel expenses related to the performance of the Services, including meals, lodging transportation, car rental and incidental expenses. All such expenses shall be supported by documentation, and shall be in accordance with VSTR's published guidelines delivered to StarTek.

3.7 Right of Audit. StarTek shall keep complete and accurate records and documentation to substantiate the amounts claimed in any invoice, which records shall be made available to VSTR for audit as set forth below. During StarTek's normal business

hours and *, StarTek shall make its records available for audit by VSTR_. or any authorized representative of VSTR during the term of this Agreement, and until * after completion of the Services or earlier termination of this Agreement, whichever occurs first. VSTR shall have a right to audit the books and records of StarTek as provided in this Section 3.7 no more than *. The Parties shall promptly pay or reimburse the other Party based upon the results of any audit conducted in accordance with this Section 3.7. Any dispute regarding the results of any audit and amounts subject to payment or reimbursement shall be resolved in accordance with the procedures and the time periods provided in Sections 3.5.1 through 3.5.4 above. The cost of any audit shall be borne by VSTR, provided however *.

4. TERM AND TERMINATION.

4.1 Term. This Agreement shall commence as of the Effective Date and continue through June 30, 2003, subject to automatic renewal for additional one year terms unless terminated pursuant to Section 4.2, 4.3 or 4.4 hereof.

4.2 Termination for Convenience and by Agreement. A Party may terminate this Agreement (i) for any reason or for no reason upon at least * prior written notice to the other Party, or (ii) by agreement with the other Party.

4.3 Termination for Breach or Force Majeure. Either Party may terminate this Agreement immediately upon notice to the other Party (i) if the other Party materially breaches this Agreement and fails to cure such breach within * of receipt of written notice of such breach from the non-breaching Party; (ii) if the other Party fails to make any payment required hereunder (which payment has not been disputed pursuant to this Agreement) when due hereunder following * prior written notice that such payment has not been made; (iii) if the other Party becomes insolvent, invokes as a debtor any laws relating to the relief of debtors from creditor's rights, or has such laws invoked against it, is the subject of liquidation or termination of business, is adjudicated bankrupt, or is involved in an assignment for the benefit of its creditors; or (iv) upon the occurrence and after continuance of an event of force majeure, or in other circumstances, as provided in Exhibits A-1 and A-2.

4.4 Assurances. If VoiceStream or StarTek reasonably believe that an event described in Section 4.3(iii) above has occurred or is likely to occur in the next *, VoiceStream or StarTek may in writing, demand adequate assurance of due performance of the obligations of the other hereunder. If StarTek or VSTR fail to deliver adequate written assurances or performance within * of receipt of the written demand therefore, VSTR or StarTek may, at its option, deem such failure as a repudiation of the Agreement, and, at its option and upon *, terminate this Agreement by delivery of written notice to the other.

4.5 Effect of Termination. The expiration or termination of this Agreement shall not relieve or discharge either Party from any obligation hereunder which survives termination. In the event of any termination, StarTek agrees to cooperate with VoiceStream to effectuate an orderly transition of the business and will continue to provide Services hereunder pursuant to a schedule mutually agreeable to the parties (which may include a schedule for ramping down services) for a reasonable period of time not to exceed * from the date of termination.

5. REPRESENTATIONS AND WARRANTIES.

5.1 StarTek. StarTek hereby represents and warrants to VSTR as follows:

5.1.1 StarTek is financially solvent, able to pay its debts and possesses sufficient working capital to provide and complete the Services in accordance with this Agreement.

5.1.2 StarTek has the experience and skills necessary to perform and provide the Services required under this Agreement. All Services provided by StarTek shall be performed (i) in a professional manner, commensurate with that which is customary in the industry, (ii) in compliance with all applicable federal, state and local laws, rules, regulations and ordinances and (iii) in compliance with VSTR's written policies set forth as Exhibit hereto. StarTek's performance of the Services will not violate any agreement or obligation between StarTek and any third party.

5.1.3 All information supplied by or on behalf of StarTek shall be accurate and complete in all material respects.

5.1.4 StarTek is in compliance with all applicable federal, state and local laws, rules, regulations and ordinances relating to the Services to be performed by StarTek for the benefit of VSTR hereunder. StarTek entering into and performing its obligations pursuant to this Agreement will not violate any agreement between StarTek and any third party.

5.2 VSTR. VSTR hereby represents and warrants to StarTek as follows:

5.2.1 VSTR is financially solvent, able to pays its debts and possesses sufficient working capital to pay for the Services to be performed by StarTek hereunder.

5.2.2 VSTR is in compliance with all applicable federal, state and local laws, rules, regulations and ordinances relating. VSTR entering into and performing its obligations pursuant to this Agreement will not violate any agreement between VSTR and any third party.

5.2.3 All information supplied by or on behalf of VSTR shall be accurate and complete in all material respects.

6. LIABILITY PROVISIONS.

6.1 Disclaimer of Warranties. Unless otherwise expressly provided herein, STARTEK MAKES NO WARRANTY TO VSTR OR ANY OTHER PERSON OR ENTITY, WHETHER EXPRESS, IMPLIED, OR STATUTORY, AS TO THE DESCRIPTION, QUALITY, MERCHANTABILITY, COMPLETENESS, NONINFRINGEMENT, OR FITNESS FOR ANY PURPOSE OF ANY SERVICE PROVIDED HEREUNDER OR DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL OF WHICH WARRANTIES BY STARTEK ARE HEREBY EXCLUDED AND DISCLAIMED.

6.2 Indemnification: Limitations on Liability.

6.2.1 StarTek's Obligations. StarTek shall indemnify, defend and hold VSTR harmless from and against any and all third-party claims, liabilities, losses, damages(including attorneys' fees, costs and other litigation expenses), and causes of action relating to (i) a material breach of this Agreement by StarTek or (ii) bodily injury, death, or personal property damage proximately caused by the negligence or willful misconduct of StarTek in the performance or nonperformance (where performance is required) by StarTek of its obligations pursuant to this Agreement;

provided, however, StarTek shall not be responsible for claims, liabilities, losses, damages, and causes of action to the extent caused by the acts or omissions of VSTR.

6.2.2 VSTR's Obligations. VSTR shall indemnify, defend and hold StarTek harmless from and against any and all third-party claims, liabilities, losses, damages (including attorneys' fees, costs and other litigation expenses), and causes of action relating to (i) a material breach of this Agreement by VSTR or (ii) bodily injury, death, or personal property damage proximately caused by the negligence or willful misconduct of VSTR in the performance or nonperformance (where performance is required) by VSTR of its obligations pursuant to this Agreement; provided, however, VSTR shall not be responsible for claims, liabilities, losses, damages, and causes of action to the extent caused by the acts or omissions of StarTek.

6.2.3 Procedure. Each Party's indemnification obligations hereunder shall be subject to (a) receiving written notice of the existence of any action, (b) permitting the indemnifying party, at its option, to control the defense of such action, (c) permitting the indemnified party to participate in the defense of any action, (at the expense of the indemnifying party)and (d) receiving reasonable cooperation of the indemnified party in the defense thereof.

6.2:4 Limitations. The indemnification rights of an indemnified party hereunder shall be the exclusive monetary remedy of the indemnified party with respect to the claims to which such indemnification relates.

6.3 Limitation on Liability. STARTEK SHALL NOT BE LIABLE TO VSTR AND VSTR SHALL NOT BE LIABLE TO STARTEK (REGARDLESS OF THE FORM OF ACTION OR THE CLAIM (e.g. CONTRACT, WARRANTY, TORT, MALPRACTICE, AND/OR OTHERWISE)) FOR INDIRECT, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OR FOR ANY LOSS OF REVENUE, LOST PROFITS, LOST BUSINESS OPPORTUNITIES, OR FOR ANY FAILURE TO REALIZE SAVINGS OR OTHER BENEFITS, EVEN IF ADVISED OF THE POSSIBILITY OF ANY OF THE FOREGOING; THE AGGREGATE LIABILITY OF STARTEK AND VSTR RELATING TO OR ARISING FROM THIS AGREEMENT AND FOR ANY AND ALL CAUSES OF ACTION SHALL NOT EXCEED *. THIS SECTION SHALL NOT APPLY TO ANY TORT LIABILITY BASED ON GROSS NEGLIGENCE OR WILLFUL MISCONDUCT RESULTING IN PHYSICAL DAMAGE TO TANGIBLE PROPERTY OR PERSONAL INJURY OR DEATH OR FOR A BREACH OF THE CONFIDENTIALITY REQUIREMENTS HEREUNDER. THIS AGREEMENT, AND THIS SECTION IN PARTICULAR, DEFINES A MUTUALLY AGREED UPON ALLOCATION OF RISK, AND THE FEES AND OTHER CONSIDERATION HAVE BEEN SET TO REFLECT SUCH ALLOCATION.

7. INTELLECTUAL PROPERTY/CONFIDENTIALITY.

7.1. Ownership) of Materials. Each Party retains any and all rights to its own previously existing information, software and/or developments and to its own information, software and/or developments that are created separately from and independent of its activities under the Agreement. Except as specifically set forth in this Agreement, neither Party obtains rights to information provided by the other solely by its access to or use of the information in performing its obligations or exercising its rights hereunder.

7.2. Data. As between VSTR and StarTek, VSTR will own exclusively all data collected as a direct result of the Services provided hereunder. VSTR shall use the data collected by StarTek in accordance with all applicable law, rules and regulations.

7.3. No License. Neither Party is granted any license in intellectual property that is owned or developed by the other Party.

7.4 Confidentiality. The Parties acknowledge that each may be given access to certain confidential or secret information and material relating to or owned by the other, including but not limited to financial information, customer lists, information pertaining to VSTR or StarTek customers, files and other information regarding that Party's business, organization, operations, and plans in the course of the performance under the Agreement. Such information and material shall be the sole and exclusive property of the provider of such information, and each Party agrees that during the term of the Agreement and for five (5) years thereafter, the receiving Party will not disclose such confidential or secret information or material, or the terms of the Agreement, to any governmental agency, person, entity, firm, or corporation, or use confidential or secret information or material except in furtherance of the Agreement, without the express prior written consent of the other Party. This section shall not apply to any information (a) previously known to the receiving Party free of any obligation to keep it confidential, (b) that has been or which becomes publicly known through no wrongful act of the receiving Party, (c) which is rightfully received from a third party who is under no obligation of confidence to either Party, (d) which is independently developed by the receiving Party without resort to information which has been disclosed pursuant to the Agreement or (e) is required to be disclosed in order to comply with applicable laws (including state and federal securities laws applicable to StarTek as a public company) or administrative process or any governmental or court order; provided, however, that in a circumstance where disclosure is compelled by governmental or court order the Party that is subject to such compelled disclosure shall give the other Party prompt prior notice of such compelled disclosure so that the other Party may seek to protect such information. The receiving Party shall return the confidential information to the disclosing Party upon request by the disclosing Party. This Section shall survive termination of the Agreement.

8. GENERAL PROVISIONS.

8.1 Entire Agreement. This Agreement, including all Exhibits (including the Offline Exhibit which will be completed at a later date, the Call Center Emergency Preparedness Plan, Exhibit E, and the Change Management Process, Exhibit F) hereto, which are incorporated herein by this reference, contains the entire understanding of the Parties with respect to the subject matter hereof, and supersedes all prior agreements and understandings between the Parties.

8.2 Assignment. StarTek acknowledges that the Services to be rendered by StarTek are unique and personal. Accordingly, StarTek may not assign any of StarTek's rights, including the right to receive payments, or delegate any of StarTek's duties or obligations under this Agreement without the prior written consent of VSTR. Notwithstanding the foregoing, nothing in the Agreement or Exhibits A-1 or A-2 shall prevent StarTek from subcontracting the Services to any subsidiary or affiliate. VSTR may assign its rights hereunder upon its sole discretion, subject to StarTek's verification of assignee's ability to fulfill the financial obligations under this Agreement. This Agreement shall inure to the benefit of and shall be binding upon the permitted successors and assigns of the Parties.

8.3 Publicity. Except as required by law, including state and federal securities laws applicable to StarTek as a public company, StarTek will not disclose the existence of this Agreement, or make any disclosure to any third party concerning its business relationship with VSTR, including any press releases, without the prior written approval of VSTR.

8.4 Governing Law. This Agreement shall be governed by and construed according to the laws of the State of Washington, without regard to the conflict of laws or choice of law provisions thereof.

8.5 Construction. This Agreement, together with all Exhibits hereto, represents the wording selected by the Parties to define their agreement and no rule of strict construction shall apply against either Party. This Agreement is written in, and shall be governed by, the English language. This Agreement may be translated into one or more languages; provided, however, in the event of any conflict in interpretation between this Agreement and any foreign language translation, the interpretation of this English version of the Agreement shall prevail. This Agreement (a) represents the entire agreement between the Parties relating to the subject matter of this Agreement, (b) supersedes and terminates all prior purchase orders, agreements, understandings, representations, and warranties applicable to the subject matter of this Agreement, and (c) may only be amended or modified by a writing signed by both Parties by their duly authorized representatives (which in the case of VSTR shall be a Vice President or higher). Any waiver pursuant to this Agreement must be in writing and any waiver of one event shall not be construed as a waiver of subsequent events. Headings used in this Agreement are for reference only and shall not be deemed a part of this Agreement.

