<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 10549
FORM 10-Q
(x) Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1999 or
( ) Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number: 0-28432
Boston Communications Group, Inc.
---------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-3026859
------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Sylvan Road, Woburn, Massachusetts 01801
--------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (617)692-7000
-----------------------------------------------------------------
-----------------------------------------------------------------
(Former name, former address, 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 (X) No ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of November 1, 1999, the Company had outstanding 16,598,454 shares of common
stock, $.01 par value per share.
<PAGE>
INDEX
PAGE NUMBER
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets.............................3
Consolidated Statements of Operations...................4
Consolidated Statements of Cash Flows...................5
Notes to Consolidated Financial Statements..............6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.....................8
Certain Factors That May Affect Future Results.........16
Item 3. Quantitative and Qualitative Disclosures About Market
Risk...................................................19
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K.......................20
<PAGE>
BOSTON COMMUNICATIONS GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1999 1998
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 13,856 $ 18,523
Short-term investments 9,011 7,086
Accounts receivable, net of allowance for billing
adjustments and doubtful accounts of $2,092 in 1999
and $1,508 in 1998 25,630 18,432
Inventory 2,182 3,525
Deferred income taxes 1,564 1,564
Prepaid expenses and other assets 1,329 823
-------- --------
Total current assets 53,572 49,953
Property and equipment, net 44,400 38,055
Goodwill, net 3,006 3,460
Other assets 360 292
-------- --------
Total assets $101,338 $ 91,760
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,184 $ 884
Accrued expenses 16,706 10,124
Income taxes payable 486 496
Current maturities of capital lease obligations 1,936 1,052
-------- --------
Total current liabilities 20,312 12,556
Capital lease obligations, net of current maturities 2,233 546
Shareholders' equity:
Preferred Stock, par value $.01 per share, 2,000,000
Shares authorized, 0 shares issued and outstanding -- --
Common Stock, voting, par value $.01 per share,
35,000,000 shares authorized, 16,699,899 and
16,436,028 shares issued in 1999 and 1998,
respectively 167 164
Additional paid-in capital 93,178 91,683
Treasury stock (101,420 shares) at cost (673) (673)
Accumulated deficit (13,879) (12,516)
-------- --------
Total shareholders' equity 78,793 78,658
-------- --------
Total liabilities and shareholders' equity $101,338 $ 91,760
======== ========
</TABLE>
<PAGE>
BOSTON COMMUNICATIONS GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Prepaid wireless services $ 9,115 $ 5,010 $26,718 $11,987
Teleservices 10,088 7,514 30,638 18,329
Roaming services 5,956 7,097 17,124 21,952
System sales 955 1,547 3,219 10,543
------- ------- ------- -------
26,114 21,168 77,699 62,811
Expenses:
Cost of service revenues 17,651 13,684 50,189 38,624
Cost of system revenues 728 1,363 2,326 6,216
Cost of system revenues-one-time charge 1,824 -- 1,824 --
Engineering, research and development 1,632 1,426 4,446 4,005
Sales and marketing 1,498 1,387 4,768 4,028
General and administrative 1,985 1,572 5,419 4,455
Depreciation and amortization 3,921 2,908 10,837 8,056
Impairment of long-lived assets -- -- -- 698
------- ------- ------- -------
Total operating expenses 29,239 22,340 79,809 66,082
------- ------- ------- -------
Operating loss (3,125) (1,172) (2,110) (3,271)
Interest income 227 331 748 1,043
------- ------- ------- -------
Loss before income taxes (2,898) (841) (1,362) (2,228)
Provision (benefit) for income taxes (684) 208 -- --
------- ------- ------- -------
Loss per common share $(2,214) $(1,049) $(1,362) $(2,228)
======= ======= ======= =======
Basic and diluted net loss per common share $ (0.13) $ (0.06) $ (0.08) $ (0.14)
======= ======= ======= =======
Weighted average common shares outstanding 16,575 16,277 16,506 16,267
======= ======= ======= =======
</TABLE>
<PAGE>
BOSTON COMMUNICATIONS GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine months ended
September 30,
1999 1998
---- ----
OPERATING ACTIVITIES
Net loss $ (1,362) $ (2,228)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 10,837 8,054
Impairment of long-lived assets -- 698
One-time charge 1,824 --
Changes in operating assets and liabilities:
Accounts receivable (7,198) (6,516)
Inventory (134) (2,045)
Prepaid expenses and other assets (576) (129)
Accounts payable and accrued expenses 6,535 1,542
Income taxes payable (10) (10)
-------- --------
Net cash provided by (used in) operations 9,916 (634)
INVESTING ACTIVITIES
Purchases of property and equipment (13,086) (7,044)
Sales of short-term investments 13,897 15,113
Purchases of short-term investments (15,822) (9,188)
-------- --------
Net cash used in investing activities (15,011) (1,119)
FINANCING ACTIVITIES
Proceeds from exercise of stock options and employee
stock purchase plan 1,498 155
Purchase of treasury stock -- (301)
Repayment of capital lease obligations (1,070) (844)
-------- --------
Net cash provided by (used in) financing activities 428 (990)
-------- --------
Decrease in cash and cash equivalents (4,667) (2,743)
Cash and cash equivalents at beginning of period 18,523 23,601
-------- --------
Cash and cash equivalents at end of period $ 13,856 $ 20,858
======== ========
Supplemental disclosure of non-cash transactions:
Capital lease obligations 3,641
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying consolidated financial statements have been prepared by
the Company, without audit, and reflect all adjustments which in the
opinion of management, are necessary for a fair statement of the results of
the interim periods presented. All adjustments were of a normal recurring
nature. Certain information and footnote disclosures normally included in
the annual audited consolidated financial statements have been condensed or
omitted in accordance with rules of the United States Securities and
Exchange Commission. Accordingly, the Company believes that although the
disclosures are adequate to make the information presented not misleading,
the consolidated financial statements should be read in conjunction with
the Company's audited consolidated financial statements, including the
footnotes, thereto contained in the Company's Form 10-K for the fiscal year
ended December 31, 1998.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
2. Earnings Per Share
The following table sets forth the computation of basic and diluted net
income (loss) per share (in thousands):
<TABLE>
<CAPTION>
Three Months Nine months
Ended September 30, Ended September 30,
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Numerator for basic and diluted loss per share:
Net loss $(2,214) $(1,049) $(1,362) $(2,228)
- ------------------------------------------------------------------------------------------
Denominator:
Denominator for basic earnings per share - 16,575 16,277 16,506 16,267
weighted average shares
Effect of dilutive securities:
Employee stock options -- -- -- --
- ------------------------------------------------------------------------------------------
Denominator for diluted earnings per share
adjusted weighted average shares and assumed
conversion 16,575 16,277 16,506 16,267
- ------------------------------------------------------------------------------------------
Basic and diluted net loss per common share $(0.13) $(0.06) $(0.08) $(0.14)
- ------------------------------------------------------------------------------------------
</TABLE>
3. Inventory
Inventories consisted of the following at (in thousands):
<PAGE>
September 30, December 31,
1999 1998
----- ----
Purchased parts $1,714 $2,690
Work-in-process 468 835
Finished goods -- --
-- --
------ ------
$2,182 $3,525
====== ======
4. Segment Reporting
Divisional Data
(in thousands, except for percentages)
<TABLE>
<CAPTION>
Prepaid
Three months ended Wireless Roaming
September 30, Services Teleservices Services Systems Total
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999
Revenues $9,115 $10,088 $5,956 $955 26,114
Gross margin 5,173 1,233 1,102 (1,597) 5,911
Gross margin percentage 57% 12% 19% (167)% 23%
Operating income (loss) 15 (417) 351 (3,074) (3,125)
Percentage of total revenues 0% (4)% 6% (322)% (12)%
1998
Revenues $5,010 $7,514 $7,097 $1,547 21,168
Gross margin 2,513 1,855 1,569 184 6,121
Gross margin percentage 50% 25% 22% 12% 29%
Operating income (loss) (1,378) 432 718 (944) (1,172)
Percentage of total revenues (28)% 6% 10% (61)% (6)%
<CAPTION>
Prepaid
Nine months ended Wireless Roaming
September 30, Services Teleservices Services Systems Total
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999
Revenues 26,718 30,638 17,124 3,219 77,699
Gross margin 16,020 5,370 2,901 (931) 23,360
Gross margin percentage 60% 18% 17% (29)% 30%
Operating income (loss) 2,015 594 693 (5,412) (2,110)
Percentage of total revenues 8% 2% 4% (168)% (3)%
1998
Revenues 11,987 18,329 21,952 10,543 62,811
Gross margin 4,300 4,222 5,122 4,327 17,971
Gross margin percentage 36% 23% 23% 41% 29%
Operating income (loss) (7,239) 215 2,617 1,136 (3,271)
Percentage of total revenues (60)% 1% 12% 11% (5)%
</TABLE>
5. One-Time Charge
In September 1999, the Company recorded a one-time charge of $1.8 million
as a result of the reorganization of the Systems Division. The charge
primarily relates to expenses associated with the reorganization of the
Systems Division including inventory write-downs and severance.
<PAGE>
6. Subsequent Events
In October 1999, the Company terminated a services agreement with a third
party who leased and operated call center equipment and a facility on
behalf of the Company. The leases were assigned to the Company, resulting
in capital additions of approximately $2.7 million. In addition, the
Company will prepay rent of $2.4 million over the next 12 months for the
remaining 48 months on the facility lease.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Consolidated Results of Operations
The Company's total revenues increased 23% from $21.2 million in the three
months ended September 30, 1998 to $26.1 million in the three months ended
September 30, 1999 and increased 24% from $62.8 million in the nine months ended
September 30, 1998 to $77.7 million in the nine months ended September 30, 1999.
During the nine-month period ended September 30, 1999, the growth was primarily
attributable to a 123% increase in the Company's principal business, prepaid
wireless, and a 67% increase in teleservices revenues. A 70% decline in systems
revenues and a 22% decline in roaming services revenues during the nine-month
period ended Septemeber 30, 1999 partially offset the growth in prepaid wireless
and teleservices.
The Company generated an operating loss of $3.1 million during the three months
ended September 30, 1999 compared to an operating loss of $1.2 million for the
same period in the prior year. For the nine months ended September 30, 1999, the
Company generated an operating loss of $2.1 million compared to an operating
loss of $3.3 million for the nine months ended September 30, 1998. The operating
loss during the three months ended September 30, 1999 included the $1.8 million
one-time charge due to the reorganization of the Systems Division. For the
three-month periods, the improved results for prepaid wireless services were
offset by a decline in operating income for the other divisions. For the
nine-month periods, the improvement in the operating results of prepaid wireless
services and teleservices was partially offset by a decline in operating income
from the systems and roaming services divisions. The specifics of each
division's revenues and operating results are discussed in greater detail below.
Prepaid Wireless Services Division
Prepaid Wireless Services Division revenues increased 82% from $5.0 million in
the three months ended September 30, 1998 to $9.1 million in the three months
ended September 30, 1999 and increased 123% from $12.0 million to $26.7 million
for the nine month periods ended September 30, 1998 and 1999, respectively. The
Company's carrier customers began to more aggressively price and market prepaid
services and also added many new markets to the C2C network to help stimulate
these increases in revenues. Increased usage continues to result in certain
carriers achieving volume price discounts that, along with contractual renewals,
yield lower revenue rates per minute of usage. In
<PAGE>
addition, lower minutes of usage per subscriber were generated compared to the
same periods in prior year. As of September 30, 1999 there were approximately
1.47 million prepaid subscribers on the C2C network, compared to 623,000
subscribers at September 30, 1998, an increase of 136%.
The revenue increase excludes performance penalties incurred during the three
month period ended September 30, 1999 as a result of outages experienced on the
C2C network due to hardware failures. The Company has been working closely with
its critical vendors to correct the hardware failures, improve support and
minimize the likelihood of future outages. The Company continues to invest
additional capital to improve system redundancy that should reduce downtime if
an unforeseen outage occurs. However, there can be no assurances that additional
outages will not occur or that any such outages will not have a material adverse
effect on the Company's business, financial condition or results of operations.
Gross margins for the Prepaid Wireless Services Division improved from 50% in
the three months ended September 30, 1998 to 57% in the three months ended
September 30, 1999 and from 36% for the nine months ended September 30, 1998 to
60% for the nine months ended September 30, 1999. Because the costs associated
with the prepaid division are generally fixed, the increase in prepaid wireless
services revenues in 1999 did not have a corresponding increase in variable
costs.
In the three months ended September 30, 1999, the Prepaid Wireless Services
Division generated operating income of $15,000 compared to an operating loss of
$1.4 million in the three months ended September 30, 1998 and operating income
of $2.0 million for the nine months ended September 30, 1999 compared to an
operating loss of $7.2 million for the nine months ended September 30, 1998. The
operating losses incurred in 1998 were due to costs associated with the
expansion of the C2C network, including personnel costs and depreciation of
telecommunications equipment and software. Although depreciation and other
operating costs increased in 1999 to support the expanded system, the increases
in revenues and gross margin in 1999 more than offset these costs that are more
fixed than variable, resulting in an operating profit.
Teleservices Division
Teleservices Division revenues increased 34% from $7.5 million in the three
months ended September 30, 1998 to $10.1 million in the three months ended
September 30, 1999 and increased 67% from $18.3 million for the nine months
ended September 30, 1998 to $30.6 million for the nine months ended September
30, 1999. The significant increases in Teleservices revenues resulted primarily
from additional services provided to existing carrier customers and increased
revenue generated from billing inquiry services provided to the Prepaid
Division's carrier customers. As a result of changing customer needs and a
recently developed distributed architecture that will enable carriers to use the
Company's proprietary software to deliver prepaid billing inquiry in-house, the
Company anticipates that Teleservices revenues will decrease. Teleservices
revenues from prepaid billing inquiry services were $2.2 million for the three
months ended September 30, 1998 and increased to $4.5 million for the three
months ended September 30, 1999 and were $5.1 million and $13.0 for the nine
months ended September 30, 1998 and 1999, respectively.
<PAGE>
Gross margins for the Teleservices Division decreased from 25% of Teleservices
revenue for the three months ended September 30, 1998 to 12% for the three
months ended September 30, 1999 and decreased from 23% for the nine months ended
September 30, 1998 to 18% for the nine months ended September 30, 1999. Although
the Teleservices Division experienced a significant increase in revenues, gross
margins for the three and nine month periods ended September 30, 1999 decreased
due to penalties incurred from a software problem resulting in calls going
unanswered, along with increased upfront costs incurred to support growth and
expansion into new and existing call centers. These costs include labor and
related costs to train new personnel and improve their skills to appropriate
levels. In addition, the Company has outsourced certain Teleservices programs to
a third party and therefore costs that would typically be incurred as general
and administrative and depreciation expenses are charged as costs of services,
thereby reducing gross margins but not necessarily operating income. The Company
also assumed certain call center equipment capital leases in October 1999 which
are expected to improve margins in future quarters since these expenses will no
longer be classified as cost of services but instead will be classified as
depreciation expense. In addition, the Company has relocated substantially all
of its call center operations to lower cost labor markets that should also
improve gross margins.
The Teleservices Division generated operating income of $432,000 for the three
months ended September 30, 1998 compared to an operating loss of $417,000 in the
three months ended September 30, 1999 and increased from operating income of
$215,000 for the nine months ended September 30, 1998 to $594,000 for the nine
months ended September 30, 1999. For the three-month period ended September 30,
1999, the operating loss was generated mainly due to a software problem
resulting in calls going unanswered, along with the loss of a customer whose
customer care was merged into an acquiring company's operations. For the nine
month period ended September 30, 1999, the improvement in operating income
resulted from the increased revenue from the Teleservices Division, which
absorbed more of the fixed sales, administrative and depreciation costs compared
to the same periods in 1998.
Roaming Services Division
Roaming services revenues decreased 16% from $7.1 million in the three months
ended September 30, 1998 to $6.0 million in the three months ended September 30,
1999 and decreased 22% from $22.0 million in the nine months ended September 30,
1998 to $17.1 million for the nine months ended September 30, 1999. The
decreases in roaming services revenues in 1999 were primarily attributable to
consolidation of wireless carriers which is causing their automatic roaming
footprints to expand, fewer suspensions of inter-carrier automatic roaming
agreements and customers taking advantage of prepaid wireless offerings in the
marketplace. In addition, demand for the Company's roaming service, whose
premium rates are set by the Company's carrier customers, has been adversely
affected by lower priced one-rate registered roaming plans offered by some
national carriers. The Company anticipates that these trends will continue and,
therefore, roaming services revenues will continue to decrease over time as
compared to prior periods.
Gross margins for the Roaming Services Division decreased from 22% of roaming
services revenues in the three months ended September 30, 1998 to 19% in the
<PAGE>
three months ended September 30, 1999 and decreased from 23% of roaming services
revenues for the nine month period ended September 30, 1998 to 17% for the nine
month period ended September 30, 1999. The decreases were primarily the result
of reduced roaming services revenues that could not absorb the fixed costs
associated with operating this Division.
Operating income for the Roaming Services Division decreased from $718,000 in
the three months ended September 30, 1998 to $351,000 in the three months ended
September 30, 1999 and decreased from $2.6 million for the nine months ended
September 30, 1998 to $693,000 for the same period in 1999. The decreases in
1999 were primarily a result of the reduction in gross margin and lower
absorption of fixed operating and depreciation costs due to the decline in
roaming services revenues.
Systems Division
Systems revenues decreased 38% from $1.5 million in the third quarter of 1998 to
$955,000 in the third quarter of 1999 and decreased 70% from $10.5 million for
the nine months ended September 30, 1998 to $3.2 million for the same period in
1999. The decreases were due to the decline in orders for the Division's
international prepaid systems. In addition, the first quarter of 1998 included
an unusually large sale to a wireless carrier that was implementing prepaid
wireless systems throughout South America.
Gross margins for the Systems Division decreased from 12% of systems revenues in
the September 30, 1998 to (167%) in the three months ended September 30, 1999
and decreased from 41% of systems revenues for the nine months ended September
30, 1998 compared to (29%) for the nine months ended September 30, 1999. The
decreases resulted from decreased systems revenue for the period that could not
absorb fixed manufacturing overhead. In addition, during the third quarter of
1999, the Company reorganized the Systems Division and in conjunction with the
reorganization recorded a one-time charge of $1.8 million. The charge
principally relates to expenses associated with inventory write-downs to bring
the level of inventory in line with the future sales strategy, as well as
severance costs. The Company believes that the reorganization will help position
the Division to expand its presence in the international market, while ensuring
that corporate exposure to the under-performance of the Division is minimized.
However, should the reorganization not be successful, the Systems Division may
incur additional operating losses, asset impairment charges or other write-offs
that could materially and adversely affect the Company's business, operating
results and financial condition.
Operating income (loss) for the Systems Division decreased from an operating
loss of $944,000 in the three months ended September 30, 1998 to an operating
loss of $3.1 million in the three months ended September 30, 1999 and decreased
from operating income of $1.1 million for the nine months ended September 30,
1998 to an operating loss of $5.4 million for the nine months ended September
30, 1999. The decreases in 1999 were primarily a result of the one-time charge
along with the low sales volume that caused lower gross margins and less
absorption of fixed operating, depreciation and amortization costs.
<PAGE>
Operating Data
1999 1998
% of % of
Three months ended September 30, Total Total
($ in thousands) Total Revenues Total Revenues
- --------------------------------------------------------------------------------
Total revenues $26,114 100% $21,168 100%
Engineering, research and development 1,632 6% 1,426 7%
Sales and marketing 1,498 6% 1,387 7%
General and administrative 1,985 8% 1,572 7%
Depreciation and amortization 3,921 15% 2,908 14%
1999 1998
% of % of
Nine months ended September 30, Total Total
($ in thousands) Total Revenues Total Revenues
- --------------------------------------------------------------------------------
Revenues $77,699 100% $62,811 100%
Engineering, research and development 4,446 6% 4,005 6%
Sales and marketing 4,768 6% 4,028 6%
General and administrative 5,419 7% 4,455 7%
Depreciation and amortization 10,837 14% 8,056 13%
Engineering, research and development expenses
Engineering, research and development expenses primarily include the salaries
and benefits for software development and engineering personnel associated with
the development, implementation and maintenance of existing and new services.
Engineering, research and development expenses decreased from 7% to 6% of
revenues for the quarters ended September 30, 1998 and 1999, respectively, and
were consistent at 6% for the nine months ended September 30, 1998 and 1999. The
percentage decrease for the three months primarily resulted from certain
engineers devoting less time to developing and building out the C2C network
infrastructure than they had in the prior year. Since these engineers began to
support the operations of the existing network, beginning in 1999 they are
classified in cost of services. On an absolute dollar basis, the engineering,
research and development expenses increased in 1999 due to additional personnel
hired to develop new features and functionality for the Company's C2C network.
Sales and marketing expenses
Sales and marketing expenses include direct sales, marketing and product
management salaries, commissions, travel and entertainment expenses, in addition
to the cost of trade shows, advertising and other promotional expenses. As a
percentage of total revenues, sales and marketing expenses decreased from 7% to
6% for the three-month periods ended September 30, 1998 and 1999, respectively,
and were consistent at 6% for the nine month periods ended September 30, 1998
and 1999. The increases in absolute dollars for the quarter and nine months
ended September 30, 1999 primarily related to new marketing and business
development efforts for the Company. The decrease in sales and marketing
expenses as a percentage of total revenues for the three-month period resulted
from the use of distribution arrangements in the Systems
<PAGE>
Division which reduced sales and marketing costs. The Company expects to
continue to increase expenditures for sales, marketing and product management in
the future to assist carriers with more prepaid marketing and distribution
efforts. Such expenditures are expected to remain relatively consistent as a
percentage of total revenues.
General and administrative expenses
General and administrative expenses include salaries and benefits of employees
and expenses for other administrative support services provided to the Company.
General and administrative expenses increased from 7% of total revenues for the
three months ended September 30, 1998 to 8% in the three months ended September
30, 1999 due to increased personnel and other related costs to support the
Company's growth. General and administrative expenses remained consistent at 7%
for the nine-month periods ended September 30, 1998 and 1999.
Depreciation and amortization expense
Depreciation and amortization expense includes depreciation of
telecommunications systems, furniture and equipment, buildings and leasehold
improvements. The Company provides for depreciation using the straight-line
method over the estimated useful lives of the assets, which range from three to
twenty years. Goodwill related to acquisitions is amortized over eight years.
Depreciation and amortization expense increased from 14% of total revenues for
the three months ended September 30, 1998 to 15% of total revenues for the three
months ended September 30, 1999 and increased from 13% of total revenues in the
nine months ended September 30, 1998 to 14% of total revenues in the nine months
ended September 30, 1999. The increase in 1999 was primarily due to the
depreciation of additional technical equipment and software to support the rapid
expansion and enhancement of the Company's prepaid wireless network. This
increase was partially offset by a decrease in depreciation as a percentage of
Teleservices revenues since most of the Division's growth was facilitated
through outsourced call center facilities. Beginning in the fourth quarter of
1998, the Company has primarily supported the growth in Teleservices by leasing
call center facilities, equipment and personnel from third parties and
classifying amounts entirely in cost of services. Depreciation and amortization
expenses are expected to increase in absolute dollars due to increased capital
expenditures for telecommunications hardware and software, primarily related to
new C2C features and functionality and the continued enhancement and expansion
of the C2C network. In addition, the Company also assumed certain call center
equipment capital leases in October 1999 which are expected to increase
depreciation in future quarters since these expenses will no longer be
classified as cost of services but instead will be classified as depreciation
expense.
Impairment of Long Lived Assets
During the nine months ended September 30, 1998, the Company recorded a pre-tax
charge of $698,000 for an additional impairment loss on equipment that had been
removed from operations.
<PAGE>
Interest income
Interest income decreased from $331,000 for the quarter ended September 30, 1998
to $227,000 in 1999 and from $1.0 million to $748,000 for the nine month periods
ended September 30, 1998 and 1999, respectively. Interest income was earned from
investments of the proceeds of the Company's public offerings and was offset by
interest expense from the Company's capital leases.
Provision (benefit) for income taxes
In the three-month period ended September 30, 1999 the Company reversed the
previously recorded income tax provision recognized during the prior quarters
due to the losses incurred. In the quarter ended September 30, 1998, the Company
recorded income tax expense of $208,000 that represents the reversal of the
income tax benefit that was recorded in the first quarter of 1998 to reflect the
Company's best estimate for an effective tax rate for the year ending December
31, 1998.
The Company has recorded a net deferred tax asset for net operating loss carry
forwards and other temporary differences based on management's assessment that
it is more likely than not that future results of operations will be sufficient
to realize this asset.
Liquidity and Capital Resources
Cash, cash equivalents and short-term investments decreased from $25.6 million
at December 31, 1998 compared to $22.9 million at September 30, 1999. Net cash
provided by operations of $9.9 million for the nine months ended September 30,
1999 was primarily generated from $10.8 million in depreciation and amortization
expense, which resulted from the continued significant investment in
telecommunications systems and equipment. The increase in accounts payable and
accrued expenses of $6.9 million resulted from the timing of payments, increased
operating costs and increased capital expenditures and was offset by a $7.2
million increase in accounts receivable due to the increased sales volume in
1999.
The Company's investing activities utilized $15.0 million of net cash during the
nine-month period ended September 30, 1999 primarily for purchases of property
and equipment. In addition, $3.6 million in property and equipment was leased
during the same period. These capital additions include $12.5 million for
telecommunications systems equipment and software for expansion of the Company's
C2C network. The Company anticipates that over the next 12 months it will
continue to make significant capital investments for additional equipment and
software to improve redundancy, support new wireless intelligent (WIN)
technology and enhance feature capabilities to strengthen prepaid wireless
services.
The Company's financing activities generated $428,000 in net cash during the
nine months ended September 30, 1999, due to proceeds from exercise of stock
options, partially offset by payments of capital lease obligations.
<PAGE>
The Company believes that its cash and cash equivalents, short-term investments
and the funds anticipated to be generated from operations will be sufficient to
finance the Company's operations for at least the next 12 months.
Year 2000 Readiness Disclosure
The Company has implemented Y2K enterprise-wide projects and conducted tests to
ensure that all products, services and support systems can fully process
date/time data before, during, and after midnight December 31, 1999, recognize
the year 2000 as a Leap Year and maintain existing interoperability and
interfaces with other devices already in use without any modifications or
changes in operations. The Company is managing its readiness by:
1) Maintaining inventories of all hardware, software,
telecommunications providers, and material third party
relationships. This stage is complete and the process will continue
to be updated during 1999.
2) Maintaining compliance certification from each vendor through direct
communication. This stage is complete and the process will continue
to be updated during 1999.
3) Maintaining tested and compliant systems through a company wide
freeze until the successful millennium transition.
In June 1998, the Company completed the re-write, redesign and implementation of
its C2C prepaid system. The Company's development team devoted nearly one year
to produce the necessary changes and included Year 2000 readiness as part of
this process. Additionally, we believe desktop hardware and software, call
distribution systems and customer service handling software are Year 2000 ready
today. To ensure Year 2000 readiness, the Company has upgraded these systems
through vendor-provided Year 2000 patches or purchases of new systems during the
normal course of business. Core business teams for all divisions have examined
internal and external support systems including facilities, finance and human
resource components. The Company has completed a comprehensive on-site physical
inventory and upgraded all of its C2C nodes, of which Year 2000 readiness was a
component. The remedial action required as a result of this inventory was
minimal and was completed in June 1999. In addition, BCGI has upgraded all
servers for core services to be Year 2000 ready.
As of June 30, 1999 the Prepaid, Teleservices, Roaming and Systems Divisions
have successfully completed Year 2000 readiness testing of all systems and
applications owned and operated by the Company to provide core services. Many of
these tests were conducted in conjunction with some of the Company's major
customers and telecommunications vendors. The remaining administrative systems
and applications were tested for Year 2000 readiness and completed before
October 1, 1999.
The Company is fully dependent on the services of multiple telecommunications
providers. If these providers fail to deliver services because of Year 2000
issues or otherwise, the Company would be vulnerable to serious service failures
and be exposed to liability to customers and third parties, including
<PAGE>
the potential for significant lost revenue. The Company is communicating with
all providers in order to assess this risk. These telecommunications providers
have announced their networks as currently Year 2000 compliant. Additionally,
the Company will evaluate contingency options in the event of a failure by such
providers. The Company has developed limited Y2K contingency plans for the
services of these providers, based upon normal Business Continuity Plans.
The Company has developed a Year 2000 business continuity plan in order to
mitigate any potential impact of Year 2000 issues. In addition, the Company has
formally adopted a Year 2000 freeze strategy that takes effect beginning
November 19, 1999 for all production systems.
The Company has spent significant amounts in research and development to ensure
that its products and services are Year 2000 ready. In addition, during 1998 and
through September 30, 1999 the Company has incurred and expensed approximately
$803,000 in payroll, benefit and consulting costs for dedicated resources
related to Year 2000 issues. The Company currently estimates that additional
costs of approximately $173,000 will be incurred in 1999 to test and remediate
Year 2000 issues. The Company anticipates that the amounts and resources
utilized to achieve Year 2000 readiness will not delay or reduce the resources
available to complete other projects.
The costs to complete Year 2000 analysis and remediation are based on
management's best estimates, which have been determined through numerous
assumptions about future events including the availability of resources and
other factors. However, there can be no assurances that these estimates will be
achieved and actual results could differ materially from those anticipated.
Specific factors that could generate significant negative consequences include
undetected errors or defects of third party hardware and software utilized in
the Company's operations, noncompliance of other providers (phone service,
electricity, other utilities, etc.) and other uncertainties. Although management
does not expect Year 2000 issues to have a material impact on its business or
results of operations, there can be no assurance that there will not be
interruptions or other limitations of system functionality.
