5. Enforcement

5.1. A material breach of this Settlement will constitute a violation of the Commission order adopting the Settlement, e.g., a failure to pay any of the monthly installment payments on the due dates prescribed by this Settlement. A material breach or any violation of a California Public Utilities statute or a Commission decision, order, regulation, or other regulatory authority of the Commission, will warrant instituting enforcement or compliance proceedings against Talk. In any such action, CSD will document its allegations and carry the burden of proof.

5.2. On the date when Talk delivers to the Commission its last and sixth monthly installment payment as described in Paragraph 1.2 above, each Party to this proceeding and the Commission in adopting this Settlement, mutually releases and will be deemed to have mutually released each other Party from any and all liabilities, claims, or expenses of any nature whatsoever, whether known or unknown, foreseen or unforeseen, arising from, relating to, or in any manner connected with any and all acts, conduct, or omissions referenced, discussed, mentioned, stated, described in the CSD Declarations pertaining to this docket, I. 01-08-003.

5.3. The Commission has primary jurisdiction over any interpretation, enforcement, or remedies pertaining to this Settlement. No Party may bring an action pertaining to this Settlement in any local, state, federal court, or administrative agency without first having exhausted its administrative remedies at the Commission.

5.4. This Settlement will be governed by and interpreted according to California law and Commission rules and regulations.

5.5. According to Rule 51.8, the Commission adoption of this Settlement is binding on all Parties to this proceeding. This Settlement will constitute no approval, disposition of, or precedent regarding any legal principle or issue of law or fact in this proceeding or in any future proceeding.

5.6. After the Commission adopts this Settlement and when Talk has paid and delivered to the Commission all the monthly installment payments described in this Settlement, CSD agrees to initiate no administrative proceedings or any other claim or action against Talk with regard to any act, conduct, or omission alleged, referenced, discussed, or described in the CSD Declarations pertaining to this docket, I.00-01-018. However, this Paragraph will not apply if Talk either before or after the Commission adopts this Settlement materially fails to fulfill any of its monthly installment payment obligations described in this Settlement. CSD may provide information or otherwise co-operate to the extent requested by a law enforcement agency or a court of law.

5.7. The Parties agree that they will not file any application for rehearing of any Commission decision or order that adopts the Settlement, or take any other action in any way inconsistent with fully supporting this Settlement.

5.8. The Parties will jointly request that the Commission order full cooperation from the pertinent Billing Agents, Underlying Facilities Based Providers, LECs, and any other Persons or Corporations that are necessary to implementing this Settlement.

6. Execution of Settlement

6.1. This Settlement is subject to approval and adoption by the Commission. The Parties agree to execute or furnish any other additional information, documents, and/or testimony, or take any other action, that the Commission or CSD may request, as necessary to implement the Joint Motion and Settlement.

6.2. This Settlement may be executed in any number of counterparts and by different Parties hereto in separate counterparts, with the same effect as if all Parties had signed the same document. All such counterparts will be deemed an original and will together constitute the same Settlement. This Settlement is the entire agreement among the Parties, which cannot be amended or modified without the express written consent of all the Parties.

6.3. This Settlement is not severable. If pursuant to Rule 51.7 the Commission modifies any provision of this Settlement, all the Parties must consent to such change. If the modifications are not acceptable to one or more of the Parties, then the Settlement is deemed rescinded. A Party will be deemed to have consented to the Commission modification unless within 15 Days following the date of issuance of the Commission proposed modification(s), that Party notifies in writing the other Party and files with the Commission its objection to the modification(s).

6.4. Each Party represents that it has investigated the facts and law pertaining to the matters described in this Settlement. No Party has relied or presently relies upon any oral or written statement, promise, or representation by any other Party, except as specifically set forth in this Settlement.

6.5. This Settlement will be binding upon the respective Parties, their successors, assignees, executors, administrators, parent companies, subsidiary companies, affiliates, divisions, units, officers, directors, and ten-percent-or-greater shareholders.

6.6. The Parties acknowledge and stipulate that this Settlement is fair and not the result of any fraud, duress, or undue influence by any other Party. Each Party hereby states that it has read and fully understands its rights, privileges, and duties under this Settlement. Moreover, each Party has had its respective attorney or other authorized person review the terms of this Settlement. By executing this Settlement each Party declares that the provisions herein are adequate, reasonable, and mutually agreed upon; and that they are entering this Settlement freely and voluntarily.

7. Definitions

· "Billing Agent" means any other clearinghouse or billing aggregator that has been or is billing and collecting on behalf of Talk in California.

· "BTN" means the Billing Telephone Number of the consumer's telephone line that is billed for telephone services and any other telephone line of the consumer billed under the same BTN, as provisioned by Talk.

· "CAB" means the Consumer Affairs Branch of the California Public Utilities Commission.

· "CIC" means Carrier Identification Code.

· "CSD" means, the Consumer Services Division of the California Public Utilities Commission, 505 Van Ness Avenue, San Francisco, California 94102-3298.

· "Corporation" means a corporation, a company, an association, or a joint stock association.