8.6 Relationship. The Parties acknowledge and agree that their relationship shall be solely and exclusively that of independent contractors, and that in no event shall either Party be, claim to be, or be deemed to be an employee, agent, or partner of the other Party by reason of or with respect to this Agreement or any Services provided pursuant to this Agreement. Without limiting the generality of the foregoing, each Party agrees (a) to conduct itself strictly as an independent contractor pursuant to this Agreement, and (b) to comply with all applicable laws, rules and regulations, including without limitation all laws, rules and regulations governing payment of federal and state income taxes, self-employment taxes, estimated taxes, sales, use and service taxes, and all other federal, state, local and foreign taxes of any nature imposed with respect to any obligations pursuant to this Agreement or payments therefor. VSTR shall have the right to request StarTek to remove any personnel from the VSTR account who has engaged in poor performance, fraud or, breach of this Agreement.

8.7 Non-Solicitation. Without the prior written consent of the other Party, during the term of this Agreement^-and continuing through the second anniversary of the termination of this Agreement, neither Party shall, and shall ensure that its affiliates do not, directly or indirectly, solicit or attempt to solicit for employment any persons employed by the other Party who are directly involved in carrying out the obligations of the Parties pursuant to this Agreement.

8.8 Notice. Any notice or communication required or permitted to be given hereunder [(other than forecasts required to be delivered pursuant Exhibits A-1 and A-2] shall be in writing and may be delivered by hand, deposited with an overnight courier, sent by email, confirmed facsimile (followed by delivery of a copy by US Mail), or mailed by registered or certified mail, return receipt requested, postage prepaid, in each case to the address of the receiving Party as set forth in this section. Such notice shall be deemed

to have been given as of the date it is delivered, mailed, emailed, faxed or sent, whichever is earlier.

To StarTek: StarTek, Inc. 100 Garfield Street Denver, Colorado 80206 Fax: (303) 388-9970 Attention: Chief Financial Officer		StarTek, Inc. 100 Inovation Drive Kingston, Ontario K7K 7E7 Fax: (613) 546-1818 Attention: VoiceStream Operations Manager
To VSTR: Sue Nokes Sr. Vice President Customer Care 12920 SE 38th Street Bellevue, WA 98006 Fax:425-378-4920
With a copy to Sr. Vice President and General Counsel

8.9 Severability. If any term or provision of this Agreement or the application thereof to any person or circumstance, at any time or to any extent, is held invalid, illegal, or unenforceable by a court of competent jurisdiction by reason of any rule of law or public policy, all other conditions and provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the transaction contemplated hereby is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transaction contemplated hereby is fulfilled to the maximum extent possible.

8.10 DOJ Agreement. VoiceStream has entered into an agreement with the Federal Bureau of Investigation and the Department of Justice that requires parties contracting with VoiceStream to comply with applicable terms. StarTek agrees as follows:

(a): StarTek shall not throughout the term of this Agreement or at any time thereafter store subscriber audio or data communications occurring in the U.S., or any other subscriber information, including, without limitation, call transactional data, call associated data, call identifying data, subscriber information and subscriber billing records (collectively, "Subscriber Information") outside of the United States without VoiceStream's prior written consent, which may be withheld for no reason, or any reason, in VoiceStream's sole discretion;
(b): StarTek will provide VoiceStream within at least thirty (30) days prior written notice of its desire to store Subscriber Information outside the United States, including description of the communications and/or information, identification of the custodian, identification of the proposed location where the communications and/or information would be stored; and identification of the factors it considered in seeking to store the communications and/or information outside the United States.
(c): StarTek will store billing records relating to VoiceStream subscribers for a minimum period of two years;

(d): StarTek will store Subscriber Information in its possession, custody and control if requested by a domestic governmental entity pursuant to 18 U.S.C. § 2703(f);
(e): StarTek will store Subscriber Information in a manner such that the communications and/or information do not become subject to mandatory destruction under any foreign laws;
(f): StarTek will make available in the United States all Subscriber Information that is stored by StarTek or a third party (as permitted under this Agreement);
(g): StarTek will not disclose Subscriber Information to any foreign government or entity without first (i) satisfying all applicable U.S. federal, state and local legal requirements, including receiving appropriate authorization by a domestic U.S. court, or receiving prior written authorization from the U.S. Department of Justice, and (ii) notifying VoiceStream of the request for such information within five (5) days of its receipt;
(h): StarTek will protect the confidentiality and security of all lawful U.S. process and the confidentiality and security of Classified Information and Sensitive Information in accordance with federal and state laws and regulations.

8.11 Counterparts. This Agreement may be executed counterparts, each which shall be an original but all of which taken together shall constitute one in the same instrument.

Executed as of the Effective Date:

STARTEK USA, INC.		VOICESTREAM WIRELESS CORPORATION
By:	/s/ WILLIAM E. MEADE	By:	/s/ SUSAN NOKES
President/CEO Name and Title		Sue Nokes Sr. Vice President Customer Care

EXHIBIT A-1

STATEMENT OF WORK—STANDARD

This Statement of Work—Standard is incorporated into that certain Amended and Restated Services Agreement dated effective as of April 1, 2002 (the "Agreement") by this reference. Defined terms used in this Statement of Work shall have the meanings provided in the Agreement, unless expressly defined herein.

StarTek will provide the following services relating to standard inbound activations for VSTR.

A. General. StarTek will handle Standard Activation calls for VSTR (as described in this Exhibit A-1 with respect to Standard Activations, the "Services"). StarTek shall establish a dedicated program (StarTek's dedicated representatives shall handle only VSTR calls) to perform the Services.

B. Hours of Operation. Except as otherwise set forth herein, the hours of operation for Standard Activations will be *.

C. Call Volume and Forecasting.

1. StarTek will provide Standard Activations utilizing full time equivalents ("FTEs") in accordance with this Statement of Work. An FTE is defined as * Customer Contact Employee *.

2. VSTR will regularly prepare and deliver to StarTek the following forecasts for Standard Activations to support the proper planning of the infrastructure required to support the Standard Activations programs:

a. VSTR shall deliver a * rolling informational forecast to StarTek on or before the 15th day of each month (the "*"), which shall contain forecasted * call volumes.

b. VSTR shall deliver an informational forecast to StarTek no less than 45 days before the 1st day of each month for which the forecast is made (the "*"), which shall contain a * call volume and AHT forecasts by * interval.

c. For purposes of this Statement of Work, the "Final Forecast" shall mean the following: (i) an updated * call volume and AHT forecasts delivered * prior to the start of the actual *. The * forecast will vary no more than * in call volume by * from the original * forecast. If the final forecast is not delivered in a timely fashion with respect to a particular *, the appropriate * forecast shall be the Final Forecast for such *; or (ii) if a * Forecast is delivered in a timely fashion with respect to a particular *, the most recent * forecast shall be the Final Forecast for such *.

3. StarTek will use * call volume forecasts provided by VSTR as the Final Forecast in accordance with this Agreement. This process is known as Interval Forecasting. StarTek will schedule the appropriate number of FTEs in * intervals in accordance with the VSTR Final Forecast. This process is known as Interval Scheduling. StarTek will provide Interval Scheduling plans to VSTR within * after receiving a Final Forecast from VSTR. These documented plans will illustrate how StarTek plans to meet the DMOQ Service Level. The documented plans will include the number of required FTEs to meet the DMOQ Service Level, the number of scheduled CCEs, and the * Service Level Objectives.

4. VSTR and StarTek will cooperatively manage intraday schedule adjustments to manage actual call volumes.

5. VSTR and StarTek will mutually agree upon and participate in the preparation of other call volume forecasts, as reasonably required for the successful performance of the Programs. These may include, without limitation, * forecasts. As part of the support structure, StarTek will

provide a senior call management-planning specialist who will, among other things, assist VSTR in the development of call volume forecasts.

6. StarTek will recruit, train, and staff the appropriate number of CCEs to handle the Final Forecast volumes (calls offered) at the DMOQ Service Level *. If the Final Forecast for a particular * is * or more of the Final Forecast for the proceeding *, StarTek may add additional staff to service such increase with the consent of VSTR, which consent shall not be unreasonably withheld.

7. The forecasts referred to above shall in no way represent a commitment from VSTR to provide volumes to StarTek, except for purposes of amounts payable by VSTR to StarTek as provided in this Section 7. Amounts payable by VSTR to StarTek hereunder and the DMOQ calculation shall be based on the Final Forecast for a *; provided, however, VSTR shall pay the greater of (a) actual FTE minutes handled during such period, (b) * percent of the minutes set forth in the Final Forecast or (c) the minimum guaranteed minutes as set forth in Exhibit A-1.

8. All forecasts required to be provided hereunder shall be delivered in writing no later than 2:00 p.m. PST on the required date to a point-of-contact designated in writing by StarTek from time to time. All forecasts shall be delivered via e-mail, or if e-mail is not operational, via facsimile followed by a telephone call, to the e-mail address, facsimile number, and telephone number designated in writing by StarTek from time to time. All forecasts shall be deemed delivered upon receipt by StarTek.

D. Average Handle Time. Average Handle Time ("AHT") is defined as the sum of average talk time, hold time while on a call and after call work. StarTek agrees that the AHT objectives shall be less than or equal to a * for English Standard Activations. The AHT objective shall he less than or equal to a * for Spanish Activations. The AHT objectives may be changed upon mutual agreement of StarTek and VSTR based on rolling *trending results.

E. Training.

1. CCEs will be trained on the VSTR standard new hire training curriculum. Training for the program shall be in accordance with the VSTR New Hire Training Curriculum. Upon * days written_. notice to StarTek, VSTR may change the VSTR New Hire Training Curriculum and the hours required for delivery. Prior to completion of training, VSTR will deliver all applicable application IDs. *. StarTek will establish procedures to prevent *. Any CCE who violates this policy will be promptly removed from the VSTR account.

2. All costs and expenses for training and training materials for new CCE's and any initial and program extension training, or changes or modifications to the program or continuation training that exceeds one * specialist shall be borne by *. New FTEs are defined as FTEs required in excess of the previous month's FTE requirement, based upon the Final Forecast. *. Training needs to be approved by VSTR in writing no more than 24 hours following receipt of StarTek's request.

3. All costs associated with attrition training and VSTR requests for removal of personnel, including, but not limited to, new trainers and any associated materials, shall be borne by *. If VSTR does not approve the reasonable request of StarTek for additional staff as needed based on the forecast, StarTek shall be responsible for the volume-related DMOQs for the related * based on the * forecast.

4. If StarTek is not meeting the quality standards set forth in Section L below and it is determined by both StarTek and VSTR that additional "skill set" training is required for the StarTek representatives, * will bear the cost of the additional training.

F. Escalation Procedures. StarTek shall utilize VSTR-provided escalation processes, as provided by VSTR, to handle calls beyond the CCE scope of training or for management support of a customer issue. This process will ensure that each call that cannot be handled by the CCE is then handled by the lead representative and up to the manager before being transferred to VSTR for resolution. If a customer requires management support, a CCE shall transfer the call to a manager and stay with the call to completion. VSTR shall update all on-line job aides that define the escalation procedures for the program when any changes are made.

G. Telecommunications. VSTR shall deliver calls to StarTek's network point of entry. International telecommunications costs to deliver calls to StarTek's Canada locations will be negotiated and managed by StarTek. *

H. Customer Care Systems. StarTek shall be responsible for costs associated with workstations and local area network (LAN) infrastructure equipped to run the most recent version of the * deployed at the time of the implementation of this Agreement. StarTek is hereby granted a license for the term of this Agreement to use the * for purposes of performing its obligations under this Agreement. StarTek shall also provide the building, telecommunications switch for the Interactive Voice Response (IVR) system, remote monitoring application and associated toll free number, Universal Power Supply (UPS), desktop computers, office supplies, and dedicated workspaces in each call center. * shall be responsible for costs associated with wide area network (WAN) infrastructure (including, but not limited to, the WAN data connectivity infrastructure, application/database servers, routers, and related peripherals. * shall also be responsible for software required to support the *. VSTR will be responsible for the *, Knowledge Database, and Call Tracking systems required to support the Services performed under this Agreement.

I. Systems Use and Downtime. Information given to callers or collected by CCEs will be directly taken from and/or input into VSTR's systems. In the event that VSTR's systems go down, StarTek shall capture call information on the downtime forms provided by VSTR. StarTek agrees that it shall then input information from these downtime forms once the system is restored. The quality metrics (error rate) shall apply to the completion of all forms. Periods of time during the day in which occupancy is lowest will be utilized to perform this function. Turnaround commitment to enter downtime forms into VSTR's systems will be * hours from the time when VSTR's systems are restored. If call volume does not allow for * turnaround due to call volume meeting at least * of the forecasted volume, another * input period shall be granted. Downtime forms will be destroyed or sent to VSTR, as directed by VSTR, every *. StarTek will assign a special Aspect ACD tracking code to designate when specified representatives are entering downtime form information into System. VSTR agrees to pay StarTek * for entering downtime information as stated in the Pricing Schedule set forth in Section V_- of this Statement of Work.