Certain Factors That May Affect Future Results
This Quarterly Report contains forward-looking statements that involve risks and
uncertainties, including without limitation, statements regarding continued
decreases in prepaid revenue per minute, decreases in teleservices revenues
resulting from changing carrier needs and proprietary software which enables
carriers to provide prepaid customer care in-house, reduced Teleservices margins
from the relocation of call center operations, the trend of decreased
suspensions of inter-carrier automatic roaming agreements, roaming customers
taking advantage of prepaid wireless offerings in the marketplace and carrier
marketing of one-rate registered roaming plans to reduce roaming service
revenues, expenditures for sales, marketing and product management and greater
costs of depreciation and amortization. The Company's actual results may differ
significantly from the results discussed in the forward-looking statements. A
number of important factors exist that could affect the Company's future
operating results, including, without limitation, technological changes in the
Company's industry, the ability of the Company to
<PAGE>
continue to successfully support its C2C network, the ability of the Company's
carrier customers to successfully continue to market and sell C2C prepaid
wireless services, the Company's ability to retain existing customers and
attract new customers, increased competition and general economic factors.
Historically, a significant portion of the Company's revenues in any particular
period have been attributable to a limited number of customers. This
concentration of customers can cause the Company's revenues and earnings to
fluctuate from quarter to quarter, based on the volume of call traffic generated
through these customers, the services being performed for the Teleservices
programs and the level of system sales. A significant decrease in business from
any of the Company's major customers, including a decrease in business due to
factors outside of the Company's control, would have a material adverse effect
on the Company's business, financial condition and results of operations.
The Company has recently developed a distributed architecture that will enable
carriers to use our proprietary software to deliver prepaid billing inquiry
in-house. However, any revenues generated from this application will reduce the
need for the Teleservices Division to provide customer care services and
therefore may reduce teleservices revenues in future quarters.
A number of the Company's Prepaid and Teleservices contracts have continued
beyond their expiration dates or will expire in 1999 and beyond. Most of these
contracts are in the process of being renegotiated and renewed. There can be no
assurances that the Company will be successful in renewing any of these
contracts. If these contracts are not renewed the Company's business, financial
condition and results of operations could be materially adversely affected.
The Company has experienced fluctuations in its quarterly operating results and
anticipates that such fluctuations will continue and could intensify. The
Company experienced an operating loss in 1997 and the first three quarters of
1998, primarily due to expenses associated with the development and expansion of
its C2C network. During the three months ended September 30, 1999 an operating
loss was also incurred due to the Systems Division one-time charge and system
outages in Prepaid and a software problem in Teleservices. In addition, the
Company's Systems Division has experienced operating losses during each of the
last five quarters due to fewer sales of international prepaid systems. The
Company's quarterly operating results may vary significantly depending on a
number of factors including, the timing of the introduction or acceptance of new
services offered by the Company or its competitors, changes in the mix of
services provided by the Company, variations in the level of system sales,
changes in regulations affecting the wireless industry, changes in the Company's
operating expenses, the ability to identify, hire and retain qualified personnel
and general economic conditions. Due to all of the foregoing factors, it is
possible that in some future quarter the Company's results of operations will be
below prior results or the expectations of public market analysts and investors.
In such event, the price of the Company's Common Stock would likely be
materially and adversely affected.
The Company has recently taken steps in an attempt to improve the results of the
Systems Division, which has generated losses during each of the last five
<PAGE>
quarters. A reorganization plan was implemented in September 1999 in an effort
realign the division and improve operating results. However, should these
reorganization efforts not be successful, the Systems Division may incur
additional operating losses, asset impairment charges or other write-offs that
could materially and adversely affect the Company's overall business, operating
results and financial condition.
The Company historically has provided its services almost exclusively to
wireless carriers. Although the wireless telecommunications market has
experienced significant growth in recent years, there can be no assurance that
such growth will continue at similar rates, or at all, or that wireless carriers
will continue to use the Company's services. The Company expects that demand for
its roaming services will continue to decline as fewer inter-carrier roaming
agreements are suspended, roaming customers taking advantage of prepaid wireless
offerings in the marketplace and carriers more frequently offer one-rate roaming
plans. In addition, prepaid wireless and PCS services are relatively new
services in new markets, and if these markets do not grow as expected or if the
carriers in these markets do not use the Company's services, the Company's
business, financial condition and results of operations would be materially and
adversely affected.
The Company's future success depends, in large part, on the continued use of its
existing services and systems, the acceptance of new services in the wireless
industry and the Company's ability to develop new services and systems or adapt
existing services or systems to keep pace with changes in the wireless telephone
industry. Further, a rapid shift away from the use of wireless in favor of other
services, could affect demand for the Company's service offerings and could
require the Company to develop modified or alternative service offerings to
address the particular needs of the providers of such new services. There can be
no assurance that the Company will be successful in developing or marketing its
existing or future service offerings or systems in a timely manner, or at all.
The Company is currently devoting significant resources toward the support and
enhancement of its prepaid wireless services and systems to maintain system
reliability and expand the C2C network. Several of the Company's carrier
customer contracts contain penalty clauses that provide for reductions in
revenue for certain network outages. There can be no assurance that the Company
will successfully support and enhance the C2C network effectively to avoid
system outages and any associated loss in revenue, that the market for the
Company's prepaid service will continue to develop, or that the Company's C2C
network will successfully support current and future growth. Furthermore, the
Company has expended significant amounts of capital to support the C2C
agreements it has secured with its carrier customers. Because C2C revenues are
principally generated by prepaid subscriber minutes of use, the Company's C2C
revenues can be impacted by the carrier's ability to successfully market and
sell prepaid services. Revenues from the Company's C2C network are dependent on
the ability to retain subscribers on the network and there can be no assurance
that the Company's churn rate will not increase, which may result in reductions
in related revenues. In addition, teleservices revenues associated with billing
inquiry support for C2C carrier customers are becoming a more significant
portion of teleservices revenues and therefore these revenues are dependent upon
the size and growth of the C2C subscriber base. Average C2C minutes of usage per
subscriber have decreased during the past quarter and there can be no
<PAGE>
assurance that these reductions will not continue, which may result in lower
than expected revenues.
The Company has experienced outages on the C2C network which have resulted in
performance penalties and unbilled revenue. Despite efforts to avoid outages in
the future, there can be no assurance that future outages will not occur. Such
outages can result in additional penalties and lost revenue for the Company. In
addition, outages could damage the Company's reputation. The occurrence of one
or more outages could have a material adverse effect on the company's business,
operating results and financial condition.
The Company has expanded its operations rapidly, creating significant demands on
the Company's administrative, operational, development and financial personnel
and other resources. In addition, the growth of the Company's Teleservices
Division is dependent on recruiting, training and retaining employees to perform
customer services responsibilities. Teleservices has also outsourced a portion
of its call center operations to a third party vendor who is responsible for
certain operational functions, including hiring, training and retaining
employees. There can be no assurance that the vendor will continue to be able to
meet the Company's existing and future needs effectively. Additional expansion
by the Company may further strain the Company's management, financial and other
resources. There can be no assurance that the Company's systems, procedures,
controls and existing space will be adequate to support expansion of the
Company's operations. If the Company's management is unable to manage growth
effectively, the quality of the Company's services, its ability to retain key
personnel and its business, financial condition and results of operations could
be materially and adversely affected.
The Company's operations are supported by many hardware components and software
applications from third party vendors. There can be no assurances that these
hardware components and software applications will function in accordance with
specifications agreed upon by the Company and its vendors. If the hardware and
software do not function as specified, the Company's business, financial
condition and results of operations could be materially and adversely affected.
The Company currently prices and sells all of its systems to international
customers in U.S. dollars. In addition, many Systems Division customers are
multinational corporations that are publicly traded in the U.S. All payments are
received in U.S. dollars which helps to protect the Company from the need to
hedge against foreign currency risk. While these provisions serve to protect the
Company from accounts receivable losses, there can be no assurances that systems
sales to foreign countries will not result in losses due to devaluation of
foreign currencies or other international business conditions outside of the
Company's control.
The market for services to wireless carriers is highly competitive and subject
to rapid change. A number of companies currently offer one or more of the
services offered by the Company. In addition, many wireless carriers are
providing or can provide, in-house, the services that the Company offers. In
addition, the Company anticipates continued growth and competition in the
wireless carrier services industry and consequently, the entrance of new
competitors in the future. An increase in competition could result in price
<PAGE>
reductions and loss of market share and could have a material adverse effect on
the Company's business, financial condition or results of operations.
The Company's success and ability to compete is dependent in part upon its
proprietary technology. If unauthorized copying or misuse of the Company's
technology were to occur to any substantial degree, the Company's business,
financial condition and results of operations could be materially adversely
affected. In addition, some of the software used to support the Company's
services is licensed by the Company from single vendors, which are small
corporations. There can be no assurance that these suppliers will continue to
license this software to the Company or, if any supplier terminates its
agreement with the Company, that the Company will be able to develop or
otherwise procure software from another supplier on a timely basis and at
commercially acceptable prices.
The Company's operations are dependent on its ability to maintain its computer,
switching and other telecommunications equipment and systems in effective
working order and to protect its systems against damage from fire, natural
disaster, power loss, telecommunications failure or similar events. Any damage,
failure or delay that causes interruptions in the Company's operations could
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company has recorded a net deferred tax asset for net operating loss carry
forwards and other temporary differences based on management's assessment that
it is more likely than not that future results of operations will be sufficient
to realize this asset. However, there can be no assurances that future results
of operations will be sufficient to fully realize this asset.
The Company is actively addressing the concerns of its operations with respect
to Year 2000 issues. Company management, with the assistance of consultants, has
implemented an enterprise-wide project to identify systems, equipment, vendors
and customers that may be affected by the Year 2000 issues and developed a
comprehensive plan to be in compliance with the Year 2000 issues prior December
31, 1999. The Company expects to make the necessary changes to be Year 2000
ready, but there can be no assurances that the Company will adequately identify
all Year 2000 issues and the associated costs and expenses in a timely manner.
Also, there can be no assurance that such costs and expenses will not have a
material adverse effect on the Company's business, financial condition and
results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company currently prices and sells all of its systems to international
customers in U.S. dollars. In addition, many Systems Division customers are
multinational corporations that are publicly traded in the U.S. All payments are
received in U.S. dollars which helps to protect the Company from the need to
hedge against foreign currency risk. While these provisions serve to protect the
Company from accounts receivable losses, there can be no assurances that systems
sales to foreign countries will not result in losses due to devaluation of
foreign currencies or other international business conditions outside of the
Company's control.
<PAGE>
The Company does not believe that there is any material market risk exposure
with respect to derivative or other financial instruments which would require
disclosure under this item.
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
The exhibits listed in the Exhibit Index are part of or
included in this report.
b) Reports on Form 8-K
NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Boston Communications Group, Inc.
---------------------------------
(Registrant)
Date: November 11, 1999 By: /s/ Karen A. Walker
----------------------------
Karen A. Walker
Vice President, Financial
Administration and Chief Financial Officer
(Principal Financial and Accounting Officer
and Duly Authorized Officer)
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
10.51* Letter of Agreement between Centigram Communications
Corporation and Boston Communications Group dated August 12,
1999.
10.52* Amendment #1 to the Agreement between A G Communication
Systems Corporation and Boston Communications Group dated
August 26, 1999
10.53 Lease between Cummings Properties and Boston Communications
Group dated June 3, 1999
10.54* Riverview, New Brunswick, Canada Management Services Agreement
between ICT Group, Inc. and Boston Communications Group, Inc.
dated August 4, 1999
10.55* Lakeland, FL Management Services Agreement between ICT Group,
Inc. and Boston Communications Group, Inc. dated August 4,
1999
27 Financial Data Schedule
* Confidential treatment requested as to certain positions, which positions
have been deleted and filed separately with Securities and Exchange
Commission.
<PAGE>
EXHIBIT 10.51
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission.
Asterisks denote omissions.
CONFIDENTIAL - LETTER OF AGREEMENT
CENTIGRAM COMMUNICATIONS CORPORATION AND BOSTON COMMUNICATIONS GROUP
The following is a brief summary of terms of a proposed business relationship
between Centigram Communications Corporation (Centigram) and Boston
Communications Group (BCG). This is only an expression of interest and a
guideline of how Centigram intends to move toward a definitive agreement. It is
intended to be interpreted as a formal expression of Centigram's interest in
proceeding toward a definitive agreement incorporating these terms.
Notwithstanding anything herein to the contrary, no agreement for this business
relationship shall be deemed to exist and no terms surrounding this letter of
agreement shall be binding unless and until a Definitive Agreement incorporating
the terms has been executed by both parties.
1. GENERAL CONDITIONS
Timing: Centigram intends to have a definitive agreement executed by both
- ------
parties as soon as possible. Further due diligence will be conducted to
determine the timing and feasibility of Phase 2 and Phase 3, as outlined below.
Product:
- -------
Phase 1: Initially, Centigram would resell BCG's existing pre-paid systems
(application, Voice Node and Database Platform) in Centigram's international
markets, as defined below. It is the intent that these systems would be shipped
directly from BCG to Centigram's end customers or distributors. Centigram will
pay BCG in accordance with a price list to be mutually agreed upon and attached
to the Definitive Agreement. As part of the Phase 1 contract, both parties
would further define the respective roles and responsibilities in the pre-sales,
sales and post-sales support of the pre-paid systems.
It is the intent of both parties to move toward a business relationship as
described in phases 2 and 3.
Phase 2: Centigram would resell BCG's existing pre-paid application and
Database platform, but would use industry standard Voice Node and Database
hardware components directly purchased by Centigram. In this scenario,
Centigram would pay BCG a license fee for the software applications and
documentation and purchase any unique BCG hardware components. Centigram would
be responsible for integration, final assembly and testing of the systems. BCG
would be responsible for shipping all software, documentation and unique
components to Centigram's San Jose facility.
Phase 3: Centigram would resell BCG's pre-paid application that would utilize
Centigram's Series 6 platform as the voice node. BCG's Database Platform would
be interfaced to Centigram's voice node. Centigram would continue to use
industry standard hardware components for the Database platform. In this
scenario, Centigram would pay BCG a license fee for the software applications
and documentation and purchase any unique BCG hardware components. Additionally,
this scenario would require Centigram and BCG to do some joint R&D. Further
agreement as to ownership and marketing rights regarding such joint R&D will
need to be defined by both parties. Centigram would be responsible for
integration, final assembly and testing of the systems. BCG would be
responsible for shipping all software, documentation and unique components to
Centigram's San Jose facility.
Phase 4: WIN platform. Both parties agree to work jointly to determine, under
a separate agreement, a WIN-based BCG-Centigram pre-paid offering.
Co-branding: In all 4 phases described above, Centigram and BCG would co-brand
- ------------
the pre-paid system under a trademark to be mutually agreed upon, such as the
"BCG-Centigram" platform.
Warranty:
- ---------
BCG would provide a 12-month software warranty to Centigram from the date of
customer acceptance.
2. MISCELLANEOUS
<PAGE>
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission.
Asterisks denote omissions.
Centigram's International Markets
- ---------------------------------
These markets include all countries in the following regions: CALA - Caribbean
and Latin America, Asia-Pacific (including Australasia and the Far East north
through China and Japan) and EMEA - EurAsia, Middle East and Africa.
Support
- -------
Centigram would provide on-site installation, training and 7 x 24 tier 1 support
to end customers. During the warranty period, BCG would provide 7 x 24 tier 2
support (including any software updates and training programs) to Centigram.
After the warranty period, Centigram will pay BCG for tier 2 services at a
negotiated preferred customer price. BCG will provide Centigram with soft
copies of ongoing marketing materials, documentation, user manuals and other
available support materials, as they are updated.
BCG-Centigram System Sales
- --------------------------
The BCG-Centigram system would only include pre-paid functionality, not BCG
voicemail or any other BCG enhanced services products.
In the event that the end customer or BCG want to have a direct sale, leasing or
service bureau relationship with each other, if Centigram has provided the
customer lead (as mutually agreed upon), BCG would pay Centigram an agency fee
of [**] of the pre-paid system price for the customer sale, payable 45 days from
date of shipment. This arrangement would also pertain to the North American
markets.
Custom Development
- ------------------
In many, if not most end customer implementations, some custom development would
be required. BCG would provide custom development services to Centigram at
preferred vendor rates for these services.
Payment Terms
- -------------
Centigram would pay BCG 45 days from the date of shipment to the end customer.
Indemnification
- ---------------
It would be the intent of both parties that BCG indemnify Centigram from any
patent, trademark, trade secret, etc., infringement related to the licensing of
BCG's pre-paid systems.
Press Release
- -------------
Upon signature of this letter of agreement, it is the intent of both parties
that a joint press release be issued announcing the intent of both parties to
co-brand a pre-paid system that would be resold by Centigram.
Term
- ----
The contract between Centigram and BCG would be a 3-year contract, automatically
renewed in one year increments. Either party could terminate the agreement as of
the end of the initial term, or the end of any 1-year increment thereafter, with
6 months notice. The agreement may be terminated if either party defaults under
the agreement and the default is not cured in a reasonable period of time or if
either party files for bankruptcy.
Exclusivity
- -----------
The contract would be a two-way, non-exclusive agreement.
Confidentiality
- ---------------
This letter of agreement and ensuing contract is considered confidential.
Assignability
- -------------
Should either party be acquired or merged, the contract between Centigram and
BCG would survive. Either party, however, may terminate the agreement in the
event of acquisition or merger with 90 days written notice.
SIGNATURES:
/s/ ROBERT L. PUETTE /s/ E.Y. SNOWDEN
- ----------------------------------- -------------------------------
Robert L. Puette E.Y. Snowden
PRESIDENT AND CEO PRESIDENT AND CEO
CENTIGRAM COMMUNICATIONS CORP. BOSTON COMMUNICATIONS GROUP
<PAGE>
EXHIBIT 10.52
Confidential Materials omitted and filed with the Securities and Exchange
Commission.
Asterisks denote omissions.
AMENDMENT No. 1
to the
AGREEMENT
Between,
AG Communication Systems Corporation, a Delaware corporation, with offices
located at 2500 West Utopia Road, Phoenix, Arizona 85027 (hereinafter
referred to as "AGCS"),
And,
Cellular Express, Inc., a Massachusetts corporation d/b/a Boston
Communications Group, with offices located at 100 Sylvan Road, Woburn,
Massachusetts 01801 (hereinafter referred to as "Company").
WHEREAS, AGCS and Company entered into an Agreement, dated November 16, 1998
(the "Agreement"), by the terms of which AGCS agreed to develop and port
Wireless Prepaid Services (WPS) solutions based on Company and/or industry
specifications, all as more fully set forth in the Agreement; and
NOW, THEREFORE, the parties agree as follows:
1. The first paragraph of Article 14, Termination, shall be amended as follows:
-----------
This Agreement may not be terminated by the Company, at its sole
discretion, prior to meeting all its payment obligations set forth in
Attachment 1 of this Agreement. Company may terminate this Agreement, at
its sole discretion, at any time following completion of all its payment
obligations set forth in Attachment 1 of this Agreement, on fifteen (15)
days prior written notice to AGCS. Upon termination by the Company,
following its meeting all its payment obligations AGCS shall not have any
further rights against the Company under this Agreement. Should Company
terminate this Agreement prior to meeting all its payment obligations, for
any reason except default by AGCS, Company agrees to pay AGCS the amounts
set forth in Attachment 1 of this Agreement.
2. Section 26, Definitions, is hereby added to the Agreement:
-----------
26. Definitions.
-----------
(a) "WPS Software" means the [**] Call Control and Protocol Software,
UWC WPS Release 1.0, TIA WPS Release 1.0 and GSM WPS Release 1.0, which
interfaces with Company's rating engine and Company's Intelligent
Peripheral (IP) as detailed in the following Company documents: Company's
WIN prepaid business requirements [**].
(b) "UWC WPS Release 1.0" means a Wireless Intelligent Network (WIN)
based UWC WPS solution based on UWC Prepaid Charging (PPC), Phase 1,
service specifications with modifications/additions per Company functional
specifications as defined in the first paragraph of Section 1, GENERAL, of
Attachment 1.
(c) "TIA WPS Release 1.0" means the mutually agreed to capabilities of
UWC WPS Release 1.0 plus a TIA WPS solution based on TIA TR-45.2.2.4 WIN,
Phase 2 (Package A) specifications with modifications/additions per Company
functional specifications as defined in the first paragraph of Section 1,
GENERAL, of Attachment 1.
(d) "GSM WPS Release 1.0" means a GSM CAMEL based WPS solution in
accordance with mutually agreed to functional specifications.
1
<PAGE>
Confidential Materials omitted and filed with the Securities and Exchange
Commission.
Asterisks denote omissions.
3. The first paragraph of Section 1, GENERAL, of Attachment 1 shall be amended
as follows:
AG Communication Systems (AGCS) will develop and port the following
Wireless Prepaid Services (WPS) solutions for Boston Communications Group
(BCGI): a Roaming WPS solution based on BCGI's submitted technical
specification [**] and BCGI's roaming functional specifications to be
provided by BCGI; a Wireless Intelligent Network (WIN) based UWC WPS
solution based on UWC Prepaid Charging (PPC), Phase 1, service
specifications with modifications/additions per BCGI functional
specifications and, a TIA WPS solution based on TIA TR-45.2.2.4 WIN, Phase
2 (Package A) specifications with modifications/additions per BCGI
functional specifications, which is expected to be standardized sometime in
1999. Additionally, BCGI may request, and AGCS agrees, to develop GSM CAMEL
WPS as defined in the following paragraph.
4. The second paragraph of Section 1, GENERAL, of Attachment 1 shall be
amended as follows:
AGCS will develop a WIN based UWC WPS solution for delivery by April 1,
2000. This solution will interface with BCGI's rating engine and BCGI's IP
as detailed in the following BCGI documents: BCGI's WIN prepaid business
requirements [**]; and a WIN prepaid functional specification to be
provided by BCGI. AGCS will migrate this solution to a TIA WIN Phase 2
solution within nine months of when this standard becomes available. If
BCGI requests AGCS to develop GSM CAMEL WPS, , AGCS will develop WIN based
UWC/TIA WPS solution only on the [**] platform and will develop GSM CAMEL
WPS on the [**] platform. BCGI must notify AGCS in writing prior to January
1, 2000, if they wish to have AGCS develop GSM CAMEL WPS on the [**]
platform or to develop WIN based UWC/TIA WPS on a second platform, either
the [**] platform. If written notification is not received by AGCS prior to
January 1, 2000, AGCS shall develop GSM CAMEL WPS on the [**] platform in
lieu of development of WIN based UWC/TIA WPS on a second platform. AGCS
shall deliver the selected solution (UWC/TIA WPS solution developed to run
on a second platform or GSM CAMEL WPS) nine months after written request by
BCGI to develop such solution or September 1, 2000, whichever is earlier.
The price for the UWC/TIA/GSM WPS solutions referred to above shall be [**]
to be invoiced in accordance with the schedule set forth in Payment Terms.
5. The third paragraph of Section 1, GENERAL, of Attachment 1 shall be amended
as follows:
AGCS will develop and port the roaming solution to BCGI specifications for
[**]. This price includes BCGI exclusive license of the roaming solution.
Maintenance for this is included throughout December 31, 2001.
6. The fourth paragraph of Section 1, GENERAL, of Attachment 1 shall be
deleted in its entirety.
7. The fifth paragraph of Section 1, GENERAL, of Attachment 1 shall be amended
as follows:
Annual maintenance fees, in accordance with the level of support provided
by AGCS, for service bureau usage of UWC/TIA WPS and GSM CAMEL WPS will be
as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
FIRST LEVEL SUPPORT SECOND LEVEL SUPPORT
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
First Platform* with one Application [**] [**]
- --------------------------------------------------------------------------------------------------
2nd Platform with one Application [**] [**]
- --------------------------------------------------------------------------------------------------
Each Successive Platform w/one Application [**] [**]
- --------------------------------------------------------------------------------------------------
Two Applications on the same platform add: [**] [**]
- --------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
Confidential Materials omitted and filed with the Securities and Exchange
Commission.
Asterisks denote omissions.
* Platform consists of the following scenarios:
1. One system with live customers and one hot standby system.
2. A mated pair each running at no more that 50% capacity utilization.
3. A mated pair each running at no more that 50% capacity utilization
each with a hot standby.
The fee for the maintenance to be provided to BCGI by AGCS shall be
invoiced quarterly by AGCS beginning thirty (30) days prior to the
expiration of the existing warranty or maintenance period, payable thirty
(30) days from invoice date. First level of support will validate the
problem reported and isolate the problem to the WPS Software. Non revenue
generating installations, including lab and back-up units, will not be
subject to maintenance fees.
8. The seventh paragraph of Section 1, GENERAL, of Attachment 1 shall be
amended as follows:
The Agreement does not preclude BCGI from developing Intelligent Network
(IN) Service Logic for prepaid or any other IN applications.
9. The eight paragraph of Section 1, GENERAL, of Attachment 1 shall be amended
as follows:
BCGI will have an unlimited, fully paid and perpetual license (excluding
source code and maintenance) to the UWC/TIA and/or GSM CAMEL, if BCGI
requests AGCS to develop GSM CAMEL WPS. AGCS will develop UWC/TIA WPS
solution on the [**] initially to be delivered by April 1, 2000. If BCGI
chooses UWC/TIA WPS solution to be developed to run on a second platform,
one of the following platforms may be used: [**]. Should BCGI choose to
have AGCS develop GSM CAMEL WPS, the GSM CAMEL WPS solution shall be
developed to run on the [**] platform.
If BCGI chooses development of any of the applications on the [**]
platform, BCGI and AGCS will evenly share the cost of this platform for the
purpose of development and testing. Prior to September 1, 2003, BCGI may
elect to reimburse AGCS for the cost paid by AGCS for the above platform
jointly purchased for development and testing, if, BCGI wishes to take
ownership of this platform.
AGCS agrees to place the source code in escrow within 30 days following
acceptance of the software by BCGI, upon mutually agreed terms which shall
include the provision that the source code shall be released to BCGI in the
event that AGCS or its successor ceases operations or is otherwise unable
or refuses in writing to maintain the software.
10. Payment Terms in Section 1, GENERAL, of Attachment 1 shall be amended as
follows:
<TABLE>
<CAPTION>
Payment Terms:
ROAMING SOLUTION
Schedule % Amount Responsibility Date
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contract Signature 25% [**]
Functional Specifications (Roaming) 0% [**] BCGI December 7, 1998
Final Design Specifications (Roaming) 15% [**] AGCS/BCGI January 18,1999
Integration Testing (Roaming) 10% [**] AGCS Starts June 1999
Final Acceptance(Roaming) 10% [**] BCGI Ends July 1999
Commercial Use (Roaming) 25% [**] BCGI August 1999
Integration testing: SCP-Rating
for 1 platform (UWC/TIA WPS solution) 15% [**] (on delivery)
----------
TOTAL 100% [**]
</TABLE>
3
<PAGE>
Confidential Materials omitted and filed with the Securities and Exchange
Commission.
Asterisks denote omissions.
<TABLE>
<CAPTION>
UWC/TIA/GSM WPS Solution for Service Bureau*
<S> <C> <C>
Amount Responsibility Invoice Date
------------------------------------------------------------
[**] BCGI At Signature
[**] BCGI Acceptance of 1st Platform
[**] BCGI Upon delivery of the 2nd Platform
[**] BCGI January 1, 2001
[**] BCGI May 1, 2001
</TABLE>
*These payments cover use of the applications in a service bureau
environment running on one or more BCGI or carrier owned SCPs connected to
BCGI's service bureau rating and database engine.
System Sales shall be governed by the terms and conditions set forth in
Attachment 3 to this Amendment No. 1. Maintenance for System Sales shall
be governed by the terms and conditions set forth in Attachment 4 to this
Amendment No. 1.
11. Advance Payments in Section 1, GENERAL, of Attachment 1 shall be deleted in
its entirety.
12. The first paragraph of Section 3, UWC/TIA WPS SOLUTION, of Attachment 1
shall be deleted in its entirety.
13. The second paragraph of Section 3, UWC/TIA WPS SOLUTION, of Attachment 1
shall be deleted in its entirety.
14. Article 21, Audit, of the Agreement shall be deleted in its entirety.
-----
15. Article 23, Maintenance, of the Agreement shall be amended as follows:
-----------
23. Maintenance BCGI has the option to purchase maintenance, as set forth
in Attachment 4 to this Amendment No. 1, for an initial term of twelve
(12) months following the end of the warranty period provided by AGCS
for the WPS Software. AGCS' TAC support will be provided and that
maintenance will correct errors or deficiencies in the operation and
functioning of the application as required by the specifications.
Maintenance does not include additional or enhanced functionality or
additional or enhanced features to the software, except that provided
for in Attachment 1.
16. Article 20, Acceptance, of the Agreement shall be amended as follows:
----------
The first sentence of 20.1 should be amended as follows, the remainder
of the article remains the same:
Prior to delivery of the commercial Roaming WPS Software solution
and any WPS Software solution to Company, AGCS shall perform the
internal testing that is appropriate to provide reasonable
assurance that each software solution will perform in conformance
with their specifications.
17. Article 20, Acceptance, of the Agreement shall be amended by adding a
----------
Section 20.6 as follows:
20.6 If BCGI chooses GSM CAMEL WPS Software, and if the GSM CAMEL WPS
Software solution fails to perform in conformance with its
specifications during the acceptance test period, AGCS shall extend
the acceptance test period, as mutually agreed by the parties, and
shall correct material deficiencies. If AGCS is unable to correct
material deficiencies by the date agreed to by both parties, Company
shall be refunded the amount paid for the GSM CAMEL WPS Software
solution.
4
<PAGE>
18. Unless otherwise modified or amended by this Amendment No. 1, the Agreement
remains in full force and effect.
IN WITNESS WHEREOF the parties have signed this Amendment No. 1 in two originals
as of the date or dates below written.