· "CPCN" means those Certificates of Public Necessity and Convenience granted by the Commission and held by Talk under the following corporate identification numbers: U-5289-C and U-5535-C.

· "CSD Declarations" means those Declarations of Stephanie Amato, Stephen Northrop, and/or Dao Phan, including the attachments thereto, as made a part of the record of evidence in this proceeding;

· "Day" means a calendar day unless otherwise stated.

· "Eligible Consumer" means those California consumers (whether an individual, person, or corporation) who were reported by the Commission Consumer Affairs Branch (CAB), or a local exchange carrier (LEC) (e.g., Pacific Bell or Verizon), as having complained that Talk or its agent switched or caused the LEC to switch without authorization the consumer's presubscribed local, toll or long distance telephone service provider to Talk; charged the consumer without authorization for telephone services; or engaged in abusive marketing operations or practices. "Unauthorized switching" also means the following: (i) an unauthorized change of provider accomplished by using an underlying carrier's CIC, which the LEC designated and recorded as a PIC dispute involving the underlying carrier but which the underlying carrier determined as a PIC dispute involving Talk, its parent, agent, or affiliate; or (ii) consumer complaint of a PIC dispute reported by an LEC or an underlying facilities- based provider, and involving Talk, its parent, agent, affiliate, or underlying facilities-based provider. An Eligible Consumer will be entitled to restitution for each telephone line(s) that was switched without authorization.

· "Fee Agreement" means that contract between Talk and the SCA for the performance of settlement claims administration services as described in the Settlement Claims Administration Plan and the Settlement (Exhibit 2)

· "Joint Motion" means the All Parties Joint Motion for Commission Adoption of the Attached Settlement signed by the attorneys for the Parties, and filed at the Commission with this Settlement attached.

· "Paragraph" means a numbered provision of this Settlement.

· "Party" means CSD or Talk; "Parties" means collectively CSD and Talk; and both terms "Party" and "Parties" also include with regard to CSD any director, principal, investigator, attorney, or other Commission present or former employee; and with regard to Talk, any present or former employee, officer, director, stockholder, agent, sub-agent, principal, representative, corporate parent or subsidiary, affiliate, successor, attorney, or assigns.

· "Person" means an individual, a firm, and/or a copartnership.

· "PIC" means Primary Interexchange Carrier.

· "Restitution Escrow Account" means that interest bearing bank account established by the Commission for the deposit of the Restitution Monies paid by Talk to the Commission on or about February 11, 2002.

· "Restitution Account" means that bank account established by the SCA for the holding of the Restitution Monies disbursed by the Commission from the Restitution Escrow Account, for distribution to the Eligible Consumers.

· "Restitution Check" means a bank check in the amount of $25 drawn on the Restitution Account by the SCA and made payable to the order of an Eligible Consumer.

· "Restitution Monies" means those monies paid by the Commission to the SCA for deposit into the Restitution Account.

· "Rule" means a provision of the Commission Rules of Practice and Procedure, unless otherwise stated.

· "Section" means a section of the California Public Utilities Code, unless otherwise stated.

· "Settlement Claims Administrator" (SCA) means Rosenthal & Company LLC, 35 Leveroni Ct Ste 150, Novato CA 94949, retained by Talk with CSD's concurrence to process, administer, and mail the Restitution Checks to the Eligible Consumers according to this Settlement and the Settlement Claims Administration Plan.

· "Settlement Claims Administration Plan" means the written description of the SCA's duties and responsibilities for distributing the Restitution Monies to the Eligible Consumers (Exhibit 3).

· "Telephone Corporation" means every corporation or person owning, controlling, operating, or managing any telephone line for compensation within California, and includes a reseller of telephone services.

· "USPS" means the United States Postal Service.

8. Conclusion

The undersigned hereby acknowledge and covenant that they have been duly authorized to execute this Settlement on behalf of their respective principals and that such execution is made within the course and scope of their respective agency and/or employment. The Parties hereto have caused this Settlement to be duly executed by their respective authorized representative(s) as of the date hereof.

CONSUMER SERVICES DIVISION,

By: /s/ RICHARD W. CLARK Date: 3/22/02

Richard W. Clark

Director

/s/ CLEVELAND W. LEE Date: 3/22/02

Cleveland W. Lee

Attorney for the Consumer Services Division

TALK AMERICA, INC.,

By: /s/ ALOYSIUS T. LAWN IV Date: March 22, 2002

Aloysius T. Lawn IV

Executive Vice President and General Counsel

/s/ THOMAS J. MACBRIDE JR. Date: 3/22/02

Thomas J. MacBride Jr.

Attorney for Talk America, Inc.

(END OF APPENDIX A)

APPENDIX B

Fee Agreement

This Fee Agreement is between Talk America, Inc. and the Settlement Claims Administrator ("SCA"), Rosenthal & Company LLC, of 35 Leveroni Court, Suite 150, Novato, CA 94949, which incorporates by reference the Settlement that the Parties of record filed in proceeding, I.01-08-003. All capitalized terms used herein have the same meaning as defined in Paragraph 7 of the Settlement, "Definitions."