J. Overtime.

1. If the daily call volume will exceed the Final Forecast by more than *, StarTek will so notify VSTR and will recruit trained CCEs to work overtime to support the call handling. If the Final Forecast is within *, StarTek must recruit CCEs to work overtime to cover the shortage and *. Any overtime must be authorized by VSTR, in advance. * the overtime rate for all approved overtime. For any additional staffing required for call volume over * of final forecast must be approved by VSTR in advance.

2. The recruiting process for overtime shall be deployed as soon as the circumstance affecting the call volume variance is identified. If StarTek identifies the item at least * before the occurrence, StarTek shall use its commercially reasonable efforts to minimize the financial impact by changing schedules to support the staffing required. StarTek shall also recruit CCEs to work overtime on a * basis when the * call volume dictates additional staffing needs to maintain service goals.

3. Except as provided above, StarTek shall obtain written authorization from VSTR for any overtime that may be required or incurred for the performance of the Programs.

K. Change Management. VSTR shall provide StarTek with periodic information that is distributed through its internal change process, to enable all CCEs to remain current on the latest VSTR promotions and features StarTek is responsible for distributing this information via its internal change process to CCEs, trainers, team leaders, and lead representatives so that change can be supported in a timely manner. StarTek shall, on a * basis, initiate test calls to verify CCEs' understanding of the latest change information and to ensure acceptable call quality, as defined in Section L below. StarTek will provide verification of compliance to VSTR.. StarTek will be responsible for conducting a continuous evaluation of the internal change process with the feedback of VSTR and will provide revised documentation on an as needed basis.

L. Direct Measures of Quality (DMOQs).

l. The DMOQs for Services performed hereunder shall be as follows:

a.

Service Level:

•: Inbound Activation Calls: * of the * calls offered shall be answered within *.
•: Actual call volume that exceeds the Final Forecast by * for any * interval will not be included in the * DMOQ calculation for Service Level.

b.: Call Volume: StarTek shall answer the call volume provided in the Final Forecast.
c.: Call Quality: According to the results from the call quality calibration and observation process, as described below, * or higher.
d.: Data Accuracy: * accuracy rate or better. Data accuracy will be calculated by dividing the total number of erroneous activations by the total number of activations audited. Activation audits must be a minimum of * of the previous * volume. These audits must be complete within * of the activation entry. All errors identified shall be fixed appropriately. The computation of data accuracy shall exclude errors resulting from sources and actions beyond the reasonable control of StarTek.

2. For the purposes of ensuring Call Quality, StarTek and VSTR shall measure the CCEs' call quality using the following types of observations:

a.: VSTR observation;
b.: VSTR/StarTek joint observation; and
c.: StarTek minimum of *.

3. An agreed upon number of VSTR observations and VSTR/StarTek joint observations shall be performed per StarTek call center per *. The scores for all of these observations will be totaled and an average * score shall be calculated. The call quality observation form to be used in this process shall be provided by VSTR. Results shall be used to provide * feedback to CCEs and StarTek management. The call quality scoring criteria used by StarTek will match that used by VSTR. StarTek must achieve a minimum voice quality score of *. A minimum of * call monitoring feedback sessions per CCE, * shall be conducted by the CCE's direct supervisor and StarTek's Quality Team.

M. Reports. StarTek shall provide VSTR with standard call count reports, performance reports, and station manager detail reports on a * basis * by * for the previous * by * for the previous *, and * by the * by *for the previous *. The reports shall be in the format and contain the information set forth in Exhibit C hereto. StarTek shall provide report cards reflecting measurements of the DMOQs and all of the above metrics within * of each *. VSTR and StarTek shall mutually agree upon any other

reports and the cost associated with the development of those reports. VSTR agrees to follow the change management process defined by StarTek and agreed to by VSTR when requesting changes to reports or additional information. If VSTR requires material format changes to VoiceStream standard reports, VSTR will be required to compensate StarTek for the development costs, based upon the rate outlined in the Pricing Schedule set forth in Section V of this Statement of Work and will be estimated by StarTek and approved by VoiceStream prior to invoicing.

N. Monitoring. VSTR shall have the right, to the extent permitted by law and at no additional expense, to monitor at any time (either on-site or remotely) customer contact calls to ensure compliance with performance, operational and quality control standards.

O. Holidays. StarTek shall observe the following holiday schedule for managers, trainers, service specialists and CCEs. VSTR shall compensate StarTek for holiday rates as identified in the Pricing Schedule set forth in Section V of this Statement of Work for all standard activation agents when applicable to location where work is performed.

New Year's Day

Victoria Day

Canada Day

Labour Day

Thanksgiving Day

Christmas

P. System Downtime; Force Majeure.

1. In the event StarTek determines that system maintenance is necessary, StarTek will notify VSTR of the need for such maintenance and will obtain the prior written approval of VSTR to schedule the time and duration of such maintenance. All routine maintenance shall be scheduled during off-system hours. In no event shall interruption of Services for system maintenance constitute a failure of performance by StarTek if performed in accordance with this Section P. StarTek shall promptly report to VSTR any StarTek system failures, duration and impact.

2. Except for VSTR's obligation to make payments for amounts due StarTek, each Party's failure to perform shall be excused where such failure is a result of causes beyond its reasonable control. Such causes shall include without limitation acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations imposed after the fact, fire, communication line failures of third parties, vandalism, power failures by third parties, cables cut by third parties, earthquakes, floods or other similar catastrophes, failure of the VSTR system or the Internet not related to StarTek's actions or inactions, any law, order, regulation, direction, action or request of any governmental entity or court or civil or military authority having jurisdiction over either of the parties, national emergencies, insurrections, riots, wars, strikes, lock outs, or work stoppages. In the event of failures to perform for * or more as a result of a force majeure, either Party may terminate the Agreement by giving written notice to the other Party. Any such notice of termination shall be effective upon receipt.

3. Notwithstanding the foregoing or anything in the Agreement to the contrary, StarTek shall take commercially reasonable steps to ensure that the Services shall continue without interruption due to a StarTek systems failure during the term of the Agreement by implementing *reasonably necessary to provide the Services with an up-time of * (not including scheduled maintenance), which shall include *. The components and execution of this disaster recovery plan must be reviewed, updated, and tested quarterly and results reported to VSTR.

Q. Allocation of Resources. VSTR acknowledges that upon the occurrence of a force majeure event or in instances of unusually high demand, demands on StarTek's facilities may exceed such facilities available capacity. In any such instance, StarTek shall, upon written notice to VSTR, be entitled to equitably prioritize Services and otherwise curtail utilization of its facilities in a manner so that any degradation to the Services provided to VSTR is (unless agreed otherwise by VSTR in writing) no greater than the level of degradation experienced by StarTek's other customers. Upon the request of VSTR, StarTek shall provide VSTR with reasonable evidence of its compliance with the foregoing.

R. Staffing Requirements. StarTek agrees that all managers shall be full-time StarTek employees. Subject to Section E, StarTek will ensure that each person assigned to a function' has the necessary functional and VSTR-related training to successfully perform the function. In addition, before a function is performed by an individual assigned to that function, StarTek shall verify that the necessary skills have been attained through the use of certification of skills program StarTek shall also ensure that all persons who interact with the customers maintain their VSTR-related skills through * certification process. [If VSTR reasonably requests StarTek to remove any personnel performing Services pursuant to this Agreement, StarTek shall promptly comply with such request, within *.] In support of this process, StarTek will do the following:

•: Team leaders/supervisors shall go on-line to support customer calls each week for at least * calls per * to maintain their skills. The remainder of their time shall be used to support CCE development, and to otherwise assist StarTek employees to perform the Services.
•: Instructional analysts shall go on-line to support customer calls each * to maintain their skills.
•: Managers, lead representatives, team leaders/supervisors and trainers must be full-time employees of StarTek and must have completed VSTR National Standard Curriculum Training.
•: Managers will monitor a minimum of * per CCE per *.

S. Error Rate and Fraud. The error rate on Standard Activations shall not exceed *. VSTR error rates will be computed from data quality reports and VS Reports in the following areas: * and features and all criteria as specified in the Activation Verification Database, or similar application approved by VSTR. VSTR and StarTek will jointly develop or attain an appropriate application for measuring data quality. VSTR is responsible for providing StarTek detailed error reports by occurrence within * of occurrence.

StarTek shall implement and enforce procedures to detect fraudulent activity by a StarTek representative. All fraud detected by VSTR *will be researched within * upon receipt of notification. * management will provide a documented e-mail including * of employee's action. A tracking spreadsheet will be updated on a * basis by designated representative of StarTek and sent to * management for reconciling. StarTek will be held liable for any revenue loss due to * by a * representative. VSTR holds all rights to remove any representative from the VSTR project.

T. Breach of Service Levels.

1. In the event that StarTek perform-is any of the Service Level Objectives at Level 3 or greater, as specified in Section U, for a consecutive period of *, StarTek shall be in breach of this Agreement and VSTR may terminate this Agreement if StarTek fails to cure the breach after * days notice to cure.

2. In the event that StarTek performs any of the Service Level Objectives at Level 1 or 2, as specified in Section U, Chart 1 for a consecutive * period or longer, StarTek shall be in breach of

this Agreement. StarTek shall prepare a plan to cure the breach and shall have * from the date of the first date of failure in which to cure the breach. In the event that StarTek fails to cure the breach within the *period, VSTR may terminate the Agreement for StarTek's breach.

U. Service Level Adjustments.

Chart 1

Service Level Objectives

[* * *]

Chart 2 Service Credits

[* * *]

1. VSTR shall receive a Service Credit (as set forth in the Service Credits table above} for each * in which the levels of StarTek's performance fail to meet the Service Level Objectives (as set forth in the Service Credit Level Objectives table above).

(a) The Service Credit for each * shall be calculated by adding the * for each Service that fails to meet the applicable Service Credit Level Objective (the "Total Percentage"). The total * payments calculated based on AHT pursuant to the Pricing Schedule set forth in Section V below ("AHT Revenue"), multiplied by the Total Percentage, shall equal the Service Credit for the *. In determining whether StarTek has met a particular Service Credit Level Objective, * during which actual call volume or minutes is more than *greater than call volume or minute volume in the Final Forecast shall not be considered and StarTek shall not be entitled to any service credit. Any interval where service level, was not achieved will be subtracted from AHT revenue.

(b) *

(c) The total adjustment based, on- the. above shall. not exceed * of AHT Revenue per month, and shall be deemed waived by VSTR as it applies to Speed of Answer for each * in which call volume levels exceed by more than * the call volume levels of the previous *.

2. StarTek shall receive a * service premium of * of AHT Revenue if all service level objectives are achieved and the data accuracy score is * and the voice quality score is * or better for- the invoiced *. This premium will be calculated and determined as a direct reflection of * end reports and will not be scrutinized by any incremental system latencies, process changes, etc.

V. Pricing Schedule. VSTR shall pay StarTek for Services as provided in the following schedule; provided, however, that VSTR shall guarantee to StarTek and pay applicable per minute charges for no less-than * (regardless of the actual number of minutes sent to StarTek: This minimum number of weekly minutes shall not survive any termination of this Agreement.

EXHIBIT A-2

STATEMENT OF WORK—ADVANCED

This Statement of Work—Advanced is incorporated into that certain Amended and Restated. Services Agreement dated as of April 1, 2002 (the "Agreement") by this reference. Defined terms used in this Statement of Work shall have the meanings provided in the Agreement, unless expressly defined herein.

StarTek will provide the following services relating to advanced inbound activations for VSTR. For purposes of this Exhibit A-2 and the Agreement, "Advanced Activations" shall mean calls transferred from StarTek's internal standard activations queue for advanced type processing according to VoiceStream training and process documentation.(this includes the following activities, faxes, FTP, etc.).

A. General. StarTek will handle Advanced Activation calls for VSTR (the "Services"). StarTek shall establish a dedicated program (StarTek's dedicated representatives shall handle only VSTR calls) to perform the Services.

B. Hours of Operation. Except as otherwise set forth herein, the hours of operation for Advanced Activations will be *.

C. Call Volume.

1. StarTek will provide Advanced Activations utilizing full time equivalents ("FTEs") in accordance with this Statement of Work. An FTE is defined as * Customer Contact Employee (CCE) *.

2. StarTek will staff to a VoiceStream approved number of FTE's and will staff according to their own internal call transfer patterns as agreed to by both parties.

E. Training.

1. CCEs will be trained on the VSTR standard new hire, training curriculum. Training for the program shall be in accordance with the VSTR New Hire Training Curriculum. Upon * written notice to StarTek, VSTR may change the VSTR New Hire Training Curriculum and the hours required for delivery. Prior to completion of training, VSTR will deliver all applicable application IDs. *. StarTek will establish procedures to ensure that *. Any CCE who violates this policy will be promptly removed from the VSTR account.