Cellular Express, Inc. AG Communication Systems Corporation
By: /s/ Kevin Thigpen By: /s/ Charles Schulz
----------------------------------- ------------------------------
Name: Kevin Thigpen Name: Charles Schulz
----------------------------------- ----------------------------
Title: Vice President & General Manager Title: VP/GM PAG
---------------------------------- ---------------------------
Date: August 24, 1999 Date: August 26, 1999
----------------------------------- ----------------------------
5
<PAGE>
Confidential Materials omitted and filed with the Securities and Exchange
Commission.
Asterisks denote omissions.
Attachment 3
------------
SYSTEM SALES
1. SCOPE
1.1 The following terms and conditions shall apply to transactions in which AG
Communication Systems Corporation (AGCS) furnishes WPS Software to Boston
Communications Group (BCGI) as a distributor for purposes of (i)
sublicensing WPS Software throughout the world and (ii) using WPS Software
to provide installation, training and support services to BCGI customers
worldwide.
1.2 Following June 1, 2002 the parties may negotiate a mutually acceptable
agreement to replace the current terms and conditions.
2. DEFINITIONS
All initially capitalized terms that are not specifically defined in this
Attachment 3 shall have the meanings ascribed to them in the Agreement.
Additionally, the following terms and their definitions shall apply:
2.1 "Enhancement" means any upgrade or new feature not included in "WPS
Software" as defined in Amendment No. 1 to the Agreement that increases
capability of the WPS Software and any Documentation related to the
Enhancement. Enhancements will be signified by either a new release number,
(e.g., Release 4.0 succeeding Release 3.0) for the addition of major
capabilities, or a software point release to identify the addition of a
minor capability to the software (i.e., Release 4.1, the number 1
indicating a software point release to Release 4.0 of the software).
Enhancements will be made available to LICENSEE at a mutually agreed upon
price and licensed pursuant to this Agreement or to an amendment to this
Agreement, or a separate agreement or written order between the parties.
2.2 "Licensed Materials" means the WPS Software (as defined below in Section
26(a) of the Agreement) and Related Documentation; no source code versions
of computer programs are included in Licensed Materials.
2.3 "Modification" means a revision or minor change to the WPS Software
intended to correct errors or nonconformance with the Related
Documentation. Modifications do not include Enhancements. An issue number
to the release itself (e.g., release 2.0 Issue 1) will signify
modifications. Modifications are provided at no charge to BCGI under
warranty coverage and the Software Maintenance Agreement.
2.4 "Related Documentation" means the printed materials provided with the WPS
Software describing the WPS Software and their installation and use.
2.5 "Service Providers" means entities that are sublicensed, directly or
indirectly, by BCGI to use the WPS Software and to provide Wireless Prepaid
services to their respective subscribers. Service Providers may not
sublicense the WPS Software, but may permanently assign or transfer their
license to use the WPS Software to a third party, provided such party is
not a competitor of AGCS and agrees to be bound in writing to the terms and
conditions of the sublicense.
2.6 "Third Party Vendor(s)" means any and all third party hardware and/or
software vendor(s) whose hardware and/or software are required for the
operation of the WPS Software.
3. LICENSE GRANT
3.1 AGCS grants BCGI, subject to the fees set forth in Section 8, a [**] right
to sublicense, market and distribute copies of the Licensed Materials in
object code form. AGCS shall also provide BCGI with one
1
<PAGE>
Confidential Materials omitted and filed with the Securities and Exchange
Commission.
Asterisks denote omissions.
(1) demonstration copy of the Licensed Materials solely for the purpose of
marketing and promoting the WPS Software.
(a) BCGI may directly, or indirectly through distributors, grant perpetual
sublicenses of the Licensed Materials in object code format to Service
Providers for such Service Provider's own internal use, subject to payment
by BCGI of the fees set forth in Section 8. BCGI shall cause the Service
Providers to execute a sublicense agreement containing the minimum terms
and conditions set forth in this Agreement. AGCS acknowledges that the
terms and conditions of the sublicense agreement are subject to
negotiations with the Service Providers, but that the final agreement will
contain substantially similar terms. No sublicense shall release BCGI from
its obligations under this Agreement.
(b) BCGI may install the WPS Software on approved hardware and operating
system, along with other BCGI or third party software applications. Should
the hardware vendor modify the operating system, AGCS shall make normal
customary changes to its WPS Software, based upon its multiple platform
provider experience, provided the changes address validated customer
opportunities. This effort shall only require recompiling and regression
testing. Beyond the parameters set forth in this Section 3.1(b), AGCS
agrees to make necessary changes or additions, including redesign of the
WPS Software, in accordance with terms to be agreed to between the parties.
(c) AGCS hereby grants BCGI a license to translate, copy and paraphrase, the
Related Documentation, as necessary to fulfill the requirements of Service
Providers and to provide an integrated prepaid services product. AGCS shall
not be liable for any loss or damage caused directly or indirectly by
faulty translations.
3.2 The WPS Software shall be licensed on a per subscriber basis as outlined in
Section 8.1 of this Attachment 3.
3.3 The WPS Software will be marketed and distributed by BCGI under the AGCS
[**] trademark under the provisions of Section 11 of this Attachment 3.
4. RELATIONSHIP OF THE PARTIES
4.1 The relationship of the parties under this Agreement shall be and at all
times remain one of independent contractors. All persons furnished by BCGI
shall be considered solely BCGI's employees or agents, and BCGI shall be
responsible for payment of all unemployment, social security and other
payroll taxes including contributions from them when required by law. All
persons furnished by AGCS shall be considered solely AGCS' employees or
agents, and AGCS shall be responsible for payment of all unemployment,
social security and other payroll taxes including contributions from them
when required by law.
5. OBLIGATIONS
5.1 AGCS Obligations:
(a) At its expense, provide one (1) suitcased sales training course open to all
members of BCGI's sales team so that BCGI will be able to effectively
market and sublicense the Licensed Materials. BCGI will provide for
related lodging and transportation expense for AGCS instructors delivering
the suitcased courses. Additional courses will be provided at AGCS' then
current prices.
2
<PAGE>
Confidential Materials omitted and filed with the Securities and Exchange
Commission.
Asterisks denote omissions.
(b) At BCGI's expense, provide technical assistance for sales visits, when such
is requested by BCGI (including travel and other time not spent directly
with the Service Provider).
(c) AGCS shall provide all Related Documentation to BCGI in English. BCGI
shall have a right to translate the documentation provided by AGCS. AGCS
shall not be liable for any loss or damage caused directly or indirectly by
faulty translations.
(d) Provide second level support to BCGI for the WPS Software sublicensed to
Service Providers. This includes twenty-four (24) hours of daily support,
seven (7) days per week and includes technical support able to resolve
problems that arise from a Service Provider with the application during the
extended warranty period if purchased separately. Out-of-warranty services
are available as provided in Attachment 4.
(e) Upon request by BCGI, assign project management personnel to work with BCGI
on Service Provider projects at a rate of [**] per hour or upon a mutually
agreed to fixed project price.
(f) If requested by BCGI for foreign business opportunities, AGCS may modify
the AGCS Software to qualify for homologation, comply with local protocols
and standards and to achieve other types of local certification and product
requirements mandated by foreign governments. In countries where AGCS has
already "localized" the WPS Software, AGCS agrees to provide such versions
to BCGI at no additional charge. If BCGI requests AGCS to modify the WPS
Software to achieve localization for an identified business opportunity,
the parties shall mutually agree to the fees and terms for such
localization.
5.2 BCGI Obligations
(a) Market the Licensed Materials as AGCS products and not as a product of
BCGI. However, nothing in this Agreement will require BCGI to market or
sublicense any Licensed Materials.
(b) Provide training for Service Providers as BCGI deems appropriate.
(c) Provide first level support for the WPS Software. This level of support
will validate the problem reported and isolate the problem to the WPS
Software whereby BCGI will report to AGCS for corrective action.
(d) Provide all Third Party Vendor software and hardware.
(e) Provide all integration and installation services for the WPS Software.
6. ORDERS
6.1 Any written order submitted by BCGI shall contain information necessary for
furnishing WPS Software including, without limitation, the date of the
order, any applicable product identifier, Service Provider name and
delivery location, requested date of shipment and extended warranty
information. All orders submitted by BCGI and order acknowledgements
submitted by AGCS shall be deemed to incorporate and are subject to the
terms and conditions of this Agreement as well as any supplemental terms
and conditions mutually agreed by both AGCS and BCGI in writing. Unless
both parties expressly agree upon all supplemental terms and conditions in
writing, such supplemental terms and conditions shall be null and void.
6.2 No written order shall be binding on AGCS unless and until accepted in
writing by AGCS, which may accept or request a clarification of any order;
provided, however, that if AGCS fails to respond to BCGI in writing
(acceptance or rejection) within ten (10) business days from receipt of the
order, AGCS shall be deemed to have accepted the order.
3
<PAGE>
Confidential Materials omitted and filed with the Securities and Exchange
Commission.
Asterisks denote omissions.
6.3 In no event shall the preprinted terms and conditions of any written order
or acknowledgment or other similar form alter or amend any provision of
this Agreement even if signed by either or both parties. An inadvertent
omission of reference to this Agreement in a written order or
acknowledgment shall not affect the application of this Agreement to such
written order or acknowledgment.
6.4 All packing, documentation and arrangements for international shipments
shall be the responsibility of BCGI. AGCS shall only arrange shipment of
the WPS Software to destinations within the United States, and in the
absence of written instructions from BCGI, shall ship the WPS Software in a
manner consistent with AGCS' usual shipping practices, F.O.B. shipping
point. Risk of loss for the deliverable shall pass to BCGI upon delivery to
the carrier. Transportation and shipping charges, including, without
limitation, any costs incurred by AGCS relating to packing, storage,
documentation and similar items which result from special shipping
instruction of BCGI, and the cost of any insurance which BCGI may request
in connection with the WPS Software, shall be added to the price stated on
the invoice and shall be paid by BCGI at the time that payment of the
purchase and/or license price for the WPS Software is due and payable.
6.5 BCGI shall have the obligation of obtaining all required export licenses
for the WPS Software where the WPS Software will be exported from the
United States.
6.6 In the event an order requires custom modifications or equipment, BCGI may,
in writing, request that AGCS reschedule the order under this Agreement in
whole or in part (i.e., request a new delivery date for the WPS Software
ordered), cancel, or reconfigure any order within sixty (60) days of
scheduled ship date. In this event, BCGI shall be subject to the following
charges:
<TABLE>
<CAPTION>
No. Days Request is Cancellation Reconfiguration/
Received Prior to Ship Charges Rescheduling
<S> <C> <C>
Within 31 - 60 [**] [**]
Within 16 - 30 [**] [**]
Within 1 - 15 [**] [**]
</TABLE>
6.7 In the event an order does not require custom modifications or equipment,
BCGI may, in writing, request that AGCS reschedule the order under this
Agreement in whole or in part (i.e., request a new delivery date for the
WPS Software ordered), cancel, or reconfigure any order within sixty (60)
days of scheduled ship date. In this event, BCGI shall be subject to the
following charges:
<TABLE>
<CAPTION>
No. Days Request is Cancellation Reconfiguration/
Received Prior to Ship Charges Rescheduling
<S> <C> <C>
Within 31 - 60 [**] [**]
Within 16 - 30 [**] [**]
Within 1 - 15 [**] [**]
</TABLE>
7. ACCEPTANCE
7.1 The WPS Software shall be deemed accepted upon shipment by AGCS to BCGI for
systems sales provided acceptance testing, as defined in Section 20 of the
Agreement, by BCGI, of the same WPS Software for service bureau usage has
been completed. If acceptance testing by BCGI as defined in Section 20 of
the Agreement for the same WPS Software for service bureau usage or an
enhanced version of the WPS Software has not been completed, the WPS
Software shall be deemed accepted following acceptance testing by BCGI as
defined in Section 20 of the Agreement for the initial shipment only of the
WPS Software for system sales.
4
<PAGE>
Confidential Materials omitted and filed with the Securities and Exchange
Commission.
Asterisks denote omissions.
8. FEES
8.1 BCGI hereby agrees to pay AGCS [**] per subscriber for system sales up to a
total payment of [**] and [**] per subscriber for such sales after the
total of such payments exceeds [**]. BCGI shall be responsible for ordering
a license in minimum subscriber blocks of [**]. The fee for a system sale
shall be determined at the time of sale based upon the number of
subscribers that the system which is sold is intended to serve, as stated
prior to the sale in writing to BCGI by the customer to whom the system is
sold. In the event a Service Provider orders a system expansion from BCGI,
BCGI will pay AGCS the applicable per subscriber fee determined at the time
of the expansion based upon the number of subscribers that the system
expansion which is sold is intended to serve, as state prior to the sale in
writing to BCGI by the Service Provider to whom the system is sold.
8.2 AGCS shall invoice BCGI upon shipment and/or acceptance, in accordance with
Section 7.1 of this Attachment 3, of the WPS Software. All invoices shall
be issued in accordance with the billing terms set forth in Section 22,
Billing Terms, of the Agreement. AGCS' invoices shall contain (i) BCGI's
--------------
"invoice to" and "ship to" addresses as specified by the Order, (ii) Order
number, (iii) applicable fee, and (iv) reference to this Agreement.
8.3 All prices are F.O.B. shipping point.
8.4 All amounts expressed herein are in U.S. dollars.
8.5 All prices for WPS Software are exclusive of all federal, state, provincial
and local excise, sales, use, value-added, occupational, levies,
assessments, import duties and like taxes which may be imposed by the
United States of America, or by any political subdivision of the United
States, or by any country or political subdivision in connection with any
transaction contemplated by this Agreement and/or WPS Software licensed by
BCGI hereunder, excluding taxes based upon AGCS' possession thereof prior
to originally scheduled delivery and taxes on AGCS' net income from the
transaction. Payment of all such taxes shall be assumed and paid for by
BCGI. BCGI shall be responsible for providing, in a timely manner, all
documentation in the nature of exemption certificates or otherwise,
necessary to allow AGCS to refrain from collections, such as sales tax,
which it would otherwise be obligated to make. BCGI agrees to indemnify and
hold AGCS harmless for all taxes and this obligation shall survive any
termination of this Agreement.
9. Audit
9.1 Not more than twice a year AGCS may audit, or designate an independent
certified auditor to audit the directly relevant records of BCGI during
BCGI's regular business hours to determine whether the amount paid to AGCS
by BCGI is accurate. Any expenses of such audit shall be born by AGCS,
unless the audit determines that the amount paid to AGCS by BCGI is
inaccurate by more than ten (10%) percent, in which case all reasonable
expenses of the audit will be born by BCGI. BCGI will be required to pay
AGCS any amount owed. In the event that the audit determines that BCGI has
made an overpayment, AGCS shall pay the amount of such overpayment to BCGI.
9.2 The number of subscribers is limited to the license(s) acquired by a
Service Provider. In the event the customer orders a system expansion from
BCGI, BCGI shall be responsible for providing AGCS a written order for a
license(s), in minimum subscriber blocks of [**], at fees set forth in
Section 8.1, to accommodate the number of subscribers in excess of the
authorized quantity. AGCS will invoice BCGI for applicable license at the
fees set forth in Section 8.1 and BCGI agrees to pay AGCS the applicable
license fee upon receipt of said invoice.
9.3 Any relevant documents shall be conclusively presumed as accurate after six
(6) months from date of delivery to AGCS by BCGI and shall be excluded from
auditing.
5
<PAGE>
9.4 Any information derived from BCGI's reports or records shall be maintained
in confidence by AGCS as confidential information of BCGI pursuant to
Section 4 of the Agreement.
10. TITLE
10.1 This Agreement is not intended to and shall not be construed to convey or
otherwise transfer title to, ownership of, or any proprietary rights in,
the Licensed Materials to BCGI or BCGI's Service Providers.
11. INFRINGEMENT OF PATENTS, TRADEMARKS AND COPYRIGHTS
11.1 In the event of any claim, action, proceeding or suit by a third party
against BCGI alleging an infringement of any patent, copyright, trademark
or trade secret by reason of the possession, use, license or distribution,
in accordance with AGCS' specifications, of any Licensed Materials
furnished to BCGI under this Agreement, AGCS at its expense, will defend
and hold harmless BCGI and its Service Providers in any such proceeding
subject to the conditions and exceptions stated below. AGCS will reimburse
BCGI and its Service Providers for any cost, expense or attorney's fee,
incurred at AGCS' written request or authorization, and will indemnify and
hold harmless BCGI and its Service Providers against any liability assessed
against BCGI on account of such infringement.
11.2 In addition, if BCGI's possession, use, license or distribution rights are
likely to be or shall be enjoined, AGCS will, at its expense and at its
option, either: (1) replace the enjoined Licensed Material furnished
pursuant to this Agreement with a suitable substitute free of any
infringement; or (2) modify it so that it will be free of the infringement
without adversely affecting its functionality; or (3) procure for BCGI and
the Service Providers a license or other right to use it; or (4) procure
for BCGI a right to license it on terms no less favorable then the terms of
this Agreement. If none of the foregoing options is available, AGCS will
remove the enjoined Licensed Materials and refund to BCGI any amounts paid
by BCGI.
11.3 BCGI shall give AGCS prompt written notice of all such claims, actions,
proceedings or suits alleging infringement or violation and BCGI shall have
the right, at its cost and expense, to cooperate in the defense of such
action (including appeals or settlements). BCGI shall, upon AGCS' request
and expense, furnish information and reasonable assistance to facilitate
the defense and/or settlement of any such claim, action, proceeding, or
suit. AGCS shall have no liability to BCGI whatsoever for any loss or
damage resulting from a claim of infringement or wrongful use or a
Proprietary Right based upon and arising from any unauthorized alteration
or modification of the WPS Software or the use of the WPS Software in
combination with hardware or software not furnished or recommended by AGCS
or any WPS Software development based on a functional specification
provided to AGCS by BCGI or a BCGI directed implementation of a functional
specification provided to AGCS by BCGI (AGCS shall be liable under this
paragraph should infringement be caused by a non BCGI directed
implementation of a BCGI functional specification).
12. WARRANTY, EXTENDED WARRANTY AND TECHNICAL ASSISTANCE
12.1 AGCS will warrant the first sublicense of each of the first releases of the
Licensed Materials for a period of six (6) months from acceptance, all
subsequent sublicenses of such Licensed Materials, as well as any
enhancements thereof, will be warranted for a period of ninety (90) days
from acceptance. AGCS will correct, at AGCS' expense, deficiencies in the
WPS Software that are brought to AGCS' attention within the warranty
period. Provided payment for extended warranty as set forth in Section 7.1
of the Maintenance Agreement has been received by AGCS, extended warranty
coverage takes effect on the date of expiration of the warranty provided by
AGCS to BCGI. Extended Warranty includes AGCS Customer Support Center (CSC)
support twenty-four (24) hours a day, seven (7) days a week.
13. TRADEMARKS AND OTHER INDICIA
13.1 Licensed Materials licensed hereunder and the packaging therefor may bear
certain trade names, trademarks, trade devices, logos, codes or other
symbols of AGCS (herein "Indicia"). AGCS hereby grants
6
<PAGE>
BCGI permission to use Indicia in BCGI's marketing and advertising of, and
in BCGI's publicity relating to, the Licensed Materials, PROVIDED such use
conforms to AGCS standards and guidelines relating thereto which AGCS may
furnish from time to time. AGCS may not use any of BCGI's trade names,
trademarks, trade devices, logos, codes or other symbols in a manner that
is likely to confuse the public concerning the relationship of the parties.
Upon termination of this Agreement, BCGI shall immediately cease using
AGCS' trademarks.
14. MARKETING
14.1 BCGI shall have complete authority to market any or all of the Licensed
Materials as it sees fit so long as BCGI meets the payment obligations set
forth in this Agreement and does not otherwise violate AGCS' rights in the
Licensed Materials. Nothing in this Agreement shall be construed to
obligate BCGI to in any way market, distribute, ship or otherwise utilize
any Licensed Materials or any portion thereof. It is understood that AGCS
will only support one (1) major release behind the current commercial
release.
7
<PAGE>
15. SURVIVAL OF OBLIGATIONS
15.1 The respective obligations of AGCS and BCGI under this Agreement which by
their nature would continue beyond the termination, cancellation or
expiration hereof, including without limitation, infringement and
indemnification obligations, shall survive termination, cancellation or
expiration hereof. All licenses and sublicenses purchased under this
Agreement or an order shall survive termination, cancellation or expiration
of this Agreement.
16. LIMITATION OF LIABILITY
16.1 In no event shall either party be responsible for any incidental, special
or consequential damages arising out of or in connection with this
Agreement.
17. EXPORT CONTROLS
17.1 In regard to the WPS Software as defined in this Agreement, BCGI will not
transmit, release, export or reexport, directly or indirectly, in whole or
in part, any proprietary information, technology, software or the source
code for the software or direct product of such proprietary information,
technology, or software: (i) to any country listed from time to time in the
Country Groups D:1 and E:2 set forth in the United States Export
Administration's list of Country Groups without a license exception or a
license from the U.S. Department of Commerce; or, (ii) in contravention of
the laws of the United States of America or the laws of any other country.
The countries currently listed in the Country Groups D:1 and E:2 are:
Afghanistan, Albania, Armenia, Azerbaijan, Belarus, Bulgaria, Cambodia,
Cuba, Estonia, Georgia, Iran, Iraq, Kazakhstan, Kyrgyzstan, Laos, Latvia,
Libya, Lithuania, Moldova, Mongolia, The People's Republic of China, North
Korea, Romania, Russia, Sudan, Syria, Tajikistan, Turkmenistan, Ukraine,
Uzbekistan and Vietnam. This clause shall survive any termination, release
or time period set forth in this agreement.
8
<PAGE>
Attachment 4
------------
SOFTWARE MAINTENANCE AGREEMENT
This Software Maintenance Agreement ("Maintenance Agreement"), entered into this
26th day of August, ("Effective Date"), by and between AG COMMUNICATION SYSTEMS
CORPORATION, a Delaware corporation, with offices located 2500 West Utopia Road,
Phoenix, Arizona 85027 (hereinafter "AGCS") and CELLULAR EXPRESS, INC., a
Massachusetts corporation d/b/a Boston Communications Group, with offices
located at 100 Sylvan Road, Woburn, Massachusetts 01801 (hereinafter referred to
as "BCGI").
WHEREAS, AGCS and BCGI have entered into an Agreement (the "Agreement") by the
terms of which AGCS agreed to develop and port Wireless Prepaid Service (WPS
Software) solutions based on BCGI and/or industry specifications, all as more
fully set forth in the Agreement; and
WHEREAS, BCGI has requested AGCS to provide second line software maintenance and
support for the WPS Software in support of BCGI; and
WHEREAS, AGCS is willing to provide, and BCGI is willing to acquire maintenance
service for the WPS Software subject to the terms and conditions hereof;
NOW THEREFORE, the parties hereto agree as follows:
1. SCOPE
1.1 The terms and conditions in this Maintenance Agreement are applicable to
the following scenarios:
a. BCGI sells systems containing WPS Software to Service Providers
b. BCGI operates the WPS Software in a service bureau environment
c. BCGI operates service bureau environment for rating and database and
links to a carrier installed Service Control Point (SCP) for WPS Software.
2. DEFINITIONS
2.1 All initially capitalized terms that are not specifically defined in this
Maintenance Agreement shall have the meanings ascribed to them in the
Agreement.
3. AGCS CUSTOMER SUPPORT CENTER
3.1 AGCS' Customer Support Center support shall be available to BCGI twenty-four
(24) hours a day, seven (7) days a week by calling 1-888-888-2427. The
service to be provided will be the following:
3.1.1 Distribution of a master AGCS escalation chart matrix and ongoing
updates. This matrix will include names, titles, and telephone numbers
of individuals within the Customer Support Center organization for
problem response escalation. AGCS agrees to respond to BCGI as stated
in Article 2.3 below on a twenty four (24) hour a day basis in the
event of an out of service condition. This support may be provided by
AGCS' installation, or other qualified personnel.
3.1.2 Telephone assistance in the diagnosis and resolution of WPS Software
problems and assistance in expediting priority replacement software
required on an emergency basis.
3.1.3 On-line remote monitoring of sites, as mutually agreed, to provide
assistance in problem identification and resolution. Such on-line
monitoring may require a data connection agreement between the parties
to regulate the method and extent of connection between the parties'
computer
1
<PAGE>
networks. BCGI shall arrange in advance, such that Service Provider
will have an appropriate access port available.
3.1.4 Routine telephone assistance in the support of the initial
implementation of newly developed software modifications to the WPS
Software.
3.1.5 Furnish software work arounds or updates for software that is not
compliant with the Related Documentation.
3.2 When BCGI refers trouble to the AGCS Customer Support Center, the caller
must be given a case number and a mutually agreed upon priority level if
resolution cannot be completed over the telephone. The table provided below
describes the four levels of priority used by the Customer Support Center.
The Customer Support Center shall provide the caller a verbal status,
disposition or resolution of the reported problem within two (2) hours of
notification for priority levels one and two. At the discretion of BCGI,
the problem may be escalated in accordance with the following escalation
matrix:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PRIORITY URGENCY DESCRIPTION
========================================================================================================
<S> <C>
1 Critical The Service Provider's network is down and inoperable. All work has stopped
and the situation is causing a critical impact to the Service Provider's
business operations and productivity. No workaround is available.
- --------------------------------------------------------------------------------------------------------
2 High The Service Provider's network is severely limited or degraded. The situation
is causing a significant impact to certain portions of the Service Provider's
business and productivity. No workaround is available.
- --------------------------------------------------------------------------------------------------------
3 Medium The Service Provider's network is slightly limited or degraded. The situation
has impaired network operations, but most business operations and user
productivity continue. A workaround or alternate configuration is available.
- --------------------------------------------------------------------------------------------------------
4 Low The Service Provider's network or user productivity are not affected. Service
Provider calls in with informational inquiries, documentation issues, upgrade
requests, requests for a new feature or function or requires additional
information.
- --------------------------------------------------------------------------------------------------------
</TABLE>
3.3 The Customer Support Center shall respond to all emergency calls within two
(2) hours.
3.4 AGCS shall cooperate in providing guidelines to ensure the necessary
tracking and resolution of service complaints.
3.5 In order to perform diagnostic testing and fault isolation with minimal
system interruption, AGCS reserves the right to obtain remote access to the
application running at the site reporting the problem. If remote access is
requested by AGCS for maintenance purposes, and access is denied or
otherwise not available to AGCS, the response times and time intervals for
resolution will be expanded to adjust for the time access is not available.
3.6 If the parties agree that AGCS will provide first-call support, BCGI shall
provide AGCS with the name, address and telephone number of a designated
system administrator and alternate for the site(s) at which the WPS
Software is installed. BCGI shall also provide AGCS with all information,
documentation, technical assistance and access to the WPS Software as AGCS
may reasonably require to perform pursuant to this Maintenance Agreement.
The system administrator and alternate shall have a working knowledge of
the WPS Software. Only the system administrator and alternate are
authorized to contact AGCS for maintenance service. BCGI shall immediately
notify AGCS of any changes with respect to the name, address or telephone
number of the system administrator and alternate. BCGI shall be responsible
for providing adequate system engineering and hardware capabilities for the
WPS Software to function properly.
2
<PAGE>
3.7 All corrective software and documentation provided by AGCS for the WPS
Software under this Maintenance Agreement shall become and remain the
exclusive property of AGCS and shall be licensed to BCGI under the license
provisions of the Agreement.
3.8 AGCS' obligations hereunder are contingent upon BCGI's compliance with the
terms of the Agreement and this Maintenance Agreement. AGCS reserves the
right to reject for maintenance service any WPS Software which has not been
on continuous maintenance service by AGCS, or has been repaired by BCGI or
a third party other than at the direction of AGCS. BCGI shall be
responsible for all charges to restore any WPS Software to a condition
acceptable to AGCS for inclusion under this Maintenance Agreement.
3.9 For certain WPS Software problems AGCS may require that BCGI furnish to
AGCS a test case and sufficient documentation to allow recreation of the
WPS Software problem.
4. Unsatisfactory Condition Situation(s)
4.1 If at any time during normal operations AGCS encounters an unsatisfactory
condition (noncompliance with the Related Documentation) directly related
to the WPS Software, AGCS agrees to meet the following time frames for
resolving the condition.
(a) Conditions that affect the ability to track and collect revenue, or
that cause major degradation of the WPS Software, requires a continuous
effort until corrected, and provide a permanent resolution within fifteen
(15) days of notification.
(b) Conditions that affect service, but have a temporary solution to reduce
the impact, or that have potential for major service degradation, AGCS
shall acknowledge the condition within five (5) days of notification and
will provide a permanent resolution within thirty (30) days of
notification.
(c) Conditions that are not service affecting but that have potential to
adversely affect normal maintenance and/or administration or WPS Software
service, AGCS will acknowledge the condition and provide a permanent
resolution within sixty (60) days of notification.
4.2 BCGI and AGCS may agree to action dates to correct unsatisfactory
conditions other than those mentioned above. The term "permanent
resolution" shall mean a correction of an unsatisfactory condition in the
form of a Modification and/or revised operating or maintenance procedures
that are acceptable to BCGI and AGCS.
5. EXCLUDED SERVICES
5.1 MAINTENANCE SERVICE DOES NOT INCLUDE: (1) SERVICES CONNECTED WITH
RELOCATION OR NETWORK RECONFIGURATION; (2) SERVICE RESULTING FROM: (a)
NEGLECT, MISUSE OR ACCIDENTAL DAMAGE OF THE WPS SOFTWARE (b) MODIFICATIONS
OR REPAIRS PERFORMED BY OTHER THAN A PARTY AUTHORIZED BY AGCS; (c)
CORRECTION OF DEFECTS ARISING FROM THE FAILURE OF BCGI TO PROVIDE AND
MAINTAIN A SUITABLE INSTALLATION ENVIRONMENT INCLUDING BUT NOT LIMITED TO
PROPER ELECTRICAL POWER, AIR CONDITIONING OR HUMIDITY CONTROL; OR (d) THE
SUPPORT OF THE WPS SOFTWARE USED FOR OTHER THAN THE PURPOSES FOR WHICH THEY
WHERE DESIGNED; (3) THE SUPPORT OF SOFTWARE DEVELOPED BY BCGI OR OBTAINED
FROM THIRD PARTIES; OR (4) THE SUPPORT OF WPS SOFTWARE NOT PROVIDED BY
AGCS.