Within 10 Days after the date of the Commission decision approving the Settlement, Talk will pay and deliver to the SCA a bank check made payable to the order of the SCA in the amount of $40,000. The $40,000 constitutes the full and complete remuneration for the SCA's services in processing, mailing, and/or accounting for the Restitution Checks to Eligible Consumers according to the attached Settlement Claims Administration Plan and the Settlement. It is anticipated that the number of checks issued will be approximately 15,000.

The SCA will serve as the fiduciary of the Eligible Consumers in establishing, managing, and controlling respectively the Restitution Account. The SCA will perform any local, State or Federal tax-reporting obligation, if any that may result from establishing and/or maintaining the Restitution Account. Talk will pay any local, State, or Federal taxes, if any, that may result from the SCA establishing and maintaining the Restitution Account.

The undersigned hereby acknowledge and covenant that they have been duly authorized to execute this Settlement on behalf of their respective principals and that such execution is made within the course and scope of their respective agency and/or employment.

ROSENTHAL & COMPANY LLC

______________________ Date: ______________

TALK AMERICA, INC.

_____________________ Date: ______________

(END OF APPENDIX B)

APPENDIX C

SETTLEMENT CLAIMS ADMINISTRATION PLAN

This Settlement Claims Administration Plan (Plan) describes the duties and obligations of the Settlement Claims Administrator (SCA), Rosenthal & Company LLC, 35 Leveroni Ct Ste 150 Novato CA 94949, in the processing, mailing, and reporting of the Restitution Checks provided to Eligible Consumers according to the Settlement filed by the Parties of record in I.01-08-003. All capitalized terms used herein will have the same meaning as specified in the Settlement Paragraph 7, "Definitions."

1. The SCA's Compensation. The Parties agree that within 10 Days after the date when the Commission adopts the Settlement, Talk will pay the SCA $40,000 for performance of the services described in this Plan and in the Settlement.

2. Eligible Consumers Records. Within 10 Days or less after all the Parties have executed the Settlement, CSD will ask the LECs, Pacific Bell and Verizon, for the names and mailing addresses of the Eligible Consumers. After its receipt, CSD will forward these names and addresses to the SCA for the mailing of the Restitution Checks to the Eligible Consumers. The SCA will maintain the Eligible Consumers names and addresses in strict confidence; use them only in accordance with this Plan and the Settlement; and after fully and completely implementing this Plan return them to CSD without keeping any copy thereof.

3. Disbursement of the Restitution Monies to the SCA. As soon as practicable after the contract between Talk and the SCA is executed, the Commission will disburse from the Restitution Escrow Account to the SCA the Restitution Monies, in the form of a bank check made payable to the order of the SCA in the amount of $374,800. The SCA will hold the $374,800 in a Restitution Account until its distribution to the Eligible Consumers. The SCA will act as a fiduciary of the Restitution Monies on behalf of the Eligible Consumers.

4. Distribution of Restitution. The SCA will distribute the Restitution Checks by mailing via first class mail in a prepaid stamped envelope addressed to an Eligible Consumer, a bank check drawn on the Restitution Account and made payable to the order of the of an Eligible Consumer in the amount of $25. A CSD statement explaining the purpose of the Restitution Check will be included in the envelope. Before mailing the Restitution Checks, the SCA will verify the Eligible Consumers' current mailing addresses with the National Change of Address Systems or by other reasonable means of updating such address. Each Restitution Check will become void if not cashed or deposited within 90 Days after the date of the Check.

5. Undeliverable and Expired Restitution Checks. The SCA will cancel any Restitution Check not deposited or cashed within the 90 Days after the date of the Check; or which are mailed but returned as undeliverable for whatever reason (e.g., no current address available). The Restitution Monies represented by such undeliverable or expired Restitution Checks, and including any interest accrued in the Restitution Account, will escheat to the State of California. Within 120 Days after the last Restitution Check is mailed, the SCA will remit this amount to the Commission in a check drawn on the Restitution Account and made payable to the order of the Commission.

6. Reports to the Commission. The SCA will report to the Commission according to the Settlement the following:

· The opening and closing balances of the Restitution Account;

· The number and date of the mailings of the Restitution Checks to the Eligible Consumers;

· The number of Restitution Checks undeliverable or expired; and

· The amount of Restitution Monies remitted to the Commission because of undeliverable or expired Restitution Checks.

7. Tax Reporting. The SCA will perform any local, State, or Federal tax-reporting obligation, if any that may result from establishing and maintaining the Restitution Account. Talk will pay any local, State, or Federal taxes, if any, that may result from the SCA establishing and maintaining the Restitution Account.

8. Questions in Implementation. Any questions regarding implementation of this Plan unaddressed here or by the Settlement should be directed to CSD, Dao Phan, telephone: (415) 703-2604, or alternatively, the attorney for CSD, Cleveland W. Lee, telephone number: (415) 703-1792.

(END OF APPENDIX C)