2. All training for new FTEs and any initial and program extension training, or changes or modifications to the program or continuation training that exceeds * specialist shall be borne by *. New FTEs are defined as FTEs required in excess of the previous * FTE requirement, based on historical patterns and presented to VS from StarTek. *. Training needs to be approved by VSTR in writing no more than * following receipt of StarTek's request. All costs associated with attrition training and VSTR requests for removal of personnel, including, but not limited to, new trainers and any associated materials, shall be borne by *.

3. If StarTek is not meeting the quality standards set forth in Section L below and * will bear the cost of the additional training. Additional training shall be initiated as soon as possible, but not later than * from the date VSTR's requests such additional training.

F. Escalation Procedures. StarTek shall utilize VSTR-provided escalation processes,, to handle calls beyond the CCE scope of training or for management support of a customer issue. This process will ensure that each call that cannot be handled by the CCE is then handled by the lead representative

and up to the manager before being transferred to VSTR for resolution. If a customer requires management support, a CCE shall transfer the call to a manager and stay with the call to completion.

G. Telecommunications. VSTR shall deliver calls to StarTek's network point of entry. International telecommunications costs to deliver calls to StarTek's Canada locations *.

H. Customer Care Systems. StarTek shall be responsible for costs associated with workstations and local area network (LAN) infrastructure equipped to run the most recent version of the VSTR * deployed at the time of the implementation of this Agreement. StarTek shall also provide the building, telecommunications switch for the Interactive Voice Response (IVR) system, remote monitoring application and associated toll free number, Universal Power Supply (UPS), desktop computers, office supplies, and dedicated workspaces in each call center.

I. Systems Use and Downtime. Information given to callers or collected by CCEs will be directly taken from and/or input into VSTR's systems. In the event that VSTR's systems go down, StarTek shall capture call information on the downtime forms provided by VSTR. StarTek agrees that it shall then input information from these downtime forms once the system is restored. The quality metrics (error rate) shall apply to the completion of all forms. Periods of time during the day in which occupancy is lowest will be utilized to perform this function. Turnaround commitment to enter downtime forms into VSTR's systems will be * from the time when VSTR's systems are restored. Downtime forms will be destroyed or sent to VSTR, as directed by VSTR, every *. StarTek will assign a special Aspect ACD tracking code to designate when specified representatives are entering downtime form information into System. VSTR agrees to pay StarTek the agreed upon * rate for entering downtime information as stated in the Pricing Schedule set forth in Section V of this Statement of Work.

J. Overtime.

1. Any overtime must be authorized by VSTR, in advance. VSTR will pay the overtime rate for all approved overtime.

2. The recruiting process for overtime shall be deployed as soon as the circumstance affecting the call volume variance is identified. If StarTek identifies the item at least * before the occurrence, StarTek shall use its commercially reasonable efforts to minimize the financial impact by changing schedules to support the staffing required. StarTek shall also recruit CCEs to work overtime on a * basis when the intra-day call volume dictates additional staffing needs to maintain service goals.

3. Except as provided above, StarTek shall obtain written authorization from VSTR for any overtime that may be required or incurred for the performance of the Programs.

K. Change Management. VSTR shall provide StarTek with periodic information that is distributed through its internal change process, as defined by StarTek, to enable all CCEs to remain current on the latest VSTR promotions and features. StarTek is responsible for distributing this information consistently and accurately via its internal change process to CCEs, trainers, team leaders, and lead representatives so that change can be supported in a timely manner. StarTek shall, on a *, initiate test calls to verify CCEs' understanding of the latest change information and to ensure acceptable call quality, as defined in Section L below. StarTek will provide verification of compliance to VSTR. StarTek will be responsible for conducting a continuous evaluation of the internal change process with the feedback of VSTR and will provide revised documentation on an as needed basis.

L. Direct Measures of Quality (DMOQs).

1. The DMOQs for Services performed hereunder shall be as follows:

a. Service Level:

•: Inbound Activation Calls: * of the * calls offered shall be answered within *.

b. Occupancy: defined as percent of each billed FTE hour spent on approved AUX state VSTR work (total switch hours divided by working approved AUX state hours) StarTek must maintain a * or better occupancy rate through July 31, 2002 and achieve * or better occupancy rate August 1, 2002 and moving forward. Post August 2002, the Occupancy goals for Advanced activations may be adjusted * with the mutual consent of both parties.

c. Call Quality: According to the results from the call quality calibration and observation process, as described below, * or higher.

2. For the purposes of ensuring Call Quality, StarTek and VSTR shall measure the CCEs' call quality using the following types of observations:

a. VSTR observation

b. VSTR/StarTek joint observation

c. StarTek minimum of *

3. An agreed upon number of VSTR observations and VSTR/StarTek joint observations shall be performed per StarTek call center per *. The scores for all of these observations will be totaled and an average * score shall be calculated. The call quality observation form to be used in this process shall be provided by VSTR. Results shall be used to provide both * feedback to CCEs and StarTek management. The CCEs direct supervisor and StarTek's quality team shall conduct a minimum of * monitoring feedback sessions per CCE, per *.

M. Reports. StarTek shall provide VSTR with standard call count reports, performance reports, and station manager detail reports on a * by * for the previous *, and * by the * for the previous *. The reports shall be in the format and contain the information set forth in Exhibit C hereto. StarTek shall provide report cards reflecting measurements of the DMOQs and all of the above metrics within * of each * end. VSTR and StarTek shall mutually agree upon any other reports and the cost associated with the development of those reports. VSTR agrees to follow the change management process defined by StarTek when requesting changes to reports or additional information. If VSTR requires material format changes to VSTR standard reports, VSTR will be required to compensate StarTek for the development costs, based upon the rate outlined in the Pricing Schedule set forth in Section V of this Statement of Work and will be estimated by StarTek and approved by VSTR prior to invoicing.

O. Holidays. StarTek shall observe the following holiday schedule for managers, trainers, service specialists and CCEs. * as identified in the Pricing Schedule set forth in Section V of this Statement of Work.

New Year's Day

Victoria Day

Canada Day

Labour Day

Thanksgiving Day

Christmas

P. System Downtime; Force Majeure.

1. In the event StarTek determines that system maintenance is necessary, StarTek will notify VSTR of the need for such maintenance and will obtain the prior written approval of VSTR to schedule the time and duration of such maintenance. All routine maintenance shall be scheduled during off system hours. In no event shall interruption of Services for system maintenance constitute a failure of performance by StarTek if performed in accordance with this Section P. StarTek shall promptly report to VSTR any StarTek system failures, duration and impact.

2. Except for VSTR's obligation to make payments for amounts due StarTek, each Party's failure to perform shall be excused as a result of causes beyond its reasonable control. Such causes shall include without limitation acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations imposed after the fact, fire, communication line failures of third parties, vandalism, power failures by third parties, cables cut by third parties, earthquakes, floods or other similar catastrophes, failure of the VSTR system or the Internet not related to StarTek's actions or inactions, any law, order, regulation, direction, action or request of any governmental entity or court or civil or military authority having jurisdiction over either of the parties, national emergencies, insurrections, riots, wars, strikes, lock outs, or work stoppages. In the event of failures to perform for * or more as a result of a force majeure, either Party may terminate the Agreement by giving written notice to the other Party. Any such notice of termination shall be effective upon receipt.

3. Notwithstanding the foregoing or anything in the Agreement to the contrary, StarTek shall take commercially reasonable steps to ensure that the Services shall continue without interruption due to a StarTek systems failure during the term of the Agreement by implementing security features and disaster recovery plans reasonably necessary to provide the Services with an up-time of * (not including scheduled maintenance), which shall include *. The components and execution of this disaster recovery plan must be reviewed, updated, and tested quarterly and results reported to VSTR.

R. Staffing Requirements. StarTek agrees that all managers shall be full-time StarTek employees. Subject to Section E, StarTek will use commercially reasonable efforts to ensure that each person assigned to a function has the necessary functional and VSTR-related training to successfully perform the function. In addition, before a function is performed by an individual assigned to that function, StarTek shall verify that the necessary skills have been attained through the use of certification of skills program. StarTek shall also ensure that all persons who interact with the customers maintain their VSTR-related skills through * certification process. If VSTR reasonably requests StarTek to remove any personnel performing Services pursuant to this Agreement, StarTek shall promptly comply with such request, within *. In support of this process, StarTek will do the following:

•: Team leaders/supervisors shall go on-line to support customer calls each * for at least * calls per * (approximately * per *) to maintain their skills. The remainder of their time shall be used to support CCE development, and to otherwise assist StarTek employees to perform the Services.

•: Instructional analysts shall go on-line to support customer calls each * to maintain their skills.
•: Managers, lead representatives, team leaders/supervisors and trainers must be full-tune employees of StarTek and must have completed VSTR National Standard Curriculum Training.
•: Managers will monitor a minimum of * calls per CCE per *.

S. Error Rate and Fraud. The error rate on Advanced Activations shall not exceed * per *. VSTR error rates will be computed from data quality reports and VS Reports in the following areas: * and features and all criteria as specified in the Activation Verification Database, or similar application approved by VSTR. VSTR and StarTek will jointly develop or attain an appropriate application for measuring data quality. VSTR is responsible for providing StarTek detailed error reports by occurrence within * of occurrence.

StarTek shall implement and enforce procedures to detect fraudulent activity by a StarTek representative. All * detected by *will be researched within * upon receipt of notification. Fraud management will provide a documented e-mail including *. A tracking spreadsheet will be updated on a * basis by designated representative of StarTek and sent to * management for reconciling. * will be held liable for any revenue loss due to fraudulent activity by a * representative. VSTR holds all rights to remove any representative from the VSTR project.

T. Breach of Service Levels.

1. In the event that StarTek performs any of the Service Level Objectives at Level 3 or greater, as specified in Section U, for a consecutive period of *, StarTek shall be in breach of this Agreement and VSTR may terminate this Agreement if StarTek fails to cure the breach after * days notice to cure.

2. In the event that StarTek performs any of the Service Level Objectives at Level 1 or 2, as specified in Section U, for a consecutive * period or longer, StarTek shall be in breach of this Agreement. StarTek shall prepare a plan to cure the breach and shall have * in which to cure the breach. In the event that StarTek fails to cure the breach within the * period, VSTR may terminate the Agreement for StarTek's breach.

U. Service Level Objectives.

[* * *]

1. VSTR shall receive a Service Credit (as set forth in the Service Credit Table above) for each * in which the levels of StarTek's performance fail to meet the Service Level Objectives (as set forth in the Service Level Objectives Table above).

2. The Service Credit for each * shall be calculated by adding the * Adjustment Percentages for each Service that fails to meet the applicable Service Level Objective (the "Total Percentage"). The total * payments calculated based on billable hours pursuant to the Pricing Schedule set forth in Section V of the Agreement ("AVA Production Revenue"), multiplied by the Total Percentage, shall equal the Service Credit for the *.

3. *

4. The total adjustment based on the above shall not exceed * per *.

5. Service premiums will not apply to Advanced Production Revenue.

V. Pricing Schedule. VSTR shall pay StarTek for * as provided in the following schedule:

EXHIBIT B

VOICESTREAM INVOICING FORMAT

* * *

[29 pages redacted]

EXHIBIT C

VOICESTREAM REPORT FORMAT

* * *

[29 pages redacted]

EXHIBIT D

ARBITRATION PROCEDURES

1. Any arbitration shall be initiated by written request for arbitration delivered by the StarTek or VSTR to the other Party. The party referring a dispute to arbitration shall be referred to herein as the "Referring Party" and the other party shall be referred to herein as the "Non-Referring Party". The Referring Party must provide in the notice a general description of the dispute, a statement that the dispute is referred to arbitration under this Agreement and the amount of money alleged to be required to compensate the Referring Party.

2. The Referring Party and the Non-Referring Party shall endeavor to agree promptly on a single arbitrator. If on or before the 10^th day following the notice described above they have not so agreed upon a single arbitrator, the Referring Party and the Non-Referring Party shall, by notice to each other, each designate one arbitrator. The two arbitrators so designated shall endeavor to designate promptly a third arbitrator. If the two arbitrators have not designed the third arbitrator by the 5^th day following the designation of the second arbitrator, or if a second arbitrator have not been designated by the 5^th day following the designation of the first, either party may request the Judicial Arbiter Group, Inc., ("JAG") (or should such organization be unable to act, such other organization or arbitrator as is mutually agreement to the StarTek and VSTR) to designate the remaining arbitrator(s). If any arbitrator resigns, becomes incapacitated or otherwise refuses or fails to serve or to continue to serve as an arbitrator, the party(ies) entitled to designate that arbitrator shall promptly designate a successor.

3. The arbitration shall be conducted in King County Washington, or such other place as the parties may agree. The hearing shall be commenced within thirty (30) days of the selection of the final arbitrator. Within thirty (30) days following the closing of the hearing a written award shall be made by the arbitrator(s) and accompanied by findings of fact and conclusions of law, which shall be contemporaneously delivered to the StarTek and VSTR.

4. The parties shall be limited to two discovery depositions each of factual witnesses, each such deposition not to exceed four hours. The parties shall be entitled to submit no more than twenty written interrogatories to the other party, twenty requests for production of documents, and twenty requests for admission. As soon as practicable after the appointment of the final arbitrator the arbitrator(s) shall set a pre-hearing conference to schedule the completion of discovery, the filing of pre-hearing briefs and such other matters as may be required for the efficient conduct of the hearing.