6. TERM AND TERMINATION
6.1 The initial maintenance term shall be the first twelve (12) months
following the end of the warranty period provided by BCGI to the Service
Provider. At the end of this initial twelve (12) month maintenance term,
maintenance shall automatically be renewed for the WPS Software for one-
year renewal terms until
3
<PAGE>
Confidential Materials omitted and filed with the Securities and Exchange
Commission.
Asterisks denote omissions.
terminated by BCGI by giving AGCS notification in writing at least sixty
(60) days prior to the expiration date of the existing maintenance term.
6.2 This Maintenance Agreement may be terminated upon the occurrence of one or
more of the following events; provided, however, the terminating party
shall have no liability to the other party for the exercise of any rights
granted in this Article, nor shall such exercise have the effect of waiving
any rights, claims, or damages to which the terminating party might be
entitled.
6.2.1 By AGCS if BCGI fails to pay the maintenance fees or any other
amounts due hereunder within thirty (30) days of notice of failure to
pay.
6.2.2 By either party if the other party is in default of any other
provision of the Agreement or this Maintenance Agreement, provided
written notice of such alleged default has been given to the other
party and such other party has not cured such default within thirty
(30) days after receipt of such notice. In the event maintenance
services are terminated for any reason during any period covered by a
prepaid maintenance fee, Service Provider shall be entitled to a
refund of the prepaid and unused maintenance fees determined by
dividing the annual maintenance fee by twelve (12) and multiplying the
result by the number of months remaining in that maintenance period.
The refundable amount applies only to prepaid amounts from Article 6
and shall not apply to other amounts owed to AGCS by BCGI under any
other provision of the Agreement or this Maintenance Agreement.
6.2.3 By AGCS, if BCGI fails to keep current with updates to the WPS
Software provided by AGCS. "Keep current" shall be defined as the
then current commercial release or one release prior (e.g., current =
release 3.0, prior = release 2.0).
7. MAINTENANCE CHARGES
7.1 System Sales. For System Sales the price for the maintenance to be
------------
provided to BCGI by AGCS under this Maintenance Agreement (except for
maintenance to the Roaming Application and for service bureau usage) will
be [**] of the WPS Software license fees if BCGI provides first level
support and [**] of the WPS Software license fees if BCGI provides second
level support. This fee will be invoiced quarterly by AGCS beginning
thirty (30) days prior to the expiration of the existing warranty or
maintenance period, payable thirty (30) days from invoice date. AGCS
reserves the right to adjust the maintenance price for any renewal of this
Maintenance Agreement upon ninety (90) days written notice prior to the end
of the term then in effect up to an annual maximum increase of ten percent
(10%).
7.2 Service Bureau. The price for maintenance to be provided to BCGI by AGCS
--------------
when BCGI is operating the WPS Software (except the Roaming Application and
System Sales) in a service bureau environment is outlined in Section 7 of
Amendment No. 1 of the Agreement.
7.3 Roaming Application. Maintenance of the Roaming Application is included in
-------------------
the License fees paid by BCGI to AGCS for such application until December
31, 2001.
8. ADDITIONAL SERVICES
8.1 Maintenance service beyond the scope of this Maintenance Agreement shall
only be provided in response to a written request by BCGI and will be
billed to BCGI at a mutually agreed to rate.
8.2 Software maintenance shall include coverage for Modifications by AGCS to
BCGI during the maintenance term at no additional charge.
4
<PAGE>
8.3 Software maintenance provided by AGCS to BCGI to support a Software
Environment Upgrade during the maintenance term will be made available at a
mutually agreed to rate. A Software Environment Upgrade is the updating of
the WPS Software, or parts thereof, to permit the WPS Software to continue
to operate according to its requirements and is made necessary by changes
or modifications made to the computer platform on which the WPS Software
operates.
8.4 Significant changes by BCGI to platform hardware and/or software such as
additions or deletions of Operating System, disk interface utilities,
process monitoring and control utilities, TCP/IP or HTTP web server require
support effort not covered under this Maintenance Agreement. In the event
significant changes are made to the Software Environment by BCGI, required
changes to the WPS Software by AGCS will be treated as new development
effort.
8.5 If AGCS performs maintenance service at BCGI's request for WPS Software
that is no longer under warranty due to failure to extend or renew the
warranty, failure to pay the applicable extended warranty fees or for any
other out-of- warranty condition, those services shall be in response to a
request therefor by BCGI in a written order and will be billed to BCGI at
AGCS' then current charges for the services.
9. TAXES
9.1 BCGI shall be responsible for all federal, state and local taxes and other
governmental assessments arising from or based upon the maintenance charges
payable under this Maintenance Agreement, however designated, exclusive of
taxes on AGCS' net income. Such taxes and any other governmental
assessments shall be added to AGCS' invoice to BCGI and remitted to the
proper authorities by AGCS.
10. DELAY
10.1 AGCS shall not be responsible for failure to render service hereunder or
for delay in rendering such service where the failure or delay results from
events of Force Majeure as defined in Section 19 of the Agreement.
11. ASSIGNMENT
11.1 This Maintenance Agreement may not be assigned by either party without the
prior written consent of the other party except as otherwise provided for
under Assignments in the Agreement.
12. DISCLAIMER OF WARRANTY
12.1 OTHER THAN THE WARRANTY PROVIDED FOR IN THIS MAINTENANCE AGREEMENT, AGCS
MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE RELATED
TO THE SERVICES TO BE PROVIDED HEREUNDER.
13. LIMITATION OF LIABILITY
13.1 AGCS' LIABILITY UNDER THIS MAINTENANCE AGREEMENT SHALL BE LIMITED, AT AGCS'
OPTION, TO THE SUPPORT, REPAIR OR REPLACEMENT OF THE SOFTWARE COVERED BY
THIS MAINTENANCE AGREEMENT OR TO AN AMOUNT NOT TO EXCEED THE CURRENT ANNUAL
CHARGES PAID UNDER THIS MAINTENANCE AGREEMENT FOR THE SOFTWARE IN QUESTION.
IN NO EVENT SHALL AGCS BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF PROFITS) WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER LEGAL THEORY.
14. GENERAL
5
<PAGE>
14.1 No term of this Maintenance Agreement shall be considered waived, and no
breach excused, by either party unless made in writing. No consent, waiver
or excuse by either party, whether express or implied, shall constitute a
subsequent consent, waiver or excuse.
14.2 If any provision of this Maintenance Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable such provision shall
be severed from this Maintenance Agreement and the remaining provisions
will remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Maintenance Agreement
and caused it to be effective on the date first written above.
CELLULAR EXPRESS, INC. AG COMMUNICATION SYSTEMS
CORPORATION
By: /s/ Kevin Thigpen By: /s/ Charles Schulz
---------------------------- ----------------------------
Name: Kevin Thigpen Name: Charles Schulz
------------------------- -------------------------
Title: Vice President
& General Manager Title: VP/GM PAG
------------------------- -------------------------
Date: August 24, 1999 Date: August 26, 1999
-------------------------- --------------------------
6
<PAGE>
Exhibit 10.53
-------------
CUMMINGS PROPERTIES
STANDARD FORM
COMMERCIAL LEASE
In consideration of the covenants herein contained, Cummings Properties, LLC
hereinafter called LESSOR, does hereby lease to Boston Communications Group,
Inc. (a MA corp.), hereinafter called LESSEE, the following described premises,
hereinafter called the leased premises: approximately 19,464 square feet
(including 3.25% common area) at 100 Sylvan Road, Suite G-600, Woburn, MA 01801
TO HAVE AND HOLD the leased premises for a term of five (5) years commencing at
noon on July 1, 1999 and ending at noon on June 30, 2004 unless sooner
terminated as herein provided. LESSOR and LESSEE now covenant and agree that the
following terms and conditions shall govern this lease during the term hereof
and for such further time as LESSEE shall hold the leased premises.
1. RENT. LESSEE shall pay to LESSOR base rent at the rate of four hundred seven
thousand seven hundred seventy (407,770.00) U.S. dollars per year, drawn on a
U.S. bank, payable in advance in monthly installments of $33,980.83 on the first
day in each calendar month in advance, the first monthly payment to be made upon
LESSEE's execution of this lease, including payment in advance of appropriate
fractions of a monthly payment for any portion of a month at the commencement or
end of said lease term. All payments shall be made to LESSOR or agent at 200
West Cummings Park, Woburn, Massachusetts 01001, or at such other place as
LESSOR shall from time to time in writing designate. If the "Cost of Living" has
increased as shown by the Consumer Price Index (Boston Massachusetts, all Items,
all urban consumers), U.S. Bureau of Labor Statistics, the amount of base rent
due during each calendar year of this lease and any extensions thereof shall be
annually adjusted in proportion to any increase in the Index. All such
adjustment shall take place with the rent due on January 1 of each year during
the lease term. The base month from which to determine the amount of each
increase in the Index shall be January 1999, which figure shall be compared with
the figure for November 1999, and each November thereafter to determine the
percentage increase (if any) in the base rent to be paid during the following
calendar year. In the event that the Consumer Price Index as presently computed
is discontinued as a measure of "Cost of Living" changes, any adjustment shall
then be made on the basis of a comparable index than in general use.
2. SECURITY DEPOSIT. LESSEE shall pay to LESSOR a security deposit in the amount
of sixty seven thousand nine hundred (67,900.00) dollars upon the execution of
this lease by LESSEE, which shall be held as security for LESSEE's performance
as herein provided and refunded to LESSEE without interest at the end of this
lease subject to LESSEE's satisfactory compliance with the conditions hereof.
LESSEE may not apply the security deposit to payment of the last month's rent,
in the event of any default or breach of this lease by LESSEE, LESSOR shall
immediately apply the security deposit first to any unamortized improvements
completed for LESSEE's occupancy, then to offset any outstanding invoice or
other payment due to LESSOR, with the balance applied to outstanding rent. If
all or any portion of the security deposit is applied to cure a default or
breach during the term of the lease. LESSEE shall be responsible for restoring
said deposit forthwith and failure to do so shall be considered a substantial
default under the lease. LESSEE's failure to remit the full security deposit or
any portion thereof when
<PAGE>
due shall also constitute a substantial lease default. Until such time as LESSEE
pays the security deposit and first month's rent, LESSOR may declare this lease
null and void for failure of consideration.
3. USE OF PREMISES. LESSEE shall use the leased premises only for the purpose of
executive and administrative offices.
4. ADDITIONAL RENT. LESSEE shall pay to LESSOR as additional rent a
proportionate share (based on square footage leased by LESSEE as compared with
the total leaseable square footage of the building of which the leased premises
are a part) of any increase in the real estate taxes levied against the land and
building of which the leased premises are a part, whether such increase is
caused by an increase in the tax rate, or the assessment on the property, or a
change in the method of determining real estate taxes. LESSEE shall make payment
within thirty days (30) of written notice from LESSOR that such increased taxes
are payable, and any additional rent shall be prorated should the lease
terminate before the end of any tax year. The base from which to determine the
amount of any increase in taxes shall be the rate and the assessment in effect
as of July 1, 1999.
5. UTILITIES. LESSOR shall provide equipment per LESSOR's building standard
specifications to heat the leased premises in season and to cool all office
areas between May 1 and November 1. LESSEE shall pay all charges for utilities
used on the leased premises, including electricity, gas, oil, water and sewer.
LESSEE shall pay the utility provider or LESSOR, as applicable, for all such
utility charges as determined by separate meters serving the leased premises
and/or as a proportionate share of the utility charges for the building if not
separately metered. LESSEE shall also pay LESSOR a proportionate share of any
other fees and charges relating in any way to utility use at the building. No
plumbing, construction or electrical work of any type shall be done without
LESSOR's prior written approval and the appropriate municipal permit.
6. COMPLIANCE WITH LAWS. LESSEE acknowledges that no trade, occupation, activity
or work shall be conducted in the leased premises or use made thereof which may
be unlawful, improper, noisy, offensive, or contrary to any applicable statute,
regulation, ordinance or bylaw. LESSEE shall keep all employees working in the
leased premises covered with Worker's Compensation Insurance and shall obtain
any licenses and permits necessary for LESSEE's occupancy. LESSEE shall be
responsible for causing the leased premises and any alterations by LESSEE which
are allowed hereunder to be in full compliance with any applicable statute,
regulation, ordinance or bylaw.
7. FIRE, CASUALTY, EMINENT DOMAIN. Should a substantial portion of the leased
premises, or of the property of which they are a part, be substantially damaged
by fire or other casualty, or be taken by eminent domain, LESSOR may elect to
terminate this lease. When such fire, casualty, or taking renders the leased
premises substantially unsuitable for their intended use, a just and
proportionate abatement of rent shall be made, and LESSEE may elect to terminate
this lease if: (a) LESSOR fails to give written notice within thirty (30) days
of intention to restore the leased premises, or (b) LESSOR fails to restore the
leased premises to a condition substantially suitable for their intended use
within ninety (90) days of said fire, casualty or taking. LESSOR reserves all
rights for damages or injury to the leased premises for the taking by eminent
domain, except for the damage to LESSEE's property or equipment.
8. FIRE INSURANCE. LESSEE shall not permit any use of the leased premises which
will adversely affect or make voidable any insurance on the property of which
the leased premises are a part, or on the contents of said property, or which
shall be contrary to any law or regulation from time to time established
<PAGE>
by the Insurance Services Office (or successor), local Fire Department, LESSOR's
insurer, or any similar body. LESSEE shall on demand reimburse LESSOR, and all
other tenants, all extra insurance premiums caused by LESSEE's use of the leased
premises. LESSEE shall not vacate the leased premises or permit same to be
unoccupied other than during LESSEE's customary non-business days or hours.
9. MAINTENANCE OF PREMISES. LESSOR will be responsible for all structural
maintenance of the leased premises and for the normal daytime maintenance of all
space heating and cooling equipment, sprinklers, doors, locks, plumbing, and
electrical wiring, but specifically excluding damage caused by the careless,
malicious, willful, or negligent acts of LESSEE or others, chemical, water or
corrosion damage from any source, and maintenance of any non "building standard"
leasehold improvements, LESSEE agrees to maintain at the expense all other
aspects of the leased premises in the same condition as they are at the
commencement of the term or as they may be put in during the term of this lease,
normal wear and tear and damage by fire or other casualty only excepted, and
whenever necessary, to replace light bulbs, plate glass and other glass therein,
acknowledging that the leased premises are now in good order and the light bulbs
and glass whole. LESSEE will promptly control or vent all solvents, degreasers,
smoke, odors, etc, and shall not cause the area surrounding the leased premises
to be in anything other than a neat and clean condition, depositing all waste in
appropriate receptacles. LESSEE shall be solely responsible for any damage to
plumbing equipment, sanitary lines, or any other portion of the building which
results from the discharge or use of any acid or corrosive substance by LESSEE.
LESSEE shall not permit the leased premises to be overloaded, damaged, stripped
or defaced, nor suffer any waste, and will not keep animals within the leased
premises. If the leased premises include any wooden mezzanine type space, the
floor capacity of such space is suitable only for office use, light storage or
assembly work. If the leased premises are carpeted or partially carpeted, LESSEE
will protect carpet with plastic or masonite chair pads under any rolling
chairs. Unless heat is provided at LESSOR's expense, LESSEE shall maintain
sufficient heat to prevent freezing of pipes or other damage. Any increase in
air conditioning equipment or electrical capacity, or any installation and/or
maintenance of equipment which is necessitated by some specific aspect of
LESSEE's use of the leased premises shall be at LESSEE's expense. All
maintenance provided by LESSOR shall be during LESSOR's normal business hours.
10. ALTERATIONS. LESSEE shall not make structural alterations or additions of
any kind to the leased premises, but may make nonstructural alterations provided
LESSOR consents thereto in writing. All such allowed alterations shall be at
LESSEE's expense and shall conform with LESSOR's construction specifications. If
LESSOR provides any services or maintenance for LESSEE in connection with such
alterations or otherwise under this lease, any just invoice will be promptly
paid. LESSEE shall not permit any mechanics' liens, or similar liens, to remain
upon the leased premises in connection with work of any character performed or
claimed to have been performed at the direction of LESSEE and shall cause any
such lien to be released or removed forthwith without cost to LESSOR. Any
alterations or additions shall become part of the leased premises and the
property of LESSOR. Any alterations completed by LESSOR shall be LESSOR's
"building standard" unless noted otherwise. LESSOR shall have the right at any
time to change the arrangement of parking areas, stairs, walkways or other
common areas of the building.
11. ASSIGNMENT OR SUBLEASING. LESSEE shall not assign this lease or sublet or
allow any other firm or individual to occupy the whole or any part of the
<PAGE>
leased premises without LESSOR's prior written consent. Notwithstanding such
assignment or subleasing, LESSEE and GUARANTOR shall remain liable to LESSOR for
the payment of all rent and for the full performance of the covenants and
conditions of this lease. LESSEE shall pay LESSOR promptly for legal and
administrative expenses incurred by LESSOR in connection with any consent
requested hereunder by LESSEE.
12. SUBORDINATION. This lease shall be subject and subordinate to any and all
mortgages and other instruments in the nature of a mortgage, now or at any time
hereafter, and LESSEE shall, when requested, promptly execute and deliver such
written instruments as shall be necessary to show the subordination of this
lease to sold mortgages or other such instruments in the nature of a mortgage.
13. LESSOR'S ACCESS. LESSOR or agents of LESSOR may at any reasonable time enter
to view the leased premises, to make repairs and alterations as LESSOR should
elect to do for the leased premises, the common areas or any other portions of
the building of which the leased premises are a part, to make repairs which
LESSEE is required but has failed to do, and to show the leased premises to
others.
14. SNOW REMOVAL. The plowing of snow from all roadways and unobstructed parking
areas shall be at the sole expense of LESSOR. The control of snow and ice on all
walkways, steps and loading areas serving the leased premises and all other
areas not readily accessible to plows shall be the sole responsibility of
LESSOR. Notwithstanding the foregoing, however, LESSEE shall hold LESSOR and
OWNER harmless from any and all claims by LESSEE's agents, representatives,
employees callers or invitees for damage or personal injury resulting in any way
from snow or ice on any area involving the leased premises.
15. ACCESS AND PARKING. LESSEE shall have the right without additional charge to
use parking facilities provided for the leased premises in common with others
entitled to the use thereof. Said parking areas plus any stairs, walkways,
elevators or other common areas shall in all cases be considered a part of the
leased premises to the extent that they are utilized by LESSEE, or LESSEE's
employees, agents, callers or invitees. LESSEE will not obstruct in any manner
any portion of the building or the walkways or approaches to said building, and
will conform to all rules and regulations now or hereafter made by LESSOR for
parking, and for the care, use, or alteration of the building, it's facilities
and approaches. LESSEE further warrants that LESSEE will not permit any employee
or visitor to violate this or any other covenant or obligation of LESSEE. No
unattended parking will be permitted between 7:00 PM and 7:00 AM without
LESSOR's prior written approval, and from December 1 through March 31 annually,
such parking shall be permitted only in those areas specifically designated for
assigned overnight parking. Unregistered or disabled vehicles, or storage
trailers of any type, may not be parked at any time, LESSOR may tow, at LESSEE's
sole risk and expense, any misparked vehicle belonging to LESSEE or LESSEE's
agents, employees, invitees or callers, at any time, LESSOR shall not be
responsible for providing any security services for the leased premises.
16. LIABILITY. Except for claims arising out of LESSOR's negligence or willful
acts, LESSEE shall be solely responsible as between LESSOR and LESSEE for deaths
or personal injuries to all persons whomsoever occurring in or on the leased
premises (including any common areas that are considered part of the leased
premises hereunder) from whatever cause arising, and damage to property to
whomsoever belonging arising out of the use, control, condition or occupation of
the leased premises by LESSEE; and LESSEE agrees to indemnify and save harmless
LESSOR and OWNER from any and all liability, including but not limited to
<PAGE>
costs, expenses, damages, causes of action, claims, judgments and attorneys'
fees caused by or in any way growing out of any matters aforesaid, except for
death, personal injuries or property damage directly resulting from the sole
negligence of LESSOR.
17. INSURANCE. LESSEE will secure and carry at its own expense a comprehensive
general liability policy insuring LESSEE, LESSOR and OWNER against any claims
"based" on bodily injury (including death) or property damage arising out of the
condition of the leased premises (including any common areas that are considered
part of the leased premises hereunder) or their use by LESSEE, such policy to
insure LESSEE, LESSOR and OWNER against any claim up to One Million (1,000,000)
Dollars in the case of any one accident involving bodily injury (including
death), and up to One Million (1,000,000) Dollars against any claim for damage
to property. LESSOR and OWNER shall be included in each such policy as
additional insureds using ISO Form CG 20 26 11 85 or some other form approved by
LESSOR. LESSEE will file with LESSOR prior to occupancy certificates and any
applicable riders or endorsements showing that such insurance is in force, and
thereafter will file renewal certificates prior to the expiration of any such
policies. All such insurance certificates shall provide that such policies shall
not be cancelled without at least ten (10) days prior written notice to each
insured. In the event LESSEE shall fail to provide or maintain such insurance at
any time during the term of this lease, then LESSOR may elect to contract for
such insurance at LESSEE's expense.
18. SIGNS. LESSOR authorizes, and LESSEE at LESSEE's expense agrees to erect,
signage for the leased premises in accordance with LESSOR's building standards
for style, size, location, etc. LESSEE shall obtain the prior written consent of
LESSOR before erecting any sign on the leased premises, which consent shall
include approval as to size, wording, design and location. LESSOR may remove and
dispose of any sign not approved, erected or displayed in conformance with this
lease.
19. BROKERAGE. LESSEE warrants and represents to LESSOR that LESSEE has dealt
with no broker or third person with respect to this lease and LESSEE agrees to
indemnify LESSOR against any brokerage claims arising by virtue of this lease.
LESSOR warrants and represents to LESSEE that LESSOR has employed no exclusive
broker or agent in connection with the letting of the leased premises.
20. DEFAULT AND ACCELERATION OF RENT. In the event that: (a) any assignment for
the benefit of creditors, trust mortgage, receivership or other insolvency
proceeding shall be made or instituted with respect to LESSEE or LESSEE's
property; (b) LESSEE shall default in the observance or performance of any of
LESSEE's covenants, agreements, or obligations hereunder, other than substantial
monetary payments as provided below, and such default shall not be corrected
within ten (10) days after written notice thereof: or (c) LESSEE vacates the
leased premises, then LESSOR shall have the right thereafter, while such default
continues and without demand or further notice, to re-enter and take possession
of the leased premises, to declare the term of this lease ended, and to remove
LESSEE's effects, without being guilty of any manner of trespass, and without
prejudice to any remedies which might be otherwise used for arrears of rent or
other default or breach of the lease. If LESSEE shall default in the payment of
the security deposit, rent, taxes, or any substantial invoice lot goods, and/or
services or other sum herein specified, and such default shall continue for ten
(10) days after written notice thereof, and, because both parties agree that
nonpayment of said sums when due is a substantial breach of the lease, and,
because the payment of rent in monthly installments is for the sole benefit and
convenience of LESSEE, then in addition to the foregoing remedies the entire
balance of rent which is due hereunder shall become immediately due and payable
<PAGE>
as liquidated damages, LESSOR, without being under any obligation to do so and
without thereby waiving any default, may remedy same for the account and at the
expense of LESSEE. If LESSOR pays or incurs any obligations for the payment of
money in connection therewith, such sums paid or obligations incurred plus
interest and costs, shall be paid to LESSOR by LESSEE as additional rent. Any
sums received by LESSOR from or on behalf of LESSEE at any time shall be applied
first to any unamortized improvements completed for LESSEE's occupancy, then to
effect any outstanding invoice or other payment due to LESSOR, with the balance
applied to outstanding rent. LESSEE agrees to pay reasonable attorney's fees
and/or administrative costs incurred by LESSOR in enforcing any or all
obligations of LESSEE under this lease at any time. LESSEE shall pay LESSOR
interest at the rate of eighteen (18) percent per annum on any payment from
LESSEE to LESSOR which is past due.
21. NOTICE. Any notice from LESSOR to LESSEE relating to the leased premises or
to the occupancy thereof shall be deemed duly served when left at the leased
premises addressed to LESSEE, or served by constable, or delivered to the leased
premises by certified mail, return receipt requested, postage prepaid, addressed
to LESSEE. Any notice from LESSEE to LESSOR relating to the leased premises or
to the occupancy thereof shall be deemed duly served when served by constable,
or delivered to LESSOR by certified mail, return receipt requested, postage
prepaid, addressed to LESSOR at 200 West Cummings Park, Woburn, MA 01801 or at
LESSOR's last designated address. No oral notice or representation shall have
any force or effect. Time is of the essence in service of any notice.
22. OCCUPANCY. In the event that LESSEE takes possession of said leased premises
prior to the start of said term, LESSEE will perform and observe all of LESSEE's
covenants from the date upon which LESSEE takes possession except the obligation
for the payment of extra rent for any period of less than one month, LESSEE
shall not remove LESSEE's goods or property from the leased premises other than
in the ordinary and usual course of business, without having first paid and
satisfied LESSOR for all rent which may become due during the entire term of
this lease. LESSOR shall have the right to relocate LESSEE to another facility
upon prior written notice to LESSEE and on terms comparable to those herein. In
the event that LESSEE continues to occupy or control all or any part of the
leased premises after the agreed termination of this lease without the written
permission of LESSOR, then LESSEE shall be liable to LESSOR for any and all
lose, damages or expenses incurred by LESSOR, and all other terms of this lease
shall continue to apply except that rent shall be due in full monthly
installments at a rate of one hundred fifty (150) percent of that which would
otherwise be due under this lease. It being understood between the parties that
such extended occupancy is as a tenant at sufferance and is solely for the
benefit and convenience of LESSEE and as such has greater rental value. LESSEE's
control or occupancy of all or any part of the leased premises beyond upon on
the last day of any monthly rental period shall constitute LESSEE's occupancy
for any entire additional month, and increased rent as provided in this section
shall be due and payable immediately in advance. LESSOR's acceptance of any
payments from LESSEE during such extended occupancy shall not alter LESSEE's
status as a tenant at sufference.
23. FIRE PREVENTION. LESSEE agrees to use every reasonable precaution against
fire and agrees to provide and maintain approved, labeled fire extinguishers,
emergency lighting equipment, and exit signs and complete any other
modifications within the leased premises as required or recommended by the
Insurance Services Office (or successor organization), OSHA, the local Fire
Department, or any similar body.
<PAGE>
24. OUTSIDE AREA. Any goods, equipment or things of any type or description held
or stored in any common area without LESSOR's prior written consent shall be
deemed abandoned and may be removed at by LESSOR at LESSEE's expense without
notice. LESSEE shall maintain a building standard size dumpster in a location of
approved by LESSOR, which dumpster shall be provided and serviced at LESSEE's
expense by whichever disposal firm may from time to time be designated by
LESSOR. Alternatively, if a shared dumpster or compactor is provided by LESSOR,
LESSEE shall pay its proportionate share of the costs associated therewith.
25. ENVIRONMENT. LESSEE will so conduct and operate the leased premises as not
to interfere in any way with the use and enjoyment of other portions of the same
or neighboring buildings by others by reason of odors, smoke, smells, noise,
pets, accumulation of garbage or trash, vermin or other pests, or otherwise, and
will at its expense employ a professional pest control service if necessary.
LESSEE agrees to maintain efficient and effective devices for preventing damage
to heating equipment from solvents, degreasers, cutting oils, propellants, etc.
which may be present at the leased premises. No hazardous materials or wastes
shall be stored, disposed of, or allowed to remain at the leased premises at any
time, and LESSEE shall be solely responsible for any and all corrosion or other
damage associated with the use, storage and/or disposal of same by LESSEE.
26. RESPONSIBILITY. Neither LESSOR nor OWNER shall be held liable to anyone for
loss or damage caused in any way by the use, leakage, seepage or escape of water
from any source, or for the cessation of any service rendered customarily to
said premises or buildings, or agreed to by the terms of this lease, due to any
accident, the making of repairs, alterations or improvements, labor
difficulties, weather conditions, mechanical breakdowns, trouble or scarcity in
obtaining fuel, electricity, service or supplies from the sources from which
they are usually obtained for said building, or any cause beyond LESSOR's
immediate control.
27. SURRENDER. LESSEE shall at the termination of this lease remove all of
LESSEE's goods and effects from the leased premises. LESSEE shall deliver to
LESSOR the leased promises and all keys and locks thereto, all fixtures and
equipment connected therewith, and all alterations, additions and improvements
made to or upon the leased promises, whether completed by LESSEE, LESSOR or
others, including but not limited to any offices, partitions, window blinds,
floor coverings (including computer floors), plumbing and plumbing fixtures, air
conditioning equipment and ductwork or any type, exhaust fans or heaters, water
coolers, burglar alarms, telephone wiring, telephone equipment, air or gas
distribution piping, compressors, overhead cranes, hoists, trolleys or
conveyors, counters, shelving or signs attached to walls or floors, all
electrical work, including but not limited to lighting fixtures of any type,
wiring, conduit, EMT, transformers, distribution panels, bus ducts, raceways,
outlets and disconnects, and furnishings or equipment which have been bolted,
welded, nailed, screwed, glued or otherwise attached to any wall, floor or
ceiling, or which have been directly wired to any portion of the electrical
system or which have been plumbed to the water supply, drainage or venting
systems serving the leased premises. LESSEE shall deliver the leased premises
sanitized from any chemicals or other contaminants, and broom clean and in the
same condition as they were at the commencement of this lease or any prior lease
between the parties for the leased premises, or as they were modified during
said term with LESSOR's written consent, reasonable wear and tear and damage by
<PAGE>
fire or other casualty only excepted. In the event of LESSEE's failure to remove
any of LESSEE's property from the leased premises upon termination of the lease,
LESSOR is hereby authorized, without liability to LESSEE for loss or damage
thereto, and at the sole risk of LESSEE, to remove and store any such property
at LESSEE's expense, or to retain same under LESSOR's control, or to sell at
public or private sale (without notice), any or all of the property not so
removed and to apply the net proceeds of such sale to the payment of any sum due
hereunder, or to destroy such abandoned property. In no case shall the leased
premises be deemed surrendered to LESSOR until the termination date provided
herein or such other date as may be specified in a written agreement between the
parties, notwithstanding the delivery of any keys to LESSOR.