5. The arbitrator shall not be authorized to modify or amend any terms or provisions of this Agreement and shall not make an award in excess of or inconsistent with the terms of this Agreement.

6. The final award of the arbitrator will be binding on the Parties and enforceable through entry of a judgment in any court of law having jurisdiction thereof.

EXHIBIT E

CALL CENTER EMERGENCY PREPAREDNESS
PLAN MANAGEMENT PROCEDURES

* * *

[34 pages redacted]

EXHIBIT F

CHANGE MANAGEMENT PROCESS

* * *

[8 pages redacted]

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EXHIBIT 10.43

EX-10.44 4 a2093268zex-10_44.htm EXHIBIT 10.44
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Exhibit 10.44

AT&T WIRELESS SERVICES
PROVIDER MASTER SERVICE AGREEMENT

PROVIDER Legal Name		AT&T Wireless Services Inc. ("Company")
StarTek USA, Inc.		AT&T Wireless Services, Inc. d/b/a AT&T Wireless
PROVIDER Address		Company Address
100 Garfield St, Suite 400 Denver, CO 80206		7277 164^th Ave NE Redmond WA 98052
PROVIDER Contact		Company Contact
Name: David Rosenthal Title: EVP and CFO Telephone: 303-399-2400 Fax: 303-388-9970		Name: Michael Bainter Title: Senior Buyer Telephone: 425-580-8031 Fax: 425-580-8324

Terms and Conditions

Company and Provider agree that the following terms and conditions apply. Definitions related to this agreement are listed in Schedule 1 or contained in the Terms and Conditions.

This Master Service Agreement "StarTek 1" ("MSA") consists of the attached Terms and Conditions, Schedules, Orders, and the Policies and Procedures as of January 1, 2002 (as defined in Section 1.7) as may be mutually amended by Company and Provider.

Provider desires to provide Teleservices to Company. Company and Provider desire to enter into this MSA to authorize Orders to be issued for Teleservices to be performed by Provider.

1. RELATIONSHIP OF THE PARTIES

1.1 Authorization.

1.1.1 Company authorizes Provider to perform Teleservices and provide other Work that may be defined in mutually agreed upon Orders. Provider agrees to perform Work for Company.

1.1.2 Provider acknowledges that the Company may offer Teleservices directly, and may appoint other Providers, and others who may offer or sell the Company's Service, and may also sell wireless telephones and related equipment and provide installation, repair or warranty service.

1.1.3 In performing their duties under this MSA, Provider and the Company must adhere strictly to the highest standards of fair dealing and ethical business conduct, and each must refrain from any business practice, promotion or advertising which may be injurious to the business of the other.

1.2 Nature of Relationship. In all dealings within the scope of this MSA, the parties acknowledge and agree that the relationship created by this MSA is that of independent contracting parties and is not, and will not be deemed to be any other relationship, including, without limitation, that of joint venturers, joint employers, or partnership. Provider is not a general agent of Company.

1.2.1 When providing Teleservices under this MSA, Provider must divulge its legal name and the nature of the relationship between Provider and Company.

1.2.2 Provider has not paid and will not be required to pay any franchise fee or other fee to be a Provider for Company or to use Company's name or other intellectual property. This MSA does not create any franchise between the parties.

1.2.3 Provider is solely responsible for the control and direction of its Personnel who perform the Work covered by this MSA. Any changes in Personnel performing Teleservices for Company that are reasonably requested by Company will be made as soon as possible. However, should Provider disagree with Company's request, the parties shall then resort to the escalation process in section 11.3. Subject to applicable laws, from time to time Company may request and Provider will deliver the names (including corresponding aliases) of Provider's Personnel for the purpose of monitoring.

1.2.4 Neither Provider nor its Personnel or agents may be deemed to be Company's employees or agents. Provider and Provider's Personnel must not represent themselves as Company's employees or agents, or otherwise use any Company identification in any manner, at any time, for any purpose not contemplated by the scope of this MSA. It is understood that Provider is an independent contractor for all purposes and at all times. Provider is wholly and solely responsible for withholding and payment of all applicable federal, state and local income and other payroll taxes with respect to its Personnel, including contributions from them as required by law.

1.3 Training.

1.3.1 For any Work, Company shall provide, in whatever medium it chooses, a copy of the training materials and methods and procedures necessary for the training of Provider's owners, officers, and Personnel, involved in fulfilling Provider's obligations under this MSA and any other person or entity who obtains through Provider the right to perform the Work. Said training shall include training for the prevention and detection of fraud. Company may, at its option, provide a program and materials to train Provider's trainers in Company's promotional programs. All training, if delivered by Provider, must include and adhere to the content, methods and procedures submitted by Company. Materials provided by Company remain the property of Company.

1.3.2 Provider must develop and conduct a program to train its Personnel to perform the Work, with emphasis on high quality accounts receivables techniques, customer service and skilled telemarketing and sales techniques in accordance with the requirements of each Order. All training is subject to observation and approval by Company.

1.3.3 Company may, in its sole discretion, permit a mutually agreeable number of Provider's Personnel to attend training classes offered by Company at no charge. While the training itself is free of charge, Provider is responsible for all expenses associated with Provider's representatives attending such Company training courses.

1.3.4 Provider certifies that all its Personnel have received initial and promotion-specific training prior to commencement of Work. Provider agrees to ensure that all its Personnel have received Company product and Service training. Provider must adhere to training delivery requirements as provided in writing by Company including adherence to operational methods and procedures. Company may monitor the delivery of training.

1.3.5 Bi-lingual capability includes proficiency in languages and ability to read and write English script and translate into languages during customer contact. Language requirements are specified in Orders. Provider must ensure that its Personnel speak languages(s) required by Company for specific programs fluently, easily and with proper grammar and pronunciation.

1.3.6 Provider is fully responsible for the conduct and sales techniques of its Personnel. All rights, obligations, and responsibilities relating to Provider's Personnel are those of Provider. Provider must ensure that all Personnel involved in sales or service attend regular training courses required by Company regarding the sale of and changes to the Service. Provider must ensure that only those Personnel who have been trained on a specific aspect of Service or piece of equipment sell that particular Service or equipment unless otherwise mutually agreed to in writing.

1.4 Confidentiality.

1.4.1 Both parties acknowledge that they may be in receipt of certain confidential proprietary information relating to each other, including without limitation, lists of Subscribers, financial and business information, including commission structures, technical information and other information not generally known to the public, including the terms of this MSA (collectively, "Confidential Information"). Provider agrees that information related to Company's subscribers, in whatever form, constitutes Confidential Information of Company. Both parties acknowledge that any Confidential Information that has been disclosed by one to the other has been disclosed solely for the performance of the duties under the MSA. Both parties agree that all Confidential Information is the exclusive property of the disclosing party. Both parties further acknowledge that the disclosure or improper use of Confidential Information would irreparably injure the disclosing party and that Confidential Information is a trade secret of the disclosing party.

1.4.2 Confidential Information shall not include information which is or becomes through no fault of the receiving party part of the public domain; which was already known to the receiving party at the time of disclosure as evidenced by written documents; which is independently developed by the receiving party without reference to or use of any Confidential Information received from the other party; which is lawfully obtained by the receiving party from a third party outside of this MSA, which third party also lawfully obtained the Confidential Information; or which is disclosed pursuant to law, judicial order or government regulation so long as the receiving party immediately notifies the other party prior to disclosure.

1.4.3 Both parties agree that, during and after the term of the MSA, for a period of five (5) years, neither party, nor any employee, affiliate, or other person or entity otherwise connected with either party, will directly or indirectly, without the prior written consent of the disclosing party, divulge, use, sell, exchange, give away or transfer any Confidential Information of the disclosing party. Both parties further agree that they will advise their employees of these restrictions and will use reasonable efforts to prevent the disclosure or the improper use of Confidential Information by any current or former employees. Each party agrees not to publicize or disclose the terms of this MSA to any third party without the prior written consent of the other, except as may be required by law.

1.4.4 Both parties agree that the following all constitute Confidential Information of the disclosing party: any idea, data, program, technical, business or other intangible information, however conveyed, and any document, print, tape, disk, tool or other tangible information-conveying or performance-aiding article owned or controlled by the disclosing party, and provided to the receiving party under or in contemplation of this MSA.

1.4.5 Both parties agree to promptly destroy or surrender, as the disclosing party directs, any or all Confidential Information.

1.4.6 If the receiving party is served with any form of process to obtain any Confidential Information of the disclosing party, the receiving party must immediately notify the disclosing party's representative identified in Section 13 NOTICES of this Master Services Agreement.

1.5 Compliance with Laws. Each party must comply at its own expense with the following, as applicable:

a): All federal, state, local and foreign laws, ordinances, regulations and codes including those relating to telemarketing activities and benefit plan administration and including the identification and procurement of required permits, certificates, licenses, insurance, approvals and inspections performed under this MSA.
b): All FCC rules, regulations and tariffs.
c): The Federal Trade Commission Telemarketing Sales Rule, 16 CFR 310, including without limitation, Provider's obligation to refrain from abusive telemarketing practices, to make all

required disclosures as set forth in 16 CFR 310.4, and to maintain accurate and complete records of Provider's telemarketing activities relating to Company and otherwise, as set forth in 16 CFR 310.5.

1.6 Changes in Law. If any existing law or regulation is changed or if any new law or regulation is enacted that affects the Work provided under this MSA, Provider and/or Company may modify this MSA to the extent reasonably necessary to ensure that such Work will be in full compliance with such laws and regulations. If such change results in a material change in the applicable Order, Provider and Company will utilize the Change Management process outlined in Section 1.8.

1.7 Compliance with Policies and Procedures. Company and Provider agree to comply with all applicable policies and procedures which may be found in Company's CCNet system, and/or as may provided by Company's Vendor Management team ("Policies and Procedures"). Any portion of a Policy or Procedure that relates to discipline or management of Company's employees shall not apply to Provider. Provider's failure to comply with any Policies and Procedures, which are regularly complied with by Company, may subject Provider to monetary or other penalties as detailed in the particular Policy or Procedure. Company agrees to send written notice to Provider of any new Policies and Procedures issued by the Company or of any changes to existing Policies and Procedures. If Provider has access to CCNet, Company may provide written notice by posting new Policies or Procedures or changes to existing Policies and Procedures in CCNet. If Provider determines that a new Policy or Procedure or a change to an existing Policy or Procedure materially changes the terms and conditions of this MSA or any Order(s), then Company and Provider shall utilize the Change Management Process below.

1.8 Change Management Process

Company may at any time during the term of the MSA or any Order require new Policies and Procedures or require additions, deletions or alterations") to an existing Policy or Procedure or other work (all hereinafter referred to as a "Change"). Within ten (10) business days after a written request for a Change, Provider shall submit a response to Company which shall detail the reasons Provider believes it cannot comply with the Change as presented and shall include any changes in Provider's costs or in the delivery or Work schedule necessitated by the Change. Company shall, within ten (10) business days of receipt of the response either (i) agree with Provider's response, in which case the parties shall amend the Policy or Procedure or the Order accordingly or excuse Provider, in writing, from complying with the particular Policy or Procedure at issue, or (ii) disagree with Provider's response; in which case the parties shall utilize Section 11.4 Escalation and/or Section 11.5 Non-binding Mediation. No Change shall be considered or implemented, nor shall Provider be entitled to any compensation for work done pursuant to or in contemplation of a Change, until the parties have resolved the Change pursuant to steps (i) or (ii) above. Provider fails to challenge the Change under this section.

2. DUTIES AND RESPONSIBILITIES OF PROVIDER

2.1 General. Provider must faithfully, honestly and diligently perform its obligations under this MSA, and, in providing Teleservices, must use its reasonable efforts to promote and enhance the use of Service provided by or through Company. Provider will take no action inconsistent with the provisions of this MSA and, pursuant to the terms of any Order, in providing Teleservices, must support the Company's efforts in providing Service to Subscribers. In providing Teleservices, Provider must provide timely, courteous and efficient service to Subscribers and must be governed in all dealings with members of the public by the highest standards of honesty, integrity, ethical conduct and fair dealing. In providing Teleservices Provider must refrain from any business practice, promotion or advertising that may be injurious to the business of Company. Neither Provider nor any affiliate may be a reseller of Company's Service.

2.2 Provider's Representations and Warranties:

2.2.1 Provider will comply with all applicable local, state and federal laws, statutes, orders, ordinances and regulations relating to performance of the Work, including compliance with all requirements of Section 6, 7 and 12 of the Fair Labor Standards Act of 1938, as amended from time to time and with all regulations and orders issued under Section 14 of the administrator of the Wage and Hour Division as amended from time to time. On request, Provider shall furnish Company with certificates of compliance with all such laws, orders and regulations.

2.2.2 In furtherance of Company's commitment to workplace diversity as an equal opportunity employer, Provider will, while performing the Work and at all other times while on Company property or conducting any Company related business, comply with all applicable local, state and federal laws, including specifically all laws prohibiting harassment or discrimination of any kind in the workplace.

2.2.3 Provider is not a party to any existing union contract that purports to obligate Company to the union, either as a successor or assignee of Provider, or in any other way.

2.2.4 Provider Works, and the exercise by Company of its rights hereunder with respect to the Provider Works will not infringe upon, violate or misappropriate any patent, copyright, trade secret, trademark, contract or other right or interest of any third party.

2.2.5 Provider's execution, delivery and performance of this MSA will not violate any employment, nondisclosure, confidentiality, consulting or other agreement to which Provider is a party or by which it may be bound.

2.3 Solicitation and Enrollment. Provider will assist Company's efforts to prevent fraudulent or abusive use of Company's Service and will, subject to Sections 1.7 and 1.8, comply with all fraud prevention Policies and Procedures issued by Company from time to time.

2.4 Regulatory Matters. In accordance with Section 1.6, this MSA is subject to (i) changes or modifications to comply with, and (ii) any necessary approvals of, local, state and federal regulatory agencies having jurisdiction over the offering or provision of Service or Provider's activities in connection therewith. Company may add, delete, suspend or modify the rates for, or features included in, Service, and determine whether such changes apply to both existing or future Subscribers, and will notify Provider, through a revised Policy or Procedure, as soon as practicable of each such modification. Provider may not take any action inconsistent with any efforts by the Company before regulatory authorities or others regarding any modification of rates for Service.

2.5 Exclusivity. Provider agrees that if it performs Teleservices for a Competitive Service Entity, it will perform Company's Work according to the following conditions:

a): In centers where the Teleservices performed for Company are physically separate from Teleservices performed for Competitive Service Entities.
b): With separate management structures for Company Work and Competitive Service Entities.
c): Physically segment Company's Confidential Information from other clients' confidential data.

2.5.1 Provider's Personnel who are involved in Teleservices Work for Company must not be used to "jump start" telemarketing programs for Competitive Service Entities for a minimum of 6 months following their completion of Work covered by this MSA. Notwithstanding the foregoing, the "jump start" restriction shall not apply if (i) Company requests removal of a Provider employee providing Work under an Order, (ii) a sustained decrease in Company's volumes occurs which necessitates a decrease in headcount, or (iii) the parties mutually agree otherwise in writing.

2.6 Account Manager. Provider must designate a National Account Manager for each Order executed under this MSA. The National Account Manager must be equipped with a cellular phone at Provider's expense.

2.6.1 Responsibilities & Duties. The National Account Manager is responsible for the following:

a): be accessible to manage Provider's performance under this MSA;
b): insure that Teleservices are performed in accordance with this MSA and the applicable Order;
c): serve as the single point of contact throughout the term of the Order;
d): while at Company's facilities, the National Account Manager must wear designated identification at all times and comply with all Company regulations;
e): meet with Company Vendor Managers for formal business reviews quarterly or as requested by either Company or Provider.

2.7 Suspected/Actual Fraud. Provider's Director of Corporate Security is responsible for communicating with Company's Business Security Department in the event external or internal fraudulent activity at a Provider's Call Center is suspected or detected by Provider. Company's Business Security Department is responsible for communicating with Provider's Director of Corporate Security in the event external fraudulent activity or internal fraudulent activity at Providers call center is suspected or detected by Company. Internal fraud is defined as fraudulent activity that occurs with the active and knowing participation of a Provider employee. In the event internal fraud is suspected or detected, Company and Provider agree to the following process:

2.7.1 The Provider's Director of Corporate Security must contact Company's Vendor Manager and appropriate security officer to inform them of the activity (whether suspected or actual). In addition, Company's security officer will, within two (2) business days, notify Provider's Director of Corporate Security of any suspected external or internal fraudulent activity at Provider's Call Center and provide all documentation necessary for Provider's Director of Corporate Security to investigate each such suspected fraudulent activity ("Notification").

2.7.2 Within 2 weeks of the Notification Provider must submit a written report to Company documenting the progress of the investigation into the suspected or actual fraudulent activity.

2.7.3 If the fraudulent activity is within Provider's organization, within 4 weeks of the Notification, Provider must submit to Company's security officer the resolution of the incident, or a correction plan for Company's approval. Said correction plan will include any recommendations which should be taken by Company to alleviate the fraudulent activity from occurring at Provider's Call Center, and may include a request for reports and/or systems access to enable Provider to detect and or prevent such fraudulent activity from occurring in the future.

2.7.4 Provider has 30 days following the Company's security officer's written approval of the correction plan to execute the plan. If, after 30 days, the specific, internal fraudulent activity at issue at Provider's Call Center which was the subject of the Notification continues to occur, and Company has complied with all reasonable requests contained in the correction plan, then Provider will be subject to continuous performance default as described in the Order.

2.7.5 If the specific fraudulent incident at issue should have been reasonably detected by Provider, then Provider is liable for all proven, direct damages suffered by Company as a result of the specific incident at issue as a result of the fraudulent activity. Direct damages may include but is not limited to equipment costs, sales commissions, shipping charges, toll charges, and reimbursement for unauthorized credits, but shall not include Company's investigation costs or consequential damages.

2.7.6 During any investigation, the Provider's Director of Corporate Security or his designee must be available to meet with Company's security representatives on a weekly basis until the matter has been resolved to Company's satisfaction. Provider, through the Provider's Director of Corporate Security, must comply with Company's requests for information regarding an ongoing investigation or provide a deliverable date within two business days.

3. STATEMENT OF WORK. During the term of this MSA, Company may authorize Provider to perform Work for Company as specified in Orders mutually agreed to by the parties. Provider will

perform the Work in accordance with the terms of the Order and this MSA. Absent a valid Order, Provider is not obligated to perform Work for Company and Company is not obligated to compensate Provider, unless the parties mutually agree otherwise, in writing.

3.1 Provider agrees to perform all Work specified in the Orders in accordance with the terms and conditions therein and meet all interim deadlines as agreed by the parties. The Work must be performed to the reasonable satisfaction of Company and in accordance with the standards set forth in this MSA and the applicable Order. In return for the Work performed by Provider, Provider is compensated at the rates set forth in each Order.

3.2 To be valid, all Orders must be in writing and contain the information set out below.

a): The incorporation, by reference, of this MSA;
b): A description of the work to be performed by Provider;
c): A description of the materials to be delivered by Company;
d): Time periods or other such schedules for the performance of the Work;
e): Quality or performance metrics;
f): The compensation provisions and schedule of payments;
g): The appropriate signatures of the authorized representatives of Company and Provider;
h): Reports to be furnished by Provider to Company;
i): Forecasting process;
j): Training;
k): Systems and telecommunications requirements; and
l): Any other applicable terms.

3.3 Orders constitute the only authorization for Provider to take any action or expend any money on behalf of Company, unless otherwise agreed to in writing by the parties. Provider acknowledges and agrees that Work cannot begin unless and until an authorized representative of each of the parties properly executes an Order or unless the parties mutually agree otherwise in writing. The terms and conditions of this MSA apply to all Orders and other written agreements executed under this MSA. Upon the expiration of the term stated in the Order or written agreement, and unless otherwise stated in each Order or written agreement, the Order or written agreement continues in effect on a month-to-month basis until terminated with 30 days written notice.

3.4 In addition to the other obligations set forth in this MSA (including without limitation Company's payment obligations), Company will furnish Provider with any information relevant to the Work to be performed under this MSA. Any information produced by Company to Provider in this regard is Confidential Information as defined in Section 1.4 of this MSA. Upon expiration or upon termination of this MSA, Provider must return to Company all information furnished by Company or Company Specific Work Product developed by Provider on Company's behalf.

3.5 Company and Provider agree to meet with each other as needed and at their own expense to discuss planning and review progress of the Work described in this MSA.

4. COMPENSATION

4.1 Payment/Compensation. Subject to the terms of this MSA and the Order, Company will compensate Provider in accordance with the amounts set forth in each Order, which amounts (with the exception of pass through expenses) shall be fixed for the term of the applicable Order, unless otherwise mutually agreed upon by the parties in writing. Each Order contains the full payment provisions to Provider for the performance of Work under this MSA.

4.2 Compensation. Provider earns compensation in accordance with the amounts set out in each Order. Payment shall be considered credited to Company's account when received by Provider. Provider will file all reports and pay all fees, government assessments and taxes applicable to Provider's

business when due. Any Provider employment related taxes shall be paid by Provider. Company will file all reports and pay all fees, government assessments and taxes applicable to the Work when due. Compensation will be paid by Company or credited to Provider as follows:

4.2.1 Within 45 days after receipt of an accurate original or revised invoice, which will include all applicable backup documentation reasonably necessary to verify the charges, from Provider.

5. INFRASTRUCTURE FOR TELESERVICES

5.1 Provider is responsible for all costs associated with providing and maintaining the following equipment:

(a): One desktop PC for each of its Personnel configured to Company's specifications, including maintenance, upgrades and the wiring;
(b): building, including dedicated workspaces and office supplies;
(c): telecommunications switch; and
(d): One Universal Power Supply (UPS) for each desktop PC.

5.2 Company is responsible for all costs associated with workstation infrastructure which may include, but is not limited to, the following:

(a): network (T1's);
(b): servers;
(c): routers;
(d): hubs;
(e): Data Service Units (DSUs); and
(f): network information servers.

5.3 Ownership. Provider owns all equipment supplied by Provider and Company owns all equipment supplied by Company, regardless of its location. Company agrees to add capacity to the infrastructure as required to support the dedicated environment. This infrastructure includes all components required to access these systems up to the desktop computers utilized by Provider's Personnel.

5.4 Access Codes. Provider must request from Company confidential individual codes allowing access to Company systems ("User IDs") for personnel requiring such access. These User IDs must be requested 15 business days in advance of the need, unless the parties mutually agree, in writing, to a shorter period. Company agrees that any Confidential Information supplied by Provider for the purpose of acquiring User IDs shall be subject to Section 1.4 Confidentiality. Further, Company agrees to limit access to and disclosure of Provider's Confidential Information supplied pursuant to this Section 5.4 to Company's employees on a "need to know" basis only.

5.5 User ID's. Provided Company receives a request for User ID's in the timeframes specified in Section 5.4, Company will provide to Provider the necessary User ID's to support universal access for all required systems to support initial, attrition and growth classes at least 1 week prior to the start of classes. User IDs for change related classes will be provided as soon as possible, but no later than four business days prior to the start of the class.

5.6 Provider will notify Company's designated Vendor Manager of all CCEs and their corresponding User IDs that are no longer performing Work for Company within 48 hours of payroll separation or movement from the Company Work supported by Provider. Company bears the responsibility for any unauthorized use of User IDs and passwords after the second business day following its receipt of Provider's notice of separated CCEs. Individual User IDs must not be reused, shared, or transferred to another CCE for any reason, unless authorized in advance by Company in writing. Company will promptly provide User IDs with the appropriate level of authorization and access to enable the CCEs to fully perform their job responsibilities. Company is also responsible for promptly updating User IDs to ensure that system changes and maintenance do not adversely impact CCEs ability to perform as defined within an Order.

6. PROVIDER'S OPERATING MATTERS

6.1 Provider's Business Records. Provider must create and maintain at its offices full, complete, and accurate records of its business conducted and billed pursuant to this MSA. These records must be created and maintained in accordance with recognized commercial accounting practices and must be preserved until the later of (i) the final determination and payment of all costs incurred under this MSA or (ii) the period legally required. Provider must also make available the information it is required to make public as a subsidiary of a publicly traded company. Provider agrees, upon ten (10) days advance written notice, to permit Company or Company's representative to examine and copy these records and all supporting records at all reasonable times at its own expense, however Company agrees such examination shall be limited to twice per calendar year. The preceding limitation will not apply if Company requires access to Provider's records with respect to a billing dispute, court order or other legal process. Company agrees that for purposes of auditing, it shall not utilize, as a Company representative, any entity which competes with Provider in the provision of Telservices. Examination of Provider's invoices must be conducted no later than 3 calendar years after completion of services rendered or after the expiration date of this MSA, whichever comes later. Company acknowledges that Provider's business records are Confidential Information of Provider. Should Company, at any time during the Term of this MSA, provide detail or supporting documentation for Provider's invoices, then Provider shall have the right to audit Company's records pursuant to this Section 6.1 including any limitations imposed in regards to the frequency of such audits.

6.2 Insurance. Provider must at all times during the term of this MSA, at Provider's sole expense, be insured by a reputable insurance company licensed to do business in the states where Provider operates under this MSA, under the following types of coverage and limits of liability:

6.2.1 Commercial General Liability Insurance -Covering against claims for bodily injury, personal injury, or death, contractual liability, property damage caused by or occurring in conjunction with the operation of Provider's services, and products/completed operations liability insurance and independent

contractors liability insurance with respect to equipment, installation and service. The Company shall be listed as an additional insured under such policy, but only with respect to its legal liability caused by Provider's negligence. This insurance coverage must provide in the aggregate liability protection of at least $5,000,000 dollars per occurrence of bodily or personal injury or death, including contractual liability, $2,000,000 dollars per occurrence for property damage, and $2,000,000 dollars per occurrence for products/completed operations liability and independent contractors liability pertaining to equipment, installation or service. Such limits may be obtained by the Provider through a combination of primary and umbrella/excess liability insurance policies.