28. GENERAL (a) The invalidity or unenforceability of any provision of this
lease shall not affect or render invalid or unenforceable any other provision
hereof. (b) The obligations of this lease shall run with the land, and this
lease shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, except that LESSOR and OWNER shall be
liable only for obligations occurring while lessor, owner, or master lessee of
the premises. (c) Any action or proceeding arising out of the subject matter of
this lease shall be brought by LESSEE within one year after the cause of action
has occurred and only in a court of the Commonwealth of Massachusetts. (d) If
LESSOR is acting under or as agent for any trust or corporation, the obligations
of LESSOR shall be binding upon the trust or corporation, but not upon any
trustee, officer, director, shareholder, or beneficiary of the trust or
corporation individually. (e) If LESSOR is not the owner (OWNER) of the leased
premises, LESSOR represents that said OWNER has agreed to be bound by the terms
of this lease unless LESSEE is in default hereto. (f) This lease is made and
delivered in the Commonwealth of Massachusetts, and shall be interpreted,
construed, and enforced in accordance with the laws thereof. (g) This lease was
the result of negotiations between parties of equal bargaining strength, and
when executed by both parties shall constitute the entire agreement between sold
parties. No other oral or written representation shall have any effect hereon,
and this agreement may not be altered, extended or amended except by written
agreement attached hereto or as otherwise provided herein. (h) Notwithstanding
any other statements herein, LESSOR makes no warranty, express or implied,
concerning the suitability of the leased premises for LESSEE's intended use. (i)
LESSEE agrees that if LESSOR does not deliver possession of the leased premises
as herein provided for any reason, LESSOR shall not be liable for any damages to
LESSEE for such failure, but LESSOR agrees to use reasonable efforts to deliver
possession to LESSEE at the earliest possible date, and a proportionate
abatement of rent for such time as LESSEE may be deprived of possession said
leased premises shall be LESSEE's sole remedy. (j) Neither the submission of
this lease form, nor the prospective acceptance of the security deposit and/or
rent shall constitute a reservation of or option for the leased premises, or any
offer to lease, it being expressly understood and agreed that this lease shall
not bind either party in any manner whatsoever until it has been executed by
both parties. (k) LESSEE shall not be entitled to exercise any option contained
herein if LESSEE is in default of any forms or conditions hereof. (l) Except as
otherwise provided herein, LESSOR, OWNER and LESSEE shall not be liable for any
special, incidental or consequential damages, including but not limited to lost
profits or loss of business, arising out of or in any way connected with
performance or nonperformance under this lease, even if any party has knowledge
of the possibility of such damages. (m) The headings in this lease are for
convenience only and shall not be considered part of the terms hereof. (m) No
endorsement by LESSEE on any check shall bind LESSOR in any way. (n) No
endorsement by LESSEE on any check shall bind LESSOR in any way. (o) LESSOR and
LESSEE hereby waive any and all rights to a jury trial in any proceeding in any
way arising out of this lease.
<PAGE>
29. WAIVERS, ETC. No consent or waiver, express or implied, by LESSOR, to or of
any breach of any covenant, condition or duty of LESSEE shall be construed as a
consent or waiver to or of any other breach of the same or any other covenant,
condition or duty. If LESSEE is several persons, several corporations or a
partnership, LESSEE's obligations are joint or partnership and also several.
Unless repugnant to the context, "LESSOR" and "LESSEE" mean the person or
persons, natural or corporate, named above as LESSOR and as LESSEE respectively,
and their respective heirs, executors, administrators, successors and assigns.
30. ADDITIONAL PROVISIONS. (Continued on attached rider(s) if necessary._
- See Attached Rider-
IN WITNESS WHEREOF, LESSOR AND LESSEE have hereunto set their hands and common
seals and intend to be legally bound hereby this 3rd day of June 1999.
LESSOR: CUMMINGS PROPERTIES, LLC LESSEE: BOSTON COMMUNICATIONS GROUP,
INC.
By: /s/ Douglas Stephens By: /s/ Fritz von Mering
-------------------------------- ------------------------------
Executive Vice President Treasurer
<PAGE>
STANDARD FORM
RIDER TO LEASE
The following additional provisions are incorporated into and made a part of the
attached lease.
A. The parties acknowledge and agree that the leased premises are presently
under lease to a third party whose lease terminates on or about October
14, 1999. Upon full execution of this lease, and full payment of the first
month's rent and security deposit, LESSOR will use reasonable efforts to
obtain possession of said premises from the existing tenant prior to the
termination of its lease. In the event that LESSOR fails for any reason to
obtain possession of said premises by the commencement date of this lease,
LESSEE's obligation to pay rent in accordance with the provisions of
Section 1 above shall be proportionately abated until such time as LESSOR
obtains possession of said premises. This abatement of rent shall be
LESSEE's sole remedy for any delay in LESSOR obtaining possession.
B. To the extent LESSOR can obtain possession of the approximately 3,400
square foot (including 3.25% common area) upper level annex within the
leased premises (the "Annex") or any other portion of the leased premises
prior to the commencement date of this lease, LESSEE may then occupy said
portion. LESSEE shall pay $5,935.83 per month rent for the Annex or $20.95
per square foot for any other portion that LESSOR obtains possession of
(to be adjusted for any partial month) until LESSOR has delivered the
entire leased premises, at which time rent shall commence in full
accordance with Section 1 above.
C. LESSOR, at LESSOR's cost shall repair and repaint all drywall partitions,
replace glass and light bulbs as needed, change all lock cylinders, clean
all carpet and install LESSOR's standard level loop carpet over the floor
tile in the room that is currently a cafeteria within about 10 days
following the time LESSOR obtains possession of the leased premises. In
the event LESSOR obtains possession of the Annex or any other portion
prior to the commencement of the lease, LESSOR shall complete this work
there within about 10 days after LESSOR obtains possession.
Notwithstanding the completion date of any of this work, LESSEE's
obligation to pay monthly rent for the respective areas shall commence as
of the date LESSOR obtains possession, without any further abatement.
D. * LESSEE shall have the right to assign this lease or sublet the leased
premises to an affiliated corporation, namely a corporation in which
LESSEE owns at least a 50 percent interest, a corporation which owns at
least a 50 percent interest in LESSEE, a corporation with which LESSEE
merges, or a corporation which is formed as a result of a merger or
consolidation involving LESSEE, without further consent from LESSOR,
provided LESSEE serves LESSOR with prior written notice to that effect.
The provisions of Section 11 shall govern said assignment in all other
respects.
E. * LESSEE shall have access to the leased premises seven (7) days per week,
Twenty-four (24) hours per day. LESSEE acknowledges and agrees that LESSOR
has no responsibility for providing any security services for the leased
premises, and LESSEE assumes any and all risks in that regard.
F. LESSEE's use of common area parking spaces for its employees and business
invitees in the leased premises shall not at any time exceed LESSEE's
proportionate share of the total number of spaces provided for the
building under applicable municipal zoning regulations.
<PAGE>
G. * In the event this lease is terminated and LESSEE pays LESSOR accelerated
rent in accordance with the provisions of Section 20 herein, LESSOR agrees
to make reasonable efforts to re-let the leased premises and otherwise
mitigate its damages resulting from such termination. LESSOR shall credit
LESSEE for any rents actually received by LESSOR over the balance of the
lease minus any costs incurred by LESSOR in re-letting the premises.
LESSOR's failure to re-let the leased premises despite LESSOR's reasonable
efforts shall not limit LESSEE's liability hereunder.
H. * Provided LESSEE is not then in default of this lease or in arrears of
any rent or invoice payment, LESSEE shall have the right to extend this
lease, including all terms, conditions, escalations, etc., for one
additional period of five (5) years (the "extended lease term") by serving
LESSOR with written notice of its desire to so extend the lease. The time
for serving such written notice shall be not more than 12 months or less
than 6 months prior to the expiration of the initial lease term. Time is
of the essence.
I. * Notwithstanding the provisions of Section 1, annual base rent during the
extended lease term shall be recalculated at LESSOR's published annual
rental rate as of the commencement of the extended lease term for similar
space, and the base month from which to determine the amount of each "Cost
of Living" adjustment during the extended lease term shall then be changed
to January 2004. The "comparison" month shall be changed to November 2004,
and the first adjustment during the extended lease term shall take place
with the rent due on January 1, 2005. Section 1 shall continue to apply in
all other respects during the extended lease term.
J. LESSOR will deliver possession of the leased premises to LESSEE no later
than November 25, 1999, but if possession of the leased premises is not
delivered to LESSEE on or before November 25, 1999, LESSEE may thereafter
terminate this lease by serving LESSOR with written notice to that effect
on or before November 30, 1999. Termination of the lease shall be LESSEE's
sole remedy for any delay in delivery of the leased premises, subject to
Paragraph a above.
LESSOR: CUMMINGS PROPERTIES, LLC LESSEE: BOSTON COMMUNICATIONS GROUP,
INC.
By: /s/ Douglas Stephens By: /s/ Fritz von Mering
-------------------------------- ------------------------------
Executive Vice President Treasurer
<PAGE>
EXHIBIT 10.54
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission.
Asterisks denote omissions.
Riverview MSA
MANAGEMENT SERVICES AGREEMENT
-----------------------------
INTRODUCTION
THIS AGREEMENT is entered into on January 18, 1999 between ICT GROUP Inc.
("SUPPLIER"), 800 Town Center Drive, Langhorne, PA, 19047-1748 and Cellular
Express, Inc., d/b/a Boston Communications Group ("BUYER"), 100 Sylvan Road,
Suite 100, Woburn, MA 01801.
BACKGROUND
SUPPLIER is in the business of providing call center services to the business
community. SUPPLIER and BUYER desire to enter into this Agreement pursuant to
which, SUPPLIER will plan, manage, operate and handle calls for BUYER within
SUPPLIER's Riverview, New Brunswick, Canada call center in accordance with the
terms and conditions of the Agreement.
TERMS AND CONDITIONS
SECTION 1. SERVICE
1.1 Included Services. In consideration of the payment by BUYER to SUPPLIER of
the amounts due under this Agreement, SUPPLIER agrees that it will furnish
the BUYER with the specific Scope of Services described in Exhibit A and the
specific Service Levels described in Exhibit B. A separate Scope of Services
----------
[Exhibit "A"], Service Level [Exhibit "B"] and Pricing [Exhibit "C"]
document will be created for each BUYER [or Client of BUYER] program
supported by SUPPLIER.
1.2 Supplemental Services, SUPPLIER may provide Supplemental Services, subject
to the availability and expertise of SUPPLIER personnel, at such additional
cost for such Supplemental Services as agreed by both parties. Any
Supplemental Services shall be provided in accordance with the terms and
conditions of this Agreement and shall be pursuant to an approved Service
Enhancement Request (see Section 10).
SECTION 2. CERTAIN BUYER OBLIGATIONS
2.1 In order for SUPPLIER to perform its obligations hereunder, BUYER agrees to
use its best efforts to keep its Information current and its
Telecommunications Equipment operational at all times. Equipment failure
will negatively impact performance and Service Levels. SUPPLIER shall not be
liable to BUYER for any failure or delay in furnishing BUYER with the
Services at specified Service Levels to the extent that such failure is
attributable to a failure of BUYER's equipment,
2.2 Upon SUPPLIER's reasonable request, BUYER agrees to make its personnel,
including appropriate professional personnel, administrative personnel and
other employees, reasonably
Confidential 1 07/29/99
<PAGE>
Riverview MSA
available for consultation at mutually convenient times and places in order
to assist SUPPLIER to perform its own obligations under this Agreement.
SECTION 3. TERM
3.1 Subject to Section 14 "Termination," the initial term of this Agreement
shall commence on January 18, 1999 (effective date) and continue through
January 18, 2004 [the "Initial Term"].
3.2 Each individual program covered under the terms and conditions of this
Agreement will be detailed in a unique set of Exhibits, attached hereto,
which may contain unique term provisions.
3.3 This Agreement shall automatically renew for a period of one (1) year after
the end of the Initial Tern and from year to year thereafter unless prior
written notification is provided to either party 180 days prior to
expiration of the Initial Term or any renewal Term.
SECTION 4. QUALITY ASSURANCE
4.1 SUPPLIER agrees to use its best efforts at all times to provide prompt and
efficient service as described in Exhibit "A".
4.2 A comprehensive system of observation and monitoring of all activities will
be employed. SUPPLIER's ACD will provide BUYER with silent monitoring of
phone presentations from the BUYER's location or on SUPPLIER's premises as
requested by BUYER. SUPPLIER shall advise all people to be monitored that
they are subject to silent and other monitoring during work.
4.3 Pending renewal of BUYER's contract with CANTEL on or before December 31,
1999 [or replacement with comparable volume business], and subsequently
BUYER's contract with SUPPLER to handle said business, SUPPLIER will, after
January 1, 2000, purchase and install the "NICE Universe version 4" quality
monitoring system, identified in Systems Platform & Network Arrangements -
Exhibit "E", as requested by BUYER
SECTION 5. CONFIDENTIALITY
5.1 Confidential Information Defined
As used in this Agreement, "Confidential Information" means all information
of the BUYER or SUPPLIER [the party or parties] that is not generally known
to the public, whether of a technical, business or other nature (including,
without limitation, trade secrets, know-how and information relating to the
technology, customers, business plans, promotional and marketing activities,
finances and other business affairs), that is disclosed by either party to
the other and that has been identified as being proprietary and/or
confidential. Without limitation, all references in any form or medium
whatsoever to Subscriber's (i) name, address, phone number (11) account
balances, (ill) call records, (iv) transaction records, or (v) other
information is and shall remain BUYER Confidential Information.
5.2 Prohibition on Disclosure and Use
Except as expressly provided in this Agreement, neither party shall
disclose Confidential Information to anyone without the other party's prior
written consent. Neither party shall use, or permit others to
Confidential 2 07/29/99
<PAGE>
Riverview MSA
use, the other party's Confidential Information for any purpose other than
the performance of this Agreement. Both parties shall take all reasonable
measures to avoid unauthorized disclosures, dissemination, or use of
Confidential Information, including, at a minimum, those measures it takes
to protect its own confidential information of a similar nature.
5.3 Restrictions on Personnel
Both parties shall restrict the possession, knowledge, development, and use
of Confidential Information to its employees, agents, subcontractors, and
entities controlled by it (collectively, "Personnel") who have a need to
know Confidential Information in connection with the performance of this
Agreement. Each party's Personnel shall have access only to the
Confidential Information they need for such purpose. Each party shall
ensure that its Personnel comply with this Agreement.
5.4 Disclosure to Governmental Authority
If either party becomes legally obligated to disclose Confidential
Information to any governmental entity with jurisdiction over it, it shall
give the other party prompt written notice to allow that party to seek a
protective order or other appropriate remedy. The obligated party shall
disclose only such information as is legally required and shall use its
reasonable best efforts to obtain confidential treatment for any
Confidential Information that is so disclosed.
5.5 Exceptions
The provisions of this Section 5 shall not apply to any information that
can be shown by documented evidence: (i) to be publicly available without
breach of this Agreement; (ii) to have been known to either party at the
time of its receipt from the other party; (iii) to have been rightfully
received from a third party who did not acquire or disclose such
information by a wrongful or tortuous act; (iv) to have been independently
developed by either party without access to any Confidential Information;
or (v) to have been approved for release by either party in writing.
5.6 Ownership of Confidential Information
All Confidential Information shall remain the exclusive property of the
BUYER or the SUPPLIER respectively and the other party shall have no
rights, by license or otherwise, to use the Confidential Information except
as expressly provided herein.
5.7 Return of Confidential Information
Each party shall promptly return all tangible material embodying the other
party's Confidential Information (in any form and including, without
limitation, all summaries, copies, and excerpts of Confidential
Information) upon any expiration or termination of this Agreement or upon
the other party's written request.
5.8 Injunctive Relief
Each of SUPPLIER and BUYER hereby acknowledges and agrees that (i) the
provisions and restrictions contained in this Section 5 are reasonable and
necessary for protection of the legitimate interests of the parties hereto;
(ii) neither SUPPLIER nor BUYER would have entered into this Agreement in
the absence of such provisions and restrictions; and (iii) any violation of
any provision of this Section 5 by a party hereto or such party's
Representatives may result in irreparable injury to the other party, which
injury may be inadequately compensable in monetary damages. Accordingly,
the parties hereby acknowledge and agree that each of SUPPLIER AND
BUYER shall be entitled to seek preliminary and/or permanent injunctive relief
from the other party for any violation or threatened violation of this Section
5 by such other party or by such other party's Representatives, without the
necessity of proving actual damages or posting any bond
Confidential 3 07/29/99
<PAGE>
Riverview MSA
or other security. The rights and remedies of each party under this Section 5.8
shall be cumulative and in addition to any other rights or remedies to which
the such party may be entitled under this Agreement, at law or in equity.
SECTION 6. WARRANTEES
6.1 Each party represents and warrants to the other that they have and will
continue to maintain all necessary licenses, permits or approvals required
under this Agreement in each and every jurisdiction having authority over
the services provided under this Agreement.
6.2 Each party represents and warrants that it shall (a) comply with all
international, federal, provincial, state, and local laws, ordinances,
regulations, and, orders (including, without limitation, all laws,
ordinances, regulations, and orders related to telephone communications
with consumers and businesses) with respect to its performance of the
Services, (b) file all reports relating to the Services (including,
without limitation, tax returns), (c) pay all filing fees and federal,
provincial, state, and local taxes applicable to each party's respective
business as the same shall become due, and (d) pay all amounts required
under local, state, provincial and federal workers' compensation acts,
disability benefit acts, unemployment insurance acts, and other employee
benefit acts when due.
6.3 Each of SUPPLIER and BUYER represents and warrants to the other that (i)
this Agreement constitutes the legal, valid and binding obligation of such
party, enforceable against such party in accordance with its terms, except
as such enforceability may be limited by bankruptcy laws and other similar
laws affecting creditors' rights generally and by general principles of
equity; (ii) the execution, delivery and performance of this Agreement by
such party does not and will not conflict with or constitute a breach or
default under its charter documents, or any agreement, contract, commitment
or instrument to which it is a party, or the requirements of any
governmental or regulatory authority; and (iii) such party has the full and
unencumbered right, power and authority to enter into this Agreement and to
otherwise carry out its obligations hereunder.
SECTION 7. INDEMNIFICATION
7.1 The undersigned BUYER does hereby indemnify, defend, and save harmless
SUPPLIER and its subsidiaries, affiliates, shareholders, officers,
directors and employees from any and all loss or liability arising from any
and all complaints, claims or legal actions, in any way resulting from or
allegedly resulting from any products or services of the BUYER or its
clients, and BUYER shall assume full responsibility for, and handling of,
any such complaint, claim or legal action as well as for payment of all
expenses, costs, counsel fees, judgment and/or settlements thereby
incurred, except to the extent that such complaint, claim or legal action,
costs, counsel fees, judgment or settlements result from or arise out of a
negligent act of commission or omission or willful misconduct by SUPPLIER,
its agents and/or its employees. SUPPLIER shall notify BUYER promptly of
any complaint, claim or legal actions and shall cooperate in any defense.
SUPPLIER agrees that BUYER shall have sole control over such defense,
including but not limited to retaining counsel and all offers of
settlement.
7.2 SUPPLIER does hereby indemnify, defend, and save harmless BUYER and
its subsidiaries, affiliates, shareholders, officers, directors and
employees from any and all loss or liability arising from any and all
complaints, claims or legal actions, which may result or arise out of
SUPPLIER's performance under this Agreement, and SUPPLIER shall assume
full responsibility for, and
Confidential 4 07/29/99
<PAGE>
Riverview MSA
handling of, any such complaint, claim or legal action as well as for
payment of all expenses, costs, counsel fees, judgment and/or settlements
thereby incurred, except to the extent that such complaint, claim or legal
action, costs, counsel fees, judgment or settlements result from or arise
out of a negligent act of commission or omission or willful misconduct by
BUYER, its agents and/or its employees. BUYER shall notify SUPPLIER
promptly of any complaint, claim or legal actions and shall cooperate in
any defense. BUYER agrees that SUPPLIER shall have sole control over such
defense, *including but not limited to retaining counsel and all offers of
settlement.
SECTION 8. DISCLAIMERS; LIMITATIONS OF LIABILITY
8.1 EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
AGREEMENT, SUPPLIER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, IN FACT OR AT LAW, WITH RESPECT TO THE SERVICES AND SUPPLEMENTAL
SERVICES PROVIDED OR TO BE PROVIDED BY SUPPLIER HEREUNDER, INCLUDING
WITHOUT LIMITATION ANY REPRESENTATIONS OR WARRANTIES CONCERNING THE
COMPLETENESS OR ACCURACY OF ANY INFORMATION RECORDED, PROCESSED OR
TRANSMITTED BY SUPPLIER. EXCEPT FOR SUPPLIER'S INDEMNIFICATION OBLIGATION
UNDER SECTION 7.2 ABOVE, BUYER'S SOLE REMEDY AND SUPPLIER'S SOLE
RESPONSIBILITY WITH RESPECT TO ANY ERRORS OR OMISSIONS IN INFORMATION
TRANSMITTED BY SUPPLIER SHALL BE LIMITED TO CORRECTION OF SUCH ERRORS OR
OMISSIONS AND RETRANSMISSION OF THE CORRECTED INFORMATION AT NO ADDITIONAL
EXPENSE TO BUYER.
8.2 EXCEPT FOR THE PARTIES' INDEMNIFICATION OBLIGATIONS UNDER SECTION 7 ABOVE,
OR AS OTHERWISE EXPRESSLY PROVIDED HEREIN, NEITHER PARTY SHALL BE LIABLE TO
THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL,
INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING WITHOUT
LIMITATION LOST PROFITS, LOST SAVINGS, LOST FUTURE EARNINGS AND LOST
ECONOMIC ADVANTAGE) SUFFERED OR INCURRED BY SUCH OTHER PARTY OR ANY THIRD
PARTY IN CONNECTION WITH THIS AGREEMENT OR PERFORMANCE OR NONPERFORMANCE
HEREUNDER, EVEN IF SUCH PARTY HAS BEEN ADVISED, KNEW OR SHOULD HAVE KNOWN
OF THE POSSIBILITY OF SUCH DAMAGES.
8.3 EXCEPT FOR SUPPLIER'S INDEMNIFICATION OBLIGATION UNDER SECTION 7.2 ABOVE,
SUPPLIER'S LIABILITY TO BUYER OR TO ANY THIRD PARTY IN CONNECTION WITH THIS
AGREEMENT OR PERFORMANCE OR NONPERFORMANCE HEREUNDER SHALL NOT EXCEED THE
AMOUNT ACTUALLY PAID BY BUYER FOR SERVICES AND/OR SUPPLEMENTAL SERVICES
DURING THE THREE-MONTH PERIOD IMMEDIATELY PRECEDING THE DATE ON WHICH
BUYER'S OR SUCH THIRD PARTY'S CLAIM OR CAUSE OF ACTION AGAINST SUPPLIER
FIRST ACCRUED.
8.4 NO ACTION ARISING OUT OF THIS AGREEMENT OR PERFORMANCE OR NONPERFORMANCE
HEREUNDER, WHETHER GROUNDED IN BREACH OF CONTRACT, BREACH OF WARRANTY,
NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, MAY BE BROUGHT BY EITHER PARTY
HERETO MORE THAN TWO YEARS FOLLOWING THE DATE ON WHICH THE CAUSE OF ACTION
HAS
Confidential 5 07/29/99
<PAGE>
Riverview MSA
FIRST ARISEN.
8.5 The parties hereto acknowledge and agree that the foregoing disclaimers and
limitations of liability represent bargained for allocations of risk, and
that the pricing and other terms and conditions of this Agreement reflect
such allocations of risk.
SECTION 9. FINANCIAL TERMS
Pricing is based on the complexity, duration, type and volume of services
required. Specific prices for each program are included in the respective
exhibits attached hereto.
9.1 During the term of this Agreement, SUPPLIER will invoice BUYER 30 days
prior to the due date for the included services and related expenses
according to the amounts set forth in Pricing - Exhibit "C".
9.2 Supplemental Services shall be invoiced monthly as such Supplemental
Services are provided.
9.3 SUPPLIER will provide BUYER with invoices for Services, Supplemental
Services and other amounts payable to SUPPLIER hereunder on a monthly
basis. All such invoices shall be due and payable upon receipt
thereof by BUYER. Undisputed balances not paid within thirty days
following BUYER's receipt thereof shall bear interest, compounded
daily, at a rate per annum equal to three percent (3%) plus the
Prime Rate as publicly announced by Summit Bancorp, Princeton, New
Jersey, or its successor in interest, on the first business day
immediately following the Effective Date. This interest rate shall be
adjusted effective on the first business day of each and every
succeeding week until the outstanding balance and all interest accrued
therein is paid in full.
9.4 On May 1 of each calendar year (excluding the calendar year of the
Effective Date), the amounts set forth in Pricing - Schedule "C"
shall be increased by a percentage equal to the percentage, if any, by
which the CPI (hereinafter defined) published for January of such
calendar year exceeds the CPI published for January of the preceding
calendar year. Upon each such adjustment, the amounts set forth in
Pricing - Schedule "C" shall be the amounts applicable to all Services
performed on or after the date of such adjustment and shall remain in
effect until such amounts are further adjusted in accordance with the
foregoing sentence. As used herein, CPI means the Canadian "Consumer
Price Index", "annual average all-items indexes" as published by
Statistics Canada for the Saint John area.
9.5 Currency Adjustment: All payments shall be in U.S. Dollars, The
SUPPLIER rate schedule for services, Pricing - Exhibit "C", will be
adjusted at six (6) month intervals to reflect changes 'in the
currency exchange rate, between the Canadian Dollar and the US Dollar,
during the term of this Agreement. The exchange rate between the
currencies [the exchange rate between the Canadian Dollar and the US
Dollar] will initially be set to the rate in effect on January 1, 1999
as published in the Wall Street Journal for such date [the "Initial
Exchange Rate"]. On each subsequent July I and January I ["Calculation
Date(s)"], the Initial Exchange will be reviewed and an exchange rate
will be set for such Calculation Date. If the exchange rate on a
Calculation Date varies more than two percent [2%] from the Initial
Exchange Rate then Pricing - Exhibit "C" will be adjusted by the
amount above or below the Initial Exchange Rate and the adjusted
Pricing - Exhibit "C" will be effective on such Calculation Date until
the next Calculation Date.
The rate used in setting the January 1, 1999 Exchange Rate and
subsequent exchange rates on Calculation Dates is the spot rate in the
Wall Street Journal effective as of 4:OOPM E.S.T. for such
Confidential 6 07/29/99
<PAGE>
Riverview MSA
date. The Wall Street Journal published exchange rates represent the
interbank rate used for transactions of One Million Dollars [$1,000,000] or
greater. If the Wall Street Journal is not published on such date, then the
effective date for such spot rate shall be the next subsequent day that the
Wall Street Journal publishes the data.
In the event that adjustments made pursuant to this section 9.5 result in
the pricing set forth in Exhibit C to increase by more than an aggregate
of ten percent (10%), BUYER shall have the right to terminate this
Agreement upon giving SUPPLIER sixty (60) days prior written notice;
provided, however, that in order to be entitled to exercise such right,
BUYER must give such written notice within thirty (30) days after being
informed by SUPPLIER of the price adjustment which first gives rise to such
right.
9.6 The obligation of BUYER to pay for services rendered in accordance with the
terms and conditions of this Agreement shall survive the termination of
this Agreement for any reason.
SECTION 10. SERVICE ENHANCEMENT REQUEST
10.1 BUYER may request changes to, modifications of, and work in addition to
that identified pursuant to Exhibit A by submitting a written Service
Enhancement Request to SUPPLIER from time to time during the term of this
Agreement. SUPPLIER shall have the right to accept or reject the BUYER's
Service Enhancement Request, in its sole discretion; however, SUPPLIER will
accept reasonable requests from BUYER. SUPPLIER shall not unreasonably
withhold such acceptance or rejection. Upon the approval of a Service
Enhancement Request by SUPPLIER, the amount to be paid SUPPLIER under this
Agreement and the time of performance shall be adjusted as specified in the
Service Enhancement Request. All such work shall be executed under the
terms and conditions specified in this Agreement and each approved Service
Enhancement Request Form - Exhibit "D". will be appended to this Agreement.
SECTION 11. COOPERATION
11.1 The parties acknowledge and agree that performance under this Agreement
will require the continued definition and setting of priorities, the
balancing of competing 'tasks and schedules, and the adjustment of
priorities over different tasks and different schedules. The parties will
periodically define in writing, and mutually agree the activities,
schedules, and deliverables and relative priorities with respect thereto,
during the term of this Agreement.