6.2.2 Workers compensation insurance to the extent required by statute, together with statutory disability benefits liability in applicable states.

6.2.3 Employer's liability insurance of at least $1,000,000 each accident Bodily Injury, $1,000,000 for each employee by disease, and $1,000,000 Policy limit by disease. Such limits may be obtained by the Provider through a combination of primary and umbrella / excess liability insurance policies.

6.2.4 Primary Coverages. All coverages required by this MSA must be primary and non-contributory with respect to Provider's negligence, must be written on an occurrence basis and must be maintained without interruption from the date of this MSA until the date of termination of this MSA. The insurance policies providing such coverage shall specifically refer to, and provide insurance coverage for Provider's indemnity obligations under the "Indemnity" Section of this MSA. Provider is responsible for all deductible payments.

6.2.4 Certificates of Insurance. Certificates of insurance acceptable to Company must be filed with Company prior to commencement of Work by Provider. The certificates of insurance and the insurance policies required hereunder must reflect Additional Insured requirements in Section 6.2.1 with respect to all Work performed on behalf of Company. Failure by Provider to provide such certification of insurance does not constitute a waiver by Company of these insurance requirements.

6.2.5 Notice of Cancellation / Rating of Insurer. The certificates and the insurance policies required by this MSA must not expire for at least one year from the date of issuance and must contain a provision that coverages afforded under the policies will not be canceled or allowed to expire unless Company has received at least 30 days prior written notice. If any of the foregoing insurance coverages are required to remain in force after final payment and are reasonably available, an additional certificate evidencing continuation of this coverage must be submitted with the final application for payment. The insuring company must be reputable, admitted to do business in the state where the Provider is performing the Work for Company and have a rating by A.M. Best of at least A-VII. Provider is responsible for all deductible payments.

7. USE OF MARK BY PROVIDER; PROTECTION OF THE COMPANY'S RIGHTS

7.1 Use of Marks. During the term of this MSA, the Company authorizes Provider to call and receive calls from potential and current subscribers to Company's Service on behalf of Company and to use Company's Marks subject to the limitations contained in this MSA. Provider acknowledges that all Marks are the exclusive property of Company.

7.2 No Transfer of Rights. Provider acknowledges that this MSA does not transfer any rights to use any Marks (except to the limited extent set forth in this MSA while it is in effect) and that this MSA does not and will not confer any goodwill or other interest in any Marks upon Provider, all rights to which remain with the Company. Provider will not challenge Company's ownership of the Marks in any way.

7.3 Unauthorized Use. Any intentional unauthorized use of the Marks by Provider or its respective Personnel, or affiliates, constitutes infringement of Company's rights and a material breach

of this MSA. Upon expiration or termination of this MSA for any reason, Provider must immediately discontinue use of the Marks.

7.4 No Disparagement. Provider must not in any way disparage Company's Service or equipment.

8. TERM AND EXTENSION OF RELATIONSHIP

This MSA is effective as of March 21, 2002 ("Effective Date"), and continues in effect until December 31, 2004 or the expiration date of any outstanding Work Order, unless earlier terminated in accordance with the provisions of the MSA. This MSA is automatically extended for successive one-year periods unless either party gives written notice to the other party of its intention to terminate this MSA not less than 90 days before the expiration of the then current term.

9. TERMINATION OR EXPIRATION OF MSA

9.1 Termination. Subject to the provisions contained in Section 9.2, this MSA or any Order may be terminated as follows. Termination of the MSA for cause terminates all Orders issued under it. However termination of any one Order shall not terminate the MSA or any other Orders.

9.1.1 Either party may terminate this MSA upon thirty (30) days advance written notice to the other party if the other party breaches any material term or condition of this MSA. Either party may terminate an applicable Order if the other intentionally fails to comply with any applicable Policies or Procedures.

9.1.2 Either party may terminate an Order immediately upon written notice to the other party if the FCC or any other regulatory agency promulgates any rule, regulation, or order which in effect or application prohibits or substantially impedes either party from fulfilling their obligations under the Order.

9.1.3 With respect to Teleservices, Company may terminate an applicable Order immediately upon written notice if Company is no longer authorized to provide Service within the area.

9.1.4 This MSA terminates immediately and without notice if either party: admits in writing its inability to pay its debts generally or makes an assignment for the benefit of creditors; files any petition or action or other affirmative act of insolvency (which is not dismissed within ninety (90) days) under any bankruptcy, reorganization, insolvency arrangement, liquidation, dissolution or moratorium law and any other law or laws for the relief of, or relating to debtors; or subjects a material part of the other party's property to any levy, seizure, assignment or sale for or by any creditor, third party or governmental agency, has an Order for Relief under Title 11 of the United States Code entered by any United States Court against it; or has a trustee or receiver of any substantial part of its assets appointed by any court.

9.1.5 The parties may mutually agree to other termination provisions in an Order.

9.2 Breach and Cure Period. Other than Company's payment obligations which are governed by the Section 4.2 Compensation and Sections 9.1.2, 9.1.3 and 9.1.4, neither party is in breach of this MSA and/or an applicable Order until and unless the other party provides written notice to the allegedly breaching party of any violation of the MSA ("Cure Notice"). The alleged breaching party shall have forty-five (45) days from receipt of the Cure Notice to cure the specified breach. If the default is not cured by the end of the forty-five (45) day period, then termination is effective upon thirty (30) days prior written notice to the breaching party. Notwithstanding the above, a breach by Provider of any part of Sections 2.3, 2.4 or 7.3 of this MSA are not subject to cure and, accordingly, any such breach gives Company the right to terminate the MSA immediately upon written notice to Provider. The other party's right to terminate this MSA shall automatically expire if the breaching party has cured the breach prior to the breaching party's receipt of the termination notice.

9.3 Obligations of Provider Upon Termination or Expiration. Upon the expiration or termination of this MSA for any reason, Provider and its affiliates must: (a) discontinue the use of all Marks, such as signs, logos, stationary, or business cards for Work provided hereunder, and must return to Company all materials containing any Mark or otherwise identifying or relating to Company's business; (b) cease representing themselves in any fashion as a Provider or representative of Company for Work provided hereunder; (c) return to Company or destroy those documents, records or other materials (including, without limitation, all copies of any type including photocopies and computer copies), which were provided to Provider by Company or which contain any Confidential Information of Company for the purposes of performing Work hereunder; and (d) provided Company is not in actual default or breach of any of its material obligations hereunder, provide all reasonable cooperation in the orderly transition of the Work to Company or elsewhere. This cooperation includes, at Company's expense, packing and preparing for shipment any Company Confidential Information, materials or other inventory to be transferred, provision of reports, files and similar media necessary for continuation of the Work transferred, continuation of Work at reducing levels if necessary during a transition period and at reduced levels if Work is transferred in part at mutually agreed upon compensation.

9.4 No Compensation. Upon termination of this MSA for any reason, Provider's rights to compensation for Work provided under this MSA expire, and become null and void, except for compensation earned prior to the termination date of this MSA and any mutually agreed upon compensation which may be due for transition services.

9.5 Expiration, Revocation or Transfer of Licenses. With respect to Teleservices, if any license Company requires in order to operate expires or is revoked, any Orders terminate with respect to the area covered by the expired or revoked license(s).

10. OWNERSHIP AND USE

10.1 Company is contracting with Provider for the provision of Teleservices. As part of Provider's Work, Company expects Provider to gather information from all contacts, which includes past, current and potential subscribers on Company's programs, to assist Company in preparing Company specific scripts, and to gather information from and for Company's Personnel. Provider's ownership interest in information gathered from all contacts regarding Company's goods or services including without limitation all subscribers, names, addresses, email addresses, telephone numbers, service files, notes taken by Provider regarding service inquiries, written and electronic communications between Provider and any Company subscriber, in personally identifiable employee information and in portions of any and all scripts created hereunder that are Company specific and that are not general or generic nature (collectively, "Company Data") shall be assigned by Provider to Company and Company shall be the sole and exclusive owner of all right, title and interest in and to all Company Data. Company agrees that anything (excepting Company Data, Company Works and Company Specific Work Product) created or developed in whole by Provider (whether or not created or developed while, or in the process of, providing any services to or for Company), including without limitation any and all scripts, information, databases, documentation, forms, programming, Internet related software or processes, interactive voice response related software or processes, telephone marketing related software, telephone marketing or business methods, training methods or training materials or other telephone marketing related information, methods or processes (collectively, "Provider Works"), are and shall remain the sole and exclusive property of Provider. Any disputes related to this section will be resolved pursuant to Section 11.3 ("Escalation") and Section 11.4 ("Non-binding mediation").

10.2 Provider agrees that anything created or developed in whole by Company including without limitation any and all scripts, information, databases, documentation, forms, programming, Internet related software or processes, interactive voice response related software or processes, telephone marketing related software, telephone marketing or business methods, templates, training methods or training materials or other telephone marketing related information, methods or processes (collectively,

"Company Works"), are and shall remain the sole and exclusive property to Company. Company hereby grants to Provider a temporary, royalty free, nonexclusive, nontransferable license to use on, for or in, Company services or networks only and not for any other use or purpose outside the scope of this Agreement, any Company Works made available to Provider by Company during the term of this MSA. This temporary grant shall automatically cease upon termination of this MSA, if not otherwise terminated sooner. Provider may use Company Works solely to provide the Work hereunder for Company and will not disclose, use, or otherwise make Company Works available to any other entity that is not a party to this MSA.

10.3 Any work product Company requests Provider to create or develop expressly for Company during the course of performing Work under this MSA and which work product is specifically identified in a separate writing signed by the parties, shall be the sole and exclusive property of Company (the "Company Specific Work Product"). Provider shall assign and transfer to Company all right, title and interest in and to any such Company Specific Work Product. In addition, Provider will take such action (including, but not limited to, the execution, acknowledgement, delivery and assistance in preparation of documents or the giving of testimony) as may be reasonably requested by Company to evidence, transfer, vest or confirm Company's right, title and interest in the Company Specific Work Product. By entering into this MSA, Provider does not waive and expressly retains all rights, title and interest in its Provider Works, unless such work is identified as Company Specific Work Product.

10.4 Further Acts. Each party will take such action (including, but not limited to, the execution, acknowledgment, delivery and assistance in preparation of documents or the giving of testimony) as may be requested by the other party to evidence, transfer, vest or confirm the requesting party's right, title and interest in its Assets.

10.4 Use. Except as required for either party's performance under this MSA or as authorized in writing by the other party, neither party will use, disclose, publish or distribute any of the other party's Assets. Each party will hold the other party's Assets in its possession or control in trust for the other party and will deliver them to the other party upon request and in any event upon the expiration or termination of this MSA.

10.5 Proprietary Notices. On all copies made by one party of the other party's Assets, each party agrees to reproduce and maintain the proprietary legends or notices as are contained in or on the original or as the other party may otherwise reasonably request.

10.6 Limitation. Notwithstanding any other provision of this Agreement to the contrary, this Section 10 will not obligate Company to assign or offer to assign to Provider of any of Company's rights in Company owned material or Company proprietary materials. This satisfies the written notice and other requirements of state law.

11. DISPUTES.

11.1 Provider Disputes. It is Provider's duty to submit to Company accurate invoices and supporting documentation reasonably necessary to substantiate the charges. Each Provider invoice is deemed accurate on the 61^stday after Provider issues it. Nevertheless, Provider may, within sixty (60) days of the date each invoice is issued, submit a revised invoice. If Provider submits a revised invoice Company will remit payment according to the payment terms outlined in Section 4.2. With the exception of telecommunications toll charges, if Provider does not submit a revised invoice within 60 days of each invoice, Provider waives any discrepancy in the original inaccurate invoice.

11.2 Invoice Dispute Process: If any portion of an invoice is disputed by Company in good faith, Company may withhold payment for the disputed portion of the invoice and must provide Provider with written notification of the disputed amount and supporting documentation to substantiate the dispute. Any non-disputed amounts shall be paid in accordance with Section 4.2 Compensation. Provider will have ten (10) business days to respond, which response must include data supporting the charges invoiced. The parties shall negotiate in good faith during the thirty-day period that follows the expiration of Provider's ten (10) day period. The thirty-day period may be extended by written mutual agreement of the parties. Provider agrees to continue to perform its obligations regardless of such dispute. If, at the conclusion of the thirty (30) day period the parties have not resolved the dispute, they shall resort to Section 11.3 Escalation Process detailed below.

11.3 Escalation Process: The parties shall make all reasonable efforts to resolve through good faith negotiations between their respective principals any disputes, controversies or other matters in question between the parties to this MSA, arising out of, or relating to this MSA, or the alleged breach thereof, including any claim in which either party is demanding monetary damages of any nature and under any legal or equitable theory, including, but not limited to, negligence, breach of contract, strict liability violation of any state, local or federal law, or intentional acts or omissions by either party. Specifically, if such a dispute, controversy or other matter arises between the parties, the Company Vendor Manager and the Provider Account Manager will first attempt to reach an amicable resolution. If they are unable to resolve such dispute within ten (10) business days, Company and Provider shall each promptly designate one representative with management authority (each a "Management Representative") to use their reasonable best efforts to resolve such dispute or to negotiate an appropriate modification or amendment. If either party fails to designate a Management Representative at its own initiative, it shall do so within three business days of a written request from the other party to do so. Except as otherwise provided in the termination provisions hereof or agreed to by the parties, neither party shall be permitted to exercise any other remedies for twenty (20) days following the date that both parties have designated a Management Representative. If the issue cannot be successfully resolved by negotiation, either party may submit the matter to mediation as set forth in Section 11.4 by serving a Notice pursuant to Section 13. Nothing in this section can be construed to preclude any party from seeking injunctive relief in order to protect its rights pending the escalation or mediation process. A request by a party to a court for such injunctive relief cannot be deemed a waiver of the obligation to mediate. Nothing herein shall be deemed to limit any right of a party to terminate this MSA for any default or breach by the other party. At the conclusion of the Section 11.3 Escalation and Section 11.4 Non-Binding Mediation processes, either party shall have the right, in the event of a default, to any other remedies available in law or in equity, but not limited to the right to seek damages.

11.4 Non-binding Meditation: In the event the problem cannot be amicably resolved through the Escalation Process, the parties agree to refer the matter for non-binding mediation to a mutually acceptable third party mediator, or, at any time, at the option of either party, for mediation by the American Arbitration Association ("AAA") in New York, New York, or at such other place as the parties may agree. Each party agrees to bear its own expenses and an equal share of the expenses of the mediator and the fees the AAA. The parties, their representatives, other participants and the mediator shall hold the existence, content and result of the mediation is Confidential Information as defined in section 1.4 of this MSA. If such dispute is not resolved by such mediation within thirty (30) days of the initiation of the mediation by the third party mediator or the AAA, as the case may be, the parties will have the right to resort to any remedies permitted by law. All defenses based on the passage of time shall be tolled pending the termination of the mediation. Nothing in this section can be construed to preclude any party from seeking injunctive relief in order to protect its rights pending mediation. A request by a party to a court for such injunctive relief cannot be deemed a waiver of the obligation to mediate. Nothing in this section will be deemed to limit any right of a party to terminate this MSA for any default or breach by the other party.

12. MISCELLANEOUS

12.1 Governing Law. Except to the extent governed by federal laws or regulations, the entire relationship of the parties based on this MSA is governed by the substantive laws of the state of Washington, without reference to its choice of law rules.

12.2 Waivers. The rights of the parties under this MSA, including the Policies and Procedures as agreed to, are cumulative and not exclusive of any other rights and remedies. The waiver by any party of any right under this MSA, or any breach of this MSA does not constitute a waiver of any other right or remedy on a future occasion.

12.3 Force Majeure. Neither party is liable for loss or damage or will be in breach of this MSA if its failure to perform its obligations results from: (1) compliance with any law, ruling, order, regulation, requirement or instruction of any federal, state or municipal government or any department or agency thereof or any court of competent jurisdiction; or (2) acts of God, fires, strikes, embargoes, war, insurrection, riot, and other causes beyond the reasonable control of the party. Any delay resulting from any of these causes extends performance accordingly or excuses performance, in whole or in part, as may be reasonable.

12.4 Entire Agreement. This MSA, including the Schedules, Orders and all Policies and Procedures issued as of the effective date of this MSA represent the entire agreement of the parties with respect to the subject matter of this MSA. There are no other oral or written understandings or agreements between the Company and Provider relating to the subject matter of this MSA, and this MSA supersedes all prior negotiations, communications, agreements and addenda between the parties to this MSA with respect to the subject matter of the MSA, except that post-termination covenants or any releases from prior agreements survive. Nothing in this MSA is intended or should be deemed to confer any rights or remedies upon any entity not a party to it.

12.5 Modification. This MSA may only be amended or superseded by written agreement executed by authorized representatives of both parties, except as otherwise explicitly stated in this MSA. Each such modification is effective only in the specific instance for the specific purpose for which given. No course of dealing or usage of trade may be invoked to modify the terms and conditions of this MSA.

12.6 Assignability. This MSA shall inure to and bind the successors and assigns of the respective parties. Neither party may sell or assign this MSA or any of its rights, or delegate any of its duties or obligations under it without the other party's prior written consent, which consent shall not be unreasonably withheld.

12.7 Survivability. Upon termination of this MSA, all rights and duties of the parties terminate, except the following survive: Section 1.4 (Confidentiality); Section 9.3 ((Obligations of Provider Upon Termination or Expiration); Section 10 (Ownership); this Section 12.7 (Survivability); Section 12.9 (Indemnification); Section 12.12 (Authority to Sign); and Section 12.14 (Publicity) of this MSA. The parties must cooperate to fulfill all surviving obligations in a timely manner.

12.8 Acknowledgments. Provider acknowledges and understands that Company or other Providers may at any time compete directly with Provider in the soliciting of Subscribers for the Service or in the sale, lease, installation, repair or warranty servicing of equipment.

12.9 Indemnification. Each party ("Indemnitor") agrees to indemnify, defend and hold harmless the other party, its parent, subsidiaries and affiliates, and the Personnel, officers, directors, agents and any successors or assigns of any of them (collectively, "Indemnitee") from any and all claims, losses, actions, suits, proceedings (whether legal or administrative), costs, expenses, damages and liabilities, including reasonable attorneys' fees (collectively, "Claims"), threatened, asserted or filed by a third party against the Indemnitee arising out of a breach by Indemnitor or its designee(s) of the MSA or a Order or Indemnitor's negligence in performing Work under the MSA or an Order.

12.9.1 In addition to, and not by way of limitation of the forgoing indemnification, Indemnitor agrees to indemnify, defend and hold harmless Indemnitee from any and all Claims, to the extent arising out of or resulting from:

a.): Assertions under Workers' Compensation or similar laws made by persons furnished by Indemnitor, or by reason of any injuries to such persons for which Indemnitor would be responsible under Workers' Compensation or similar laws;
b.): Any alleged act of infringement by Indemnitor of any patent, trademark, copyright or other right or any misappropriation (including misuse) of any trade secret or other proprietary interest; or
c.): Tortious acts or omissions of Indemnitor including, but not limited to, third party claims for injuries or death to persons or damage to property, including theft, tortiously caused by Indemnitor while on Indemnitee's premises.

12.9.1 If any claim for indemnification arises under this Section 12.9, the Indemnitee shall promptly notify the Indemnitor and the Indemnitor shall be entitled to actively participate in the defense, compromise, settlement, resolution or other disposition of any Claim by counsel of the Indemnitor's own choosing and at the Indemnitor's own expense. The Indemnitee cannot settle such claim or proceeding without the prior written consent of the Indemnitor, which consent shall not be unreasonably withheld or delayed. This indemnity continues in full force and effect after the termination of this MSA.

12.10 Severability. A determination by a court or arbitrator of competent jurisdiction that any provision of this MSA or any part of it is unenforceable does not cancel or invalidate the remainder of such provision or this MSA. The remainder of the provision and this MSA remain in full force and effect and must be construed to carry out the intent of the parties.

12.12 Authority to Sign. Company and Provider each represent and warrant to the other that, if applicable, it is duly organized or incorporated and in good standing in its state of original organization or incorporation, it has the requisite approvals to enter into this MSA, it is qualified to do business in the state(s) where Company is licensed to provide Service, and the person executing this MSA on its behalf has full authority to do so.

12.13 Hiring of Employees: Provider agrees that it will not solicit for employment Company' employees who are involved with the Work relating to this MSA for a period of twelve (12) months following termination of said Work by the employee in question unless mutually agreed upon in writing. Company agrees that it will not solicit for employment Provider's Personnel who are involved with the Work relating to this MSA for a period of twelve (12) months following termination of said Work by the employee in question unless mutually agreed upon in writing.

12.14 Publicity. Each party shall (1) submit to the other all advertising, written sales promotion, press releases and other publicity matters related to this MSA in which the other party's name or mark is mentioned or language from which the connection of said name or mark may be inferred or implied and (2) not publish or use such advertising, sales promotion, press releases or publicity matters without the other party's consent.

12.15 Change of Control. In the event Provider acquires an entity that is engaged in the outsourced Teleservices business ("Affiliated Business"), Provider must notify Company within 10 days of acquiring such Affiliated Business if Provider intends to have such Affiliated Business perform Teleservices for Company. Company has 10 days after receipt of such notice to object to having the Work performed by the Affiliated Business. Company's objection must provide reasonable detail of the nature of the objections. If Company objects, then the Affiliated Business is prohibited from performing any of the Work without the prior written consent of Company. If Company fails to notify Provider of its objections within the 10-day period, the Affiliated Business may perform the Work

beginning on the 11^th day. This section does not prevent Provider from performing the Work under this MSA on a temporary emergency basis through another entity or an Affiliated Business.

13. NOTICES. All notices, requests, demands, and other communications under this MSA must be in writing and are deemed given if sent by electronic mail, facsimile, personally delivered or mailed, certified mail, return receipt requested, or sent by nationally recognized overnight carrier to the addresses shown on the first page of this MSA. In addition to the Company's notice address listed on the first page, notice must also be sent to: AT&T Wireless Services, 7277 164^th Ave NE, Redmond, WA 98052 ATTN: Legal Services.

EACH PARTY'S SIGNATURE BELOW ACKNOWLEDGES THAT EACH PARTY HAS READ AND UNDERSTANDS EACH OF THE TERMS AND CONDITIONS OF THIS MSA AND AGREES TO BE BOUND BY THEM.

PROVIDER: STARTEK USA, INC.		COMPANY: AT&T WIRELESS, SERVICES, INC.
By:	/s/ DAVID I. ROSENTHAL (Authorized Signature)	By:	/s/ GEORGE B. SLOAN (Authorized Signature)
David I. Rosenthal (Typed or Printed Name)		George B. Sloan (Typed or Printed Name)
Executive Vice President & Chief Financial Officer (Title)		Director, Supply Management (Title)
March 21, 2002 (Date)		October 1, 2002 (Date)

Schedule 1

Definitions

For the purposes of this MSA, the following terms have the meanings set forth below.

Affiliates. "Affiliates" means an entity in which Company retains more than 50% ownership, or operating control.

Assets. "Assets" shall mean either Company Data, Company Works, Company Specific Work Products and Provider Works, collectively, or Company Data, Company Works and Company Specific Work Products in the case of Company, or Provider Works in the case of Provider, as the case may be.

CCE. CCE means Provider call center employee

Company Data. Information gathered from callers regarding Company's goods or services, including without limitation all customer and subscriber names, addresses, email addresses, telephone numbers, service files, notes taken by Provider regarding service inquiries, and written and electronic communications between Provider and any Company customer or subscriber, personally identifiable employee information and portions of any and all scripts created hereunder that are Company specific and that are not general or generic nature.

Competitive Service Entity. Any company that engages in the same or similar services as Company including, without limitation, two-way pager services, cellular/wireless services (regardless of technology or frequency used), wireless voice and data services. Competitive Service Entity does not include Company affiliates or partnerships.

Marks. Marks are defined as Company's trademarks, service marks, trade names, logos, or similar indicia owned or licensed for use by Company.

Orders. The written request for Work issued by Company to Provider that is signed by both Company and Provider.

Personnel. Personnel is defined as Provider's employees, including without limitation, Call Center Employees (CCE's) and sales representatives.

Proprietary Interests. "Proprietary Interests" are defined to include patents, copyrights, trade secrets and trademarks, whether issued or pending, and other intellectual property rights.

Service. Commercial Mobile Radio Services provided by Company. Includes two-way pager services, cellular/wireless services regardless of technology or frequency used, and wireless voice and data telecommunications services.

Teleservices. Teleservices includes collections, telemarketing, customer care, reactive marketing, warranty exchange and other service or sales oriented work as may be requested by Company from time to time.

Vendor Manager. Vendor manager refers to Company's designated representative responsible for overseeing day to day operations for the Work.

Work. Company authorization for Provider to resolve delinquent accounts, accept incoming customer care calls, make outbound collection calls, offer Company's Service via telemarketing, and provide other Work that may be defined in mutually agreed upon Orders

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Exhibit 10.44

AT&T WIRELESS SERVICES PROVIDER MASTER SERVICE AGREEMENT
EX-99.1 5 a2093268zex-99_1.htm EXHIBIT 99.1
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Exhibit 99.1

CERTIFICATION OF PERIODIC REPORT

I, William E. Meade, Jr., Chief Executive Officer of StarTek Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1): the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2002 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2): the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 12, 2002

/s/ WILLIAM E. MEADE, JR.

William E. Meade, Jr.
President, Chief Executive Officer, and Director

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Exhibit 99.1

CERTIFICATION OF PERIODIC REPORT
EX-99.2 6 a2093268zex-99_2.htm EXHIBIT 99.2
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Exhibit 99.2

CERTIFICATION OF PERIODIC REPORT

I, David I. Rosenthal, Chief Financial Officer of StarTek Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1): the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2002 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2): the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 12, 2002

/s/ DAVID I. ROSENTHAL

David I. Rosenthal
Executive Vice President, Chief Financial Officer, Secretary and Treasurer

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Exhibit 99.2

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