11.2 SUPPLIER shall be excused from meeting Performance Objectives if and to
the extent that any such failure is properly attributable to the delay or
failure of BUYER to perform its obligations hereunder to provide equipment,
services or information to SUPPLIER. This includes, but is not limited to,
BUYER forecasting to within +/- 10%, anticipated call volumes under the
attached Scope of Services - Exhibit "A".
SECTION 12. RIGHT TO USE OTHER PARTY'S NAME
12.1 Each party grants to the other party the right to use the other party's
name in government filings without the necessity of obtaining the other
party's approval for such use. Neither party will use the
Confidential 7 07/29/99
<PAGE>
Riverview MSA
other party's name in a press release or other public announcement without
the other party's prior written consent, such consent not to be
unreasonably withheld or delayed.
SECTION 13. ASSIGNMENT
13.1 This Agreement shall not be assigned by either the BUYER or SUPPLIER,
except to a purchaser all or substantially all of the stock or assets of
the assigning party provided such purchaser agrees writing to comply with
the terms and conditions of this Agreement and provided further that such
purchaser has a net worth equal to or greater than that of BUYER at such
time, without the express prior written consent of the other party, and
this Agreement shall be binding upon and inure to benefit of the parties
and their respective successors and assigns.
SECTION 14. TERMINATION
14.1 This Agreement may be terminated in the following instances; such
termination shall be a termination for cause:
a) By either party, to the extent permitted under applicable law, if the
other ceases to function as a going concern, becomes insolvent, makes
an assignment for the benefit of creditors, files a petition in
bankruptcy, permits a petition in the bankruptcy to be filed against
it and such petition is not dismissed within sixty (60) days of
filing, or admits in writing its inability to pay its debts as they
mature, or if a receiver is appointed over a substantial part of its
assets;
b) By either party by reason of any other material breach of this
Agreement by other party which breach has not been remedied or cured
after at least (90) days written notice delivered by the aggrieved
party to the other party;
c) By SUPPLIER for BUYER's failure to pay any amounts or other charges
within sixty (60) days from the payment due date, it being understood
by SUPPLIER that BUYER may elect to make payment to SUPPLIER with an
express reservation of rights to assure continued performance by
SUPPLIER under this Agreement pending resolution of any disputes.
14.2 If BUYER terminates this Agreement for any reason, BUYER shall pay to
SUPPLIER the following:
a) All amounts due (subject to monthly minimums, if applicable) for
properly completed services received by BUYER in accordance with the
Scope of Services - Exhibit "A"; plus,
b) All costs and expenses incurred by SUPPLIER on behalf of BUYER up to
the date of termination including, but not limited to, telemarketing
representative training, applicable data processing costs, program
development time, and third party services.
14.3 Each set of exhibits, attached to this Agreement, define a unique set of
conditions for SUPPLER and for BUYER [see Section 3.21. The BUYER may, upon
written notice specified in Exhibit "A", terminate work associated with a
particular set of exhibits if BUYER's Client [named in the exhibits]
cancels its agreement with BUYER for the work outlined in the exhibits.
Confidential 8 07/29/99
<PAGE>
Riverview MSA
SECTION 15. INFORMAL DISPUTE RESOLUTION
15.1 Prior to the initiation of arbitration pursuant to Section 16, the parties
shall first attempt to resolve their dispute informally as follows:
a) Upon the written request of a Party, each Party shall appoint a designated
representative who does not devote substantially all of his or her time to
performance under this Agreement, whose task it will be to meet for the
purpose of endeavoring to resolve such dispute.
b) The designated representatives shall meet as often as they reasonably deem
necessary for each Party to gather and furnish to the other all information
with respect to the matter in issue which Parties believe to be appropriate
and germane in connection with its resolution. The representatives shall
discuss the problem and attempt to resolve the dispute without necessity of
any formal proceeding.
c) During the course of discussion, all reasonable requests made by one Party
to another for nonprivileged information, reasonably related to this
Agreement, shall be honored in order that each of the Parties may be fully
advised of the other's position.
d) The specific format for the discussions shall be left to the discretion of
the designated representatives, but may include the preparation of
agreed-upon statements of fact or written statements of position.
e) Arbitration for the resolution of a dispute shall not be commenced until
the earlier of
i) the designated representatives concluding in good faith that amicable
resolution through continued negotiation of the matter does not appear
likely; or
ii) thirty (30) days after the initial written request to appoint a
designated representative pursuant to Paragraph (a) above [this period
shall be deemed to run notwithstanding any claim that the process
described in this Section 15. 1, subparagraph a), was not followed].
15.2 This Section 15 shall not be construed to prevent a Party from instituting,
and a Party is authorized to institute, arbitration earlier than prescribed
in Subparagraph 15.1 to (i) avoid the application of any applicable
limitations period, (ii) preserve a superior position with respect to other
creditors, or (iii) seek immediate injunctive relief
SECTION 16. ARBITRATION
16.1 Whenever either party shall decide to institute arbitration with respect to
a dispute concerning this Agreement or the satisfaction of any term or
condition this Agreement, such party shall provide written notice thereof
to the other party hereto. Thereupon, the parties hereto shall abide by the
provisions of this Section 16 concerning such arbitration. Arbitration is
not applicable to disputes under Section 5 or Section 7 of this Agreement.
16.2 Except as modified by this Section 16, the proceedings shall be conducted
under the rules of the American Arbitration Association. The arbitration
shall be conducted before a single arbitrator having appropriate knowledge
and experience in handling commercial disputes. The arbitrator shall be
appointed jointly by the parties hereto within 30 days following the date
on which the arbitration
Confidential 9 07/29/99
<PAGE>
Riverview MSA
is instituted. If the parties are unable to agree upon the arbitrator
within said 30-day period, the American Arbitration Association shall be
instructed to choose the arbitrator within 15 days thereafter. None of the
arbitrators shall have any past or present relationship with or interest in
the parties to this Agreement or their affiliates. The arbitration
proceeding shall be conducted in Philadelphia, Pennsylvania and all
decisions of the American Arbitration Association shall be rendered by its
Philadelphia Office.
16.3 Except as modified by this Section 16.3, the arbitration shall be conducted
in accordance with, and the arbitrators shall be bound by, the Federal
Rules of Civil Procedure and the Federal Rules of Evidence then in effect.
Unless the arbitrators for good cause determine otherwise, the following
modifications to such rules shall apply:
a. Neither party shall be entitled to conduct depositions of party or
non- party witnesses,
b. All requests for discovery shall be submitted to the other party
hereto within 30 days following the date that the arbitrator is
appointed in accordance with Section 16.2 above,
c. All responses to discovery requests shall be provided to the
requesting party within 60 days following the date that the arbitrator
is appointed in accordance with Section 16.2 above,
d. The arbitration proceeding shall be conducted within 120 days
following the date that the arbitrator is appointed in accordance with
Section 16.2 above, and
16.4 Unless the parties mutually agree otherwise, the arbitrators shall be
instructed to issue their award within 30 days following the date on which
the arbitration proceeding is concluded. The arbitrators shall have the
authority to grant specific performance, but shall not be authorized to
award punitive or exemplary damages. Unless the arbitrators for good cause
determine otherwise, each party hereto shall bear one-half of the fees and
expenses of the arbitrators and each party hereto shall bear its own costs
and attorneys' fees in connection with the arbitration.
16.5 Judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction or application may be made to such court for
judicial acceptance of any award and an order of enforcement, as the case
may be. In no event shall a demand for arbitration be made by either party
with respect to any dispute, claim or other matter after the date on which
litigation based on such dispute, claim or other matter would be barred by
the applicable statute of limitations.
SECTION 17. RELATIONSHIP
17.1 Nothing contained herein shall be construed to create the relationship of
employer and employee between SUPPLIER and BUYER or between BUYER and any
of SUPPLIER's employees or agents. It is the express intent of the parties
hereto that SUPPLIER is not an employee of BUYER for any purpose, but is an
independent contractor for all purposes and in all situations. SUPPLIER and
SUPPLIER's employees shall not represent that they are employees of BUYER,
or shall they in any manner hold themselves out to be employees of BUYER,
17.2 Neither party shall have the right to enter into any Agreement or
commitment in the name of or on the behalf of the other, or to bind the
other in any respect whatsoever, unless specifically authorized in writing
by the other.
Confidential 10 07/29/99
<PAGE>
Riverview MSA
SECTION 18. NON-SOLICITATION OF EMPLOYEES
18.1 During the initial term and any renewal term of this Agreement, and for a
period of one year following the expiration or termination of this
Agreement, neither party hereto, nor any related or affiliated organization
over which such party has control, shall solicit for hiring (other than
through advertisements directed to the general public), offer to hire, or
*in any way employ or compensate (i) any current employee of the other
party hereto, or (11) any person who has been employed by the other party
hereto at any time during the immediately preceding six-month period,
except with the prior written consent of such other party. Notwithstanding
the foregoing sentence, neither party hereto shall be restricted from
soliciting for hiring, offering to hire, employing and/or compensating any
former employee of the other party if the former employee's employment with
such other party
was terminated by such other party.
18.2 Both parties hereby acknowledge and agree that (i) the provisions and
restrictions contained in this Section 18 are reasonable and necessary for
protection of the legitimate interests of the parties hereto; (ii) neither
party would have entered into this Agreement in the absence of such
provisions and restrictions; and (iii) any violation of any provision of
this Section 18 by a party hereto or any related or affiliated organization
over which such party has control may result in irreparable injury to the
other party, which injury may be inadequately compensable in monetary
damages. Accordingly, the parties hereby acknowledge and agree that each
party shall be entitled to seek preliminary and/or permanent injunctive
relief from the other party for any violation or threatened violation of
this Section 18 by such other party or by any related or affiliated
organization over which such party has control, without the necessity of
proving actual damages or posting any bond or other security. The rights
and remedies of each party under this Section 18.2 shall be cumulative and
in addition to any other rights or remedies to which such party may be
entitled
under this Agreement, at law or in equity.
SECTION 19. INSURANCE
19.1 SUPPLIER, at its expense, shall secure and maintain at all times during
SUPPLIER's performance of Services or Supplemental Services under this
Agreement: (i) workers' compensation insurance coverage in such amounts as
are required by the laws of the Commonwealth of Pennsylvania; and (1i)
comprehensive general liability insurance coverage having a combined bodily
injury, loss of life and property damage limit of not less than $1,000,000
per occurrence and $2,000,000 in the aggregate.
19.2 Upon BUYER's written request and at BUYER's cost and expense, SUPPLIER
shall provide BUYER with Certificates of insurance evidencing that SUPPLIER
possesses the insurance
required under this Section 19.
SECTION 20. GOVERNING LAW AND RELATED MATTERS
20.1 This Agreement shall be construed in all respects under the laws of the
Commonwealth of Pennsylvania, without regard to Pennsylvania's principles
governing conflicts of law. If any part of this Agreement shall be held to
be void or unenforceable, such part will be treated as severable, leaving
valid the remainder of this Agreement notwithstanding the part or parts
found to be void or unenforceable.
Confidential 11 07/29/99
<PAGE>
Riverview MSA
20.2 Subject to the provisions of Sections 15 and 16 above, litigation with
respect to this Agreement may be brought in the courts of the Commonwealth
of Pennsylvania or of the United States District Court for the Eastern
District of Pennsylvania, and, by execution and delivery of this Agreement,
each of the parties hereto hereby irrevocably accepts the nonexclusive
Jurisdiction of the aforesaid courts. Each of the parties hereto hereby
further irrevocably waives any claim that any such court lacks jurisdiction
over it, and agrees not to plead or claim, in any legal action or
proceeding with respect to this Agreement brought in any of the aforesaid
courts, that any such court lacks jurisdiction over it.
20.3 Each of the parties hereto hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
brought in the courts referred to in Section 21.2 and hereby further
irrevocably waives and agrees not to plead or claim 'in any such court that
any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
20.4 Each of the parties hereto hereby irrevocably consents to the service of
process in any such action or proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, to, or to the care of,
such party, at its address for notices as set forth in Section 23 below,
such service to become effective 30 days after such mailing. Each of the
parties hereto hereby irrevocably waives any objection to such service of
process and further irrevocably waives and agrees not to plead or claim in
any action or proceeding commenced hereunder that service of process was in
any way invalid or ineffective. Nothing herein shall limit the rights of
the parties hereto to serve process in any other manner permitted by law.
SECTION 21. GENERAL
21.1 Audit. Upon five (5) business days prior written notice to SUPPLIER, and
during regular business hours, BUYER shall have the right to audit,
examine, and copy any record of SUPPLIER that is related in any way to
SUPPLIER's service level and billing performance of this Agreement.
21.2 Modifications. This Agreement can only be modified by a written Agreement
duly signed by the persons authorized to sign agreements on behalf of
SUPPLIER and of BUYER.
21.3 Severability of Provisions. If any provisions of this Agreement shall be
held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or be impaired thereby.
21.4 Limitations. No action, other than an action for non-payment, regardless of
form arising out of this Agreement may be brought by either party hereto
more than two (2) years after the cause of action
has arisen.
21.5 Waivers. A waiver of a breach or default under this Agreement shall not be
a waiver of any other or subsequent breach or default. The failure or delay
by either party in enforcing compliance with any term or condition of this
Agreement shall not constitute a waiver of such term or condition unless
such term or condition is expressly waived in writing.
21.6 Force Majeure. Either party's failure to perform any of its obligations
hereunder, except for the obligation to pay monies when due hereunder,
shall be excused and shall not give rise to any claims for damages to the
extent it is caused by an event or occurrence beyond the reasonable control
of such party including, but not limited to, war, embargoes, government
restrictions, riots, severe
Confidential 12 07/29/99
<PAGE>
Riverview MSA
weather or storms, floods, earthquakes, natural disasters, or other Acts of
God, strikes, power failures, power interruptions, nuclear or other civil
or military emergencies, or telecommunications or equipment failures or
interruptions caused by suppliers.
21.7 Captions. Captions contained in this Agreement are for reference purposes
only and do not constitute part of this Agreement.
21.8 Notices. All notices which are required to be given or submitted pursuant
to this Agreement shall be in writing and shall be sent by registered or
certified mail, return receipt requested, to the address set forth below or
to such other address as SUPPLIER or BUYER may from time to time designate
by written notice delivered in accordance with this Section.
Address for notices to BUYER: Address for notices to SUPPLIER:
Boston Communications Group, Inc. ICT Group, Inc.
100 Sylvan Road, Suite 100 800 Town Center Drive
Woburn, MA, 01801 Langhorne, PA 19047
Attention: General Counsel Attention: Chief Financial Officer
21.9 Authority: Each party represents that it has full power and authority to
enter into and perform this Agreement, and the person signing this
Agreement on behalf of it has been properly authorized and empowered to
enter into this Agreement.
SECTION 22. ENTIRE AGREEMENT
22.1 This Agreement together with the Schedules hereto constitutes the entire
agreement between the parties hereto with respect to subject matter hereof
and thereof This Agreement and the Schedules hereto supersede all prior or
simultaneous representations, discussions, negotiations, letters,
proposals, agreements and understandings between the parties hereto with
respect to the subject matter hereof and thereof, whether written or oral.
If there is any inconsistency or conflict between the provisions of the
main body of this Agreement and the provisions of any Schedule hereto, the
provisions of the main body of this Agreement shall be controlling and
shall govern,
CELLULAR EXPRESS, INC., D/B/A
BOSTON COMMUNICATIONS GROUP, INC. ICT GROUP, INC.
- --------------------------------
ACCEPTED BY: Jerry Confer ACCEPTED BY: John D. Campbell
TITLE: Vice President/ General Manager TITLE: President--ICT Group Sales
SIGNATURE: /s/ Jerry Confer SIGNATURE: /s/ John D Cambell
Date: 7/30/99 Date: 8/4/99
Confidential 13 07/29/99
<PAGE>
Riverview MSA
EXHIBIT "A"
SCOPE OF SERVICES
BELL ATLANTIC MOBILE
0-7
GENERAL OVERVIEW: SUPPLIER will recruit, screen, hire and train a dedicated team
- -----------------
of Customer Service Representatives (CSR's) for BUYER's inbound Customer Service
calls. Initially the calls will be related to prepaid cellular service
'including balance inquiry, recharging, and billing inquiry and general
information. The work will be performed at SUPPLIER's call center located in
Riverview, New Brunswick, Canada. First live calls will arrive on Monday,
February 1, 1999.
During the term of this Agreement, so long as BUYER has a contract with Bell
Atlantic Mobile to handle customer service calls, BUYER will continue to utilize
the services of SUPPLIER in the handling of all such calls. In the event that
BUYER's contract with Bell Atlantic Mobile to handle customer service calls is
terminated, then BUYER may terminate the provision of services by SUPPLER to
BUYER for the customer service calls of Bell Atlantic Mobile upon 60 days prior
written notice to SUPPLIER, and BUYER shall have no obligation to make any
payment to SUPPLIER, including without limitation, any penalty, termination
charge, damages or minimum monthly billing charge except those charges due for
services rendered through the effective date of termination.
Notwithstanding the provisions of Section 14.1(b) of the Agreement to which this
Exhibit A is attached, in the event that SUPPLIER is completely unable to
perform the services for BUYER Described in this Exhibit A due to an "Equipment
and Facilities Failure" (as defined herein) of Equipment and Facilities provided
by SUPPLIER, and fails to restore the performance of such services within thirty
(30) days after receipt of written notice from BUYER, then BUYER may terminate
the program described herein without any further obligation to SUPPLIER. For
purposes of this Agreement, an "Equipment and Facilities Failure" shall mean (a)
a loss of electrical power, (b) a loss of telephone communications, (c) a
failure of computer of telephone equipment to function properly and/or, (d) loss
of use of the physical facility.
RECRUITING: SUPPLIER will use the BUYER's CSR Profile to screen and select
- ----------
CSR's. The BUYER may provide SUPPLIER with testing tools to use during the
interview. SUPPLIER will use such tools, provided they are within the limits of
all relevant government entities, to conform to the BUYER's standard. The BUYER
may review the selected CSRs in advance of training and the BUYER may, at that
time, remove CSRs that do not meet their qualifications for initial hiring.
SUPPLIER will recruit English and when requested, bilingual CSRs. The BUYER will
specify the number of each type at least 45 days in advance so that SUPPLIER
will have sufficient time to screen and select the required CSRs. The BUYER or
their representative may test the selected CSRs for their special language
skills. The BUYER may remove CSRs that do not meet their qualifications for
special language skills. SUPPLIER and BUYER will agree on a standard evaluation
form, which BUYER will complete for each CSR removed, documenting why that CSR
did not meet BUYER qualifications.
SUPPLIER will require a limited criminal background check on all selected CSRs
to inspect for a history of fraud or credit card misuse.
Confidential 14 07/29/99
<PAGE>
Riverview MSA
TRAINING: BUYER's trainers will provide CSR training on-site in Riverview until
- --------
SUPPLIER trainers and at least one (1) SUPPLIER Supervisor have completed two
training sessions with BUYER's trainers. SUPPLIER trainers will thereafter train
the CSR staff. The BUYER provided training period would continue for two
complete training sessions for each Bell Atlantic Mobile program.
The BUYER will be billed for the initial CSR program training period and for any
CSR program training that might be required by a BUYER initiated program change.
The BUYER will not be billed for any training required as a result of CSR
attrition at any time.
If training must be conducted off-site from Riverview, the BUYER will pay travel
and living expenses for the SUPPLIER staff during the training,
CONTINOUS TRAINING: SUPPLIER will provide one (1) hour of billable refresher
- ------------------
training per CSR per month.
SUPPLIER will adopt BUYER's [Zenger Miller] Supervisor Development Program.
SUPPLIER agrees, within 180 days of executing this agreement, to have one (1)
Trainer or Supervisor within the Riverview call center certified on Zenger
Miller at SUPPLIER's expense. SUPPLIER's certified Trainer or Supervisor will
then train SUPPLIER's other Trainers and Supervisors It is expected that this
development program will be an on-going activity and will consume less than 3.5%
of the supervisor's work activity on an annual basis.
LD CARRIER: BUYER will select and directly contract with [pay access and usage
- -----------
charges] the IXC of their choice who will provide inbound call transport
services.
QUALITY ASSURANCE: SUPPLIER supervisors or QA department will monitor at least
- ------------------
two inbound calls per agent per week. These calls will be rated and scored using
a format and criteria provided by the BUYER.
The BUYER will have remote access to SUPPLIER's ACD in order to monitor calls.
SUPPLIER and BUYER agree to comply with all legal requirements regarding the
monitoring and taping of calls.
Upon both party's signing a separate letter agreement covering BUYER's volume
commitment, SUPPLIER will proceed to purchase and arrange for installation of
the "NICE Universe version 4" quality monitoring system, identified in Systems
Platform & Network Arrangements - Exhibit "E", as requested by BUYER
HOURS OF COVERAGE: SUPPLIER will operate the BUYER's program 24 hours per day, 7
- -----------------
days per week, 52 weeks per year.
ASPECT: Equipped with Producer / Director capabilities and Report Writer. BUYER
- -------
will have access to Director terminal screens related to BUYER'S programs.
REPORTS: SUPPLIER will e-mail reports according to a BUYER defined schedule
- -------
The BUYER will supply Aspect ACD custom report templates to SUPPLIER. SUPPLIER
will run and
Confidential 15 07/29/99
<PAGE>
Riverview MSA
deliver said reports to BUYER according to agreed upon BUYER defined schedule.
SUPPLIER will also run standard Aspect reports, as agreed upon, when requested
or as scheduled by the BUYER. Custom reports can be developed upon request at
programming rates listed in Pricing - Exhibit "C".
SUPPLIER will supply a monthly breakdown of Payroll Hours by CSR which, at
minimum, will include Aspect Log-on hours and training hours.
SYSTEMS & NETWORK: Detailed in the attached Systems Platform & Network
- -------------------
Arrangements - Exhibit "E"
SYSTEMS SUPPORT: SUPPLIER agrees to provide one [1] System Administrator, solely
- ----------------
dedicated to the BUYER, whenever the BUYER's billable monthly purchase of
Dedicated CSR time exceeds 22,500 hours.
PROMPT PROBLEM RESOLUTION: Each party agrees to immediately notify the other,
- --------------------------
via the Problem Resolution Process - Exhibit "I", of any outstanding issues
affecting the program.
SPECIAL REQUIREMENTS:
- ---------------------
SUPPLIER will supply a dedicated LAN in Riverview to support BUYER's program.
SUPPLIER will purchase and install Routers and LAN ports.
BUYER will pay for all Voice and Data communication facilities. SUPPLIER will
assist the BUYER, through a Letter of Agency, to facilitate the delivery of such
services to the Riverview facility.
BUYER may have a reasonable number of their employees in the call center during
any buildout.
The BUYER will have limited, read only, access to their program data on the
Aspect ACD for reporting purposes.
WORKSTATIONS: SUPPLIER will provide 60% - 75% as many workstations [each
- -------------
equipped for voice and data] as there are Full Time Equivalent (FTE) CSRs.
SECURITY PLAN: SUPPLIER to provide a plan within first thirty days after start-
- --------------
up. The intent of the security plan is to reasonably accommodate the BUYER's
concern that access to the PC workstation be restricted to CSRs assigned to the
BUYER's program.
Confidential 16 07/29/99
<PAGE>
Riverview MSA
EXHIBIT "B"
SERVICE LEVELS & STAFFING
BELL ATLANTIC MOBILE
SERVICE OBJECTIVE: 80% of all calls answered within 20 seconds. The 20 second
- ------------------
threshold is independent of any forced message treatment. Forced message
treatment will be added to this metric to arrive at true service levels.
SUPPLIER's ability to meet the 80/20 Service Objective depends critically on the
accuracy of the BUYER defined Staffing and BUYER provided Call Volume Forecast.
DEDICATED CSRs: SUPPLIER will provide dedicated CSR's who only work on BUYER's
- ---------------
program, according to the following Table 1:
TABLE 1 - PRODUCTION FTE CSR'S
------------------------------
- --------------------------------------------------------------------------------
Cumulative CUMULATIVE TOTAL
English BILINGUAL PRODUCTION
Date Range FTE CSR's FTE CSR'S FTE CSR'S
- --------------------------------------------------------------------------------
02/08/99 03/01/99 40 40
03/01/99 03/15/99 80 2 82
03/15/99 04/12/99 95 4 99
04/12/99 CURRENT 105 6 111
- --------------------------------------------------------------------------------
Each FTE CSR represents 150 hours per full calendar month of Dedicated Customer
Service Representative time billable to BUYER at the Production rate shown in
Pricing - Exhibit "C".
BUYER's FORECAST: Each week the BUYER will supply a rolling 45 -day forecast of
the required staffing levels. SUPPLIER and BUYER will then agree to a staffing
level in writing via Service Enhancement Request Form - Exhibit "D". SUPPLIER
agrees to meet staff increases within 45 days after receipt of the forecast
provided the increase is not more than 30 additional CSRs. SUPPLIER will apply
best efforts to meet BUYER requirements if the increase is more than 30 CSRs
within a 45-day Wine frame.
SUPPLIER will be excused from meeting Service Level Objectives if the actual
number of calls received by SUPPLIER deviates more than + 10% from the BUYER
forecast supplied 45 days prior to the week in which the calls arrive.
Confidential 17 07/29/99
<PAGE>
Riverview MSA
CENTER MANAGEMENT STAFFING: SUPPLIER will provide and maintain call center staff
- --------------------------
as follows:
STAFFING COMIMMENT: SUPPLIER will provide and maintain call center staff as
- ------------------
follows:
Training Lead - I Training Lead [shared with other BCG work]
Trainers - 60:1 ratio of CSRs to Trainers / Training Lead [shared
with other BCG work]
QA Lead - I QA Lead [shared with other BCG work]
QA Monitors - 60:1 ratio of CSRs to QA Monitors / QA Lead
Operations Manager - I Operations Manager [shared with other BCG work]
Floor Supervision - 18:1 ratio of CSRs to Floor Supervisors
QUALITY ASSURANCE STANDARDS: SUPPLIER will adhere to BUYER's standards of
- ---------------------------
monitoring at least 2 Inbound calls per agent per week.
Confidential 18 07/29/99
<PAGE>
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission.
Asterisks denote omissions.
Riverview MSA
EXHIBIT "C"
PRICING
BELL ATLANTIC MOBILE
BILLABLE HOURS: SUPPLIER will bill the BUYER for "Aspect Log-on Hours" for the
assigned CSRs. This time will include two 15 -minute breaks per 7.5 -hour
workday. Lunch break will not be billed to the BUYER.
If the BUYER requires activity other than handling inbound calls or if the
BUYER's processes and procedures require the CSR to engage in substantial non-
phone activity, those hours will be billed to the BUYER at the standard rate
specified below for Inbound Customer Service.
DEDICATED CUSTOMER SERVICE REPRESENTATIVES: [Notes I - 4]
- -------------------------------------------
PRODUCTION RATE: [**]
TRAINING RATE: [**]
SYSTEMS SUPPORT / PROGRAMMING: [Note 5] [**]
CRIMINAL BACKGROUND CHECK: [**]
CUSTOMER SPECIFIED EQUIPMENT : [**]
NOTES:
- ------
1.) All rates are in U.S. Dollars, with a minimum monthly billing equal to 150
hours times the number of FTE CSR's contracted for. Work performed in
Canada is subject to currency review / adjustment every 6 months.
2.) BUYER contracts with, and pays carrier for, all inbound access and
usage charges.
3.) Specialized data / system equipment can supplied by BUYER or priced
separately.
4.) Data communication links provided by BUYER.
5.) When requested by BUYER.
STAFFING PENALTY PROVISION: The BUYER shall receive a credit for any SUPPLIER
- ---------------------------
failure to deliver at least ninety percent (90%) of the "FTE CSR" staff (on the
scheduled "Date Range" as detailed in Table I of Exhibit "B" and/or as mutually
agreed to via Service Enhancement Request Form - Exhibit "D"). BUYER may take a
credit against the SUPPLIER monthly invoice of one half of one percent (0.5%)
for each FTE CSR below the 90% level not available during a calendar month, with
a maximum penalty of five percent (5%) in any given calendar month. An FTE CSR
is defined as 150 hours of production time.
Confidential 19 07/29/99
<PAGE>
Riverview MSA
CHANGE REQUESTS: All BUYER requested changes [staffing, systems, facilities,
- ----------------
etc.] must be documented on a Service Enhancement Request Form - Exhibit "D" and
approved via authorized signature of both BUYER and by SUPPLIER.
Confidential 20 07/29/99
<PAGE>
Riverview MSA
EXHIBIT "D"
SERVICE ENHANCEMENT REQUEST FORM
--------------------------------
A.R.______________________(YY-Seq#) Approved__________________________
Denied ____________________________
REQUESTED BY:_________________________ DATE:______________________________
IMPLEMENTATION DATE: _____/ _____/ _____
PRIORITY: _____High _____ Med _____Low
CALL CENTER: I - Deland 2 - Lakeland 3 - Riverview
4 - Other (Specify)_____________________________________
SYSTEMS: I - Facilities 2 - PCs/LAN 3 - NT Servers
4 - ACD 5 - PBX 6 - Communications
7 - Other (Specify)_____________________________________
DESCRIPTION
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
IMPACT:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
ESTIMATED COST: $ Plus tax MAINTENANCE: $_______________
------------
(Attach documentation including on going maintenance)
FINANCIAL RESPONSIBILITY: __________________ I = BCGI 2 = ICT
APPROVED BY BCGI: __________________________ DATE: _____/ _____/ _____
APPROVED BY ICT: ____________________________ DATE: _____/_____/_____
Home Office Use Only
EXPENDITURE APPROVED BY: __________________________ DATE: _____/ _____/ _____
PRINT NAME: ______________________________________ TITLE:___________________
________________________________________________________________________________
Confidential 21 07/29/99
<PAGE>
Riverview MSA
EXHIBIT "E"
SYSTEMS PLATFORM & NETWORK ARRANGEMENTS
BELL ATLANTIC MOBILE
Minimum Desktop Specification:
- ------------------------------
Processor Intel Pentium 11 233MHz
Operating System Windows NT Workstation 4.0, service pack 4
System RAM 64 Meg
Hard Drive 4 Gig
Video RAM 4 Meg
Network Interface Card
Monitor 17"
Imaging Software Drive Image
Minimum ACD Specifications:
- ---------------------------
Aspect Call Center 30OR
Vendor certified Y2K compliant system software
Thirty-two (32) Voice Ports
AMC Card - [coincidental with installation of NICE equipment]
ISDN PRI ready
Network InterQ compatible with Release 6 far end systems
Application Bridge
Event Bridge
Realtime Bridge
Anonymous FTP
Prime Time Report Software - [BUYER may supply other software at BUYER's
option & expense]
Custom View Suite w/remote network connectivity and dedicated historical
reporting station
Minimum Quality Monitoring System Specification:
- ------------------------------------------------
Upon both party's signing a separate letter agreement covering BUYER's volume
commitment, SUPPLIER will proceed to purchase and arrange for installation of
the "NICE Universe version 4" quality monitoring system, identified in Systems
Platform & Network Arrangements - Exhibit "E", as requested by BUYER
Data Network:
- -------------
SUPPLIER will supply an Ethernet 100Mb backbone to the desktop, Cisco 3600
Series Routers, all equipment managed and observed by HP software.
Confidential 22 07/29/99
<PAGE>
Riverview MSA
EXHIBIT "F"
BUYER & SUPPLIER
PROBLEM RESOLUTION PROCESS
1. Level I: It is the intent of both parties that SUPPLIER's "Center
Management" and BUYER's "Account Management" resolve daily Operational
Issues. These issues would include but are not limited to: call volume
forecasts, enhancement training, performance improvements, staffing and
schedules.
The BUYER Systems Administrator and the BUYER's Technical Operations
Manager will resolve daily Technology issues. These issues would include
but are not limited to the ACD, agent workstations, network and IVR
configurations, etc.
If immediate agreement is not reached and should the nature of the problem
have an immediate impact on the BUYER, the BUYER's customers or pose a
substantial financial loss, immediate remedial action will be taken by the
Level I management to alleviate the problem. The intent is to minimize any
negative effect on the BUYER and customers and/or to reduce any substantial
financial loss. Concurrently, the issue will be referred to Level 11 for
eventual resolution. The guiding principle should be to prevent any
disagreement from affecting the delivery of services to the BUYER and their
customers.
2. LEVEL II: A referral to Level II, can be done jointly (preferred) or
singly. It is to be done in writing with a brief outline of the issue, the
impact on BUYERs or costs and a summation of the reasons for disagreement.
The notice is to be delivered via e-mail or fax to the Level II management
teams with a voice mail or beeper message informing the Level II teams of
an active referral.
The Level II management teams for issues relating to Call Center Operations
include the SUPPLIER's Group Vice President and the BUYER's Vice
President/Director responsible for the SA relationship.
The Level II management teams issues relating to Call Center or Information
Technology include the SUPPLIER's Group Vice President - Systems and the BUYER's
Technical Operations Director,
Any issue referred to Level II, will be resolved within 48 hours or
referred to Level III for review.
A referral to Level II, will require that the Level II management teams
meet (conference call or face to face) within 48 hours of a referral to
review the issue and to confirm any interim action taken to alleviate the
issue on a temporary basis.
Any referral to Level II will require a written response outlining the
actions to be taken to resolve the conflict. The response will be provided
to Level I management teams for implementation.
3. LEVEL III: The Level III management teams are composed of SUPPLIER's -
President Management Services and BUYER's VP & GM Teleservices, The intent
of both parties is that any issue referred to Level III will be resolved
within 48 hours.
A referral to Level III, will require that the Level III management teams meet
(conference call or face to face) within 48 hours of a referral to review the
issue and to confirm any interim action taken to
Confidential 23 07/29/99
<PAGE>
Riverview MSA
alleviate the issue on a temporary basis. Any referral to Level III will require
a written response outlining the actions to be taken to resolve the conflict.
The response will be provided to Level I and II management teams for
implementation.
4. Supporting Materials: The SUPPLIER's Level II management team will maintain
and distribute to Level I,II and III teams a current contact list for all
SUPPLIER and BUYER management personnel involved in Level I, II and 111.
The list will provide phone, beeper, fax, e- mail, and cellular and postal
address information along with position.
The SUPPLIER's Level 11 management team will, in conjunction with the
BUYER's Level 11 management team, create and maintain a standard format for
the escalation and response to issues referred to the Issue Resolution
process.
5. Listing of the Level I, II and III Management Teams:
----------------------------------------------------
Level I
-------
Operational Issues
SUPPLIER: Call Center Manager
BUYER: BUYER Operations Manager
Technical Issues
SUPPLIER: Systems Administrator
BUYER: Technical Operations Manager
LEVEL II
--------
Operational Issues
SUPPLIER: VP-Operations, Management Services Division
BUYER: VP/Director
Technical Issues
SUPPLIER: VP- Systems, Management Services Division
BUYER: Technical Operations Director
Level III
---------
SUPPLIER: President, Management Services Division
BUYER: VP & GM, Teleservices Division
Confidential 24 07/29/99
<PAGE>
EXHIBIT 10.55
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission.
Asterisks denote omissions.
Lakeland MSA
MANAGEMENT SERVICES AGREEMENT
-----------------------------
INTRODUCTION
THIS AGREEMENT is entered into and is effective as of March 22, 1999 between ICT
GROUP Inc. ("SUPPLIER"), 800 Town Center Drive, Langhorne, PA, 19047-1748 and
Cellular Express, Inc., d/b/a Boston Communications Group ("BUYER"), 100 Sylvan
Road, Suite 100, Woburn, MA 01801.
BACKGROUND
SUPPLIER is in the business of providing call center services to the business
community. SUPPLIER and BUYER desire to enter into this Agreement pursuant to
which, SUPPLIER will plan, manage, operate and handle calls for BUYER within
SUPPLIER's Lakeland, Florida call center in accordance with the terms and
conditions of the Agreement.
TERMS AND CONDITIONS
SECTION 1. SERVICE
1.1 Included Services. In consideration of the payment by BUYER to SUPPLIER of
the amounts due under this Agreement, SUPPLIER agrees that it will furnish
the BUYER with the specific Scope of Services described in Exhibit A and
the specific Service Levels described in Exhibit B. A separate Scope of
Services [Exhibit "A"], Service Level [Exhibit "B"] and Pricing [Exhibit
"C"] document will be created for each BUYER [or Client of BUYER] program
supported by SUPPLIER.
1.2 Supplemental Services. SUPPLIER may provide Supplemental Services, subject
to the availability and expertise of SUPPLIER personnel, at such additional
cost for such Supplemental Services as agreed by both parties. Any
Supplemental Services shall be provided in accordance with the terms and
conditions of this Agreement and shall be pursuant to an approved Service
Enhancement Request (see Section 10).
SECTION 2. CERTAIN BUYER OBLIGATIONS
2.1 In order for SUPPLIER to perform its obligations hereunder, BUYER agrees to
use its best efforts to keep its Information current and its
Telecommunications Equipment operational at all times. Equipment failure
will negatively impact performance and Service Levels. SUPPLIER shall not
be liable to BUYER for any failure or delay in furnishing BUYER with the
Services at specified Service Levels to the extent that such failure is
attributable to a failure of BUYER's equipment.
2.2 Upon SUPPLIER's reasonable request, BUYER agrees to make its personnel,
including appropriate professional personnel, administrative personnel and
other employees, reasonably
Confidential Page 1 07/29/99
<PAGE>
Lakeland MSA
available for consultation at mutually convenient times and places in order to
assist SUPPLIER to perform its own obligations under this Agreement.
SECTION 3. TERM
3.1 Subject to Section 14 "Termination," the initial term of this Agreement
shall commence on March 22, 1999 effective date) and continue through March
22, 2004 [the "Initial Term").
3.2 Each 'individual program covered under the terms and conditions of this
Agreement will be detailed in a unique set of Exhibits, attached hereto,
which may contain unique term provisions.
3.3 This Agreement shall automatically renew for a period of one (1) year after
the end of the Initial Term and from year to year thereafter unless prior
written notification is provided to either party 180 days prior to
expiration of the Initial Term or any renewal term.
SECTION 4. QUALITY ASSURANCE
4.1 SUPPLIER agrees to use its best efforts at all times to provide prompt and
efficient service as described in Exhibit "A",
4.2 A comprehensive system of observation and monitoring of all activities will
be employed. SUPPLIER's ACD will provide BUYER with silent monitoring of
phone presentations from the BUYER's location or on SUPPLIER's premises as
requested by BUYER. SUPPLIER shall advise all people to be monitored that
they are subject to silent and other monitoring during work.
SECTION 5. CONFIDENTIALITY
5.1 Confidential Information Defined
As used in this Agreement, "Confidential Information" means all information
of the BUYER or SUPPLIER [the party or parties] that is not generally known
to the public, whether of a technical, business or other nature (including,
without limitation, trade secrets, know-how and information relating to the
technology, customers, business plans, promotional and marketing
activities, finances and other business affairs), that is disclosed by
either party to the other and that has been identified as being proprietary
and/or confidential. Without limitation, all references in any form or
medium whatsoever to Subscriber's (i) name, address, phone number (ii)
account balances, (iii) call records, (iv) transaction records, or (v)
other information is and shall remain BUYER Confidential Information.
5.2 Prohibition on Disclosure and Use
Except as expressly provided in this Agreement, neither party shall
disclose Confidential information to anyone without the other party's prior
written consent. Neither party shall use, or permit others to use, the
other party's Confidential Information for any purpose other than the
performance of this Agreement. Both parties shall take all reasonable
measures to avoid unauthorized disclosures, dissemination, or use of
Confidential Information, including, at a minimum, those measures it takes
to protect its own confidential information of a similar nature.
Confidential Page 2 07/29/99
<PAGE>
Lakeland MSA
5.3 Restrictions on Personnel
Both parties shall restrict the possession, knowledge, development, and use
of Confidential Information to its employees, agents, subcontractors, and
entities controlled by it (collectively, "Personnel") who have a need to
know Confidential Information in connection with the performance of this
Agreement. Each party's Personnel shall have access only to the
Confidential Information they need for such purpose. Each party shall
ensure that its Personnel comply with this Agreement.
5.4 Disclosure to Governmental Authority
If either party becomes legally obligated to disclose Confidential
Information to any governmental entity with jurisdiction over it, it shall
give the other party prompt written notice to allow that party to seek a
protective order or other appropriate remedy. The obligated party shall
disclose only such information as is legally required and shall use its
reasonable best efforts to obtain confidential treatment for any
Confidential Information that is so disclosed.
5.5 Exceptions
The provisions of this Section 5 shall not apply to any information that
can be shown by documented evidence: (i) to be publicly available without
breach of this Agreement; (ii) to have been known to either party at the
time of its receipt from the other party; (iii) to have been rightfully
received from a third party who did not acquire or disclose such
information by a wrongful or tortuous act; (iv) to have been independently
developed by either party without access to any Confidential Information;
or (v) to have been approved for release by either party in writing.
5.6 Ownership of Confidential Information
All Confidential Information shall remain the exclusive property of the
BUYER or the SUPPLIER respectively and the other party shall have no
rights, by license or otherwise, to use the Confidential Information except
as expressly provided herein.
5.7 Return of Confidential Information
Each party shall promptly return all tangible material embodying the other
party's Confidential Information (in any form and including, without
limitation, all summaries, copies, and excerpts of Confidential
Information) upon any expiration or termination of this Agreement or upon
the other party's written request.
5.8 Injunctive Relief
Each of SUPPLIER and BUYER hereby acknowledges and agrees that (i) the
provisions and restrictions contained in this Section 5 are reasonable and
necessary for protection of the legitimate interests of the parties hereto;
(ii) neither SUPPLIER nor BUYER would have entered into this Agreement in
the absence of such provisions and restrictions; and (iii) any violation of
any provision of this Section 5 by a party hereto or such party's
Representatives may result in irreparable injury to the other party, which
injury may be inadequately compensable in monetary damages. Accordingly,
the parties hereby acknowledge and agree that each of SUPPLIER and BUYER
shall be entitled to seek preliminary and/or permanent injunctive relief
from the other party for any violation or threatened violation of this
Section 5 by such other party or by such other party's Representatives,
without the necessity of proving actual damages or posting any bond or
other security. The rights and remedies of each party under this Section
5.8 shall be cumulative and in addition to any other rights or remedies to
which the such party may be entitled under this Agreement, at law or in
equity.
Confidential Page 3 07/29/99
<PAGE>
Lakeland MSA
SECTION 6. WARRANTEES
6.1 Each party represents and warrants to the other that they have and will
continue to maintain all necessary licenses, permits or approvals required
under this Agreement in each and every jurisdiction having authority over
the services provided under this Agreement.
6.2 Each party represents and warrants that it shall (a) comply with all
international, federal, provincial, state, and local laws, ordinances,
regulations, and orders (including, without limitation, all laws,
ordinances, regulations, and orders related to telephone communications
with consumers and businesses) with respect to its performance of the
Services, (b) file all reports relating to the Services (including, without
limitation, tax returns), (c) pay all filing fees and federal, provincial,
state, and local taxes applicable to each party's respective business as
the same shall become due, and (d) pay all amounts required under local,
state, provincial and federal workers' compensation acts, disability
benefit acts, unemployment insurance acts, and other employee benefit acts
when due.
6.3 Each of SUPPLIER and BUYER represents and warrants to the other that (i)
this Agreement constitutes the legal, valid and binding obligation of such
party, enforceable against such party in accordance with its terms, except
as such enforceability may be limited by bankruptcy laws and other similar
laws affecting creditors' rights generally and by general principles of
equity; (ii) the execution, delivery and performance of this Agreement by
such party does not and will not conflict with or constitute a breach or
default under its charter documents, or any agreement, contract, commitment
or instrument to which it is a party, or the requirements of any
governmental or regulatory authority; and (111) such party has the full and
unencumbered right, power and authority to enter into this Agreement and to
otherwise carry out its obligations hereunder.
SECTION 7. INDEMNIFICATION
7.1 The undersigned BUYER does hereby indemnify, defend, and save harmless
SUPPLIER and its subsidiaries, affiliates, shareholders, officers,
directors and employees from any and all loss or liability arising from any
and all complaints, claims or legal actions, 'in any way resulting from or
allegedly resulting from any products or services of the BUYER or its
clients, and BUYER shall assume full responsibility for, and handling of,
any such complaint, claim or legal action as well as for payment of all
expenses, costs, counsel fees, judgment and/or settlements thereby
incurred, except to the extent that such complaint, claim or legal action,
costs, counsel fees, judgment or settlements result from or arise out of a
gross negligent act of commission or omission or willful misconduct by
SUPPLIER, its agents and/or its employees. SUPPLIER shall notify BUYER
promptly of any complaint, claim or legal actions and shall cooperate in
any defense. SUPPLIER agrees that BUYER shall have sole control over such
defense, including but not limited to retaining counsel and all offers of
settlement.
7.2 SUPPLIER does hereby indemnify, defend, and save harmless BUYER and
its subsidiaries, affiliates, shareholders, officers, directors and
employees from any and all loss or liability arising from any and all
complaints, claims or legal actions, which may result or arise out of
SUPPLIER's performance under this Agreement, and SUPPLIER shall assume
full responsibility for, and handling of, any such complaint, claim or
legal action as well as for payment of all expenses, costs, counsel
fees, judgment and/or settlements thereby incurred, except to the
extent that such complaint, claim or legal action, costs, counsel
fees, judgment or settlements result from or arise out of a negligent
act of commission or omission or willful misconduct by BUYER, its
agents and/or its employees. BUYER shall notify SUPPLIER promptly of
any complaint, claim or legal actions and shall cooperate in any
defense. BUYER agrees that SUPPLIER shall have sole control over such
Confidential Page 4 07/29/99
<PAGE>
Lakeland MSA
defense, including but not limited to retaining counsel and all offers of
settlement.
SECTION 8. DISCLAIMERS; LIMITATIONS OF LIABILITY
8.1 EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
AGREEMENT, SUPPLIER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, IN FACT OR AT LAW, WITH RESPECT TO THE SERVICES AND SUPPLEMENTAL
SERVICES PROVIDED OR TO BE PROVIDED BY SUPPLIER HEREUNDER, INCLUDING
WITHOUT LIMITATION ANY REPRESENTATIONS OR WARRANTIES CONCERNING THE
COMPLETENESS OR ACCURACY OF ANY INFORMATION RECORDED, PROCESSED OR
TRANSMITTED BY SUPPLIER. EXCEPT FOR SUPPLIER'S INDEMNIFICATION OBLIGATION
UNDER SECTION 7.2 ABOVE, BUYER'S SOLE REMEDY AND SUPPLIER'S SOLE
RESPONSIBILITY WITH RESPECT TO ANY ERRORS OR OMISSIONS IN INFORMATION
TRANSMITTED BY SUPPLIER SHALL BE LIMITED TO CORRECTION OF SUCH ERRORS OR
OMISSIONS AND RETRANSMISSION OF THE CORRECTED INFORMATION AT NO ADDITIONAL
EXPENSE TO BUYER.
8.2 EXCEPT FOR THE PARTIES' INDEMNIFICATION OBLIGATIONS UNDER SECTION 7 ABOVE,
OR AS OTHERWISE EXPRESSLY PROVIDED HEREIN, NEITHER PARTY SHALL BE LIABLE TO
THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL,
INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING WITHOUT
LIMITATION LOST PROFITS, LOST SAVINGS, LOST FUTURE EARNINGS AND LOST
ECONOMIC ADVANTAGE) SUFFERED OR INCURRED BY SUCH OTHER PARTY OR ANY THIRD
PARTY IN CONNECTION WITH THIS AGREEMENT OR PERFORMANCE OR NONPERFORMANCE
HEREUNDER, EVEN IF SUCH PARTY HAS BEEN ADVISED, KNEW OR SHOULD HAVE KNOWN
OF THE POSSIBILITY OF SUCH DAMAGES.
8.3 EXCEPT FOR SUPPLIER'S INDEMNIFICATION OBLIGATION UNDER SECTION 7.2 ABOVE,
SUPPLIER'S LIABILITY TO BUYER OR TO ANY THIRD PARTY IN CONNECTION WITH THIS
AGREEMENT OR PERFORMANCE OR NONPERFORMANCE HEREUNDER SHALL NOT EXCEED THE
AMOUNT ACTUALLY PAID BY BUYER FOR SERVICES AND/OR SUPPLEMENTAL SERVICES
DURING THE THREE-MONTH PERIOD IMMEDIATELY PRECEDING THE DATE ON WHICH
BUYER'S OR SUCH THIRD PARTY'S CLAIM OR CAUSE OF ACTION AGAINST SUPPLIER
FIRST ACCRUED.
8.4 NO ACTION ARISING OUT OF THIS AGREEMENT OR PERFORMANCE OR NONPERFORMANCE
HEREUNDER, WHETHER GROUNDED IN BREACH OF CONTRACT, BREACH OF WARRANTY,
NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, MAY BE BROUGHT BY EITHER PARTY
HERETO MORE THAN TWO YEARS FOLLOWING THE DATE ON WHICH THE CAUSE OF ACTION
HAS FIRST ARISEN.
Confidential Page 5 07/29/99
<PAGE>
Lakeland MSA
8.5 The parties hereto acknowledge and agree that the foregoing disclaimers and
limitations of liability represent bargained for allocations of risk, and
that the pricing and other terms and conditions of this Agreement reflect
such allocations of risk.
SECTION 9. FINANCIAL TERMS
Pricing is based on the complexity, duration, type and volume of services
required. Specific prices for each program are included in the respective
exhibits attached hereto.
9.1 During the term of this Agreement, SUPPLIER will invoice BUYER 30 days
prior to the due date for the included services and related expenses
according to the amounts set forth in Pricing - Exhibit
9.2 Supplemental Services shall be invoiced monthly as such Supplemental
Services are provided.
9.3 SUPPLIER will provide BUYER with invoices for Services, Supplemental
Services and other amounts payable to SUPPLIER hereunder on a monthly
basis. All such invoices shall be due and payable upon receipt thereof by
BUYER. Undisputed balances, not paid within thirty days following BUYER's
receipt thereof, shall bear interest, compounded daily, at a rate per annum
equal to three percent (3%) plus the Prime Rate as publicly announced by
Summit Bancorp, Princeton, New Jersey, or its successor in interest, on the
first business day immediately following the Effective Date. This interest
rate shall be adjusted effective on the first business day of each and
every succeeding week until the outstanding balance and all interest
accrued therein is paid in Ul.
9.4 On May 1 of each calendar year (excluding the calendar year of the
Effective Date), the amounts set forth in Pricing - Schedule "C" shall be
increased by a percentage equal to the percentage, if any, by which the CPI
(hereinafter defined) published for January of such calendar year exceeds
the CPI published for January of the preceding calendar year. Upon each
such adjustment, the amounts set forth in Pricing - Schedule "C" shall be
the amounts applicable to all Services performed on or after the date of
such adjustment and shall remain in effect until such amounts are further
adjusted in accordance with the foregoing sentence. As used herein, CPI
means the U.S. Consumer Price Index for Urban Wage Earners and Clerical
Workers, South Region (urban size), presently published by the Bureau of
Labor Statistics of the Department of Labor
9.5 The obligation of BUYER to pay for services rendered in accordance with the
terms and conditions of this Agreement shall survive the termination of
this Agreement for any reason.
SECTION 10. SERVICE ENHANCEMENT REQUEST
10.1 BUYER may request changes to, modifications of, and work in addition to
that identified pursuant to Exhibit A, B and/or C by submitting a written
Service Enhancement Request to SUPPLIER from time to time during the term
of this Agreement. SUPPLIER shall have the right to accept or reject the
BUYER's Service Enhancement Request, in its sole discretion; however,
SUPPLIER will accept reasonable requests from BUYER. SUPPLIER shall not
unreasonably withhold such acceptance or rejection. Upon the approval of a
Service Enhancement Request by SUPPLIER, the amount to be paid SUPPLIER
under this Agreement and the time of performance shall be adjusted as
specified in the Service Enhancement Request. All such work shall be
executed
Confidential Page 6 07/29/99
<PAGE>
Lakeland MSA
under the terms and conditions specified in this Agreement and each
approved Service Enhancement Request Form - Exhibit "D", will be appended
to this Agreement.
SECTION 11. COOPERATION
11.1 The parties acknowledge and agree that performance under this Agreement
will require the continued definition and setting of priorities, the
balancing of competing tasks and schedules, and the adjustment of
priorities over different tasks and different schedules. The parties will
periodically define in writing, and mutually agree the activities,
schedules, and deliverables and relative priorities with respect thereto,
during the term of this Agreement.
11.2 SUPPLIER shall be excused from meeting Performance Objectives if and to the
extent that any such failure is properly attributable to the delay or
failure of BUYER to perform its obligations hereunder to provide equipment,
services or information to SUPPLIER. This includes, but is not limited to,
BUYER forecasting to within +/- 10%, anticipated call volumes under the
attached Scope of Services - Exhibit "A".
SECTION 12. RIGHT TO USE OTHER PARTY'S NAME
12.1 Each party grants to the other party the right to use the other party's
name in government filings without the necessity of obtaining the other
party's approval for such use, Neither party will use the other party's
name in a press release or other public announcement without the other
party's prior written consent, such consent not to be unreasonably withheld
or delayed.
SECTION 13. ASSIGNMENT
13.1 This Agreement shall not be assigned by either the BUYER or SUPPLIER,
except to a purchaser of all or substantially all of the stock or assets of
the assigning party provided such purchaser agrees in writing to comply
with the terms and conditions of this Agreement and provided further that
such purchaser has a net worth equal to or greater than that of BUYER at
such time, without the express prior written consent of the other party,
and this Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns.
SECTION 14. TERMINATION
14.1 This Agreement may be terminated in the following instances; such
termination shall be a termination for cause:
a) By either party, to the extent permitted under applicable law, if the
other ceases to function as a going concern, becomes insolvent, makes
an assignment for the benefit of creditors, files a petition in
bankruptcy, permits a petition in the bankruptcy to be filed against
it and such petition is not dismissed within sixty (60) days of
filing, or admits in writing its inability to pay its debts as they
mature, or if a receiver is appointed over a substantial part of its
assets;
Confidential Page 7 07/29/99
<PAGE>
Lakeland MSA
b) By either party by reason of any other material breach of this
Agreement by other party which breach has not been remedied or cured
after at least (90) days written notice delivered by the aggrieved
party to the other party;
c) By SUPPLIER for BUYER's failure to pay any amounts or other charges
within sixty (60) days from the payment due date, it being understood
by SUPPLIER that BUYER may elect to make payment to SUPPLIER with an
express reservation of rights to assure continued performance by
SUPPLIER under this Agreement pending resolution of any disputes.
14.2 If BUYER terminates this Agreement for any reason, BUYER shall pay to
SUPPLIER the following:
a) All amounts due (subject to monthly minimum, if applicable) for
properly completed services received by BUYER in accordance with the
Scope of Services - Exhibit "A"; plus,
b) All costs and expenses incurred by SUPPLIER on behalf of BUYER up to
the date of termination including, but not limited to, telemarketing
representative training, applicable data processing costs, program
development time, and third party services.
14.3 Each set of exhibits, attached to this Agreement, define a unique set of
conditions for SUPPLER and for BUYER [see Section 3.2]. The BUYER may, upon
written notice specified in Exhibit "A", terminate work associated with a
particular set of exhibits if BUYER's Client [named in the exhibits]
cancels its agreement with BUYER for the work outlined in the exhibits.
SECTION 15. INFORMAL DISPUTE RESOLUTION
15.1 Prior to the initiation of arbitration pursuant to Section 16, the parties
shall first attempt to resolve their dispute informally as follows:
a) Upon the written request of a Party, each Party shall appoint a
designated representative who does not devote substantially all of his
or her time to performance under this Agreement, whose task it will be
to meet for the purpose of endeavoring to resolve such dispute.
b) The designated representatives shall meet as often as they reasonably
deem necessary for each Party to gather and furnish to the other all
information with respect to the matter in issue which Parties believe
to be appropriate and germane in connection with its resolution. The
representatives shall discuss the problem and attempt to resolve the
dispute without necessity of any formal proceeding.
c) During the course of discussion, all reasonable requests made by one
Party to another for nonprivileged information, reasonably related to
this Agreement, shall be honored in order that each of the Parties may
be fully advised of the other's position.
d) The specific format for the discussions shall be left to the
discretion of the designated representatives, but may include the
preparation of agreed-upon statements of fact or written statements of
position.
Confidential Page 8 07/29/99
<PAGE>
Lakeland MSA
e.) Arbitration for the resolution of a dispute shall not be commenced
until the earlier of
i) the designated representatives concluding in good faith that
amicable resolution through continued negotiation of the matter
does not appear likely; or
ii) thirty (30) days after the initial written request to appoint a
designated representative pursuant to Paragraph (a) above [this
period shall be deemed to run notwithstanding any claim that the
process described in this Section 15. 1, subparagraph a), was not
followed].
15.2 This Section 15 shall not be construed to prevent a Party from instituting,
and a Party is authorized to institute, arbitration earlier than prescribed
in Subparagraph 15.1 to (i) avoid the application of any applicable
limitations period, (ii) preserve a superior position with respect to other
creditors, or (iii) seek immediate injunctive relief
SECTION 16. ARBITRATION
16.1 Whenever either party shall decide to institute arbitration with respect to
a dispute concerning this Agreement or the satisfaction of any term or
condition this Agreement, such party shall provide written notice thereof
to the other party hereto. Thereupon, the parties hereto shall abide by the
provisions of this Section 16 concerning such arbitration. Arbitration is
not applicable to disputes under Section 5 or Section 7 of this Agreement.
16.2 Except as modified by this Section 16, the proceedings shall be conducted
under the rules of the American Arbitration Association. The arbitration
shall be conducted before a single arbitrator having appropriate knowledge
and experience in handling commercial disputes. The arbitrator shall be
appointed jointly by the parties hereto within 30 days following the date
on which the arbitration is instituted. If the parties are unable to agree
upon the arbitrator within said 30-day period; the American Arbitration
Association shall be instructed to choose the arbitrator within 15 days
thereafter. None of the arbitrators shall have any past or present
relationship with or interest in the parties to this Agreement or their
affiliates. The arbitration proceeding shall be conducted in Philadelphia,
Pennsylvania and all decisions of the American Arbitration Association
shall be rendered by its Philadelphia Office.
16.3 Except as modified by this Section 16.3, the arbitration shall be conducted
in accordance with, and the arbitrators shall be bound by, the Federal
Rules of Civil Procedure and the Federal Rules of Evidence then in effect.
Unless the arbitrators for good cause determine otherwise, the following
modifications to such rules shall apply:
a. Neither party shall be entitled to conduct depositions of party or
non- party witnesses,
b. All requests for discovery shall be submitted to the other party
hereto within 30 days following the date that the arbitrator is
appointed in accordance with Section 16.2 above,
c. All responses to discovery requests shall be provided to the
requesting party within 60 days following the date that the arbitrator
is appointed in accordance with Section 16.2 above,
d. The arbitration proceeding shall be conducted within 120 days
following the date that the arbitrator is appointed in accordance with
Section 16.2 above
Confidential Page 9 07/29/99
<PAGE>
Lakeland MSA
16.4 Unless the parties mutually agree otherwise, the arbitrators shall be
instructed to issue their award within 30 days following the date on which
the arbitration proceeding is concluded. The arbitrators shall have the
authority to grant specific performance, but shall not be authorized to
award punitive or exemplary damages. Unless the arbitrators for good cause
determine otherwise, each party hereto shall bear one-half of the fees and
expenses of the arbitrators and each party hereto shall bear its own costs
and attorneys' fees in connection with the arbitration.
16.5 Judgment upon the award rendered by the arbitrators may be entered 'in any
court having jurisdiction or application may be made to such court for
judicial acceptance of any award and an order of enforcement, as the case
may be. In no event shall a demand for arbitration be made by either party
with respect to any dispute, claim or other matter after the date on which
litigation based on such dispute, claim or other matter would be barred by
the applicable statute of limitations.
SECTION 17. RELATIONSHIP
17.1 Nothing contained herein shall be construed to create the relationship of
employer and employee between SUPPLIER and BUYER or between BUYER and any
of SUPPLIER's employees or agents. It is the express intent of the parties
hereto that SUPPLIER is not an employee of BUYER for any purpose, but is an
independent contractor for all purposes and in all situations. SUPPLIER and
SUPPLIER's employees shall not represent that they are employees of BUYER,
or shall they in any manner hold themselves out to be employees of BUYER.
17.2 Neither party shall have the right to enter into any Agreement or
commitment in the name of or on the behalf of the other, or to bind the
other in any respect whatsoever, unless specifically authorized in writing
by the other.
SECTION 18. NON-SOLICITATION OF EMPLOYEES
18.1 During the initial term and any renewal term of this Agreement, and for a
period of one year following the expiration or termination of this
Agreement, neither party hereto, nor any related or affiliated organization
over which such party has control, shall solicit for hiring (other than
through advertisements directed to the general public), offer to hire, or
in any way employ or compensate (i) any current employee of the other party
hereto, or (ii) any person who has been employed by the other party hereto
at any time during the immediately preceding six-month period, except with
the prior written consent of such other party. Notwithstanding the
foregoing sentence, neither party hereto shall be restricted from
soliciting for hiring, offering to hire, employing and/or compensating any
former employee of the other party if the former employee's employment with
such other party was terminated by such other party,
18.2 Both parties hereby acknowledge and agree that (i) the provisions and
restrictions contained in this Section 18 are reasonable and necessary for
protection of the legitimate interests of the parties hereto; (ii) neither
party would have entered into this Agreement in the absence of such
provisions and restrictions; and (iii) any violation of any provision of
this Section 18 by a party hereto or any related or affiliated organization
over which such party has control may result in irreparable injury to the
other party, which injury may be inadequately compensable in monetary
damages, Accordingly, the parties hereby acknowledge and agree that each
party shall be entitled to seek
Confidential Page 10 07/29/99
<PAGE>
Lakeland MSA
preliminary and/or permanent injunctive relief from the other party for any
violation or threatened violation of this Section 18 by such other party or by
any related or affiliated organization over which such party has control,
without the necessity of proving actual damages or posting any bond or other
security. The rights and remedies of each party under this Section 18.2 shall be
cumulative and in addition to any other rights or remedies to which such party
may be entitled under this Agreement, at law or 'in equity.
SECTION 19. INSURANCE
19.1 SUPPLIER, at its expense, shall secure and maintain at all times during
SUPPLIER's performance of Services or Supplemental Services under this
Agreement: (1) workers' compensation insurance coverage in such amounts as
are required by the laws of the Commonwealth of Pennsylvania; and (ii)
comprehensive general liability 'insurance coverage having a combined
bodily injury, loss of life and property damage limit of not less than
$1,000,000 per occurrence and $2,000,000 in the aggregate.
19.2 Upon BUYER's written request and at BUYER's cost and expense, SUPPLIER
shall provide BUYER with Certificates of Insurance evidencing that SUPPLIER
possesses the insurance required under this Section 19.
SECTION 20. GOVERNING LAW AND RELATED MATTERS
20.1 This Agreement shall be construed in all respects under the laws of the
Commonwealth of Pennsylvania, without regard to Pennsylvania's principles
governing conflicts of law. If any part of this Agreement shall be held to
be void or unenforceable, such part will be treated as severable, leaving
valid the remainder of this Agreement notwithstanding the part or parts
found to be void or unenforceable.
20.2 Subject to the provisions of Sections 15 and 16 above, litigation with
respect to this Agreement may be brought in the courts of the Commonwealth
of Pennsylvania or of the United States District Court for the Eastern
District of Pennsylvania, and, by execution and delivery of this Agreement,
each of the parties hereto hereby irrevocably accepts the nonexclusive
jurisdiction of the aforesaid courts. Each of the parties hereto hereby
further irrevocably waives any claim that any such court lacks jurisdiction
over it, and agrees not to plead or claim, in any legal action or
proceeding with respect to this Agreement brought in any of the aforesaid
courts, that any such court lacks jurisdiction over it.
20.3 Each of the parties hereto hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
brought in the courts referred to in Section 21.2 and hereby further
irrevocably waives and agrees not to plead or claim in any such court that
any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
20.4 Each of the parties hereto hereby irrevocably consents to the service of
process in any such action or proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, to, or to the care of,
such party, at its address for notices as set forth in Section 23 below,
such service to become effective five (5) business days after such mailing.
Each of the parties hereto hereby irrevocably waives any objection to such
service of process and further irrevocably waives and
Confidential Page 11 07/29/99
<PAGE>
Lakeland MSA
agrees not to plead or claim in any action or proceeding commenced hereunder
that service of process was in any way invalid or ineffective. Nothing herein
shall limit the rights of the parties hereto to serve process in any other
manner permitted by law,
SECTION 21. GENERAL
21.1 Audit. Upon five (5) business days prior written notice to SUPPLIER, and
during regular business hours, BUYER shall have the right to audit,
examine, and copy any record of SUPPLIER that is related in any way to
SUPPLIER's service level and billing performance of this Agreement.
21.2 Modifications. This Agreement can only be modified by a written Agreement
duly signed by the persons authorized to sign agreements on behalf of
SUPPLIER and of BUYER.
21.3 Severability of Provisions. If any provisions of this Agreement shall be
held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or be impaired thereby.
21.4 Limitations. No action, other than an action for non-payment, regardless of
form arising out of this Agreement may be brought by either party hereto
more than two (2) years after the cause of action has arisen.
21.5 Waivers. A waiver of a breach or default under this Agreement shall not be
a waiver of any other or subsequent breach or default. The failure or delay
by either party in enforcing compliance with any term or condition of this
Agreement shall not constitute a waiver of such term or condition unless
such term or condition is expressly waived in writing.
21.6 Force Majeure. Either party's failure to perform any of its obligations
hereunder, except for the obligation to pay monies when due hereunder,
shall be excused and shall not give rise to any claims for damages to the
extent it is caused by an event or occurrence beyond the reasonable control
of such party including, but not limited to, war, embargoes, government
restrictions, riots, severe weather or storms, floods, earthquakes, natural
disasters, or other Acts of God, strikes, power failures, power
interruptions, nuclear or other civil or military emergencies, or
telecommunications or equipment failures or interruptions caused by
suppliers.
21.7 Captions. Captions contained in this Agreement are for reference purposes
only and do not constitute part of this Agreement.
21.8 Notices. All notices which are required to be given or submitted pursuant
to this Agreement shall be in writing and shall be sent by registered or
certified mail, return receipt requested, to the address set forth below or
to such other address as SUPPLIER or BUYER may from time to time designate
by written notice delivered in accordance with this Section,
Address for notices to BUYER: Address for notices to SUPPLIER:
Boston Communications Group, Inc. ICT GRoup, Inc.
100 Sylvan Road, Suite 100 800 Town Center Drive
Woburn, MA, 01801 Langhorne, PA 19047
Attention: General Counsel Attention: Chief Financial Officer
Confidential Page 12 07/29/99
<PAGE>
Lakeland MSA
21.9 Authority: Each party represents that it has full power and authority to
enter into and perform this Agreement, and the person signing this
Agreement on behalf of it has been properly authorized and empowered to
enter into this Agreement,
SECTION 22. ENTIRE AGREEMENT
22.1 This Agreement together with the Schedules hereto constitutes the entire
agreement between the parties hereto with respect to subject matter hereof
and thereof. Ibis Agreement and the Schedules hereto supersede all prior or
simultaneous representations, discussions, negotiations, letters,
proposals, agreements and understandings between the parties hereto with
respect to the subject matter hereof and thereof, whether written or oral.
If there is any inconsistency or conflict between the provisions of the
main body of this Agreement and the provisions of any Schedule hereto, the
provisions of the main body of this Agreement shall be controlling and
shall govern.
CELLULAR EXPRESS, INC., D/B/A
BOSTON COMMUNICATIONS GROUP, INC. ICT GROUP, INC.
- --------------------------------- ---------------
ACCEPTEDBY: Jerry Confer ACCEPTED BY: John D. Campbell
TITLE: Vice President/GeneralManager TITLE: President ICT Group Sales
SIGNATURE: /s/ Jerry Confer SIGNATURE: /s/ John D. Cambell
DATE: 7/30/99 DATE: 08/04/99
Confidential Page 13 07/29/99
<PAGE>
Lakeland MSA
EXHIBIT "A"
SCOPE OF SERVICES
AIRTOUCH CELLULAR
GENERAL OVERVIEW: SUPPLIER will recruit, screen, hire and train a dedicated
- -----------------
team of Customer Service Representatives (CSRs) for BUYER's inbound Customer
Service calls. Initially the calls will be related to prepaid cellular service
including balance inquiry, recharging, and billing inquiry and general
information. The work will be performed at SUPPLIER's call center located in
Lakeland, Florida, First live calls will arrive on April 5, 1999
During the term of this Agreement, so long as BUYER has a contract with Airtouch
Cellular to handle customer service calls, BUYER will continue to utilize the
services of SUPPLIER in the handling of such calls. In the event that BUYER's
contract with Airtouch Cellular to handle customer service calls is terminated,
then BUYER may terminate the provision of services by SUPPLER to BUYER for the
customer service calls of Airtouch Cellular upon 60 days prior written notice to
SUPPLIER, and BUYER shall have no obligation to make any payment to SUPPLIER,
including without limitation, any penalty, termination charge, damages or
minimum monthly billing charge, except those charges due for services rendered
through the effective date of termination.
Notwithstanding the provisions of Section 14.l (b) of the Agreement to which
this Exhibit A is attached, in the event that SUPPLIER is completely unable to
perform the services for BUYER Described in this Exhibit A due to an "Equipment
and Facilities Failure" (as defined herein) of Equipment and Facilities provided
by SUPPLIER, and fails to restore the performance of such services within thirty
(30) days after receipt of written notice from BUYER, then BUYER may terminate
the program described herein without any further obligation to SUPPLIER. For
purposes of this Agreement, an "Equipment and Facilities Failure" shall mean (a)
a loss of electrical power, (b) a loss of telephone communications, (c) a
failure of computer of telephone equipment to function properly and/or, (d) loss
of use of the physical facility.
RECRUITING: SUPPLIER will use the BUYER's CSR Profile to screen and select
- ----------
CSR's. The BUYER may provide SUPPLIER with testing tools to use during the
interview. SUPPLIER will use such tools, provided they are within the limits of
all relevant government entities, to conform to the BUYER's standard. The BUYER
may review the selected CSRs in advance of training and the BUYER may, at that
time, remove CSRs that do not meet their qualifications for initial hiring.
SUPPLIER will recruit English and when requested, bilingual CSRs. The BUYER will
specify the number of each type at least 45 days in advance so that SUPPLIER
will have sufficient time to screen and select the required CSRs. The BUYER or
their representative may test the selected CSRs for their special language
skills. The BUYER may remove CSRs that do not meet their qualifications for
special language skills. SUPPLIER and BUYER will agree on a standard evaluation
form, which BUYER will complete for each CSR removed, documenting why that CSR
did not meet BUYER qualifications.
TRAINING: BUYER's trainers will provide CSR training on-site in Lakeland until
- ---------
SUPPLIER trainers, and at least one (1) SUPPLIER Supervisor, have completed two
training sessions with BUYER's trainers,
Confidential Page 14 07/29/99
<PAGE>
Lakeland MSA
SUPPLIER trainers will thereafter train the CSR staff. The BUYER provided
training period would continue for two complete training sessions for each
Airtouch Cellular program.
The BUYER will be billed for the initial CSR program training period and for any
CSR program training that might be required by a BUYER initiated program change.
The BUYER will not be billed for any training required as a result of CSR
attrition at any time.
If training must be conducted off-site from Lakeland, the BUYER will pay travel
and living expenses for the SUPPLIER staff during the training.
CONTINUOUS TRAINING: SUPPLIER will provide one (1) hour of billable refresher
- --------------------
training [at the Regular Training Rate] per CSR per month.
SUPPLIER will adopt BUYER's [Zenger Miller] Supervisor Development Program.
SUPPLIER agrees, within 180 days of executing this agreement, to have one (1)
Trainer or Supervisor, within the Lakeland call center, certified on Zenger
Miller at SUPPLIER's expense. SUPPLIER's certified Trainer or Supervisor will
then train SUPPLIER's other Trainers and Supervisors. It is expected that this
development program will be an on-going activity and will consume less than 3.5%
of the supervisor's work activity on an annual basis.
LD CARRIER: BUYER will select and directly contract with [pay access and usage
- -----------
charges] the IXC of their choice who will provide inbound call transport
services.
QUALITY ASSURANCE: SUPPLIER supervisors or QA department will monitor at least
- ------------------
two inbound calls per agent per week. These calls will be rated and scored using
a format and criteria provided by the BUYER.
The BUYER will have remote access to SUPPLIER's ACD in order to monitor calls.
SUPPLIER and BUYER agree to comply with all legal requirements regarding
monitoring and taping of calls.
Upon both party's signing a separate letter agreement covering BUYER's volume
commitment, SUPPLIER will proceed to purchase and arrange for installation of
the "NICE Universe version 4" quality monitoring system, identified in Systems
Platform & Network Arrangements - Exhibit "E", as requested by BUYER
HOURS OF COVERAGE: SUPPLIER will operate the BUYER's program 24 hours per day, 7
- ------------------
days per week, 52 weeks per year.
ASPECT: Equipped with Producer / Director capabilities and Report Writer. BUYER
will have access to Director terminal screens related to BUYER'S programs.
REPORTS: SUPPLIER will e-mail reports according to a BUYER defined schedule
- -------
The BUYER will supply Aspect ACD custom report templates to SUPPLIER. SUPPLIER
will run and deliver reports to BUYER according to agreed upon, BUYER defined,
schedule. SUPPLIER will also run
Confidential Page 15 07/29/99
<PAGE>
Lakeland MSA
standard Aspect reports, as agreed upon, when requested or as scheduled by the
BUYER. Custom reports can be developed upon request at programming rates listed
in Pricing - Exhibit "C".
SUPPLIER will supply a monthly breakdown of Payroll Hours by CSR which, at
minimum, will include Aspect Log-on hours and training hours.
SYSTEMS & NETWORK See Systems Platform & Network Arrangements - Exhibit "E"
SYSTEMS SUPPORT: SUPPLIER agrees to provide one [1] System Administrator, solely
- ----------------
dedicated to the BUYER, whenever the BUYER's billable monthly purchase of
Dedicated CSR time exceeds 22,500 hours.
PROMPT PROBLEM RESOLUTION: Each party agrees to immediately notify the other,
- --------------------------
via the Problem Resolution Process - Exhibit "I", of any outstanding issues
affecting the program.
SPMAL REoummmws:
- ----------------
SUPPLIER will supply a dedicated LAN in Lakeland to support BUYER's program.
SUPPLIER will purchase and install Routers and LAN ports.
BUYER will pay for all Voice and Data communication facilities. SUPPLIER will
assist the BUYER, though a Letter of Agency, to facilitate the delivery of such
services to the Lakeland facility.
BUYER may have a reasonable number of their employees in the call center during
any buildout.
BUYER will have limited, read only, access to their program data on the Aspect I
ACD for reporting purposes
WORKSTATIONS: SUPPLIER will provide 60% - 75% as many workstations [each
equipped for voice and data] as there are Full Time Equivalent (FTE) CSRs.
SECURITY PLAN: SUPPLIER to provide a plan within first thirty days after start-
- --------------
up. The intent of the security plan is to reasonably accommodate the BUYER's
concern that access to the PC workstation be restricted to CSRs assigned to the
BUYER's program.
Confidential Page 16 07/29/99
<PAGE>
Lakeland MSA
EXHIBIT "B"
SERVICE LEVELS & STAFFING
AIRTOUCH CELLULAR
SERVICE OBJECTIVE: 80% of all calls will be answered within 30 seconds. The 30
- -----------------
second threshold is independent of any forced message treatment. Forced message
treatment will be added to this metric to arrive at true service levels.
SUPPLIER's ability to meet the 80/30 Service Objective depends critically on the
accuracy of the BUYER defined Staffing and BUYER provided Call Volume Forecast.
DEDICATED CSRs: SUPPLIER will provide dedicated CSR's, who only work on BUYER's
- ---------------
program, according to the following Table 1:
TABLE 1 - PRODUCTION FTE CSR'S
------------------------------
- --------------------------------------------------------------------------------
Date Range Cumulative Cumulative Total
ENGLISH BILINGUAL PRODUCTION
FTE CSR'S FTE CSR'S FTE CSR'S
- --------------------------------------------------------------------------------
04/05/99 04/17199 36 8 44
04/17/99 05/15/99 67 10 77
05/15/99 Current 110 12 122
- --------------------------------------------------------------------------------
Each FTE CSR represents 150 hours per full calendar month of Dedicated Customer
Service Representative time billable to BUYER at the Production rate shown in
Pricing - Exhibit "C",
BUYER's FORECAST: Each week the BUYER will supply a rolling 45-day forecast of
- -----------------
the required staffing levels. SUPPLIER and BUYER will then agree to a staffing
level in writing via Service Enhancement Request Form - Exhibit "D". SUPPLIER
agrees to meet staff increases within 45 days after receipt of the forecast
provided the increase is not more than 30 additional CSRs. SUPPLIER will apply
best efforts to meet BUYER requirements if the 'increase is more than 30 CSRs
within a 45-day time frame.
SUPPLIER will be excused from meeting Service Level Objectives if the actual
number of calls received by SUPPLIER deviates more than + 10% from the BUYER
forecast supplied 45 days prior to the week in which the calls arrive.
STAFFING COMMITMENT: SUPPLIER will provide and maintain call center staff as
follows:
Training Lead - I Training Lead [shared with other BCG work]
Trainers - 60:1 ratio of CSRs to Trainers / Training Lead [shared
with other BCG work]
QA Lead - I QA Lead [shared across call center]
QA Monitors - 60:1 ratio of CSRs to QA Monitors / QA Lead
Operations Manager - I Operations Manager [shared with other BCG work]
Floor Supervision - 18:1 ratio of CSRs to Floor Supervisors
Confidential Page 17 07/29/99
<PAGE>
Lakeland MSA
QUALITY ASSURANCE STANDARDS: SUPPLIER will adhere to BUYER's standards of
- ----------------------------
monitoring at least 2 Inbound calls per agent per week.
Confidential Page 18 07/29/99
<PAGE>
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission.
Asterisks denote omissions.
Lakeland MSA
EXHIBIT "C"
PRICING
AIRTOUCH CELLULAR
BILLABLE HOURS: SUPPLIER will bill the BUYER for "Aspect Log-on Hours" for the
assigned CSRs. This time will 'include two 15 -minute breaks per 7.5 -hour
workday. Lunch break will not be billed to the BUYER.
If the BUYER requires activity other than handling inbound calls or if the
BUYER's processes and procedures require the CSR to engage in substantial non-
phone activity, those hours will be billed to the BUYER at the standard rate
specified below for Inbound Customer Service.
DEDICATED CUSTOMER SERVICE REPRESENTATIVES: [Notes I - 4]
- --------------------------------------------
PRODUCTION RATE: [**]
- ----------------
TRAINING RATE:
- -------------
Special Rate for business moved from Woburn [Note 5] [**]
Additional charge for early termination [Note 6] [**]
Regular Training Rate [Note 7] [**]
SYSTEMS SUPPORT / PROGRAMMING: [Note 5] [**]
- ---------------------------------------
CRIMINAL BACKGROUND CHECK: [**]
- --------------------------
CUSTOMER SPECIFIED EQUIPMENT : [**]
- ----------------------------
NOTES:
- ------
1.) All rates are in U.S. Dollars, with a minimum monthly billing equal to 150
hours times the number of FTE CSRs contracted for. Work performed in
Canada is subject to currency review / adjustment every 6 months.
2.) BUYER contracts with, and pays IXC for all inbound access and usage
charges.
3.) Specialized data / system equipment can be supplied by BUYER or priced
separately.
4.) Data communication links provided by BUYER.
5.) Special rate for Buyer's Airtouch Cellular business moved to Lakeland from
BUYER's Woburn, MA call center, assuming SUPPLIER can continue to bill
BUYER for the full quantity of CSR's receiving Airtouch Cellular program
training, for at least six (6) months from the date on which said CSRs
begin handling calls.
6.) SUPPLIER will bill BUYER this additional $2.00 per hour for each hour of
training, provided according to Note 5, to each individual CSR, eliminated
by BUYER within six (6) months from the date on which said CSRs begin
handling calls.
7.) Regular hourly training rate for Airtouch Cellular business that's not
being moved from BUYER's Woburn, MA call center.
8.) When requested by BUYER.
Confidential 19 07/29/99
<PAGE>
Lakeland MSA
STAFFING PENALTY PROVISION: The BUYER shall receive a credit for any SUPPLIER
- ---------------------------
failure to deliver at least ninety percent (90%) of the "FTE CSR" staff (on the
scheduled "Delivery Dates" as detailed in Exhibit "B" - Dedicated CSRs and as
mutually agreed to via Modification Request Form - Exhibit "F"). BUYER may take
a credit against the SUPPLIER monthly invoice of one half of one percent (0.5%)
for each FTE CSR below the 90% level not available during a calendar month, with
a maximum penalty of five percent (5%) in any given calendar month. An FTE CSR
is defined as 150 hours of production time.
CHANGE REQUESTS: All BUYER requested changes [staffing, systems, facilities,
- ----------------
etc.] must be documented on an Acquisition Request Form - Exhibit "F" and
approved via authorized signature of both BUYER and by SUPPLIER.
Confidential 20 07/29/99
<PAGE>
Lakeland MSA
EXHIBIT "D"
APPROVED SERVICE ENHANCEMENT REQUESTS
AMERITECH CELLULAR
Confidential 21 07/29/99
<PAGE>
Lakeland MSA
EXHIBIT "E"
SYSTEMS PLATFORM & NETWORK ARRANGEMENTS
BELL ATLANTIC MOBILE
Minimum Desktop Specification:
- ------------------------------
Processor Intel Pentium 11 233MHz
Operating System Windows NT Workstation 4.0, service pack 4
System RAM 64 Meg
Hard Drive 4 Gig
Video RAM 4 Meg
Network Interface Card
Monitor 17"
Imaging Software Drive Image
Minimum ACD Specifications:
- ---------------------------
Aspect Call Center 30OR
Vendor certified Y2K compliant system software
Thirty-two (32) Voice Ports
AMC Card -
ISDN PRI ready
Network InterQ compatible with Release 7 far end systems
Application Bridge
Event Bridge
Realtime Bridge
Anonymous FTP
Prime Time Report Software - [BUYER may supply other software at BUYER's
option & expense]
Custom View Suite w/remote network connectivity and dedicated historical
reporting station
Minimum Quality Monitoring System Specification:
- ------------------------------------------------
Nice Universe version 4.1
Data Network:
- -------------
ICT will supply an Ethernet 100Mb backbone to the desktop, Cisco 3600 Series
Routers, all equipment managed and observed by HP software.
Confidential 22 07/29/99
<PAGE>
Lakeland MSA
EXHIBIT "F"
----------
SERVICE ENHANCEMENT REQUEST FORM
--------------------------------
A.R.______________________(YY-Seq#) Approved__________________________
Denied ____________________________
REQUESTED BY:_________________________ DATE:_________________________________
IMPLEMENTATION DATE: _____/ _____/ _____
PRIORITY: _____High _____ Med _____Low
CALL CENTER: I - Deland 2 - Lakeland 3 - Riverview
4 - Other (Specify)_____________________________________
SYSTEMS: I - Facilities 2 - PCs/LAN 3 - NT Servers
4 - ACD 5 - PBX 6 - Communications
7 - Other (Specify)_____________________________________
DESCRIPTION
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
IMPACT:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
ESTIMATED COST: $ Plus tax MAINTENANCE: $
------------ ------------------
(Attach documentation including on going maintenance)
FINANCIAL RESPONSIBILITY: _______1___________ = BCGI 2 = ICT
APPROVED BY BCGI: __________________________ DATE: _____/ _____/ _____
APPROVED BY ICT: ____________________________ DATE: _____/_____/_____
Home Office Use Only
EXPENDITURE APPROVED BY: __________________________ DATE: _____/ _____/ _____
PRINT NAME: ______________________________________ TITLE:___________________
________________________________________________________________________________
Confidential 23 07/29/99
<PAGE>
Lakeland MSA
EXHIBIT "G"
BUYER & SUPPLIER
PROBLEM RESOLUTION PROCESS
1. LEVEL I: It is the intent of both parties that SUPPLIER's "Center
--------
Management" and BUYER's "Account Management" resolve daily Operational
Issues. These issues would include but are not limited to: call volume
forecasts, enhancement training, performance improvements, staffing and
schedules.
The BUYER Systems Administrator and the BUYER's Technical Operations
Manager will resolve daily Technology issues. These issues would include
but are not limited to the ACD, agent workstations, network and IVR
configurations, etc.
If immediate agreement is not reached and should the nature of the problem
have an immediate impact on the BUYER, the BUYER's customers or pose a
substantial financial loss, immediate remedial action will be taken by the
Level I management to alleviate the problem. The intent is to minimize any
negative effect on the BUYER and customers and/or to reduce any substantial
financial loss. Concurrently, the issue will be referred to Level 11 for
eventual resolution. The guiding principle should be to prevent any
disagreement from affecting the delivery of services to the BUYER and their
customers.
2. LEVEL II: A referral to Level II, can be done jointly (preferred) or
---------
singly. It is to be done in writing with a brief outline of the issue, the
impact on BUYERs or costs and a summation of the reasons for disagreement.
The notice is to be delivered via e-mail or fax to the Level II management
teams with a voice mail or beeper message informing the Level II teams of
an active referral.
The Level II management teams for issues relating to Call Center Operations
include the SUPPLIER's Group Vice President and the BUYER's Vice
President/Director responsible for the SA relationship.
The Level II management teams issues relating to Call Center or Information
Technology include the SUPPLIER's Group Vice President - Systems and the BUYER's
Technical Operations Director,
Any issue referred to Level II, will be resolved within 48 hours or
referred to Level III for review.
A referral to Level II, will require that the Level II management teams
meet (conference call or face to face) within 48 hours of a referral to
review the issue and to confirm any interim action taken to alleviate the
issue on a temporary basis.
Any referral to Level II will require a written response outlining the
actions to be taken to resolve the conflict. The response will be provided
to Level I management teams for implementation.
3. LEVEL III: The Level III management teams are composed of SUPPLIER's -
----------
President Management Services and BUYER's VP & GM Teleservices, The intent
of both parties is that any issue referred to Level III will be resolved
within 48 hours.
A referral to Level III, will require that the Level III management teams meet
(conference call or face to face) within 48 hours of a referral to review the
issue and to confirm any interim action taken to
Confidential 24 07/29/99
<PAGE>
Lakeland MSA
alleviate the issue on a temporary basis. Any referral to Level III will require
a written response outlining the actions to be taken to resolve the conflict.
The response will be provided to Level I and II management teams for
implementation.
4. SUPPORTING MATERIALS: The SUPPLIER's Level II management team will maintain
--------------------
and distribute to Level I,II and III teams a current contact list for all
SUPPLIER and BUYER management personnel involved in Level I, II and 111.
The list will provide phone, beeper, fax, e- mail, and cellular and postal
address information along with position.
The SUPPLIER's Level 11 management team will, in conjunction with the
BUYER's Level 11 management team, create and maintain a standard format for
the escalation and response to issues referred to the Issue Resolution
process.
5. LISTING OF THE LEVEL I, II AND III MANAGEMENT TEAMS:
----------------------------------------------------
LEVEL I
-------
Operational Issues
SUPPLIER: Call Center Manager
BUYER: BUYER Operations Manager
Technical Issues
SUPPLIER: Systems Administrator
BUYER: Technical Operations Manager
LEVEL II
--------
Operational Issues
SUPPLIER: VP-Operations, Management Services Division
BUYER: VP/Director
Technical Issues
SUPPLIER: VP- Systems, Management Services Division
BUYER: Technical Operations Director
Level III
---------
SUPPLIER: President, Management Services Division
BUYER: VP & GM, Teleservices Division
Confidential 25 07/29/99
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> JAN-01-1999 JAN-01-1999
<PERIOD-END> SEP-30-1999 SEP-30-1999
<CASH> 13,856 13,856
<SECURITIES> 9,011 9,011
<RECEIVABLES> 25,630 25,630
<ALLOWANCES> 2,092 2,092
<INVENTORY> 2,182 2,182
<CURRENT-ASSETS> 53,572 53,572
<PP&E> 44,400 44,400
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 101,338 101,338
<CURRENT-LIABILITIES> 20,312 20,312
<BONDS> 0 0
<COMMON> 167 167
0 0
0 0
<OTHER-SE> 78,626 78,626
<TOTAL-LIABILITY-AND-EQUITY> 101,338 101,338
<SALES> 26,114 77,699
<TOTAL-REVENUES> 26,114 77,699
<CGS> 20,203 54,339
<TOTAL-COSTS> 29,239 79,809
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (227) (748)
<INCOME-PRETAX> (2,898) (1,362)
<INCOME-TAX> (684) 0
<INCOME-CONTINUING> (2,214) (1,362)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (2,214) (1,362)
<EPS-BASIC> (0.13) (0.08)
<EPS-DILUTED> (0.13) (0.08)
</TABLE>
